Bottled Water Reporter by IBWA

W W W. B O T T L E D W AT E R . O R G

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IN THIS ISSUE OSHA Delays Facts for Advocacy Tools Conversations With That Work Effective Date in New Rule College Students

BOTTLED WATER REPORTER | NOV/DEC 2016

MARKET GROWTH DRIVES INNOVATION IN BOTTLED WATER INDUSTRY

DO YOU UNDERSTAND THE NEW OVERTIME PAY RULE? IBWA CAN HELP

Also Inside: HOW TECHNOLOGY AND OPERATIONS MANAGEMENT CAN TRANSFORM YOUR BUSINESS A PUBLICATION OF THE INTERNATIONAL BOTTLED WATER ASSOCIATION

Reliable instruments for the ozone industRy Interference-Free Measurement of Dissolved Ozone Online Monitoring & Control for Ozonation Systems ATI’s Dissolved Ozone Monitor provides an economical and reliable measurement system for monitoring and controlling ozone treatment systems. With a variety of outputs including 4-20 mA analog, PID control, three adjustable relays, and digital communications (Profibus-DP, Modbus-RTU, and Ethernet-IP). The Q46H/64 is adaptable to any ozone application.

Model Q46H/64

Modular Gas Detector

Model A14/A11 • Expandable and Available for Multi-Channel Applications • Optional Self-Checking Sensors

• No Interference from Residual Chlorine • Direct Measurement of Ozone without Reagents • Multiple Sensor Mounting Styles • Low Operating Cost with Minimal Maintenance Required • Optional pH Sensor for Dual Parameter Monitoring

Digital Gas Detector

Model F12 • Available for AC, DC, or Battery • Uses “Smart Sensors” • Optional Self-Checking Sensors

800-959-0299 www.analyticaltechnology.com

Portable Gas Detector

Model C16 • Data Logger Standard • Uses “Smart Sensors” for up to 33 Different Gases

VOL. 56 • NO. 6

COLUMNS GOVERNMENT RELATIONS

24 | IBWA Advocacy Tools That Work for You How IBWA’s advocacy tools help members share bottled water’s positive story. COMMUNICATIONS

26 | Engaging With College Students About Bottled Water, Our Industry, and Why We’re the Good Guys Why facts are the best foundation for bottled water conversations. TECHNICAL UPDATE

28 | OSHA Delays Effective Date for Anti-Retaliation Portion of New Rule What you need to know. VALUE OF IBWA MEMBERSHIP

32 | IBWA: the One-Stop-Shop for Information Kevin Mathews (Nestlé Waters North America) explains to Bottled Water Reporter why he considers his company’s IBWA membership a reliable “advance warning system" for regulatory issues.

CONTENTS TABLE OF CONTENTS 10 | Market Growth Drives Innovation in Bottled Water Industry The bottled water market is strong, but don't assume this upward trajectory will continue without investment. Innovation is necessary. Zenith International market analysts suggest strategies that broaden product and brand portfolios are likely to be important for both volume and value growth. By Christina Hall

19 | How Technology and Operations Management Can Transform Your Business While bottled water operations try to manage a proliferation of SKUs, labor costs, space utilization, and health and safety issues, we must also find ways to increase performance, decrease costs, and reduce our environmental footprint. We must do so to remain competitive and profitable. But how? This article provides a glimpse at how the use of operations technology—specific to methods of operation, delivery routing, and design—can transform your business. By Shellie Brickle

DEPARTMENTS

CHAIRMAN’S COMMENTARY................................2 PRESIDENT’S MESSAGE.......................................4 WATER NOTES.....................................................6 CPO QUIZ..........................................................30 ADVERTISERS....................................................31 CALENDAR........................................................31

CONNECT WITH IBWA

BOTTLED WATER REPORTER, Volume 56, Number 6. Published six times a year by The Goetz Printing Company, 7939 Angus Court, Springfield, VA, 22153, for the International Bottled Water Association, 1700 Diagonal Road, Suite 650, Alexandria, VA 22314-2973. Tel: 703.683.5213, Fax: 703.683.4074, www.bottledwater.org. Subscription rate for members is $25 per year, which is included in the dues. U.S. and Canadian subscription rate to nonmembers is $50 per year. International subscription rate is $100 per year. Single copies are $7. POSTMASTER: Send address changes to Bottled Water Reporter, 1700 Diagonal Road, Suite 650, Alexandria, VA 22314-2973.

IBWA IBWA

International Bottled Water Association International Bottled Water Association

CHAIRMAN’S COMMENTARY WHEN NO. 1 IS NOT ENOUGH During my tenure as IBWA chairman, I’ve learned a few things. Active advocacy at the federal and state levels is important—and it’s easier than you think, thanks to IBWA. For the past two years, I frequently traveled to Washington, DC, to discuss bottled water industry issues with members of Congress. We chatted about the faulty National Park Service policy that allows individual park units to ban the sale of bottled water, the safety of bisphenol A (BPA), the onerous proposals to impose user fees or regulatory taxes on the industry as part of FDA’s Food Safety Modernization Act (FSMA), and many other topics. I even hosted Rep. Keith Rothfus (R-PA) on a tour of my Pittsburgh plant. Sound impressive? It may, but the truth is that IBWA staff so well prepared me to interact with legislators that, when it comes to bottled water, I’m the expert. Policy makers on Capitol Hill need to hear from us so that they can make more informed decisions. We have to share bottled water’s good story. IBWA members may be part of a $14.2 billion industry, but our association’s budget is limited. While anti-bottled water campaigns have sponsors and promoters, we can only rely on each other to ensure that the truth about bottled water is heard by consumers. Combatting all the negative stories isn’t easy, but you are not alone. IBWA is hard at work to provide talking points and other resources you can use on social media or when speaking with the media or elected officials to help ensure industry’s perspective is heard. Being No. 1 is not enough. I welcome the news that by early 2017 bottled water will be the No. 1 packaged beverage in the United States by volume. However, the accolade I really want is for bottled water to be acknowledged as the beverage that can help America overcome its health crisis. In 2016, we learned that IBWA’s efforts to promote water in the 2015-2020 Dietary Guidelines for Americas were successful. Guideline promotional materials published by the U.S. Department of Agriculture and the Health and Human Services Department include statements such as “Drink water instead of sugary drinks.” I look forward to the day when we see bottled water recognized in the Dietary Guidelines as crucial to a healthy diet—and perhaps even see water included on the popular MyPlate food nutrition graphic. We have achieved a lot of success in 2016—and none of it would have been possible without the active participation of IBWA members and our dedicated board of directors. So, thank you. It has been an honor to represent the bottled water industry and IBWA.

OFFICERS Chairman Joe Bell, Aqua Filter Fresh, Inc. Vice Chair Shayron Barnes-Selby, DS Services Treasurer Lynn Wachtmann, Maumee Valley Bottlers, Inc. Immediate Past Chairman Bryan Shinn, WG America Company

BOARD OF DIRECTORS Shayron Barnes-Selby, DS Services Joe Bell, Aqua Filter Fresh, Inc. Charlie Broll, Nestlé Waters North America Philippe Caradec, Danone Waters of America Andy Eaton, Eurofins Eaton Analytical Brian Grant, Pure Flo Water, Inc. Brian Hess, Niagara Bottling LLC Doug Hidding, Blackhawk Molding Co. Scott Hoover, Roaring Spring Bottling Dan Kelly, Polymer Solutions International Greg Nemec, Premium Waters, Inc. Bryan Shinn, WG America Company Robert Smith, Grand Springs Distribution Louis Vittorio, Jr., EarthRes Group, Inc. Lynn Wachtmann, Maumee Valley Bottlers, Inc. William Patrick Young, Absopure Water Co., Inc.

IBWA EXECUTIVE COMMITTEE Chairman Joe Bell, Aqua Filter Fresh, Inc. Shayron Barnes-Selby, DS Services Charlie Broll, Nestlé Waters North America Philippe Caradec, Danone Waters of America C.R. Hall, Hall’s Culligan Henry R. Hidell, III, Hidell International Scott Hoover, Roaring Spring Bottling Dan Kelly, Polymer Solutions International Ed Merklen, DS Services Bryan Shinn, WG America Company Lynn Wachtmann, Maumee Valley Bottlers, Inc. William Patrick Young, Absopure Water Co., Inc.

COMMITTEE CHAIRS Communications Committee Jane Lazgin, Nestlé Waters North America Audrey Krupiak, WG America Company Education Committee Glen Davis, Absopure Water Co., Inc. Douglas R. Hupe, Aqua Filter Fresh Environmental Sustainability Committee Philippe Caradec, Danone Waters of America Jeff Davis, Blackhawk Molding Co. Government Relations Committee Shayron Barnes-Selby, DS Services Lynn Wachtmann, Maumee Valley Bottlers, Inc. Membership Committee Marge Eggie, Polymer Solutions International Kelley Goshay, DS Services State and Regional Associations Committee Joe Cimino, ChoiceH2O Ross Rosette, H2Oregon

Joe Bell IBWA Chairman

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Supplier and Convention Committee Brian Grant, Pure Flo Water, Inc. Dan Kelly, Polymer Solutions International Technical Committee Andy Eaton, Eurofins Eaton Analytical Kevin Mathews, Nestlé Waters North America

IBWA

International Bottled Water Association

PRESIDENT’S MESSAGE PREPARING FOR WHAT’S NEXT

BOTTLED WATER REPORTER is published for: International Bottled Water Association 1700 Diagonal Road, Suite 650 Alexandria, VA 22314-2973. Tel: 703.683.5213 Fax: 703.683.4074 www.bottledwater.org

IBWA STAFF

By early 2017, bottled water will be the No. 1 packaged beverage in the United States—but that doesn’t mean we can rest on our laurels. Consumers are increasingly choosing bottled water as their packaged beverage of choice because it provides healthy hydration in recyclable packages—whether they are on-the-go or at their home or office. As an industry, we will, of course, paused to let the fact sink in that, for the first time, volume sales of bottled water will outpace carbonated soft drinks. But as noted in our cover story, “Market Growth Drives Innovation in Bottled Water Industry” (p.10), we can’t expect this upward trajectory to last indefinitely. We need to continue to innovate—and rapid growth in the market provides an ideal environment for bottled water brand innovation. To keep up with consumers’ demand for more bottled water, our bottling plants have to be operating at optimum levels. That’s why our second feature, "How Technology and Operations Management Can Transform Your Business" (p.19), reviews how recent advancements in operations technologies can help you remain competitive and profitable. This article takes a deep dive into the topics of methods of operation, delivery routing, and design, and will provide information on how to turn operations data into action. In our columns, we turn our attention to the innovative ways we can share the bottled water industry’s good story. The Government Relations column (p.24) reviews the advocacy tools IBWA makes available for members. Tools, such as the IBWA advocacy portal found on www.bottledwatermatters.org, can help members connect with elected officials to educate them about bottled water issues. In the Communications column (p.26), we discuss how to use a foundation of facts to structure conversations with bottled water critics. Finally, the Technical Update column (p.28) reviews what you need to know about the Occupational Safety and Health Administration’s (OSHA) delay of the effective date for the anti-retaliation portion of its new rule that will impact employer safety-incentive programs and post-accident drug testing policies. As we close out 2016, we have a lot to look forward to in the New Year. Bottled water will soon officially be the No. 1 U.S. packaged beverage. But to remain at the top, we’ll need to be innovative. Hopefully, the articles in this issue of Bottled Water Reporter introduce you to some new technologies and product development strategies that you will consider implementing to help your company become even more competitive and profitable.

Joe Doss IBWA President

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President Joseph K. Doss jdoss@bottledwater.org Vice President of Education, Science, and Technical Relations Robert R. Hirst bhirst@bottledwater.org Vice President of Communications Chris Hogan chogan@bottledwater.org Vice President of Government Relations Vacant Director of Conventions, Trade Shows, and Meetings Michele Campbell mcampbell@bottledwater.org Director of Government Relations J.P. Toner jtoner@bottledwater.org Director of Science and Research Al Lear alear@bottledwater.org Manager of Publications and Special Projects Sabrina E. Hicks shicks@bottledwater.org Manager of Member Services Cheryl Bass-Briscoe cbass@bottledwater.org Education and Technical Programs Coordinator Claire Crane ccrane@bottledwater.org Executive Assistant Patrice Ward ibwainfo@bottledwater.org Bottled Water Reporter Layout and Design Rose McLeod rozmack@gmail.com Tel: 315.447.4385 Editor Sabrina E. Hicks shicks@bottledwater.org Advertising Sales Stephanie Schaefer stephanie@bottledwater.org

ProStack ÂŽ & Polymer Solutions International, Inc. Where Ideas Become Solutions

WATER NOTES

MEMBER BENEFIT

IBWA Provides Members With a Guidance Document on the U.S. Dept. of Labor Overtime Pay Final Rule On May 17, 2016, the U.S. Department of Labor (DOL) issued a final rule that updates the salary level required for the executive, administrative, and professional (“white collar”) exemptions to the overtime pay provisions of the Fair Labor Standards Act (FLSA). The rule increases from $23,660 ($455 per week) to $47,476 ($913 per week) the annual salary threshold above which certain white collar workers are exempt from overtime pay eligibility. The final rule does not, however, make any 6

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changes to the job duties test for executive, administrative, and professional employees. Under the final rule, the salary and compensation levels will automatically be updated every three years, with the first adjustment to take place in 2020. The final rule will become effective on December 1, 2016. To help members comply with the final rule, IBWA has prepared a guidance document. Whenever possible, the document provides examples of jobs that are commonly found in bottled water companies, particularly

route salespersons and plant personnel. On October 26, 2016, IBWA also offered members a webinar on the DOL Overtime Rule. Please note that IBWA’s guidance document on the final rule is intended to provide a general overview of the exemptions to the minimum wage and overtime requirements of the FLSA. The determination of whether a position is exempt from the FLSA is fact specific and requires analysis of all circumstances pertaining to the day-to-day duties and functions of such position.

Accordingly, while IBWA’s guidance document can serve as a useful tool in ascertaining the general scope and applicability of any particular exemption, it does not constitute legal advice, and IBWA recommends that members contact counsel if they question the FLSA classification of any specific position.

For a copy of IBWA’s DOL Overtime Final Rule Guidance Document, IBWA members can email ibwainfo@ bottledwater.org.

WATER NOTES

EDUCATION

DWRF Awards Kristin Safran College Scholarship to Madelyn Trolinger University of Arkansas freshman Madelyn Trolinger is the 2016 recipient of the Drinking Water Research Foundation's (DWRF) Kristin Safran College Scholarship. Madelyn, whose mother Diane works at Hall’s Culligan in Lowell, Arkansas, began her studies at the University of Arkansas this fall. Her career goal is to become a doctor. Madelyn graduated, with high honors, from Elkins High School. She was a member of the National Honor Society and Student Council, including holding the position of Student Council president during her senior year. Along with excelling academically, Madelyn was a member of the cross county, volleyball, and softball teams. She was also heavily involved in

community service and volunteering efforts at her high school and in her community. For those efforts, she was recognized with the Female Citizenship Award for the class of 2016. During the judging process, the Kristin Safran College Scholarship Selection Committee—made up of DWRF Trustees Jack West and Stew Allen, and Kristin’s widower, Russ Safran—blindly reviewed applications from children or grandchildren of IBWA members (i.e., judges did not know the names of the children or parents, or the company the parents work for when reviewing applications). DWRF created the Kristin Safran College Scholarship Fund in February 2010

Madelyn Trolinger

in honor of former IBWA Board of Directors Member Kristin Safran (ARK Specialty Services), who passed away in 2009. The scholarship was established to help high school seniors pursue their college studies. For more on DWRF, visit www.thefactsaboutwater.org.

COMMUNICATIONS

IBWA Listicle Explains Why Bottled Water Is a "Healthy, Environmentally Friendly Drink"

An increasingly popular way of communicating messaging on the internet is by creating a “listicle”—an article consisting of a numbered or bulleted list, usually accompanied by short text and large images. IBWA developed its listicle for distribution via Brandpoint, a paid service that makes newsworthy content available to news editors free of charge.

IBWA’s listicle, “Bottled Water: The Healthy, Environmentally Friendly Drink," presents six reasons why bottled water has become America’s preferred beverage: (1) a healthy alternative to soda and other sugary drinks, (2) small environmental footprint, (3) the choice for the active lifestyle, (4) a legacy of preserving the environment, (5) great water, great jobs, and (6) extremely small water user. The listicle was released for distribution on October 5, 2016. As of October 18, 1,047 outlets across the United States have picked up the IBWA listicle, and audience reach was at 157 million people (75 million on desktop computers; 82 million on mobile devices). Online news outlets that published IBWA’s listicle included the LA Times, the Houston Chronicle, SFGate.com, Chicago Tribune, Orlando Sentinel, Baltimore Sun, and SeattlePI.com. IBWA has also posted the listicle on its Bottled Water Matters website for easy linking from social media channels. Members are encouraged to share the listicle with their current and prospective customers: www.bottledwatermatters.org/article/ bottled-water-healthy-environmentally-friendly-drink. NOV/DEC 2016

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SOCIAL M EDIA MESSAGING BOARD If you are looki ng

Stay cheerful this holiday season! Drink bottled water between alcoholic drinks! greatist.com/health/13-legit-waysstop-hangover

for new opport unities to conn ect with educate them about bottled w share any of th at er issues, feel free e following on yo to ur social media sites during Nov and December ember —or be inspire d and write your own! consumers and

One in 11 people in the United States has diabetes. If you are living with diabetes, the National Institute of Diabetes and Digestive and Kidney Diseases recommends that you “drink water instead of juice and regular soda.” Learn more about managing diabetes at www.niddk.nih.gov/health-information/ diabetes/manage-monitoring-diabetes.

National Campaigns November: American Diabetes Month, Election Day (November 8), America Recycles Day (November 15), Thanksgiving (November 24)

An empty #BottledWater bottle in a recycling bin is a Beautiful Thing! November 15 is America Recycles Day. Take the #BeRecycled pledge at americarecyclesday.org/pledge and help Keep America Beautiful!

December: First Day of Winter (December 21), New Year’s Eve (December 31)—and, of course, Holiday Stress!

WHAT CAN I RECYCLE?

TOP 10

1 2

Another great reason to choose #BottledWater #zerocalories #noadditives #healthyhydration bit.ly/Swap141

#BottledWater goes with everything...even ugly sweaters!

IN THE

BIN

1. CARDBOARD 2. PAPER

3. FOOD BOXES 4. MAIL

5. BEVERAGE CANS

6. FOOD CANS

7. GLASS BOTTLES

8. JARS (GLASS & PLASTIC)

ALSO RECYCLABLE

bit.ly/UglyHolidaySweater

BUT NOT IN CURBSIDE BIN PLASTIC BAGS AND WRAPS

9. JUGS 10. PLASTIC BOTTLES AND CAPS Find out about your local recycling options here:

www.iwanttoberecycled.org

ELECTRONICS

TEXTILES

Limit weight gain during the holiday season Drink H2O! Drinking water helps you feel full— and as a result, you’ll consume fewer calories.

National Waste & Recycling Association SM

Collect. Recycle. Innovate.

Download: bit.ly/AmericaRecycles2016

Download: bit.ly/ChooseH2O Up your #BottledWater intake this winter! Did you know that water consumption helps the body function better—especially in colder weather.

Check out these 18 clever Christmas trees created with recycled materials. Hurricane Season 2016 isn’t over until November 30! Make sure you follow the advice of Ready.gov and stock your survival kits with bottled water.

www.pinterest.com/pin/414964553149924199

Social Media Tip

www.pinterest.com/ pin/414964553142553657

No matter who you vote for—vote on Tuesday, November 8, 2016!

Download: bit.ly/CoolDrinkUp Important to keep bottled water available where other packaged drinks are sold: #AmericanDiabetesMonth www.bottledwater.org/public/Norm%20 and%20BW%20Stats.png

ote!

NO MATTER WHO YOU VOTE FOR... VOTE ON NOVEMBER 8, 2016 Compliments of the International Bottled Water Association www.BottledWater.org Find your polling station: www.vote411.org.

Download: bit.ly/GetOuttheBWVote

For a list of some rather interesting “national” celebrations occurring in November/ December, visit www.nationaldaycalendar. com. For example, did you know National Take a Hike Day is November 17? And National Cookie Day is celebrated on December 4? The National Day Calendar can help you get inspired to create your own unique, daily postings.

#WinterIsComing! In winter, you might not sweat as much as in summer, but that doesn't mean your #body isn’t losing water. Keep hydrated with #BottledWater!

BEVERAGE CHOICE

IBWA Continues to Educate Congress About Faulty NPS Policy That Allows National Parks to Ban the Sale of Bottled Water On September 13, 2016, IBWA Vice Chair Shayron Barnes Selby (DS Services) and Government Relations Committee Member Derieth Sutton (Niagara Bottling) traveled to Washington, DC, on behalf of the bottled water industry to meet with members of Congress to discuss IBWA’s opposition to the National Park Service (NPS) policy that allows individual park units to ban the sale of bottled water. Among the members of Congress with whom the IBWA delegation met was Representative Ken Calvert (R-CA), chairman of the Interior Appropriations Committee, which has jurisdiction over funding for the NPS. The group discussed how the industry can support congressional efforts to rescind the sales ban policy.

on the sale of bottled water at national parks. Before that, on June 16, 2016, the Senate Appropriations Committee passed its 2017 Interior Spending bill, which included in its committee report an IBWA-supported provision that stated the committee’s desire for the NPS to withdraw the faulty policy. The Senate report language is the strongest language from that chamber (to date) supporting bottled water sales at national parks. What’s Next? When members of Congress return to Capitol Hill after the November 8 elections, legislators will likely pass an omnibus measure that would fund the government through the 2017 fiscal year. IBWA will work to secure a provision in the omni-

A Little History Lesson On July 7, 2016, the House of Representatives passed the House Interior Appropriations bill (H.R. 2822), which included language prohibiting the NPS from using any funds to implement or maintain its policy that allows for bans

bus bill to end the NPS policy allowing for the ban on the sale of bottled water at individual national park units. For more information, visit bit.ly/IBWA_NPS_Advocacy to read IBWA’s “Report on Failure to Follow Procedures in the National Park Service’s Flawed Campaign Against Bottled Water.”

RECYCLING

IBWA Returns to NYC for Environmental Sustainability Education Tour On October 5, 2016, 23 IBWA members and staff participated in a one-day recycling tour that visited redemption facilities and processors of recyclable materials in the New York metro area. The tour facilities illustrated how PET is separated from other materials and eventually reused to manufacture other products, including rPET bottles. The group first visited Arbor Recycling in New York City’s Bronx borough, followed by a tour of the DRC Group, a conventional redemption center that collects plastic, aluminum, and glass. The DRC Group handles more than a billion bottles each year. All materials at DRC are sorted by hand, and the bagged containers are taken by processors or contractors to be recycled. The 2016 IBWA Environmental Sustainability Tour participants at Arbor Recycling. next stop was at PolyQuest Recycling, a distributor of virgin PET resin and manufacture of rPET resins. PolyQuest processes PET material and converts it into clear flake for post-consumer or post-industrial usage. During this stop, IBWA Director of Government Relations J.P. Toner briefed tour participants on the challenges faced by beverage container redemption systems (such as New York’s) and the competition they encounter from curbside recycling programs. The tour concluded with a visit to Sims Recycling’s Sunset Park Material Recovery Facility. This state-of-the-art facility recycles curbside commingled material from the New York metro area and has more than 2 miles of conveyor belts to sort recycled materials. The facility’s machinery sorts glass, metal, and plastics, and then, at the end of the sort, employees are used for quality control. The facility itself is built from recycled materials and also uses solar energy. IBWA would like to thank all attendees who participated in this year’s Environmental Sustainability Education Tour, as well as the New York facilities that hosted tour attendees. In addition, a special thank you to PolyQuest Recycling for providing boxed lunches and Environmental Sustainability Committee member Phyllis Rokus for helping IBWA organize such a successful and educational event. NOV/DEC 2016

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COVER STORY

MARKET GROWTH DRIVES INNOVATION IN BOTTLED WATER INDUSTRY By Christina Hall

The global bottled water market has experienced another year of strong growth. In 2015, consumption of small-pack plain water (under 2 liters) rose by 6.8 percent, surpassing 190 billion liters. According to Zenith International research, the market grew at an average annual rate of 6.1 percent between 2011 and 2015. As consumers continue to seek healthier beverage options, a slowing in carbonated soft drinks on a global scale over the past five years has seen an interesting correlation with growth in the bottled water category.

SMALL-PACK PLAIN WATER AND CARBONATED SOFT DRINKS: GLOBAL VOLUME SALES (BILLION LITERS) 250

1.1%

AVERAGE GROWTH

200

6.1%

AVERAGE GROWTH

150 100 50 0

2011

2012

2013

Small-pack plain water

2014

2015 CSD

Source: Zenith Internationalâ&#x20AC;&#x2122;s globaldrinks.com, based on 72 countries

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SOCIAL TRENDS, ESPECIALLY HEALTH TRENDS, ENCOURAGE CONSUMERS TO INCREASE CONSUMPTION OF BOTTLED WATER. Consumption per person of small-pack plain water is highest in West Europe and North America, followed by East Europe, the Middle East, and Central and Latin America. This has grown in all regions during the last five years, most significantly in North America. Rapid market growth provides the ideal environment for bottled water brand innovation. Social trends, and especially health trends, are encouraging consumers to increase consumption of bottled water. This creates opportunities for both emerging and established bottled water brands to “ride the wave” of success.

Global market leaders have retained their dominance throughout the past decade. But beneath those, the market is incredibly fragmented as new national and regional brands emerge and jostle for share. While it is important to continue to drive growth of core products, innovation propels sales in emerging areas, including children’s bottled waters, enhanced water products, convenience formats, and the quest for rapid hydration. The central tenet of these initiatives is to move away from commodity status to greater value. The key for water brands in the current environment is not to assume that this upward trajectory will continue

SMALL-PACK PLAIN WATER, CONSUMPTION PER PERSON (LITERS)

West Europe North America East Europe Middle East Central & Latin America Asia Pacific Africa 0

60 2015

Source: Zenith International

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80 2011

100

120

MARKET GROWTH

THE KEY FOR WATER BRANDS IN THE CURRENT ENVIRONMENT IS NOT TO ASSUME THAT THIS UPWARD TRAJECTORY WILL CONTINUE WITHOUT INVESTMENT BUT TO MAKE SENSIBLE AND INFORMED DECISIONS TO ENSURE FUTURE SUCCESS.

Children’s Bottled Water In response to concerns over childhood obesity, tooth decay, high-calorie content, and general nutrition in children, consumers and public health advocates have driven demand away from sugary beverages and towards healthier options. Coupled with rising demand for healthy hydration, a growing number of bottled water ranges and variants have become specifically aimed at children and their parents. Safety concerns have added to consumer sensitivity. In North America, for example, lead in public water systems has become a particular issue. CNN reported that 17.6 million Americans live in communities where the water systems have reported violations of lead and copper rules in 2015. In Portland, Oregon, plans were announced to provide bottled water to all schools during 2016-17.

IN RESPONSE TO CONCERNS OVER CHILDHOOD OBESITY, TOOTH DECAY, HIGH-CALORIE CONTENT, AND GENERAL NUTRITION IN CHILDREN, CONSUMERS AND PUBLIC HEALTH ADVOCATES HAVE DRIVEN DEMAND AWAY FROM SUGARY BEVERAGES AND TOWARDS HEALTHIER OPTIONS. Source: Zenith International’s Global Children’s Bottled Water Report ( June 2016)

without investment but to make sensible and informed decisions to ensure future success. Zenith market analysts conclude from their extensive research into bottled water trends that one strategic area for focus will be brand extension for existing successful water brands. Children’s beverages and flavored waters have seen vast numbers of successful new brand launches in the past few years. Brand extensions within those sectors could broaden the consumer base too. NOV/DEC 2016

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New water launches that target children are, for the most part, portfolio expansions of existing brands within the wider bottled water market. A number of standalone products have also appeared in recent years, such as True Drinks’ AquaBall brand. Within this segment, the aesthetics of the product play an important role in purchase appeal, so novel bottle shapes; colorful bottles, caps, and labels; and promotions that feature well-known children’s characters are prevalent. Vöslauer in Austria has been particularly successful with its Vöslauer Baby line, which puts balanced mineralization and low sodium content at the forefront of its marketing. The Vöslauer Junior extension is packaged in colorful ergonomic bottles with sports cap child-safe closures and fun labels featuring cartoon sea-creature characters. The brand has successfully managed to create a product that looks appealing to children, while maintaining integrity over its message of mineral water purity for parents. One of the advantages for both manufacturers and retailers is that children’s bottled water can command a higher price. Zenith research has found that the premium for a 500ml bottle can be anywhere from 20 percent to 100 percent.

The children’s bottled water market has great untapped potential and is likely to expand further during the next five years. Using Zenith forecasts for the growth of smallpack bottled water, alongside United Nations estimates for the rising population of children, the potential size of the market is estimated to increase by a further 7 percent per year until 2021. However, that level of growth is only sustainable in markets where higher prices can cover the extra costs of attracting both children and parents at the supermarket shelves. Bottled water companies would do well to consider this, especially because today’s consumers are thirsty for change. Flavored and sparkling water also offer opportunities for extra expansion. Many brands are aiming to move ahead of the curve in terms of sugar content and natural positioning. A number of products have already undergone reformulation to accommodate growing demand for natural and healthy beverages, including the substitution of sugar with stevia alongside the removal of artificial preservatives and ingredients.

FLAVORED WATER VOLUME SALES (BILLION LITERS)

AVERAGE GROWTH

8 7 6 5 4 3 2 1 0

2011

Source: Zenith International

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5.4%

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2012

2013

2014

2015

MARKET GROWTH

Flavored Waters Enhanced waters accounted for around 6 percent of total small-pack (under 2 liters) water consumption in 2015, including flavored and functional water. The global flavored water market grew to 7.7 billion liters in 2015, an increase of 6 percent on 2014, with growth in all regions. Flavored water benefits from being perceived as a refreshing beverage without the negative connotations of high sugar content or artificial ingredients. Innovation is promoting this healthy positioning and boosting sales.

FLAVORED WATER INNOVATION

Source: Zenith International’s Flavoured Water Innovation Report (February 2016)

Brands like Danone’s Villa del Sur Levité and Volvic Touch of Fruit have gone from strength to strength through continuous innovation and expansion into new markets. Leading plain water brands, including Evian and Asahi, have launched new flavored ranges in the last 18 months. Other long-standing brands with origins in the plain water sector like Perrier, Volvic, and Vöslauer have also introduced new flavors. With a focus on packaging, provenance, or flavor, a number of new premium flavored waters are emerging, such as Found’s Cucumber and Mint, Voss’s Tangerine Lemongrass, and Patagonia’s natural fruit essence range. The introduction of flavored variants to their established

THE INTRODUCTION OF FLAVORED VARIANTS TO THEIR ESTABLISHED PREMIUM BRANDS COULD SIGNAL THE START OF RESTAURANTS OFFERING A RANGE OF STILL, SPARKLING, AND FLAVORED WATERS, ALONGSIDE CARBONATED SOFT DRINKS.

premium brands could signal the start of restaurants offering a range of still, sparkling, and flavored waters, alongside carbonated soft drinks. A key challenge for a bottled water brand is whether and how to expand its portfolio, while maintaining its core message of healthy hydration. Zenith’s new report, "Flavoured Water Innovation Report," and consultancy can help identify the ways to take advantage of the latest innovation trends.

Country Focus: Italy Europe has often led the way in highlighting the healthy benefits of natural mineral water through a combination of brand marketing and public health initiatives to promote digestive health, increased cognitive function, and general wellbeing. In Italy, Ferrarelle’s new Fonte Essenziale recommends drinking two glasses before NOV/DEC 2016

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FLAVORED-FUNCTIONAL WATER INNOVATION

fruit drinks, and ready-to-drink tea. It has also, most recently, made the transition from plain water into functional water. San Benedetto Ice Formula Zero is available in "orange & mandarin" and "lime" flavors enriched with minerals, and San Benedetto Aquavitamin is available in four flavors for four functional areas: BEAUTYou, GENyouS, IfeelGOOD and ReadyToGo.

Brand Case Study: Innocent Drinks Bottled water businesses can benefit from case studies that examine how juice and carbonated soft drink brands are moving increasingly into the center of the overall drinks category, and drawing on bottled water’s healthy credentials. For example, Innocent Drinks was a brand that first achieved huge success in the juice smoothie market and has since moved in the direction of water. The company has now successfully added new lines and extensions to include coconut water and juicy water. This

Source: Zenith International’s Flavoured-Functional Water Innovation Report ( January 2016)

breakfast each day to support healthy liver function and to aid digestive processes. The global functional water segment is growing too, experiencing value growth of 7 percent and volume growth of 4 percent in 2015, to reach global sales of over 5.3 billion liters. In 2015, North America led in consumption per person, followed by West Europe and Asia Pacific. In fact, Asia Pacific is predicted to see substantial increases in consumption during the next five years, to become the leading region, mostly driven by China. Still water currently dominates the functional water space. As well as offering countless fruit flavorings, functional water provides additional benefits to the health-conscious consumer, principally through the use of vitamins, minerals, oxygen, and botanicals. The range of ingredients is constantly evolving to satisfy what consumers want, with leading functional trends for 2016 including protein waters, energy waters, and beauty waters. Italian company San Benedetto is one of the standout performers. With roots in natural mineral water, it has expanded its range to include flavored waters, children’s waters, premium formats, carbonates, sports drinks, 16

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CONSUMERS ARE INCREASINGLY OPTING FOR NATURAL PRODUCTS THAT RETAIN AN EXTRA ELEMENT OF EXCITEMENT NOT ALWAYS ASSOCIATED WITH PLAIN BOTTLED WATER.

MARKET GROWTH

has enabled the brand to navigate beyond the constraints of pure fruit juice. Strategies that broaden product and brand portfolios are likely to be important for both volume and value growth. Maintaining the healthy hydration message, while setting your brand apart from the competition, will be the challenge that, if successfully achieved, can strengthen recognition and loyalty. Consumers are increasingly opting for natural products that retain an extra element of excitement not always associated with plain bottled water. As consumers become more sophisticated and adventurous with their flavor preferences, exotic and superfruit flavors may capture inquisitive audiences, alongside traditional citrus and berry offerings. However, water brands have to be extremely careful about making functional claims. If your company is considering expanding its

offerings, flavored waters, low-calorie, low-carbohydrate, and low-sugar products can satisfy a wider consumer base, while maintaining a healthy position. But don’t forget, sparkling water has untapped, market potential as a healthy alternative too.

Christina Hall is a regional research manager at Zenith International Ltd. Zenith is a world-leading specialist food and drink consultancy with over 1,000 clients across more than 50 countries. The company’s main activities involve comprehensive market analysis, strategic and commercial advice, financial and technical consulting projects, information services, trade journals, and event organization. For more, visit www.zenithinternational.com.

ABOUT ZENITH INTERNATIONAL Zenith analysts based in more than 100 countries always keep one ear to the ground when it comes to emerging trends and innovations. In response to some of the key developments and global trends the company has been tracking, Zenith International has brought out a new range of deep-dive reports to provide market insight and analysis, as well as identifying opportunities, trends, and challenges determining growth within the target category. Looking at the key and emerging country markets, featuring data, market insights, and profiles, these reports are essential for anyone considering entering these promising markets. The Global Children’s Bottled Water Report 2016 looks in detail at this emerging category of products positioned towards children and investigates the future outlook of the market. Featuring over 70 detailed product profiles, this report identifies and summarizes innovation trends in order to understand what opportunities exist for new product development. As consumers are becoming more discerning about the quality and provenance of water they consume, they also make demands of the aesthetics of the packaging, pH level, and eco credentials of their bottled water, making The Global Premium Water Report 2016 essential for anyone interested in this

exciting niche. The report highlights the opportunities and challenges for new market entrants and is also available to buy with full 86 country level datasheet. With companies reformulating, sugar taxes looming, and consumers increasingly calling for naturally sweetened products without sacrificing taste, The Global Stevia Market Report 2016 looks at stevia’s role in 2016 across food and beverages and its context within natural and artificial sweeteners and sugars. The report also profiles the latest innovations, leading suppliers, and key stevia-sweetened products. Within the last 12 months, Zenith has also published Flavoured-Functional Water Innovation Report 2016 (January 2016), Flavoured Water Innovation Report 2016 (February 2016), and country focus reports on bottled water in the UK (March 2016), and China (December 2015). Zenith also continues to regularly release new titles in its Innovation Reports Series, including RTD Tea (October 2016), Breakfast Beverages (September 2016), Protein Drinks (September 2016) and Juice Innovation (July 2016), tracking the trends of the industry to aid your business. If you have any questions regarding Zenith’s reports, please contact the team through its website: www.zenithinternational. com/reports_data/market_reports.

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FUTURE SMARTS FRIDAY DECEMBER 9, 2016 CROWNE PLAZA TIMES SQUARE, NEW YORK About the event

SPeAKeRS So FAR

Future Smarts is one of the most established and highly regarded beverage industry conferences, attended by leading franchise company and bottler executives, suppliers and customers, analysts, investment bankers and more. The event provides an opportunity to network with industry leaders and hear speakers share insight into all aspects of the beverage market and the companies that drive it.

The Coca-Cola Company Marcos de Quinto, Executive Vice President and Chief Marketing Officer

Main sponsor

Cott Corporation Jerry Fowden, Chief Executive Officer

Supporting sponsors

Califia Farms Greg Steltenpohl, Chief Executive Officer Cavu Venture Partners Rohan Oza, Partner

Dr Pepper Snapple Group Jim Johnston, President Beverage Concentrates & Latin America Beverages

CLSA Americas Caroline Levy, Beverage and HPC Analyst Consumer Edge Research Brett Cooper, Senior Analyst

Nestlé Waters North America Tim Brown, President and Chief Executive Officer

About ReGIStRAtIon Go to www.beverage-digest.com/conferences for more information and to book your place online at $795. The rate increases to $895 on October 29.

Rabobank Ross Colbert, Managing Director - Global Sector Head - Beverages

Coca-Cola European Partners Damian Gammell, Chief Operating Officer

Twitch Andy Swanson, Vice President, Esports Evangelist

Aje Juan Lizariturry Moro, Chief Executive Officer

CAN BEVERAGE DIGEST MAKE YOU TOUGHER, SMARTER AND MORE MONEY IN JUST 60 DAYS?

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BEVERAGE DIGEST

JANUARY 15, 2016 VOLUME 67 / NO. 1 FOUNDED 1982 BEVERAGE-DIGEST.COM E-MAIL ALERTS

T H E B E V E R AG E I N D U ST R Y ’ S L E A D I N G I N F O R M AT I O N R E S O U R C E F O R B R E A K I N G N E W S , A N A LY S I S & DATA

PepsiCo Preps Emoji Summer Program to Battle Share a Coke. New details are emerging about PepsiCo’s coming response in the U.S. to Coca-Cola’s successful Share a Coke program (BD 10/9/15). Borrowing from Pepsi Canada, the brand will produce packages with emojis like the ones pictured at right. The U.S. program will include more than 100 emoji symbols, which take a cue from those used in text messages on smartphones. The program is intended in part to drive consumer engagement and the retail placement of new grab bins for 20-ounce bottles. Context. Canada’s program includes short videos featuring emoji cans as characters. The videos end with the Twitter hashtag #sayitwithpepsi.

PRove It to youRSelF At no chARGe: two-month FRee tRIAl

Upcharge. PepsiCo informed its independent bottlers in December of an upcharge to cover the higher cost to produce so many different emoji bottles, according to three system sources. After discussions between PepsiCo and it’s bottlers, as of now the planned upcharge is 25 cents per case. PepsiCo expects the sales lift from the program -- driven by high-margin 20-ounce single-serve packages -- to offset the upcharge.

Top industry players—and the scrappiest upstarts—have used Beverage Digest as their inside source of competitive intelligence for nearly 35 years. We’ve helped beverage executives shrewdly ride the market waves—make better decisions, develop more successful products and increase sales when others were losing ground.

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Share a Coke. Coke has told its U.S. bottlers (BD 8/28/15) that the program would return this summer for a third year. It is now in 150 markets worldwide.

Q&A: Jim Tonkin of Healthy Brand Builders. From Suja to Nut Milk, What to Watch in Functional Beverages. Jim Tonkin has been on a tear in recent years. As founder and president of Scottsdale, Arizona-based Healthy Brand Builders, the beverage consultant helped organic, cold-pressed juice maker Suja get national distribution at Whole Foods and attract a $90 million investment from Coca-Cola’s Venturing and Emerging Brands unit. Coke will have an option to purchase the rest of the company in 2018. Before that, Tonkin was the founding board member of Zico coconut water, helping creator Mark Rampolla grow and eventually sell to Coca-Cola. Tonkin has spent much of his 43-year food and beverage career developing functional and nutraceutical beverages. The following interview was edited for space and clarity.

Follow Beverage-Digest on Twitter: @BeverageDigest

In This Issue...

Pepsi Preps U.S. Summer Campaign; Requests Bottler Upcharge. PG. 1

Q&A: Jim Tonkin of Healthy Brand Builders Talks Functional Beverages.

Coke, Pepsi, DPS Concentrate Prices Up +1% - +2.5%.

CSD Volume Decline Eases in Latest Four Weeks; Pricing Decelerates.

Future Smarts: Global Insights From Coke COO James Quincey.

Soft Drinks Post Lowest Ever Score in Consumer Satisfaction Index.

PepsiCo’s Aquafina Gets New ‘Modern’ Label and Logo Design.

International Perspective: Bottled Water in China.

PG. 5

PG. 1

PG. 3

Sunny Delight Switches Private Equity Owners.

Pro Golfer Spieth Signs Multi-Year Sponsor Deal With Coke.

Monster Negotiating With Coke System Over China Entry.

PG. 3

PG. 4 PG. 4

PG. 5

Territory Changes/Deals, People, Briefs.

Additional Information ... l

Click to Pre-Register for BD's June Market Smarts Conference.

Click to Order Beverage Digest's 'Fact Book 2015.'

Click to Order BD's 'Coke System' and 'Pepsi System' Books.

W A R N I N G: Unauthorized electronic, print or fax reproduction in whole or in part is a violation of Federal Law. Violators are liable for actual damages or statutory damages up to $100,000.

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Beverage Digest | 646 512 5860 | www.beverage-digest.com

INNOVATION

How Technology and Operations Management Can Transform Your Business By Shellie Brickle

While bottled water operations try to manage a proliferation of SKUs, labor costs, space utilization, and health and safety issues, we must also find ways to increase performance, decrease costs, and reduce our environmental footprint. We must do so to remain competitive and profitable. But how? What follows is a glimpse at how the use of operations technology—specific to methods of operation, delivery routing, and design—can transform your business.

Operational technology, by definition, is hardware and software that detects or causes a change through the direct monitoring and/or control of physical devices, processes, and events in the enterprise. Operational technology helps organizations improve process efficiency, reduce transactional costs, and enhance employee productivity. Nowadays, companies have access to a wide variety of operational technology (e.g., robotics, big data, 3D printing, and mobile and cloud computing). The question at hand is this: What technologies can we use to transform operations? In a recent survey, it was found that 78 percent of companies expect operations technology to be critical to

their operations, yet only 26 percent use technology to automate operational processes. Three technologies will transform company operations across industries: big data, robotics, and 3D printing. Just what are the benefits companies can derive from those technologies? Here are a few examples: •

UPS used analytics to arrive at the most effective delivery routes for its drivers. It helped the company reduce 85 million miles driven per year, cut fuel consumption by 8 million gallons, and reduce engine idle time by 10 million minutes.

•

Using robotics in operations helps cut costs and produce higher quality NOV/DEC 2016

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Striving to achieve operational excellence is one of the most important contributors to an organization’s sustainable performance and growth. products. For example, a manual paint job for a car uses 20 to 30 percent more paint in comparison to an automated paint job. •

3D printing transforms key manufacturing processes, such as prototyping and manufacturing tooling. In fact, Puma reduced prototype creation by 75 percent, from four days to one day. Xerox reduced tooling costs by 91 percent and lead time by 93 percent.

So, how do we determine where to start?

Striving for Excellence The operational technology journey can be overwhelming, and, because of that, we can easily make wrong decisions, leaving operations with technology that cannot be used by, or even integrate with, your organization. The answer starts with operational excellence. Striving to achieve operational excellence is one of the most important contributors to an organization’s sustainable performance and growth. Companies that reach for a higher level of operational excellence reap numerous benefits: a systemic, evolving, 20

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and effective approach to business operations; a continually productive and innovative workforce; and an organization that consistently realizes sustainable growth and increasing valuation. But what is “operational excellence”? It isn’t a final destination you reach; rather, it is an ongoing journey that your organization takes to focus on minimizing and managing downside risks while maximizing performance and shareholder value. Along the way, numerous factors are essential to the success of the journey. One of them is operational discipline. It isn’t unusual to confuse operational excellence with operational discipline. While the two are closely linked— indeed, the former cannot be realized without the latter—operational discipline is but one important component on the way to operational excellence. Simply put, operational discipline means complying with a set of well-thought-out and well-defined processes, and consistently executing them correctly. It’s an essential element of your journey to achieving operational excellence.

Operational discipline provides an organized way to accomplish tasks and implement operational changes through a fundamental set of procedures that are specific to a business’s unique products or service offerings. Regardless of the industry, operational discipline increases reliability and decreases the risk of a high-consequence incident occurring. But it is not just about safety. Operational discipline improves the execution and performance of work practices across an organization to the point where leaders and employees consistently and continuously address the day-to-day operational needs of the business in a timely, safe, and efficient manner.

HELPFUL DEFINITIONS • Operational technology: Hardware and software that detects or causes a change through the direct monitoring and/or control of physical devices, processes, and events in the enterprise. • Operational excellence: Focuses on minimizing and managing downside risks while maximizing an operation’s performance and shareholder value. • Operational discipline: Closely linked with operational excellence, operational discipline means complying with a set of well-thought-out and welldefined processes, and consistently executing them correctly. • Big data: an evolving term that describes any voluminous amount of structured, semistructured, and unstructured data that has the potential to be mined for information. • Analytics: Often involves studying past historical data to uncover potential trends, analyze the effects of certain decisions or events, or evaluate the performance of a given tool or scenario. The goal of analytics is to improve the business by gaining knowledge that can be used to make improvements or changes.

The Leadership Standard But how does a business identify the appropriate gap in innovation—the gap that prevents it from achieving true operational excellence? What, exactly, is the proper investment in operational technology? The answer, in a word, is leadership.

and sustaining operational excellence, which increases reliability and minimizes errors in the organization. Through leadership in operational excellence, organizations will naturally define the necessary path to identify the gap in operational technology. Some might find that access to big data will be the transformational investment for their operational technology. Leadership articulates and defines the shared values and common purpose, and prioritizes the things that truly matter to drive the highest levels of operational excellence. When organizations create far-reaching, complicated operational excellence management systems, they are often unable to execute their plans. Success comes when leaders at every level of the organization focus on identifying the “critical few” items that are essential.

Leaders will help drive a standardized process for pursuing operational excellence. Standardization reduces variations that can lead to inefficiencies and even hazards. A standardized approach helps ensure that every worker who is charged with the responsibility of improving a process approaches it in the same way, using the same techniques. Along with standardized processes, it is equally essential that leaders foster a sense of collaboration among all levels of an organization. Collaboration and engagement result in higher levels of transparency and trust within an organization. When employees feel that they can rely on one another, a natural work rhythm evolves because there’s less hesitation or second-guessing. When employees feel they are in a just and fair environment, where their concerns and questions are welcomed, new ideas and continuous improvement flourishes. Furthermore, empowered employees assume responsibilities they might not otherwise take on. Teamwork and empowerment contribute to creating, maintaining,

INNOVATION

When companies employ operational discipline as a means of providing more predictability across their organizations, certain tasks reach higher levels of efficiency, contributing to fewer mistakes and better quality. As a result, time and opportunities open up for everyone to focus on elevating performance and results. A ripple effect of benefits occurs, with each having the power to unleash rapid and continuous improvement, as well as waves of innovation through investments in operational technology.

Empowered employees assume responsibilities they might not otherwise take on. Nestlé Waters Case Study I can tell you that the journey for Nestlé Waters has followed the path outlined above. Three years ago, we didn’t have an engineering team. We started from scratch—hand-selecting skilled members for the team, with leaders who have identified our necessary steps to operational excellence. For us, the determined needed investment was in big data and analytics. Analytics, by definition, often involves studying past historical data to

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Seasonal volume spikes, rising fuel costs, sudden long-term traffic issues, and other resource emergencies can overload your driver and equipment limits, forcing you to make decisions that affect your bottom line. uncover potential trends, analyze the effects of certain decisions or events, or evaluate the performance of a given tool or scenario. The goal of analytics is to improve the business by gaining knowledge that can be used to make improvements or changes. Analytics led us to invest in the development of delivery routing and design. This wave of innovation allows us to provide superior customer service, while improving internal operations. During the past two years, we’ve moved from delivery drivers sequencing their own routes to delivering optimized results through the analysis of historical and predictive data. Even the most predictable static routes can eat away at your company’s profits over time through customer changes, backtracking, and off-route stops. Seasonal volume spikes, rising fuel costs, sudden long-term traffic issues, and other resource emergencies can overload your driver and equipment limits, forcing you to make decisions that affect your bottom line. Pinpointing and fixing those leaks takes more than guesswork and sticky notes. Through the warehousing of historical data, we now have the ability to analyze, modify, and optimize our entire distribution and service operation from the top down. Advanced routing algorithms deliver the functionality we need to take on even the most complex re-routing analyses. We are also able to drill down to configure each route and its stop sequence within a certain territory in order to accommodate our customers’ 22

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specific needs and time window requirements. In a matter of minutes, we have a strategic roadmap of balanced routes. For immediate analysis, our big data now compares “before” and “after” routing statistics to show potential savings in time, cost, and equipment— plus a numeric score to benchmark our progress. After we have completed an optimization scenario, we can then choose to review and edit our results through a range of views, including all routes simultaneously or each delivery route by week and/or delivery day. We can create interactive summary maps that clearly show the bottom-line benefits of our proposed balanced routes over that of our original routing. We can define the criteria pertaining to this process, including preferred and maximum route duration, multiple distribution centers, customer locations, open/close times and multiple time windows, historical order volume, delivery instructions, multiple service or delivery days, available drivers and equipment, driver’s rate of pay, vehicle capacities, historical traffic patterns, and speed limits. With big data, we can now explore strategic options that lead to enhanced customer service and greater cost efficiencies across the board. By creating “what if ” projections, we are able to take immediate control of every aspect of our operations, to assess the best use of our resources in meeting operational goals. We are now able to consider fluctuating human capital, in line with our

bell curve volume trends. We have been able to expand routes without adding to our fleet. We have reconfigured routing structure to account for season fluctuations. What was then a month-plus recovery from a hurricane or snow storm is now days or, in some cases, a day. Through the use of big data, we now have the metrics and outcomes for precise financial forecasting by whatever variable sets we choose, such as time period or geographic area. Most importantly to our profit and loss, we can determine the actual cost of each delivery stop down to the penny, allowing us to maximize efficiencies every day along every mile.

Invest in People While investing in delivery routing and design, in the form of operational technology, was our most profitable choice, every organization has different requirements, different levels of consumer demand. Organizations must first invest in their people, leaders who will pave the path and determine the best course to attain operational excellence. Cultivating a culture of excellence requires leaders to “walk the walk, not just talk the talk.” Highly effective leaders demonstrate what they want to achieve in their organization and provide the energy to make it a reality. The tone is set at the top and carries across the organization. At every level, this “felt leadership” demonstrates a commitment to operational discipline that enables everyone to understand and accept the importance of it in their daily tasks, which is a key step in the journey toward operational excellence. Ultimately, you understand that the most innovative part of any business is its people.

Shellie Brickle is director of engineering at Nestlé Waters North America.

B- FEATURE

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IBWA Advocacy Tools That Work for You

By J.P. Toner, IBWA Director of Government Relations

The late, great Gene Wilder gifted us with a wonderful example of how to acknowledge when you need help. In Blazing Saddles, Wilder, as the Waco Kid, has the following conversation with the newly appointed sheriff of Rock Ridge, played by Cleavon Little: Sheriff Bart: “Need any help?” Jim, the Waco Kid: “Oh…all I can get.” Most of us, however, are not as forthcoming when asking for help. We 24

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tend to think that requesting help from others is a sign of weakness; actually, it is a sign of confidence in those from whom you are requesting the help. IBWA staff thrive on being able to help our members. Whether you need technical advice, guidance on how to better shape bottled water messaging, or the latest industry issue update, IBWA staff members are available to provide the insight and assistance you need. When dealing with issues that impact the bottled water industry, IBWA

offers members several unique tools they can use. We want members to be able to easily share the positive story of bottled water with their customers, community, even people in positions of influence. You may not be familiar with all of the advocacy tools IBWA offers, so let’s review them.

Advocacy Portal Housed on IBWA’s Bottled Water Matters website, the advocacy portal (www.bottledwatermatters.org/take-

GOVERNMENT RELATIONS action-for-bottled-water) not only allows members to send messages to elected officials at federal, state, and local levels but also presents useful government information. The portal’s main purpose is to provide an easy way for IBWA members to identify and communicate with their elected representatives. When IBWA needs to be strategic with our letter-writing efforts to legislators, we direct members to the advocacy portal. By simply entering their home or work address, members are able to write to the government officials who represent their districts. You can even add a personal note about how a particular piece of legislation may affect your business. It’s a quick and easy way to get our messages in front of policy decision makers in a timely manner. On the rare occasions when there aren’t any pending issues, members can still send legislators a generic letter to remind them of the important role bottled water plays during emergency situations and for consumers who are striving to achieve a healthy lifestyle. IBWA encourages all members to check the advocacy portal regularly for “calls to action,” and ask that you consider sending a letter to your elected officials.

Economic Data Have you ever needed to provide an elected official or a business partner economic numbers for the bottled water industry for a particular state or district? Such specialized data is available on both IBWA’s official website (www.bottledwater.org) and www.bottledwatermatters.org/economics. Jobs, taxes, and fiscal impact data are some of the figures offered by a simple search. You can sort data by state, congressional and state political districts, and county. The information is updated every two years and provides a unique insight into the bottled water industry’s presence across the United

States. Economic data such as this is among the important information we leave behind for lawmakers to review with their staffs during our regular visits to Capitol Hill.

civic engagement, or just want a better understanding of your local political process, IBWA’s GR staff members are available to help ensure you get the answers you need.

ISSUES CHANGE. ELECTED OFFICIALS CHANGE. BUT IBWA IS ALWAYS HERE TO ASSIST MEMBERS. IBWA PAC Webpage The password-protected political action committee (PAC) webpage on bottledwater.org provides members with details about the IBWA PAC, a political newsfeed, links to top stories from The National Journal and Politico, recent tweets from The Hill, and a place to enter your zip code to get voter registration information. The site also provides links to IBWA’s Government 101 webpage and advocacy portal (which is located on bottledwatermatters.org). The page can be accessed by visiting www.bottledwater. org and clicking the IBWA PAC logo in the top right-hand corner. If you are interested in seeing what materials are available on the site, contact me for access information: jtoner@bottledwater.org.

Issues change. Elected officials change. Your business changes. But IBWA’s GR team will always work to provide members with the most accurate information available to help you make decisions about your business. Is there a local issue you need to be aware of where you are considering a new plant? Do you need to identify the legislators who represent your workers? Are you interested in finding new ways for your company to engage with local politicians? All that information is just a click, phone call, or email away. Just consider IBWA’s GR staff the Waco Kid to your Sheriff Bart!

Here to Help Sometimes the data you find after conducting online research doesn’t answer your specific question, and you just want to talk with someone. That’s why the IBWA Government Relations (GR) staff is here to provide members with answers to your questions about issues, politics, and how you can make an advocacy difference. Whether you are looking to host an elected official at one of your plants, need someone to speak with your employees about

GOVERNMENT 101 Has it been awhile since you studied U.S. government in school? IBWA’s advocacy portal presents information that can help you brush up on how government works and how you can be an effective citizen. Visit www.bottledwatermatters. org/take-action-for-bottledwater for more.

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Engaging With College Students About Bottled Water, Our Industry, and Why We’re the Good Guys By Chris Hogan, IBWA Vice President of Communications

Bottled water is poised to become the No. 1 packaged drink in America. According to Beverage Marketing Corporation (BMC), this significant market shift will happen around the beginning of 2017. This news is important because it reveals a historic realignment in what packaged beverage consumers are choosing to drink: they are replacing former favorite carbonated soft drinks with bottled water. However, not everyone will greet this good news with a healthy hydration mindset. College students can be a difficult audience. Idealistic and skeptical, they 26

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often dismiss anything reported out by industry as biased, corporate propaganda. Although IBWA and our members have an unblemished reputation of promoting bottled water with facts and science, the same can’t be said of anti-bottled water groups that often market misleading and factually incorrect statements. The news that bottled water will soon topple soft drinks as America’s No. 1 packaged beverage is likely to generate increased public discussion—and misinformation—about bottled water. Here, we present information that might help IBWA members be prepared for those conversations.

Benefit of Having Allies While efforts to restrict or ban the sale of bottled water on college campuses has received some media coverage, it is rarely acknowledged that those campaigns are often led by traditionally anti-bottled water groups like Corporate Accountability International (CAI) and Food and Water Watch. (Visit bit.ly/CAI_NPSeffort to review a current CAI effort against bottled water.) Even if a proposed ban on the sale of bottled water is embraced by the student body, that effort won’t succeed unless the school’s administration supports it. Administration officials,

COMMUNICATIONS who are responsible for ensuring that campus operations run smoothly, are often hesitant to restrict access to bottled water—the healthy hydration packaged beverage option. That’s why IBWA shares bottled water facts with students and school administrators. A well-informed consumer is our best ally.

While IBWA tackles general topics (such as the false accusation of corporatization), we also focus on specific topics that could actually impact a college campus. For example, we have promoted the results from a study of the University of Vermont’s (UVM)

Why Engage and Educate

SHARING IBWA CONTENT ON SOCIAL MEDIA HELPS EXTEND THE REACH OF OUR MESSAGING.

IBWA constantly pushes out positive, factual messaging about bottled water and its important role as a healthy packaged beverage option for students, faculty, staff, and campus visitors. We share those messages with audiences that can impact, influence, or engage the student population or campus organizations. For example, IBWA will contact student leaders or university administration officials who are most likely to have influence on a potential or proposed sales ban. Through phone calls, emails, letters to the editors of student publications, and outreach to school purchasing officers, IBWA shares bottled water facts and offers to answer any questions they might have about the industry. One issue gaining popularity among college students is the misguided theory of the “corporatization” of water. The idea of a large bottled water company swooping down and privatizing public water resources is one that fits neatly into many existing urban legends. However, it is patently false. The distrust many students have of corporations and their impact on the environment feeds those fears. The truth is that bottled water companies have a vested interest in protecting their water sources. Companies routinely measure and monitor water sources to ensure sustainability. In fact, water recharge areas are often vast watershed properties that bottled water companies seek to protect from pollution and contamination. Those properties also serve to protect and enhance wildlife.

bottled water sales ban. That study found the sales ban caused an increase in the sale of soft drinks and led to an increase in plastic in the university’s waste stream. Sharing UVM’s research results can be helpful when you want to illustrate the unintended consequences of bottled water sales bans.

How to Amplify Our Message Because online engagement is one of the most effective ways to reach college students who have concerns or questions about bottled water, IBWA’s Facebook, Instagram, Pinterest, Twitter, and YouTube accounts regularly reinforce our healthy hydration messages.

We encourage all members to share IBWA content on their social media platforms to help extend the reach of our pro-bottled water messages. When searching for content to share, members can access IBWA’s website for an advocacy toolkit, educational materials,

fact sheets, talking points, sample opeds and letters to the editor, blog posts, social media posters, and press releases. Most of IBWA’s content centers on the core themes of healthy hydration, consumer choice, bottled water’s small environmental footprint, and support of public water systems. (See sidebar below for links to a few notable IBWA resources.) Because our adversaries are very active on social media, it is imperative that we join in on the discussion— because if we don’t, our voices—and facts—will never be heard.

IBWA’S COLLEGE CAMPUS MESSAGING TOOLS • College Campus Ban Toolkit (bit.ly/IBWA_CampusBanToolkit2016) • Bottled Water on Campus Policy Position Statement (bit.ly/BWonCampusPosition) • Third-Party News and Media Supporting Bottled Water (bit.ly/3rdPartyLettersCampusToolkit) • Press Release on the University of Vermont’s Bottled Water Sales Ban Study (bit.ly/IBWA_UVMpresser) • University of Vermont Bottled Water Sales Ban Infographic (bit.ly/UVM_BWstudy) • College Bottled Water Sales Ban Video: Student Activism: 101 (bit.ly/StudentActivism101) To learn more about how your company can join IBWA’s efforts to help keep bottled water available on college campuses, please contact IBWA Vice President of Communications Chris Hogan: chogan@bottledwater.org.

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OSHA Delays Effective Date for Anti-Retaliation Portion of New Rule Impacting Employer Safety-Incentive Programs and Post-Accident Drug Testing Policies By Al Lear, IBWA Director of Science and Research

In May 2016, the Occupational Safety and Health Administration (OSHA) issued a final rule to “Improve Tracking of Workplace Injuries and Illnesses” (29 CFR Parts 1904 and 1902). The new rule requires electronic submission of workplace injury and illness data, which is already required to be kept under current OSHA regulations. It also includes an anti-retaliation provision that will impact employer safety-incentive programs and post-accident drug testing policies. While the electronic reporting provision goes into effect on January 1, 2017, the antiretaliation provision, which was to take 28

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effect on August 10, 2016, was delayed until November 1, 2016. The new reporting requirements will be phased in over two years, as follows: • Establishments with 250 or more employees in industries covered by the recordkeeping regulation must submit information from their 2016 Form 300A by July 1, 2017. These employers will be required to submit information from all 2017 forms (300A, 300, and 301) by July 1, 2018. Beginning in 2019 and every year thereafter, the information must be submitted by March 2.

•

Establishments with 20-249 employees in certain high-risk industries must submit information from their 2016 Form 300A by July 1, 2017 and their 2017 Form 300A by July 1, 2018. Beginning in 2019 and every year thereafter, the information must be submitted by March 2. Under the North American Industry Classification System (NAICS) Sector 31-33, manufacturing is considered a high-risk industry by OSHA. Bottled water manufacturing (NAICS Code-312112) is included in the manufacturing sector. For a

TECHNICAL UPDATE list of high-risk industries identified by OSHA, with corresponding NAICS numbers, visit bit.ly/ NAICShighrisk. For clarification that bottled water manufacturing falls within the manufacturing section, visit bit.ly/BWmanu. • Establishments with less than 20 employees must electronically submit information to OSHA only upon request. Provided below are details on the impact OSHA’s new rule will have on safety-incentive programs and postaccident drug testing policies.

Employer Injury-Reporting Policies OSHA’s final rule requires employers to develop employee injury and illness reporting requirements that meet certain criteria. Employers must inform employees of the following: • Procedures for promptly and accurately reporting work-related injuries and illnesses. If a procedure would deter or discourage employees from reporting injuries and illnesses, then it is not considered reasonable under the final rule. • Employees have the right to report work-related injuries and illnesses. • Employers are prohibited from discharging, or in any manner discriminating against, employees for reporting work-related injuries or illnesses. The final rule does not state the manner in which an employer should inform employees of their rights and the procedures to report work-related injuries and illnesses. One option is to establish or revise written procedures and notify employees of the procedures or employee training.

Employer Safety-Incentive Programs and Post-Accident Drug Testing Policies Employers are required to do the following: [E]stablish a reasonable procedure for

employees to report work-related injuries and illness promptly and accurately. A procedure is not reasonable if it would deter or discourage a reasonable employee from accurately reporting a workplace injury or illness. OSHA’s proposed rule included a suggestion that safety-incentive policies and post-accident drug testing could be considered practices that would discourage employees from reporting work-related injuries or illnesses. Therefore, it said, those could be discriminatory practices. Safety-Incentive Programs. In the preamble to the rule, OSHA recognizes that safety-incentive programs can take many forms, but some well-intentioned programs (such as entering all employees who have not been injured in the previous year in a drawing to win a prize or awarding a team of employees a bonus if no one from the team is injured during a stipulated period of time) can “have potential to discourage reporting of work-related injuries and illnesses without improving workplace safety.” According to OSHA, that results in underreporting and employer liability for inaccurate recordkeeping. OSHA states that it addresses the latter concerns by prohibiting employers from using incentive programs in a way that impairs accurate recordkeeping. If an incentive program makes a reward contingent upon whether employees follow legitimate safety rules rather than whether they report any injuries or illnesses, the program would be consistent with the new rule. OSHA encourages incentive programs that promote worker participation in safety-related activities, such as identifying hazards or participating in investigations of injuries, incidents, or “near misses.” Post-Accident Drug Testing Policy. In the proposed rule, OSHA suggested that post-accident drug testing could discourage employees from reporting

work-related injuries or illnesses and therefore be a discriminatory practice. OSHA explains in the final rule that employers are not prohibited from using drug testing (or the threat of drug testing) but that “blanket post-injury drug testing policies deter proper reporting.” To strike the appropriate balance, drug testing policies should “limit postincident testing to situations in which employee drug use is likely to have contributed to the incident, and for which the drug test can accurately identify impairment caused by drug use.” For example, it would likely not be reasonable to drug test an employee who reports a repetitive strain injury, an injury caused by the lack of a machine guarding, or an injury caused by machine or tool malfunction. Such a policy is likely only to deter reporting without contributing to the employers understanding of why the injury occurred. The rule’s language suggests there should be a reasonable possibility that drug use by the reporting employee was a contributing factor to the injury or illness in order for the employer to require drug testing. Employers conducting drug testing to comply with a state or federal law or regulation (e.g., workers compensation law or Department of Transportation regulation) would be in compliance with the final rule as that would not be considered retaliatory. It is unclear, at this time, how workers compensation insurance coverage will be affected, especially if the coverage requires drug testing after every accident. It is likely that unless post-accident drug testing is required by law, an employer will not be able to test an employee unless the employer suspect’s drug use was somehow involved in the accident. For more information about OSHA’s final rule and the delay of the anti-retaliation portion effective date until November 1, 2016, visit bit.ly/ OSHAanti-retaliation.

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CPO QUIZ

IBWA

certified plant operators (CPOs) are encouraged to complete the following quiz for Â˝ IBWA continuing education unit (CEU). The questions are derived from material presented in this issue of the Bottled Water Reporter, the IBWA Plant Technical Reference Manual, and the IBWA Bottled Water Code of Practice. Submit this quiz to Claire Crane (ccrane@bottledwater.org / Fax: 703.683.4074), IBWA Education and Technical Program Coordinator, 1700 Diagonal Road, Suite 650, Alexandria, VA 22314. Look for additional quizzes in future issues and earn additional IBWA CEUs! Name______________________________________________________

Company_ _________________________________________________

Address____________________________________________________

City_______________________________________________________

State/Province_ _____________________________________________

ZIP/Postal Code_ ___________________________________________

Check your selection for each question

Which of the following statements is false?

OO Sodium fluoride is a hazardous chemical in its pure state. OO The bottled water industry is not regulated by OSHA because it is a safe product free of OO hazardous chemicals. OO A written Hazard Communication Program must be kept on file at each bottling facility. OO When mixing sulfuric acid and water, add the acid slowly to the water.

Which of the following statements is false?

OO If a procedure would deter or discourage employees from reporting injuries and illnesses, then it is not considered reasonable under the final rule. OO Employees have the right to report work-related injuries and illnesses. OO When an employee is injured, he/she should immediately contact the company CEO. OO Employers are prohibited from discharging, or in any manner discriminating against, employees for reporting work-related injuries or illnesses.

Hazardous waste generators are regulated by the U.S. _____.

OO OO OO OO

Food and Drug Administration Environmental Protection Agency Department of Commerce Department of Labor

OSHAâ&#x20AC;&#x2122;s new rule impacting employer safety-incentive programs prohibits post-accident drug testing.

OO True OO False

Entry into a storage tank is regulated by _____ under its confined space entry rules.

OO OO OO OO 30

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The term applied to a delayed health hazard is _____.

OO OO OO OO

Immediate Long-term Chronic Acute

Confined space does not mean a space that:

OO Is large enough and so configured that an employee can bodily enter and perform assigned work. OO A storage vessel that is placed in an inaccessible place. OO Has limited or restricted means for entry or exit (for example, tanks, vessels, silos, storage bins, hoppers, vaults and pits are spaces that may have limited means of entry). OO Is not designed for continuous employee occupancy.

The new OSHA rule on employee safety _____.

OO OO OO OO

Establishes standardized plant audit procedures. Includes safety incentive programs. Regulates chemical waste disposal. Prohibits sick employees from working in the plant.

Chlorine bleach, iodine, ozone, and quaternary ammonium are examples of _____ in the plant.

OO OO OO OO

process chemicals lubricants sanitizers pesticides

10|

An MSDS sheet is a document that contains _____.

OO Information about the properties of chemical and other substances OO Health effects data and information OO Exposure treatment information OO All of the above

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2017 IBWA MEDIA

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PLANNER

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FEBRUARY TBD

IBWA Winter Board and Committee Meetings Teleconference

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Nashville, TN

JUNE 5-8

IBWA June Board of Directors and Committee Meetings Hilton Old Town Alexandria, VA

NOVEMBER 6-10

IBWA Annual Business Conference and Trade Show Gaylord Texan Resort Grapevine, TX

JOIN OUR TEA M

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VALUE OF IBWA MEMBERSHIP KEVIN MATHEWS VICE PRESIDENT OF REGULATORY AND SCIENTIFIC AFFAIRS NESTLÉ WATERS NORTH AMERICA STAMFORD | CT ALL ABOUT KEVIN Kevin studied Biology and Business at Bloomsburg University of Pennsylvania. When not working, he’s an outdoor enthusiast— often traveling to foreign countries in Europe, Central and South America, and the Caribbean to hike, scuba dive, and cycle. Some of his proudest accomplishments include running the 1998 New York City Marathon, paragliding in the Andes Mountains of Colombia with his wife Sharon earlier this year, and, of course, raising their four wonderful children.

IBWA members who frequently attend the association’s in-person business and committee meetings will know of Kevin Mathews, and they may also know that he’s been with Nestlé Waters North America (NWNA) for many years—27 to be exact. But what people might not know is that, before NWNA, Kevin held operations and quality assurance positions at Coca Cola, Pepsi, Seneca Foods Corporation, and Kellogg Company. Clearly, Kevin has a lot of industry experience. Still, he states that he, and others at NWNA, regularly lean on IBWA for the “advance warnings” the association routinely offers. “Just because we are a big company doesn’t mean that we know and see everything coming our way,” explains Kevin. “We have a lot of different organizations that we use in order to help us gain information, but I think, of all those, IBWA is an extremely important one because IBWA covers all the different relevant areas that a company needs to have on their radar. It’s kind of like a one-stop-shop.” “Especially in today’s regulatory environment, things can come out of the clear blue sky and catch you unaware. The nice thing about having an IBWA membership is that there are many talented people within the organization that make it their business to look for things that are developing—things members should know about—to help us prepare for potential issues that are coming down the track,” he says. An active IBWA member, Kevin recently received the IBWA/Kristin Safran Board of Directors' Award, which recognizes members whose advocacy, commitment, or actions on behalf of IBWA and the bottled water industry have achieved clear and measurable results. He also currently co-chairs the Technical Committee, sits on the Environmental Sustainability Committee, and is a Drinking Water Research Foundation trustee. Kevin says he is amazed by the strong and close working relationships that are developed between member companies. People are willing to reach out to other companies and lend a helping hand. “It’s like a cottage industry that has grown very large.” “People enjoy working together and socializing, you can see that we have a tight-knit group. We truly have a passion for the industry—and we are not afraid to reach out to other companies and suppliers to share camaraderie and lend assistance.” NWNA is the third largest non-alcoholic beverage company in the United States. The company was formed in 1976 with a single brand: Perrier. Today, NWNA has 15 brands, 30 bottling facilities, and 7,500 employees, all of whom volunteer in some way in the community where they work. Kevin helps out at “The Hole in the Wall Gang Camp,” a camp for terminally ill children that was founded by Paul Newman.

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