“Globalisation of the food sector is uniquely constrained by nature and culture: food production requires the transformation of natural entities into edible form while the act of eating itself is a profoundly cultural exercise… In other words food chains will never fully escape ecology or culture”. (Morgan et al., 2006)
The extent to which nature and culture affect globalisation of food commodities has the potential to vary on a case by case basis. Both the particular type of foodstuff and the country this foodstuff is being produced and consumed in will have a large affect on the conclusion about whether or not a particular food is or is not globalised and how exactly the natural and cultural environments affected this conclusion. As it is impractical to study “all” food commodities it is best to address this question using case studies of a particular food commodity. Both the natural and cultural environments also vary across the world so it is once again more practical to restrict the study to a particular country. As a case study the bottled water industry within Australia provides a unique insight into how the processes of globalisation affects food in Australia and around the world.
Bottled drinking water is water filled into hermetically sealed containers of various compositions, forms and capacities that is safe and suitable for direct consumption without necessary further treatment (ICBWA, 2003). As an industry the bottled water market is not a new industry, it grew out of the rise in popularity of visiting mineral springs for hygiene purposes in late eighteenth century Europe, over time the owners of these famous spas began to sell water for use off site. The commercial exploitation began initially in France with one of the world most famous brands Evian beginning sale of its water in 1826. The first water to be sold in a bottle (as prior to this water was mainly sold in stoneware and porcelain jars) was Malvern in England in 1851 (Mascha, 2006).
The initial market for bottling natural mineral waters reached its height in the late nineteenth century and began to fall in the early twentieth century as the need for it decreased, as public water supplies became more consistently healthy and safe to drink due to the development of chlorination as a method of sterilisation. The market for bottled water began to rise again in 1977 with Perrier, a major global brand launching a $5 million marketing campaign in the United States focusing on health and image (Chapelle, 2009). This followed on from marketing strategies by Evian in the 1950s claiming that their water aided lactating mothers by providing important minerals for infants (Mascha, 2006).
The market for bottled water began to grow rapidly in the 1980s and especially the 1990s particularly in developed western countries. The growth in the perception of bottled water being healthier than tap water is believed to be closely linked to this growth (Klessig, 2004). American sales of bottled water increased from 50 million USD in 1960 to 5 Billion USD in 2000 (Mascha, 2005). Between 2000 and 2003 the market continued to grow worldwide shown by a growth in both production volume, from 119,800 million litres to 153,083 million litres and production value increasing from 30,819 million USD to 45,772 million USD (ICBWA, 2009). This massive increase in consumption despite the fact that most developed countries provide high quality drinking water to houses at a fraction of the cost is given as one of the greatest examples of the power of advertising and marketing in the last few decades (H Royte, 2008), the bottled water industry has in fact been seen to have created its own water culture (I Klessig, 2004).
Globalisation as a concept and a buzzword has also increased in usage in the last few decades, despite there being a great deal of confusion and often almost conflicting views on what globalisation is, can and will be. Defined as “the process by which people, their ideas and their activities (economic, cultural and political) in previously relatively separated parts of the world become interconnected, integrated, drawn to the same social space at the same historical time.” (Clark, 2003). One view of what globalisation is, feels that economic globalisation is shown by qualitative changes to Trade, Capital Flow, Production, Movement of People or the Flow of Ideas, Information and Ideology (Fagan, 2009). Compared to other studied and globalising industries the world food industry can only be seen to be unevenly and fragmentally globalising with advances in logistics playing a major role in the extent to which a particular food, especially fresh produce is being seen to globalise (if indeed it is being seen to globalise at all).
A Globalised Commodity Chain Analysis can be used as a framework to begin to empirically assess economic globalisation of a particular commodity. Divided into four dimensions the globalised food commodity chain begins by assessing the supply chain of a product, then looks at the power relationships between the different agents involved, the institutional frameworks involved and finally the geographic relationships within the globalised food commodity chain (Fagan, 2009). A small flaw in the globalised commodity chain exists as it will only follow a particular good or commodity and the economic interactions of different commodities (particularly those commodities produced by the same company) may go unnoticed. For example if a company is using one product to draw in customers to a more profitable different product in a method similar to loss leading or producing a less profitable product that is seen in a more favourable light by consumers (particularly due to health or ethical reasons).
The globalised commodity chain for bottled water is slightly simpler than most other food commodities due to the simpler production stage and the fact it is much less labour intensive than most other food commodities. The first dimension of a global food commodity chain is the supply chain, which is divided into three separate phases; production, processing and distribution.
The production phase of the supply chain for bottled water is very simple and bottled waters may be produced and labelled as drinking water, glacier water, mineral water, mineralised water, packaged water, purified water, rain water, spring water, table water or as appropriately designated by the Australia New Zealand Food Standards Code (ABWI, 2005). The most common designations are spring water, which must come from underground, artesian water from deeper artesian basin and purified water which is distilled water sourced from either an underground spring, or more commonly a local water authority (Choice, 2005).
Processing for bottled water relates to the treatment and bottling of the water. There are a variety of standards that bottled water must meet. Codex Alimentarius, the guiding document for international food trade by the World Health Organisation provides guidelines for standards for bottled water to meet, and in Australia the Food Standards Australia New Zealand sets minimum standards for all types of bottled water under standard 2.6.2 Non-alcoholic Beverages and Brewed Soft Drinks”. There are also voluntary associations that bottlers can join that require members to meet certain regulations. The International Council of Bottled Water Associations (ICBWA) has a model code, however it has no enforcement criteria and associations cannot be audited for compliance (ICBWA, 2003). The Australasian Bottled Water Institute (ABWI) also has a model code based strongly on the ICBWA’s Model code which members must adhere to. This code has obligatory daily, weekly and annual testing by both the water bottler and independent third party auditors. Testing occurs at the originating source, the tankers, the finished product, containers and laboratories. The testing is for a variety of potential contaminants and some of the ABWI Model code standards are stricter than FSANZ standards and cover both health and physical (aesthetic) properties (ABWI, 2005).
In Australian bottling of the water at the source entitles the water to be labelled as “bottled at source”, otherwise the water is normally tanked to a separate bottling facility, in contrast to Europe that has strict controls requiring all spring water to be bottled at the source. Standards for bottled water are different to tap water in Australia with purity standards being lower for bottled water than tap water in Australia (Choice, 2005).
The distribution phase of the supply chain for bottled water in Australia is the most complicated stage. Bottled water can be broken into two broad industry sectors, the retail sector involving a large variety of sizes, sales outlets and possibly even ingredients. Pack sizes can vary from small (110 ml) to large (10L). This sector has grown quickly at around 10% a year with new products and businesses regularly entering the market. The retail sector is focused on production and distribution of small packs through distributers and wholesalers and a major component of this sector is the ability of the business to market their product successfully, in particular attaining some form of distinction from the other retail bottled water products in the market (ABWI, 2009).
The other sector in bottled water is Home and Office Delivery (HOD), which is very competitive, partially due to the simple capital and equipment requirements needed compared to other beverages. HOD involves large (11L, 15L and 19L) size returnable bottles and dispensers for use in home and office environments. Given the product is being directly supplied to the end consumer there are some very different considerations needed than compared to the retail sector. Location, population density, service philosophy, marketing methods and competition from within the sector and other sectors all have a large affect on the Home and Office Delivery sector (ABWI, 2009).
An important aspect of the distribution phase for both retail and home and office delivery sectors is the role advertising plays in forming the relationships between the producers and consumers. Both brand profile of the individual products and the image of bottled water as a whole need to be carefully cultivated given the ready availability of clean water to homes in Australia. Advertising can be split into two main focuses, either promoting the water to the new middle class as one of the “designer” products, such as brands of clothing, coffee or water that accompanies a particular lifestyle(Smith, 1996) or the advertising is generally focused on the water being purer and healthier than tap water (Klessig, 2004), often with images of remote exotic landscapes and locations emphasising the distance away from “unclean” civilisation such as FIJI water’s “distance is what makes us so pure and healthy” advertising catch line (Fiji Water Company, 2009).
The second dimension of the Global Commodity Chain Analysis is the power relationships between the various agents involved. In Australia nearly a third of the bottled water sold is either of the Mt Franklin brand or the Frantelle brand (Choice, 2005). Mt Franklin is a brand owned by Coca-Cola Amatil, a global corporation and the fifth largest food company in Australia (Fagan, 2009). Frantelle is a brand owned by P&N Beverages which is the only Australian company to compete in all the non alcoholic and non dairy beverage markets (P&N, 2007). Mt Franklin water is able to use the large Coca-Cola distribution network to enable wide spread of the product while Frantelle dominates in the supermarkets due to the support the wide range of P&N products can provide each other in gaining supermarket shelf space. Small distributers are unable to offer the same price and volume to the supermarket chains that the large distributing companies can (Mascha 2005). The pattern of large beverage companies dominating the retail segment of the bottled water industry is also true for other western developed countries worldwide. Danone and Nestle are the two main companies in the global bottled water market, Danone selling Evian amongst its bottled water brands and Nestle selling Perrier amongst its water brands. Dasani, which is a Coca-Cola brand and Aquafina, a PepsiCo brand also occupy large segments of the American market (Mascha, 2005).
The companies involved in Home and Office Delivery are smaller due to the restrictions they suffer distributing their products, the smaller size and direct to consumer distribution forces these companies to be much more competitive with each other. Suppliers of water and the owners of the spring are limited to selling water in bulk to an existing company or starting their own brand from scratch and being forced to compete in the market if they want to join the bottled water industry (ABWI, 2009). As an industry 90% of the bottled water volume bottlers are represented by the ABWI (Gentile, 2008) and it is in turn a member of the ICBWA. The vast majority of certified bottler members of the ABWI in 2009 were from Australia, 24 of 31 companies use Australian contact addresses. While 24 of the 27 supplier members give Australian contact addresses (ABWI, 2009).
Institutional Frameworks are the third dimension of the Global Commodity Chain Analysis. On a global scale bottled water needs to meet the standards set in Codex Alimentarius and can choose to meet regulations in the ICBWA Model Code (ICBWA, 2003). Within Australian bottled water is required to meet regulations set out by Food Standards Australia New Zealand in the Food Standards Code (ABWI, 2009) these regulations are different to regulations placed on tap water (Choice, 2005). Membership of the ABWI also requires members to adhere to the AWBI Model code which goes further than the FSANZ regulations including a hydrological survey before water extraction. In addition to these regulations each state has different requirements before a permit for commercial water extraction can be issued. The Australasian Bottle Water Institute is also attempting to get uniform source approval processes introduced Australia wide to minimise the advantages and disadvantages there are in starting commercial extraction in different states. Due to the limited nature of water supply in Australia and the many competing uses for it is carefully regulated by government bodies, however bottled water only uses 0.01% of groundwater drawn from aquifers in Australia (Gentile, 08).
The final dimension of a Global Commodity Chain Analysis is the geographic relationships. Particular for food the first aspect here assessed are the food miles travelled due to the lengthening supply chains. Depending on the individual product the food miles travelled by the various bottled waters for sale in Australia can vary greatly. Premium brands such as Evian and Fiji water will travel around the world, often being marketed as coming from somewhere remote, untouched and isolated. This is the main marketing strategy of Fiji water, “untouched by man”, and
“Far from pollution. Far from acid rain. Far from industrial waste. There's no question about it: Fiji is far away. But when it comes to drinking water, "remote" happens to be very, very good. Look at it this way. FIJI Water is drawn from an artesian aquifer, located at the very edge of a rainforest, hundreds of kilometres away from the nearest continent. That very distance is part of what makes us so pure and healthy” (Fiji Water, 2009);
Other brands of water try to minimise the distance their product travels, Mt Franklin promotes itself as “produced in plants across Australia near the water sources so that water is not freighted across the country (or shipped in from overseas like some water). This saves on carbon miles” (Coca-Cola Amatil, 2009). By promoting itself as from a remote untouched location a brand opens itself to criticism for the food miles travelled by the product, yet by trying to have multiple sources a brand loses the opportunity to market itself as premium water from an untouched wilderness area.
The scale of the market the water operates in is probably related to the size of the company distributing the brand and which market segment it operates in. The retail segment which is dominated by the large beverage companies with their wide distribution network is operating on a national scale or even larger for most brands, with the leading brands Frantelle and Mt Franklin both operating Australia wide and other brands such as Fiji Water, Evian and Perrier being sold globally. Often these large beverage companies are not marketing these bottled waters under their brand name but are using a new brand. Perhaps this is to disconnect their “healthy” water product from their perceived “unhealthy” soft drinks or this could perhaps be an attempt to glocalise their healthier products.
HOD works on a more local scale as the water needs to be transported regularly to the consumer straight from the bottling location and the bottles then returned to be refilled. This and the size of the companies involved keep this segment to a much smaller scale than the retail segment. The attempt by the supra national, yet Australian dominated ABWI to get uniform source approval processes introduced in Australia can also be seen as an attempt to shift one of the institutional framework approval bodies to a larger scale too.
Another consideration for the Global Commodity Chain Analysis that is fairly unique to water and fits best for consideration into the geographic dimension are the various temporal differences in the product. Fiji water claims to have fallen 450 years ago, while Cloud Juice is rainfall from the Great Southern Ocean, Hawaiian Springs Natural Artesian Water is 30 days old and Wasatch Ice Water is between 18,000 and 22,000 years old. The age of the water does not indicate the quality of the product however as that is related much more to the treatment and care the water receives during the bottling process (Mascha, 2005). However the age of the water may be a strong indication of how sustainable a resource that particular source is, long term siphoning of water from an old source at a rate higher than the sources renewal rate will lead eventually to the exhaustion of that particular water source.
The qualitative changes that can be observed as occurring in that last few decades in the bottled water industry can be used to decide just how globalised the bottled water industry is. With five areas to explore the nature of globalisation with the starting with trade is the easiest beginning. The trade in spring water is not a new phenomenon, however the scale of the trade is much greater than it ever has been before, at most this is just a quantitative shift in water trade.
A qualitative shift in the trade of bottled water however can be found in the companies that are doing the trading in the bottled water, this is a change in production. Traditionally bottled water was traded by the owners of the source by companies focused on the selling this product. It is in recent decades that the trade in water became dominated by large beverage companies such as Coca-Cola Amatil and P&N. As a company P&N only began trading in 1992 (P&N, 2007).
There have been qualitative changes to the flows of money and finance in the bottled water industry linked to the shift in dominance from source based companies to larger beverage companies. One reason for the attraction of large beverage companies to the bottled water industry is by using existing distribution networks to distribute a product that is comparatively cheap with a high public profile, due to how it is perceived as healthier enables them to generate a high cash flow. This is especially useful to any highly leveraged companies. Rather than being the sole source of income bottled water has become one of a series of income streams for companies and can be used as a method of attracting customers to the wider company with the perceived health benefits of the bottled water.
Bottled water has had very little change on the global flows of people either qualitatively or quantitatively. The changes here have been related to bottled water making the transport of safe drinking water into more isolated regions, especially in the developing world more possible. This has minor qualitative effects on both tourism and general health however.
The major shifts that have occurred with bottled water have occurred in the flows of ideas, information and ideology. The rise in profile of bottled water can be linked closely to the rise of the new middle class and the heavily marketed ideas that bottled water is healthier than tap water. The initial growth in the bottled water industry occurred as bottled water was perceived to have almost medicinal benefits, but the industry went into decline after the development of chlorination processes to provide clean healthy water to people’s homes. Perrier began the campaign for bottled water to become a staple of healthy living in the late 1970s. This campaign managed to make bottled water a “lifestyle defining product” for the newly emerging consumer group, the yuppies (Chappelle, 2009). Concerns over the quality of drinking water also emerged in Australia with the cryptosporidium and giardia scare in Sydney in 1998 giving much weight to the view bottled water is healthier, despite more lenient regulations compared to tap water (Choice, 2005). Convenience is also seen as benefit of bottled water, but in reality bottled water has become a status item and security blanket at the same time. Rather than use “dirty” public facilities consumers keep a bottle of water with them at all times, described as a form of “hyperindividualism” where people are moving away from a common purpose towards more personal enhancement (Royte, 2008).
The extent to which nature and culture has affected how globalised the bottled water industry is unique compared to other food industries as nature has a much reduced ability to restrict water to particular environments. As water is not an organic product, it does not “grow” and therefore it is not restricted to particular climates or soil types. Geology has an affect on the suitability and size of the aquifers that are the source of spring and mineral water but then main affect of nature on the globalisation of water is in fact how “natural” the source location is perceived to be by the consumer, which is far more related to the consumers culture than to the natural environment. Water that can market itself as being from remote, untouched and purer locations will generally be perceived to be healthier than other waters, regardless of the actual natural environments involved.
Culture has by far a more important effect on the extent to which globalisation has occurred in the bottled water industry. The initial rise and fall in the industry are linked to cultural factors. Bottled water was initially perceived correctly as being healthier for people in the 19th century but with the development of reliable clean water being delivered to people’s houses the bottled water industry started to decline as it was no longer a healthier option. In recent years the growth of the new middle class and the cultural changes associated with this consumer group has linked closely with the recent rapid re expansion of the bottled water industry. This growth has been directly linked to marketing and advertising campaigns aimed at this new consumer group pushing bottled water as a more convenient, healthy and safe option than the cheaper widely available tap water provided to consumer’s houses.
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