Focus - Troubled waters for bottled water?

The economic downturn could not have come at a worse time for the bottled water industry. Not only is the category battling to win the consumer's pennies and cents, but it has also had to battle against a media onslaught against its environmental position. Times are certainly tough for water, but, as Annette Farr reports, there remains some hope, if you look hard enough.

Danone, whose bottled water brands Evian and Volvic command first and second place in the UK bottled water category, posted its annual results last week confirming that its bottled water division sales have fallen away. Although growth was seen in developing markets, particularly Indonesia, Mexico and Argentina, the continued adverse trends in the category in established markets - France, Spain, the UK and Japan - led to negative volume growth in Europe. Overall, Danone's water division sales declined in the year by 1.5%.

Of course, bottled water is not the only category in the soft drinks repertoire which is suffering from a tightening of purse-strings and global economic recession. In Europe, research company Canadean reports that, as the current recession intensifies, the market for soft drinks and other commercial beverages is beginning to suffer.

Latest data from the company's Quarterly Beverage Tracker shows that, in the last quarter of 2008, soft drinks markets ran out of growth, and are unlikely to do much better in 2009. Taken as a whole, soft drinks markets in West Europe stagnated last year, with previous growth categories, such as packaged water, recording a decline.

Yet packaged or bottled water is almost the perfect beverage. Natural mineral water and spring water producers deliver a drink that hydrates, refreshes, has zero calories and, with its inherent mineral make up, is good for you. It ticks all the right boxes when it comes to health, wellness and obesity issues. Chemically-treated tap water is not the same proposition.

Nonetheless, following years of impressive growth, the bottled water sector has become a target for environmental campaigners and negative media attention. There is every reason to argue, however, that, of all soft drink categories, bottled water producers have been the most responsible when it comes to environmental impact management. Many have been environmentally aware - long before it became a fashionable cause - making sustainable care and protection of the land from which the water is sourced a priority and not a mere posturing exercise.

Welsh producer Ty Nant, famous for its iconic blue bottle, began looking after the environment in the early 1990s, taking the view that no waste from its operations would go into landfill. If it could be recycled, it was. The company also decided not to put any further chemicals on its land (which has been replanted with broad-leafed trees) and organic Soil Association certification is imminent. "We are transforming and making a mark on the environment through correct, sustainable and quantifiable ways," says Nick Taylor, Ty Nant's general manager.

Highland Spring, the UK's leading bottled water brand, has been similarly responsible about protecting its land and catchment area. The land has been accredited organic since 2001 and has EMAS (Eco Management & Audit Scheme) accreditation.

But, with all the signs pointing to consumers turning away from bottled water, how can the industry persuade its customers to maintain, or return to, a bottled water buying habit? After all, compared to other soft drinks, bottled water is not expensive. If bottled water disappeared from supermarket shelves tomorrow, what would consumers buy in its place?

Sally Stanley, marketing director at Highland Spring told the Independent newspaper: "They would revert back to buying the carbonates of old. Would that be good? I don't think so. We've spent an awful lot of time and effort trying to wean children off carbonated soft drinks that are sugar-laden or diet carbonated drinks which contain other ingredients."

When the triumvirate of Danone, Nestlé and Highland Spring formed the Natural Hydration Council (NHC) in the UK last September, they said it would be dedicated to researching the science and sustainable benefits of natural bottled water, communicating the facts, so that consumers can make an informed choice about natural bottled water and hydration in their diet.

Now, more than ever, the bottled water industry needs to be communicating the attributes of its packaged beverage product in a robust, authoritative and united manner. Thus, it is encouraging to learn that the NHC is planning to spearhead an industry campaign to underline the positive benefits of bottled water and get consumers into the 'water habit'.

According to NHC director Jeremy Clark, it is the credit crunch which is very much adding to the category's pressures. He points out that bottled water has not faced the pressures of a recession before. "Research indicates consumers are not leaving the category on mass, but rather that there is a drift and frequency is down," Clark says. "Tap water consumption has not increased. Rather, there has been switching back into other soft drinks, indicating that, as financial pressures take precedence over health concerns, consumers retrench to the comfort of 'junk food'."

He adds, "We simply do not drink enough water in this country, period. The average person drinks just 100ml of bottled water and 100ml of tap per day. That's less than one cup out of the recommended six to eight cups a day. The amount of tap water we drink has remained the same for the last 30 years. So the growth of bottled water over the last decade has been a force for good: coming in addition to tap and doubling the amount of water we drink. But it is still not enough."

Meanwhile there is some goods news from bottled water brands. In its year-end results, announced this month, Britvic singled out its Drench bottled water brand as a driver of its 'stills' growth. Amongst the smaller producers, Speyside Glenlivet Natural Mineral Water has been named as 2008's 'New Scottish Exporter of the Year' at the Food from Britain Export Awards and Breock Natural Cornish Water has achieved a listing at Waitrose. This company was started by husband and wife Murray and Shirley Hutchens, who decided to diversify into marketing the water after tests on their spring found it to be exceptionally pure.

Elsewhere, research studies undertaken at Queen Margaret University in Edinburgh on Deeside Natural Mineral Water confirmed that the water is 50% more effective than other waters tested in suppressing free radicals which help protect cells from damage. Mary Warnock, lecturer in Dietetics, Nutrition and Biological Sciences at Queen Margaret University says: "The results from these tests are very exciting. They show that something as simple as Deeside Natural Mineral Water ... could be effective at protecting the body and skin from the harmful effects of free radical damage."

It is to be hoped that the NHC's planned, but as yet unspecific campaign, in whatever form it takes, will galvanise consumers back into a bottled water buying habit; the sooner the better.

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