Select Committee on Environment, Food and Rural Affairs Appendices to the Minutes of Evidence


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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