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Amid price cuts, companies struggle to make bottled-water profitable

Bottled-water makers have cut prices to win back consumers who have switched to tap water as a way to save money and reduce waste, reports the Wall Street Journal.

Aquafina (owned by PepsiCo) and other companies have drastically cut the price of multipacks to less than 25 cents a bottle in some cases. Overall, bottled-water brands sold for an average of $1.35 a gallon in the U.S., down from $1.94 in 2001, according to Beverage Marketing Corp. Analysts believe prices may fall further next year.

Bottled-water sales nationwide fell 6% to $7.6 billion for the year ended July 12, according to Information Resources Inc. Particularly hard hit have been single-serve bottle sales, hurting profitability.

“The bottling companies rely on single-serve bottles sold in vending machines and coolers for much of their profit margin on bottled water, but with those sales down, they are also struggling to make water profitable,” writes Valerie Bauerlein for the Wall Street Journal.

Beyond its higher cost relative to tap water, bottled-water has also suffered from a poor environmental reputation and concerns over quality. Green groups have noted that tap water faces more stringent health and safety controls than bottled-water and generates substantially less waste.

Valerie Bauerlein. Bottled-Water Price War Heats Up as Demand Falls. The Wall Street Journal, page B1 AUGUST 31, 2009

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