Saturday, October 26, 2013

Nice graphic on the rise of bottled water and the demise of soft drinks. However, one question remains unanswered...

"...But bottled water is washing away the palate trained to drain a bubbly soda. By the end of this decade, if not sooner, sales of bottled water are expected to surpass those of carbonated soft drinks, according to Michael C. Bellas, chief executive of the Beverage Marketing Corporation.
“I’ve never seen anything like it,” said Mr. Bellas, who has watched water’s rise in the industry since the 1980s..."
It is a useful example to teach supply and demand, specifically two determinants of demand---a change in consumer preferences and the availability of substitutes.  At a given price the quantity demanded for bottled water is more than is was before and for soft drinks it is less than what it was before. The demand curve for bottled water shifts to the right and to the left for soft drinks as consumers change their preferences for a drink with less sugar, and water is a viable substitute to quench a thirst.

Here is a graphic that accompanied the article showing the movement in the market for the two categories of drink.

I think it is interesting to note that while the consumption of bottled water has leveled off since 2007-08, the consumption of soft drinks has continued to decline, even post-recession.  What are people drinking? The population has increased over this time period.  Are people wising up and just drinking what comes out of the facet for pennies on the dollar? What do you think?

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