Friday, October 17, 2008

Is the Tide Turning for Big Water?


These are dark days for Big Water.

America is finally waking up to the observation comedian Dennis Miller made so many years ago: that only in America could a company make money selling something that falls for for free from the sky.

Leave it to an economic cataclysm to make us re-assess some of our assumptions.

With the perfect storm of a faltering economy, concern for the environment and consumers increasingly questioning the assumption of health that was the foundation of the bottled water business, Big Water is worried.

If you need proof (and why would you? Have I ever lied to you?) take a look at this article from The Miami Herald.

It seems that Miami-Dade had the gall to run a series of advertisements telling people how great the water coming out of their tap really is.

(Quality aside, South Florida is being developed in such an unsustainable way that eventually, it will not have enough of this water to supply its population. A recent notice from the South Florida Water Management District, announced plans for year-round conservation rules to be enacted in an effort to save water. But that's not what we're here to talk about today.)

And while everything the radios ads said is true, that public water is generally cheaper, safer and purer, the Nestle Waters North American company decided it was time for their lawyers to get involved.

In a legal action that they made sure to call The Miami Herald about, Nestle argued that promoting public water was "an attack on the integrity of the company."

Folks around here will remember Nestle as the company that raised a fuss with its plans to sink wells all over Chester County to re-sell in a bottle.

Pottstown residents may also remember them as the company that donated palette upon palette of bottled water to the borough when the boil water alert hit town three or four years ago.

But people in Miami may remember them as the company that threatened to sue them over false advertising claims.

If this seems a little desperate to you (and it does to me), that's because Big Water has reason to be desperate.

Just two days ago, The Mercury ran an Associated Press story in its business section about Pepsi-Cola cutting 3,300 jobs.

The story talked about how the economy was affecting the company and stock shares, but the crux was near the end. Buried at the bottom of the AP story was this sentence: "Bottled water sales volume slid by double-digits as consumers drank more tap water."

Given that this was the company's focus because of an earlier (and sustained) drop in the carbonated soda market and you can start to see why suing your way to profitability starts to look like a good strategy.

By contrast, The New York Times story on the same announcement put the drop in bottled water sales right on top, which is where (I think) it belongs.

An analyst the Times interviewed "found that 34 percent of consumers say they are reusing plastic bottles more often and 23 percent say they are cutting back on bottled beverages in favor of tap water or beverages in containers that create less waste."

Another firm found that water filter sales, the kind you attach to your tap, were up 16 percent in the first half of this year. Yikes!

"Volume for noncarbonated beverage sales dropped 5 percent in the quarter, led by double-digit declines in Aquafina and Propel, a flavored and vitamin-enhanced water drink," the Times reported.

The dirtly little secret of the bottled water industry is that much of the bottled water marketed with pictures of mountains, clear streams or wild animals, actually comes from the very taps people buy the product in the hopes of avoiding.

As we reported in my Mercury series on water issues, "Ebb & Flow" (kindly preserved on the Web by the Green Valleys Association, but regrettably not to be found on The Mercury's own Web site), as much as 40 percent of bottled water is actually bottled tap water, sometimes with added treatment, sometimes not.”

Aquafina, the number one bottled water brand, made by Pepsi-Cola, comes from municipal sources like Wichita, Kan., while Dasani comes from sources in Queens, N.Y. and Jacksonville, Fla.

In a 2001 blind taste test, the vast majority of people selected New York City tap water as tasting better than Evian and Poland Spring.

"Americans drank more than 9 billion gallons in 2007, and fewer than half of 228 brands of bottled water reveal their source. Typical cost is $3.79 per gallon, 1,900 times the cost of public tap water," the San Francisco Chronicle reported.

And then there's the final blow.

If not for taste, the one thing most consumers assume about their bottled water is that its purer or more safe than that nasty old tap water.

Not according to this Oct. 15 story in the Chronicle.

According to that paper, "the Environmental Working Group tested 10 brands of bottled water and found that Wal-Mart's Sam's Choice contained chemical levels that exceeded legal limits in California and the voluntary standards adopted by the industry.

"The tests discovered an average of eight contaminants in each brand. Four brands besides Wal-Mart's also were contaminated with bacteria.

"Our study was a snapshot of the marketplace. We found some brands that provided good quality and other brands that contained various chemical pollutants. What this shows is that consumers cannot have confidence. They don't know what they're getting," said a group spokeswoman.

The group also singled out Giant Supermarket's brand Acadia for excessive levels of disinfection byproducts, the newspaper reporter.

"Also present in bottled water were caffeine and the pharmaceutical Tylenol, as well as arsenic, radioactive isotopes, nitrates and ammonia from fertilizer residue. Industrial chemicals used as solvents, degreasing agents and propellants were also found in the tests," according to the newspapers.

The study also found trace amounts of synthetic chemicals or degradation products from the manufacture of PET, or polyethylene terephthalate, plastic bottles were found, including acetaldehyde, isobutane and toluene.

"The environmental group filed a notice of intent to sue Wal-Mart Tuesday, alleging that the mega-chain failed to warn the public of illegal concentrations of trihalomethanes, which are cancer-causing chemicals. "

Hmm, wonder how long it will take the marketing department to divert us away from that that?
The cynic in me says that they will just discontinue the brand, then bottle the same water with the same procedures under a different name and wait for someone to catch them again.
(Why is it that no matter what happens, the lawyers always make money?)

But if the lawsuits keep coming, pretty soon, people start asking themselves the question Pepsi-Cola and Coca-Cola dread: "Why am I paying 1,000 times more for something that may be more dangerous and less frequently tested that the water that comes out of my own tap for just pennies?"

Why indeed.

And answer is marketing and what we've been trained think and assume.

Considering all this, it's no wonder the ad campaign in Florida had Nestle running to their lawyers.

Frankly, I'm surprised it didn't happen sooner.

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