Do you know where your bottled water comes from?
The owners of a Chicago plumbing supply store say they thought they did.
Since 2008, they had five-gallon bottles of Ice Mountain spring water delivered to their Chicago Faucet Shoppe offices.
The attraction sprang from marketing that exclaimed, "Imagine having fresh, great-tasting spring water right in your home or office any time you want it!"
But the plumbing shop owners say they learned in July those bottles contain filtered municipal tap water.
The water's source wasn't disclosed in advertising, they allege in a consumer lawsuit that has landed Nestlé Waters North America — the USA's top bottled water supplier and a subsidiary of Switzerland-based nutrition and health giant Nestlé — in legal hot water.
"Nestlé Waters' failure to disclose this critical fact caused consumers to purchase five-gallon jugs that they wouldn't have otherwise purchased ... and caused consumers to pay more" than the pennies per gallon that tap water costs, alleged a Chicago Faucet consumer complaint filed Oct. 10 in Illinois federal court.
The case echoes allegations in a previous case against Nestlé Waters, which sells Ice Mountain and other popular U.S. bottled water brands, including Poland Spring, Arrowhead, Deer Park, Ozarka, Calistoga, Zephyrhills and Nestlé Pure Life.
Nestlé Waters tops the surging U.S. bottled water market, with a 32% share based on total volume, says Gary Hemphill, managing director of Beverage Marketing, a research and consulting firm that tracks the industry. Nestlé Waters in 2011 had seven of the 10 leading bottled-water brands in wholesale dollar sales and gallon volume.
The company is part of a sales phenomenon that has made single-serve water bottles a common sight at U.S. offices, schools, stadiums and other gathering places in the last generation. Per-person annual consumption of bottled water hit a new peak of 29.2 gallons in 2011, Beverage Marketing data show. Overall bottled water sales last year reached a record 9.1 billion gallons, up 4.1% from 2010.
"When I grew up, nobody was drinking bottled water. Now, an increasing number of people do," said Peter Gleick, a water and climate analyst and author of Bottled and Sold: The Story Behind Our Obsession With Bottled Water.
Increasing popularity has also come with concern, criticism and legal battles. The Illinois case is the latest in a series of lawsuits and reports in the last decade that have focused on the sources, labeling, health safety, cost, government regulation and environmental issues surrounding major companies in the $11 billion-a-year U.S. bottled-water market.
Like some past bottled-water cases, the Illinois lawsuit alleges that Nestlé Waters violated a state consumer fraud statute. However, bottled water is regulated by the U.S. Food and Drug Administration, which enforces standards for water types, quality and labeling.
"We do feel very strongly that we'll be cleared through the legal process," said Nestlé Waters spokeswoman Jane Lazgin.
Chicago Faucet officials declined to discuss specifics of the lawsuit, which is in an early legal stage. Their attorneys did not return repeated calls seeking comment.
Nestlé Waters in recent years has disclosed the source of its water on labels of several sizes of its water brands, as well as in marketing material. For instance, the sources listed on the company website for Ice Mountain water include springs in Michigan, Pennsylvania, Maryland, Maine and Tennessee, plus well or municipal suppliers.
However, the Faucet Shoppe lawsuit charges that Nestlé omitted such disclosures on five-gallon bottles delivered to businesses and homes. Believing her company had been buying spring water, a Chicago Faucet Shoppe officer called Nestlé Waters in July to order deliveries at home, as well.
"After speaking to several Nestlé Waters' employees, this officer was informed for the first time that the Ice Mountain five-gallon bottles do not contain 100(PERCENT) natural spring water but instead contain resold municipal tap water," the legal complaint charged.
However, Lazgin said the caps on Ice Mountain's five-gallon bottles are labeled to show they contain water from the Woodridge, Ill., municipal system that's been purified through a reverse osmosis process. That disclosure complies with federal requirements, she said.
Nestlé Waters has moved to dismiss the lawsuit, in part by arguing that FDA regulations for bottled water supersede state consumer laws. Chicago Faucet Shoppe, meanwhile, has sought class-action status for the case because countless consumers could have been affected.
An earlier lawsuit's outcome
This isn't the first time the bottled-water giant has been sued about disclosure issues. In 2003, federal class-action lawsuits charged that the company misled Poland Spring consumers with advertising that seemed to imply the water came from a pristine spring in a Maine forest. Instead, the actions charged, the water came from four separate sources, including one 35 miles away from the original Poland Spring.
The company ultimately settled by agreeing to provide $8.05 million in consumer discounts and contributions and make $2.75 million in charitable donations, court records show. The settlement also called for Nestlé Waters to continue listing Poland Springs' water sources on labels and conduct long-term water-quality monitoring of the brand.
Legal appeals aimed at overturning the settlement on arguments that it short-changed consumers proved unsuccessful.
Beverage giants PepsiCo and Coca-Cola also have drawn legal challenges on their popular bottled water brands.
A 2007 case filed in New York federal court charged that Pepsi's advertising, marketing and labeling on the company's Aquafina brand "failed to inform consumers that the source of the water was public tap water, not water from an inherently cleaner source, such as a mountain."
Around the same time the lawsuit was filed, Pepsi publicly disclosed that Aquafina water originated from public drinking-water supplies.
A federal court in White Plains, N.Y., dismissed the lawsuit in 2008 on grounds that the case was based on state regulations that were superseded by federal law. Pepsi's labeling of Aquafina did not violate federal requirements, the court ruled.
Coca-Cola, whose subsidiary Glacéau markets the popular Vitaminwater, is the target of a current consumer lawsuit led in part by the Center for Science in the Public Interest. The lawsuit charges that Vitaminwater has been "deceptively promoted" as a nutrient-enhanced water beverage with marketing that says "vitamins + water (EQUALS) all you need."
"The truth is, however, that Vitaminwater ... contains 33 grams of sugar, which is almost as much sugar as contained in a can of Coke," the court complaint charged.
Attorneys for Coca-Cola argued that the sugar content was listed on Vitaminwater labels and did not violate federal regulations. During a court hearing, they suggested that a consumer would not be misled into thinking the product contained just vitamins and water because the sweet taste signaled that sugar was present.
But a 2010 ruling by a federal judge in New York found that Vitaminwater's marketing and labeling were "potentially misleading," and allowed most of the case to proceed. The court is now weighing arguments to classify the case as a class-action lawsuit.
Puzzled consumers
Consumer confusion about bottled water disclosure issues isn't surprising, said Gleick, because federal labeling regulations don't require bottling companies to list how the water was purified, the results of any tests for contaminants and other health safety information.
"The information on the label is not truly helpful to the consumer," said Gleick, who called the labeling regulations "grossly inadequate."
Separately, several studies have warned that despite ads and container illustrations that show crystal-clear springs, mountain streams or other pristine settings, bottled-water purity and safety isn't necessarily assured.
A four-year study released in 1999 by the Natural Resources Defense Council concluded that most bottled water is of good quality. Still, the environmental watchdog group's tests of 103 brands found some traces of contamination in 23. Similarly, a 2008 report by the Environmental Working Group, a public health watchdog, found 38 chemical pollutants in bottle of 10 brands of bottled water.
Both organizations and a 2009 report by the Government Accountability Office concluded that the Food and Drug Administration's oversight of bottled water is less stringent than the Environmental Protection Agency's regulation of public tap water.
The GAO found that the federal law doesn't specifically empower the FDA to require bottlers to report test results or use certified laboratories to conduct those tests. That hasn't changed since the report, the FDA said. But, after years of delay, the agency last year set a maximum allowable level for an organic compound commonly used in manufacturing polyvinyl chloride plastics.
Oversight issue
"Compared with the EPA oversight of public water systems, it (the FDA) just doesn't match up," said Emily Wurth, water policy director for Food& Water Watch, a non-profit consumer advocacy organization.
Yet, many Americans, swayed by what Gleick described as extensive industry advertising, fewer public drinking fountains and taste concerns, feel bottled water is better than what comes from their faucets. That's a mistake, he said.
"In most municipalities, tap water is just as safe and healthy as bottled water, if not safer," Sarah Janssen, a senior National Resource Defense Council scientist, said in a recent interview.
Moreover, the GAO report found that most U.S.-produced plastic water bottles are discarded, not recycled, a trend that could raise environmental and other issues.
Based in part on that finding, Food& Water Watch last year concluded that "Bottled water comes with unnecessary costs to the consumer as well as environmental damage from the associated energy, water use and plastic waste."
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