Strategy for bottled water

Political:

Bottled drink manufactures shift their in house recycling operations to government recycling programs. For import and export, government stability to do business is crucial. Government regulations are in place and getting harder with the food and drug administration (FDA) standards of identity for the bottled water products to avoid being misbranded. These standards also take into consideration the quality/safety and the source of the water (The bottled water regulations 1999).

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The International Bottled Water Association (IBWA) is a protector therefore opposes all taxes, surcharges and fees against the industry as water is considered as essential. But Netherland is introducing a carbon based packaging tax in January 2008, the first of its kind in Europe to target waste and recycling. Also, Canada is applying a fee not a tax to create a more sustainable system. For worldwide decrease of carbon dioxide emission the governments signed the Kyoto protocol. Several governments are taking actions like in the UK “The climate change Levy” was launched in April 2001 to help fund measure to promote energy efficiency in business but also an EGA scheme offering tax incentives for firms investing in approved energy saving technologies. (Appendix 5 & 10)

Economic:

Worldwide the industry is now valued at $45bn with a production of 180bn litres a year and increasing approximately 7 to 10 % annually with a gross profit for 2006 of 39%, It is in a very powerful position and creates employment. The success and profitability of the industry like many others will depend on the oil price on the stock market. Plastic bottle prices and cost of transport around the world will fluctuate according to oil prices. In case of inflation being too high consumption can reduce by low purchasing power as tap water is a much cheaper alternative and influences badly the industry. Furthermore, it is a waste of money for consumers but also a waste of energy in production when there is a cost effective alternative: Tap water. (Appendix 1, 4, 5, 7 & 9)

Socio cultural:

Consumers in developed countries choose to drink bottled water for taste and convenience, while in developing countries it’s due to unsafe and unreliable tap water supplies which increase consumption. Nowadays, health is the main worry for consumers as such, the population is willing to spend money instead of using an identical product at home almost free of charge, it’s quite a social phenomenon. The growth in consumption is due also to fear of chlorine and even more to climate change. There are facts that bottled water is 100 times more often tested than tap water, this is why it has a better reputation. Furthermore bottled water is very fashion, drinking tap water is likely more embarrassing. One of the key success factors of bottled water is advertising that boost sales, the marketing now is even at a children level. Good marketing changes lifestyle showing the product like the clearest, cleanest and healthier product on earth. (Appendix 1 & 3)

Technological:

One of the main opportunities here is the use of ordinary tap water for bottled water for a fraction of a pence but with the technology of a purification process. Abundant water from the great lakes represents a massive supply. Developed governments are spending a lot on research & development on water treatments. Where municipal water is lower in quality, the use of home activated-carbon filtrations system is very efficient in producing potable water at considerable low cost. Filters are more economical, especially the ones used in the UK. Packaging is continuously improving; producers are constraint to change it due to its petroleum-derived plastic therefore switching from PVC to PET for less toxicity.

They have started with recycling and biodegradable plastic. Innovation also in the design of bottles it’s lighter and consequently incurs in less CO2 emission when shipping around the world. This is also used as attractive marketing tool (keep customer interest) just like the offering of different flavours or fizzy waters. The launch of bottled water naturally high in calcium or the introduction of a product enriched with calcium and magnesium has become a niche. New products continuously refresh portfolios and are absolutely vital to the retention of customers’ interest and the maintenance of retail shelf space. (Appendix 6 & 10)

Environment:

It is nowadays the main point of discussion; the environment can be surprising and influences many organisations. Pollution is increasing due to mining pollution, live stock waste, agriculture pesticide, oil pollution…etc and represents a real danger for earth water…for us. We use 50 billions plastic water bottles with a worldwide recycling rate of 10% which is very little. That means 40 billions bottles are filling up our land in pollution, however the recycling rate is increasing which results in further energy savings. The World wild fund (WWF) is concerned by the 22m tonnes of bottled water transported each year among countries, resulting in excessive gas emission, 2.5 million tons of Co2 in 2006. Production contributes to global warming, where tap water often transported by gravity causing zero CO2 emission. It takes a certain amount of energy to move plastic bottles from where it’s made, to where it’s filled then to the store to go finally to consumers. (Appendix 2, 5, 8 & 9)

Legal:

Bottled water producers have to make sure to label there products properly according to bottled water regulations 1999 within the 3 categories and to register to the local environment health officer. Government are not really strict so far but start to get more involved to make sure procedures are into place and respected. Companies for the health & safety of there products sold, have to ensure microbiological and chemical analysis to meet the legislative criteria. (Appendix 11)

Conclusion:

The bottled water is booming and is the fastest growing drinks industry in the world but at an environmental loss. More regulations, restrictions, control are coming in the future but also important climate changes and risk of contamination lead to new food products concerns. What will happen over the next few years when consumption and pollution will increase? Producers need to consider water as a precious even having today abundant amount.

The key success of the industry is to adapt politically, economically, legally and invest fairly in environmental side due to more and more challenging external factors but also to take advantage of technological opportunities without letting down issues within the business it self.