RETAILERS DON'T SEE ANY DROUGHT IN BOTTLED WATER SALES

BARBARA MURRAY

GREENWICH, Conn. -- Poland Spring's $10.8 million settlement of a class-action lawsuit questioning the source of its bottled water is not having the ripple effect that the industry feared, retailers and others told SN.

It's more like a drop in the bucket, they said.

"Bottled water sales are as strong as ever," said Richard Galanti, chief financial officer of Costco Wholesale, Issaquah, Wash.

"I don't know that we can comment on what the outcome of the settlement might be, but our feeling is that whenever a vendor of ours answers consumer questions about quality, that's a good thing," said Mary Mulry, senior director of product development and standards, Wild Oats Markets, Boulder, Colo.

As part of the pact approved Nov. 5, all parties agreed that Poland Spring brand water is properly labeled and meets the U.S. Food and Drug Administration's definition for spring water. In return, Poland Spring, owned by Nestle Waters North America, Greenwich, Conn., will provide customers with discounts and coupons, and it will make charitable contributions. The agreement stipulates that Poland Spring water will continue to come from the same four springs it comes from now.

Still, the case again piques consumer suspicions that arise from time to time regarding the source of natural spring waters, and it's a question that the industry as a whole needs to address, category watchers noted.

"The whole water history is full of brands being labeled as being bottled somewhere where they weren't, but the quality is good and in most instances it beats tap water dramatically," said Bill Wyman, founder and president of Rockwell Consulting, Ridgefield, Conn.

Another consultant, Tom Pirko, president of Bevmark, a Santa Barbara, Calif.-based consulting firm, said he didn't think the settlement would hurt the image or the sales of the category.

"Consumer psychology is such that when the consumer lands on a spot, he or she will stay there till she is knocked off. The quality, the safety, the fashionability, is locked in. They form positive bonds, and a scandal here or there is not going to change much," he said, adding that bottled water has "gone past fad or fashion; it's now a very deeply seated habit for many people."

In fact, Pirko believes the discounts and coupons that are part of the settlement might actually help Poland Spring's sales.