Investing in Bottled Water – A Precious Commodity

Water is the ultimate commodity. We all need water to survive, but rather than take our water straight from the tap, Americans are drinking more bottled water than beer, coffee, or even milk. In 2007, the average individual in the United States drank well over 28 gallons of the bottled commodity. That was a staggering difference from just 1.6 gallons back in 1976. The sad reality is that bottled water has become such a valuable commodity that some companies like Fiji Water produce as many as one million bottles a day while half of the residents on Fiji don’t have access to their own drinking water. Around the world, entire populations are being cut off from having access to clean drinking water, and here it is a $50 billion industry across the globe.

Only soft drinks outsell bottled water, and with the health conscious spending their dollars more wisely at the grocery store, bottled water may very well outpace sodas within the next decade or so. Industry leaders include brand names like Saratoga Springs, Poland Springs, Arrowhead, and Crystal Geyser, but Aquafina (owned by Pepsi) dominates the market with Coke’s Dasani coming in at a close second. Even soft drink companies are taking advantage of the bottle water phenomenon, as are plenty of investors.

Investing in water is a smart option because it’s a limited commodity, even if it doesn’t seem like it. There is a limited supply of water throughout the world and no substitute exists that can make up for a shortage. This means that people will pay a premium for water in just about any form. Companies are always seeking out ways in which they can develop better purifying technologies, more efficient infrastructures and transportation methods to get the water to the masses. Water conservation and sanitation is always at the forefronts of people’s minds, which makes water mutual funds attractive investments.

A major player in water mutual funds is the Calvert Global Water Fund (CFWAX). Unlike other investments that focus on bottle water, Calvert seeks to address concerns surrounding recycling waste and creating better sustainability, which is one trend that is only projected to go up. With so few mutual funds investing in the water industry, it would seem like most investors don’t see water as a viable investment opportunity when, in fact, few things on Earth are as precious as water, and growing assets in the sector may begin proving that.

About Richard Wilson