Culligan flows with the times

Hey Culligan man, you changed.Just weeks at its new headquarters in Rosemont, Culligan International Co.'s state-of-the-art laboratories are operational, both testing water and innovating products.Left behind is its longtime, 40-acre Northbrook campus and many of its old ways."We've worked hard on developing a pipeline of new products," said Mark Seals, chief executive officer of Culligan. "So we're going to be introducing some breakthrough products in 2008."Seals wouldn't reveal his '08 strategies but he all but promised to jump-start one of the landmark companies in the Chicago area and in the water bottle delivery and treatment industry.Still, his top initiatives appear to be a combination of new products, international expansion and 'green' marketing.Changes at the 71-year-old Culligan are inevitable, industry observers said, given the tsunami-like changes in the water bottle industry in the last 20 years.French water bottle brands Evian and Perrier first popularized the single-serve, refreshment-oriented bottled waters in the United States.When Nestle, Pepsi and Coke followed with their own brands, the domestic single-serve market surged.However, Culligan specializes in water cooler jugs, residential softeners, home and office deliveries, repairs, and commercial/industrial water treatments.The so-called tap-water-replacement sector is expanding in the low single digits, according to Beverage Marketing Corp., a New York City-based beverage consulting and research firm.Meanwhile, sales of single-serve bottled water continues to surge in the double digits, according to Beverage Marketing.Culligan finds itself confronting three main categories of competitors, Seals said. Other branded dealers; mom-and-pop shops such as plumbers; and big box home improvement stores selling filtration systems, all of which compete for Culligan's traditional territory, he said.Culligan is part of an $11 billion to $15 billion a year bottled water industry that competes with carbonated drinks for consumer tastes. More recently, water beverages, such as vitamin-enhanced waters, also compete for the convenience-oriented refreshment market."It is an extremely, extremely competitive market out there right now," said Tim Mahon, a longtime consultant to the water bottle industry and presently a principal at Anderson Economic Group in Chicago, a research and consulting firm.Mahon worked with U.S. Filter when it bought Culligan in the late 1990s. Culligan later sold to what became Paris-based Veolia Environment, which turned around and sold Culligan again to New York-based venture capital firm Clayton, Dubilier and Rice in 2004.With that buyout came the expertise of General Electric's former CEO Jack Welch, who travels to Chicago a couple times a year to offer his hands-on insights, Seals said.Mahon said he can only speculate on how Culligan expects to pump up its sales but he suspects any plan will rely heavily on Culligan's distribution system, including more than 700 company-owned and independent franchises.Giving Culligan a head start, Seals said, is its history and 90 percent brand awareness in the United States.The firm still uses the "Hey Culligan man" advertising slogan in radio and television ads but more prominently displays its new tagline "better water. pure and simple."Another of Culligan's biggest marketing points will be 'green' initiatives, as single-serve plastic water bottles get criticized for filling landfills and contributing to global warming.Culligan recycles its jugs, makes energy-saving sensors and sells "jugless" water coolers that filter tap water without a jug."We think the world has moved in our direction," Seals said.Another clue to Seals' strategies might be his travel habits. Culligan taps almost 50 percent of its estimated $800 million sales in foreign markets.Seals finds himself on airplanes these days visiting markets from China to Europe to the United Arab Emirates.Seals would only cite growth figures for Dubai, where he said Culligan is growing in the double digits and has gained key airport and skyscraper contracts.With its hottest selling product being household-oriented, Culligan might be expected to be concerned about the U.S. housing recession. But Seals remains optimistic for Culligan's portfolio of business lines and water treatment products."We have the mix of residential and commercial," Seals said. "Our portfolio is so broad it insulates us."