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Bottled Water Industy Faces Downward Spiral

These are desperate times indeed for bottled water companies, which means they're resorting to desperate measures.

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A coalition of Canadian groups filed a complaint under the Canadian Code of Advertising Standards against Nestlé Waters North America. The groups argued that Nestlé attempted to mislead the public on the true impacts of bottled water and that the ad contravened the Canadian Code of Advertising Standards by making false and misleading statements regarding the environmental impacts of its product. The complaint also alleged that some of the statements in the ad are contrary to guidelines that have been set by Canada's Competition Bureau and the Canadian Standards Association to ensure environmental claims are specific and verifiable. The complaint has yet to be resolved.

Infiltrating and spying

In June 2008, a Swiss television station aired a documentary revealing how in 2003 Nestlé had commissioned a private security firm -- Securitas -- to infiltrate a group of Swiss citizens who were working on a book about Nestlé's business activities. The citizens were all members of the trade monitoring group Association for the Taxation of Financial Transactions for the Aid of Citizens, known by its French acronym ATTAC. One of the main focuses of Nestlé's surveillance was a Brazilian activist who has been struggling against the company's bottled water operations in Sao Lourenco Brazil.

The tactics outlined above paint a picture of a company trying to salvage a struggling business segment. They also point to Nestlé's historical track record in dealing with organized resistance to its global operations. Due to its size and diversity, Nestlé's socioeconomic impact is truly global and spans a large number of industries. Given its reach it is no surprise that the Economist would state in 2004 that "few companies are more exposed than Nestlé to reputational risks". The company response to critics is often arrogant, hostile and stubborn. This is not a company that will shy away from controversy and will employ a diversity of tactics to cleanse its reputation and ensure a steady stream of profits. How it is dealing with the bottled water backlash is no different to how it has responded to other criticisms.

Nestlé's recent drop in bottled water sales and its increased resistance to the bottled water backlash show that it will not go down without a fight. Nevertheless, when industry analysts begin discussing the prospect of selling bottled water brands what we will see is Nestlé either begin to sell off parts of its bottled water division or fight back. Until now, Nestlé has chosen to fight on a variety fronts with the hopes of regaining lost ground. However, given that the company is facing a broad popular movement challenging bottled water and a buying public with less disposable income, the future does not look bright for Nestlé Waters.

 

 

Richard Girard is the corporate researcher at the Polaris Institute.

 
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