Bottled-water company ramps up production in Plainfield

The recession plus environmental concerns put a damper on the bottled water industry, but the company that’s opening
a plant in Plainfield expects to see double-digit growth this year and next.

Niagara Bottling LLC recently hired 55 for its plant on Whitaker Road, which will make half-liter bottles of purified municipal
tap water.

The Ontario, Calif.-based company is a private-label bottler, so it’s part one of the only categories in the bottled-water
industry to see any growth during the recession.

“Water as much as anything has become very commoditized,” said Dexter Manning, who leads the Atlanta-based food
and beverage consulting practice for Grant Thornton. “It has caused the market leaders, Dasani and Aquafina, to suffer
some losses.”

Almost every water brand that Beverage World tracked in its latest state-of-the industry report showed sales declines
in 2008. One of the exceptions was private-label, or generic, water, which grew 7.3 percent.

Niagara’s own projections show it’s reaping the benefits of consumers’ thrifty habits. In a statement the
company submitted to local officials last fall for tax abatement and other incentives, Niagara said it expects sales this
year to increase 16.8 percent, to $555 million.

The company projects double-digit growth through 2011, then expects the rate to taper off to 9 percent.

Last year, the company’s statement showed, it expected sales of $475 million, an increase of 28 percent.

Executives of the family-owned company declined to be interviewed. Dereith Sutton, government relations coordinator, said
via e-mail, “Niagara experienced an exceptional year in 2009, and we’re excited for the opportunity to spread
our presence into new markets in 2010.”

Plainfield is Niagara’s eighth bottling plant, after Allentown, Pa., and Dallas, which opened in 2007 and 2008.

Niagara is the second water-bottler to come to central Indiana. Nestle Waters North America opened a bottling plant in Greenwood
in 2008 that employs 58 people.

Nestle markets several water brands, including Poland Spring and Ice Mountain. In its recent earnings report for 2009, the
Swiss food giant said sales in the water division declined 1.4 percent.

However, the company’s economy-oriented Pure Life brand, which is produced in Greenwood and elsewhere, gained market
share and increased sales 14 percent.

The industry’s long-term outlook is dim, Manning said. “I see a very, very slow growth for the total industry.”

On top of being price-conscious, consumers are concerned about bottled water’s use of plastic, Manning said. The major
brands are competing to lay claim to the most eco-conscious packaging, and Coca-Cola, which owns the Dasani brand, is expected
to roll out a biodegradable, starch-based plastic bottle this year, he said. Both Nestle and Niagara are promoting new, lighter
bottle designs.

Across Indiana, cities and towns have touted their relatively abundant water supplies to attract food and beverage manufacturers.

Niagara has invested $35 million and received a host of incentives from the town of Plainfield.

Town Manager Rich Carlucci said an allotment of $8.5 million in federal “recovery zone” facility bonds helped
Niagara finance its purchase of a 441,000-square-foot building from Mesa, Ariz.-based Arcus Private Capital Solutions last
fall.

Carlucci said the building was in financial distress. Niagara is leasing half the building to OHL, a Brentwood, Tenn.-based
logistics firm. Niagara is on the hook to repay the bonds, Carlucci said.

Plainfield also is giving Niagara an “industrial” water rate and discounting its sewer and water access fees
50 percent. The water rate will save the company about $90,000 a year. Its maximum access fee will be $1.2 million, Carlucci
said.

The industrial rate that the town created around Niagara is $2.36 per 1,000 gallons for the first 150,000 gallons. After
that point, the rate drops to $1.80 per 1,000 gallons. Plainfield residents pay $3.04 per 1,000 gallons. Carlucci said the
industrial rate will be in effect only until the town’s next rate increase.

When proposing its Plainfield plant last fall, Niagara projected using about 300,000 gallons a day. Sutton said the company’s
actual use may differ.•

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