The human body contains as much as 65-70% water, the brain is composed of 70% water, the lungs are nearly 90% water and blood is up to 83% water. Our bodies can only survive for about three days without water, making clean, drinkable water the most important factor for global public health.
While more than 2/3 of the earth is covered in water, only 2.5% of that water is fresh water and only a small percentage of that is clean and drinkable.
Unfortunately, when it comes to increasing the world’s fresh water supply, there are only four options: increase the amount of reuse/recycling, increase water storage and reservoirs, conserve more water or create a new source. For many years, for many countries, the only viable new source of fresh water has been desalination.
Global desalination output has tripled since the year 2000 and there are now 16,000 desalination plants up and running around the world. In California, there are 12 desalination projects in various stages, including the Carlsbad plant that will soon begin full operations and the Huntington Beach plant that is scheduled to be operational in 2018. Both these plants will produce about 50 million gallons of fresh water per day. While that sounds like a lot, for the San Diego market which the Carlsbad plant will serve, the 50 million gallons is only about 7-8% of its daily water needs.
The scarcity of fresh water has not prevented significant growth in the bottled water market. In recent years there has been a flood of new bottled water products and brands that are building their marketing campaigns around increased minerals, better quality, and a variety of additives. This year has seen a 7% increase in bottled water sales over 2014. This increase, along with the growth of prior years, has bottled water sales on track to outsell soda for the first time by 2017, according to the forecasts of industry tracker Beverage Marketing Corp.
Nestle Inc., whose water brands include Pure Life and Poland Springs, sold more bottled water in 2015 than Dr Pepper/Snapple Group Inc. sold soda, making Nestle the #3 company in the U.S. for non-alcoholic beverages.
This growth in bottled water at the expense of soda is not good news for the #1 and #2 companies, Coca-Cola Co. and PepsiCo Inc., respectively. Together, Coca-Cola and Pepsi control more than 65% of the highly-profitable soda market.
Over the last 15 years, according to Beverage Marketing Corp., annual bottled water consumption per person has increased from 19 gallons to 34 gallons, while soda for this same period has decreased from 53 gallons to 40 gallons.
Coca-Cola’s Dasani and Pepsi’s Aquafina do control about 20% of the bottled water market, but they both would much rather be selling more soda than water. Comparing the cost of water vs soda over the past decade, the wholesale price of a gallon of water has decreased from $1.60 to a $1.20, while soda has increased from $3.00 to $4.00.
In 2015 retail sales of bottled water reached almost $19 billion, compared to $37 billion for soda. It is in the profit margins where the real difference exists. The bottled water profit margin is about 15% for a case and about 35% for an individual bottle. For soda, the profit margin for a case is 60-100% and by the bottle or can is 150% or more.
Not that long ago the bottled water market did not even exist. Now there are hundreds of brands of bottled water on the market. Many of these new brands are attempting to establish themselves by adding flavor, minerals, vitamins or some other elegant health benefit.
Bottled water does have one significant negative, and that is its environmental impact. According to Valley Water.org, more than 80% of the plastic water bottles are used just once, which means only 1 out of 5 bottles are recycled. With the growth of the bottled water market, U.S. landfills now have more than 2 million tons of discarded plastic bottles. These bottles will take more than 1,000 years to bio-degrade and, if incinerated, they will produce toxic fumes.
For consumers the demand for bottled water far outweighs any environmental impact. Even the fact that it takes 3 quarts of water to package 1 quart of bottled water and more than 1.5 million barrels of oil to meet the annual demand of U.S. bottled water manufacturers, it is not enough to deter consumers from buying bottled water.
For the immediate future, bottled water sales and consumption is going to continue to increase, at least until a tap water device comes along that truly provides, clean, germ-free, drinkable water, that tastes as good as bottled water. Then consumers will no longer ignore the environmental impacts of bottled water and the bottled water market will disappear even faster, than it grew.
Ian’s weekly column covers regional, state and national issues. His 40 year media career, includes 20 years as Publisher & CEO of various media companies. He welcomes comments from readers, and can be reached at ilamont@lbregister.com.
