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Bottled water industry sales decrease during recession

Is the bottled water boom coming to an end?

That's the industry banter in the recent wake of major bottled water companies like Pepsi and Nestle reporting less demand for water packaged in a plastic bottle.

Florida's got a personal interest in the bottled water trend. Like it or not, the state's springs are a major supplier of water to the industry.

The simple explanation is the recession's convinced more people to drink water from a tap. Pepsi CEO Indra Nooyi recently cited the shift to tap water "in this downturn" by some of its "casual" beverage drinkers. Pepsi's Aquafina is the country's biggest bottled water brand.

In a tough economy, Pepsi Bottling North America president Robert King recently told analysts, "one of the first things that a shopper can decide to do is consume tap water as opposed to purchasing bottled water.

"I think we are seeing just a pretty dramatic change in the growth trajectory of that category over the past couple of quarters, and we are assuming that that's going to continue certainly for the foreseeable future," he said,

Another bottled water giant, Nestle, this month reported profits for the first half of this year fell 2.7 percent. It was Nestle's first decline in six years and was led by a dip in bottled water.

Nestle Waters North America is a major user of Florida's aquifer to bottle water under the Zephyrhills brand. Nestle also sells Arrowhead, Calistoga, Deer Park, Ice Mountain, Ozarka and Poland Spring among its domestic brands.

Coca-Cola, which sells Dasani bottled water, also says demand is softening.

Recent stories in the Wall Street Journal and Washington Post have been accompanied by such headlines as "Bottled Water, R.I.P.?" and "Bottle Water Boom Appears Tapped Out."

In Florida, about 3.6 million gallons of water a day is pulled from the ground to become bottled water. That's not much in the bigger scheme of Florida water consumption. But it stings in a drought-sensitive state that water gets tapped to be consumed elsewhere.

The Beverage Marketing Group says Americans drank 8.7 billion gallons of bottled water last year, down from 8.8 billion gallons in 2007. It was the first decline in this decade.

Recession played a part in the drop. But environmental concern may prove a more lasting reason.

Not only do empty water bottles pose a massive waste problem. The plastic bottles themselves are made from oil — another precious and expensive resource — and reports are on the rise that contaminants in the plastic can leach into the water.

One bottled water brand called Fiji Water, controlled by a couple in Beverly Hills, Calif., is under attack in a Mother Jones magazine story for being packaged in Chinese-made plastic bottles and hauled thousands of miles "to its eco-conscious consumers."

On Monday, Nestle said it will start offering a bottled water — called "re-source water" — packaged with a higher percentage of recycled plastic. The company also will work with "select" Whole Foods stores to recycle the bottles and allow users to claim a container deposit. Nestle will donate a nickel per recycled bottle to Keep America Beautiful, reports Reuters.

Want to keep it simple and cheap? Drink more tap water.

Robert Trigaux can be reached at trigaux@sptimes.com.

Bottled water industry sales decrease during recession 08/17/09 [Last modified: Monday, August 17, 2009 8:13pm]
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