Maybe Oil and Water Do Mix

Americans have a seemingly insatiable appetite for over-the-top displays. Think about how many consumer items that, given the current economic environment, now seem like symbols of a decade of extreme consumption and excess -- not to mention the subsequent sense of entitlement. Giant SUVs and even the bottled-water craze are examples of a consumer gone wild.

Now that times are leaner, such status symbols can seem oh-so last year. Many companies will need to adjust as consumers change in a big way. And they will change. They've already begun to.     

The incredible shrinking automobile
The cat's out of the bag, if the SUV situation is any indication. Back in May, I started noticing more and more people riding the public buses and walking (often with grocery bags) as gas galloped towards the $4 mark -- and I attributed the change to our gas pains.

The data show that Americans really are cutting their driving and are crowding onto public transit as gas prices take off. Americans drove 1.4 billion fewer highway miles in April, the sixth month in a row we cut back on our road-warrior tendencies.

Further, we've all heard the news that Ford (NYSE: F  ) and General Motors (NYSE: GM  ) are being forced to shift their emphasis from gas-guzzling trucks and SUVs to fuel-efficient cars. I don't know about you, but I swear I see more and more Toyota Priuses and Daimler's Smart Cars all the time. Honda's (NYSE: HMC  ) hydrogen-powered car is causing a lot of buzz. GM plans to resuscitate its electric car, too.

Water, water, everywhere (and in our taps at home!)
Bottled water looks like the next casualty as consumers try not to blow their budgets. Now, I'm not one of those people who fly into a rage every time I see somebody chugging from a bottle of water. Still, I've long thought the bottled-water craze was one of the weirdest episodes in the history of corporate marketing, not to mention consumer behavior. After all, many bottled waters are basically filtered municipal -- or tap -- water.

Yes, it's true. According to a Fast Company article last summer, Pepsi's (NYSE: PEP  ) Aquafina -- which has the top market share in the niche -- is simply filtered municipal water, as is the No. 2 brand, Coca-Cola's (NYSE: KO  ) Dasani. And while the companies' fancy, vigorous, energy-intensive reverse-osmosis process allows the companies bragging rights, the author argued that in effect, the companies are cleaning water that's already clean. Convincing consumers to desire something that's not any better than what they have for free at home -- now that's a miracle of marketing.

Bottled water brings us back to oil, too. Shipping heavy bottled water all over the country (and the world, for that matter) increases energy demand, which means more fuel. The plastic bottles are also petroleum-based. Just realizing this underlines how purchasing decisions often have more far-flung repercussions than people realize. You could argue that bottled water hurts Americans' pocketbooks in more ways than one.   

Pirate ship in a bottle
You could also argue that much like some people's decisions to switch to public transit, walking, or mopeds, a slowdown in the sale of bottled water is yet another illustration of the dramatic lifestyle changes afoot these days.

A recent Associated Press article discussed signs of a sudden consumer shift away from bottled water. Consumers' ecological concerns are now joined by budgetary ones, it seems, and that's a powerful combination. Americans spent nearly $17 billion on bottled water in 2007, but that 12% growth was actually the slowest growth since in any year the early 1990s. With the current economic climate, maybe people are getting wise to the idea that draining bottled water can also drain the wallet.

Meanwhile, faucet-purification accessories, such as Clorox's (NYSE: CL  ) Brita and Procter & Gamble's (NYSE: PG  ) Pur, are making serious gains. The AP article gave some figures that highlight what many Americans are apparently figuring out: Regular bottled-water consumption at current prices could cost the purchaser hundreds, or even thousands, of dollars per year compared with just using tap water, at about $51 per year. 

Cheap chic
The recent tendency for Americans to want things they didn't need is great fodder for pop psychologists and armchair behavioral economists. Some combination of slick marketing and the perception of affordability during the recent economic go-go years contributed to an out-of-control consumer culture. Those crazy years were also fueled by some other unsustainable elements, such as housing prices and easy credit, and now the marketplace is quite painfully pushing us all back into equilibrium again.

Many companies surely laughed all the way to the bank when times were good, but now they're going to have to adjust -- some quite painfully -- as Americans make tough adjustments and cut expenditures that now seem frivolous. But as is always the case, what's painful for some companies will surely spell opportunities for others.

Oil and water don't mix, but right now, they're sending a signal that a more frugal, conservation-minded American consumer attitude may be brewing.


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  • Report this Comment On June 22, 2008, at 9:00 PM, FakePlasticFish wrote:

    Yes, people are realizing the connection between bottled water and oil (oil for transportation as well as plastic bottles) but it's ironic that in its anti-bottled water commercials, Clorox never mentions the connection between its plastic Brita filters and oil.

    In Europe, the original Brita company has created a take-back recycling program for used filter cartridges and all parts are recycled/reused in Brita's own facility. In North America, Clorox's Brita cartridges can only be tossed in the trash.

    The "Take Back The Filter Campaign" is urging Clorox to provide the same kind of take-back program as already exists in Europe.

    Please visit http://www.takebackthefilter.org to sign the petition, send us your used filters, and spread the word.

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