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Coca-Cola Company (KO) & Drinking From a Firehose

We may have our love affair with beer, wine, and spirits, but none of those beverages can quench our thirst for profits like bottled water does. The Coca-Cola Company (NYSE:KO) as one of the premier bottled water companies, saw case volumes surge 10% in 2012 for its Dasani brand, and they were up 6% in the first quarter of 2013.

At 3.2% compounded annual growth between 2005 and 2011, bottled water has surpassed beer’s 2.2% increase in that time frame and is on equal footing with the better-than-3% rise in wine and spirits sales. It’s far outpacing the seven consecutive years of carbonated beverage volume declines, too.

Drinking from a firehose
While water may not be enjoying the same double-digit growth rates it enjoyed in the last decade, it is recovering enough to begin building up some heady growth again. After two straight years of declines in 2008 and 2009, bottled water’s cup is running over again. Sales grew 2.6% in 2010 and were up 3.2% in 2011, and then they more than doubled to 6.7% last year. It may not be long before sales achieve double-digit growth once more.

The Coca-Cola Company (NYSE:KO)Water, water everywhere
And therein lies the problem. Despite the marketing efforts of major bottled water sellers like Coke, PepsiCo, Inc. (NYSE:PEP) (which owns Aquafina), and Nestle, there’s really not that much difference between what they’re selling you in their plastic bottles and what comes out of your tap. Indeed, a few years ago, Pepsi was forced to acknowledge that its Aquafina brand is nothing more than tap water. Nestle’s Pure Life brand is also municipally sourced, as is Dasani, which Coke admits is just “purified” tap water. That’s a big difference from “source water,” which comes from a spring.

Poland Spring’s brand does actually come from the real Poland Spring in Maine, but only 30% worth. The rest is from other springs in the state including Clear, Evergreen, and Spruce, among others.

Tap that keg!
There’s no difference, that is, except money. Bottled water sales totaled $11.8 billion last year, according to BottledWater.org. Yet if you’re buying bottled water, you’re paying simply for Coke’s and Pepsi’s marketing machines, which have created the impression that municipally treated water provided by facility operators like American Water Works Co., Inc. (NYSE:AWK) and Aqua America Inc (NYSE:WTR) is unsafe.

Admittedly, it bothers me when state governments force the fluoridation of water, for example, but there are means for removing it. Yet, in general, you’ll do well for yourself financially and physically by drinking the water from your tap instead of buying bottled. It’s why the bottlers themselves tap into it in the first place!

Still, The Coca-Cola Company (NYSE:KO)’s stock at least ought to be able to bubble up again as consumers seem willing again to buy bottled water, perhaps letting the beverage maker catch lightning in a bottle again.

The article This Trend Could Bottle Up Coca-Cola’s Stock originally appeared on Fool.com.

Fool contributor Rich Duprey has no position in any stocks mentioned. The Motley Fool recommends Aqua America and Coca-Cola. It recommends and owns shares of PepsiCo.

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