Food & Beverage | Selling water: Coke, Pepsi look to make water rain money

Bottled water is starting to seem more like soda, and sometimes taste like it, too.

As bottled water surges in popularity, Coke, Pepsi and other companies are using celebrity endorsements, stylish packaging and fancy filtration processes like “reverse osmosis” to sell people on expanding variations of what comes out of the tap. They’re also adding flourishes like bubbles, flavors or sweeteners that can blur the lines between what is water and what is soda.

For this year’s Super Bowl, PepsiCo even ran an ad for its new Lifewtr, promoting the drink in a spotlight typically reserved for sodas. Also running their first Super Bowl ads were Fiji and Bai Brands, which sell “enhanced waters” made with fruit juice and stevia sweetener.

Michael Simon, Bai’s chief marketing officer, says its drinks “give people that healthy profile they’re looking for, but now they no longer have to sacrifice on taste with the neutrality of water.”

Bottled water has been gaining ground for years, and overtook soda as the No. 1 drink in the U.S. by sales volume last year, industry tracker Beverage Marketing Corp. said. Some of the fizzy, sweetened drinks are considered water by the companies or industry trackers in some cases, as the distinctions between them lose meaning. Companies aren’t as interested in the big, economy packs of plain bottled water that have been fueling the growth, says Ali Dibaj, a Bernstein analyst who covers the industry, since those are less profitable than sodas and are a “horrible business to be in.”

So Coke and Pepsi are focusing on pricier options that compete with brands like Evian and Perrier. And they’re introducing fizzy and fruity varieties to get a better foothold in increasingly crowded marketplace where options like LaCroix and others are gaining popularity. Showing just how blurry the lines are getting, PepsiCo launched a drink last week that it describes as “sorta juice, sorta soda, sorta sparkling water.” Such options can capture people looking to cut back on sodas or juices, and may get people who might buy lower-priced waters to upgrade.

“You can get up the ladder in terms of water and get out of the categories that don’t drive a lot of value,” Coca-Cola’s incoming CEO James Quincey said in September.

Quincey cites Smartwater, which has enjoyed sales growth in North America, as a way for Coke to profitably expand its water business. The brand is billed as “vapor distilled” and features actress Jennifer Aniston in its ads.

He also said that in the crowded Chinese market, Coke is upgrading people to a water brand it markets as “socially responsible” with a different blend of minerals, which costs twice as much.

Exactly what makes water seem like it’s worth the extra money varies, but image is key.

PepsiCo had toyed with names like “Qua” and “Om” before settling on Lifewtr. The company points to the artwork featured on its bottles, and the “reverse osmosis” filtration the water undergoes, with electrolytes added for taste. “This is where consumers are heading,” said Todd Kaplan, vice president of marketing at PepsiCo, about lower-calorie drinks like Lifewtr.

Both Lifewtr and Smartwater, which account for a small portion of the overall packaged water market, are made with municipal water and were selling for USD2.79 for a 1-liter bottle at a 7-Eleven in New York City. The convenience store chain’s private label brand was selling for $1.50 for the same size bottle.

The challenge for Coke and Pepsi is people like Andrew Allen. The New York City resident said he is trying to drink more water, but isn’t loyal to a particular brand and buys whatever he can get a deal on.

“I just wanted to stop drinking soda — just give it up,” Allen said.

Julie McKnight, who also lives in New York City, said the distinctions made by some bottled waters are not worth the extra price. “It doesn’t seem any different,” she said. Mostly, McKnight said uses reusable bottles that she fills with filtered tap water.

To help address people’s concerns about the environment as well as paying for a variation of what they could get from the faucet, companies like Nestle have been “light weighting” the packaging to use less plastic and keep prices down.

In addition to the still, unflavored versions, Coke’s Dasani and Pepsi’s Aquafina have been rolling out sparkling and flavored extensions. Such options are making it trickier to define drinks that may be fizzy and sweet, yet marketed as water. Beverage Digest, another industry tracker, counts flavored sparkling varieties in its water category, as well as Sparkling Ice, which is made with artificial sweeteners.

“Someone could argue with a straight face that maybe those belong with [sodas],” executive editor Duane Stanford noted. But, he said, people drink Sparkling Ice with the “mindset” that it is water. Candice Choi, AP Food Industry Writer

Cod fishing catches plummet in waters off New England

The cod isn’t so sacred in New England anymore.

The fish-and-chips staple was once a critical piece of New England’s fishing industry, but catch is plummeting to all-time lows in the region. The decline of the fishery has made the U.S. reliant on foreign cod, and cod fish fillets and steaks purchased in American supermarkets and restaurants are now typically caught by Norway, Russia or Iceland in the north Atlantic.

In Maine, which is home to the country’s second-largest Atlantic cod fishery, the dwindling catch has many wondering if cod fishing is a thing of the past.

“It’s going to be more and more difficult for people to make this work,” said Maggie Raymond, executive director of the Associated Fisheries of Maine.

State records say 2016 was historically bad for cod fishing in Maine. Fishermen brought less than 77,110 kilograms of the fish to land in the state last year.

The haul was below the previous record low of about 113,398 kilograms a year earlier. Maine’s record year for cod was 1991, when fishermen brought more than 9.5 million kilograms of the bottom dweller to the docks, according to records that date to 1950.

The Sacred Cod is the nickname of a wood carving of the fish that hangs in the Massachusetts State House. That state remains the center of the nation’s Atlantic cod fishery, but the business is in jeopardy there, too. Catch fell from nearly 45.3 million kilograms in 1980 to less than 1.36 million kilograms in 2015.

The catch of cod in Maine, and elsewhere in New England, has fallen in the face of increasingly meager quotas allowed by the federal government. The government’s catch limit in the Gulf of Maine has fallen from more than 8.2 million kilograms in 2011 to about a 453,592 kilograms last year.

New Hampshire fishermen brought more than 90,718 kilograms of cod to land in 1997. That dropped to 20,276 kilograms in 2015. Rhode Island’s total dropped from 215,414 kilograms to 138,891 63,000 kilograms from 1997 to 2015.

The National Oceanic and Atmospheric Administration released an assessment of the Gulf of Maine cod stock in 2014 that said the spawning population was at its lowest point in the history of the study of the fish. Scientists have cited years of overfishing and inhospitable environmental conditions as possible reasons for the decline.

A new assessment is taking place this year, said Jamie Cournane, groundfish plan coordinator for the New England Fishery Management Council, which regulates fisheries under NOAA.

Cod are considered groundfish, which are fish that live near the ocean bottom. Several types of groundfish, including haddock, sole and halibut, have high economic value. The low quotas for cod are problematic for New England fishermen because they must also stop fishing for other valuable species once they reach their cod limit.

U.S. fishermen primarily fish for cod in the Gulf of Maine and Georges Bank, which are major fishing areas off of New England. Georges Bank has also seen steep cod quota cuts in recent years.

“We did not see any positive news for recruitment, which led to those reductions that industry is facing right now,” Cournane said. AP