Bottled Water Flies Off the Shelves in Rio as Taps Run Dry
(Bloomberg) -- Companies are struggling to meet Rio de Janeiro’s surging demand for bottled water as taps that were already supplying the population with a foul tasting, smelly liquid suddenly ran dry.
Sales of mineral water jumped 50% between December and January, according to the sector’s union, and logistic plans had to be reworked. Supermarket chains are enlisting new suppliers and increasing deliveries to the city -- already a hot market during the Southern hemisphere’s summer, when temperatures often top 40 degrees Celsius (104 Fahrenheit).
“Our machines are working at 100%,” Minalba, one of Brazil’s biggest water bottlers, said in a response to questions. “We increased shifts to assist as much as possible, and are dedicating more trucks and more people to deliveries in Rio.”
For more than a month, tap water in several parts of Rio has been cloudy, sometimes brown. Authorities say the issue affecting some 9 million residents and visitors is caused by geosmin, a naturally occurring organic compound produced by algae. Activated charcoal and clay have been added to the water in a bid to neutralize its odor and taste, without completely eliminating the problem.
Things got worse this week when detergent was also found in the water supplied to the population. Cedae, the state-owned water utility that serves Rio, shut down a key treatment unit to fix the problem, causing temporary shortages in dozens of neighborhoods and forcing some schools to postpone the beginning of classes.
Cedae maintains that the water is safe to drink. The company “is monitoring and analyzing the water distributed throughout the system daily,” it said in a response to questions.
The crisis in Rio has added ammunition to Brazil’s push to privatize water and sanitation assets, a task that has eluded previous governments due to the opposition of unions and politicians who often grant jobs to allies at state-run companies. Some 100 million Brazilians do not currently have access to sewage collection, an issue with long-term ripple effects. Research has linked the Zika virus epidemic of 2018, which will have ripple effects on health-care spending for decades, to poor sanitation.
A bill changing the legal framework of the sector, seen as crucial to attract investment and improve services, is expected to be approved this year after years of back and forth in Congress. The sale of Cedae doesn’t depend on lawmakers, though: Rio’s government pledged to privatize it in 2017 as part of an agreement for a federal bailout loan.
Water bottlers expect demand to continue climbing as tourists descend on one of Brazil’s largest cities for Carnival holidays later this month. Minalba says its sales are already up 30% versus the same period last year.
Industrywide, sales of 20-liter bottles jumped 150% between December and January, while those of smaller, disposable bottles have climbed 50% on average.
Pouso Alto, a Minas Gerais-based water bottler which supplies more than 10 states in Brazil, temporarily suspended sales to several locations and is redirecting its production to Rio amid what it described as unprecedented demand.
The firm was working with 35% spare capacity until December. After selling its entire inventory in the first week of January, it went to full capacity and added an extra shift. Daily truck deliveries doubled to 14, and the factory was adapted to focus production on 1.5-liter bottles, the most required by clients.
“We are operating at full capacity and so are all of our competitors,” said Marcelo Felix, Operations Director at the firm. “I’ve never seen demand this heated.”
It’s not the first time Pouso Alto sees a surge prompted by crisis. Sales first peaked one year ago, after a Vale SA mining disaster contaminated one of the main rivers that supplies Belo Horizonte, the capital of Minas Gerais state. The Rio water crisis has taken consumption of bottled water to a new level, Felix said.
“We used to call clients and ask what they wanted,” he said. “Now, it’s the other way around. They ask us what we have.”
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