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We have reached a production of 74 million litres

Vitor Gonzalves, CEO Aguas de MOnchiqueMonchique’s water has been known since the time when the Romans occupied the Iberian Peninsula. Endowed with unique properties, this water, with its ‘strange flavour’ (as various consumers have mentioned ever since it first began to be produced commercially), has recently become a synonym for quality and well-being. After passing through a period of financial difficulty, the Sociedade da Água de Monchique, which had held the concession for the commercial exploitation of the region’s water since 1992, was taken over in 2010 by the Braga-based company WaterBunkers SGPS SA. It rapidly evolved from being an own-label brand to become a kind of gourmet product. It was also one of the last brands to resist the use of PET plastic bottles. The company’s CEO, Vitor Gonçalves, aged 37, explains the ‘chic’ transformation that has been brought to the brand and also presents some proposals for a more ecological environment, based on the idea of joint responsibility between producers and consumers.

Água de Monchique has evolved from being an own-label brand to become a gourmet product. Who are the new investors?
I prefer to talk about the Sociedade das Águas de Monchique because it is an independent company that was bought in 2010 by Water Bunkers, a group whose capital is completely Portuguese-held, being owned by essentially family shareholders. The aim was to become part of a group of water producers, so that we could then have a combined strategy for attacking the Portuguese market at the level of private labels. This was the path that the previous directors had decided to follow, and which, at the time, had been considered necessary for the company that was bought in such a financially fragile condition, with the aim of balancing its accounts.

What has changed since then?
By mid-2014, that strategy had proved to be inadequate and so a new strategy was developed with the help of various people. We undertook a lot of research into already existing waters, particularly with regard to their pH content, in other words, seeking to discover the special equilibrium that this water has at the level of its physical and chemical properties. We reached the conclusion that this water is unique, and not just in Portugal. It is one of the only waters in the world with such a high pH level and with such a favourable physical and chemical balance in terms of its mineral properties. Based on this, we drew up a plan to revolutionise our marketing strategy.

The price has changed, and so has the label, as well as the company turnover…
Today, Monchique has a turnover that is five times higher than it was in 2014. In 2013, we produced 25 million litres of water, and since then we have gradually increased production, so that by 2017 we had reached a level of 74 million litres. Before we implemented this strategy, we were selling water at a lower price because it was being sold as store brands and we had a more localised distribution, in the Algarve, the Alentejo and hardly anywhere else. Today, Monchique doesn’t make store brands any more, and, if we carry on like this, it never will again. We have enhanced the value of the product, its quality and the excellence of the water, and the market demand for our water has forced us to increase production to meet it. .

Água de Monchique was one of the last brands of water continuing to resist the switch from glass bottles. Now all of its bottles are plastic.
When we bought this company, in 2010, the Sociedade das Águas de Monchique no longer used glass bottles. Our project for expansion contemplated a return to glass, so that we could bring greater diversity to our range of products in the market. Just to give you an idea, glass bottles are used for just 4% of the water production in the Portuguese market. Everyone likes the idea of glass bottles, but if you ask someone if they’re prepared to pay fifty cents for a glass bottle instead of fifteen cents, their answer will be no.

But isn’t glass more ecological than plastic?
Glass is also a product with a very heavy ecological footprint. Plastic is frequently regarded as being a highly polluting material, and indeed it is, but at the moment it’s the only possible way of producing water in large quantities at a price that’s accessible for everyone. I don’t believe that, in the short term, it will be possible to eliminate the use of PET plastics, until a product appears that can replace it, but, in the long term, I believe that there’ll be a revolution in the sector with regard to this aspect. More and more new techniques have been proposed for the development of PET plastics, for both financial and environmental reasons. Bottles are becoming increasingly lighter. In 2012, we used to put five litres of water in a plastic bottle weighing 120 grams, which today weighs just 72 grams. That reduction multiplied by millions of bottles per year makes an enormous difference in terms of the plastic that’s placed in the market.

And is there no alternative to PET? How many containers did you produce last year?
The vast majority of our water is bottled in either five-litre or one and a half-litre containers, which together represent 85% of our production. In 2017, we produced 74 million litres, which corresponded to roughly 34 million bottles, split between the various sizes. There isn’t yet any product that can be moulded so easily and at accessible prices that is capable of replacing PET as a petroleum-based product. There have been some experiments conducted with corn starch and soya, but these are expensive and don’t work in products of this type. I believe that, in the future, new polymers will be developed that have a less serious direct carbon footprint than PET.

And why not glass?
The question of glass is a myth, and it also requires a lot of energy for its production, so that, at root, it is a highly polluting industry. And the recycling of glass is less efficient than the recycling of PET. The transport of glass is also less efficient than the transport of PET; the lorries are more heavily laden and the loads they transport are smaller, not to mention the weight of the crates. Whereas now I can load a lorry with 45 thousand plastic bottles, I can only load it with half as many glass bottles. Besides which, glass takes longer to degrade than plastic does. If I had a biodegradable or non-polluting polymer that was available at an accessible price, I’d be the first to adopt it. The problem of the pollution from PET plastics lies in the mentality of consumers. Protecting the environment and the ecology should be the first level of consideration in the habits that we develop, whether this is in the form of recycling or saving water, which is extremely important. The secret of environmental protection, whether it involves glass or PET, depends on a change in mindsets, both at the level of the consumer and at the level of the producer.

Can you be more specific?
In Portugal, there is an obligation for producers of various types of materials, such as cardboard and PET plastics, among others, to contribute, in proportion to what they produce, to help in recycling that same product. There is a financial contribution that all companies are obliged to make (and I fully support this) to a company called Sociedade Ponto Verde. This company has, as its mission, to lead the recycling process and, insofar as possible, to make sure that 100 % of plastic waste is recycled. This means that recycling has to be part of our everyday activities. I have great hopes in the future, and I believe that the new generations are more ecologically committed.

But you mentioned a change in mindsets. Were you referring to something concrete?
Recycling is big business, especially in the case of plastic. And I think that many people don’t yet recognise this. It’s interesting to study the case of Germany, where what they’ve been doing is very intelligent and has had an effect on the consumers’ way of thinking. What they’ve done is to repay consumers in cash whenever they recycle. In this way, consumers get to feel the effects of their actions in their own pockets. Whenever someone buys a bottle, they pay extra for that same bottle and this amount is then refunded if the person recycles the bottle. It’s remarkable because it forces people to change their attitudes and has even resulted in a special street business, with the homeless or poor people collecting these bottles and cleaning them at the same time. This is known as the circular economy; nothing is wasted and everything is transformed. This is already a glimpse of the future, where we don’t extract more natural resources, because the planet is already exhausted. Instead we use the resources that we have and constantly recycle them. As I say, it’s the circular economy. It’s what the Germans are doing, and very well too. Often, the only way to change mentalities is by hitting people in their pockets.

agua monchique

Let’s go back to economics. Nowadays, the Monchique brand is sold, to some extent, all over the world.
Today, it’s a water that is recognised not only in Portugal, but worldwide. This is the result of the communication strategy that we’ve been developing and our investment in a new labelling concept that tells consumers all about the water’s properties. The Monchique and Chic brands are sold, above all, in Portugal, but also in China, Macau, Hong Kong, the United States, Spain, Holland, France and Angola. We have been following a very carefully devised expansion plan because unfortunately – or perhaps fortunately – the factory doesn’t have sufficient production capacity to meet the market demand for this water, both in Portugal and abroad. That’s a new problem, which began to appear a year ago.

With such levels of demand and production, do you have any idea how long the existing water reserves will last?

We have to have enough water. We have two catchment areas and a borehole where we draw the Chic water from; all three of them have practically the same characteristics. The water from Monchique is very specific because it’s captured at depths of up to 900 metres, which isn’t very normal in the case of mineral waters. We’re talking about a very old aquifer that has copious reserves and very steady flow rates. In the last eight years, there’s never been any change in the flow rate, neither in times of drought, nor when it rains heavily. It’s a very deep aquifer, the reserves are very generous and I must say that we take a lot of care not to overexploit the aquifer. We have a pre-set limit to the amount of water we extract and after that we don’t take any more. We’re conscious of the fact that this is a public resource that has to be exploited properly and that we have to preserve.

There are some people who say that there’s less water in the streams and watercourses in this area. Is there any relation?
It has nothing to do with us. Our aquifer is underground, at a depth of 900 metres and it has practically no influence on this matter. When you say there’s a shortage of water, you’re talking about spring water, and there are, in fact, some springs around here. If you drill a hole to a depth of 30 metres, you’ll find water, but this has nothing to do with Água de Monchique. The aquifer has enough capacity for us to be able to double our production without any risk of overexploitation. I’d say that we could go up to levels of 150, 160 million litres per year, without any problems in terms of over exploitation.

And what about prolonged periods of drought?
This is a question that always needs to be borne in mind from a long-term perspective, even when the aquifer is three kilometres deep. If, because of climate change, the water isn’t replenished constantly, then, regardless of however large the reserves may be, this will inevitably have repercussions in the long term. In Monchique and anywhere else in the world. These variations are still quite recent, but in the long term they may affect us all: first of all, we’ll see it at the surface, or in the watercourses, in the short term. However, we don’t foresee any problems at the level of water reserves within the next four years.

Water is becoming a kind of “blue gold”…
Water is essential for life and must be available to everyone. You can perhaps call it “blue gold” because it’s becoming increasingly rare, but I don’t much care for this name. Water is a very important natural resource, a basic element in life; we’re composed of 78% water, and I always say that what we drink is more important than what we eat. I’m also worried that, in the future, quality drinking water may not be available for everybody. With all the climate changes that we’re experiencing, as well as the drought that we’re undergoing, even in Portugal, I don’t much care for this elitist terminology of “blue gold”. Instead, I’d say that it’s clearly a product that is becoming increasingly scarce. We mustn’t forget that only 7% of all the water that is available on the planet is fit for drinking, which means that it is a scarce asset that has to be carefully preserved and very well managed, something that hasn’t been happening so far, particularly in Portugal. I agree that it is going to become increasingly valuable, but I don’t know exactly to what extent and I’m rather afraid of this increased value, but I also believe that the change in people’s mentalities and their growing awareness that water needs to be preserved gives me some hope that this scenario won’t be so catastrophic in the future.

Como acha que as pessoas da região olham para a mudança da marca e o aumento de produção?
I think people must, or should, feel proud because we have placed the name of Monchique on the world map, and this must be a source of great pride for the people from Monchique. Our doors are open for them to come and visit us, and we directly support the local council in the various social projects it’s involved in: cultural projects, building social housing and other projects. We’re trying our best to make a positive contribution to the development of our borough, whether in the social area or in partnership with the local council, or in supporting the local fire brigade. We’re trying to give back to the community some of the success that we’ve achieved, which for us is a very important question. We’re also involved in other projects linked to children and cancer, both in the Algarve and nationwide too.

So, this whole process of abstracting and bottling the water is carried out in Monchique?
Everything is done here. The water is sent directly from Monchique all over Portugal and to the rest of the world, by road or through the ports, from where it is shipped to various countries. We have enjoyed a remarkable growth in our business, and this has had obvious repercussions on our need for human resources. We have created several new vacancies for workers in the region, and this will continue to be the case in the future with the process of expansion that we have planned for. We’ve taken on more people, especially more skilled staff. In 2011/2012, we had 23 workers and now, at this moment, we have 36 in total, which, given that we are still a small company, is quite a remarkable increase. We have been an important factor for creating employment in the region, and it is our intention to continue doing so. And furthermore, we give priority to employing people from Monchique. Because these people identify with the region, with the brand, and they probably have life stories that are linked with Caldas. For us, it is important that they should become involved with the company and this has been one of the secrets of our success.

Is there a possibility that you might sell the company to foreign investors?
It’s not in our plans for the time being. I’m not a great fan of large international groups. This is a project for the future, for making the company grow, and it depends on our expanding the factory. We have planned a major investment for upgrading this factory and building a new unit, for generating our own energy and becoming self-sufficient in this area, recycling the river water itself and introducing a major environmental component from the viewpoint of having a self-sufficient ecological footprint. Even so, we also want to implement the use of glass, and we’re envisaging an investment of roughly two million euros over a period of roughly two years. We’re going to be a factory of the future.

Thank you.

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