BELU Water

Belu is an award-winning social enterprise which bottles natural mineral water in the UK. Belu started selling water to raise money to help those living without access to clean water. The company was founded in 2002 by Marilyn Smith and Reed Paget with an idea that a locally-sourced bottled water brand could also address global water issues by investing 100% of its net profits in clean water projects in developing countries. Part of the idea was that where campaigning has failed to reduce bottle water consumption, an “environment-led business model” could raise consumer awareness of a more positive choice and increase ethical consumption. 

Belu was originally launched in a glass bottle and then in compostable bottles and is now also available in other formats. The early compostable 'plastic' version was produced from an environmentally friendly polymer. This product is made from maize, a renewable source and could be composted much faster than conventional materials.  

The business trades with the aim of giving all of its profits to WaterAid. It primarily aims to be an environmental brand, setting the benchmark in the industry. In 2006, Belu became the first bottled water company in the UK that was completely carbon neutral. Through more lightweight bottles and reducing food miles, their carbon emissions are and any that cannot be moved are offset. All Belu's products are recyclable and are use the highest percentage of recycled material they can.  

Belu Water is a private company limited by shares. Shares are owned by The Belu Foundation a registered charity. The trustees of the Belu Foundation agreed a model with Belu Water and WaterAid whereby profits go straight to WaterAid. 

Belu was helped in its early stages through a loan of £50,000 from the London Rebuilding Society to help support the start-up of the business and with marketing. LRS then subsequently made a further investment of £50,000 alongside £250,000 from Big Issue Invest. In 2003, Waitrose agreed to stock the water, increasing the potential for revenues but Belu need further financial help from Gordon Roddick (co-founder of the Body Shop). Other investors included environmentalist Ben Goldsmith and Chris Cooper-Hohn, a hedge fund manager.

Belu is found in many shops and restaurants across the country including Waitrose and Tesco stores and Nobo and Sketch restaurants, the Groucho club, in the Department of Culture Media and Sport and the UK Parliament and at Clifford Chance law firm and Goldman Sachs. Belu has eight staff, of which five are women. Three work part-time including the CEO, Karen Lynch.

Belu work in partnership with their supply chain and competitors in order to bring more carbon efficient products to market. Montgomeryshire Natural Spring Water in Powys produce Belu’s clear glass bottled mineral water and the new lightweight Ethical Glass bottle. This is the lightest clear glass bottles on the market. Wenlock Spring in Shropshire fill Belu’s green bottles, made from 80% recycled glass, also in the UK.  

Belu is a social enterprise which, like many others, hopes to change the market in which it operates by demonstrating what is possible. Belu’s mission statement is “One day we hope all bottled water companies will be different. They will only source and sell water within the same country. Their bottles will be made using recycled glass or plastic. They will be 100% carbon neutral. All profits will go to water projects in the world's poorest communities. Eventually, we really hope that all bottled water will be produced this way. But at the moment there is only one. Belu. Made with mineral water and ethics.” 

In a way this ideal could compromise the long term business model of Belu itself. CEO Karen Lynch says that “It’s complicated when your ultimate goal is to eradicate your own company” which is what could happen if other, bigger businesses picked up the Belu model.

Belu developed the first British water bottle made from 50% recycled plastic. In 2013, Belu collaborated with Bristol’s glass packaging specialists Rawlings to develop the lightest weight glass bottle for mineral water in the UK. They reduced the weight of the previous 750ml bottle by 70g and 330ml bottle by 55g. Belu will now be able to save more glass every year, up to 2.1 million bottles and reduce emission by 11%. This light bottle means that more bottles can be moved at once, increasing transport efficiencies.

Furthermore, this bottle is being made available to other companies with the aim of reducing the whole industry’s carbon emissions. In doing so, Belu hope to show that it “is possible for a small social enterprise to set the environmental benchmark in an industry, use this to engage consumers and indeed be profitable to enable the supporting of a social purpose.”

In 2008, Reed Paget received The Independent's Social Entrepreneur of the Year award and was one of the last Labour government’s social enterprise ‘ambassadors’. In 2013, Belu were nominated for or won a number of awards including the Third Sector awards, Lloyds TSB People and Environment Business Awards, Social Enterprise UK Awards and the Great British Entrepreneurship Awards. 

Belu are now the only water brand certified to PAS 2060 standard, which is the standard for clear and transparent carbon communications. Belu measure the carbon emissions form all the raw materials necessary from their products. Belu account for all carbon emissions generated during the production and the process of transporting the product to customers. They also calculate the carbon emissions associated with keeping the water chilled. The business works with industry experts to quantify their environmental impact and then offset it through sustainable projects. 

In order to offset these emissions, Belu invest in projects that reduce greenhouse emissions, such as a 20 megawatt hydropower energy project in Turkey. This project, for example, supports the creation of thirteen jobs, planting of more than 13,000 trees as well as the generation of clean energy. 

Belu have given £583,341 to WaterAid which they calculate as improving the lives of over 38,000 people. For instance, £80 can pay for a locally manufactured rainwater harvesting system for one family in Bangladesh or £4,000 can protect a spring for 800 – 1,000 people in Ethiopia. As revenues grew 29% in 2013, Belu gave WaterAid an additional £60,000 on top of our minimum pledge. In total, the business gave WaterAid £196,530 in 2013.

Belu was nominated as a CoolBrand for 2012/13 and was the first bottled water to achieve "Approved Supplier Status" from the Sustainable Restaurant Association. CEO Karen also mentors other social enterprises including Rubies in the Rubble and Auntie Daisy. 

At the end of the last decade, Belu was not making a profit. This was despite sales growing from £8,000 in 2004 to £2.7 million in 2008. In 2007, the company lost £600,000 and made a loss again in 2009 and 2010. Karen Lynch describes how she is “most proud of taking Belu from a broken model with huge losses into a successful self-sustaining business. It was a shambles when I first arrived. It was a campaigning brand so focused on its social cause that the business was an aside.”

Reed Paget appointed Karen Lynch as a new MD in 2010. Lynch switched the business model from direct distribution to wholesale and revenue has grown 40% between 2010 and 2012. This includes deals with restaurant chains, including Zizzi, now with Sainsbury’s supermarkets. 

In the future, Belu will not be expanding overseas - as this would contradict their environmental values. Belu will never export its bottles in order to maintain its 100% carbon neutral status and commitment to local supply chains. However Karen Lynch says that they will look to replicate the model overseas, through working with others. But they have recently launched a water cooler business and meanwhile, have pledged to give £1 million to WaterAid by 2020. 

Karen Lynch suggest that one lesson from the experience of Belu is that free, pro bono, support from marketing agencies and others is not always welcome as it is sometimes short of the quality it might be if the customer was paying (sometimes known as “no bono”)!. 

But more widely, the critical lesson from Belu, building on the success of Divine Chocolate is that it is possible to build, from scratch, an ethical, consumer facing social enterprise competing with big private businesses. As Karen Lynch out it “if we can do it with water and Divine can do it with chocolate, anyone can do it and in any sector.” Belu believe that they have “demonstrated a working model that, if successful in water, can be used in any market of consumer goods.”

One other lessons is the critical role that early stag finance can play in helping a start-up grow to scale. Finding the right investors with an understanding of the social mission of the organisation and with a healthy appetite for risk can be crucial.