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Bottled water sales see a drought

Amid the recession, thrifty consumers have rediscovered another source for their third-favorite drink: the tap.

August 14, 2009|Ylan Q. Mui

The recession has finally answered the question that centuries of philosophers could not: The glass is half-empty.

That's because sales of bottled water have fallen for the first time in at least five years, assailed by wrathful environmentalists and budget-conscious consumers who have discovered that tap water is practically free. Even Nestle, the country's largest seller of bottled water, is beginning to feel a bit parched. On Wednesday, it reported that profits for the first half of the year dropped 2.7%, the first decline in six years.

The biggest loser? Water.

"It's an obvious way to cut back," said Joan Holleran, director of research for market research firm Mintel. "People might still be buying bottled water, but you can bet that they're refilling those bottles."

The news delighted environmentalists, who have long berated the industry for wasting natural resources and stuffing landfills with plastic bottles. "I thought we'd never be able to impact sales of bottled water, and all of a sudden it's really gained momentum," said Wenonah Hauter, executive director of advocacy group Food & Water Watch. "I think we're making real progress."

Not so long ago, bottled water was bubbling. It climbed up the ranks of America's favorite beverages in recent years, beating out juice to become the third most popular in 2008, according to Mintel. (Soda is the drink of choice by far, followed by milk.) Sales of bottled water swelled 59% to $5.1 billion from 2003 to 2008, making it one of the fastest-growing beverages. About 70% of consumers say they drink bottled water.

But the economic downturn is stemming the tide. Nestle sells a variety of brands, such as Poland Spring, Deer Park, S. Pellegrino and Perrier. It was the only sector in Nestle's food and beverage group to post a decline in global sales during the first half of the year, down 2.9% because of weakness in the United States and Western Europe. Coca-Cola has also blamed softening demand for weaker U.S. sales of its bottled waters.

According to consulting firm Beverage Marketing Corp., Americans drank 8.7 billion gallons of bottled water last year, compared with 8.8 billion in 2007 -- the first decline this decade. Per capita consumption dropped from 29 gallons to 28.5. Jeff Cioletti, editor in chief of trade publication Beverage World, said he doesn't believe bottled water will return to galloping growth for a long while.

"There were sort of a lot of head winds," he said.

Those forces include not only the economic downturn but also the massive campaign by environmentalists to get consumers to turn on the tap.

According to Food & Water Watch, more than 17 million barrels of oil -- enough to fuel 1 million cars for a year -- are needed to produce the plastic water bottles sold in the United States annually. And about 86% of the empty bottles get thrown into the trash rather than recycled. Beverage companies have responded through recycling initiatives and by buying carbon off- sets.

Hauter said that she has worked on water issues for about a decade but that the movement took off about three years ago. The group fans out to festivals and other public events, pouring water for attendees into corn-based, biodegradable cups or metal containers bearing the name of its campaign, "Take Back the Tap."

The metal containers are also available online for about $20 each. Sales, she reports, have been strong.

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Mui writes for the Washington Post.

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