Australian ban on plastic bottles unlikely to be repeated in UAE

The story of Bundanoon, the little town in Australia and its ban on bottled water, has renewed debates about the ecological impact of the industry. Back-to-tap water movements, taste tests and advertisements that demonise bottled water seem to have many companies backed into a corner; National Public Radio, the American radio service, has reported that after years of success the bottled water industry in the US is suddenly experiencing slow growth, due to a mixture of environmental and recessional factors.

But that is not the case in the UAE. Business Monitor International (BMI), a market analysis company, says the country's bottled water industry is not only unlikely to suffer but is also currently one of the most profitable businesses. According to BMI's third-quarter report, UAE's annual consumption of bottled water is the highest in the world, at an average rate of 275 litres per head, compared with the 150 litres in most European countries.

That adds up to more than 500 retail-sized bottles for each person; good news for a business segment which is said to be worth around Dh1 billion (US$350 million). If the UAE's insatiable thirst for bottled water continues, BMI predicts that the value of the industry will climb to around $420m by 2013. Shonil Chande, a BMI food and drink analyst who wrote the report, says that the situation in the UAE is unique, as the most popular products, apart from the 500ml bottles sold in supermarkets, are the home-delivered bulk-water or five-gallon water containers. Sales figures show Al Ain Mineral Water, Masafi Mineral Water and Oasis Water each reporting growth rates that range between 20-50 per cent in the past few months.

While the hot climate and the lack of competition from alcoholic beverages are influential factors, Mr Chande says the attitude of the UAE consumer is even more significant. In spite of the current downturn, he says, most people in the UAE earn comfortable incomes and do not feel the need to cut back on essential commodities such as water. "Bottled water can be still seen as a status symbol here," Mr Chande says. "The consumer in the UAE is wealthy enough and does not have to compensate on good quality water."

Another factor is the unwillingness to drink water supplied by the Government. The stigma attached to drinking tap water, says Mr Chande, is so entrenched that UAE customers will not be trading in their plastic bottles for refillable containers any time soon. Makram Haider, the brand manager at Masafi, agrees that most people in the UAE turn to bottled water because of the uncertainty behind the distribution of water: "Consumers do not find tap water trustworthy because they don't know where it's coming from and what it's gone through."

However, panelists at a community lecture held recently by the Emirates Environmental Group discussed sustainable water consumption and declared tap water in the UAE safe to drink. They urged people to reduce their bottled-water purchases and pointed out that the desalinated water in the UAE met the World Health Organisation's standards for potable water. One of the environmental concerns about bottled water relates to the issue of plastic waste. Most bottled water companies in the UAE have pledged to undertake recycling initiatives.

But Mr Chande says he does not see any environmental movement making a considerable impact on the local industry as it did in Australia, even with some government investment into public drinking water. "It wouldn't make sense for the Government to ban bottled water because it is such a strong and well-established industry here," he says. For those who do want to drink straight from the tap, water-purifier companies such as Brita and Euro Forbes International are promoting their product as an alternative.

Most home purifiers consist of filters that remove chemical impurities from tap water and come in the form of portable jugs or are installed and connected to a tap. Brita, which achieved around $388 million worldwide sales in 2008, has gained a dedicated following in the US through its advertisements attacking bottled water with slogans such as "Thirty minutes on a treadmill. Forever in a landfill."

Jagdish Shahani, Euro Forbes' vice president of international sales and marketing, says the company tries to inform potential buyers about the benefits involved. "The market is out there," he says. "It is just a matter of educating and bringing about awareness among people." In the UAE, Euro Forbes has seen a 40 per cent increase in business this year. Despite the campaigning of anti-bottled water movements, such as UnBottle It and Tappening.com, Mr Shahani believes it will take a lot more for the deep-rooted bottled water industry to be toppled in the UAE.

"I think all the recent media attention around the Australian town will help the water purifier business a lot," he said. "But the fact is, bottled water is here to stay and you can't just wish it away." [e-mail]