Wednesday, June 18, 2008

More Consumers Turn On To Tap Water to Trim Costs

Tap water is making a comeback.

With a day's worth of bottled water -- the recommended 64 ounces -- costing hundreds to thousands of dollars a year depending on the brand, more people are opting to slurp water that comes straight from the sink. The lousy economy may be accomplishing what environmentalists have been trying to do for years -- wean people off the disposable plastic bottles of water sold as stylish, portable, healthier and safer than water from the tap.

Measured in 700-milliliter bottles of Poland Spring, a daily intake of water would cost $4.41, based on prices at a CVS drugstore in New York. Or $6.36 in 20-ounce bottles of Dasani. By half-liters of Evian, that will be $6.76, please. That adds up to thousands of dollars a year. Even a 24-pack of half-liter bottles at Costco Wholesale Corp., a bargain at $6.97, would be consumed by one person in six days. That is more than $400 a year.

But water from the tap? A little more than 0.001 cent for a day's worth of water, based on averages from an American Water Works Association survey -- about 51 cents a year.

U.S. consumers spent $16.8 billion on bottled water in 2007, according to trade publication Beverage Digest. That is up 12% from the year before, but it is still the slowest growth rate since the early 1990s, said editor John Sicher.

Coca-Cola Enterprises Inc., the biggest bottler of Coca-Cola Co.'s Dasani, recently cut its outlook for the quarter, saying the weak North American economy is hurting sales of bottled water and soda, particularly 20-ounce single-serve sizes consumers had been buying at gas stations.

"They're not walking in and spending a dollar plus for a 20-ounce bottle of water," said beverage analyst William Pecoriello at Morgan Stanley. Flavored and "enhanced" waters like vitamin drinks also are eating into plain bottled water's market share.

Mr. Pecoriello said Americans' concern about the environment also is a factor, driven by campaigns against the use of oil in making and transporting the bottles, the waste they create and the notion of paying for what is essentially free.

The Tappening Project, which promotes tap water in the U.S. as clean, safe and more eco-friendly than bottled water, launched an ad campaign in May. The company has sold more than 200,000 reusable hard plastic and stainless-steel bottles since November.

Linda Schiffman, 56 years old, a recent retiree from Lexington, Mass., bought two metal bottles at $14.50 apiece for herself and her daughter from Corporate Accountability, a consumer-advocate group, after she swore off buying cases of bottled water from Costco. "I've been doing a lot of cost cutting since I retired," said Ms. Schiffman, a former middle-school guidance counselor. "Additionally, I started feeling like this was a big waste environmentally."

Aware of those concerns, some bottled water makers are trying to address the issue. Nestlé SA says all its half-liter bottles now come in an "eco-shape" that contains 30% less plastic than the average bottle, and it has pared back other packaging. PepsiCo Inc. and Coca-Cola also have cut down on the amount of plastic used in their bottles.

While it is difficult to track rates of tap-water use, sales of faucet accessories are booming.

Brita tap-water-purification products made by Clorox Co. reported double-digit volume and sales growth in May and have seen three straight quarters of strong growth.

Robin Jaeger of Needham, Mass., fills her kids' reusable bottles with water from the house's faucet. But she doesn't use water straight from the tap.

"My kids have come to the conclusion that any water that's not filtered doesn't taste good," she said.

Her reverse-osmosis filter system costs about $200 every 18 months for maintenance -- still cheaper than buying by the bottle. While Brita is the dominant player in water filtration, according to Deutsche Bank analyst Bill Schmitz, sales of Procter & Gamble Co.'s Pur water-filtration systems also are growing. Sales from the Pur line have increased almost every month since mid-2007, said Bruce Letz, its brand manager. He declined to give sales figures but said "the water-filtration category is expanding very rapidly."

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