It took a worldwide economic tsunami, but the tide may have finally turned on bottled water.
"Tap water is making a comeback,' according to the NYTimes, which reported this week that PepsiCo's quarterly earnings are down 9.6 percent "in part because of declines in sales of soda and bottled water in the United States." And while this news is good for the green movement, it's not so good for the jobs outlook. As a result of its earnings fizzle, PepsiCo (bottlers of Aquafina water) plans to cut costs by closing a half dozen plants and eliminating 3,300 jobs. Ouch.
Who knew going green was going to hurt so much.
The Times reports that PepsiCo's and other industry analysts have found "that 34 percent of consumers say they are reusing plastic bottles more often and 23 percent say they are cutting back on bottled beverages in favor of tap water or beverages in containers that create less waste." Meantime, sales of water filters increased 16 percent in the first half of the year.
And although PepsiCo sees this trend as just a temporary blip, John Sicher, the publisher of Beverage Digest, tells the Times that "unless both Pepsi and Coke do something quickly, they could lose a generation of carbonated soft drink consumers," not to mention bottled water drinkers.
Oh no! Imagine that - a generation of less obese Americans and a drop in the diabetes epidemic! How will we survive?
Don't think for a minute that PepsiCo plans to go quietly into the night. Chairman and CEO Indra Nooyi tells Brandweek that some of the estimated $1.2 billion PepsiCo plans to save over the next three years will be applied to its marketing budget. PepsiCo, already in the middle of a major redesign of its globe logo as well as numerous package redesigns, is planning a number of new product launches including introduction of a new energy drink next year.
However, putting tap water into landfill-bound plastic bottles and slapping fancy labels on them may be a business that's come to an end. PepsiCo and others are likely in serious discussions about pouring their bottled water businesses down the drain, not just because of economics but also because of a flood of bad PR.
For instance, on the same day that PepsiCo announced its dismal earnings, a front page story in the SF Chronicle announced that "Bottled water not always at it appears." The paper reports that recent tests of 10 brands of bottled water by the non-profit Environmental Working Group, found an average of 8 contaminants in each brand. Five brands contained traces of bacteria, and one brand - Wal-Mart's Sam's Choice - "contained chemical levels that exceded legal limits in California."
Meantime, the LATimes pointed out this week that tap water suppliers are subject to broader scrutiny than bottled water suppliers, because "they're required by law to publish and circulate an annual Consumer Confidence Report, which states their sources of water and any contaminants found." So the bottom line is that the water you're getting out of the kitchen sink is not only cheaper, but probably cleaner that the stuff you pay $1.57 per bottle for at the store.
Many Americans have been leaning green for some time now. But it's more than a little ironic that it will be a lack of greenbacks that pushes them into total tree-hugger mode (and I mean that in the best possible way). Save money and save the planet -- all at the same time.
Now who's going to save us from the poorhouse?