Nestle Waters – Is the healthy hydration company promoting a healthy environment?

The negative effects that bottled water has on the environment and what one company is trying to do about it.

Nestle Waters North America began in the bottled water market in 1976 with the Perrier brand[1]. Since then, the market for bottled water has continued to grow. Nestle Waters NA now encompasses 11 brands in the US, representing over $4b in sales and controlling 37% of the market. Despite strong growth, Nestle as an industry leader is facing significant challenges as climate change poses a threat to its core operations.

 

Water – an increasingly scarce resource

 

Currently, Nestle sources its water from natural springs and reservoirs. Increases in global temperatures and changes to weather patterns are causing droughts and limiting the availability of water, upon which Nestle directly depends. Compounding this increasing scarcity of water is the fact that for each 1L of water that Nestle bottles, Nestle needs ~3L of water[2]:

 

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The climate effects of plastic bottles

 

Production

 

Producing plastic water bottles is extremely energy resource intense. Polyethylene terephthalate (PET), the most commonly used plastic for water bottles, is a crude oil derivative product. It takes about 17.6m barrels of oil to meet demand for US water bottle manufacturing each year[3]. It is estimated that the oil used in water bottle manufacturing could instead fuel 1m cars for a year[4]. In addition to the use of oil, bottling water produces more than 2.5 million tons of carbon dioxide each year, which directly contributes to climate change5.

 

Distribution

 

Transportation is the one of the largest contributors to greenhouse gas emissions worldwide[5]. Nestle transports its products from its factories to its distribution and retailers or directly to consumers. In 2013, on average, customers were located 450km from the Nestle factory10. As a result, a significant portion of Nestle’s greenhouse gas emissions were related to its transportation of finished products. On the bright side, 80% of products were shipped directly to consumers, which helped to limit transportation distances by removing the middle man in the supply chain10.

 

Waste

 

Even though all plastic water bottles are recyclable, data from the National Association of PET Container Resources (NAPCOR) shows that only 38.6 percent of bottles were recycled in 2011[6]. NAPCOR also shows there have been recent significant increases in recycle rates (up 20% from 2010 to 2011). It is important to note that this data was commissioned by an industry association and may be skewed towards positive outlook on recycling rates. However, the data still show that the majority of plastic bottles end up in landfills.

 

What is Nestle doing about it?

 

Nestle is already trying to lessen its impact on the environment through its sustainability initiatives. From 2010 to 2015, Nestle decreased packaging weight per liter by 9%, its use of additional water by 19%, and its energy consumption per liter by 19%[7]. With respect to distribution, Nestle is trying to optimize its logistics by reducing its distance from consumers, optimizing its payload, and exploring alternative transportation[8]. Additionally, Nestle is educating consumers about recycling through labels and advertisements and supports initiatives that increase the number of recycling receptacles available[9]. These actions are aimed at improving recycling rates, so that fewer plastic water bottles end up in landfills and therefore decrease the impact Nestle’s bottles have on the environment.

 

However, these incremental actions may not produce a large enough impact. As a result, governments are beginning to take action against bottled water manufacturers. For example, Ontario has recently approved a 2-year ban on the creation or expansion of bottled water operations (an area where Nestle operates) in response to a local drought and growing concerns about the industry’s effect on the regional groundwater supply[10].

 

What other opportunities exist?

 

Along with continuing to pursue their current sustainability initiatives, Nestle can do even more to lessen its impact on the environment:

 

  • Decrease the amount of water used to make 1 liter of bottled water. Currently, Nestle uses nearly 3L of water for each liter of bottled water it produces. Given its scale, decreasing the amount of water needed per bottle even slightly could have significant effects on its need for water.
  • Invest in alternative water purification techniques. Nestle should develop technologies that extract less freshwater by utilizing currently non-potable water. For example, Nestle could invest in technologies that purify rain water or desalinate ocean water.
  • Develop alternative containers that have less of an impact on the environment. Production and destruction of plastic bottles has a huge impact on the environment. Nestle should seek alternative materials for its containers that require less energy to produce or are biodegradable.

 

As climate change continues to progress, Nestle can build upon its current sustainability initiatives to lessen it environmental impact by limiting its energy use, water use, and waste.

 

(791 words)

[1] http://www.nestle-watersna.com/content/documents/pdfs/nwna_at_a_glance_2015.pdf

[2] http://www.nestle-waters.com/creating-shared-value/water-stewardship/best-in-class-water-use

[3] http://pacinst.org/publication/bottled-water-and-energy-a-fact-sheet/

[4] http://www.earth-policy.org/plan_b_updates/2006/update51

[5] https://climate.dot.gov/about/transportations-role/overview.html

[6] http://www.plasticsnews.com/article/20130220/NEWS/130229991/pet-water-bottle-recycling-rate-jumps-almost-20-percent

[7] http://www.nestle-waters.com/aboutus/key-figures/key-figures-onglet2

[8] http://www.nestle-waters.com/creating-shared-value/environmental-performance/distribution

[9] http://www.nestle-waters.com/creating-shared-value/recycling-more/structuring-and-improving-pet-collection

[10] https://www.theguardian.com/world/2016/oct/17/ontario-bottled-water-operations-moratorium

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5 thoughts on “Nestle Waters – Is the healthy hydration company promoting a healthy environment?

  1. You touched upon a number of great points mentioned above. A couple of thoughts:

    1) With these additional investments into alternative purification techniques and eco-friendly packaging, Nestle will undoubtedly incur significant additional costs. If Nestle passes these on to the consumer, I wonder if the consumer will opt to buy from another competitor or just drink tap water altogether, since the water market is fairly elastic. (At least in developed countries with clean water!).

    2) I wonder what the long-term viability of the bottled water industry is in general. As you mentioned, Ontario is starting to restrict expansion of bottled water operations – I would not be surprised if others follow suit. Given increasing regulatory restrictions on bottled water companies, a lot of companies are developing innovative water filters (that work in both developed and developing countries) without the need for actual water bottles.

    Ultimately, I feel like the bottled water industry itself is somewhat of a contradiction to sustainability. Perhaps Nestle will need to re-evaluate what markets it sees itself operating in for the long haul.

  2. Thank you for this great post! Though the measures Nestle has put in place thus far to increase the sustainability of its bottled water business are admirable, I agree with you that there is much more Nestle can and should do to lessen its impact on the environment. As the above comment mentions, the idea of sustainable bottled water is sort of paradoxical. I think you’ve made some great suggestions in terms of other things Nestle could do to mitigate the adverse effects of bottled water production and consumption; to me, the most exciting is the prospect of developing innovative materials to replace plastic, so that bottles themselves could be disposed of safely and easily. I am aware of products targeted towards at-risk populations that employ biodegradable or even edible packaging. If Nestle could put resources behind driving innovation in that vein, and subsequently use the power of its immense global supply chain to bring that innovation to scale, the implications would be enormous.

  3. Wow, roughly 2/3 of the water the Company uses for production goes to waste (in the sense that it never makes it into a bottle)? I never thought about the reality of bottling water – I naively ignored the idea that other parts of the production/packaging/distribution process would need water in some way, shape, or form.

    Do you know how much recycled plastic Nestle uses in its production process? Are the bottles it uses sourced from some sort of contract manufacturer? If it primarily uses “new” plastic, I’m curious about the extent to which it would be feasible for Nestle (and/or its manufacturers) to produce and use bottles made from 100% recycled plastic.

    I was surprised at your comment that Nestle Waters includes 11 brands in the U.S., and I had to up the Nestle Waters North America website (http://www.nestle-watersna.com/en) to take a look for myself. Ice Mountain, Poland Spring, Deer Park, Nestle Pure Life, etc. … It makes me wonder – are the production, packaging, and distribution processes the same across all of the brands, or are some of the individual brands harsher on the environment than others?

  4. Thanks for the insightful post Catherine. I agree with the previous two comments. If Nestle truly wants to shift away from its practices that contribute to climate change, there needs to be a major shift in how they view their core business.

    I like your suggestion of developing new material to replace the plastic used in producing the bottles but I would like to take the idea a step further. I think Nestle should shift from producing single serving bottles to either developing filters that can be used to convert salt, fresh and tap water into drinkable water or produce a re-usable bottle to further reduce the need for bottled water. While I recognize that both of those avenues represent an uphill battle with established competitors such as Brita and Swell respectively, I believe this is the most effective way Nestle can make an impact against climate change.

    Unfortunately, it seems like Nestle has one foot in and one foot out of this fight. They have recently established a program called ReadyRefresh that will deliver packages of 24 plastic water bottles to people’s homes. While I understand the need to continue to generate revenue for the company, this appears in direct opposition to their “sustainable mission”. Instead of delivering all of these individually sized waters, they could just as easily provide 2-3 larger sized containers to mitigate the environmental impact. This practice truly calls into question where Nestle’s motivations lie.

  5. This is very interesting and actually just ties back to what I learned from the Coca-Cola post (that they spend 1.7L per liter of Coca-cola and I later found out that beer industry is as wasteful as you said Nestle is, 3L to 1L of beverage).
    The fact that only 38% of the bottles were recycled is alarming, but I would like to understand how it evolved with the growing awareness of climate changing and recycle impact.
    I’m glad government is becoming more environmentally active but it concerns me when it starts to over regulate the market. I would prefer it to do a campaign to increase awareness in the population and decrease the demand for such products than to ban companies and affect so strongly on the free market.

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