CBE 555 Presentation

Modified by Jon Konen

Originally by Joel Thomas

March 10, 2008

What’s on Tap?Market Trends

Market Growth & Comparative MarketsFinancial AnalysisMyths dispelled

Reason (given) to believe Safety Quality Purity

Environmental ImpactFiji case studySource problems

Disturbance of Delicate EcosystemsAlternativesConclusions

Market Trends

Changes in U.S. Consumption Over 5 Years

U.S. BOTTLED WATER MARKET

Volume and Producer Revenues 2002 – 2007(P)

Millions of Annual Millions of Annual Year Gallons % Change Dollars % Change 2002 5,795.7 -- $7,901.4 -- 2003 6,269.8 8.2% $8,526.4 7.9% 2004 6,806.7 8.6% $9,169.5 7.5% 2005 7,539.1 10.8% $10,007.4 9.1% 2006 8,253.0 9.5% $10,980.0 9.7% 2007 (P) 9,075.0 10.0% 11,905 9.6% (P) Preliminary

Source: Beverage Marketing Corporation

FinancialTypical Price Standardized

PriceW.W. Bottled Water Consumption

yearly

Tap Water $1.52/HCF* $0.000357/L 89 billion L/yr $32 million

Bottled Water

$1.00/Liter $1.00/L 89 billion L/yr $89 billion

*HCF = Hundred Cubic Feet

Difference $88.97 billion

Factor 2800x more

Why do people drink bottled water?Alternative to other beverages

TrendyLuxuriousConvenience

Worries about tap water“Bottled water is purer.”“Bottled water is just safer.”

Differently regulated (see regulation slide) Hype, myth, and propaganda

Perception of difference“Bottled water tastes better.”

Placebo effect Caters to different “tastes” (preferences)

Bottled water is better than tap water 3 out of 4 cases, it is tap water

Brand SourceAquafina Pepsi bottling plants

Dasani CocaCola bottling plants

Yosemite Waters Los Angeles, CA

Alaskan Falls Worthington, OH

Everest Corpus Christi Texas**Listed on the bottleSource: Corpus Christi Municipal Water Supply

Healthier?Myth: BW is healthier than tap water Truth: BW not regulated to check for parasites and certain

other microbes.See regulations slide (next)

Myth: Water bottles leak carcinogens into water if you reuse bottles.

Truth: Bottled Water (BW) does have an expiration date. Extended exposure to heat and light leeches plasticizers and

terephthalates into water.However, infinite shelf life when stored under optimum conditionsEnough to kill?

Re-using Plastic BottlesBottles do not leak carcinogens over short time that are

harmfulBacteria can grow in the bottles due to trace amounts of

water left behind when sitting for several daysCleaning and sanitizing bottles after 1-2 days of use

eliminates bacteria makes bottle safe againNothing from the bottle is cause of sickness, bacteria that

grows from water left in the bottle.

Safer? - Regulation of waterTap water – EPA Regulated

Purity requirements – more limitations than FDABottled water – FDA Regulated

Standards of identity – Must ensure truth in advertising = declare your source Final product must be at least as pure as source

% Total Dissolved Solids (TDS) in mineral water Sparkling water may have no more CO2 dissolved than source

May remove and replace up to limit

Limits on Chemical, Microbial, and Radiological Contamination

But… No test for Parasites, E. Coli, Cryptosporidium, Giardia No test for Asbestos No test for Organics such as Benzenes

Regulation IssuesComprehensive database at www.ewg.org for

contaminants in public tap waterNo database/ information for contaminants in bottled

water.Claims of purer water

Ohio State study of 57 bottled water samples, 15 had higher bacteria contents than tap water

Others were “more pure” than tap waterAll were deemed safe to drink

Tastes Better? - PerspectivePenn and Teller (Showtime fame) – Fooled customers at a

San Francisco Restaurant with bottles of water filled from the restaurant’s tap

Customers thought it tasted better and was more fancy than tap water

Taste test using New York City water and 5 name brands, NYC water tied for 3rd with water from Iceland.

Last place – Evian (most expensive), First place – K-mart brand water

Limitations of FDA RegulationLoophole: regulates only BW for interstate commerce

Reliance on state regulation “The FDA relies on state and local government agencies to approve

water sources for safety and sanitary quality” 1 in 5 do not regulate

Unequal protectionDevotion of half of time of one FDA inspector for every 100 EPA water

quality inspectors Low priority for inspection under General Food Safety Program Reliance on voluntary declaration of violations

Environmental ImpactSolid Waste

Effective recycling rate = 34.1 % Recycling problems

FDA regulations food surfaces materials = one

time use Saturation of market for recycled

PETTotal waste mass

998 million tons/yr

Uses mass amounts of gasoline and oil to ship water across the country and around the world.

Poly(Ethylene Terephthalate)

Water Resource ImpactWater resources

Privatization of water Water rights Ethical issue

Especially in third world and water-poor countriesSource Depletion

Damage to delicate ecosystems Coastal land drilling – salt water intrusion damages soil quality Spring water – can drain streams and riverbeds miles away

Question of water rights Ground water – common source of well water

Carbon ImpactFiji Case Study: One bottle of Fiji Water

CO2 emissionsProduction in China – 93g (3x mass PET)Transport to Figi – 4gTransport of filled bottles to US – 153g

Total Impact: 250g CO2/bottle

Energy cost of PET production, filling and transportation is equivalent to filling each bottle

¼ full of oil.Price to consumer - $2.50/bottle

Alternatives to Bottled WaterConsumers say bottled water is convenient

Use Nalgene or other reusable bottle and bring with youContainers must be cleaned regularly to prevent bacterial

growth. May be cleaned hundreds of times.Public water fountainsPurifying with Brita and other filters if worried about

quality

ConclusionsBillion Dollar IndustryCharging exorbitant prices

Marketing and hypeUsing existing technology and equipment

Often already paid for with tax dollarsGenerating culture of distrust, disposability and wasteAlternatives: Nalgenes and other washable safe containers

Questions?When will the growth of bottled water slow down?With increasing use in developing countries (India,

China), will cost of water continue to rise?Water quality is heavily regulated in the US, should

municipalities be selling their water for profit versus large corporations paying fractions of cents to sell for 2800 X profit?

How long until FDA imposes stringent standards on bottled water?

Sourceshttp://www.epa.gov/http://www.cfsan.fda.gov/~dms/botwatr.html

(FDA/CFSAN website)

http://www.nrdc.org/water/drinking/ National Resources Defense Council

http://www.bottledwater.org International Bottled Water Association

http://www.epa.gov/msw/facts-text.htmhttp://www.epa.gov/safewater/faq/faq.htmlhttp://www.pubmedcentral.nih.gov/articlerender.fcgi?artid=1693287http://en.wikipedia.org/wiki/Bottled_waterhttp://www.jewishworldreview.com/0505/stossel051805.php3www.bottledwaterweb.comhttp://www.cnn.com/2007/HEALTH/07/27/pepsico.aquafina.reut/