01 June 2010

Water chat with Tom Lauria

About ten days ago, I had a water chat with Tom Lauria, the head of outreach at International Bottled Water Association (IBWA). US bottled water sales are worth $11 billion. IBWA has 300 members, many of them small. Coke and Nestle belong, but not Pepsi. 40% of the water is purified from municipal tap water; 60% comes from spring water. (Jennifer Aniston's water comes from unicorn tears...)

Here's our fifty minute talk [24 MB mp3]. We did it on skype -- Tom is in Virginia -- so it's a bit clunky at the start.

In it, we discussed Peter Gleick's story of how a stadium denied tap water to its captive audience to make money (something I said awhile ago about airports), and we agreed that bottled water was not the problem.

We talked about the difference between deposits on bottles and curbside recycling. Plastic water bottles take less energy to ship than glass, and they are more-recycled than other plastic products, but there is still a problem with pollution. (I favor semi-refunded deposits, with some money kept back for reprocessing the plastic into something useful.)

We also talked about the water quality issue -- bottled water is regulated by the USDA; tap water by the EPA. I've said before that they should be regulated by one agency and compared with one measuring stick, but they are not. The regulatory turf battle means that a lot of activists (on both sides) claim that they are under stricter control. The GAO compared the two and found that "FDA Safety and Consumer Protections Are Often Less Stringent Than Comparable EPA Protections for Tap Water" [pdf]

Bottom Line: Companies sell bottled water to customers who want to buy it. It's important to keep track of where the bottles go afterwards, but not much else.

6 comments:

  1. Dr. Zetland:

    Had a meeting with a bottler. He explained input costs and wholesale cost of bottled water vs. soda. His profit margin is much greater with bottled water vs. soda.

    Had a separate meeting with a perspective new venture into bottled water. They had mountains of research regarding all aspects of the venture. They had developed a very detailed and specific business plan. The bottom line was that the bottled water market was currently over crowded and among a list of negatives, gaining shelf space was a major barrier to entry.

    Both the bottler and new venture had looked into returnable glass bottles. The interesting common thread between the two completely unrelated concerns was the marketing aspect of the returnable bottles. Both determined plastic was better but if glass was used it was the “marketing appeal” of (a) reusable, (b) that water seemed to taste (water has taste?) better out of a glass container, © the appeal and familiarity of returnable bottles to the age 50 and over crowd that in their past had experienced the “returnable bottle” of the pre-1970’s.

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  2. Re how many bottles are littered: This Keep America Beautiful report on litter (http://www.kab.org/site/DocServer/LitterFactSheet_LITTER.pdf?docID=5184) is not very specific about plastic water bottles, but the increase in plastic litter (165%) between 1969 and 2009 is striking. ("Beverage containers" decreased, but I think that refers to metal cans.)

    For information on the rate at which bottle-bill states recover those containers versus non-bottle bill states, see www.container-recycling.org

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  3. I'd like to see the production comparison of glass vs. plastic with a real carbon price. Just out of curiosity, which one is more carbon-intensive? I'm guessing glass, but I really don't know.

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  4. @WEH -- it's all marketing. They may even be able to charge more for glass, and then spend the extra $ on gas (for moving it) and carbon credits (for the gas :)

    @Josh -- it's transport costs, raw materials, reuse vs recycling rates. I'd bet that plastic was also better...

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  5. Just one small corrective. The wholesale bottled water market is about $11 billion a year — according to Beverage Marketing Inc. in NYC which tracks sales by the bottlers.

    But Americans spend much more than $11 billion a year on bottled water — and the true retail spending, and cost, is important.

    The retail mark-up tends to be 100 percent on bottled water, give or take, according to bottled water executives I've interview.

    So the cost to consumers of bottled water is more like $22 billion a year. The average U.S. family (112 million U.S. households) spends $196 a year on bottled water.

    (I wrote about bottled water in Fast Company a couple years ago, and am finishing a book on water more broadly.)

    http://www.fastcompany.com/node/59971/print

    Enjoy the blog enormously.

    Charles Fishman
    Editor-at-large, Fast Company magazine
    Author, "The Wal-Mart Effect," the NYT bestseller
    www.walmarteffectbook.com
    cnfish@mindspring.com

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  6. @Charles -- thanks for that point. I'll include it in future posts!

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