Source: Bottlers want to profit from your tap water | The Herald November 4, 2019
Worries about plastic throwaways have spurred Coke, Pepsi, and Nestle to seek new ways to monetise water. Over the past four decades, consumers around the world have chugged trillions of bottles of water from brands such as Perrier, Evian, Dasani, and Aquafina. Few realise that most of what they pay for is plastic and time on a truck. Companies typically get the water for free or just a nominal fee, and bottling the stuff and getting it to consumers — as well as advertising it — accounts for the bulk of their costs.
Today, increasing concern about the carbon and plastic waste generated by that process is fuelling a backlash that threatens the business.
Across the industry, sales are softening and some towns are even banning plastic water bottles — spurring producers to respond with alternatives ranging from canned water to flavour pods for tap water to dispensers that sell sparkling and flavoured mixes.
“The waters business has to cope with a number of sustainability issues that are becoming increasingly important,” Nestle SA Chief Executive Officer Mark Schneider told analysts in October.
Until the 1970s, bottled water was mostly sold in limited areas by European companies that tapped springs in the Alps. Then in 1973, DuPont patented PET plastic bottles, which were cheaper, lighter, and stronger than the glass that had been the industry standard.
Combined with the rapidly globalising economy, PET allowed water sellers to ship their wares much farther, opening up new markets.
Bottlers sprung up in just about every country and the likes of Nestle, Coca-Cola, and Pepsi Company added water to their portfolios, helping boost global revenue in the business to $130 billion last year, according to researcher Euromonitor.
These days, things aren’t quite so bubbly as consumers grow increasingly aware of their carbon footprint. Danone, the maker of Evian, on October 18 reported its biggest decline in quarterly water revenue in a decade. That same day, Coca-Cola Company said water sales were lower than it expected.
With shipments headed for a second annual decline, Nestle is reorganizing its bottled water business.
Buffeted by lower-price rivals and high transport costs, Nestle raised prices — which sapped sales of its mass-market offerings such as Poland Spring and Pure Life as consumers shifted to cheaper generic brands.
CEO Schneider has said the company wants to focus instead on higher-end products such as flavoured and sparkling waters like its Perrier and San Pellegrino brands.
More than 80 US colleges and a handful of municipalities have restricted sales of bottled water. In Concord, Massachusetts it’s illegal to sell still water in small plastic bottles, and San Francisco bars such sales on city property.
In the UK, a non-profit called City to Sea has introduced an app that points thirsty users to places where they can get free water — with a pledge from chains such as Starbucks and Costa to refill bottles at no cost.
“Producers face a real risk from the environmental movement, which has strong support among young people,” says Alain Oberhuber, an analyst at Mainfirst Bank, who predicts a sharp decline in sales of bottled water over the next two decades. “They know they have to do something.”
With bottled water now outselling carbonated soft drinks in the US, one part of that “something” is aluminium cans filled with water.
Coke introduced cans of Dasani in the northeast US this year and plans to try selling it in aluminium bottles in 2020. Pepsi has been selling canned Aquafina at restaurants and stadiums and is testing it in stores. And Danone is trying the idea with local brands in Britain, Denmark, and Poland.
The soft drinks giants are also seeking to monetise consumption of tap water. Pepsi last year paid more than $3 billion for SodaStream, which produces systems for making fizzy water at home.
And Pepsi has introduced a brand called Drinkfinity, which sells pods that attach to reusable bottles to infuse tap water with caffeine, vitamins, or electrolytes in a variety of flavours.
Coke is rolling out a water dispenser it calls Dasani PureFill, which allows consumers to refill their bottles with free filtered water and gives the option of adding flavours or carbonation for about $1 for a 20-ounce bottle. The company is planning to test the idea — and various prices — at roughly 100 locations such as offices, hospitals, and colleges.
Nestle next year plans to introduce a dispenser it calls Refill Plus, which filters tap water and can add flavours and varying levels of carbonation, and it’s working on a paper-based bottle that it says is fully biodegradable.
Danone is exploring refill stations but for now is focusing on the home market with a new device that dispenses Evian delivered in balloon-like spheres that use less plastic than bottles.
Producers are counting on such initiatives to appeal to consumers who consider branded water healthier than tap. Howard Telford, head of soft drinks at Euromonitor, says such efforts will have only a marginal effect on the industry’s carbon footprint. But he says adding extras such as flavourings and fizz may help shore up profits for the likes of Coke, Nestle, and Pepsi.
“It points to a future,” Telford says, “where flavour, carbonation, and functional additives — rather than disposable packaging and simple convenience — could be the main value drivers in packaged water.” — Bloomberg.
Newer Post
Foreigners to pay airfare in forex Older Post
Farmers welcome Command Agric funding terms
COMMENTS