purelife web

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Why theStrategies

Behind NestlsNewBottled WaterBrandMay Be Good fortheCompany but BadforPublic Water

Hangingon forPure Life


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About Food & WaterWatchFood & WaterWatchworks toensure thefood, waterand fish weconsume issafe,accessibleandsustainable.So we

can allenjoyandtrust inwhat

we eatanddrink,wehelppeopletakechargeofwheretheirfood

comesfrom,keep

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governmentto do its jobprotectingcitizens, andeducateabout theimportanceof keepingsharedresourcesunder

public control.

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ExecutiveSummary................................................................................................................................................ivIntroduction......................................................................................................................................................1

Table 1: Change in sales, 2008-200....................................................................................................

Background: Troubled Times for BottledWater.........................................................................................................2Table 2: Top 10 U.S. Bottled Water Brands in Wholesale Dollar Sales,

200..........................................

Chart 1: Estimated Wholesale Sales for the U.S. Bottled Water Market,1984-200

..................................

Chart 2: Total Advertising Expenditures, 2004-200

..............................................................................

Chart 3: 2009 Advertising Expenditures................................................................................................

A New Strategy: From Perrier to PureLife...............................................................................................................3 Chart 4: Nestl Pure Life Sales, 2004-

200

...........................................................................................

Bottling Municipal Water: Profitablefor Nestl, Not for Public WaterSystems........................................................4

Selling Bottled Water as Healthy: Goodfor Nestls Image, Not the

Taps................................................................6

Targeting New MarketsSolves Nestls SalesProblems, Not the WorldWaterCrisis...............................................8

Chart 5: Nestl Waters Sales by Region, 2007-2010

............................................................................

Chart 6/Table 3: Change in Nestl Waters Sales by Region Between 2007 and2010

............................

Conclusion: Hanging on for PureLife...............................................................................................................

....10Endnotes...........................................................................................................................................

...........11

Why the Strategies Behind Nestls New Bottled WaterBrandMay Be Good for the Company but Bad for Public Water

Hanging on forPure Lif


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Hanging on for Pure Life: Why the Strategies Behind Nestls New BoWater Brand May Be Good for the Company but Bad for Public W

ExecutiveSummaryAs manyconsumersin theUnitedStates andEurope aredroppingbottledwater, theindustry isbeginningto see ade-

cline insales.In fact,between 2007and2010,NestlWaters,thebiggestwaterbottler

in theworld,saw itstotalsales

drop 12.6 percent.

Today,Nestlappears tohavedevelopednewstrategiesto combatthischallenging

salesclimate,whichcenteraround

its Pure Lifebrand.Unfortunately,while thebrand hasbeenprofitable,these tacticsdo not bode

well for publicwater

in the United States or abroad.

TheUnitedStatesis thelargestbottled

watermarketin theworldand haslongbeen amajorsourceofNestlsbottled

water sales.ThecompanysNorthAmerican

subsidiary isthe biggestbottler in theUnitedStates.Today,the U.S.bottled

waterindustry isseeing salesfall as many

consumersandgovernmentsare choosingto drink tapwaterinstead,citing

concernsabout thecost,

energy,water useand plasticwasteassociatedwithbottledwater. TheCEO ofNestlWaters

NorthAmerica has

said that he isnotconcernedabout tapwater cuttinginto profits.Nevertheless,the companyap-

pears to be changing its tactics to keep its sales afloat.

Nestl hasshifted thefocus of itsadvertisingdollars inthe UnitedStates toits newPure Lifebrand.Between2004

and 2009,spendingon PureLifeadvertisingincreasedby morethan 3000percent;thecompanys

nearly $9.7million

expenditureon thebrand in2009 wasmore thanany otherbottledwatercompanyspent on a

leadingdomesticbrand,

and more than Nestls next five spring water brands combined.

Along withthis changeinexpenditurescame a shiftin strategy.Pure Life

differs fromNestlspreviousbrands in the

UnitedStates interms ofthe sourceof itswater, the

messagingused to sellit, and itstargetaudience.Pure Lifebottles

municipaltap waterratherthanspring

water,which canhelp thecompanyavoid thecostlyconflictsoverwateraccess

andlabelingthat haveplagued its

springwateroperationsin thepast,allowing itinstead tovie with itsmaincompeti-

tors,PepsiCoand Coca-

Cola, onprice. Thecompanyfocuses itsmessagingon thehealthbenefits ofbottledwater,

especiallycompared

to sugarysoftdrinks,whichimprovesthe imageof itsproductand helpsit appealto parentsand

teachers

who areconcernedabout theirchildrenshealth. ItalsospecificallytargetsHispanicimmigrantsin theUnited

States andemergingmarkets indevelopingnationsabroad consumerswho areaccustomedto inadequatewater

infrastructure and therefore less inclined to drink from the tap because of safety concerns.

In 2009,NestlsPure Lifebrandhelped thecompanyoutperformthe rest ofthe U.S.bottled

waterindustry.Between

2008and2009,PureLifesalesgrew 18percentwhile

everyotherleadingbrandsawsalesdrop.WhileNestlsrev-

enueswentdownwith therest oftheindustryin thattimeperiod,its 3.5percentoverallsalesdeclinewas lessthan

that of theoverallindustry,whichwentdown 5percent.

The PureLife brandalsoplayed arole inincreasingthe total

sales ofNestlsglobalwaterdivision.AlthoughNestlWaterssalesdeclined3.4percentin Europeand 1.1percent

in theUnitedStatesandCanadabetween2009 and2010,totalsalesincreasedby 0.4percent,due tothe 24.6percent

growth in other regions.

Whilethese

strategiesappear tohavehelpedboostNestlsprofits,they havenot beensobeneficialfor

consumersor

the

environment.No matter thesource, whenthere is safetap wateravailable,bottled watercomes withunnecessary

costs to theconsumer aswell asenvironmentaldamage fromthe associatedenergy, wateruse and plasticwaste. In

addition,Nestlsnew PureLifestrategiescould beespeciallyworrisomewhen itcomes totheir

potentialimpact on

public water.


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Food & Water Watch

Nestls

shift tobottlingmunicipalwater intheUnitedStateshas ledanindustrytrend inshiftingfrom

springwater to

municipalwater.Between2005 and2009, theoverallvolume oftap waterbottled bytheindustrygrew by66

percent

while thevolume ofspringwaterincreasedby only 9percent,whichmeansthat tapwaterbottling

expandedat more

than seventimes therate of springwaterbottling.

Today, manypublic watersystems areinadequatelyfunded andfacing

potentialwatershortages;allowing acorporationto bottleand sellcommunitywater canbe a raw

deal for themunici-

pality. Bottlingmunicipalwater insteadof spring waterdoes not doaway with theenvironmentalconcerns,which is

y residents in Sacramento, for one, opposed a new Pure Life facility that would draw on their city tap wat

In addition,sellingbottledwater ashealthy,especially

to children,distractsconsumersfromanotheroption thatis

also healthy the tap.Promotingthe mindsetthat bottled

water is agood sourceof healthywaterunderminespublic

confidence intap water,which isespecially

dangeroustoday as ourdisappearingpublicdrinkingwatersources need

political support and funding.

While

Nestlsglobalwaterdivisionssales arefalling inEurope,theUnitedStatesandCanada,they aregrowingrap-

idly in theemergingmarketsthat Nestlistargetingin the restof theword. In2010,Nestlssales ofbottledwater in

theseotherregionsincreasedby 25percentover its2009 salesin theseareas. Thisisproblematicbecausespecifically

sellingbottledwater topopulationsaround theworld thatdo not haveaccess tosafedrinkingwatercapitalizeson the

worldwatercrisis.While thismay beprofitableforNestl, itdoes notprovide along-termsolutionfor thebillions of

peopleabroadwho lackaccess toadequatewater andsanitation.In fact, thecompanywill likelysell bottledwater to

the customers abroad who can afford it, not those who are in most dire need of better water supplies.

Just asconsumers inthe UnitedStates arebetter servedby properly

maintainedpublic waterinfrastructurethan bottled

water sales,the waterneeds ofpopulationsabroad

cannot beaddressedwithoutrecognizingthat accessto water is

affected bygovernance.

To addressthe worldwater crisis,the globalcommunitymust treataccess towater as abasic

human right, not a source of profits.

In the

UnitedStates, itisimportantto supportpublicdrinkingwaterratherthanbottledwater

no matterhowcleverly

the productisadvertised.

That is whyFood &WaterWatch isworking topromotefederalfunding fordrinking

water

infrastructure and water programs that will keep our public water clean and safe for future generation


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Water links us to our neighbor in away more profound and complexthan any other.

John Thorson


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Food & Water Watch

1

Pure Life is the newest of Nestl Waters North Amer

top brands. Nestl Waters North America is the U3

based subsidiary of Nestl, a multinational corporabased in Switzerland.9In 2009, the company owne4

larger portion of the U.S. market than any other compaIt was responsible for 35.4 percent of total industry s5

owned seven out of the 10 leading brands in the UnStates, including Pure Life,and brought in revenues w

$3.8 billion. (See Table 2.) Although its sales went do6

in 2009, along with the other leading companies, NeWaters North Americas 3.5 percent decline outpe7

formed the rest of the industry.

The Beverage Marketing Corporation attributes Nes

relative success to its competitive advantage and its skmarketing. These traits appear to have contributed to8

success of Pure Life, which differs from Nestls pous brands in the source of its water, the messaging

company is using to sell it, and the target audience foadvertising

Unfortunately, while the tactics that the company is uto sell Pure Life may be boosting Nestls bottom

may not bode so well for the future of public water.

Between 2008 and 2009, only one leading bottled water brand in the UnitedStatesposted an increase in sales: Nestl Pure Life. The brands 18 percent growtwas

1

huge outlier in a year where every single other leading brand saw sales declinndoverall industry sales dropped 5 percent (see Table

1).

Introduction

Source: Beverage Marketing Corporation. Bottled Water in the U.S. 2010 Edition.July 2010 at 150.

Table 1: Change in sales, 2008-2009

Brands 2008/09Aquafina -10.00%

Dasani -7.90%

Poland Spring -6.40%

Nestl PureLife

18.00%Arrowhea

d-11.90%

CrystalGeyser

-10.40%

DeerPark

-5.60%

Ozarka -8.40%

IceMountain

-5.70%

Zephyrhills -10.90%

Percent drop for the 10leadingbrands

-6.20%

All Others -3.80%

Percent drop for entireindustry

-5.20%


Background: Troubled TimesforBottledWaterNestls change in tactics with its new Pure Life brandhas likely been influenced by the new challenging salesclimate for bottled water. Starting in 2008, the multi-

billion dollar industry saw sales decline for two years ina row, a trend that the Beverage Marketing Corporationattributes to a bad overall economy and a growingeco-consciousness.

This recent downturn is an anomaly for a product thatindustry analysts describe as one of the great successstories in the history of the beverage industry,9 a prod-10

uct that has transitioned from its precocious youth toenergetic adulthood and now has a firmly entrenchedposition in the U.S. marketplace.9 In the 25 years be-11

tween 1984 and 2009, total estimated wholesale dollars

increased tenfold from 1 billion to more than 10 billiondollars9 (see Chart 1), making it the second-best-selling12

beverage category, next to carbonated soft drinks.13

A large portion of the change in outlook appears tdue to a growing consumer awareness of the social

environmental concerns associated with the prodThe bottled water industry uses water, consumes eneand creates mountains of plastic waste as a result of

production and transport of its product. Researchers atPacific Institute found that in 2006, the industry used th

liters of water to produce each liter of bottled water,that in 2007, the U.S. bottled water industry consum

the energy equivalent of between 32 and 54 milliobarrels of oil.9 They also calculated that bottled w14

production can take up to 2,000 times as much eneas tap water if the plastic production, water extracbottling and transportation costs are all factored i15 In

addition, the Government Accountability Office repothat in 2006, about three-quarters of plastic water botwere not recycled.9 At this rate, millions of tons of em16

plastic bottles end up in landfills, where they may nedecompose. Meanwhile, for many cash-strapped c

sumers and governments, it makes more sense to dtap water, which costs between $0.002 and $0.003

gallon, rather than the typical bottled water brands, wcost hundreds to thousands of times that amount, w

being less environmentally friendly.17

As consumer and environmental organizations, along wthe media, have publicized these issues, many consumand governments are cutting down on bottled water,

industry sales are declining.

Table 2: Top 10 U.S. Bottled Water Brands inWholesale Dollar Sales, 2009

Brand ParentCompany

TotalSales(inmillions)

1 Aquafina PepsiCo $1,176.

2 Dasani Coca-Cola $1,156.

3 Poland SpringNestl WatersNorthAmerica

$830.4

4 Nestl PureLife

Nestl WatersNorthAmerica

$698.8

5 Arrowhead


$478.

6 CrystalGeyser

Crystal GeyserRoxane

$475.4

7 Deer

Park

Nestl WatersNorth

America

$456.8

8 OzarkaNestl WatersNorthAmerica

$319.8

9 IceMountain


$261.6

10 ZephyrhillsNestl WatersNorthAmerica

$225.8

Source: Beverage Marketing Corporation. Bottled Water in the U.S. 2010 Edition. July2010 at 150.

Source: Beverage Marketing Corporation. Bottled Water in the U.S. 2010 Ed2010 at 20.

0

$2

$4

$6

$8

$10

$12

1984

1989

1994

1999

2004

29


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Chart 1: Estimated Wholesale Sales for theBottled Water Market, in Billions of Dol1994-2009


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Food & Water Watch

As the tides are turning for bottled water, some compa-nies appear to be losing interest in the product. For ex-ample, the Beverage Marketing Corporation notes that themajor bottlers have turned off the spigot of advertisingdollars in recent years.9 The $0.004 per gallon that the18

overall industry spent on advertising in 2009 was a 31-

year low.9 PepsiCo spent 500 times less on Aquafina in19

2005 than it did in 2009, as its advertising expenditureswent down from $25.6 million to $50,500.9 Coca-Colas20

$3.1 million budget for advertising Dasani in 2009 wasa far cry from its peak, which was in 2001, at $26.4million.9 Even Nestl slashed ad spending on its ma-21

jor brands in 2008, although in 2009, it spent moreon some brands and less on others.9 In 2010, the Wall22

Street Journal reported that Danone, a multinationalcorporation in France that owns some of the worlds lead-ing brands, including Evian, was talking about selling itswater division to a Japanese company.23

But Nestl Waters North America appears to have nointention of letting up entirely. In his 2009 presentation onthe future of bottled water, Nestl CEO Kim Jeffery said thatthe company is bullish on bottled water.24 Further, theBeverage Marketing Corporation reports that Jeffery is notoutwardly concerned about the threat from tap water.25

Yet while Nestl remains publicly optimistic, the companydoes appear to be changing its strategies in response tothe consumer backlash shifts that are most evident inits new focus on Pure Life.

A New Strategy: From Perrier toPureLife

Pure Life is a new brand for the leading bottler in United States. The Swiss food and beverage giant

tapped into the U.S. bottled water market with its Pebrand in the late 1970s.9 The expensive sparkling26

ter from France appealed to some consumers as a st

symbol.27

Since then, Nestl acquired spring water brands arothe country that extracted water from some of the m

ecologically sensitive water sources in the UnitedStates,9 which the companys own marketing sugge28

are also some of the most pristine. Today, six out oseven leading brands are regional spring water bra

Poland Spring, from Maine; Arrowhead, from CalifoArizona and Nevada; Deer Park, sold from New Yo

Florida; Ozarka, from the Southwest; Ice Mountain inMidwest; and Zephyrhills, in Florida.2

In contrast, Pure Life is available on a national sca30 Itwas actually the companys first multi-site bottled w

product, introduced in Pakistan in 1998.9 It came to 31

United States in 2002, when Nestl announced thwould change its recently acquired Aberfoyle Springs

Nestl Pure Life.32

Today, the company is focusing the bulk of its advertisenergy on Pure Life rather than its regional spring wSource: FWW calculation based on data from Beverage Marketing Corporation.

Bottled Water in the U.S. 2010 Edition. July 2010 at 270.

Source: Beverage Marketing Corporation. Bottled Water in the U.S. 2010 Ed2010 at 270.

art 1: Estimated Wholesale Sales for the U.S.tled Water Market, in Billions of Dollars,

94-2009

Chart 2: Total Advertising Expenditures, inMillions of Dollars, 2004-2009

Chart 3: 2009 Advertising ExpenditureMillions of Dollars

NestlPure

Life

Arrowhead

PolandSpring

DeerPark

Ozarka0

$5

$10

$15

$20

$25

$21.2

$9.7

$2.3 $2.1$2.4

$0.8 $0.7

$18.5

$10.4$11.2

$6.5

Nestl

PureLife

Arrowhea

d

Polan

dSpring

Deer

Park

Ozarka Zephyrhil0

$2

$4

$6

$8

$10


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brands. The company increased expenditures on adver-tising for Pure Life by 3,000 percent between 2004 and2009, from $309,200 to nearly $9.7 million.9 In that time33

period, it spent more than twice as much on advertisingfor Pure Life than its leading spring water brand, PolandSpring.9 (See Chart 2.) In fact, in 2009, Nestl spent far34

more money advertising Pure Life than any company spenton any other leading bottled water brand.9 The amount it35

spent on Pure Life was four times as much as it spent onArrowhead its next-highest brand in advertising dollarsspent and more than it spent on the next five of its lead-ing spring water brands combined.9(See Chart 3.)36

This shift in expenditures appears to have paid off, as PureLife has seen exceptional growth. Since 2004, Nestl PureLife sales have increased 320 percent, from 166.4 millionto 698.8 million in wholesale dollar sales.9(See Chart 4.)37

But it wasnt just the amount of money the company spent

advertising the product that changed. With Pure Life,Nestl also changed the source of its water, the messagingthe company is using to sell it, and the target audience forits advertising.

These shifts are strategic because they allow the companyto avoid some of the factors that have made selling bottledwater more difficult in recent years. Unfortunately, thesenew strategies do not address consumer concerns aboutthe environmental impacts of the product and, in fact,present new problems for public water.

Bottling Municipal Water: ProfitabforNestl, Not for Public Water

SystemsAlthough Pure Life began as a spring water brand wit first came to the United States, the company bega

shift to bottling municipal water in 2005.9 Today, Nest38

shift in source water has played a large role in the windustry trend towards bottling municipal water. Betw

2005 and 2009, the overall volume of tap water botby the industry grew by 66 percent while the volumspring water increased by only 9 percent, which me

that tap water bottling expanded at more than seven timthe rate of spring water bottling.9 In the past five ye39

municipal waters share of the market has increased percentfrom one third to nearly half of the total vol

sold.9 The Beverage Marketing Corporation attrib40

much of this trend to the shift in source of Pure Li41

According to the Beverage Marketing Corporation, ventional wisdom in the bottled water industry is that

majority (but by no means all) of bottled water consumdo not recognize the distinction between spring water

drinking water packaged after it has been processemunicipal systems.9 If changing the source water d42

not significantly affect sales, bottling municipal waterstrategic move for the company because it can help Ne

avoid the costly conflicts with communities that hplagued its spring water operations in the past.

Spring water bottling sucks up large quantities of wfrom local sources, often near environmentally sensit

Source: Beverage Marketing Corporation. Bottled Water in the U.S. 2010July 2010 at 223.

Members of the Portland State University Environmental Club encourage other studentsto drink tap water instead of bottled water. Photo courtesy Lisa Meersman.

Chart 4: Nestl Pure Life Sales, in MillionDollars, 2004-2009

$166.4

$248.8

$355.7

$545.1

$592.1

$698

2004 2005 2006 2007 2008 2009

$100

$200

$300

$400

$500

$600

$700

$800


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Food & Water Watch

sources of water.9 This can deplete surrounding water-43

ways if water from the ground is pulled out faster than itis naturally replenished.9 Often, residents near proposed44

plants oppose spring water operations because of concernsabout the long-term safety of their water supply, as well asissues such as noise and wear on local infrastructure.9 The45

Beverage Marketing Corporation notes that residents alsoexpress concerns that the company takes too much of afinite resource (water) without paying adequate compen-sation.9 Nestl has attracted negative press or paid for46

expensive lawsuits because of such conflicts in Michigan,Massachusetts, Colorado, Texas, Maine, Florida, Californiaand Oregon.47

Today, the company is finding it more difficult to find newsources of spring water because local groups are increas-ingly organized and vocal in their opposition to newplants. Despite the vast financial resources that Nestl has

at its disposal, it abandoned its attempt to bottle waterfrom McCloud, California, after loud citizen outcry, andis facing strong resistance to its planned plant in CascadeLocks, Oregon.48

If most consumers do not care where their water comesfrom, bottling spring water may not be worth the bad pub-licity. Already, the top two leading brands in the country,PepsiCos Aquafina and Coca-Colas Dasani, draw from mu-nicipal sources.9 Although the brands have received nega-49

tive press for bottling tap water, many consumers do notappear to be bothered by it. Even with their respective 10percent and 8 percent drops in sales in 2009, both brands

still brought in more than a billion dollars in sales each.50

In fact, the Beverage Marketing Corporation notes thatmost customers appear to have very little brand loyalty,and instead are more concerned about the price.9 It says51

that the bottled water market is increasingly price-sensi-tive and that price wars in the bottled water sector havebeen prevalent in the last decade and a half.52

This is where Nestl has an advantage as a low-costproducer it has a large parent company, so it cantake risks other companies cant, and it produces its own

bottles, which keeps costs down.9 A large portion of the

53

success of Pure Life appears to be due to its low price.The new brand is cheaper than its leading rivals, whichhelped the company make deals with large suppliers suchas Burger King and Walmart that had previously gone toAquafina or Dasani.54

While bottling municipal water appears to have been agood move for the company, its not such a great deal forthe public. While the Beverage Marketing Corporationputs a positive spin on the product by describing

municipal water bottlers as intermediaries betwmunicipal water systems and consumers,9 this igno55

the fact that pipes can also serve as intermediaries bring the water straight to households at a lower cos

the consumer.

Unfortunately, many municipal water systems in tUnited States today are woefully underfunded, in nof maintenance and repair, and facing water shorta

When bottlers take water out of a municipal system, tare profiting from a community resource that is fun

by taxpayer dollars. They may even pay less for the wthan other users. For example, in January 2011, whencity of Pasadena, Texas, agreed to allow Nestls new Life bottling plant in its city limits, it offered the compa 50 percent discount on the citys water and still it was giving the company a tougher deal than most

nicipalities would have offered.56

A perfect example of Nestls shift in strategy occurecently in northern California. The company had plan

to bottle spring water from the rural town of McClbut faced six years of resistance from residents conce

about the effects a bottling plant would have on their lecosystems and quality of life.9 Instead of pursuing57

McCloud facility, Nestl announced in 2009 that it wouse an existing facility to bottle municipal water in

more populous state capital of Sacramento instead.9 58

plant planned to use 30 million gallons of the cityswater in 2010, along with additional water from priv

springs, to bottle water under the Pure Life and Arrowhbrands.9 When the CEO of Nestl Waters North Ame59

wrote to the residents of McCloud announcing that

art 4: Nestl Pure Life Sales, in Millions oflars, 2004-2009

The Beverage MarketingCorporation describesmunicipal water bottlers asintermediaries betweenwater systems and consumersbut pipes also serve as

intermediaries that bring thwater straight to households aa lower cost to the consumer.


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company was withdrawing its plans to build a plant there,he said that Sacramento plant production will replacethe production we expected in McCloud.9 Seeing this, a60

group of concerned local residents formed the group SaveOur Water Sacramento to oppose the plant and seek astop to bottling plants in the city.9 As a leader of Save Our61

Water Sacramento stated regarding the switch from bot-tling water in McCloud to bottling it in Sacramento, Itsnot like those environmental issues disappear.62

Selling Bottled Water as Healthy:Goodfor Nestls Image, Not theTapsAlong with the change in source water, Nestl haschanged its messaging approach from promoting thepure source of the water to the health benefits. Thismove is strategic for the company because it can helpavoid criticism over the accuracy of its labeling, broaden

the appeal of the product, and create a new, more posi-tive overall image for Nestls bottled water by associatingitself with healthy kids and the anti-obesity movement.Unfortunately, promoting bottled water in this way under-mines consumer support for a healthy source of drinkingwater that is also more cost-effective and environmentallyfriendly: the tap.

In the past, Nestls major brands focused their adving on the quality of the water that comes from a spe

location. Poland Spring, its label depicting a river ing between rows of pine trees, says that it Just may

the best tasting water on earth; Arrowhead is mounspring water; Deer Park uses the line, Thats good

ter! Ozarka, from the Southwest, says it is Straight fnature to you! Ice Mountain claims to be Pure asDriven Snow! And Zephyrhills, in Florida, bills itsePure water from a pure place.63 Most recently, the co

pany launched a Born Better campaign, to helpsumers learn about what makes Nestl Waters regi

spring brands so unique.64

In contrast, Pure Lifes messaging focuses on whatdo with the product rather than where it came from

slogan is Satisfying your thirst for life.9 Instead of m65

tains and rivers, its label depicts people holding th

hands in the air.9 And, rather than advertising the are

66

comes from, its web page says that it is an essential paa healthy lifestyle.67

Since water is clearly healthy, this new message islikely to be disputed as inaccurate unlike some ofcompanys previous messages, which have come unfire as its spring water operations have attracted pu

scrutiny. For example, Nestls Poland Spring brand hit with several class-action lawsuits around the cou

accusing the brand of false advertising because ofalleged disconnect between the labeling and the way

actual bottling operations work.9 The company ad68

ted no wrongdoing, but in one suit, the judge approvesettlement in which Nestl would give plaintiffs $8 mi

in coupons and donate $2.75 million to charities.6

While Nestl did not lose the case in court, many sumers have become skeptical of its claims. Moreoveit is becoming more difficult to find new sources of sp

water, it may be more difficult to defend spring watbels. Already, as the company continues its quest to bo

more water, many of its operations are moving faraway from the original sources described on their la

Poland Spring is no longer getting its water just from

original site; it now has three plants in Maine, after ing one in Hollis and one in Kingfield.9 It draws fro70

additional sources around the state, including FryebPoland, Dallas Plantation, Pierce Pond Township and

Albans.9 Similarly, the Deer Park brand has moved a71

from its origins. The company said in 2001 that it closing down its Deer Park plant in Deer Park, Maryla

and going instead to Allentown, Pennsylvania; it adraws water from Florida.9 Selling bottled municipa72

ter without emphasizing where it came from can help th


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Food & Water Watch

company avoid criticism down the road that these sourcesare not true to their labels.

Changing the message to focus on health rather than loca-tion also enables the company to reach a broader audi-ence with a single product. Since the messaging does notspecify a particular location, it can appeal to a national,rather than a regional audience. The company appears tobe employing this new strategy with its new spring waterbrand, Re-source, as well, which says that it is spring wa-ter but does not advertise the specific location the springwater comes from.73

In addition, switching its message may help Nestl im-prove its overall corporate image. In the past, the com-pany has attempted to paint itself as more environmentally

friendly by making lighter packaging, supporting recyclingprograms and making donations to water-related chari-ties.9 These types of messages have been criticized as74

greenwashing or bluewashing when it comes towater making environmentally friendly claims that con-tradict or distract from the true impacts of a product.75

By switching to a health message, the company maydistract consumers from these critiques and associate itselfinstead with a much less objectionable subject healthy

kids. Today, as many parents and teachers are worabout obesity affecting children, they are looking f

ternatives to soda and other sugary beverages. Accor

to Beverage World, an industry publication, many of PLifes television commercials are designed to convince

sumers that drinking water is better than drinking s76

Pure Life is capitalizing on this trend by bringing its hemessage specifically to schools. Its Go Play! progr

gave children the opportunity to redeem Pure Life lato earn points for their schools that could be redeeas funds for recreational programming.9 The Beve77

Marketing Corporation reports that in 2009 the compsaid Pure Life is now present in a quarter of Amerschool cafeterias.78

Unfortunately, while these changes in messaging mayprove Nestls image, they promote a consumer min

that is damaging to the future of public water. By adveing bottled water as healthy, the company is encou

ing consumers to overlook the tap, even though it is healthy. For example, one study conducted in Germ

found that encouraging children to drink from schwater fountains prevented obesity.9 In addition, re79

ing any mention of the source of the water means thatpackaging does not even give the consumer a reminder


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that water is a finite natural resource that should be usedresponsibly. These sorts of messages are especially wor-risome when they are targeted towards children, some ofthe most impressionable consumers.

As bottled water has become more mainstream, consum-ers are becoming more accustomed to buying water in

plastic packaging rather than drinking it from a tap or afountain. The increased availability of bottled water anddwindling or run-down sources of public drinking wateronly reinforce this shift in mindset. For example, a stadiumat the University of Central Florida was built without waterfountains during a brief time when the Florida buildingcode allowed the sale of bottled water to substitute forfountains. The bottled water ran out during the stadiumsopening in 2007, resulting in dehydrated and sick fans.80

Similarly, bottled water is now one of the most commonlysold products in schools, while many school drinkingfountains around the country are falling into disrepair.81

Increasingly, bottled water is becoming available wherepublic water is not. Many of these decisions are madebecause selling bottled water generates a profit, whileproviding public water does not, even though it is an ex-tremely valuable service. If consumers are influenced byNestls advertising to believe that bottled water is a goodsource of healthy water, they are likely to become less in-clined to advocate for changes in policy and funding thatare necessary to keep public water safe and affordable.

Targeting New Markets SolvesNestlsSales Problems, Not the WorldWaterCrisis

Nestl is also shifting the target of its marketing fromtraditional customer base in the United States and Eur

to Hispanic immigrants in the United States and eming markets in the rest of the world. This is a strat

move because it targets populations that have not hadcess to safe tap water but it wont solve the world w

problems that make the product seem like a good opin the first place.

In the past, most of the companys bottled water revenhave come from markets in Europe and North Ame

that are now less receptive to the product.9 In the Un82

States, Nestles first bottled water product, Perrier, gapopularity as a status symbol among many urban mid

class consumers who were willing to pay the higher cNow, bottled water is ubiquitous, and many Amer

consumers see tap water as a better alternative. Simtrends have occurred in Europe.

But not everyone in the world has the option to drink tap water. According to the World Health Organiza

1.1 billion people worldwide lack access to an improdrinking water source and 2.6 billion lack sanitat

facilities.9 The United Nations says that urgent actio83

needed if we are to avoid a global water crisis.9 As84

food and drink consulting company put it, In the wern world, we take tap water availability and qualit

granted. In other markets, bottled water is much more vital lifeline.85

Nestl is specifically targeting these emerging markwith its bottled water. Today, the water division of

global corporation has plants in 37 countries, wantenter 5 more and is aiming to expand its proportio

sales from emerging markets to a third of revenue withdecade.9 It has its eyes set on China, Brazil, the Mi86

East and Pakistan, and hopes to further accelerategrowth of its Pure Life brand in emerging market87

Today, Pure Life specifically is sold in Algeria, Argen

Brazil, China, Egypt, Indonesia, Iran, Jordan, LebanMexico, Nigeria, Pakistan, Russia, Saudi Arabia, SoAfrica, Thailand, Turkey, the United Arab Emirates

Uzbekistan, as well as Canada, the United Kingdom the United States.88

Targeting new markets appears to be bringing the pany some level of success. Although Nestl Waters

total sales decline 12.6 percent between 2007 and 20the company began to see positive overall growth due


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Food & Water Watch

sales growth in emerging markets in 2010.9 For example,89

in 2008, while Nestls global water division saw negativegrowth overall, its emerging markets businesses grew morethan 20 percent.9 One Swiss publication dubbed Pure Life0

The Perrier for the Poor.9 It is now the best-selling water1

brand in the world.9 These Pure Life sales were probably2

a major reason why, by the end of 2010, Nestl Waters2010 Annual Report indicated that, while the companyssales in Europe, the United States and Canada had de-clined again, the companys sales in other regions grewdramatically.9 (See Chart 5.) Nestls sales in these other3

regions were 25 percent larger in 2010 than they werein 2009.9 This growth offset the declines in Europe, the4

United States and Canada enough that Nestle Waters saw aslight (0.4 percent) increase in overall sales.5

Even in the United States, Nestl is now targeting popula-tions that are more likely to see bottled water as a goodalternative to the tap because they come from countrieswhere tap water is often not safe to drink. In 2008, theadvertising magazine Brandweek reported that Pure Lifestarget audience is recent U.S. Hispanic immigrants,moms in particular, who are un-acculturated to Americanproducts, yet have an affinity for the Nestl name.9 The6

company teamed up with Cristina Saralegui, a celebritywho has been referred to as the Spanish Oprah7 fora series of television commercials. Overall, it spent $19million on Hispanic network television and cable ads in2006, which went up to $30 million in 2007. The compa-ny has also opened an entire store in New York City to ap-peal to this audience, which it calls Pure Life Mercado del

Agua (water store).9 Ironically, the Pure Life Mercado del8Agua is located in the Bronx, one of the lowest-incomeareas of New York City a city whose tap water has beentouted as some of the best in the world.9 This means thatthe store is specifically selling to a population that may beleast likely to afford bottled water, even though there is amuch cheaper water option available.

Unfortunately, while selling bottled water abroad may bea good way to find new customers for Nestl, it is not go-ing to solve the world water crisis. Nestls global head-quarters is targeting the billion customers that it estimates

will be able to increase their incomes enough to affordNestl products.9 It seems unlikely that the company100

will sell bottled water at a reduced price to the peoplewho cannot afford to buy it. Unfortunately, the worldscitizens who most need water are the ones least likely toafford bottled water.

Just as consumers in the United States are best servedby functioning tap water, populations around the worldneed safe public water. The Second United Nations Water

Source: Nestl Annual Report. 2010 at 39 and Nestl. Annual Report. 200929.

Nestls Mercado del Agua, or Water Market, in the Bronx, specifically advertPure Life brand. Photos by Food & Water Watch.

Chart 5: Nestl Waters Sales by RegioBillions of Swiss Francs, 2007-2010

2012007 2008 2009

0

5.12

4.55

0.74

4.56

4.26

0.77

4.44

3.77

0.85

4.39

3.64

1.06

UnitedStatesandCanada

Europe

Otherregions


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Development Report says that the water crisis is cre-ated by a crisis of governance who has control overit and how it is managed.9 Buying bottled water does101

not address this issue. In fact, water bottlers have finan-cial incentive not to address these challenges if water

is scarce, they can charge a premium for their product.Even in the United States, the potential deterioration ofwater infrastructure can be seen as a profit opportunity forbottled water. In his 2009 presentation about the future ofbottled water, Nestl CEO Kim Jeffrey said that the com-pany believes that tap water infrastructure in the UnitedStates will continue to decline and that people will turnto filtration and bottled water for pure water needs.102

While bottled water can be a temporary solution forobtaining clean water on an individual basis, it does notaddress the broader need to sustainably manage water

resources in the United States or abroad, and it does notprovide access to water for the billions of people aroundthe world who can least afford it. To achieve this goal, theglobal community must recognize that water should notbe treated as a source of profits, but rather as a basic hu-man right.

Conclusion: Hanging on for PureLifeA major part of Nestls success in the U.S. bottled windustry relative to its competition in 2009 was th

creased sales of its new Pure Life brand. This may be g

for the companys bottom line, but it doesnt bode welthe future of public water if American consumers cont

to buy bottled water when they could be drinking water the most cost-effective, environmentally frie

source of water there is.

No matter how clever a companys marketing campaconsumers are better served by properly maintained

water than by buying individually packaged bottles ofter. Today, as many tap water systems in the United Sta

are in need of maintenance and repair, it is importanensure that this important public resource is adequa

funded. That is why Food & Water Watch is workinrenew Americas water through increased federal fun

for drinking water programs and infrastructure.

Source: FWW Calculation based on data from Nestl. Annual Report. 2010 at 39 and Nestl. Annual Report. 2009 at 29.

Chart6/Table3:PercentageChangeinNestlWatersSalesbyRegion,Between 2007and2010

Total salesEurope UnitedStatesand Canada

Other regions-30%

-20%

-10%

0

10%

20%

30%

40%

50%

Europe -20.1%

UnitedStates andCanada

-14.2%

Otherregions

44.8%

Total

sales

-12.6%


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Food & Water Watch

Endnotes

1 Beverage Marketing Corporation. Bottled Water in the U.S.2010 Edition. July 2010 at 150.

2 Beverage Marketing Corporation. Bottled Water in the U.S.2010 Edition. July 2010 at 150, 3.

3 SeeNestl website, www.Nestl-watersna.com/menu/ourbrands.htm accessed January 29, 2011.

4 Beverage Marketing Corporation. Bottled Water in the U.S.2010 Edition. July 2010 at 152; Nestl. Annual Report. 2009 at 2.




8 Beverage Marketing Corporation. Bottled Water in the U.S.2010 Edition. July 2010 at 153.Beverage Marketing Corporation. Bottled Water in the U.S.2010 Edition. July 2010 at 7, 22.





14 Pacific Institute. Bottled Water and Energy: A Factsheet. 2007;Gleick, PH and HS Cooley. Energy implications of bottled wa-ter.Environmental Research Letters, 4, 014009. 2009 at 6.

15 Gleick, PH and HS Cooley. Energy implications of bottled wa-ter.Environmental Research Letters, 4, 014009. 2009 at 6.

16 U.S. Government Accountability Office. Bottled Water: FDASafety and Consumer Protections are Often Less Stringent thanComparable EPA Protections for Tap Water. June 2009 at 23.

17 Office of Water. U.S. Environmental Protection Agency. Wateron Tap: what you need to know. (EPA 816-K-03-007). October2003; NUS Consulting Group. 2007-2008 International WaterReport & Cost Survey. July 2008; Food & Water Watch pur-

chased five single-serve bottles of water in August/September2009 from a Washington, D.C. 7-Eleven, CVS Pharmacy, Giant,Safeway and Whole Foods Market. The cost, excluding sales tax,totaled $5.77 for 97.4 ounces, which works out to $7.58 pergallon.






23 Vidalon, Dominique and Soyoung Kim. Danone in talks to

sell bottled water unit: report.Reuters. November 9, 2010.Cimilluca, Dana and Anupreeta Das. Can Danone slakeJapanese thirst?The Wall Street Journal.November 10, 2010.

24 Jeffery, Kim. [Powerpoint] The Future of Bottled Water.September 18, 2009 at 15.


26 Moskin, Julia. Must be something in the water.The New YorkTimes. February 15, 2006.

27 Davies, Jennifer. Business in a bottle.San Diego Union Tribune.January 16, 2005.

28 Hyndman, David. Associate Professor, Michigan State University.Testimony on Assessing the Environmental Risks of the Water

Bottling Industrys Extraction of Groundwater. Subcomon Domestic Policy. Committee on Oversight and GoverReform. December 12, 2007 at 3.

29 Beverage Marketing Corporation. Bottled Water in the2010 Edition. July 2010 at 150;SeeNestl website, www.Nes

watersna.com/menu/ourbrands.htm accessed January 29,30 Nestl website. Nestl Pure Life. Available at www.Nest

watersna.com/Menu/OurBrands/NPL.htm. Accessed Janua

2011.31 Beverage Marketing Corporation. Bottled Water in the2010 Edition. July 2010 at 165; Nestl Waters. [BrochurNestl Waters 2010: 2009 facts and figures. 2010.

32 Beverage Marketing Corporation. Bottled Water in the2010 Edition. July 2010 at 165.


34 FWW calculation based on data from Beverage MarketinCorporation. Bottled Water in the U.S. 2010 Edition. July

at 262.35 Beverage Marketing Corporation. Bottled Water in the

2010 Edition. July 2010 at 262.36 FWW calculation based on data from Beverage Marketin

Corporation. Bottled Water in the U.S. 2010 Edition. Julyat 262.

37 FWW calculation based on data from Beverage MarketinCorporation. Bottled Water in the U.S. 2010 Edition. Julyat 223.


39 FWW analysis of Beverage Marketing Corporation. BotWater in the U.S. 2010 Edition. July 2010 at 255.

40 Beverage Marketing Corporation. Bottled Water in the2010 Edition. July 2010 at 254, 255.



43 Hyndman, David. Associate Professor, Michigan State UnivTestimony on Assessing the Environmental Risks of theBottling Industrys Extraction of Groundwater. Subcom

on Domestic Policy. Committee on Oversight and GoverReform. December 12, 2007.44 Alley, William et al. U.S. Department of the Interior. U.S

Geological Survey. Sustainability of Ground-Water Reso(Circular 1186). 1999 at 22, 30-35.

45 SeeFood & Water Watch. All Bottled Up: Nestls PursuCommunity Water. January 2009.


47 SeeFood & Water Watch. All Bottled Up: Nestls PursuCommunity Water. January 2009.


49 Geller, Martinne. Aquafina labels to spell out source tter.Reuters. July 26, 2007.

50 Beverage Marketing Corporation. Bottled Water in the

2010 Edition. July 2010 at 150.51 Beverage Marketing Corporation. Bottled Water in the2010 Edition. July 2010 at 12.



54 Beverage Marketing Corporation. Bottled Water in the2010 Edition. July 2010 at 166, 13.


56 Dawson, Jennifer. Nestl bottles up location for $13M Paplant.Houston Business Journal. January 7, 2011.


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57 McCloud Watershed Council. Nestl Project in McCloud.[website] Available at http://www.mccloudwatershedcouncil.org/nestle-project. Accessed March 12, 2011; ECONorthwest.The Potential Economic Impacts of the Proposed Water BottlingFacility in McCloud. Prepared for McCloud Watershed Council,October 2007.

58 Hurt, Suzanne. Discussion grows over Nestl water bottlingplant.Sacramento Press. October 25, 2009.

59 Hurt, Suzanne. Discussion grows over Nestl water bottlingplant.Sacramento Press. October 25, 2009; Johnson, Kelly.Nestl Waters to set up plant in Sacramento warehouse. July24, 2009.

60 Nestl Waters North America. [Press Release] Nestl WatersNorth America Withdraws McCloud Project Proposal.September 10, 2009.



63 SeeNestl website, www.Nestl-watersna.com/menu/ourbrands.htm accessed January 29, 2011.

64 Nestl Waters North America. [Press Release] Nestl WatersNorth America Launches Born Better Campaign to HelpConsumers Learn About What Makes Nestl Waters Regional

Spring Water Brands So Unique. November 10, 2009.65 Nestl website. Nestl Pure Life. Available at www.Nestl-watersna.com/Menu/OurBrands/NPL.htm. Accessed January 29,2011.

66 Nestl website. Nestl Pure Life. Available at www.Nestl-watersna.com/Menu/OurBrands/NPL.htm. Accessed January 29,2011.

67 Nestl website. Nestl Pure Life; Nestl Pure Life Sources.Available at www.Nestl-watersna.com/Menu/OurBrands/NPL.htm. Accessed January 29, 2011.




71 Beverage Marketing Corporation. Bottled Water in the U.S.2010 Edition. July 2010 at 158.72 Beverage Marketing Corporation. Bottled Water in the U.S.

2010 Edition. July 2010 at 163.73 Beverage Marketing Corporation. Bottled Water in the U.S.

2010 Edition. July 2010 at 170.74 Food & Water Watch. Bluewashing: Why The Bottled Water

Industrys Ecofriendly Claims Dont Hold Water. March 22,2010.

75 Food & Water Watch. Bluewashing: Why The Bottled WaterIndustrys Ecofriendly Claims Dont Hold Water. March 22,2010.

76 As Water Sales Dry Up, Nestl Pans Soda.Beverage World.November 13, 2008.

77 Nestl Waters North America. Nestl Pure Life Go Play! FactSheet. 2007.

78 Beverage Marketing Corporation. Bottled Water in the U.S.2010 Edition. July 2010 at 166.79 Muckelbauer, Rebecca et al. Promotion and Provision

of Drinking Water in Schools for Overweight Prevention:Randomized, Controlled Cluster Trial.Pediatrics. Vol. 123. iss. 4.2009.

80 SeeFood & Water Watch. How Your Organization Can PromoteTap Water. May 2010 at 2; UCF Says No Water FountainsFor You. Wesh TV/DT, Orlando, Florida, September 14, 2007.Accessed on July 17, 2009; UCF To Install Water FountainsIn New Stadium. Wesh TV/DT. Orlando, Florida, September 18,2007. Accessed on July 27, 200

81 SeeFood & Water Watch. Teaching the Tap: Why AmerSchools Need Funding for Water. Burke, Garance. Schdrinking water contains toxins. Associated Press. Septe

25, 2009. Accessed April 29, 2010. Centers for Disease Cand Prevention. Competitive Foods and Beverages AvailPurchase in Secondary Schools ---Selected Sites, United 2006.Morbidity and Mortality Weekly Report.Vol. 57 iss. 34.August 29, 2008.

82 Nestl. [Press release]. Excellent first half for Nestl in8.9% organic growth, 3.5% real internal growth EBIT ma

constant currencies +60 basis points, +30 basis points repoAugust 7, 2008.

83 World Health Organization and UNICEF. Joint MonitoringProgramme for Water Supply and Sanitation. Water foMaking it Happen. 2005.

84 United Nations World Water Assessment Programme. Wa Changing World. 39 UN World Water Development Rrd

2009 at vii.85 Thomasson, Emma. Slowdown weighs on bottled wateThe

Calgary Herald.November 3, 2008.86 Mulier, Tom. Nestl Waters Optimistic Sales Will Rebo

Emerging Markets Growth.Bloomberg. June 21, 2010.87 Mulier, Tom. Nestl Waters Optimistic Sales Will Rebo

on Emerging Markets Growth.Bloomberg. June 21, 2010.

Thomasson, Emma. Slowdown weighs on bottled wateTheCalgary Herald.November 3, 2008.

88 Nestle Waters. [website] Brands by countries. Available awww.nestle-waters.com/brands/all-countries.html. AccesMarch 15, 2010.

89 FWW calculation based on data from Nestl. Annual Re2009 at 29; Nestl. Annual Report. 2010 at 39.

0 Nestl. [Press release]. Excellent first half for Nestl in8.9% organic growth, 3.5% real internal growth EBIT ma

constant currencies +60 basis points, +30 basis points repoAugust 7, 2008.

1 Thomasson, Emma. Slowdown weighs on bottled wateTheCalgary Herald.November 3, 2008.

2 Nestl Waters. [Brochure]. Nestl Waters 2010: 2009 facfigures. 2010.

3 Nestl. Annual Report. 2010 at 39.

4 FWW Calculation based on data from Nestl. Annual Re2010 at 39 and Nestl. Annual Report. 2009 at 29.5 Nestl. Annual Report. 2010 at 39.6 De Lafuente, Della. Nestl pitches Pure Life to U.S. Hisp

Brandweek. August 6, 2008.7 Fernandez, Maria. Fairwell for El Show de Cristina.Los Angel

Times. November 1, 2010.8 Beverage Marketing Corporation. Bottled Water in the

2010 Edition. July 2010 at 166, 167; Lafuente, Della. Npitches Pure Life to U.S. Hispanics.Brandweek. August 6, 200New York City Department of City Planning Population DSocioeconomic Profile Social Characteristics New Yor

1990 and 2000 Census. Data from U.S. Census Bureau, New York City Department of Environmental Protection.

York City 2009 Drinking Water Supply and Quality Report.at 3.

100 9 Nestl to make a splash.The Financial Times. July 1, 2010.101 9 United Nations Educational Scientific and Cultural Organand Bergham Books. Water: A Shared Responsibility. United Nations World Water Development Report 2. 200

102 9 Jeffery, Kim. [Powerpoint] The Future of Bottled WaterSeptember 18, 2009.


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