3 Brothers: All for None : Blood Is Thicker Than the Water They Bottle . . . . . . but Not Enough to Bring Their Firms Together

In one respect, Dimitri Peykoff would have been proud of his three sons: Christ, Andrew and Angelo.

An immigrant from Greece who ran a bar and candy store in a working class section of Buffalo, N.Y., Peykoff taught his boys to “work hard and stick together,” recalls Christ, the eldest brother.

Work hard they did. One after another, the Peykoff brothers migrated to Orange County, plunged into the drinking water business, and prospered.

Sticking together proved a problem.

In fact, the Peykoffs today compete head to head as the chief executives of three rival water companies: Niagara Drinking Water in Irvine, founded by Andrew in 1963; Oasis Drinking Waters in Santa Ana, founded by Christ in 1975, and Rocky Mountain Water in Santa Fe Springs, founded by Angelo in 1971 and located in Fullerton until earlier this year.

Although Andrew and Christ were once in the Orange County water business as partners, and Angelo almost joined up as well, the pressures of working closely in the same business proved overwhelming, and they have all gone their separate ways. As a result, Christ said, the brothers’ personal relationships have become strained over the years, although they remain on speaking terms.

“They’re my brothers; I still have to talk to them,” said Christ, 52. “As they say, blood is thicker than water.”

Andrew agreed with his older brother’s assessment, while Angelo declined to be interviewed.

All three Peykoff businesses are doing well, each generating annual sales of $5 million to $10 million in a Southern California bottled water arket estimated at $300 million.

Together, the Peykoff companies account for roughly a third of the Orange County bottled water market.

Yet they are relatively small in comparison to Arrowhead and Sparkletts, which together account for about half of the Southern California bottled water business, according to the International Bottled Water Assn. of Alexandria, Va. Two other companies, Hinkley & Schmitt in Orange and Bastanchury Bottled Waters in Fullerton, also have a significant stake in Orange County, each with roughly 10% of the market.

Although they don’t dominate the market, the Peykoff brothers are fairly representative of bottled water company operators across the country.

“The majority of bottled water companies are family owned, and most are regional and local in nature,” said William Deal, a vice president of the national trade group.

The Peykoff companies sell three basic products: purified water, which is processed to remove all minerals and is used in hospitals and as drinking water for people on low-salt diets; drinking water, which is purified water with minerals added to create a natural flavor; and fluoridated water, which is the same as drinking water but has fluoride added to prevent tooth decay.

Niagara also sells mountain spring water, which it obtains from Mt. Palomar in northern San Diego County.

Niagara and Rocky Mountain concentrate on the home-delivery market, in which for about $15 a month customers are provided with twice-monthly deliveries of five-gallon jugs.

Oasis also offers home delivery but has diversified into supermarket sales. The firm bottles water under its own name as well as under about a dozen supermarket brand names.

The three brothers sell their water throughout Southern California. Oasis also supplies stores in Las Vegas and recently began shipping water to supermarkets in the San Francisco area.

The Peykoffs’ unusual pilgrimage to Orange County began in 1960, when middle brother Andrew, now 49, arrived in Orange County to seek his fortune.

After working briefly as a milkman and a water delivery man, Andrew used the life savings of $20,000 of the brothers’ father to start Niagara Drinking Water in Buena Park. It was the seed money for what the father hoped would be a family business.

Older brother Christ was a financial partner in Niagara, but he stayed in Buffalo to run the family bar. In 1969, Christ moved to Orange County to join Andrew in the water business.

Angelo, the youngest brother, appeared on the scene in 1971. He talked to his brothers about joining them in Niagara, but they couldn’t agree on terms. Angelo opted instead to create his own water company, which he named Rocky Mountain.

Andrew and Christ eventually found that they couldn’t agree on much either, and Christ left Niagara in 1975 to start Oasis.

Despite the family feuding, the Peykoff brothers have done well. Angelo’s Rocky Mountain has grown to be the largest of the firms, but competitors say all three are successful.

They probably could be even more successful if they joined forces, but the brothers say that is unlikely.

“There are two schools of thought,” Andrew said. “We could all get together and enjoy economies of scale. The other school is, don’t get in each other’s way and everyone will do just fine. We just paddle our own canoes.”

Orange County’s explosive population growth has made it possible for the Peykoffs to do just that. From 1960 through 1987, the number of county households increased from 227,012 to 829,406, according to the Orange County Forecast & Analysis Center.

A significant number of those households would rather get their drinking water from a bottle than a faucet. The reason, said Deal of the bottling association, is that “water tastes lousy in California.”

Orange County officials stress that the public water supply is every bit as healthful as bottled water, but they concede that tap water often gets low marks on taste.

California accounts for roughly 45% of a $1.7-billion nationwide market for bottled water, according to the bottled water association. And one in three California households has bottled water delivered, compared to one in 15 nationwide, the association said.

According to Stuart R. Krasner, a chemist and water taster for the Metropolitan Water District in La Verne, tap water in Southern California often contains chlorine or algae that, while harmless, give it an “earthy” taste. The Metropolitan Water District covers all of Southern California.

Whatever the motivation, consumers are drinking more and more bottled water. The national market is expected to increase 10% to 15% annually into the next century, according to a report in the California Beverage Hotline, a trade publication.

That is on top of a 500% increase over the last 10 years, the bottled water association reports.

Recent news reports questioning the quality of public water supplies also are fueling sales. A three-year study conducted by the California Department of Health Services, for instance, found an “unusually low” rate of miscarriages among women who drank only bottled water during their pregnancies.

Water From Underground

“Think what you’d have to pay to get advertising like that,” Andrew Peykoff said.

The brand names chosen by the Peykoff brothers--Niagara, Oasis and Rocky Mountain--conjure up images of water obtained from faraway, pristine sources.

In reality, each company gets its water from essentially the same place: underground aquifers that also supply the county with most of its public water supply.

Niagara, in fact, uses tap water as its source. The company is supplied by the Irvine Ranch Water District, which blends water pumped from a well with periodically diverted water from the Colorado and Feather rivers when the well runs low.

Oasis and Rocky Mountain, in contrast, obtain their water from wells located on their premises.

Andrew contends that Niagara’s source of water--that mixture of Irvine well water and out-of-state river water--is of a higher quality than those of his two brothers. Christ makes the same claim about Oasis’ Santa Ana well water.

“The general quality of (the Irvine Ranch Water District) is the best . . . in the county,” claimed Andrew of Niagara’s water source.

“It’s always better to have well water, and it just happens that this is the best well water in all of Orange County,” countered Christ of the Oasis supply.

But both concede that the question is somewhat academic, since all the water is processed.

11-Stage Process

At Niagara, for example, water goes through an 11-stage purification process that includes carbon filtration, micro-filtration, high-pressure reverse osmosis, blending, aeration, oxygenation and, finally, the addition of minerals to restore a natural flavor.

To others in the Southern California bottled water business, the Peykoff brothers are something of a curiosity. The presence of three brothers in the same business in Orange County has prompted speculation that the Peykoff brothers get along better than they would have their competitors believe.

“Ostensibly, they are competing against themselves,” said Robert Hickey, vice president and general manager of Hinkley & Schmitt Co. of Southern California, which operates a bottling plant in Orange. “That kind of puts a question mark in the minds of the rest of us.”

But the Peykoffs shrug off suggestions that despite the separate companies, they may be acting in concert.

In fact, the Peykoffs said they may talk to one another about the water business in general, but that they never discuss how their individual products are made.

“How we go about getting the taste the way we do (at Niagara) is proprietary. There are a lot of trade secrets,” said Andrew.

“In this business, everybody and his brother is out to get you.”