3M expands home water business
- Article by: Dee DePass
- Star Tribune
- March 16, 2014 - 6:26 AM
The flow of innovation at 3M Co. is reaching the drinking water of U.S. homeowners.
The Maplewood conglomerate, best known for its Post-it notes and adhesives, announced last week that it is expanding its residential water business and will soon have hundreds of dealers selling 3M-branded water softeners and kitchen-sink filters to households nationwide.
“Residential [water] equipment is growing each year and it’s become more and more of a U.S. focus for us. … These are some exciting changes,” said Mark Howlett, marketing manager for 3M Purification Water Solutions.
So far, 3M’s residential water division has contracted with 35 full-service dealers — including one in Minnesota — to spread the word about its products and compete in a market that has long been dominated by Culligan, Pentair and other water-filtration giants. The plan calls for 3M to brand its home equipment for the first time, and for nearly 1,200 3M-labeled trucks to circulate neighborhoods by 2017.
Until now, 3M has tried to expand its residential water business by tapping wholesale distributors that sell to water experts or retailers. Under the new approach, 3M will also deal directly with independent water dealers who visit households, test water and help homeowners select the right equipment, which the dealer then installs. 3M officials declined to disclose residential water revenue, but said the company expects to grow significantly amid the marketing push.
“I had no idea they were in the water conditioning business … but [3M-branded equipment] makes a lot of sense. Every homeowner is familiar with the 3M name,” said Dwight Moody, 3M’s first residential water dealer in Minnesota and owner of Range Water Conditioning in Grand Rapids.
Moody has six trucks and a crew of 12 covering the northern half of the state for 3M’s purification division. He recently sold four of the new 3M systems, which range in price from $300 to $1,500.
Water treatment is big business in Minnesota and across the nation as mineral buildup affects everything from the taste of water to the longevity and effectiveness of household appliances. In places like northern Minnesota, iron is a big problem. “So drinking water can taste like a rusty nail,” Moody said.
Now 3M will lend its name and reputation to offer homeowners relief. With 3M on board, Moody no longer expects blank looks when he mentions non-Culligan equipment makers. “Before, homeowners would say, ‘Never heard of them.’ ”
3M plans to add a second dealer in Minnesota in the next 90 days who will cover the Twin Cities. Eventually, the company plans to have 400 dealers nationwide. “Water-equipment dealers typically have three trucks that service a territory, so we could have 1,200 trucks nationwide in just a few years, all focused on 3M [water technology],” Howlett said.
Meanwhile, Culligan has about 600 mostly U.S. dealers and has equipment in thousands of homes across the country. The company declined to comment on 3M’s expansion into the residential water treatment arena.
3M has had a presence in water, but it was mostly aimed at industrial and commercial clients. 3M dived into industrial water in 2005 when it paid $1.3 billion for Cuno, a Connecticut-based liquid-filtration giant whose equipment filtered briny water from oil wells, liquids from pharmaceuticals and contaminants from beverage plants. A sliver of Cuno was residential water treatment, which was how 3M got into the business.
Matt Arnold, Edward Jones equity analyst, said 3M has an interesting opportunity. “They are leveraging their expertise and moving it from just industrial to both industrial and consumer. They are opening up the size of the market opportunity that exists.”
3M’s success will depend on how they price the equipment, Arnold said, noting that consumer products usually have lower prices and higher margins. 3M’s profits could also rise if it sells a constant stream of replacement filters to homeowners. “It’s those little things you will have to watch for” that could make 3M profitable, Arnold said.
Determined to outshine its peers, 3M spent the past two years readying itself for big growth and invested heavily to enhance its residential technology, Howlett said.
At the national Water Quality Association Trade Show show a year ago, 3M introduced a sophisticated reverse-osmosis water-filtration unit for under kitchen sinks. But it only filtered 8 gallons of water a day. At next week’s WQA show, 3M will introduce new equipment that filters 36 gallons a day with the help of a new booster pump. The new machine filters out a greater percentage of nitrates and volatile organic compounds.
“The units have gone through significant enhancements,” Howlett said. “For large families that are looking for a higher quality of reverse-osmosis drinking water, it ends up being a fantastic unit.”
In fact, 3M announced its new marketing plans for its water equipment in advance of the WQA show, which starts Tuesday in Orlando and runs through March 21.
3M is also offering some technology perks for its fledgling dealer network. It has a new mobile app that generates sales leads, provides marketing tips, and discloses industry trends and territory information. The idea is to give the dealers “personalized marketing campaigns,” that can beef up sales and help homeowners.
To offer more support, 3M is also launching a nine-member 3M Dealer Advisory Council made up of leaders in the industry. 3M will introduce the council next week at the industry trade show.
Dee DePass • 612-673-7725
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