The Tribune

• Water supplier in first across-board rise in 15 years

• Held-off for three years but expenses jump by 30%

• Says increase ‘minimal’; refuses to ‘cut corners’

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

A Bahamian bottled water supplier yesterday said it had been forced to implement its first product-wide price increase for 15 years as “a last resort” with costs having increased “no less than 30 percent” since COVID hit.

Christian Knowles, Aquapure’s senior manager, told Tribune Business the manufacturer had resisted passing greater raw material and other expenses on to consumers for as long as possible but “sometimes the dam bursts and you really have no choice”.

Branding some of the higher increases as “insane”, but typical of the post-pandemic norm most Bahamian companies find themselves operating in, he voiced optimism that Aquapure had “got it right” and struck the necessary balance between not over-burdening consumers while ensuring it earns enough income to survive and remain viable.

Declining to provide specifics on the increases, which will take effect on May 1, Mr Knowles told this newspaper they should be sufficiently “minimal” - ranging from 25 cents on some product lines to 50 cents, with others “not touched” - not to have a major impact on Bahamian families still struggling to make ends meet amid the ongoing cost of living crisis as water is something they cannot go without.

“I’m an optimist. I don’t like to be negative, and I was hoping things would come back down to normal pre-COVID but that’s not what’s happening,” Mr Knowles explained. “Freight has come down quite a bit from the craziness where it was at during COVID, but raw material costs are still very high.”

Suggesting that many suppliers have elected to keep prices high because customers have no choice but to pay them, he added: “I can’t do that to the people of The Bahamas. Ethically, I cannot do that. We really haven’t raised our prices in ten years maybe. This is the first major price increase that we’ve done since I became part of the company and that’s about 15 years ago.

“We tried our best [to hold off]. We went through the whole SKU (stock-keeping unit) line to reassess everything. We did an accounting exercise to see what the impacts were, and put a lot of time and effort into making sure we did the absolute necessary amount as well. It’s really not something you do every day. We wanted to get it right, and hopefully we did without putting too much on the customer while helping us a little bit.”

Aquapure’s three-year effort to hold back the tide, caused by a multitude of cost increases happening at the same time, highlights the pressures many Bahamian manufacturers and other companies are under as their expense base continues to expand post-COVID.

The bottled water supplier, in a message to its customers, said: “It is with sincere regret that we must announce that we will be implementing a small price increase on all of our products. Although many of our suppliers have already raised the price of their services to us, over the last three years we have resisted raising our prices in an effort to minimise the burden on you, our valued customers.

“As a manufacturer’s costs increase, there comes a point when they have only two choices in order to stay viable - cut corners, or increase prices to cover the additional expenses. Rest assured, we value our quality and your trust far too much to even think about cutting corners. Hence we have no choice but to implement this small price increase.”

Mr Knowles said Aquapure was able to mitigate some of its cost pressures through being a vertically-integrated manufacturer that produces its own bottles. However, it can do little about volatile raw materials prices determined by global commodities markets, with resin and paper costs especially vulnerable.

He added that the company’s “hedge” against such volatility is its relationship with multiple suppliers of the same materials, which it uses as “leverage” in negotiations to obtain the best possible price. And, while freight rates have “come down quite significantly from the several hundred percent” they increased by during COVID and the subsequent supply chain disruption, Aquapure has piggybacked off its large suppliers who are able to obtain better shipping rates than it could itself.

“There’s some things we can do but it’s unfortunate,” Mr Knowles said. “There’s a position in economics when the market has absorbed the price changes without any other actions. If people for a prolonged period of time pay the increased costs it’s business to keep prices where they are. I think we’re seeing a lot of that now. People have adapted to the new economy and are reacting to the new rules.

“Certainly we’ve never done a price increase like this since I’ve been involved here. We might have increased our five-gallon rates once in 10-15 years and that’s not a big deal.” Asked how much Aquapure’s costs have risen over the past three years, Mr Knowles replied: “I would say, straight across the board, our costs have increased no less than 30 percent and probably a bit more on average. At the high end, it’s been insane.

“You can only kick the can down the road for so long. You can decide when it comes, but it’s a last resort. This was our last resort. We didn’t take this lightly and want to make sure people can afford something like water. We’ve made the decision and have to stick with it at this point. I’m hoping we got it right. I’d hate to have to come back to it.”

Aquapure has also seen its fixed costs rise since 2023’s start as Bahamas Power & Light’s (BPL) rolling series of fuel charge hikes kick-in to recover some $90m in unpaid fuel bills owed to Shell. Mr Knowles said the company’s labour expenses have also increased due to the 24 percent minimum wage rise that took effect on January 1, 2023, as it employs “a lot of manual labour” at that pay scale.

“Those things went up. We have to figure out ways to do things a little more efficiently and save money where we can, which will come from efficiencies in the plant, negotiating harder on raw materials,” Mr Knowles said. “That’s the way of the world right now. It has affected our cash flow quite a bit and we can see that. Our two highest costs are human capital and utilities, and both have gone up. We have to adapt to the times and we’re in a good position to do that.”

Noting that Aquapure, like The Bahamas itself, is celebrating its 50th birthday this year, he added: “If we did the same things we did 50 years ago it would not make sense. That’s a testament to us having been around for 50 years. We have to adapt to change and the times. Hopefully the new normal settles and forces people to be more efficient and less wasteful; less wasteful with time and money.”