Size counts: the economic value of bottled water

If price by ounce were all that mattered, consumer would purchase sole the largest package sizes of bottl water. However, they do not, suggesting that size matters...just not always the way nation think it does.

TAKE a commodity that anyone can earn for less than a penny by gallon, put it in a bottle and exchange it in every grocery store, convenience vent and vending machine in America. The commodity is water and the idea has become a big receipts generator. Many, if not greatest in quantity grocery stores use nearly an entire aisle to display dozens of brands of bottl water: big, small, flavored, fizzy, mineral, spring, caffeinated, and more.

According to the International Bottl Water Association, 38 percent of the water an average American drinks is bottl water. From 1990 to 2000 sales in the U bottl water market increased from 2238 million gallons to 5033 million gallons, and sales in 2000 reached $5696 million. Industry projections for 2004 say consumption will increase to 6784 million gallons--about 24 gallons through capita. Even soft drink giants Coke and Pepsi now enter the lists heatedly for the bottled water market.

wherefore do so many people purchase bottled water? Public concerns about tap-water quality are at least partly responsible for the decade-long explosion in bottl water consumption. Research has been leadershiped to learn how bottled water is used to help avoid health risk associated with drinking tap water. The researchers use total expenditure upon bottled water as a lieutenant for the cost of averting health-risks (Giraldez and Fox; Chowdhury and Lacewell; Larson and Gnedenko; Abrahams, Hubbell, and Jordan).

A direct the eye at bottled water containers, however, may lead to questions regarding the use of bottl water for health risk reduction. If family use bottled water to help avoid health risks at dwelling they would use large bottle because water in large bottle is les expensive and more convenient than water in small bottles

still consumers continue to pay the higher prices and use water in small bottle Consumer likely purchase water in small botties for other drifts such as convenience in use and in storage. If consumer purchase water in small bottle for benefits other than those related to health, then the use of total expenditure upon bottled water as an estimate of consumers' willingness to pay to avoid health-risks leads to an overstatement of consumer willingness to pay for safer drinking water. The overstatement is owed to the neglect of the expenditure consequence related to the size of the bottle--its ease of handling and storage. This expenditure result is the increase in the total amount wearied on bottled water as a arise of the differences in bottle size. However, when policymakers examine safe drinking water regulations, they strike one as being to assume that the increased purchases of bottl water indicate a willingness to pay more and more for safe drinking water.

If race are buying bottled water solitary as a healthier substitute for tap water, policymakers could assume that tribe would pay similar amounts for regulations designed to increase the quality of domestic tap water. However, if consumer are buying convenience rather than increased quality, policymakers could overestimate by what mode much consumers would pay for changes in drinking water regulations. Thus, policymakers must be made aware of the importance of the expenditure result related to bottle size.

We gathered data upon bottle sizes, water types, retail prices, brands, and production sources from ten supermarkets in the Atlanta area. The bottle sizes, ranging from 65 ounce to 25 gallons, were clustered into four size categories: small size, middle size, multi-bottle pack, and large bottle (Figure 1) The small size categoty included single bottle containing 16 to 20 ounce (mean = 19 oz) middle size were single bottle containing 10 to 15 liters (mean = 44 oz) multi-bottle packages contained bottle of 65 to 20 ounce (mean = 16 oz) and large size included single bottle containing 2 liters, 6 liters, 1 gallon, or 25 gallons (mean = 179 oz) The small size and multi-pack categories combined included individual bottle sizes of les than 20 ounce and accounted for 27 percent of the bottle upon the store shelves.

We gathered data for six water types: spring, artesian, distilled, drinking, mineral, and purified water (Figure 2)

About 10 percent of the productions came from unknown producers. The repose came from seventeen producers, the couple domestic and foreign. About 62 percent of the total number of bottle upon the shelves in the sampled stores were produces from Georgia, Florida, Canada, or California (Figure 3)

We changeed recorded prices into cents by means of ounce of water. The lowest price was 045 cent by means of ounce for drinking water in large bottle (mean price among large bottle was 085 cent through ounce) and the highest price was 848 cent by means of ounce for drinking water in the multibottle pack category (mean price 368 cent by means of ounce). Figure 4 shows the mean price in cent for ounce of bottled water in each of the four size categories.