Bottled Water Market Expected to Decline Over Coming Year

The bottled water industry is facing difficult times; the easy, double-digit growth of prior years has disappeared (only 2% growth last year, and a decline is predicted for this year), and the backlash against bottling something that comes out of your faucet is growing:

Just a few years ago, beverage giants bet on a big future for bottled water. With U.S. sales growing near double-digit rates, bottled water was a hip and healthy alternative to soda.

But the downturn and an environmental backlash against plastic bottles caused growth in the $12 billion business to slow to 2% last year, with data provider Euromonitor predicting a decline this year. “The prime issues are the economy and the environment,” says Gary Hemphill, senior vice-president at New York industry consultancy Beverage Marketing Corp.

Now, dominant players such as Coca-Cola (KO), PepsiCo (PEP), and Nestlé (NSRGY) are trying to reverse the decline. They’re introducing new flavors, promoting lower-cost brands, and trying to go greener in an effort to stem the growing appeal of tap water. But it may prove to be an uphill battle, especially in developed markets where consumers increasingly fret about the energy costs and pollution generated by bottled water.

Once again, Neslte Waters CEO Kim Jeffries can’t resist the urge to do what Nestle formerly said they didn’t do – denigrate the quality of the water flowing from your tap:

But Kim Jeffery, chief executive of Nestlé Waters North America, balks at comparisons to tap, noting that Pure Life is filtered of chemicals and has added minerals. “Tap water is very different,” he insists.

Yes, tap water is very different. It doesn’t come in plastic bottles (which are rarely recycled), and it costs less than gasoline. Whoa, dude.

Read the whole article at Businessweek: Coke and Pepsi Try Reinventing Water – BusinessWeek.