San Francisco Bottled Water Ban Could Impact Sales

San Francisco is gunning for the $10.8 billion bottled-water industry, with the mayor's office banning the consumption of bottled water at all city offices and agencies. While it might be easy to dismiss the news as one more wacky regulation from the Left Coast, experts say it reflects the growing sentiment of city managers and environmentalists.

"Supplying the plastic water bottles that American consumers purchase in one year requires more than 47 million gallons of oil, and more than one billion plastic water bottles end up in California's landfills each year, leaking toxic additives into the groundwater," Gavin Newsom's announcement says.

"Furthermore, transporting bottled water involves burning massive quantities of fossil fuels. All of this waste and pollution is generated by a product that is often inferior to the quality of San Francisco's pristine tap water."

The International Bottled Water Association (IBWA) quickly issued a statement denouncing the move and defending the industry's environmental record.



"Plastic beverage bottles are among the most recycled packaging in this country, and beverage companies continue to reduce the amount of plastic used in their packaging," it says. "Rather than focusing on one beverage choice, it would make more sense for our government officials to focus on improving recycling rates for all consumer packaging."

Potentially, such policies could be devastating for U.S. bottled-water sales, which came in at 8.25 billion gallons in 2006--a 9.5% increase from the earlier year, reports the IBWA and Beverage Marketing Corp.

Per person, that amounts to 27.6 gallons--a 2-gallon increase from the prior year. With $10.8 billion in wholesale sales, water ranks as No. 2, falling far short of the 15.1 billion gallons of soft drinks sold in 2006. But water sales have been rising rapidly while sales of the bubbly stuff have gone from flat to falling. Soft drinks now account for 50.9% of the beverage market, with water accounting for 27.8%.

The market heavyweights are PepsiCo, with its Aquafina brand ranking as the 9th most popular beverage, with a total 2.1% share of beverage volume (up from 1.7% in 2005). Coca-Cola is close behind with Dasani, which ranked 10th overall in 2006, with a 1.8% share of volume (up from 1.6% in the prior year.)

In fact, it's the tremendous popularity of water that has turned it into such an environmental hot potato. "Many of the bottle bills were created in a day when no one dreamed we'd be buying bottled water," says Jenny Powers, a spokesperson for the Natural Resources Defense Council. "So water bottles are less frequently recycled than other beverage containers."

As a result, mainstream environmental groups frown on bottled water. "Because bottled water has not been proven to be any cleaner or safer than the average tap water, and because almost all Americans have access to safe tap water, bottled water is not the eco-friendly choice," Powers says.

While it's hard to predict if the water-bashing will spread East--particularly at a time when anti-obesity advocates are encouraging consumers to replace sugary beverages with calorie-free water--California's environmental policies tend to be influential, Powers says.

Earlier this year, for example, San Francisco became the first U.S. city to ban the use of plastic bags. Already, Phoenix, Santa Cruz, Calif., Portland, Ore., and Boston are considering similar bans.

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