Key points:
1. Plastic water bottles are an undeniable environmental disaster, contributing tons of plastic each year to the Texas-size Pacific Garbage Patch.
2. Bottlers have an incentive to fix the problem and save their $11 billion cash cow.
3. But canteens—repositioned as fashion accessories—are making a strong return and could eventually cannibalize 30 to 40 percent of the market.
In the middle of the northern Pacific Ocean, the currents converge just right.
They form a giant loop of swirling water, attracting floating debris from the entire Pacific basin into just one spot. In the middle of this immense area of ocean is a growing island of floating garbage twice the size of Texas. It is a sea of unbelievable foulness filled with all manner of trash from North America, Russia, Japan, China, and Southeast Asia. And it’s growing.
By far one of the biggest contributors: the plastic water bottle.
Since the early 1990s, when the plastic water bottle became popular, billions upon billions have been manufactured. In the early days, virtually none were recycled. Many ended up in landfills, but countless more ended up in the Pacific drainage basin, eventually making their way into the Pacific Garbage Patch.
But we recycle them now, don’t we? Well, largely, no. Industry estimates suggest that only 12 to 15 percent ever make it to a capable facility. And that number is good compared to the rest of the Pacific Rim nations.
For bottlers, growing concern over the Pacific Garbage Patch (as well as a host of other environmental and business issues) is a big deal.
In the United States alone, bottled water accounts for a staggering $11 billion slice of the drink market. The average American consumed 28.3 gallons of it last year alone, making it the second-most consumed beverage, after only soft drinks.
Big players Coca-Cola, Nestle, and Pepsico have a profound interest in not allowing environmental concerns (and new concerns regarding the leaching of petro-chemicals into your water bottle while temperature cycling in transit) to derail this cash cow.
To respond, what has industry done? A few things: Bottlers have begun to reduce the overall amount of plastic used to make the bottle itself. This is good for the economics of the business, doesn’t hurt the drinking experience, and makes bottles easier to recycle. Some bottlers are experimenting with bottles made from corn-plastic instead of petroleum. A very interesting idea, but given ethanol’s run-in with the food/fuel debate, I suspect this particular technology may be short-lived. Other ideas involve creating easily degradable “bottles”—designed to decompose safely in landfills and water tables (or better yet, provide microbial nutrients as they do so). Very cool.
However, the biggest “threat” to the bottlers and their market is not necessarily a new idea, but a very old one: the canteen.
Oddly enough, the rise of the canteen as a viable competitor to disposable plastic water bottles is considered disruptive innovation. (Or, perhaps more appropriately, “disruptive re-innovation”).
The modern canteen is a holdover from colonial times and recent military history. Popular for backpackers and weekend adventurers up until the 1980s, the canteen fell out of favor as disposable plastic bottles became cheaper and more prevalent. In a world where every state park has a vending machine, why carry a canteen?
The current ecological climate is setting the stage for the rebirth of the canteen as a popular (and not a niche) option, but brand positioning will take it the rest of the way. Let’s briefly explore a few of the key planks in the positioning platform.
The first is a raw and rational economic argument. In some places (the Disney grounds come to mind), a bottle of water can cost $3. At the vending machine, perhaps $1.50. Even in the grocery store, you can hardly do better than 20 cents. At an average of one water bottle per day (hardly a stretch), that’s a range of $76 to $1,095 per year—with the median number somewhere around $250. Yikes. A good canteen will run you $30 to $40. Once. That’s a good ROI.
The second is the obvious ecological argument. The canteen (made with an inert inner wall of aluminum) is inherently safer than plastic, washable, and re-usable. In many models, one you get tired of it, the metals are sought by recyclers and easily converted into something else. No more trash.
These are great reasons, of course, but they are nothing compared to aesthetic appeal. The smartest canteen makers are reincarnating the canteen as a sexy status symbol—a wearable icon of ruggedness, environmental stewardship, and fashion for men, women, and children of all ages.
Of all the reasons canteens—I think—will take off, I’ll put my money on sex appeal every time.
Now all that said, the humble canteen has a long way to go to break entrenched habits. However, a good guess is that they could peel away 20 to 30 percent of the water bottle market in the United States. That’s $3.5 billion to $4 billion per year. Or about 80 million units.
That might seem like a lot, but who thought we’d ever buy tap water in a bottle?
Stranger things have happened. Let’s hope this one does too.
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Most of us have access to very good drinking water piped into our homes. The average cost is $1.50 per 1,000 gallons. If you drink 1 liter per day, your annual cost is $0.14. YES, 14 cents per YEAR .... plus the cost of a canteen.
Posted by: PJ | June 24, 2009 at 10:59 AM
Bottled water is just soooooooooo in, and then there is the over priced bottled water, same stuff with a higher price, and don't forget flavored water, and drinking as much water as some people do isn't good for you.
Maybe Obama needs to appoint a "Water Czar" to stop all this unnecessary water drinking
Posted by: jim moore | June 23, 2009 at 04:52 PM