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Businesses The Almighty Buck

Nestle Makes Billions Bottling Water It Pays Nearly Nothing For (bloomberg.com) 406

Nestle, the world's largest food and beverage company, has been bottling water since 1843 and has grown into the largest seller of bottled water. But a detailed report on Bloomberg uncovers the company's operation in Michigan, revealing that Nestle has come to dominate in the industry in part by going into economically depressed areas with lax water laws. It makes billions selling a product for which it pays close to nothing. Find the Bloomberg Businessweek article here (it might be paywalled, here's an alternative source).
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Nestle Makes Billions Bottling Water It Pays Nearly Nothing For

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  • by King_TJ ( 85913 ) on Friday September 22, 2017 @02:24PM (#55246353) Journal

    I've heard a lot about how "evil" Nestle is for these practices. But as usual, we're simply dealing with shrewd businesses taking advantage of situations where they can make huge profits because the law of the land doesn't prevent any of it.

    IMO, laws can be changed at any time -- so blame the governments for this.

    • by the_skywise ( 189793 ) on Friday September 22, 2017 @02:31PM (#55246429)
      Yeah - the article paints Nestle as evil but gives the city leaders a total pass for charging only a $200 extraction fee.
      Either the city leaders are completely incompetent and should be kicked out or they took kickbacks in someway and should be kicked out and imprisoned.
      My only thought is that the city leaders decided it'd be worth the cost in terms of jobs and increased tax dollars to the city (which this article pooh-poohs as not worthwhile to research). I know a nearby town has a nestle plant and it's been a boon for the survival of the town.
      • by Anonymous Coward on Friday September 22, 2017 @02:53PM (#55246623)

        To be fair, Nestle SHOULD be painted evil in all this after their CEO's statement that he didn't think water was a human right.

        • Re: (Score:2, Insightful)

          by megamind ( 4743067 )
          YOU HAVE TO FIGHT!! FOR YOUR RIGHT!!! TO PAAAAAARRTTAAAAY!! No one has inherited rights to a limited resources and fresh water is the most precious of all. You are all lucky someone is even willing to bottle it up and ship it to your locale.
        • Because it isn't a human right?

          You can't just wave your hand and assert that a limited resource is a "right".

      • by EndlessNameless ( 673105 ) on Friday September 22, 2017 @03:03PM (#55246713)

        Yeah - the article paints Nestle as evil but gives the city leaders a total pass for charging only a $200 extraction fee.

        It's basically corporate welfare---a handout to a big corporation in exchange for jobs.

        If they increase the fee to a significant level, Nestle will just move to another economically depressed area and offer them hundreds or thousands of jobs in exchange for free access to water.

        When you have hundreds of communities willing to sell out, it's awfully nice to be the buyer.

      • by Cyberax ( 705495 )
        Also, a typical bottling plant water use is minuscule compared to agricultural water use. The only problems happen when bottling is competing with municipalities for fairly rare "spring water" (which has to come from an actual spring).
    • Even if they don't get a discount... Tap water costs pennies a bottle volume to fill, yet we as consumers pay dollars per bottle.

      Yes Nestle has to pay for the bottle, shipping and other markups for things that aren't water, but it is a huge discrepancy in pricing. Why don't we as consumers buy reusable bottles (maybe even a simple glass) and fill them up ourselves for the same rates. This would be like people getting mad that oil only costs 50 dollars a barrel, yet they get about 31 gallons of gas/diesel

      • by King_TJ ( 85913 )

        "Stupid consumers" aren't even the problem, IMO. Clearly, plenty of consumers feel that the convenience of a sealed, labeled bottle of fresh water is worth the price being charged. And maybe it is? For example, if I try to take my own drinks in to a sporting event like a national league baseball game, they won't allow it past security unless it's in a sealed container. My reusable bottles I filled myself won't cut it. But the crazy concession prices in the stadium mean the bottled water, bought ahead of ti

        • Re: (Score:2, Informative)

          by Anonymous Coward
          Or you can just bring empty reusable bottles to the game and fill them up at a water fountain once inside.
        • by crtreece ( 59298 )
          I do this when flying, and the rules for the stadium of the local national league baseball team say it's permitted as well. Take your _empty_ reusable bottle and fill it up from the drinking fountain once you get past security.
      • Put your own tap water in a bottle. How is it price gouging when just about every home has running water in it, with the exception of those very few places where its suggested not to drink it.
      • Why don't we as consumers buy reusable bottles (maybe even a simple glass) and fill them up ourselves for the same rates.

        I can buy 24 bottles of store brand water for around $2. That's less than 10 cents a bottle. I keep a case in my car for when I'm thirsty. Yes, I could fill up a few dozen bottles and keep them in my car but then I would have to remember to fill them, make sure to rotate them, worry about them leaking, etc... Let's say all that only takes me 30 minutes for 24 bottles, my time is worth more that $4/hour.

      • by gnick ( 1211984 )

        Yes Nestle has to pay for the bottle, shipping and other markups for things that aren't water...

        My guess is that shipping dwarfs the other expenses (advertising?) If only there was a better way to transport water than by bottle and truck...

        • Just like the oil companies...wanting to build yet another pipeline across our land. When that breaks down and spills out, they're going to have a real mess to clean up.

      • by bluefoxlucid ( 723572 ) on Friday September 22, 2017 @03:05PM (#55246715) Homepage Journal

        I'm not sure if Nestle makes billions, either. At this point it's not worth looking (I'm not about to sit down and tackle this problem right now), especially since Nestle's practices are known-harmful and how much they make off them is irrelevant.

        Still, on the subject of how much a company makes: the gross profits are often the subject of discussion when we want to attack a business for price gouging, or for any other reason. A Wendy's franchise, for example, charges twice as much for a hamburger as the cost of the burger flipper, the burger maker, the gas, the grease, and the burger itself; yet the franchise makes an 8% average yearly profit.

        Net profits include a lot of organization and things like rent and power, while gross profits skip all that and just focus on what specifically went into the assembly of a product. You also get things like the cost-of-risk, which ends you with e.g. Eli Lily making some 40% profits one year and -21% profits another year, with a five-year average of around 12% (not small, but not egregious). It's a great narrative in the prescription drug debate to call out Lily for making 40% profits [one year], or to point out that those pills cost 11 cents to manufacture; it just happens to be lies told entirely by careful arrangement of true facts.

        So does Nestle have billions in revenues, or enormous revenues and billions in profits?

        (The problem with seeking the truth--or maybe the best part, depending on your perspective--is you'll routinely say things that make someone on every point on the political spectrum squirm around a lot. Sometimes they throw things at you because they don't like having those thoughts.)

      • by mysidia ( 191772 )

        Why don't we as consumers buy reusable bottles .... and fill them up ourselves for the same rates.

        We get their large packs of bottled water, or in some cases filter our own water, because the available municipal water available has made us sick before.

        We regularly get postcards months later from the water district informing us that "Our water was contaminated" above coliform limits.... (Gee thanks!).

        And the quality of municipal water in the city 10 miles away isn't too great either.... "Brown water"

    • by Rujiel ( 1632063 )
      It's not, their fault that sociopathic behavior in the buying of our political system is so darn lucrative! I'm having a hard time believing that anyone actually thinks this shit-- Nestle has more power over our political system than any of us individually could ever hope to have, and yet they're the victim?
      • by King_TJ ( 85913 ) on Friday September 22, 2017 @02:55PM (#55246637) Journal

        Why does it have to be so polarized? (EG. Nestle = victim, OR Nestle = evil sociopaths)

        I really don't find Nestle as either one. I think they're just taking advantage of the opportunities presented to maximize profits, as they've promised their stockholders all along. If Nestle was really SO evil, they'd be putting highly addictive substances into their water bottles causing you to crave Nestle branded water - or something like that?

        Yes, corporations tend to have enough money to buy influence in the political system. That's why I've always felt we need to both pay attention to what's going on and vote in an informed manner, AND reduce government's size and scope. The more power and influence central government has in the first place, the more ability it has to selectively grant businesses specials favors or privileges - despite the will of the people being against it.

        I'd love to see political lobbyists outlawed, period. There's no reason someone should get paid just to try to win a politician's favor on an issue when that's the job of the voting public to decide. My elected representatives are supposed to be up there, doing the lobbying for the issues those of us in their district believe should be handled a certain way. Individuals trying to influence them with gifts, dinners, and what-not? They're clearly only there to subvert the process.

        • I wish I had mod points right now.

          You're exactly right, of course. In every other civilized nation in the world bribery is a crime. In America, we call it lobbying and that somehow makes it legal.

          I'd love to see lobbying made illegal. It can take gerrymandering and forfeiture laws with it too on the way out the door.

        • by gnick ( 1211984 )

          If Nestle was really SO evil, they'd be putting highly addictive substances into their water bottles causing you to crave Nestle branded water...

          They wouldn't be the first [goavitae.com].

        • Campaign contributions from corporations are illegal; however, you're quite right they can buy influence. They can pay full-time lobbyists to represent themselves. They can legally own PACs which, so long as they don't coordinate with any campaign committee, can do whatever they want--and the corporation can put as much money as it wants into a PAC it owns.

          Using the right terms there, chief.

          I'd love to see political lobbyists outlawed, period. There's no reason someone should get paid just to try to win a politician's favor on an issue when that's the job of the voting public to decide.

          It'd be a hard thing to ban without causing a lot of downstream damage. Beyond that, individual citizens aren't

        • by blindseer ( 891256 ) <blindseer.earthlink@net> on Friday September 22, 2017 @04:19PM (#55247235)

          I'd love to see political lobbyists outlawed, period.

          How would that work? First, you'd have to define a political lobbyist. Second, you'd need an enforcement mechanism.

          Part of the problem in making political lobbying illegal is that everyone has the right to communicate with their elected officials. Are you going to say that once someone makes a profession of communicating with a politician that they cannot talk to them any more? Okay, define the point at which a person is a professional lobbyist.

          For an example let's assume I want clean water for my community. So, I start a little group, Keep My Water Clean. I collect donations, hold fundraisers, and so forth so that I can spend my time traveling through the state and the nation telling those in public office that there needs to be government enforcement on keeping municipal water safe to drink and to fund the creation of municipal water sources for growing communities. You want to ban that?

          Let's say there is a ban. How should I be punished if I violate this law and create Keep My Water Clean in spite of the ban? Would you have me jailed? Should I be fined? How do you think that would look in a court of law? Or, the court of public opinion?

          I've seen arguments like this before and the typical response would be that non-profit corporations would be exempt. Okay, did you know that the NFL was a non-profit until there was enough public outrage that they changed their legal status? Being a non-profit doesn't mean the entity cannot be very large and make a lot of people a lot of money. Also, suppose a bunch of people got together to make a non-profit that made it no secret of it's affiliation with a large for-profit entity. Let's call this group Pepsico Employees for Clean Water. Every member of the group is a Pepsico employee, and the board is identical to the board of Pepsico. When they hold a meeting they "rent" a conference room at Pepsico headquarters, and Pepsico then "donates" this rent to the non-profit Pepsico Employees for Clean Water, which is then noted on their tax return as a donation to a non-profit.

          I say let people say what they want.

          I've heard this somewhere before and it comes to mind here, liberals want people to shut up while conservatives want people to keep talking. Go ahead, keep talking. Let the best argument win.

      • Oddly enough, if 10% of the Democratic voters in my district gave me $5, I'd have $275,000. I can win this election in $50k; whether I actually will is another matter, but it's in the realm of firm possibility.

        Of course not even 10% of people who want to volunteer their time are throwing me $5, so I'm reading the FEC's public records on who in my area has made political contributions (large and small) and canvassing their streets knocking on every door asking for donations. For those folks I've profile

    • In fact, this could be fixed on either end: either increase the requirements on the gathering side or increase the requirements on the selling side. If my state has strict laws in place to ensure the quality of tap water, I don't think it's unreasonable to believe that bottled water should be required to be at least as safe, though obviously that isn't how it works yet.

    • so blame the governments for this.

      I'll blame the lawmakers and the companies. Just because something is legal doesn't mean it's right, and when someone engages in legal behavior that is wrong, they shouldn't get off the hook just because they didn't break the law.

    • I've heard a lot about how "evil" Nestle is for these practices. But as usual, we're simply dealing with shrewd businesses taking advantage of situations where they can make huge profits because the law of the land doesn't prevent any of it.

      IMO, laws can be changed at any time -- so blame the governments for this.

      Having had nice refreshing drinks from water buffaloes on a hot day (what we called an old military water tank on a trailer), I can say there are clearly alternatives to water bottles that result in a LOT less pollution. There should be a more meaningful tax on small water bottles sold outside of an emergency situation.

      Incidentally, very few things are as annoying as people who buy a lot of water bottles and leave them half-empty all over the place. (Yes, these people exist.)

    • by vux984 ( 928602 )

      Its even dumber than that.

      Nestle's bottled water product is the same as Coke's flagship product, less a 1/100th a penny worth of flavoring. Are we made about that too now?

  • I have spectacular well water where I live. How do I get in on this gig?
  • Sigh. (Score:5, Insightful)

    by ledow ( 319597 ) on Friday September 22, 2017 @02:28PM (#55246397) Homepage

    THEY'RE BOTTLING WATER.

    Their biggest expense is probably the bottle, and then moving it to somewhere they can sell it.

    This isn't news.

    Nor is it news that stupid people will pay again for something that already comes out of their bathroom taps or falls from the sky for free all the time.

    Dasani (Coke-owned?) were bottling River Thames water and selling it to Londoners. Everyone bought it UNTIL it made the news. They hadn't even noticed or cared up until then.

    Bottled water has its place, sure, but paying for a bottle of water if you live in a huge house with hot and cold running water is like buying a can of air.

    • Disruptive!!! (Score:4, Insightful)

      by jabberw0k ( 62554 ) on Friday September 22, 2017 @02:30PM (#55246415) Homepage Journal
      Shhh, now Everybody who's Anybody is going to have to breathe exclusively canned air, because Jeff Bezos and Elon Musk say so. The truly elite breathe iAir, natchurally.
    • by jandrese ( 485 )
      Biggest expense is definitely shipping the water. The bottles are nearly free at the scale Nestle operates. It's trucking around all of those tons of water that get expensive. Plus advertising, warehouse expenses, salaries, etc...
      • Economics of scale does not reduce the cost of a single item (magically?) to zero.
        Considering that the article said, they make billions, and a bottle probably costs a dollar, they probbaly sell a few nillions of bottles.
        Considering 10 bottles cost a single cent in production, we still look at millions of cost for the bottles ...
        Wow that was easy again ...

      • by OzPeter ( 195038 )

        Biggest expense is definitely shipping the water.

        If they could dehydrate it first then that would substantially lower the shipping costs.

      • Why don't they just dehydrate the water? A heavily-distilled source mixed with a powdered mineral profile, aerated, and sterilized would achieve the same result.

        Maybe if I get elected and save up my Congressional salary, I can start a new bottled water venture. I'll have water profiles to match all kinds of water from around the world--Evian, Sheffield water (the basis of Bass Pale Ale), the wells of various famous European monestaries, you name it--and I'll synthetically produce matching water by mixing

    • Re:Sigh. (Score:5, Informative)

      by OzPeter ( 195038 ) on Friday September 22, 2017 @03:05PM (#55246717)

      ...falls from the sky for free all the time.

      There are many places in the US (typically in the West) where unless you own the water rights to the land you are on, you do not own the water that falls onto that land. So rainwater is only free for certain values of free.

      • The primary cost isn't the water as TFA is making it out to be. It's the filtration. Nestle, Coca Cola (Dasani), and Pepsi (Aquafina), Budweiser, etc. use reverse osmosis fiiltration to purify city tap water for use in their beverages as well as for bottled water. So do most restaurants for that matter.

        The typical reverse osmosis filter in your home operates at a low enough volume that it can run off of pressure from the city water supply. In that case you're basically stealing electricity from the c
    • Re:Sigh. (Score:5, Insightful)

      by Obfuscant ( 592200 ) on Friday September 22, 2017 @03:08PM (#55246753)

      Nor is it news that stupid people will pay again for something that already comes out of their bathroom taps or falls from the sky for free all the time.

      Unfortunately, many times that I am in need of water I am neither in my bathroom (or even in my house at all), nor is it raining.

      Yes, you could claim that it is stupid for people not to carry a refillable bottle of water with them at all times, but you'd be wrong. It's called "convenience", and everyone pays for convenience. Even if you don't use the convenience (and pay for it) of getting a bottle of clean, drinkable water when and where you need it, you pay for the convenience of having someone else make your clothing, build your cars, create your electricity, and almost certainly growing your food. Sometimes, I bet, you even pay for the convenience of not having to prepare your own food or not having to carry it around with you all the time so you can eat it when you need to.

      Calling people stupid because they make use of modern conveniences, despite it costing more than doing everything themselves, is just arrogance.

      Yeah, maybe using bottled water in your own home is overkill, but maybe it isn't -- if you live in Flint, for example. But using bottled water when you're at some event where it would be INconvenient to carry a water bottle is not.

    • As an AC has pointed out, Dasani does do work to make their water *taste* better. First, you have to Chlorinate tap water to keep people from getting sick. But the Chlorine really tastes awful. So they filter it out right before bottling. The bottles have to be air tight to keep bacteria from growing. But removing the Chlorine removes minerals. Distilled water doesn't taste good either. So then they add back a tasty blend of minerals. Why we can't have machines to do this at home, I don't know. The
    • by tattood ( 855883 )
      Penn & Teller did an episode of Bullshit! several years about bottled water. They set up hidden cameras at a restaurant and offered a "premium bottled water" menu to the guests. Each and every glass of "premium" water was just filled from the garden hose outside the restaurant, but none of the patrons could tell the difference.
  • As to the social consequences of what they do, it's up to government to regulate those if they're a problem.

    For example there are third world countries where Coca Cola's bottled water business is sucking up the water supply that locals need to survive. It can do this because governments there care more about wealthy businesses than they do about people.

    • So the people doing the terrible things have no responsibility for their terrible actions if government doesn't stop them?

      Bullshit.

      • by hey! ( 33014 )

        They have moral responsibility, but no legal responsibility. Maybe this is not the way the world should be, but it is the was the world *is*. Where there is money to be made, people are no better than they are forced to be.

      • by Nutria ( 679911 )

        Without fear of the (yes, yes, I know: mythical) Eye In The Sky punishing you, who decides wrong from right?

        Government, that's who.

        • Government, that's who.

          Umm, no. Government decides what's legal and illegal. Society decides what's right and wrong.

  • by turkeydance ( 1266624 ) on Friday September 22, 2017 @02:32PM (#55246437)
    the largest expense is transportation. my dictionary costs $0.44 to make.
  • How about those cross-country water pipelines?

    Oh, not as valuable as oil yet?

  • by JoeyRox ( 2711699 ) on Friday September 22, 2017 @02:35PM (#55246459)
    A 2-liter of Coca Coca cost pennies to make.
    • If you ever want to give up drinking soda, go take a tour of a soda-making/bottling plant. The stench will forever quell your desire to drink soda ever again
    • incorrect. you don't know how to calculate the cost of making, marketing, distributing. They don't make 10,000X profit on a bottle, guess again.

      • by vux984 ( 928602 )

        The difference between Nestle's bottled water, and a bottle of coke is a fraction of a cent worth of syrup. That's it. Drop 1/10000th of $1 worth of flavoring from a bottle of coke, and its now a bottle of water.

        If we're going to act all outraged at nestle for selling us overpriced water, then we should be just as outraged at coke for doing the exact same thing with coke.

        Because that is the entire difference between the two products. 1/10000th of a $1. The rest, the packaging, bottling, marketing, distribut

    • by dddux ( 3656447 )
      And it costs billions to cure diabetes.
  • So paying $3.00 for a bottle of water at an event is a rip-off when you can bring your own bottle of tap-water for nearly nothing from home? I am so surprised.
    • So paying $3.00 for a bottle of water at an event is a rip-off when you can bring your own bottle of tap-water for nearly nothing from home?

      If you bring your own bottle of tap-water to an event . . . U R TERRORIST!!!!

      This is why it's banned at events and on airlines. They want to protect you from TERRORISTS!

      They don't ban it so the airport shops and event vendors can make tidy profits . . . like some skeptical folks might assume.

      • by crtreece ( 59298 )
        Most events, and the airport, will let you in with your empty reusable water bottle. Fill it from the water fountain once you get in. The last few airports I've been in even had the wall-mounted bottle filling stations.
  • Pretty much everyone should be aware by now that designer bottled water is an enormous, expensive scam that is harmful in pretty much every respect.

  • Why is this here? (Score:5, Insightful)

    by duke_cheetah2003 ( 862933 ) on Friday September 22, 2017 @02:50PM (#55246587) Homepage

    This has absolutely nothing to do with nerds, technology, internet, or anything even close. It's a food company putting water in bottles. WTF. Not news that matters.

  • So what? The question is and has always been (and always been ignored or avoided) WHO OWNS NESTLE????? Who is the majority shareholder of Nestle???? Who are the owners. Stop talking about monolithic corporations without naming the owners --- otherwise you are just spinning.
  • I can not say this about other countries, but in the US, if you purchase bottled water for ANYTHING other than an emergency back up to existing water supplies, you deserve EVERYTHING that comes with it. The actual cost is around a 2000X markup. But I think a Tusser quote pretty much sums it up. A foole and his money be soone at debate: which after with sorow repents him too late. [knowyourphrase.com]
    • wrong, plenty of cities have water that tastes like ass or has bad thing in it, perfectly worth it to buy bottled water.

      if you think bottled water is expense of note, get a real job.

      • Yup! My GF and I used to drive to Southern Missouri to visit her relatives. We stopped in Rich Hill for a break and the first time we did, she told me to try the water. Ugh, I never did THAT again!

    • I dunno. $4 for a pack of 21 1-liter bottles of water from Costco doesn't seem like a budget breaking decision.

      And I'll be frank, tap water is disgusting almost everywhere. It might just be tap water they're putting into the bottles, but there's some serious filtration going on, that makes that water tastes 2000X better than tap water.

      But personally, I only use bottled water when I drink it directly. For coffee, food prep, or anything else that needs water, the tap is fine.

      For what it's worth, if you're

  • Bottled Life - Nestlé's Business with Water [youtube.com] (English with some German commentary, YT auto-translate of subtitles may help)

    This docu is about Nestlé's bottled water operations in (mostly) poor countries. But with some parts about this subject as well - taking a public resource & selling that for profit.

  • If, for example, you live in Flint MI, it might be worthwhile to buy their water. Unless they used Flint water.

  • by Dracos ( 107777 )

    ... by which mankind has swindled itself are religion and bottled water.

Memories of you remind me of you. -- Karl Lehenbauer

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