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Over the past ten years, the global bottled water industry has taken off; however, sales and profits have slumped amidst the global recession.
Following double digit growth at the beginning of the decade, bottled water volume declined by 1.0% in 2008 and by 2.5% in 2009. These declines took producers’ revenues down with them.
Bottled water wholesale dollar sales first exceeded $6 billion in 2000. By 2007, they reached a height of $11.5 billion and tapered off in 2008 and 2009. But despite a slowing in demand, bottled water suppliers continued to make billions in profits.
Fueled by the high profit margins, and the accessibility of water supplies in the United States, huge multinationals have jumped on the bottled water bandwagon. Some would contend that these companies are doing nothing more than extracting water from the ground, slapping a label on it and reselling it for competitive prices.
Multinationals in this industry include Aquafina (Pepsi), Dasani (co*ke), Perrier (Nestle), Evian, and Fiji Water among hundreds of others. Campaigners against bottled water cite concerns – including energy consumption and greenhouse gas emissions, waste, the environmental effect of water extraction, the dangers of privatization and social issues.
Research has shown that bottled water is really not any healthier for the consumer than tap water and is contributing to the destruction of the environment.
The plastic bottles in which the bottled water is packaged are producing up to 1.5 million tons of plastic waste per year. According to Food and Water Watch, such plastic requires up to 47 million gallons of oil per year to produce. Although such plastic bottles are in high demand by recyclers, over 80% are simply thrown away, adding to the deterioration of our oceans and harming marine life that mistake the garbage for food.
Additionally, regulation of the bottled water industry falls under the Food and Drug Administration. In practice, about 70% of bottled water never crosses state lines for sale, making it exempt from FDA oversight. However, municipal water systems in the United States are regulated by the Environmental Protection Agency and are regularly inspected for bacteria and toxic chemicals.
In 2009, the top three bottled water companies in the United States were Nestl Waters North America (NWNA), PepsiCo and CocaCola, the three of which combined accounted for 57.5% of total wholesale dollar sales. The largest water bottler in the country remained NWNA with $3.8 billion in sales.
NWNA, which bottle major regional brands such as Poland Spring, Arrowhead, Deer Park and Zephyrhills, claimed 35.4% of total bottled water sales in 2009. The company’s Pure Life label was one of the few to buck the downward tendency afflicting the market. The brand’s wholesale dollars grew by 18% in 2009.
Pepsi-Cola with just one brand, Aquafina, accounted for 11.1% of the market in 2009. Coca-Cola’s Dasani brand saw $1.2 billion in sales in 2009. co*ke also manages or owns several current and former Danone brands in the United States.
As you might assume, the profit margins in the bottled water industry are exceedingly high; the normal profit margin on bottled water is an astounding 50 to 200%. Ironically, as select corporations become richer because of these profit margins, many in the developing world lack access to clean water.
Of course, you, as the consumer, are the one paying a fortune towards those companies’ high profits! And since bottled water is terrible for the environment and not proven to be any better for your personal health, you might want to consider investing in a reusable water bottle.
Remember the following facts each time you contemplate buying bottled water, and make your decision accordingly:
Plastic Water Bottle Facts
- Average Serving Size 12 fl ounces
- Servings Per Container: only, ever 1
Amount Per Bottle Production
- Crude Oil … 3 fl oz.
- Water Required … 3x bottle size
Total Bottles
- Total plastic for bottles … 900,000 tons
- Total CO2 produced … 2.5 million tons
- Total oil used to produce … 17 million barrels
- Total bottles not recycled … 80%
- Percent of water from tap … 40%
- Time to decompose … Up to 1,000 years
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Rob Berger is the founder of Dough Roller and the Dough Roller Money Podcast. A former securities law attorney and Forbes deputy editor, Rob is the author of the book Retire Before Mom and Dad. He educates independent investors on his YouTube channel and at RobBerger.com.
