Although the commercial POU drinking water cooler business is a relative newcomer to the water treatment industry, it is one that has matured rapidly.

As sales growth flattened in the 5-gallon bottled water category in the late 1990s — and continuing through to the present — bottled water companies have joined the list of those offering filtered drinking water coolers to their clients.

While not nearly as profitable as bottles, it has given them a product with which they can defend against the filtered cooler competitors vying for their customer base.

The predominant sales strategy for filtered water cooler dealers is to target clients currently supplying 5-gallon bottled water coolers to their employees.

While supplying bottled coolers makes employees happy and allows them the convenience of not having to drink tap water, it also creates headaches for those involved in facilities and operations.

Since the early 1990s, companies have been looking for ways to cut overhead costs without sacrificing the quality of the amenities they provide their employees. With increasing numbers they are switching to filtered drinking water coolers to eliminate the hassles and headaches of the bottles and cut their current administrative and drinking water costs, while at the same time dramatically improving the taste and quality of their office drinking water.

There are currently three reasons that end-users might make the switch from 5-gallon bottled water coolers to filtered coolers:

By eliminating the cost of renting or purchasing a bottled water cooler and the cost of having the bottles delivered clients can cut monthly costs by 20 to 75 percent. This does not take into account the cost of storage space for the full and empty bottles or the indirect labor costs to stock, deliver and change bottles.

Filtered coolers can eliminate the hassles of once or twice per month bottled water deliveries; storage space required for stockpiling bottles; the possibility of running out of water; security issues with a delivery people coming through their office 12 to 52 times per year; as well as the possibility of injury and workers’ compensation claims as a result of lifting the 42 pound bottles.

Without proper monthly cleaning and sanitizing the water storage reservoirs of bottled water coolers are prime breeding grounds for bacteria, algae and biofilm growth. While basic filtered coolers are not immune to that same biofilm growth, the nature of their sealed system slows the growth of microbiolicals to levels below that of the "open tank" bottled water coolers

Although the future of the office drinking water cooler industry is not completely clear, a few trends have appeared:

With more independent filtered cooler dealers, OCS operators, and vending companies selling filtered coolers as a primary or add-on product, the market share of bottled water coolers will continue to decline.

The overall market for water coolers (both bottled and POU) in commercial offices will continue to increase, as it is extremely rare for clients to switch from filtered coolers back to bottles, or from bottled water back to using tap water.

It is evident that the vast majority of water cooler production in the future will happen outside the US, primarily in Korea, Mainland China and Taiwan. It is expected that by 2008 over 95 percent of all bottled and filtered coolers used in the US will be manufactured outside this country.

Inexpensive foreign made bottled water coolers are increasingly more available at big-box retailers. While these coolers are lower in quality than the commercial versions supplied by bottlers, they are stripping away the $8-$12 monthly rental revenue to bottlers and are becoming a virtual disposable piece of office equipment.

From overseas manufacturers we expect to see more attractive water cooler designs, lower prices on the entry-level coolers, and mid- and high-end coolers incorporating newer and better technologies.

Larger companies with locations throughout the US are looking for ways to cut costs, eliminate overhead and consolidate vendors. It is not uncommon for Fortune 500 companies in the US to spend as much as $25 to $45 to process a single vendor invoice.

These companies are looking for vendors that can provide superior nationwide service that will cut costs and eliminate the overhead and the headaches of dealing with local vendors in each of their markets.

For the past 15 years local dealers and local coffee and vending companies have dominated the industry. As filtered drinking water coolers continue to gain market share and become the preferred option for office managers and facilities managers, at some point, there will be a consolidation in the industry.

As happened in the bottled water industry over the past 5-10 years, the attractiveness of the filtered cooler industry will soon begin to appeal to more than just the local dealer.

Jeff Doughty is the president and CEO of Spectrum Water Coolers Inc., a 16-year-old nationwide filtered drinking water cooler company with headquarters in Jessup, MD.