Memorandum submitted by the British Soft
Drinks Association
SUMMARY
This paper explains the opposition of Water
Bottlers in England and Wales to the application of time-limited
abstraction licences and the need for flexibility and proportionality.
At a time when demand for bottled water is growing rapidly, English
and Welsh companies fear that the licensing system will restrict
expansion plans and hand the market to imports.
INTRODUCTION
1. The British Soft Drinks Association (BSDA)
represents the spectrum of soft drinks manufacturers in the UK,
including manufacturers and distributors of Natural Mineral Waters,
Spring Waters and other Bottled Drinking Waters. The UK bottled
water sector produced approximately 1,200 million litres of the
1,600 litres of bottled water consumed in 2001, the remainder
being imported predominantly from France.
2. In addition, the use of Natural Mineral
Water and Spring Water as an ingredient in soft drinks is growing
rapidly.
3. BSDA Members fully support policies and
measures necessary to protect the environment and sustain natural
resources. Indeed, water bottlers have a vested interest in protecting
and sustaining the quality and availability of water supplies
which are essential to their businesses. However, the application
of 12-year time-limits to abstraction licences in England and
Wales will threaten the development of many businesses at a time
when the market is growing rapidly. BSDA strongly urges that the
system of time-limiting is reviewed to take account of the needs
of water bottlers.
4. The comments in this paper will make
a clear distinction between the policy being pursued in England
and Wales and that in Scotland. In the latter country, water bottlers
are impressed by the assiduous consultation undertaken by the
Scottish Executive, its pragmatic approach to the controls to
be applied to water abstraction and its economic impact assessment
of proposed measures. BSDA regrets that DEFRA and the Environment
Agency have not taken the same approach.
THE BOTTLED
WATER INDUSTRY
DEPENDS ON
LONG-TERM
INVESTMENT
5. Bottled water is a fast-growing sector;
the UK retail market is now worth more than £900 million
per year, growing at an annual rate of 10-15%. Consumption has
more than doubled in six years and this rate of growth is predicted
to continue in the future as bottled water grows in popularity.
The market is very competitive, with a strong presence from imported
brands of 25% market-share in 2001. At present, the best-selling
and best-known brands in the UK are French.
6. British companies are determined to gain
market share but will need time and investment to grow output.
Banks and other investors will not invest in bottled water companies
whose businesses might be arbitrarily curtailed by the length,
loss or uncertainty of their abstraction licences. This means
that English and Welsh businesses will have difficulty in expanding
to meet consumer demand and imported products will take an even
larger share. This is a loss for jobs (often in rural areas),
the economy and consumer choice.
7. BSDA believes that DEFRA and the EA are
stifling investment and, consequently, industrial growth for bureaucratic
rather than environmental reasons. The EA is currently offering
licences of as little as four years' duration, which is causing
investment plans to be curtailed. It is not clear whether the
limited length is determined by a desire to synchronise the award
of licences or, as EA has suggested, because of the review requirements
of the Natural Habitats Directive. In either case, the Framework
Water Directive is not mentioned.
PROPORTIONALITY AND
THE ENVIRONMENT
8. The UK water bottling industry currently
bottles about 1,200 million litres of water per year. This is
less than the leakage from the mains water system in nine hours.
Cutting back on water bottling would therefore have little impact
on overall water usage. Furthermore, water bottling is a highly
efficient use of water with very little wastage and cannot become
more efficient. In this context, it must be stressed that Natural
Mineral and Spring Waters are named after a specific source and
cannot therefore move to another location where water might be
more plentiful.
9. The EA uses meteorological data to evaluate
water availability which takes no account of the age of the resources
used by water bottlers. Recent rainfall charts might assist with
the management of mains water supplies but will be a completely
unreliable guide to the availability of water from deep sources
which will have fallen as rain decades ago.
10. DEFRA and the EA are urged to take full
account of the specific impact of water bottlers and devise relevant
and proportionate measures.
BOTTLED WATER
IS A
STRATEGIC RESOURCE
11. Bottled water is not only sold through
retail outlets but is also relied on as a strategic resource.
Mains water suppliers rely on back-up supplies of bottled waters—through
contracts with specialist water bottlers—to help them meet
their public service obligations in the event of a disruption
to the mains supply. All bottled water members of BSDA have arrangements
or contracts to supply bottled water to Water companies, local
authorities, hospitals etc in the event of contamination or disruption
of the mains supply.
12. This service, which is part of an overall
public health strategy, depends on the viability of the water
bottling sector.
CONCLUSION
BSDA does not oppose measures necessary to protect
the environment and water resources. It strongly recommends, however,
that measures are proportionate, practical and based on need.
It deplores the bureaucratic and ill-considered approach taken
to the sector in England and Wales and commends the collaborative,
sensitive and rational policy in Scotland.
It very much hopes that DEFRA and the EA will
permit and assist the sector to apply for licences longer than
12 years so that pay-back on investment can be achieved and the
industry can expand to meet market demand.
British Soft Drinks Association Ltd
18 September 2002
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