logomore green contentexpand
Woman putting on makeup

23 Natural Cosmetics

Protect your skin, your health and your planet, with these popular toxin-free beauty products.

Dow+150.25up+1.52%
10,058.64
Nasdaq+24.82up+1.17%
2,150.87
S&P+13.78up+1.30%
1,070.52
Bottled water © Grove Pashley/Corbis

Extra8/2/2007 12:01 AM ET

Bottled water: A river of money

Continued from page 1

Meanwhile, one out of six people in the world have no dependable, safe drinking water. The global economy denies the most fundamental element of life to 1 billion people while delivering to us an array of water "varieties" from around the globe, not one of which we actually need. That tension is complicated by the fact that if we suddenly decided not to purchase the "lake" of Poland Spring water in Maine, none of that water would find its way to people who really are thirsty.

A chilled plastic bottle of water in the convenience-store cooler is the perfect symbol of this moment in American commerce and culture. It acknowledges our demand for instant gratification, our vanity, our token concern for health. Its packaging and transport depend entirely on cheap fossil fuel.

Yes, it's just a bottle of water -- modest compared with the indulgence of driving a Hummer. But when a whole industry grows up around supplying us with something we don't need, when a whole industry is built on the packaging and the presentation, it's worth asking how that happened and what the impact is. And if you do ask, if you trace both the water and the business back to where they came from, you find a story more complicated, more bemusing and ultimately more sobering than the bottles we tote everywhere suggest.

In the town of San Pellegrino Terme, Italy, for example, is a spigot that runs all the time, providing water free to the local residents -- except the free Pellegrino has no bubbles. Pellegrino trucks in the bubbles for its bottling plant.

And in Fiji, a state-of-the-art factory spins out more than a million bottles a day of the hippest bottled water on the U.S. market today, while more than half the people in Fiji do not have safe, reliable drinking water. That means it is easier for the typical American in Beverly Hills or Baltimore to get a drink of safe, pure, refreshing Fiji water than it is for most people in Fiji.

At the Peninsula hotel in Beverly Hills, where the rooms start around $500 a night and the guest next door might well be an Oscar winner, the minibar in each of the 196 rooms contains six bottles of Fiji Water. Before Fiji Water displaced Evian, Diet Coke was the top-selling minibar item. Now, says Christian Boyens, the Peninsula's director of food and beverage, "the 1 liter of Fiji Water is No. 1. Diet Coke is No. 2. And the 500-milliliter bottle of Fiji is No. 3."

Being the water in the Peninsula minibar is so desirable -- not just for the money to be made but for the exposure with the Peninsula's clientele -- that Boyens gets sales calls each week from companies trying to dislodge Fiji.

'I thought water was water'

Boyens, who has a master's degree in business administration from Cornell, used to be indifferent to water. Not anymore. His restaurants and bars carry 20 different waters.

"Sometimes a guest will ask for Poland Spring, and you can't get Poland Spring in California," he says.

So what does he do?

"We'll call the Peninsula in New York and have them FedEx out a case. I thought water was water. But our customers know what they want."

The marketing of bottled water is subtle compared with the marketing of, say, soft drinks or beer. The point of Fiji Water in the minibar at the Peninsula, or at the center of the table in a white-tablecloth restaurant, is that guests will try it, love it and buy it at a store the next time they see it.

Seeing it isn't difficult because the water aisle in a suburban supermarket typically stocks a dozen brands of water, not including those enhanced with flavors or vitamins or, yes, oxygen. In 1976, the average American drank 1.6 gallons of bottled water a year, according to Beverage Marketing. Last year, we each drank an average of 28.3 gallons of bottled water -- 18 half-liter bottles a month. We drink more bottled water than milk, coffee or beer. Only carbonated soft drinks, at 52.9 gallons annually, are more popular than bottled water.

Video on MSN Money

Cash globe © PhotoAlto/SuperStock
Tap water versus bottled water
Katie Couric talks with Ronni Sandroff of Consumer Reports about whether water that you buy is better than what you can get free from the tap.

No one has experienced this transformation more profoundly than Kim Jeffery. He began his career in the water business in the Midwest in 1978, selling Perrier.

"People didn't know whether to put it in their lawn mower or drink it," he says.

Now he's the CEO of Nestlé Waters North America, in charge of U.S. sales of Perrier, San Pellegrino, Poland Spring and a portfolio of other regional spring waters. Combined, his brands will sell about $4.5 billion worth of water this year, generating roughly $500 million in pretax profit. Jeffery insists that unlike the soda business, which is stoked by imaginative TV and marketing campaigns, the mainstream water business is, quite simply, "a force of nature."

"The entire bottled-water business today is half the size of the carbonated-beverage industry," says Jeffery, "but our marketing budget is 15% of what they spend. When you put a bottle of water in that cold box, it's the most thirst-quenching beverage there is. There's nothing in it that's not good for you. People just know that intuitively.

"A lot of people tell me, 'You guys have done some great marketing to get customers to pay for water,' " Jeffery says. "But we aren't that smart. We had to have a hell of a lot of help from the consumer."

Continued: Blame France

< previous |  1 | 2 | 3 | 4 | 5 | 6 | next >

Rate this Article

Click on one of the stars below to rate this article from 1 (lowest) to 5 (highest). LowRate it 1Rate it 2Rate it 3Rate it 4Rate it 5High
Fast Company on MSN Money

MSN Money Poll

  1. Why do you drink bottled water?

Vote to see results

Click here to see results without voting

Poll results

  1. Why do you drink bottled water?
    1. It's mobile and convenient to use a bottle.
      35%
    2. I don't know. I just do it without thinking.
      3%
    3. Bottled water tastes better than tap water.
      24%
    4. Tap water isn't as healthful.
      6%
    5. I don't. I drink tap water.
      32%
9643 responses, not scientifically valid, results updated every minute.

Fund data provided by Morningstar, Inc. © 2009. All rights reserved.
StockScouter data provided by Gradient Analytics, Inc.
Quotes supplied by Interactive Data.
MSN Money's editorial goal is to provide a forum for personal finance and investment ideas. Our articles, columns, message board posts and other features should not be construed as investment advice, nor does their appearance imply an endorsement by Microsoft of any specific security or trading strategy. An investor's best course of action must be based on individual circumstances.