Catch the wave

Bottled water’s still popular, but the worm may be turning.

Bottled water’s still popular, but the worm may be turning.

Bottled water has been a boom industry for hospitality, but is there a drought coming? Here’s a guide to surviving the bottled-water backlash

There are some very startling facts and statistics about bottled water, but one strikes me as being all that needs to be said: in 2009, Australians spent $500 million buying bottled water. That represented a 10 per cent increase in purchase from 2008. And if I owned a bar or a restaurant, I’d want to be in on some of that $500 mill…

Given this, it is no wonder that on-premise beverage facilitators have been so keen to make bottled water a part of their revenue stream. Any operation with a dining room has certainly enjoyed leveraging the margin on bottled water over the last ten years. Reports in early 2010 that marquee restaurants in both Melbourne and Sydney were selling sub-$2.20 LUC bottled water for $11 to $14 on-premise really do add an insulting sotto voce tone to that perennial waiter’s question: “And would you like some sparkling or still water with that?”

At those prices, no wonder more and more fine diners are rather unposhly replying: “Just tap water, ploise…”

Whilst it has been a grand growth industry for all players alike—manufacturers, distributors, retailers and on-premise businesses—there are now some signs that the bottled water worm might be turning. That said, some aspects of bottled water’s appeal still exist in a very real way for hospitality professionals.

It’s still trendy. It is still considered a convenience. It is still considered healthful—if not so much by the fact it is water, then certainly by the fact that when you are drinking $14 water you are not drinking $38 sauvignon blanc.

Yet the downsides are growing. Packaging is the new issue for the general environmentally concerned member of the public. Plastic bottles and landfill. Glass bottles and transport/environment costs. These issues might yet become problematic for any hospitality operator selling bottled water, whether it’s small plastic jobs in the disco or large imported Italian glass bottles in the main dining room.

An example of the backlash against bottled water is the Bottled Water Alliance. This not-for-profit organisation is part of the Do Something campaign, which also lobbies to ban plastic bags, amongst other social and environmental issues. The Bottled Water Alliance points out that producing and delivering a litre of bottled water can emit hundreds of times more greenhouse gas than a litre of tap water; furthermore, the Department of Environment and Climate Change estimates that 200ml of oil is used to produce, package, transport and refrigerate each litre bottle of bottled water. As a result, at least 50 million litres of oil are used in the manufacture and distribution of bottled water in Australia every year. To spread the message, the Bottled Water Alliance has the support of actors and celebrity chefs. So should you be concerned about the backlash, in relation to your business’s profits, not to mention your business’s public perception?

Geoff Parker is the CEO of the Australian Bottled Water Institute, a non-government body representing water bottlers. He is confident that bottled water sales will continue along a “high single-digit growth pattern” over the next year—and into the immediate future. He also has some points to make about “misinformation” regarding its environmental costs.

“There’s a lot of new and very cutting-edge plastic vessels that have a very visually appealing look and feel; and plastic is lighter and easier to recycle…” Geoff Parker, CEO, Australian Bottled Water Institute

“It is odd that bottled water has been targeted in this way by these campaigners. Our industry is very environmentally aware and we in fact recycle our containers at a rate of about 60 per cent—not the 37 per cent or so that other sources claim. The other factor is that whilst obesity remains a major health problem in Australia, these anti-bottled water campaigners want to remove the one bottled product in the bar or shop’s fridge that is the best dietary option—namely bottled water.” As for on-premise bottled water sales, Parker thinks the future looks bright, particularly as local water bottlers look to expand.

“We don’t capture the on-premise data specifically, but at a recent conference in Brisbane, quite a number of local water bottlers attended, looking to on-premise to compete with imported and very expensive Italian and French bottled waters. Local bottled water wants to compete with these products, and provide a premium product in both glass and in plastic. There’s a lot of new and very cutting-edge plastic vessels that have a very visually appealing look and feel; and plastic is lighter and easier to recycle…”

Restaurateurs, it seems, need to cut their cloth to suit their needs: if your clientele wants imported Italian water, then your failure to provide it will mean a potential turn-away of customers. Should you “educate” your customer about the evils of such shipped glass bottles, well, I reckon they’ll run away even more quickly.

Yet the real question to restaurants is how much they think they can continue to charge—over the odds—for bottled water. As Geoff Parker adds: “The high cost of bottled water on-premise? That’s Economics 101: the market will always right itself; but a large range of bottled water products help the hospitality industry cater for everyone’s needs, from large venues to smaller restaurants.”

Some elements of the hospitality industry might want to embrace a more high-profile environmental angle with regard to bottled water; but for the majority of operators, bottled water is now a part of the fiscal reality. The key is to provide customers with—within the law—what they want. And if that’s bottled water, then full steam ahead. Or should bars and restaurants actually be at the front line of social and environmental policy? Plenty of revolutions have started in cafes, but I reckon most of the revolutionaries—whether drinking water or not—still had to pay for their drinks.

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