HomeMy WebLinkAbout12 Bottling Water Agenda Item # 12
TRUCKEE .
Workshop
To: Board of Directors
From: John Ulrich
Date: December 5, 2007
Subject: Discussion of the potential to pursue bottling of water
1. WHY THIS MATTER IS BEFORE THE BOARD
Members of the Board have expressed interest in reviewing the feasibility and potential sale or
distribution of bottled water as a service provided by the District.
District Objectives:
1. Provide an adequate, reliable and high quality water supply and distribution system to meet
current and future needs.
District Goals:
5. Manage the District in an environmentally sound manner
5.5 District will maintain a program of energy and water efficiency
5.6 District will seek to minimize any negative impact of its operations on the
environment
6. Manage the District in a effective, efficient and fiscally responsible manner.
6.5 Review and implement a Financial Goals policy to achieve a stable financial
condition.
Financial Goals:
Set operating revenues to capture entire cost to provide service plus maintain reserves and
satisfy debt coverage ratios.
2. HISTORY
The District owns property and water rights for McGlashan Springs, located on Bermgarten Road.
In earlier days, before the 1950's, McGlashan Springs and other springs were used as a source
of water to serve District customers. During 2006, the Board considered the sale of the property
or considered other uses including recreation, maintain open space and potential for bottling and
selling the spring water as a source of income for the District.
3. BACKGROUND and NEW INFORMATION
There are about 180 brands of bottled waters sold or distributed in the US. Bottled waters can be
sold as various products, including:
• Drinking water — water obtained from an approved source — filtered, and treated with
ozone or an equivalent disinfection process
• Natural water — water from an underground spring or well — including municipal or public
water source. It can not be blended with other water sources. It is usually disinfected and
filtered.
• Spring Water — The FDA regulates this product: Spring water must be derived from an
underground formation, from which it flows naturally to the surface of the earth. No
particular physical or chemical properties are required other than those normally applied
for drinking water.
1 Memo-Bottling water
The current bottled water business is considered as a cut-throat business with 80% of the market
in the US controlled by a few large companies that use their distribution network for prominent
shelf space. Experts believe that any new entry must have a unique history and source location
to interest the consumer to purchase the product. Depending upon expectations for success, a
new entry may spend several years and multiple millions of dollars creating a new niche in the
bottled water market. Undeveloped springs and artesian well sources are for sale throughout the
US, including 5 in California. Six US bottled water companies, with springs, are for sale, ranging
price between $0.5 and $2.0 million.
Bottled water companies have been criticized for introducing contaminates, unusual components,
such as sugars and plastic waste into the environment. The production of plastic resin (PET) for
bottles requires consumption of water, air emissions of hydrocarbons, sulfur and nitrogen oxides,
carbon monoxide and nitrogen oxides. More water is used to produce the bottles than will be
contained in the finished bottles. Since 90% of the 15+ billion water bottles sold in the US per
year are thrown into the trash, some being recycled, the majority end up in land fills.
The District could consider several options whether for profit or community service:
• Look at the development of McGlashan Springs or its District water supply for bottling and
distribution.
o Prepare a business plan that would incorporate options with risks and rewards.
■ Sell or lease the springs for third party development — receiving a share of the
profits — if any.
■ Install an on site bottling plant and distribution center
• Transport water to Roseville or Reno area contract bottlers for bottling, packaging
and distribution.
• One estimate suggests that this option would cost approximately $5.00 per 24
bottle case
• Local stores sell 24 bottle cases for about $5.00 each, depending on featured
sale items
■ Environmental and community impacts—good and bad
o Consider use of bottled water as a community asset. Bottle and distribute within the
community for governmental, school and non-profit agencies for internal consumption
and fund raising activities.
o Utilize storage of bottled water for emergency supply and distribution to customers
when they are without normal District supply.
o Consider legal, regulatory, permitting, labor and other business costs.
• Focus on having community use more re-usable containers filled with District water
o Supply, at cost, logo labeled containers, in various sizes for people to continuously
refill for transport, storage and use
■ Reduces purchase of bottled water, replaced by District water
4. RECOMMENDATION
The Board should consider options, if any; they would like the Staff to further pursue. No budget
has been arried ov fr 2007.
( 27 Irich, In G
Memo-Bottling water