8.06.2006

Ethical Water?

Walking into a Starbucks the other day I noticed that they were selling a different kind of bottled water. Ethos Water boasts that buying a bottle helps save thirsty children in far off places. It's a snazzy campaign built on, like many these days are, the concept that consumerism can be ethical. Why buy that Everest bottle when purchasing an Ethos water will also save the lives of children?

The truth is, clichedly, a little bit harder to swallow. Oddly enough, it's printed right there on the bottle and on the front page of their chic, Flash webpage.

They, technically Starbucks, donates a whopping five cents to the cause - their goal being to donate $10 million within the next five years. And to be honest, $10 million is a decent goal. Unfortunately for anyone with a taste for cynicism, donating 5 cents of every bottle purchased (less than 4% of the price) is the equivalent of giving a homeless man a nickel, punching him in the throat, and shouting from the street corners about your genorocity.

Here's a little math: How much water does Ethos have to sell to reach their goal? At 5 cents per bottle, that's 200 million bottles over the next 5 years (40 million per year). And just how much money will Ethos be making if they reach this heartwarming goal?

The price at my local Starbuck's was $1.49. Remove the 5 selflessly donated cents and about 40 cents for production cost, and the total comes to $1.04. Multiplied by 200 million bottles, and Ethos is making $192,307,692 over the next five years in order to lovingly donate $10 million to the poor children of the world's water needs.

But a business needs to run, right? True. But the problem isn't with keeping the business afloat in order to serve the needs of the lower classes and underdeveloped countries. There are plenty of non-profit organizations out there like Water Partners who actually work to get underdeveloped countries the water they need without all of the grandstanding that Ethos does.

Ethos is a business using a marketing technique that has recently become highly effective. Tell a guilt-ridden middle-class that they can do their part to save the world just by purcashing something hip at their local Starbucks beanery. It feels good to donate to a cause, right? Trust me. It does. And that's the reason that marketing like this is so effective. It creates an environment for the consumer to feel good about something they would have already done.

So if it came down to buying Ethos or any other bottled water, shouldn't you just buy Ethos since it's on par with the rest AND donates the money?

Don't pull out your wallet just yet.

Like I said earlier, Ethos was $1.49 at the local Starbucks (prices may vary), and, with most things in economics, if you went to the supermarket and bought a 6 or 24 pack of bottled water, you'd be saving enough money per bottle to donate 10 cents to any water cause of your choice.

You'd be doing twice as much as Ethos is.

If you're actually interested in doing so, check out these sources.

5 Comments:

At 9:03:00 AM, Anonymous Anonymous said...

Your post highlights one my my main gripes with blogs -- that any uninformed rube can post can post anything without actually thinking through their comments or making intelligent assertions. Your premise and math wrt Ethos are horrendous -- a "production cost" of ~40 cents is laughably off-base, and betrays you poor grip of CPG economics -- in reality, COGS plus applicable overhead/G&A, is much closer to $1.20-$1.40/bottle. Now play out the result. Or better yet, don't bother.

 
At 10:56:00 AM, Blogger Beancan Tatterpants said...

You sure showed me. Here's some informative links about bottled water production that you might be interested in:

http://www.panda.org/livingwaters/pubs/bottled_water.pdf

This is in PDF, but pages 18-20 are of particular interest.

http://www.astonisher.com/skinny/skinny_coke.html

http://www.soc.duke.edu/~s142tm16/eos.htm

Just a few sources with ranging credibility, although they are probably rubes.

I suppose an estimate of 40 cents per bottle is about as laughable as 1.20-1.40. Your estimate leaves pennies for Ethos (which would be fine since they are selling a ton of product) but zero for the stores carrying it.

Meanwhile, it still doesn't change the fact that its an advertising gimmick, and if you doubt that, then I really wish I could trade places with you.

Thanks for posting. Seems you're enjoying your main gripe with blogs from both angles.

 
At 11:20:00 PM, Blogger Scribe LA said...

Thanks for breaking it down. The Ethos water in Palm Springs sells for $1.89, 40 more cents than in your store. Yipes.
Scribe
Someone is making a killing off this campaign and it certainly isn't the people who really need the money/resources.

 
At 1:15:00 AM, Anonymous Anonymous said...

As a person who knows the cost of doing this I would say 0.25 is more like it, you can even start your own soda company and it would cost little more per bottle. All you need is about $75,000.00 and a place to put all, they do you marketing as well. $25,000.00 for logo and soda and the other $50,000.00 for product, you would have about 200,000 bottles and would make about $133,000.00 after all cost. And if you want don't think I'm right give this company a call http://powerbrands.

I was looking into this myself information below.

Mark

POWER BRANDS
Beverly Hills Office
8350 Wilshire Blvd., Suite 200
Beverly Hills, CA 90211
(800) 730-9445 (Toll Free)
(215) 243-8305 (Fax)
www.powerbrands.us

POWER BRANDS
Administrative Office
16501 Sherman Way, Suite 225
Van Nuys, CA 91406
(714) 271-8727 (Cell)
www.powerbrands.us
martybrown@powerbrands.us

POWER BRANDS
Chicago Office
101 Addison Ave.
Suite 208
Elmhurst, IL 60126
630-833-0880 (Phone)
630-833-0858 (Fax)

 
At 1:52:00 AM, Anonymous Anonymous said...

Just wanted to add little more info..

Lets say you wanted to start small and don't have a lot of money, you could still do it for way less then $1 each.

Here is a link you should read its the cost of Bottles its like 16 cents each keep in mind this is a small amount http://www.bottlesetc.com/descript.cfm?FamilyID=2&DescriptionID=51

You get 4778 and it cost only 764.48 plus you pay for lids and they cost about 0.075 each and that $97.50 and water is almost nothing at about 0.002 per gal so lets just add that into it as well.

Now I can make a bottle of water and it only cost me $0.237 each and I can get a nice logo for it and it will cost 0.05 each so total $0.287 each, this is a very small amount and as posted above its even less once you get bigger.

Out of packet cost: $1361.73
Profits: $4433.984

You could make you money and more

I hope this clears up any misunderstanding on what the cost of bottle water is thank.

Mark

 

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