Tuesday, May 25, 2010

Mining Water? Environmentalist Attack Nestlé Bottled Water Operations

Man, this is getting to be something else.

Remember my post from the the other day, "
Nestlé Knuckles Under to Greenpeace? Well, Those Enviro-Nazis Ain't Seen Nothin' Yet!"?

Well, follow that up with this piece at WSJ, "
Bottled Water Pits Nestlé vs. Greens":

CASCADE LOCKS, Oregon—In this idyllic town on the north slope of Mount Hood, an autopsy on three dead rainbow trout may play a role in Nestlé SA's efforts to reverse a deep slide in its bottled-water business.

Bottled water, which for years delivered double-digit growth for Nestlé, is under fire from environmentalists. They decry the energy used to transport it and the use of billions of plastic bottles, and oppose efforts to use new springs, citing concerns about water scarcity.

In Cascade Locks, Nestlé is trying to tap 100 million gallons of water annually for its Arrowhead water brand from a new spring—and keep the environmentalists happy, too. A key is proving that water drawn from the spring—which supplies a hatchery that raises Idaho Sockeye, an endangered species—can be replaced with municipal well water, with no harm to the fish.

Nestlé is running a one-year test here to raise 700 rainbow trout in a tank filled with well water. Worried that activists might sabotage the test, Nestlé put the 1,700-gallon tank under lock and added security cameras. Officials from the Oregon Department of Fish and Wildlife monitor the fish's progress and are now autopsying the three that have died so far.

"We are accused of mining water, which would suggest we are depleting a resource," says Kim Jeffrey, chief executive of Nestlé's North American water business. "But instead, we take water in a sustainable way. The notion that we just take what we want is simply not factual."

The project is testament to Nestlé's determination to fix its bottled-water business. Its North American water sales fell to 4.4 billion Swiss francs, or $4.2 billion, in 2009, down 13% from 2007.

"Water is a category that gave us so many years of joy," Nestlé Chief Executive Paul Bulcke said in an interview. "And all of a sudden, it changes. That is what hurts."

Until 2007, bottled water was a dream business for Nestlé, whose brands include Pure Life, Poland Springs and Perrier. Per-capita consumption of bottled water in the U.S. soared to 29 gallons in 2007 from 16 gallons in 2000. A bottle of Nestlé's San Pellegrino water became a trendy statement of health consciousness.

Annual growth rates of Nestlé's U.S. water business topped 15% in the mid-2000s. By last year, it had 38% of the $10 billion U.S. bottled-water market, more than rivals Coca-Cola Co. and PepsiCo Inc. combined.

But the gusher has slowed the past two years as environmentalists have tried making bottled water a new cause. Some tony restaurants in Los Angeles and New York have conspicuously stopped offering bottled water. A slate of documentaries claims that water producers mislead the public about the virtues of bottled water compared to tap.

Nestlé's water sales have been hit badly by the economic downturn, as shoppers began seeing bottled water as an unnecessary luxury, turning to cheaper tap water instead. Moreover, consumers who still wanted bottled water began buying some of the slew of cheaper new private-label brands that supermarkets have launched over the last couple of years. In response, Nestlé has been pushing Pure Life, a lower-priced water that comes from purified municipal sources.

Bottlers say bottled water represents a small share of water use and is typically tapped in a sustainable way, a view backed by independent hydrologists. But the attacks hurt.

In 2007, one group launched a campaign called "Lying in Advertising." One poster read: "Bottled Water Causes Blindness in Puppies," with a tagline reading, "If bottled-water companies can lie, we can too." And now, a Congressional bill that would slap a 4% tax on bottled water to pay for upgrades of municipal water systems is gaining fresh attention, after a rupture in a water main left two million Boston residents without drinkable water in May.

Nestlé has been a favorite target of activists since the 1970s, when it encountered tough criticism of how it marketed baby formula to poor mothers in underdeveloped countries. Its role as leader of the U.S. bottled-water market and the fact that it taps springs in often-pristine rural areas has exposed it to particular criticism from opponents of bottled water.

Some 80% of Nestlé's bottled water is from springs, while the rest is purified municipal water. Coke and Pepsi's bottled water brands largely come from purified municipal sources.

Last fall, Nestlé threw in the towel on plans to tap one glacier-fed spring in Northern California after a six-year battle. Nestlé waged a six-year court case to carry on using a spring in Michigan, reaching a settlement last summer. In October, it gained approval to tap a Colorado source, after agreeing to 44 conditions.

Now, in Cascade Locks, Nestlé is fighting environmentalists' opposition to its plan to draw water from a spring in this 1,100-person town.
Video: The introduction from "Flow: For the Love of Water."

RELATED: At OregonLive, "Campaign launched against Nestle Waters proposed Cascade Locks plant."