🗣️ "Bottled Water Craze Raises Questions about Water Quality & Utility Strategies"

Host: Reese Tisdale
Guests: Eric Bindler | Director | Bluefield Research &
Keith Hays | Vice President & Co-Founder | Bluefield Research
Category: 🗣️ Opinion

Podcast’s Essential Bites:

[2:18] EB: “[Liquid Death] is a […] canned water company. They claim that it's 100% mountain water from the Alps. They sell it in these kind of 16 ounce […] aluminum cans, as opposed to plastic water bottles, but obviously similar to the idea [of] portable water. And it's really an […] interesting […] marketing and brand presence that they've carved out. So as the name would suggest, it's kind of this very heavy metal themed brand. They sell a lot of clothes and merchandise. Their tagline is “Murder your thirst” and they've got flavored water options like mango chainsaw. […] The reason that we're talking about it today is that […] they just closed their new Series C funding round [and] raised $75 million. Overall, they've raised about $125 [million], over the past two to three years since they were founded. They've also had a lot of celebrity investors, like Tony Hawk, Wiz Khalifa.”

[7:57] EB: “I think it's fair to classify [the high amount of money going into a bottled water brand] as kind of a threat. […] Bottled water really comes in as its positioned as the safer this cleaner alternative to tap water. […] It's no secret that tap water is far from perfect. We've got issues like PFOS, and lead and other metals, not the liquid death kind of heavy metal. […] But we only know this information about the utility sector, because municipal utilities are subject to pretty stringent testing and monitoring and reporting requirements. And bottled water companies just don't have the same level of regulatory scrutiny put on them that allows them to get away with these messages of we're safer, we're cleaner, we're healthier than your municipal tap water. But bottled water also often has a lot of the same problems. And actually […] anywhere from half to two thirds of bottled water just comes from municipal sources anyway.”

[12:02] KH: “The truth is that […] water utilities, municipal drinking water suppliers need to get better at marketing, need to get better at addressing some of those scare tactics […] about the quality. They need to probably talk more about how sophisticated and how rigorous they are regulated, and being compliant and what that means in terms of safety. And how it's a fundamental public service that at the end of the day, a lot of our taxpayers are actually financing. […] When COVID hit, we saw bottled water consumption […] jump[ing] like 20% in one quarter in the US. And a lot of that was partly people climbing their bunker and hiding away, […] but also there was some false information about could you actually have gotten COVID from drinking your tap water. […] I think some utilities did learn about that [and] put out statements […], but unfortunately, that happens in the context of […] this is not going to kill you. Whereas you have another company that's making significant profits saying we're selling liquid death.”

[17:01] KH: “Particularly in emerging markets, one of the reasons why bottled water consumption is so high, even if there is a decent amount of infrastructure, is there's just a lack of public trust in the water utility. So probably the biggest example of that would be like Mexico. So Mexico is a country [with] the highest per capita consumption of bottled water. There's zero trust in public municipalities to supply drinkable water. And what happens then is you get into this vicious circle of there's no public trust water, so they don't pay for the water, which means that they can’t finance the infrastructure, which means they can improve the public supply of drinkable water, which means everyone's gonna keep buying bottled water.”

[22:56] EB: “Bottled water is about 600 times the price of tap water. Liquid Death is about 2,000 times the price of tap water. […] And even with […] these just outrageous price differences in mind, […] it really gets back to this issue of people just not trusting their municipal supplier. And that might be completely justified in a lot of parts of the world, […] but in these luxury markets, like the US, it's just kind of outrageous that people have this perception. […] There was a consumer report survey from 2019 that […] 34% of US consumers regularly avoid tap water if they have the opportunity to. […] 17% don't drink any tap water.”

[30:39] EB: “The average funding round that we see for […] water technology firms that are trying to solve problems in the municipal or industrial or agricultural water market is about $10 million [of] average fundraising amount, compared to $75 million for Liquid Death. And I think that that in and of itself is telling about investor priorities, that as much as we're hearing investors, and financial players talking about ESG, and sustainability, it's so much easier for a company like Liquid Death to raise so much more money. Because the […] investment returns are higher. Liquid Death grew […] at almost a 300% compound annual growth rate over the past few years. […] So I get it. But on the other hand, if you're going to be talking about really being serious about corporate sustainability and ESG in the investment space, we need more capital flowing to these really valuable, smart, and impactful technologies that can actually help in the municipal water sector and solve some of those problems versus just kind of bypassing that sector altogether, and going through this kind of consumer focused marketing approach.”

Rating: 💧💧💧💧

🎙️ Full Episode: Apple | Spotify
🕰️ 36 min | 🗓️ 01/18/2022
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