Buyers of bottled H2O tapped out

At its Fort Lauderdale, Fla., warehouse, bottled water distributor Aqua Maestro stocks one of the na

At its Fort Lauderdale, Fla., warehouse, bottled water distributor Aqua Maestro stocks one of the nation’s largest selections of fine waters, which everyone from celebrities to health nuts taps to quench their cravings for upscale H20.

But in recent months, a growing number of Aqua Maestro customers have lost their appetite for the premium water packaged in sleek glass bottles.

Since November, the Boca Raton-based distributor has been receiving fewer orders from hotels in south Florida, where it commonly sells Sam Benedetto, Saratoga and other premium brands of bottled water. With Miami Beach’s vacancy rate recently reaching 40 percent, hotels there need less water because they have fewer patrons, said Brett Spitalny, the chief operating officer of Aqua Maestro parent Global Beverage Solutions.

“It was a moderate slowdown in November and December, and it’s just continuing,” Spitalny said.

Although Spitalny expects sales to pick up eventually, the nation’s 14-month-old recession is trickling down throughout the bottled water industry. The chill that hit the industry in 2008 marked a reversal from its previous years of rapid growth.

The Capital Region houses several major water bottling operations — including the Saratoga Spring Water Co.’s famous sparkling and non-carbonated blue bottles that Aqua Maestro sells. Many of those companies will likely spend the year fending off economic draughts.

“Their production is down. … More people are drinking out of their faucets these days,” said Ozzie Martucci, president of the International Brotherhood of Teamsters Local 669.

Martucci’s union represents approximately 170 Adirondack Beverage workers at the Scotia-Glenville Business Park in Scotia. It also represents 250 workers at PepsiCo’s Latham bottling plant and Glens Falls distribution center.

Adirondack, a subsidiary of the Worcester, Mass., Polar Beverages, produces the Adirondack Natural Spring brand of bottled water. In Latham, Pepsi bottles its Aquafina, the nation’s best-selling water brand.

Saratoga Spring Chief Executive Officer Adam Madkour did not immediately return a call seeking comment.

Evaporating sales

Total U.S. bottled water sales fell 3.3 percent to $6.74 billion during the 52-week period ending Jan. 24. That was a drastic change from the 11.5 percent gain the industry posted for the same period of the previous year. Still and non-carbonated water sales, which account for 90.3 percent of the industry’s total, took a steeper dive last year and slumped 3.5 percent to $6.1 billion.

“2008 was a challenging year for all refreshment beverage companies. Part of that was driven by the softer economy,” said Gary Hemphill, a spokesman for the Beverage Marketing Corp., a beverage data and consulting firm in New York.

Those challenges were apparent in the year-end financial results Pepsi posted earlier this month. The Purchase beverage giant said its fourth-quarter profit declined 43 percent, a loss largely driven by the stronger dollar and restructuring charges. The quarter’s restructuring included Pepsi’s October announcement that it would cut 3,300 jobs and close six plants. Twenty of the 120 jobs at the company’s Latham plant were eliminated.

Hemphill said the bottled water industry was hurt last year by the soft economy and environmental concerns over the disposal of empty plastic bottles. Crude oil’s spike to record high prices last summer also impacted the industry by affecting gasoline and plastic prices.

In Saratoga Springs, Stewart’s Shops experienced flat annual bottled water sales growth for 2008. The convenience store chain recorded those lackluster results even though it posted a 5 percent increase in total sales for last year, said Stewart’s spokesman Tom Mailey.

Overall bottled water sales were likewise flat at Golub Corp. in Rotterdam. Company spokeswoman Mona Golub partly attributed that trend to the widespread availability of that product at everything from convenience shops to hardware stores. The Price Chopper parent did see sales gains with flavored and nutrient-enhanced bottled water products.

“There’s been a lot of innovation around water,” said Hemphill.

Not plain old h2o

By 2007, many beverage makers had poured into the flavored and enhanced water market. The Atlanta-based Coca Cola Co. that year launched its Dasani Plus brand, which includes bottles of kiwi-strawberry flavored water enhanced with vitamins B3, B6 and B12. A year earlier, Pepsi rolled out its SoBe Life flavored water enhanced with vitamins B, C and E.

To adjust to the emergence of flavored and vitamin-enhanced waters and to the economy, Aqua Maestro last week began offering those products on its Web site.

Sam Sylvetsky, the vice president of sales for nutrient pre-mix maker Fortitech, called the nutrient-fortified bottled water market one of his company’s “most dynamic” segments with the fastest growth in new products. He said demand from that market has been growing at the Schenectady-based Fortitech over the past six years, and currently, “It’s as busy or busier than it’s ever been.”

Isbre Holding Corp. is at least one bottled water company that’s as busy as it has ever been. But that is primarily because the Osa, Norway, company only entered the U.S. market in 2006.

Isbre, which imports sub-Arctic glacial spring water from western Norway, has spent the past three years pushing into Northeast markets by gaining shelf space in supermarkets. They include Shop Rite, Stop & Shop and A&P.

“We’re such a young company, there’s only growth for us. We’re getting our product on the shelves,” said Stevan Sandberg, who is the president of Isbre’s U.S. operation in Montvale, N.J.

In 2007, Isbre partnered with the East Syracuse-based Spirit and Sanzone Distributors, which will distribute Isbre in 21 upstate counties. So far, Isbre’s closest retailers to Albany are Quickway convenience stores around Binghamton and Syracuse. Sandberg said his company aims to eventually get its bottled water into Price Chopper supermarkets.

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