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Blue Rhino founder coverts gas to H20

People – September 2006

Blue Rhino founder converts gas to H20
by Chris Richter

Billy Prim is trying to do with water what he did with gas. In 1994, he launched propane distributor Blue Rhino and nurtured it into a $250 million business. Last year, he started Winston-Salem-based Primo Water Corp., based on the concept that fueled Blue Rhino’s success — convenient locations where people swap empty containers for full ones./p>

This is a good time to dive into water. Consumption of the bottled kind has grown about 8% a year since 2002, and it has become a $10 billion a year industry, according to Beverage Marketing, a New York-based research company. Primo’s niche is supplying the increasing number of home water coolers and dispensers.

In May, Mooresville-based Lowe’s announced it will put Primo sales racks in all its continental U.S. hardware stores. “We want to make sure every time someone leaves with a water dispenser or water cooler, they also leave with a bottle of Primo, and we get them started in our program,” Prim says.

Primo also is making inroads with grocery chains. Its racks are in Harris Teeter and some Kroger stores. Blue Rhino made its cylinder exchanges widely accessible, which changed the propane business. Prim’s goal is to accomplish the same thing for bottled water.

Customers buy their first five-gallon bottle for $14.99, the suggested price. When they return it, they get a coupon for another at $6.99. Primo picks up the empties and refills them, using water from natural springs and municipal sources and adding minerals such as calcium and magnesium. For people who disdain tap water, Primo can eliminate the hassles of the contracts and schedules involved in home delivery, and it’s less expensive than buying smaller bottles.

Prim, 50, was raised in Yadkin County. He left for N.C. State University, intending to major in engineering. His father’s death during his freshman year forced him to return to help run his family’s farm-supply business. In the late ’70s he bought a heating-oil distributorship that he built into Yadkinville-based American Oil and Gas. When a Wal-Mart in Elkin asked about the possibility of on-site propane exchange, he developed the idea for Blue Rhino. The company went public in 1998, and six years later he sold it to Overland Park, Kan.-based Ferrellgas for $343 million.

Compared with Blue Rhino, Primo is still small potatoes. Prim, the primary shareholder in the 50-employee private company, won’t discuss revenue. But he’s confident about the future — he believes that within seven years hardly anybody will drink tap water.

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