Plastic Water Bottles, Which Enabled a Drinks Boom, Now Threaten Industry
Hi,<p>I&#x27;m the founder of Tap previously the CEO and Founder of MakeSpace. Earlier this year I began working on a new company with the goal of eliminating the single use plastic water bottle.<p>Earlier this year I made an observation, the first step of any scientific experiment, that launched Tap. I noticed water fountains were not on Google Maps. This puzzled me and led me to dive deeper into understanding the beverage market.<p>TL;DR -- The answer is going to be carrying your own bottle (Like we all did in high school &#x2F; college &#x2F; burning man). But the lack of knowing where to find clean, unpackaged water is the reason for the growth of single-use plastic bottles. We&#x27;ve set out to change that.<p>Here&#x27;s my thoughts:<p>The beverage industry is ripe for disruption. There are two glaring problems plaguing the industry:<p>The first is that the amount of waste created is terrible for our environment. With ~9% of plastic waste actually getting recycled, we&#x27;re seeing massive amounts of plastic go straight to landfills and our oceans. Now that China has recently rejected our plastic and cardboard, that problem is going to get worse...fast. As local, city, state, and even international governments ban single use plastic (ex. European Union), the opportunity has finally emerged. In these progressive cities, I think the beverage industry will respond to the local ban by moving to paper, aluminum, or glass. But any of these moves would actually INCREASE the cost of goods sold from materials and transportation as plastic has always been the cheapest option. Coca-Cola has even referenced this in its 2017 10-K. (direct quote below)<p>“Changes in, or failure to comply with, the laws and regulations applicable to our products or our business operations could increase our costs or reduce our net operating revenues. Changes in applicable laws or regulations or evolving interpretations thereof... to discourage the use of plastic, including regulations relating to recovery and&#x2F;or disposal of plastic packaging materials due to environmental concerns... may result in increased compliance costs, capital expenditures and other financial obligations for us and our bottling partners, which could affect our profitability, or may impede the production, distribution, marketing and sale of our products, which could affect our net operating revenues.”<p>The second is the decline of consumer preference to sugary drinks. The bottling industry, at one time, was significantly more decentralized because people cared about the taste of local water. Inventions like high fructose corn syrup (HFCS) created most of the beverages we grew up drinking and this taste became more manufactured. However, the health problems associated with HFCS have been enough to slow revenue from these products. In 2017, for the first time bottled water sales exceed those of sugary drinks.<p>Now we see Coke&#x2F;Pepsi&#x2F;Nestle pushing hard into bottled water sales. We’re also seeing JUSTWater (Jaden Smith) and Boxed Water come about, in addition to Watermelon water which addresses the eco and consumer preference change.<p>These, in my opinion, are just a half step forward. So what&#x27;s the answer? Well, think outside the bottle.<p>Tap is going to disrupt the beverage industry by decentralizing the bottling industry. We&#x27;ve created a consumer alternative to packaged beverages -- a marketplace for unpackaged beverages with a group of users, with 17,000 users in &lt;60 days since launch, who carry their own bottles. As 65% of the cost of a beverage today goes into transportation and packaging, by the mere change that the user carries their own bottle, we can massively win on beverage options and lower prices. Water is our first product.<p>Furthermore, sales of reusable bottles (Contigo -- 45 million units per year, SOMA ,Swell, Klean, Yeti, Hydroflask) are skyrocketing with over 51% of new reusable bottle sales being attributed to the consumers wanting to reduce their plastic usage.<p>An article was published this past week in the WSJ taking aim at water bottles. Specifically, the WSJ spoke to bottled water’s massive growth over the years, and how its future is suddenly uncertain because of the movement to halt the plastic crisis.<p>Highlights on the market:<p>“Bottled-water sales have boomed in recent decades amid safety fears about tap water and a shift away from sugary drinks. Between 1994 and 2017, U.S. consumption soared 284% to nearly 42 gallons a year per person, according to Beverage Marketing Corp., a consulting firm.”<p>That is unparalleled growth… And of this boom in the U.S., 67% of all packaged water sold has come in single-serve, disposable bottles.<p>While the news has decreased public trust in tap water, and consumers continue to shift away from sugary drinks, something interesting is happening...Due to a massive uptick in public awareness about the plastic issue, single-use bottled-water sales are actually BEGINNING TO SLOW.<p>“Bottled-water volume growth is forecast to slow this year in both the U.S. and globally, according to research firm Euromonitor. Nestlé SA, the world’s biggest bottled-water maker, in October said its bottled-water volumes for the first nine months of the year declined 0.2%, compared with 2.1% growth a year earlier.”<p>Something interesting is happening here. Consumers are still BUYING water at record pace because they can’t trust the tap, however, they aren’t purchasing single-use plastic. Drinking water sales aren’t DECLINING, they are SHIFTING… They are shifting towards bulk packaging. Consumers are shifting to bulk because bulk is the only easily available alternative.<p>Another staggering statistic was released showing that one in five consumers in the last twelve months have purchased a reusable water bottle. Of these consumers, 52% of them said the leading driver was to reduce their personal plastic usage. 20% of consumers in the last 12 months alone purchasing a new reusable bottle proves there is a large market of people who incorporate reusable bottles into their daily routine.<p>Beverage companies are working to catch up with the trend. According to the WSJ, “Pepsi also now sells reusable water bottles that come with capsules to add flavors, and is testing stations in the U.S. that dispense Aquafina-branded water in different flavors.”<p>There are in fact other solutions, but major beverage brands find they are not favorable. “A former Nestlé executive said the company’s internal research showed consumers were unlikely to take to boxed water. Glass bottles, meanwhile, break easily and are expensive to transport because they are heavy.”<p>“Poland Spring-owner Nestlé is rolling out glass and aluminum packaging for some brands and researching ways to make all its packaging recyclable or reusable by 2025.”
These alternatives will all INCREASE THE COST OF GOODS SOLD, and these “solutions” are still wasteful.<p>So here is where we think we fit in… and it’s what we&#x27;re working to prove.<p>“It’s tempting to romanticize a world without packaging,” Coca-Cola Co. CEO James Quincey wrote in a blog post this year.<p>It’s tempting because it is happening and within our reach.<p>Brands like Pepsi (SodaStream) and FloWater are growing rapidly due to their unique position in being able to provide UNPACKAGED and TRUSTED water. This is the only solution that caters to the needs of those who don’t want the plastic bottle, but still desired premium, filtered options. Before these brands, the choices were limited for the reusable-bottle-carrying consumer: filter your own water (ex. Brita), rely on water coolers (like in offices) or simply trust the tap. And as tap water continues to be vilified, and the other solutions aren’t convenient, there is a market of UNPACKAGED, TRUSTED water that is prime for explosive growth.<p>www.findtap.com &#x2F; apps in Android and App store (Search &quot;Tap Water&quot;).<p>Lastly, check out the #DrinkDifferent movement on Instagram at @FindTap. Join us with a 30 day pledge to skip plastic bottles.<p>Ps. We&#x27;re hiring. Hit me up siruva07 at gmail dot com if wanna learn more.