Interview with Dominic Hadeed, Founder of Blue Waters, Trinidad and Tobago
Dominic Hadeed is the eldest child and only son of an entrepreneurial father. Of Syrian origin, the Hadeed family settled in Trinidad and Tobago where Dominic’s father and uncles started successful businesses in the textile and garment trade. While Dominic inherited his father’s entrepreneurial flair, he did not inherit an interest in his business and soon set out on his own. He founded Blue Waters in 1999 and today it is the Caribbean’s largest bottled water manufacturer, available throughout the region and with over 65% market share. This is his story.
Why did you go into the beverage industry when you started out in 1999?
Though I started the business in 1999, the idea was actually born about five years earlier. As a junior in college- I went to Lynn University in Florida- I came up with the idea of building a business around bottled water. Nobody was doing it at that time in Trinidad. For my research project in school, we had to pick an entrepreneur to do a thesis on. The top entrepreneur in Florida at that time was a guy called Wayne Huizenga; he had started Blockbuster video, Waste Management, AutoNation; he had owned the Dolphins and the Miami Marlins; basically he practically owned all the sporting teams in Florida. It was the kind of entrepreneurship that was so inspiring to read about.
But when I graduated, my family expected me to join my father’s fabric business and work with him and my uncle. So I tried to work for the family business for a few years. During that time I also realised that the business we were in would not last my lifetime. There were very few young people in Trinidad who were looking to become tailors and seamstresses when they grew up. People wanted brands not sewn clothes. At that time, free trade was opening up, and the duty on ready-made items started to fall. You could see that it was becoming faster, more affordable and more convenient to buy ready-made items.
But then my uncle passed away, and I said to my father, “Life is too short not to do what you love,” and I couldn’t get this water business out of my mind.
When my uncle was diagnosed with cancer, my family suggested that I run the shopping centre business instead of the fabrics business. I liked that a lot more. But then my uncle passed away, and I said to my father, “Life is too short not to do what you love,” and I couldn’t get this water business out of my mind. I told my father that I had to try. I felt very strongly that it would be much better for me to do it while my father was still around so he could witness the success or failure and could help me deal with either. He eventually conceded. I launched Blue Waters in 1999 with his reluctant blessing.
What was the beverage industry like at that time?
There were 42 brands available at that time from small bottlers and imported brands, but the four local large beverage companies, Coke, Pepsi and two well-established independents, however, they had not entered the water business, they thought it was a fad. It kind of gave smaller companies a window of opportunity to come up. But the smaller companies were not doing it well. I was late to the party, yet I knew nobody was doing a good job of it. I saw that nobody was doing it what I would call ‘the local way’, they just followed the international market.
Our timing in entering the market turned out to be a blessing. If I had gone in a couple of years earlier, I probably would not have made it, and if I had waited a little bit longer, it would’ve been too late. It just fell into place at the right time. I didn’t make money initially; I lost an arm and a leg in the first two years. I broke even year three, year four and year five I made back the money that I had lost in years one and two. It wasn’t a get-rich-quick scheme; it wasn’t an easy ride. Because I was hell bent on doing it the right way.
What do you mean by ‘the right way’?
Well, I didn’t cut corners. I wanted our manufacturing to be fully automatic because that produced a better standard of hygiene. You set up a lab, you do proper testing, you get proper distribution to reach the country and give good service, you offer bottle sizes that appeal to the customers, so all of that was expensive. That meant high fixed costs so even though our sales were fine in the beginning; we didn’t see any profit from it for about two years.
If we start out with a good quality product, all these convenient package sizes that they want, staff that are well-trained, how could you not succeed?
From the beginning this allowed us to have an open door policy. I would allow anyone to take a tour of the factory. I knew we had nothing to hide. If you remove all the things that make you fail, what’s left is success. If we start out with a good quality product, all these convenient package sizes that they want, you give a good service, staff that are well-trained, how could you not succeed? It’s when you try to cut corners that you eventually lose.
How did the consumers react to you?
At the beginning it was hard. But we staked our territory immediately. Every SKU offered consumers an improved proposition. We were the first to introduce the 5-gallon bottles with handles and no spill coolers. Nobody wanted to introduce those bottles with handles or coolers because they cost more.
Everybody was buying the ‘preforms’, which is what you use to blow the bottle, from the soft drink guys. But to do a bottle for soft drink, you need to use more plastic than for water because you have to retain the carbonation. I started off with French equipment, and I sent the preforms to the equipment suppliers and said, “What is the biggest bottle I can make with this?”. They said you can make 650 ml. So I just gave the customers 30% more water for free!
Was that the branding angle? More for less?
It was all about understanding what people want, and understanding people’s self-interest, and trying to find a business model that could give people what they want, and still be better than the competition. In those days in Trinidad, they were selling water in bags. The cheapest way to buy water was in these little pouches. People liked the price because it was cheap, but they didn’t like the taste. It had a funny taste because the manufacturers were not using the right plastic. We used a laminate – the double ply that made the water taste good. But to match that price point we had to reduce the size to 360 ml, so we were actually offering less water for the same price in that size, but it tasted better. So we were not the cheapest, but it was a consistently good taste.
How did you market your water?
Well, we knew that many people felt drinking or boiling tap water was fine. So we thought about the places that people would refuse to drink from a tap in Trinidad: the beaches and open-air events. The beaches were not high volume and they were very far from our factory. Most of my competitors wouldn’t even bother because you lost money taking the long trips. Most of the companies didn’t have enough trucks to cover the whole country anyway so they stayed in the cities. Trinidad also has a lot of carnivals where people party late into the night. So we went after all these beaches and special events – and all the promoters.
We started off with just two trucks and people were like, “Wow, Dominic, you guys are so big. Everywhere I turn I see Blue Waters”. With just two little trucks, you could be exactly where people would want to buy water and give the appearance that we were huge!
Again, that comes down to the consumer experience. You have to want to serve the people well, that has to be one of your core drivers. If you just want to make money, sell cheap, it won’t work.
You have to want to serve the people well, that has to be one of your core drivers. If you just want to make money, sell cheap, it won’t work.
You have to put customers first and look through their eyes, and then find a way to work backwards and say, “How can I make money giving them what they want?” as opposed to trying to force stuff down their throats. That’s how it was in the early days and it worked.
So from these early innovative beginnings how far did you get?
Today we probably command about 65% of the market here in Trinidad and Tobago, and to a lesser extent some of the islands in the Caribbean. We probably have about the same market share in St. Lucia where we have another factory. If you go to a supermarket there is a lot of variety on the shelf, but we command, 60 or 70% of the shelf space in most places. There’s still a lot of choice, but the main players are down to about three or four.
How many different products have you come up with?
We co-pack for Pepsi, we don’t distribute Pepsi products, but we produce for them. Then under the Blue Waters name, we have cranberry water and three other flavours. We also distribute Monster Energy Drink.
A big thing for us is focus, not doing too many things in the beginning really made a difference. I know that’s why we beat out some of the other distributors, they had just too many brands and you couldn’t fall in love with so many brands at once. For us, it was really about taking our time. Everything must have quality, be functional and great tasting. Those are the three things that we look for in a good product. You don’t have to do too many things to be successful, you just need to do a few very well, and that’s what we aim for. I think that makes us pretty unique.