Is caffeinated water the way of the future? Big water bottle companies like Nestle (OTC: NSRGY) and Coca-Cola (NASDAQ: COKE) (NYSE: KO) seem to think so. Both have now announced plans to launch caffeinated sparkling water in early 2020. This comes as Americans increasingly turn towards healthier options and as Nestle's image becomes increasingly tarnished by their "predatory" business practices.
Nestle is putting their money behind Poland Spring energy water planning to take advantage of the name recognition of the billion-dollar brand. This canned sparkling water will contain the same amount of caffeine as a cup of coffee. According to Yumi Clevenger-Lee, chief marketing officer of Nestle Waters North America, customers have been experiencing an "energy crisis... sometimes water doesn't cut it." Some prospective customers seem very excited for the new alternative to coffee.
Nestle Pure Life Plus, on the other hand, is Nestle's new functional water. The launch is currently scheduled for February 2020 and will come in three varieties: magnesium, zinc, and potassium. Clevenger-Lee wants to differentiate Nestle Pure Life Plus from functional drinks with "very high sugar, the colors and all of those other things", so the beverage will include no artificial sweeteners or sugar.
Nestle isn't the first company to pick up on the caffeinated water trend. In November, Coca-Cola announced its plan to launch AHA flavored sparkling water. AHA will come in 8 different flavors, two of which include caffeine. AHA is scheduled to hit shelves on March 2 in the U.S. The company released their first line of sparkling water in 2014 and released a sparkling version of Smartwater in 2015. Shane Grant, Coke's head of its North American still beverages unit, says the company is looking for a "differentiated space"
The popularity of bottled water in America seems to be stagnating, and Americans are drinking less soda every year. Beverage companies are scrambling to keep up with changing trends especially since the largest shift is towards tap water. Due to environmental concerns, many potential customers are transitioning to reusable water bottles. Companies need to make their product special enough to attract customers who are now getting their water elsewhere.
Nowhere is the sign of shifting sentiments about bottled water more stark than in Michigan where Nestle has a reputation for taking advantage of public resources. The company which saw sales exceeding $7.8 billion in 2018 currently pays practically nothing to pump millions of gallons of water out of Michigan water systems every year. In 2018, they paid only $200 per Critics call their practices in the state "predatory" and say the company is a corporate villain. The company will provide funding for baseball diamonds and fireworks for communities while draining nearby creeks and streams dry. The company argues it has the right to pump water out of these communities because it is an "essential public service", but the Michigan Court of Appeals disagrees. The court blocked the company's plans to increase water withdrawals in a small town in Michigan.
Meanwhile, in Flint, Michigan, residents pay far more for potentially tainted water than the billion dollar company pays for clean water. In a move that many consider to be disingenuous, Nestle began donating packs of bottled water to Flint residents in 2017. Just this summer, the company was condemned for draining water out of California while wildfires and droughts raged. The company paid just $2,000 for their federal permit and nothing for the water itself.