Drinking Water (25 page)

• More than 50 percent of students polled at the University of California, Santa Barbara, said they rarely or never drink tap water.

These trends have translated directly into company profits. Whether pumped from a spring or purchased from the municipal water authority, the raw material for producing bottled water is cheap—costing anywhere from 240 to 10,000 times less than the final sales price in a bottle. Put another way, the $1.50 you pay for 16 ounces of Dasani would buy about 1,000 gallons of tap water in many cities. This translates to costing Pepsi about $0.0002 for the basic raw material in each bottle. Can you imagine paying such a markup for any other consumer product? Could I interest you in a $10,000 sandwich?

Of course, the consumer is also paying for the treatment, packaging, shipping, marketing, and other expenses, but there’s no hiding the fact that bottled water provides a tidy profit margin. Bottled water often has the highest markup on a restaurant menu. It’s no
coincidence that the trade publication
Hotel Online Special Report
advised that “as we all know, the profit margin with bottled water is astronomical. As such, every restaurant should be offering it to their guests, all the time.” So don’t act surprised when the first thing you are asked after sitting down at a restaurant is whether you would like bottled water or tap or, better yet, when the waiter brings bottled water to the table without asking and then makes you feel gauche for requesting tap water instead.

With the cost of bottling equipment around $100,000, this is an easy market to enter if you can find the right marketing angle and distribution network. As the bottled water marketing manager for Nestlé complained, “We have what we call the ‘San Pretendos,’ the little regional guys that are just nipping at you all the time with their regional programs.” And there are plenty of folks trying to enter much smaller niche markets, as well. With choices such as K9 Quencher and Woof Water, what is a concerned dog owner to do? As Bill Fels, the entrepreneur behind Pet Refresh, described, “My thought was that if your water tastes bad to you, how does it taste to your pet? And how healthy is it?” He may have a point, and it sure beats drinking out of the toilet. But he may be laughing all the way to the bank if he can make inroads to the more than $30 billion a year spent by pet owners. And there are countless other niche market opportunities out there. Yale University and other fine schools provide their own branded bottles on campus.

The growth of bottled water, both in mass and niche markets, truly is impressive. In a mere three decades, a product that would have seemed as ludicrous to most people as bottled air now battles the iconic Coke and Pepsi for bragging rights as the dominant commercial beverage in the United States. Surely, though, this was not an ascent without wires. Now, let’s take a closer look at this commercial juggernaut and the important questions it implies. First and foremost, why are so many people buying so much bottled water? Is bottled water really better for you than tap water? And should we feel guilty about buying this stuff?

A
S THE CHAIRMAN OF THE BOARD OF
P
ERRIER ONCE INCAUTIOUSLY
observed, “It struck me … that all you had to do is take the water out of the ground and then sell it for more than the price of wine, milk, or, for that matter, oil.” And he wasn’t exaggerating. A moment’s reflection, though, suggests two big assumptions in his observation. The first is that consumers will want to buy bottled water rather than tap water or another beverage. The second is that they will pay a premium. Neither is self-evident. Indeed, if he had said the same thing about dirt, he would sound like an idiot.

In some respects, selling bottled water is the ultimate marketing challenge because, well, it’s water in a bottle. And if water is water, then why should consumers choose one brand over another? In this sense, bottled water is no different than any other generic commodity, and the only real difference among brands should be price or marketing. But low price clearly is not seen as a competitive advantage; indeed, the opposite is true. Hence, it’s no surprise to see the emphasis on branding. Names such as Arctic Falls, Arctic Spring, and Glacier all suggest pure snow-fed waters; images of mountain peaks and remote places such as Fiji and Poland Spring reinforce the notion of clean water. These are all culturally recognizable references.

Surprisingly, though, one successful marketing strategy has been to use a
meaningless
name. Unlike Perrier or Badoit, the brands of Dasani and Aquafina are not named for spring waters, much less from a specific location. Instead, Coke and Pepsi take tap water; run it through a series of fine filters to remove minerals and bacteria, ultraviolet and ozonation treatments to kill any remaining organisms, and reverse osmosis to remove any remaining materials; and then add minerals (nicknamed “pixie dust”) back in because all the taste has been removed. Just as the taste of Coke is the same regardless of where it is bottled, Aquafina, Dasani, Pure Life, and others have become the water equivalent to the McDonald’s french fry—identical in consistency and taste no matter where you buy it.

The irony is stunning. America’s leading bottled waters have moved as far as possible from the distinctive aspects of spring
waters that made them attractive in the first place. Badoit and Evian became famous precisely because the water
came from
Badoit and Evian, each with its particular taste and therapeutic qualities. The Coke, Pepsi, and other major brand waters, by contrast, bear meaningless names that have evolved through focus group selection and that are intentionally tasteless. Not that they taste bad. The companies simply try to make their waters as indistinctive as possible, at least in terms of taste. Aquafina’s label features a panoramic mountain range, presumably to suggest the glacier quality of its water. Yet you’ll have to look hard to find the snowcapped peaks closest to Ayer, Massachusetts (about two thousand miles away, in fact), one of the eleven or so major municipal water sources for Aquafina’s water. Not, of course, that any ordinary consumer could figure out the water’s origin from looking at the label (until a few years ago, when Pepsi changed its labeling to state that it came from public water sources).

This strategy has carried over to the spring water brands, as well. To carry the name “spring water,” federal regulations require the water to be drawn from an underground aquifer that flows naturally to the surface. Poland Spring doesn’t wait, drawing its bottling water to the surface using a borehole drilled straight into the aquifer. But the success of Perrier and its subsequent owner, Nestlé, in managing Poland Spring’s growth to more than $600 million in sales led to a problem. The spring simply couldn’t provide enough water to meet the demand. As Peter Gleick describes, to keep the spring water label the company needed to find more spring waters somewhere else. As a result, “Poland Spring is no longer a ‘source’ but a ‘brand.’ The water in the bottle might come from Poland Spring, or it might come from Clear Spring, Evergreen Spring, Spruce Spring, Garden Spring, Bradford Spring, or White Cedar Spring—other Maine water sources owned by Nestlé Waters North America. There is no way to know. And Nestlé isn’t saying.”

So a lot of thought goes into the product names, but why are people buying the product? Some critics of bottled water place great emphasis on the strategy of “manufactured demand.” A clever video,
“The Story of Bottled Water,” distributed by the consumer group Food & Water Watch puts it this way: “Imagine you’re in charge of a bottled water company. Since people aren’t lining up to trade their hard-earned money for your unnecessary product, you make them feel scared and insecure if they don’t have it. And that’s exactly what the bottled water industry did.” Without effective marketing campaigns, the argument goes, there would not be a market. It’s no coincidence, many have observed, that “Evian” spelled backward is “naive.”

Attributing the market’s rise solely to effective marketing, though, doesn’t hold water, if you’ll excuse the pun. Companies would sell Pet Rocks, if they could—and that worked for a while—but there’s a limit to what marketing alone can achieve. For the type of multidecade sustained growth we have seen with bottled water, it needs to meet more than just a manufactured need. So what else explains the demand?

A series of polls over the years have asked why people drink bottled water. They all come up with the same basic explanations— convenience, style, taste, fitness and health concerns—all credible though, as we will see below, some more legitimate than others.

Convenience

Pervasive store displays and vending machines clearly make buying a bottle of water convenient for quenching thirst, as does the steady demise of drinking fountains. The main explanation behind the convenient attraction of bottled water, though, lies in the often-overlooked PET bottle. Polyethylene terephthalate plastic is ideally suited for holding beverages. It is cheap, light, and commonplace, and does not leach into the liquid it contains. The bottle was introduced in the soft drink market in 1977 but not in the bottled water market until 1990. As the CEO of Nestlé Waters North America later observed, “It revolutionized our industry because now people could get bottled water in the same format they were getting soft drinks in.” Consumers now had an easy choice in the convenience store to buy a bottle of juice, soda, or water, all in the same packaging. Water looked like it belonged on the store shelf.

Style

As
Time
magazine presciently declared back in 1985, “Water snobbery has replaced wine snobbery as the latest noon-hour recreation. People order their eau by brand name, as they once did Scotch. The fastidious will not take it on the rocks, because ice bruises the bubbles.” Trendy rock stars and supermodels have long had their favorite brand in hand. Jack Nicholson made waves twenty years ago when he snuck a bottle of Evian into the no-beverages section of the Academy Awards. As bottled water has become increasingly mainstream, the chic factor has diminished some, but only some. There are still plenty of stylish bottles and names selling at a premium. While denouncing the environmental impacts of Fiji Water, the progressive magazine
Mother Jones
could not help but admiringly admit that the company has managed to position its product “squarely at the nexus of pop-culture glamour and progressive politics.” Two can play at this game, however, and the ever-stylish government authorities in Paris have enlisted the help of Pierre Cardin to promote the use of tap water by designing a water carafe that neatly fits on a refrigerator door. So far, they’ve distributed thirty thousand for free.

A number of fancy restaurants have taken advantage of the bottled water cachet with the service of a tableside “water sommelier” who can provide counsel to diners looking for just the right choice of bottled water to match the dish and mood. As the noted connoisseur Arthur von Wiesenberger has counseled, when drinking bottled water, ask yourself whether it has “a slow, medium bead, or random bead, or a profuse, fast bead. Is it crisp? Bubbly? Slippery on the palate? Alkaline or slightly acidic on the tongue? Well-balanced? Refreshing? Can it claim a full, elegant mousse, a sharp spritz, a cheerful entry followed by a clean refreshing finish?” This is all wonderfully pretentious, of course, but also accurate. Because of their mineral content, many bottled waters do offer different tastes and carbonation.

Taste

Indeed, taste is a common explanation for buying bottled water. This surely is a concern in some parts of the country where
local geology provides tap water with strong odors and bottled water is clearly preferable. Despite claims of caring about taste, though, there is little evidence this really matters to most consumers. Blind taste tests continue to show not only that most people cannot distinguish among bottled waters, but also that they can’t even distinguish between bottled and tap water. This has been the case on popular shows such as ABC’s
20/20
and
Good Morning America
. New York City tap water routinely wins blind taste tests against bottled water. Nor should this be surprising. After all, as described above, Dasani, Aquafina, and other mass-market bottled waters are intentionally designed for a bland, flat taste. This could not be further from the view in Europe, where they drink particular brands precisely because of where they come from and how they taste.

Ever wonder why it is so hard to order water with ice in Europe? It’s not snobbery. Cold suppresses our tongue’s ability to taste minerals in water. This only matters, of course, if you care about taste in the first place. For most people, the sort of taste that really matters is more the taste in choosing a particular brand than the taste on the tongue.

Fitness and Health

Because bottled water has been marketed so successfully in vending machines and display cases alongside sodas and sports drinks, health-conscious consumers concerned about their waistlines can easily compare drinks filled with sugar, caffeine, and sweeteners to water, which has none of these. Perrier’s initial success was largely due to its branding as a healthy alternative to soda and juice, and this remains an effective strategy. As an aside, though, it is revealing that some have attributed the rise in tooth cavities to the growing use of nonfluoridated bottled water.

The bigger health concern, and by far the most controversial, comes when comparing bottled water with tap water. While bottled water executives will loudly argue that their competition is soft drinks and juices, there’s a good deal more to the story. Consider, for example, some of the slogans of Fiji Water (“The Label Says Fiji
Because It’s Not Bottled in
Cleveland
”) or Poland Spring (“Sip smarter. Live Longer.”). Susan Wellington, head of Quaker Oats’ beverage division, could not have been clearer when she vowed, “When we’re done, tap water will be relegated to showers and washing dishes.” Fighting words, indeed. In fact, she seems to be winning. Personal drinking habits clearly are changing. Compared to 1980, the average American drinks twenty-five gallons more bottled water, seventeen gallons more soft drinks, and thirty-six gallons
less
tap water.