Pure Drink or Pure Hype?
Exploding Sales: Marketing a Perception of Purity
Over half of all Americans (54 percent) drink bottled water, and about 36 percent of us imbibe regularly (more than once a week).  Sales have nearly tripled in the last decade, to about $4 billion in 1997, rising from 4.5 gallons per year for the average American in 1986 to 12.7 gallons per year per person in 1997.  Americans consumed a total of 3.43 billion gallons of bottled water in 1997 (see Figure 1).  Globally, the market was estimated in 1995 to be worth more than $14 billion annually in wholesale sales, and it has certainly grown since then.  According to a 1992 inventory, there were already 700 brands of bottled water produced by about 430 bottling facilities in the United States,  a number that likely has grown since that time, because of the enormous expansion in bottled water sales.
Enormous Growth in Sales of Bottled Water
The industry has more than recovered from adverse public attention to problems with bottled water quality in 1990 and 1991. At that time benzene contamination was found in Perrier mineral water, causing a worldwide recall of this bottled water in February 1990. Congressional hearings convened in 1991 by Michigan congressman John Dingell focused intense public scrutiny on bottled water quality issues in the wake of the Perrier incident, giving the industry a fleeting black eye. 
Source: Beverage Marketing Corporation, New York
Since expunging these blotches on its image of purity, the industry has exploded, with the market now growing at a strong rate of 8 to 10 percent per year -- about twice as fast as the rate for other beverages.  According to industry stock analysts, "the profit margins in the business are really pretty good" -- for some bottlers in the neighborhood of 25 to 30 percent.  That means every $1.50 bottle of water brings around $0.50 in profit. The actual cost of the water in the bottle purchased off a store shelf is generally just a fraction of a cent to a few cents.  Thus, typically 90 percent or more of the cost paid by bottled water consumers goes to things other than the water itself -- bottling, packaging, shipping, marketing, retailing, other expenses, and profit. As the then-chairman of the board of the Perrier Corporation stated in a remarkable moment of candor, "It struck me . . .that all you had to do is take the water out of the ground and then sell it for more than the price of wine, milk, or, for that matter, oil." 
The bottled water industry's rapid growth is surprising in light of the retail price of bottled water: It costs from 240 to over 10,000 times more per gallon to purchase bottled water than it does to purchase a gallon of average tap water. For example, in California average tap water costs about $1.60 per thousand gallons (about one tenth of a cent per gallon), while it has been reported that average bottled water costs about $0.90 per gallon -- a 560-fold difference.  Expensive imported water sold in smaller bottles can cost several thousand times more than tap water: That $1.50 half-liter bottle of imported water may be costing you 10,000 times more per gallon than your tap water.
While Americans with annual incomes of $60,000 per year or more are about 35 percent more likely than those of lesser means to buy bottled water, the purchasers of bottled water are hardly limited to high income yuppies.  As was put starkly in American Demographics recently,
Black, Asian, and Hispanic households are more likely than whites to use bottled water, even though blacks and Hispanics as a group have lower-than-average household incomes . . . .Scares like the municipal water contamination that occurred in Milwaukee in 1993 may have even low-income families springing for bottled water. It's clear that many households are still opting for bottled water, even though it can be an expensive habit. A five-year supply of bottled water at the recommended intake of eight glasses a day can cost more than $1,000. An equivalent amount of tap water costs about $1.65. 
Heavy Marketing of the "Purity" of Bottled Water versus Tap Water
What has driven this ever-greater consumer demand for bottled water? Market experts and public-opinion polls attribute the surprising increase primarily to several factors. People choose bottled water because it is perceived to be safer and of higher quality than tap water, and many are now using it because they view it as a healthful alternative beverage to soft drinks or alcohol.
The public is concerned about tap water safety and quality, and, with much encouragement from the bottled water industry's aggressive marketing, views bottled water as a purer, safer option. As a key industry consultant put it, "water bottlers are selling a market perception that water is 'pure and good for you' . . . ." 
Just to be sure this public perception is carefully nurtured, the bottled water industry has engaged in an expensive public relations campaign to persuade the public about the purity of bottled water and to disabuse the public of any "misconceptions about the cost, safety, quality and regulations governing bottled water."  The PR campaign has included media releases, briefings in at least 10 cities, distribution of press kits, videos and video news releases. The campaign spent significant resources enlisting health groups as spokespeople, "educating" consumers and groups representing populations likely to be at elevated risk from tap water, and seeking to reach others about the safety of bottled water.  Recent figures for the total bottled water industry's advertising budget are difficult to come by, but as long ago as 1990 -- when the industry was selling much less water than it is today -- total media outlays for the bottled water industry were $42.9 million dollars.  That spending likely has increased substantially in the past nine years.
The industry-encouraged consumer thirst for bottled water as a safer, higher-quality source of drinking water was recently explained in a bottled water industry association trade magazine:
Consumers Want to Drink Water That's Safe. News reports about crises involving municipal water supplies in many parts of the country heightened public awareness and concern about the safety of tap water. Environmental groups and the Environmental Protection Agency sounded the safety alarm in several cities last year. As a result, consumers began to choose bottled water as a safe alternative for drinking water. 
Many companies directly and openly market to consumers by highlighting tap water contamination problems and offering their product as a safer alternative. An ad campaign of the nation's second-largest water-bottling company, McKesson Water Products Company (bottlers of Sparkletts, Alhambra, Aqua Vend, and Crystal), for example, was cited in the advertising trade press as "right on" and highly effective because it took advantage of "consumers' concern over the purity of tap water . . . ."  McKesson was commended for running ads that "listed some of the contaminants in tap water, juxtaposing Sparkletts as 'the source of pure water.'"  Other bottlers have used EPA data indicating widespread tap water contamination with lead,  and much has been made by the industry of the vulnerability of tap water to Cryptosporidium and the purported complete protection of bottled water from this parasite. 
One soft-drink-industry executive who has increasingly turned to bottled water to boost revenue and "sells lots of Evian" explained to The New York Times recently how the bottled water market is helped by pollution concerns: "Water quality in the United States is getting progressively worse. Every time there's a water main break on 23rd Street and people have to boil water for a week, or there's problems with the Ohio River, it clears out the supermarket shelves." 
In discussing the public's concern about tap water and how this opens up opportunities for bottlers, a recent article in the magazine of the International Bottled Water Association (IBWA), the industry's trade association, explained:
Consumers are being bombarded with headlines warning about the potential risks of tap water, particularly water that may be contaminated with the parasite Cryptosporidium . . . . [N]ational media attention has been focused on the issue for several reasons. First, the Natural Resources Defense Council -- one of the country's most respected environmental groups -- warned consumers about the dangers of Cryptosporidium in municipal water supplies. Next, the Centers for Disease Control and Prevention (CDC) released guidelines for immuno-compromised people who are concerned about the safety of their drinking water. Finally, the media has been extensively covering congressional activity on water safety.
Naturally all of this has resulted in increased consumer awareness and concern about the safety of water . . . . The good news is that bottled water is a safe alternative. IBWA member companies produce safe, high-quality, strictly regulated products. The challenge for the industry is one of communication: how can we get the facts about bottled water to consumers? 
In response, the industry has made a major effort to train its staff to "explain" why bottled water is safer than tap water and to place media stories focusing on the high quality of bottled water. These representatives portray their products as entirely free of any contamination and free of risk from Cryptosporidium and any other contaminants. 
Bottled water industry advertising materials and "fact sheets" routinely state that bottled water is pure or entirely free of contaminants. A widely circulated IBWA question-and-answer fact sheet for consumers is one typical example:
How do I know that Cryptosporidium is not in my bottled water?
For starters, bottled water companies are required to use approved sources . . . .By law, [springs and wells] must be protected from surface intrusion and other environmental influences. This requirement ensures that surface water contaminants such as Cryptosporidium and Giardia are not present . . . . All IBWA member companies that use municipal supplies are encouraged to employ at least one of the three processing methods recommended by [CDC] for effective removal of microbial (surface water) contaminants, including Cryptosporidium.
Does bottled water contain any chlorine or harmful chemicals?
As discussed in Chapter 3 and the accompanying Technical Report (print report only), these blanket reassurances of absolute purity of all bottled water are incorrect. At least one sample of about a quarter of the bottled waters we tested violated strict state (California) health standards or warning levels, and about one fifth of the waters exceeded unenforceable state or industry bacteria guidelines. Moreover, it is incorrect to assert that simply because water comes from a well or a spring it is immune from Cryptosporidium or other microbial contaminants of potential concern. Several waterborne-disease outbreaks -- including outbreaks of Cryptosporidium-induced illness -- have been caused by tap water taken from contaminated wells or springs.  There is no reason to believe that bottled water taken from springs, wells (or from tap water or other sources, for that matter) is necessarily impervious to such contamination; only strong regulatory controls of water sources and strict treatment mandates (controls well beyond the weak federal bottled water rules) can ensure that no microbial contaminants are present.
While it appears that many consumers who turn to bottled water do so out of concern about the safety of their tap water, some also have switched to bottled water because they are turned off by tap water's taste and odor (such as the pungent chlorine smell and taste) and simply prefer the taste and smell of bottled water. In addition, Americans are choosing bottled water as what industry insiders call a "refreshment beverage," because it is marketed and viewed as a light, clear, caffeine-, salt-, and sweetener-free, and healthful alternative to soft drinks like Coke and Pepsi. 
In fact, a 1993 poll of people who drink bottled water found that 35 percent of bottled water drinkers used it primarily out of concern about tap water quality. Another 12 percent chose bottled water because of both safety or health concerns and the desire for a substitute for other beverages (see Figure 2). Thus, as of 1993 at least, nearly half (47 percent) of bottled water drinkers used it at least partially out of concern for their health and safety. Another 35 percent drank it as a substitute for soft drinks and other beverages. Seventeen percent said they chose bottled water for other reasons -- such as "taste" (7 percent) or "convenience."
It is absolutely clear, therefore, that a leading reason for the explosion in bottled water sales is the public perception, fueled by heavy industry advertising, that bottled water is pure and pristine, and thus a healthier choice than tap water.
Selling bottled tap water
What exactly are consumers getting for their money? Is the bottled water industry's carefully marketed image of absolute purity and pristine sources an accurate reflection of where bottled water comes from, and is the water really so immaculately pure compared with tap water?
Government and industry estimates indicate that about 25 percent to 30 percent of the bottled water sold in the United States comes from a city's or town's tap water -- sometimes further treated, sometimes not.  One IBWA expert reportedly estimated in 1992 that 40 percent of the bottled water was derived from tap water.  The percentage of bottled water derived from tap water may be rising, because some major bottlers have begun to sell new brands of water derived from city tap water.
One extremely popular newly launched brand of bottled water is Pepsico's Aquafina® brand (which reportedly has taken Pepsi into the top 10 sellers of bottled water in the United States, with sales jumping 126 percent in one year to more than $52 million in 1997, according to the trade press).  Aquafina® bottles, which picture beautiful stylized mountains on the label, do not mention that the water is derived from municipal tap water. The water reportedly is treated tap water taken from 11 different city and town water supplies across the nation.  Pepsi executives defend the practice. In a 1997 report, "Pepsi spokesman Larry Jabbonsky made no apologies for the Aquafina label or advertising and said Pepsi isn't hiding anything. He said anyone can find out the true source of Aquafina by calling the 800 number on the bottle top."  Coca-Cola, according to some accounts, is also very interested in the high profit potential of entering the U.S. bottled water market and has carefully tracked Pepsi's success with Aquafina. 
Other bottlers also use tap water as their source. For example, it has been reported that in south Texas, a brand of bottled water called Everest, with mountains on the label, lists the source as the municipal water supply of Corpus Christi, which, as one report noted, "is hard by the Gulf of Mexico and nowhere near Everest or any other mountain." 
NRDC's testing found that some brands of bottled water that claim to be spring water or that do not indicate that they are from a municipal source have likely been chlorinated -- a sign that they are likely derived from a municipal source, even though one of bottlers' key selling points is the lack of chlorine taste and odor in their product. For example, tests of two different samples of Safeway Spring Water, sold in California, chemically resembled tap water, in that it contained substantial levels of trihalomethanes -- common by-products of chlorine disinfection.[2a]
In addition, some cities recently have announced that they plan to enter the bottled water market by selling their water untreated in bottles.  Houston, for instance, has announced that it will sell its self-proclaimed "Superior Water" -- city water taken straight from the tap and pumped into bottles.  Other cities including Kansas City and North Miami Beach are said to be evaluating plans to sell their water in bottles. 
Recent FDA rules now in force do require that if water is taken from a municipal source and not treated further, the bottle label must indicate that it is "from a municipal source" or "from a community water system."  However, if the water is treated using any of several common technologies (some of which could fail to filter out certain contaminants, depending upon the treatment used), there is no requirement to label its municipal source.  Apparently Pepsi is permitted to not mention on the Aquafina® label that its water derives from municipal tap water, because it considers its water "purified water" under this exception.[2b]
2a. It is possible, albeit unlikely, that true spring water could have been chlorinated prior to bottling.
2b. No quantitative data are publicly available regarding whether this practice is in widespread use beyond the Aquafina® label. Moreover, due to the lack of state and FDA resources dedicated to monitoring the bottled water industry, the prevalence of the now unlawful practice of bottling untreated tap water from a public water system without labeling its municipal water source is unknown.
34. "Uncapping Consumers’ Thirst for Bottled Water," Bottled Water Reporter, p. 63 (December/January, 1994); Martha Hamilton, Washington Post, "Liquid Assets, Pure and Simple," September 14, 1996 p. D1.
39. See, "Bottled Water Regulation," Hearing of the Subcommittee on Oversight and Investigations of the House Committee on Energy and Commerce, Serial No. 102-36, 102nd Cong., 1st Sess. (April 10, 1991).
40. In 1997, there was a 9.6 percent increase in bottled water sales over 1996, for example, according to Beverage Marketing Association 1998 data cited in "Advertising & Marketing:Waterlogged," Los Angeles Times, p. D5 (April 23, 1998); see also, Harry Berkowitz, "Wading in Water: As Sales Soar, Bottlers Try to Distinguish Their Products," Newsday, p. 1 (August 31, 1997).
42. According to an industry consulting company: "If the bottler installs the equipment the price per gallon may be as low as 0.0125 cents per gallon. If the property installs the equipment the price range, depending on volume and market proximity, is 0.02 to 0.06 cents per gallon. The proximity of the source to the bottling facility has a significant fiscal impact on the raw product costs. According to Mike Cullis formerly of Hidell-Eyster Technical Services, Inc., ‘Total operating costs of a dedicated tanker is $1.10 per mile. Therefore the difference between a source 100 miles and a source 200 miles from the bottling plant translates to $220 per load or a laid in cost of 0.04 cents per gallon’." "The higher the volume, the lower the cost per gallon. Filling a 5,000 gallon tanker truck per week from a supplier with his own pumping equipment can cost 0.05 cents per gallon. If the volume increases the cost drops considerably. According to Roy Christensen of Black Mountain Spring Water some of the biggest cost of raw water is negotiating the contract. Besides owning their own sources, Black Mountain has leases and agreements with spring water property owners. ‘Entrepreneurs have developed spring sources in our area and there are now more sources available than ever before,’ said Christensen. The price per gallon in Northern California has remained consistent over the past few years because, unlike fossil fuels, spring sources are not a diminishing resource, even with increasing demand. "Road access is a primary problem along with water quality. Lower total dissolved solids (tds) is most desirable for spring bottlers but the threshold of acceptability varies from State to State. A source in the Western U.S. may have upwards of 150 parts per million (ppm) tds [total dissolved solids] and be acceptable, while in the Northeast bottlers prefer 100 or less tds. "The Perrier Group developed a pumping station at a Boys Scout Camp south of Waco, Texas for their Oasis and Ozarka brands. The cost of the pumping station was approximately $300,000 which Perrier supplied. Today Perrier pays an annual fee of $25,000 to draw the water from the source and average 10,000 gallons per day. "Bill Egan, owner of Mountainwood Springs in Blairstown, New Jersey, bought property with a large 5-6 million gallon per day spring, twelve years ago. He built a stainless steel pumping facility and developed a bulk water business selling water to bottlers like Great Bear, Cumberland Farms and General Foods. "It is very competitive,’ said Egan. ‘A lot of people think that if you get a spring you'll be an instant millionaire. They don't do their homework. There are not a lot of big users for bulk water," Egan said. He tests his water every hour and it is certified by the National Sanitation Foundation. In the summer season Egan says he fills over ten 6200 gallon tanker trucks per day, each one taking about 45 minutes to load. "The raw spring water supplier is often tempted to enter the business himself and build a bottling facility. Ultimately this may undermine the relationship with other bottlers who he supplies to, as they compete for supermarket shelf space and route sales. Being a bulk water supplier is not as capital intensive as becoming a bottler and still has a lot of appeal. As Bill Egan said, ‘The business is glamorous. Water is a topic of conversation." "What is water worth? Today water is sold from spring owners to bottlers from a few pennies to almost 10 cents a gallon." THE BOTTLED WATER WEB, © 1997 Best Cellar Communications, www.bottledwaterweb.com/indus.html.
44. L. Allen and J.L. Darby, "Quality Control of Bottled and Vended Water in California: A Review and Comparison to Tap Water," Journal of Environmental Health, vol. 56, no. 8, pp. 17-22 (April 1994).
48. See, e.g., "Bottled Water Campaign Focuses on Quality Issues," Bottled Water Reporter, p. 52 (April/May 1995); "A Flood of Good News for Bottled Water: The Beverage For Life Campaign: A (Media) Year in Review, Bottled Water Reporter, p. 73 (October/November 1994)
49. "Bottled Water: The ‘Beverage for Life’ Campaign," Bottled Water Reporter, p. 86 (February/March 1995); Sylvia Swanson, "IBWA In the Forefront," Bottled Water Reporter, p. 30 (December/January 1996).
54. As one typical example, advertising materials for Nicolet "Natural Artesian Water" cite as one rationale for purchasing Nicolet water the fact that "US EPA recently stated that as many as 42 million Americans may be consuming tapwater tainted with unacceptable lead concentrations from lead soldered joints in water mains and plumbing systems." (www.nicoletwater.com/source/source.html [8/12/1997]).
60. See, M.H. Kramer, et al. , "Surveillance for Waterborne-Disease Outbreaks--United States, 1993-1994," In: Centers for Disease Control & Prevention Surveillance Summaries, Morbidity and Mortality Weekly Report, vol. 45, no. SS-1, pp. 1-31 (April 12, 1996); B.L. Herwart, et al., "Outbreaks of Waterborne Disease in the U.S.: 1989-90," Journal of the American Water Works Association, p. 129 (April 1992); W.C. Levine, W.T. Stephenson, and G. Craun, "Waterborne Disease Outbreaks, 1986-1988," Mortality and Morbidity Weekly Report vol. 39, no. SS-1 (March 1990; NRDC, The Dirty Little Secret About Our Drinking Water (1995).
63. L. Allen & J.L. Darby, "Quality Control of Bottled and Vended Water in California: A Review and Comparison of Tap Water," Journal of Environmental Health, vol. 56, no. 8, p. 19 (April 1994), citing FDA; accord, "Bottled Water Regulation," Hearing Before the Subcommittee on Oversight and Investigation of the House Committee on Energy and Commerce, Serial No. 102-36 102nd Cong., 1st Sess., p. 3, (April 10, 1991); accord, Ibid. p. 152 (Statement of William F. Deal, CEO, International Bottled Water Association). In a recent interview with the head of the FDA bottled water program, FDA confirmed that they have no reason to believe that this percentage has changed substantially since 1991. Interview with Terry Troxel, FDA, September 18, 1997.
64. Memorandum, Dr. Karen Golden, FDA:CFSAN:OC:RCS, Regarding Discussion with Tyrone Wilson, International Bottled Water Association, Regarding Bottled Drinking Water (dated February 10, 1992)[FDA Docket 93N-0200, Reference 2].
66. See, K. Benezra, "Pepsi to Herald Aquafina as Populist Alternative to Pricey Waters," Brandweek (June 2, 1997); B. Mohl and P. Wen, "Mountain on Water's Label is Just a Mirage," The Boston Globe, p. B2; (October 19, 1997); H. Berkowitz, "Wading in Water: As Sales Soar, Bottlers Try to Distinguish Their Products," Newsday (August 31, 1997); Mark Tran, "Demi Moore Creates a Fizz; Pepsi Dives Into Growth Market in Effort to Swamp French Brands," The Guardian (London) , p. 20 (June 27, 1997); "1996 Alternative Beverages: Still Water Supply Up Sharply, Perrier, Coke, Pepsi, and Suntory Gain Share," Beverage Digest (April 25, 1997), (www.beverage-digest.com/970425.html), (printed 9/25/1997).
71. Julie Mason, "A Big Splash? Bottled City Water Soon May be Available in Stores," The Houston Chronicle p. 1 (July 10, 1997); D. Usborne, "Oil Town Finds an New Source of Wealth on Tap," The Independent p. 10 (August 7, 1997); "No Frills Water," The Christian Science Monitor p. 20 (September 3, 1997), (editorial).
Bottled Water : Pure Drink or Pure Hype?. By Erik D. Olson. April 1999. Print version, $14.00. Order print copies .
last revised 9/25/2000