Sales of bottled water go flat as consumers return to the tap

Jenny Wiggins, September 15, 2008, Financial Times - The ubiquitous plastic water bottle, long the bane of environmental campaigners, is being ditched by consumers in Europe and the US as incomes slump and people return to the tap for a free drink.

Sales of the world's best-known brands, including Aquafina and Volvic, have tumbled in some countries as weakening economies take a toll on household incomes and consumers become more concerned about the environmental impact of throwing away the plastic packaging of a liquid that can be drunk for free.

In the UK, bottled water sales volumes have slid 4.7 per cent and sales revenues have fallen 5.1 per cent in the 12 months to mid-August, according to research group Nielsen. This includes a 2.5 per cent drop in sales volumes of Evian and a 7.4 per cent drop in sales volumes of Volvic, both owned by French company Danone.

In the US, where bottled water consumption is higher than in any other country, supermarket sales are at their slowest rate since bottled water became popular a decade ago.

Total sales volumes are up just 1 per cent this year (including recently popular brands such as Glaceau that contain added vitamins and fruit infusions), according to US soft drinks newsletter Beverage Digest. This compares with growth of 11 per cent over the same period last year, and more than 21 per cent in 2006.

"The bottled water industry has slowed dramatically this year as has the rest of the beverage industry," said John Sicher, editor of Beverage Digest. "With the challenging economy for many consumers, there's been some increase in [use of] tap water and some trading down to less expensive beverages."

PepsiCo's Aquafina brand has had a bad year in the US, with supermarket sales volumes down 12.7 per cent year to date. Indra Nooyi, PepsiCo chief executive, acknowledged two months ago the company was losing sales as people switched to tap water.

The slump in bottled water sales, worth some €70bn (£55.6bn) annually, has hit revenues at owners of the biggest brands. At Danone, where brands including Evian and Volvic contribute one-third of total group sales, revenues from bottled water fell 0.8 per cent in the second quarter.

At Nestlé, where brands including Vittel, Perrier and Poland Spring contribute 10 per cent or SFr4.9m (£2.4m) to group sales, water revenues fell 1.1 per cent in the first half of the year.