MNeagle
25th May 2010, 11:52 AM
for Ponce (an Oregon story about water):
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.
Finding the right spring for bottled water is no easy task.
Water is costly to transport, so a spring must be relatively close to large markets, yet far enough to protect it from urban pollutants. It must have enough spare capacity to make it worth building a bottling plant nearby, and the water needs the right balance of minerals to taste right.
The job has gotten tougher as Nestlé tries to cut costs and carbon emissions by decreasing the distances its trucks travel; it has cut the average miles each delivery requires by about 15% since 2007. Nine out of 10 candidate springs turn out to be unsuitable, says Dave Palais, a Nestlé resource manager.
Cascade Locks is a rare fit. Mr. Palais has been searching for a spring to supply water to Northwest markets since 2007. The company currently trucks water from California or British Columbia.
Cascade Locks, which gets about 80 inches of rain a year and sits right off Interstate 84, is home to Oxbow Springs. When Nestlé came calling in 2008, Cascade Locks' town fathers were thrilled. Since the decline of the timber industry in the 1970s, Cascade Locks has struggled. With 18% unemployment, the town has seen an exodus of residents. Last year, the high school closed due to a drop in enrollment. The number of businesses has dwindled from about 90 three decades ago to about a dozen.
To bottle Oxbow Springs' water, Nestlé has proposed a plan that includes looking out for Idaho Sockeye, which are among the fish raised in a 100-year-old hatchery managed by the Oregon Department of Fish and Wildlife.
Nestlé would pipe water from the spring to a proposed new $50 million bottling plant that would employ 53 workers. In turn, it would pump Cascade Locks' municipal well water to the hatchery to replace all the water taken from the spring—buying 300 gallons a minute from the town for the switch, or about a sixth the total municipal capacity.
Town officials say Nestlé would pay about $360,000 a year for the water under current industrial rates, but say they could strike a deal for special pricing for such a large customer.
The project would boost Cascade Locks' beleaguered finances by doubling the city's property taxes. City Administrator Bernard Seeger envisions sprucing up the town's dilapidated main street and expanding police service from three days to five.
"When Nestlé came, we said, 'Wow, this would be amazing,"' says Mr. Seeger. "We're sitting on a massive amount of water here."
The Fish and Wildlife Department, which had looked for a way to bring more water to the hatchery several years ago but found it too expensive, could use the new pumps and pipes that Nestlé would install to expand the operation, says Douglas Bochsler, the agency official in charge of the project.
Nestlé has held two town hall meetings to explain the project and hear residents' concerns. It has rented a store front on Cascade Locks' main street where Mr. Palais spends several days a month to answer questions and set up a toll-free number, although it says few calls have come in so far.
Environmentalists have been just as quick off the mark. Washington D.C.-based Food and Water Watch, a dogged opponent of Nestlé, has created a coalition of 16 environmental and religious groups dubbed "Keep Nestlé Out of the Gorge." In March, it delivered a 10-gallon water bottle holding 3,700 signatures of opponents to Oregon's Department of Fish and Wildlife. Protesters waved placards reading "Protect Oregon's Water."
Julia DeGraw, the Food and Water Watch activist leading the campaign, argues that a resource as precious as water should never fall into corporate hands, saying it discourages cities from investing in water infrastructure and increases the risk corporate interests may prevail over public ones in case of a drought. She raises environmental concerns, including the effect on fish. Ms. DeGraw also accuses Nestlé of targeting towns that are economically depressed, an allegation Nestlé denies. She says Nestlé has paid on average one-fifth of one cent a gallon to buy spring water, while selling it to consumers for $5.30.
"A lot of Oregonians don't want to see the state's resources extracted by a multinational that would make a massive profit off it," says Ms. DeGraw, a native Oregonian. "It's all or nothing for us."
Nestlé says it offers towns fair conditions to tap springs and fully informs citizens of its plans. Nestlé says the difference between its purchase price and the retail sales price is due to the cost of filtering, bottling and distributing its water; it says its lowest retail price for a gallon of spring water is about $1.20.
The Oregon Water Resources Department plans to hold a public comment period before deciding, while the Department of Fish and Wildlife says it would include a clause to break any contract with Nestlé in case of adverse environmental impacts.
Nestlé says it's conducting studies to address some environmental concerns. Only after studies are done, and the year-long test to see that the fish survive in municipal water, will Nestlé file its application with state authorities.
"If Food and Water Watch wants to be responsible, they should wait to see what the [tests] say and not make spurious arguments," says Nestlé's Mr. Jeffrey.
In April, at a screening of a new anti-bottled-water documentary, "Tapped," Mr. Jeffrey challenged Jim Walsh, a Food and Water Watch leader also in attendance. "Do you want to come in and talk to me about the issues, or do you just want to see us out of business?" Mr. Jeffrey says he asked Mr. Walsh.
"The latter," responded Mr. Walsh, according to Mr. Jeffrey's recollection.
Mr. Walsh says he doesn't recall saying he wanted to see Nestlé go out of business, but says his group is "fundamentally opposed to the process of bottling water."
Mr. Jeffrey, a 32-year veteran of the bottled-water business, says state authorities monitor Nestlé's spring withdrawals too closely for it to deplete water. A Nestlé plant draws about the same amount of water in a year as a single ski area or a large farm, he says, and would have to abide by restrictions during droughts.
Hydrologists say bottled water is a tiny fraction of what industry, farms and homes use and don't generally view it as a threat to aquifers. "Bottled water use is a drop in the bucket," says Thomas Harter, expert in water management at the University of California at Davis.
The Cascade Locks efforts are part of a push by the company to cast its water in a friendlier light. Nestlé is launching a lighter bottle with nine grams of plastic, a quarter of that found in some sports-drinks packaging. Nestlé truck drivers must now turn off engines instead of idling and the company is introducing hydrogen-fuel-cell forklifts.
Environmentalists say it is impossible for a company that churns out 20 billion plastic bottles a year to become environmentally friendly and dismiss the efforts as "bluewashing."
In Cascade Locks, some resent seeing a rare business opportunity possibly lost. "This is becoming the Battle of the Middle Gorge," says Mayor Brad Lorang. "Stopping Nestlé won't save the planet, but getting Nestlé to come here could save the town."
Link to Article (http://online.wsj.com/article/SB10001424052748704414504575243921712969144.html?m od=WSJ_hpp_MIDDLENexttoWhatsNewsTop)
Slideshow & charts at link too.
EDIT: Changed long link to named link to prevent horizontal scrolling. -Gaillo
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.
Finding the right spring for bottled water is no easy task.
Water is costly to transport, so a spring must be relatively close to large markets, yet far enough to protect it from urban pollutants. It must have enough spare capacity to make it worth building a bottling plant nearby, and the water needs the right balance of minerals to taste right.
The job has gotten tougher as Nestlé tries to cut costs and carbon emissions by decreasing the distances its trucks travel; it has cut the average miles each delivery requires by about 15% since 2007. Nine out of 10 candidate springs turn out to be unsuitable, says Dave Palais, a Nestlé resource manager.
Cascade Locks is a rare fit. Mr. Palais has been searching for a spring to supply water to Northwest markets since 2007. The company currently trucks water from California or British Columbia.
Cascade Locks, which gets about 80 inches of rain a year and sits right off Interstate 84, is home to Oxbow Springs. When Nestlé came calling in 2008, Cascade Locks' town fathers were thrilled. Since the decline of the timber industry in the 1970s, Cascade Locks has struggled. With 18% unemployment, the town has seen an exodus of residents. Last year, the high school closed due to a drop in enrollment. The number of businesses has dwindled from about 90 three decades ago to about a dozen.
To bottle Oxbow Springs' water, Nestlé has proposed a plan that includes looking out for Idaho Sockeye, which are among the fish raised in a 100-year-old hatchery managed by the Oregon Department of Fish and Wildlife.
Nestlé would pipe water from the spring to a proposed new $50 million bottling plant that would employ 53 workers. In turn, it would pump Cascade Locks' municipal well water to the hatchery to replace all the water taken from the spring—buying 300 gallons a minute from the town for the switch, or about a sixth the total municipal capacity.
Town officials say Nestlé would pay about $360,000 a year for the water under current industrial rates, but say they could strike a deal for special pricing for such a large customer.
The project would boost Cascade Locks' beleaguered finances by doubling the city's property taxes. City Administrator Bernard Seeger envisions sprucing up the town's dilapidated main street and expanding police service from three days to five.
"When Nestlé came, we said, 'Wow, this would be amazing,"' says Mr. Seeger. "We're sitting on a massive amount of water here."
The Fish and Wildlife Department, which had looked for a way to bring more water to the hatchery several years ago but found it too expensive, could use the new pumps and pipes that Nestlé would install to expand the operation, says Douglas Bochsler, the agency official in charge of the project.
Nestlé has held two town hall meetings to explain the project and hear residents' concerns. It has rented a store front on Cascade Locks' main street where Mr. Palais spends several days a month to answer questions and set up a toll-free number, although it says few calls have come in so far.
Environmentalists have been just as quick off the mark. Washington D.C.-based Food and Water Watch, a dogged opponent of Nestlé, has created a coalition of 16 environmental and religious groups dubbed "Keep Nestlé Out of the Gorge." In March, it delivered a 10-gallon water bottle holding 3,700 signatures of opponents to Oregon's Department of Fish and Wildlife. Protesters waved placards reading "Protect Oregon's Water."
Julia DeGraw, the Food and Water Watch activist leading the campaign, argues that a resource as precious as water should never fall into corporate hands, saying it discourages cities from investing in water infrastructure and increases the risk corporate interests may prevail over public ones in case of a drought. She raises environmental concerns, including the effect on fish. Ms. DeGraw also accuses Nestlé of targeting towns that are economically depressed, an allegation Nestlé denies. She says Nestlé has paid on average one-fifth of one cent a gallon to buy spring water, while selling it to consumers for $5.30.
"A lot of Oregonians don't want to see the state's resources extracted by a multinational that would make a massive profit off it," says Ms. DeGraw, a native Oregonian. "It's all or nothing for us."
Nestlé says it offers towns fair conditions to tap springs and fully informs citizens of its plans. Nestlé says the difference between its purchase price and the retail sales price is due to the cost of filtering, bottling and distributing its water; it says its lowest retail price for a gallon of spring water is about $1.20.
The Oregon Water Resources Department plans to hold a public comment period before deciding, while the Department of Fish and Wildlife says it would include a clause to break any contract with Nestlé in case of adverse environmental impacts.
Nestlé says it's conducting studies to address some environmental concerns. Only after studies are done, and the year-long test to see that the fish survive in municipal water, will Nestlé file its application with state authorities.
"If Food and Water Watch wants to be responsible, they should wait to see what the [tests] say and not make spurious arguments," says Nestlé's Mr. Jeffrey.
In April, at a screening of a new anti-bottled-water documentary, "Tapped," Mr. Jeffrey challenged Jim Walsh, a Food and Water Watch leader also in attendance. "Do you want to come in and talk to me about the issues, or do you just want to see us out of business?" Mr. Jeffrey says he asked Mr. Walsh.
"The latter," responded Mr. Walsh, according to Mr. Jeffrey's recollection.
Mr. Walsh says he doesn't recall saying he wanted to see Nestlé go out of business, but says his group is "fundamentally opposed to the process of bottling water."
Mr. Jeffrey, a 32-year veteran of the bottled-water business, says state authorities monitor Nestlé's spring withdrawals too closely for it to deplete water. A Nestlé plant draws about the same amount of water in a year as a single ski area or a large farm, he says, and would have to abide by restrictions during droughts.
Hydrologists say bottled water is a tiny fraction of what industry, farms and homes use and don't generally view it as a threat to aquifers. "Bottled water use is a drop in the bucket," says Thomas Harter, expert in water management at the University of California at Davis.
The Cascade Locks efforts are part of a push by the company to cast its water in a friendlier light. Nestlé is launching a lighter bottle with nine grams of plastic, a quarter of that found in some sports-drinks packaging. Nestlé truck drivers must now turn off engines instead of idling and the company is introducing hydrogen-fuel-cell forklifts.
Environmentalists say it is impossible for a company that churns out 20 billion plastic bottles a year to become environmentally friendly and dismiss the efforts as "bluewashing."
In Cascade Locks, some resent seeing a rare business opportunity possibly lost. "This is becoming the Battle of the Middle Gorge," says Mayor Brad Lorang. "Stopping Nestlé won't save the planet, but getting Nestlé to come here could save the town."
Link to Article (http://online.wsj.com/article/SB10001424052748704414504575243921712969144.html?m od=WSJ_hpp_MIDDLENexttoWhatsNewsTop)
Slideshow & charts at link too.
EDIT: Changed long link to named link to prevent horizontal scrolling. -Gaillo