An article appearing in today's Times Online highlights how future growth for the bottled water industry lies in Asia. The article echoes what we at the Polaris Institute have been saying over the past few months that led by Coke, Pepsi, Danone and Nestlé, the industry will increase its exploitation of the desperate lack of potable publicly delivered Water in the Global South.
Asia is definitely a major growth area for the industry, but we would add that Latin America, in particular Mexico and Brazil, are also major targets for bottled water companies.
Asian middle classes’ thirst for bottled water will pull trigger on an Eastern blue gold rush
Leo Lewis, The Times, December 17, 2009 - The relentless rise of Asia’s middle classes is poised to create an explosion in the global market for bottled water that will see the world consuming more than 280 billion litres annually by 2012.
According to sustainability analysts, bottled water will establish a permanent presence on dining tables in emerging markets despite abrupt reversals in the US and Western Europe, where recessionary thriftiness and environmental concerns have begun to bite.
The expected growth surge, which will be driven in large part by China, India and the Middle East, is expected to trigger what some are already dubbing a blue gold rush as investment money chases different ways to play the bullish consumption forecasts and back whichever brand appears likely to become the “Perrier of the East”.
The recently published Global Bottled Water report by the consultancy Zenith International said that worldwide bottled water growth in 2008 had been 4.5 per cent and predicted another 18 per cent rise over the next three years. However, others judge these figures too conservative and believe growth rates will be more like 25 per cent over the same period.
Behind the more bullish forecasts are three features of the Chinese market that suggest its growing thirst for bottled water may be even more vigorous than the one that gripped the US and Europe from the late 1990s. The first is a recent United Nations survey of tap water in 11 Chinese provinces that found more than half of all water samples contained unacceptably high levels of bacteria.
Increasing water shortages are also expected to play a big role as households stock themselves with bottled water to overcome seasonal droughts.
The biggest driver, though, is expected to be wealth. A recent report by McKinsey explored the probable economic impact of a huge Chinese middle class demanding better living standards. Bottled water was a symbol of middle class luxury in the US and Europe, and China’s middle class is expected to comprise at least 350 million people by 2011.
Brokers said there were few “pure” ways for investors to play the bottled water story in emerging markets: Danone, Nestlé, Coca-Cola and Pepsico all have significant water businesses in developing countries but are too diverse to track accurately bottled water growth.
Some believe that the bottled water story most strongly favours Thailand’s Indorama Polymer — the company poised to become the world’s secondbiggest producer of plastic bottles.
Senior investment bankers in Asia said they were also gearing-up for several years’ worth of potential deal-making as mergers reshape the landscape and the “new Nestlés and Coca-Colas” emerge from Asia as dominant players. Consolidation is expected to be a theme in India particularly, where the market is expected to grow by 100 per cent over the next five years and there are currently more than 2,000 bottled water producers.
Analysts described as “striking” the suddenness with which consumers in Europe and the US were turning back to tap water. Simon Powell, head of sustainability research for CLSA, the brokerage, said that awareness campaigns about the carbon footprint of plastic bottles and internationally transported water have successfully been waged against bottled water in the West. The result, he said, was that “at the extreme end, you have got people sloganeering that drinking bottled water is the moral equivalent of smoking or driving a Hummer”.
Mr Powell said: “It is so striking how the EU and US consumer have abandoned bottled water. Two years ago, if you asked for tap water in a restaurant, you’d practically be shown the door. Now, it’s the done thing. As bottled water emerges as a growth area in the developing world, investors are constantly going to find themselves underestimating the fashions involved.”
Thursday, December 17, 2009
Friday, December 11, 2009
Aquablue Exposed!
Back in June, the Polaris Institute released a report about the plans of a little known bottled water company to start bottling water at an old Hershey chocolate factory in the town of Smiths Falls, Ontario. The report posed some serious questions about the company and the bottled water industry.
Given that Smiths Falls has recently suffered huge job losses due to the closure of the Hershey's plant and other facilities, one of the main concerns raised in the report was that by embracing a bottled water plant the town would be relying on a diminishing industry with limited ability to create jobs. Further research conducted over the past few months showed that the company had a limited track record in operating a business, highlighted the questionable business dealings of the company's CEO and president, and revealed that the plant had not actually been purchased by Aquablue. Based on this information, our fears that the people of Smiths Falls were being taken for a ride seemed to be coming true.
This brings us to last Friday, December 7th, when the Canadian Broadcasting Corporation (CBC) aired a story about Aquablue that confirmed many of our concerns about whether or not this business would ever actually open. Since December 7th the CBC has produced 4 radio pieces, posted 4 news stories and aired two television reports that speak about many of our concerns with Aquablue.
Here are some highlights of what the CBC has uncovered:
To listen to the December 10th radio expose click here
Given that Smiths Falls has recently suffered huge job losses due to the closure of the Hershey's plant and other facilities, one of the main concerns raised in the report was that by embracing a bottled water plant the town would be relying on a diminishing industry with limited ability to create jobs. Further research conducted over the past few months showed that the company had a limited track record in operating a business, highlighted the questionable business dealings of the company's CEO and president, and revealed that the plant had not actually been purchased by Aquablue. Based on this information, our fears that the people of Smiths Falls were being taken for a ride seemed to be coming true.
This brings us to last Friday, December 7th, when the Canadian Broadcasting Corporation (CBC) aired a story about Aquablue that confirmed many of our concerns about whether or not this business would ever actually open. Since December 7th the CBC has produced 4 radio pieces, posted 4 news stories and aired two television reports that speak about many of our concerns with Aquablue.
Here are some highlights of what the CBC has uncovered:
- "When Aquablue International...announced in June that it would take over the closed Hershey chocolate factory and create a business that would employ 200 people, it was like a light at the end of a long tunnel for the residents of Smiths Falls."
- "'We're actively looking to secure all our financing, especially on the equipment side, placing an order for the equipment,' Villeneuve said.When asked whether he had all the financing, he said: 'No, not completely, not totally, yes.'"
- "One local man — who didn't want to give his name — said no one he knows believed it would actually happen. 'They think it's just a phoney setup,' he said. 'They make a lot of promises, but nothing's coming out.'"
- "several local companies have already worked removing old production lines and retrofitting the building. Between them, they are owed more than $360,000 for the work."
- "Tom Ondrejicka, who left his position as Aquablue's former marketing director six months ago, said he's still owed $14,000 from the company and he doubts it will ever reopen the Smiths Falls plant. He estimated taking over the plant would cost close to $50 million. 'That money's not there,' he said."
- The company's president, Dan Villeneuve, said there's still no lease-to-own agreement with Hershey for the factory, and Aquablue hasn't ordered any equipment, but the company is committed to opening the plant by next June.
To listen to the December 10th radio expose click here
Wednesday, December 9, 2009
State bottled water expenditures exposed
A new report from our friends at Corporate Accountability International in Boston exposes State spending on bottled water.
Read the report here
Read The Polaris Institute and CUPE Nova Scotia's 2009 report on the Canadian Government's expenditures on bottled water here
Read CAI's press release below:
Millions of Taxpayer Dollars Flow to Bottled Water
New Report Calls Such Spending Wasteful, Calls for Support of Public Water
Contact:
Nick Guroff, 617-784-4753
For Immediate Release: December 9, 2009
BOSTON, MA – States in the Northeast have set aside or spent between $228,874 and $527,107 a year for bottled water, according to a new report Getting States Off the Bottle released today by Corporate Accountability International. The states surveyed include four Northeastern states: Massachusetts, Connecticut, Vermont and Pennsylvania – all known for their high quality tap water.
The findings come as public water systems face a $24 billion annual shortfall, and during financial times where states can ill afford to be spending public dollars on such a non-essential use of an essential public resource.
“Not only is the spending patently wasteful at a time when states can not afford unnecessary expenses, but it broadcasts the absolute wrong message about our high quality tap water,” said Connecticut State Representative Richard Roy, Chair of the House Environmental Committee.
Roy is one of hundreds of public officials nationwide that are now calling for taxpayer dollars to cease flowing to bottled water. In 2008, the U.S. Conference of Mayors, representing more than 1200 mayors, passed a resolution encouraging mayors to phase out city spending on bottled water. To date, more than 100 cities have taken action to cut spending on bottled water or support public water systems as well as three states, including Illinois, Virginia and New York.
Governors and mayors are stewards of public water systems, responsible for overseeing budgets that provide the overwhelming majority of public funding for this essential public service. But the need for greater investment in these systems is growing rapidly, while public fundings for these systems languishes.
A major cause of the gap in funding has been the marketing and promotion of bottled water. Marketing campaigns, such as Nestlé’s Born Better, have convinced one in five people to believe the only place to get clean drinking water is from a bottle. And as public confidence in tap water has waned, so too has the political will to invest in public water.
“Swift action by governors to cut bottled water spending can be a strong first step in restoring public water systems and the public’s confidence in them,” said Kelle Louaillier, executive director of Corporate Accountability International.
After all, up to forty percent of bottled water sold comes from the same source as tap water. Tap water is also more highly regulated than what comes in the bottle.
Public education campaigns like Think Outside the Bottle are, however, restoring confidence in public water systems. A recent Harris Poll found that 29 percent of people switched from bottled to tap water in the last year. An overall decline in the North American bottled water market reflects this shift in behavior and attitude toward the tap. However, state action is still lagging. While each state profiled in the report has taken some steps to allocate funding towards water infrastructure – such as dedicating funds from the American Recovery and Reinvestment Act to water systems – even these steps are a drop in the bucket compared to what will be needed to close the gap.
“During these tough economic times our states need to be thinking, ‘we should only spend scarce public dollars on projects that grow the economy at large not just the bottom line for a handful of private corporations,’” said Louaillier. “Investment in public water is, in this respect, one of the wisest investments we can make.”
According to a U.S. Conference of Mayors report, every dollar invested in public water generates more than six for the economy at large in the long term.
For the full report visit www.StopCorporateAbuse.org/GettingStatesOffTheBottle
Read the report here
Read The Polaris Institute and CUPE Nova Scotia's 2009 report on the Canadian Government's expenditures on bottled water here
Read CAI's press release below:
Millions of Taxpayer Dollars Flow to Bottled Water
New Report Calls Such Spending Wasteful, Calls for Support of Public Water
Contact:
Nick Guroff, 617-784-4753
For Immediate Release: December 9, 2009
BOSTON, MA – States in the Northeast have set aside or spent between $228,874 and $527,107 a year for bottled water, according to a new report Getting States Off the Bottle released today by Corporate Accountability International. The states surveyed include four Northeastern states: Massachusetts, Connecticut, Vermont and Pennsylvania – all known for their high quality tap water.
The findings come as public water systems face a $24 billion annual shortfall, and during financial times where states can ill afford to be spending public dollars on such a non-essential use of an essential public resource.
“Not only is the spending patently wasteful at a time when states can not afford unnecessary expenses, but it broadcasts the absolute wrong message about our high quality tap water,” said Connecticut State Representative Richard Roy, Chair of the House Environmental Committee.
Roy is one of hundreds of public officials nationwide that are now calling for taxpayer dollars to cease flowing to bottled water. In 2008, the U.S. Conference of Mayors, representing more than 1200 mayors, passed a resolution encouraging mayors to phase out city spending on bottled water. To date, more than 100 cities have taken action to cut spending on bottled water or support public water systems as well as three states, including Illinois, Virginia and New York.
Governors and mayors are stewards of public water systems, responsible for overseeing budgets that provide the overwhelming majority of public funding for this essential public service. But the need for greater investment in these systems is growing rapidly, while public fundings for these systems languishes.
A major cause of the gap in funding has been the marketing and promotion of bottled water. Marketing campaigns, such as Nestlé’s Born Better, have convinced one in five people to believe the only place to get clean drinking water is from a bottle. And as public confidence in tap water has waned, so too has the political will to invest in public water.
“Swift action by governors to cut bottled water spending can be a strong first step in restoring public water systems and the public’s confidence in them,” said Kelle Louaillier, executive director of Corporate Accountability International.
After all, up to forty percent of bottled water sold comes from the same source as tap water. Tap water is also more highly regulated than what comes in the bottle.
Public education campaigns like Think Outside the Bottle are, however, restoring confidence in public water systems. A recent Harris Poll found that 29 percent of people switched from bottled to tap water in the last year. An overall decline in the North American bottled water market reflects this shift in behavior and attitude toward the tap. However, state action is still lagging. While each state profiled in the report has taken some steps to allocate funding towards water infrastructure – such as dedicating funds from the American Recovery and Reinvestment Act to water systems – even these steps are a drop in the bucket compared to what will be needed to close the gap.
“During these tough economic times our states need to be thinking, ‘we should only spend scarce public dollars on projects that grow the economy at large not just the bottom line for a handful of private corporations,’” said Louaillier. “Investment in public water is, in this respect, one of the wisest investments we can make.”
According to a U.S. Conference of Mayors report, every dollar invested in public water generates more than six for the economy at large in the long term.
For the full report visit www.StopCorporateAbuse.org/GettingStatesOffTheBottle
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