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Water & Gas: An American pricing paradox

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Americans are willing to pay so much because they prize convenience, experts say. When consumers spend $1.60 on a liter of bottled water, they are paying for a lifestyle as much as for the water itself.

"We're a bottled culture," says Robin Kaminsky, director of water for Pepsi, which markets the Aquafina brand.

Mr. Belch witnessed the appeal of portability firsthand when his wife brought home a case of bottled water, despite the fact that they had a water purifier installed in their home. "She said the point was to get the kids drinking water instead of Gatorade," says Belch.

Giant beveragemakers Pepsi and Coke – the latter of which sells Dasani bottled water – entered the bottled-water market, experts say, because they realized they could make huge profits on a product that most consumers bought in single servings.

Indeed, because many Americans buy bottled water in amounts of one liter or less, a gallon of the product can ultimately cost consumers' more than $6.

Water appeals to consumers now partly because many care more about nutrition and hydration and living a healthy lifestyle.

But marketers have also fueled the trend. To some degree, water bottlers have created demand where there was none.

"Bottled water has gotten people to drink more water," says Ms. Kaminsky.

Overall, sales of bottled water grew 30 percent last year, while carbonated beverage sales grew only 0.6 percent.

The utility of having water in a portable container obviously appeals to consumers. But by giving the bottles an identifiable brand, and pouring into millions of advertising ($85 million in 2001), marketers have turned a home utility into an appendage of daily life.

"A product that was once a commodity is now moving in the direction of being a serious branded consumer product," says John Sicher, editor of Beverage Digest.

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