Analysis: Bottled water set for further growth despite green pressure
The health attributes of bottled water seem incontrovertible but the environmental issues surrounding the production and marketing of bottled water have opened what might have been viewed as a blameless product to considerable criticism from campaigners and pressure groups. Annette Farr reports on recent events in the US which have given bottled water producers cause for concern.
It seems somewhat ironic that amidst all the media and political pressure soft drinks producers face about some of their more traditional offerings, the beverage that arguably ticks all the right boxes with regard to health and wellness should become subject to censure. But in spite of its positive health attributes, bottled water is not free from controversy.
Bottled water brands in the US are the latest to witness pressure from the "what's wrong with tap water?" lobby, in a backlash which mirrors that seen in the UK. In San Francisco, Mayor Gavin Newsom has issued an Executive Directive to ban the purchase of bottled water by San Francisco City and County offices on the basis that there is nothing wrong with tap water, and that bottled water is harmful to the environment. Similarly, in New York there is an advertising campaign to discourage the purchase and consumption of bottled water on the same grounds.
The International Bottled Water Association (IBWA), which represents US bottled water producers, has responded with a robust defence of bottled water on the grounds of safety, taste, purity, hydration and convenience. The association says consumers continue to be won over by the drink's inherent healthy proposition.
This is certainly supported by a recent survey, conducted by Harris Interactive, which revealed that bottled water was seen as the healthiest beverage choice by consumers. Of the 3,238 consumers surveyed, some 58% said bottled water was the drink they most associated with healthy living. The next most popular choice was milk with 22%. Only 5% said bottled fruit beverages were the healthiest choice.
Commenting on the results of the survey, IBWA vice president of communications Stephen R. Kay said: "Consumers are choosing bottled water in greater numbers for a variety of reasons. The consistent safety, quality, good taste and convenience make bottled water a natural choice that can contribute to a healthy lifestyle."
Growth in bottled water has been phenomenal Stateside. Since the turn of the century, consumption has more than doubled. Ten years ago, bottled waters made up less than 10% of all soft drinks sold in the US. Today the category is the second largest behind carbonated soft drinks. As Beverage Marketing Corporation observes in its 2007 report Bottled Water in the United States: "Whilst carbonated soft drinks still have volume and average intake levels more than twice as high as bottled water, the (carbonated) soft drink market has been stagnant lately, in no small part due to bottled water."
Nestlé Waters North America is the country's leading bottled water producer, a position it has held for two decades, with a 32.4% share of the market. A particular strength is Nestlé's portfolio of brands sourced mainly from regional springs. Seven of the these are ranked in the US top ten: Poland Spring (Northeast), Arrowhead (West), Deer Park (Mid-Atlantic) Ice Mountain (Midwest), Ozarka (Texas), Zephyrhills (Florida) and Nestlé Pure Life which has national distribution.
However, analysts regard the national launch of Aquafina by PepsiCo in 1997 as the stimulus for the category's signal growth. Coca-Cola followed in 1999 with Dasani. The two rivals' significant marketing and distribution resources have ensured a high profile for bottled water. Aquafina holds the No 1 position in terms of individual brands, with Dasani at No 2. Neither is a spring water, however, both being produced by purifying tap water.
But it's not just the beverage giants that are capitalising on America's love of water. The category's coming of age has brought with it a more discerning consumer who wants to know the water's provenance and environmental attributes.
For example, Willie Nelson, the veteran country & western singer, has launched his own bottled water, called Willie Nelson Spring Water sourced from Hot Springs Arkansas. He claims the natural taste cannot be replicated because it is filtered for some 3,000 years through layers of shale, sandstone, and limestone acquiring its own distinctive mineral composition. This natural spring water comes in 0.5-litre (16.9oz), 100% recyclable PET bottles.
Another newer entrant comes from Park City in Utah's Wasatch Mountains, famous for hosting the Sundance Film Festival. This is the home of the town's namesake premier water brand produced by Park City Ice Water. This brand clearly hopes to counter criticism of bottled water on environmental grounds, being packaged in an environmentally-friendly 473ml (16oz) high-tech stand-up flexible pouch that is said to produce considerably less waste than other packaging formats.
And in spite of the flurry of new product launches, there seems little chance of the market reaching saturation point anytime soon. Market analyst Canadean's Global Bottled Water Report forecasts that by 2009 the market will have expanded to almost 33.5bn litres with an impressive compound annual growth rate of 10.6% between 2007 and 2009.
And Americans still have some way to go to match European bottled water drinking volumes. Canadean says West Europeans drink 113 litres of bottled waters each year per capita while Americans are drinking a little over 80 litres.
So while the pressure on bottled water brands on environmental grounds represents an unwelcome distraction, requiring both a concerted and robust defence and continued research into more environmentally friendly forms of packaging, the bottled water juggernaut looks set to roll on in the US for some time to come.
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