How Coke and Pepsi Make Millions From Bottling Tap Water

How Coke and Pepsi Make Millions From Bottling Tap Water, as Residents Face Shutoffs
The beverage giants were allowed to keep bottling in Detroit, despite substantial uncollected water bills

In recent weeks, on a quiet stretch of Detroit’s west side dotted with vacant homes, a 262,000-square-foot Coca-Cola manufacturing facility has buzzed with activity, even as many businesses in Michigan were ordered by the state to temporarily close to combat the ongoing coronavirus pandemic.

Coca-Cola churns out a number of beverages here, including Dasani bottled water, which generated more than $1 billion in U.S. sales in the past year, according to market research firm IRI. It’s a good time to be in the water business: As the coronavirus pandemic spread in the U.S. throughout March, bottled water sales increased 57 percent over the same time period last year.

But among the products, such as toilet paper and hand sanitizer, that Americans are panic-buying, bottled water is unusual: There is no shortage of safe drinking water, and health officials have tried to assure people that public water supplies are not contaminated by the coronavirus. Hoarding bottled water simply isn’t necessary for most people.

What’s more, most bottled water sold in the U.S. comes from the same municipal sources that supply tap water—a fact that might be unknown to most consumers. Coca-Cola makes Dasani at the company’s Detroit plant by purchasing, treating, and bottling municipal water before selling it at a significant upcharge to consumers. Pepsi bottles its Aquafina water brand in Detroit the same way.

The business model is hugely profitable. The cost to buy that municipal water is exceedingly low—and once bottled, the markup can be around 133 times greater, a Consumer Reports analysis of company water billing and usage records found.

But what’s good for businesses isn’t necessarily good for consumers, according to CR’s review, which included the examination of hundreds of pages of billing and other records obtained through public records requests, and interviews with environmental law experts, industry consultants, residents of Detroit, and consumer advocates.

For starters, bottlers and consumers aren’t always treated as equals by water utilities, CR found. In Detroit, whose policy prior to the coronavirus crisis called for shutting off water to residents if they fell $150 behind in their water bills, 2,800 homes were estimated to be without running water at the start of the pandemic. (Read more about cities that have not restored water to residents during the coronavirus crisis.)

But bottlers in Detroit have also racked up tens of thousands of dollars of past-due water bills that went unpaid for months, CR found. Not once has their access to water been shut off over the time period we examined. When asked why, the city cited the companies’ strong payment history and an ability to pay their bills. The city said in a later statement that it had made errors collecting past-due balances.

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