• Wall Street Journal, Monday, August 31, 2009 10:33 AM

A price war has broken out in the bottled water market as sales have declined due mostly to the environmental concerns, Valerie Bauerlein reports. Sales of bottled water have suffered as environmentalists urge boycotts of the product. Brands sold for an average of $1.35 a gallon in the first quarter, down more than 30% from $1.94 in 2001, according to Beverage Marketing Corp.

The lowest price cited is Kroger's private-label brand, which was selling for $2.49 for a 24-pack of half-liter bottles (50 cents less than PepsiCo's Aquafina could be had at some stores). "That's the lowest I've seen," says Beverage Marketing Corp. CEO Michael Bellas, who says prices were once as high as $6.99 for a 24-pack.

Some analysts tell Bauerlein that the price could fall even further as PepsiCo absorbs its two biggest bottlers and lowers its delivery costs. But manufacturers caution in general that the low prices are promotional, and claim bargains before holidays like Labor Day are common. Timothy F. Brown, head of retail operations for Nestlé, says a lot of the price slashing has been driven by retailers looking to attract shoppers.

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