Thirsty for Profits.

Company finding revenue stream by selling customized labels on water bottles to people or companies looking for unusual marketing tool

LUNIS Williams Jr. was sitting in Candlestick Park in San Francisco eight years ago, drinking a bottle of Crystal Geyser water, when he came up with an idea he believes will one day make him a wealthy man.

"I realized that if the label had 'Giants' on it, it would be the least expensive souvenir in the stadium," he said. "From there I started puffing my business plan together."

The plan is seemingly simple: Find someone who wants a promotional, custom-labeled bottle of water and go find the folks to put it together, taking a cut out of the middle.

"Bottled water is just a vehicle. If you can put the message with the vehicle, then you have a viable product," he said. "Companies don't care about the price. They want their image in everyone's hands."

After an attempt to get the business off the ground in San Francisco went awry, he formed Premier Label Water Co. and moved the operation to Los Angeles, where he has amassed a client list that includes Gap Inc., Warner Bros., Microsoft Corp., Walt Disney Studios, Donna Karan International Inc. and Lucky Brand Jeans.

Despite the slowing economy, Williams says revenues will grow 15 percent this year -- to a projected $550,000. It's growth spurred by an emphasis on sales and cost cuffing.

Downsizing, refocusing

After years of relying on a staff of three, Williams said business had picked up to the point that he was taking more calls for product than he was making. In 1997, he cut the sales staff loose and brought in his fiancee, Maureen McQuiston, who is now the firms' sole employee.

A significant portion of his overhead is in the labels. He has to make minimum orders of 500 -- even if his client only wants 10 cases, or 240 bottles (Williams' minimum order).

Premier sells a case for $276, from which Williams takes $75. He wholesales orders of 10,000 bottles for $4,900, though his profit margin slips to 20

percent.

The company outsources labeling to L.A.-based ABB Labels Inc. and the bottling to companies in Santa Ana and Dandridge, Tenn. That leaves him free to beat the bushes for new business.

Gene Montesano, chief executive of Lucky Brand, said Premiere's products, which Lucky gives away to customers at 50 retail stores nationwide, are a perfect fit for the lifestyle brand image the company wants to convey.

"It's more than just popping open a bottle of water, drinking it and not thinking about it' he said. "We just thought it was a nice opportunity to have (a message) that their luck gets better with every sip."

Now, as part of the wave of post-Sept. 11 patriotic fervor, things have started to take off.

Williams landed a contract to organize the production, sales and distribution of water bottles whose labels are festooned with American flag decals that can be peeled off. Production got underway Sept. 13, and the first cases were scheduled to be available last week.

The idea originated with PatriotWater.com, a Mesa, Ariz. company that owns the rights to the decal label. PatriotWater originally intended to use the product just as a vehicle to celebrate Veterans Day, with 15 percent of each case going to the Veterans of Foreign Wars.

"Luins has put together a network of bottlers across the country so our product can be available in every state in the United States," said Ed Balder, executive marketing director for PatriotWater.com. "He's incredibly responsive. We're counting on the public's demand for the product to get so high that retailers will have to take it on."

University water

From each case, Williams said Premier stands to make 2 percent of PatriotWater.com's revenues.

The recent success is a far cry from the $100,000 in debt he said he accumulated shortly after starting his first designer label water bottle business in 1993.

Williams originally pitched the idea as a marketing test to a Stanford University administration, which participated in the federally-funded Minority Business Enterprise program.

University officials reluctantly agreed when Williams offered to refund the bookstores and cafeterias for any product that remained on the shelves. Within a week, he said that 50 cases sold out.

But that business foundered, he said, when the relationship with his money partner went sour, prompting Williams to head south with an eye toward the celebrity and entertainment company market. He moved to L.A. in 1995 and set up shop using $50,000 of the $85,000 his mother left him when she died in 1994.

With the money, he hired four employees, covered some expenses and paid off some of his old debts. He said the business took off when he persuaded The Gap to give him an $80,000 advance for 15,400 cases of water to be used as give-aways at its retail outlets.

He said he might have to hire additional staff next year to handle the PatriotWater.com operation. "It's a big coup for me," he said. "That contract will really make me a player in the private label water business."

Premier Label Water Co.

Year Founded: 1993

Core Business: Water bottles with custom labels

Revenues In 1993: $100,000

Revenues In 2001: $550,000 (projected)

Employees in 1993: 18

Employees In 2001: 2

Goal: To land the contract to oversee production of the first water bottles with American flag decals to be peeled off designer labels

Driving Force: The need for effective sales and marketing tools