What’s convenience worth? Less than it was at the beginning of the summer, if the price of bottled water is any indication.
The Wall Street Journal reported this week that there’s been a price war among bottled-water makers this summer to win back customers who have turned back to their kitchen sinks to save money and reduce environmental waste.
Now some of this may be retailers using water as a loss-leader. Some of it may be people looking for places to cut their budgets and realizing that they can send the little ones to soccer practice with a jug full of ice water for far less than the cost of a bottle of water that might well be full of tap water anyway. Some of it may just be recognition that this is an easy way to support the green movement. A consulting firm that studies such things say prices have fallen 30% since 2001, to $1.35 a gallon on average from $1.94. What was selling for $5.99 and $6.99 for a 24-pack of half-liter bottles is now under $3.00 in many places.
Surprisingly, bottled water doesn’t seem to be a source of huge profits, even if it is a source of huge increases in volume sales for companies like Coke and Pepsi (which own Dasani and Aquafina, respectively). That tells me that the bottled-water companies may be measuring the wrong thing.
The Journal reported that Dasani has seen U.S. sales volume fall nearly 26% in the past few months, but I have to wonder how much of that is due to its refusal to cut prices at all and how much is due to a ripple effect from its admission that its U.K. version is tap water from the London water supply. Over the same period, Aquafina’s sales fell only 13.8%, helped by a 5% price cut while Poland Spring (owned by Nestle’) fell 8.9% amid an 11.3% cut in price.
Let’s be honest. This is still a $7 billion business. After a decade of huge growth, sales over a recent 12-month period only declined 6%, which seems surprisingly small given all the reasons that one might turn away from the product.
Spokespersons for all three companies expressed optimism that bottled-water sales will improve with the economy and that “consumers’ demand for value, convenience, and purity will prevail.”
I’m rooting for the kitchen sink and plastic jug.