A Look At How Nestle Makes Billions Selling You Groundwater In A Bottle

Cross-posted from Zero Hedge

A few weeks ago we shared with readers a lawsuit filed in Connecticut against Nestle Waters North America, Inc. alleging that the water they marketed as Poland ‘Natural Spring Water’ was actually just bottled groundwater…the same water that runs through the taps of many American households.

Now a new investigation from Bloomberg Businessweek reveals how large water bottling companies choose their plant locations based not on the steady supply of pristine, natural drinking water, as their labels and other marketing campaigns would lead you to believe, but based on which economically depressed municipalities offer up the most tax breaks and have the most lax water laws.

As an example, even in the drought stricken state of California, Bloomberg notes that Nestle was able to strike a sweetheart 20-year supply agreement with the U.S. Forest Service to pay roughly $0.000001 for the water in each bottle that consumers blindly drop a couple bucks to purchase.

But it illuminates how Nestlé has come to dominate a controversial industry, spring by spring, often going into economically depressed municipalities with the promise of jobs and new infrastructure in exchange for tax breaks and access to a resource that’s scarce for millions. Where Nestlé encounters grass-roots resistance against its industrial-strength guzzling, it deploys lawyers; where it’s welcome, it can push the limits of that hospitality, sometimes with the acquiescence of state and local governments that are too cash-strapped or inept to say no. There are the usual costs of doing business, including transportation, infrastructure, and salaries. But Nestlé pays little for the product it bottles—sometimes a municipal rate and other times just a nominal extraction fee. In Michigan, it’s $200.

Elsewhere, Nestlé has largely prevailed against opposition. In Fryeburg, Maine, it took the company four years to successfully appeal a zoning board resolution to build a facility it said it needed for its Poland Spring line. Last year it gained rights to extract water for the next 20 years—and perhaps 25 more after that. In San Bernardino, Calif., Nestlé has long paid the U.S. Forest Service an annual rate of $524 to extract about 30 million gallons, even during droughts. “Our public agencies have dropped the ball,” says Peter Gleick, co-founder of the Pacific Institute, which focuses on water issues. “Every gallon of water that is taken out of a natural system for bottled water is a gallon of water that doesn’t flow down a stream, that doesn’t support a natural ecosystem,” he says.

Water

Not surprisingly, Nestlé isn’t the only bottled water company playing these games. As Bloomberg notes, Pepsi and Coca-Cola bottle municipal water from Detroit for their Aquafina and Dasani brands, respectively; they pay city rates, then sell the product back for a massive profit.

Of course, even if it is pulled from a ‘natural spring’, which often times it is not, bottled water isn’t necessarily more safe than tap water despite the fact that you’re paying a 1,000,000x markup for the product. In the U.S., municipalities with 2.5 million or more people are required to test their supply dozens of times each day, whereas those with fewer than 50,000 customers must test for certain contaminants 60 times per month.

Bottled water companies, on the other hand, aren’t required to monitor their reserve or report contamination, even though most will say that they do…you just have to take their word for it.  That said, as we pointed out in the post below, American’s are increasingly no longer willing to do that

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