"H2o Woes"-Uncorking The Bottled Water Business
Wednesday, November 01, 2006SUSIE GHARIB: Twenty years ago, bottled water was part of the beverage market that was pretty much ignored by most companies. That's not true today. With growing numbers of Americans drinking bottled water, the field is now dominated by big companies like Coca-Cola, Nestle and others. As we continue our series "H2o Woes," Jeff Yastine looks at the big demands and the big controversies of bottling natural spring water.
JEFF YASTINE, NIGHTLY BUSINESS REPORT CORRESPONDENT: When it comes to diving the nation's lakes and rivers, there are few matches for this: the inland freshwater springs of northern Florida. Small and large, there are dozens of such springs across the region. It's a mecca for cave divers below the water's surface, and above it, an attraction for locals as well. The springs and the underground aquifers that feed them are also a mecca for a much more lucrative activity: supplying the nation's nearly insatiable thirst for bottled water. Twenty years ago there were only a few companies with permits for freshwater withdrawals from the region. But that number has grown with the popularity of bottled water.
MEG ANDRONACO, NATURAL RES. MGR., NESTLE WATERS, NORTH AMERICA: The water emanating out of this spring can be anywhere from 10 to 20-- sometimes a little bit older than that. It takes that long for the water to travel.
YASTINE: Ten to 20 years?
ANDRONACO: Ten to 20 years. Thank you. Yeah. It's not just very local. It's not weeks or days. It's most years-old.
YASTINE: Meg Andronaco is the natural resources manager for Nestle waters, the nation's largest bottler of spring water. The company taps five spring sources in Florida, including this one, Crystal Springs, northeast of Tampa.
ANDRONACO: We do have internal standards for the springs we use. I do believe there's abundant springs both in Florida and the United States. But we look at water quality in the spring, the location of the spring, the flow from the spring.
YASTINE: Bottled water companies are riding a wave of popularity. Just in the past five years, bottled water sales rose by more than 60 percent. Much of that comes from brands bottled from municipal sources, but spring water represents a key growth segment for the industry.
STEPHEN KAY, VP COMMUNICATIONS, INTERNATIONAL BOTTLED WATER ASSOCIATION: Spring water sources are very important to the bottled water and the beverage industry overall. The greatest growth in the bottled water industry is what we call distilled spring water segment. That's water that doesn't have carbonation or sparkling. So the spring water segment is the largest portion and the most demand for consumers.
YASTINE: But spring water bottling is not without controversy. Opponents in a few areas around the country have sought to block commercial bottling efforts. Some fear it could draw too much water out of springs or cause nearby wells to run dry.
PETER GLEICK, CO-FOUNDER & PRESIDENT, PACIFIC INSTITUTE: It's very important to look at. It's very important to look very carefully at a local water resource and the impacts of a bottled water company on that local resource. It may be a small fraction of a state total. It may be a small fraction of a regional total, but it may turn out to be a large fraction of a community's resource and it's important to look at. It's a valid to question controls that are being put in place to protect those local resources and we're going to see more and more of that.
YASTINE: Bottlers counter that a spring water bottling plant draws a relatively small amount each day -- hundreds of thousands of gallons, compared to millions of gallons used just for lawn irrigation in the same region. Companies like Nestle Waters say there's an additional incentive to be good stewards of water resources. This bottling plant near the tiny north Florida town of Lee cost upwards of $80 million to build. It taps the same flow of water as this nearby spring. The company says it's not in its best interest to exhaust such sources. ANDRONACO: We don't build our factories on wheels so we don't build it at one spring and use that spring up and move it to another. We want to be here 100 years from now, when we're all retired and gone. And so we need to do the monitoring and the longer period of time you do that, the more (INAUDIBLE) you have, the more data you have the better. You can understand your system better.
YASTINE: Springs attractive to bottlers tend to be in rural areas. Some communities have welcomed the additional jobs created for the local economy.
PAULA ARNOLD, PRESIDENT/CEO, GREATER MADISON COUNTY CHAMBER OF COMMERCE: In a small rural county like Madison, we're always needing jobs and our average wage in this county is about $8.50 per hour, which is relatively low statewide and obviously nationwide. And Nestle jobs, their entry level job pays $11 an hour, so it's considerably higher and it offers a great opportunity to our residents.
YASTINE: The opportunity for bottlers is a big one as well, as long as consumers keep buying and the spring water keeps flowing. Jeff Yastine, NIGHTLY BUSINESS REPORT, Lee, Florida.
