Bottled water: A river of money

Taste, of course, is highly personal. New Yorkers excepted, Americans love to belittle the quality of their tap water. But in blind taste tests, with waters at equal temperatures, presented in identical glasses, ordinary people can rarely distinguish between tap water, spring water and luxury waters. At the height of Perrier's popularity, Bruce Nevins was asked on a live network radio show one morning to pick Perrier from a lineup of seven carbonated waters served in paper cups. It took him five tries.

The industry's comeback

Americans are actually in the midst of a second love affair with bottled water. In the United States, many of the earliest, still-familiar brands of spring water -- Poland Spring, Saratoga Springs, Deer Park, Arrowhead -- were originally associated with resort and spa complexes. The water itself, pure at a time when cities struggled to provide safe water, was the source of the enterprise.

In the late 1800s, Poland Spring was already a renowned brand of healthful drinking water that you could get home-delivered in Boston, New York, Philadelphia or Chicago. It was also a sprawling summer resort complex, with thousands of guests and three Victorian hotels, some of which had bathtubs with spigots that allowed guests to bathe in Poland Spring water. The resort burned in 1976, but at the crest of a hill in Poland Spring, Maine, you can still visit a marble-and-granite temple built in 1906 to house the original spring.

The car, the Depression, World War II and, perhaps most important, clean, safe municipal water unwound the resorts and the first wave of water as business. We had to wait two generations for the second, which would turn out to be much different -- and much larger.

Today, for all the apparent variety on the shelf, bottled water is dominated in the United States and worldwide by four huge companies. PepsiCo has the nation's top-selling bottled water, Aquafina, with 13% of the market. Coca-Cola's Dasani is No. 2, with 11% of the market. Both are simply purified municipal water, so 24% of the bottled water we buy is tap water repackaged by Coke and Pepsi for our convenience. Evian is owned by Danone, a French food giant, and distributed in the United States by Coke.

The really big water company in the United States is Nestlé, which gradually bought up the nation's heritage brands and expanded them. The waters are slightly different – spring water must come from actual springs, identified specifically on the label -- but together, they add up to 26% of the market, according to Beverage Marketing, surpassing Coke's and Pepsi's brands combined.

Because most water brands are owned by larger companies, it's hard to get directly at the economics. But according to those inside the business, half the price of a typical $1.29 bottle goes to the retailer. As much as a third goes to the distributor and transport. An additional 12 to 15 cents is the cost of the water itself, the bottle and the cap. That leaves roughly a dime of profit. On multipacks, that profit is more like 2 cents a bottle.

Water sales to overtake soda

As the abundance in the supermarket water aisle shows, that business is now trying to help us find new waters to drink and new occasions for drinking them. Aquafina's marketing vice president, Ahad Afridi, says his team has done the research to understand what kind of water drinkers we are. It has found six types, including the "water pure-fectionists," the "water explorers," the "image seekers" and the "strugglers" -- consumers who "don't really like water that much" and "will have a cheeseburger with a diet soda."

It's a startling level of thought and analysis, until you realize that within a decade, U.S. consumption of bottled water is expected to surpass soda. That kind of market can't be left to chance. Aquafina's fine segmentation is all about the newest explosion of waters that aren't really water -- flavored waters, enhanced waters, colored waters, water drinks branded after everything from Special K breakfast cereal to Tropicana juice.

Afridi is a true believer. He talks about water as if it were more than a drink, more than a product -- as if it were a character all its own, a superhero ready to take the pure-fectionist, the water explorer and the struggler by the hand and carry them to new adventures.

"Water as a beverage has more right to extend and enter into more territories than any other beverage," Afridi says. "Water has a right to travel where others can't."

Uh, meaning what?

"Water that's got vitamins in it. Water that's got some immunity-type benefit to it. Water that helps keep skin younger. Water that gives you energy."

Water: It's pure, it's healthy, it's perfect -- and it's been made better. The future of water sounds distinctly unlike water.

Continued: Visiting the source

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