Branded H2O is set to overtake fizzy drink as the world's most popular drop.

Bottled water is the world's best-selling soft drink. This year it is expected to overtake fizzy drinks, with sales of more than 233 billion litres, compared with 227 billion litres of soda.

The trend began a decade ago when consumption of soft drinks in the US declined amid concerns the sugar they contained was making the nation fat. At the same time demand for bottled water increased in emerging economies such as China and India because their piped water infrastructure was poor, with flooding and other natural occurrences leading to water contamination.

Putting aside the consumers who choose bottled water out of need, it is interesting to consider the consumers who choose water in a bottle rather than much cheaper water out of a tap. Water experts suggest bottled water costs nearly 1000 times more than water from the tap.

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The reasons given for the increasing popularity of bottled water include the convenience - you can't lug your kitchen sink around with you - taste and health benefits.

But is bottled water the ultimate marketing scam?

It is certainly a marketing success - how many other products would consumers be prepared to pay such a premium for, when they have an easily available cheap alternative? Coke and Pepsi have made a fortune out of bottled water, even though it is essentially Coke without the additives or Pepsi without the flavouring or fizz.

As for our belief that bottled water is purer (and therefore better for us) than tapwater, the argument doesn't hold.

Perrier and Evian began the marketing campaign 20 years ago, positioning their water as a desirable flavourless beverage that, when chosen, indicated a person of superior taste and standing. Both companies first convinced European consumers and then travelled to the US, persuading those who thought "American culture" was an oxymoron to join those Europeans who had exhibited refined taste by choosing water packaged in attractive bottles.

Evian was the first to associate water with fitness, with an early advertisement titled "Revival of the Fittest" suggesting that its unique minerals could rid the body of impurities faster and replace fluids lost during a workout. It is true that Evian rehydrates, but so does any water. Here's a fun fact - Evian spelled backwards is "naive".

As for our belief that bottled water is purer (and therefore better for us) than tapwater, the argument doesn't hold. The New York Times reported that one third of bottled water is tapwater and bottled water is as susceptible to contamination as any water. While many bottled water brands supposedly source their water from mountain streams, artesian wells and an assortment of springs, much of it comes from town supply.

Starbucks, Wal-Mart and Nestle recently suffered a public backlash for sourcing their bottled water from the California water supply during a drought.

In terms of taste, it is not clear that bottled water does in fact taste better. In blind test after blind test, consumers could not identify the difference between bottled and tapwater, and often concluded that the plain old tapwater tasted better.


While bottled water sales have overtaken soft drinks this year, the US$100 billion ($135 billion) industry might be at something of a crossroad.

The public is becoming increasingly vocal about the shortcomings of the bottled water industry. Bottling plants have been shut down by campaigners determined to protect precious water and avoid environmental impact.

Apparently, the amount of oil used to make a year's worth of bottles could fill one million cars for a year.

There is also concern about waste. The town of Concord, Massachusetts, has banned the sale of small water bottles and the University of Vermont has become the first university to ban bottled water. New York City has begun to promote tapwater.

The fact we're all drinking more water is a good thing. Just how good a thing it is for the bottled water industry remains to be seen.

This column is presented in association with Fisher Funds.