Back in September 2009, slack bottled water sales took a toll on blue-chips such as Coca-Cola
According to industry research cited in a recent Wall Street Journal article, U.S. per capita bottled-water consumption fell an estimated 3.5% in 2009, worse than the sub-2% downturn of 2008.
Industry tracker Beverage Marketing Corp. previously said that 2008's developments indicated "forces affecting the beverage marketplace generally," which "did not suggest the start of an ongoing diminishment in demand for bottled water."
Ostensibly, that call was based on bottled water's then-recent outperformance versus carbonated soft drinks, which notably appears to have continued into 2009.
Yet for shareholders of Coca-Cola and PepsiCo, who are doubtlessly familiar with soda's tough sell in the U.S., the positive buzz of relative outperformance does little to assuage their companies' meaningful U.S. volume declines in not one, but two major product categories.
Exactly how meaningful? The rivals' respective Dasani and Aquafina water brands saw North American volume plunge by double digits in 2009. Less onerously, although hardly encouraging, Coca-Cola's regional carbonated volume ebbed 3%, while PepsiCo's slumped 5%.
Investors may need to get used to such numbers. Market-researcher Mintel, for instance, sees sales of home water-filtration solutions climbing nearly 20% in the next three years.
Presumably, that projection includes trade-up by consumers who have long practiced unprotected tap-swigging, but the remainder of the growth will likely come directly out of soda and bottled water sales.
Other companies that might suffer in that scenario include Dow Chemical
However, there's one final card the beverage makers can play.
While bottled water ads have historically challenged the quality of municipal wells, it could be high time to impugn the efficacy of home filtration products. Granted, the popular Brita and PUR water-filtration brands -- made by Clorox
Meanwhile, I expect that the industry in general will continue to publicize bottled water's small environmental footprint compared to that of soft drinks and other beverages -- an area in which Nestle (OTC: NSRGY) in particular has excelled.
Ultimately, I'm not confident that even the most aggressive marketing tactics can appreciably move U.S. consumers back to the bottle. However, I do expect that Coca-Cola and PepsiCo's renewed focus on the North American market will give investors plenty to watch.
Coca-Cola is a Motley Fool Inside Value recommendation. Clorox, Coca-Cola, PepsiCo, and Procter & Gamble are Income Investor choices. Motley Fool Options has recommended a diagonal call position on PepsiCo. The Fool owns shares of Procter & Gamble. Try any of our Foolish newsletter services free for 30 days.