BIRMINGHAM, Ala. — The Birmingham Water Works Board (BWWB) is considering spending $200,000 to explore whether the city should bottle and sell its water.
The board expects to compete with such beverage giants as Coca-Cola and Pepsi.
The plan is being pushed by board member Sherry Lewis, who attended the International Bottled Water Association annual conference last November.
While Birmingham has nationally-ranked water quality, it is unclear whether it would be feasible to foray into competing with private businesses who already enjoy massive market share in the industry.
Board member Darryl Jones in 2012 presented a report that found that it would be unprofitable for the BWWB to enter into the market.
“The extremely low price of bottled water is a challenge to overcome if the BWWB would like to enter into this business,” Jones wrote in the report. “The only way to justify the expense would be to accept annual losses as a marketing strategy for the BWWB brand to be seen in the community and surrounding areas.”
In a dramatic change, Jones now says the board could sell 737,055 bottles in the second year with $479,000 in revenue, followed by 2.179 million bottles in the third year with $2.39 million in revenue. There is no word on what profit margin these numbers would bring.
Other cities who had considered selling bottled water ultimately backed away from the plan when they found it to be unprofitable and too difficult to break into a well-secured market.
According to AL.com, water boards in Erie, Pennsylvania, Orlando, Florida, and Cleveland, Ohio all found it to be a money-losing venture.
Jones now proposes contracting with Birmingham-based Pepsi bottler Buffalo Rock as a less expensive option to the water board building its own bottling plant.
Though Birmingham’s surrounding communities such as Vestavia Hills, Mountain Brook, and Homewood and others in St. Clair, Blount, Shelby, and Walker counties are serviced by the BWWB, they have no representation on the board. State Senator Jabo Waggoner (R-Vestavia Hills) sponsored a bill last year, which failed to make it through the House, that would change that.
“I am pleased that my colleagues joined me in passing this much needed legislation that is very important to the consumers and ratepayers in the region of Alabama I represent,” Waggoner said after the State Senate passed his bill last year. “My legislation requires disclosure and unquestioned accountability in all Birmingham Water Works transactions.”
Waggoner pointed to numerous examples of abuse, waste, mismanagement and alleged fraud at the Birmingham Water Works as further justification for the bill.
An internal forensic audit was commissioned by the water works board in 2012 after an overtime fraud scheme involving water works employees came to light. According to Michael Mason of Forensic CPAs, who conducted the audit, his findings suggested “a serious lack of an adequate control culture throughout the organization.”
“The audit graphically cataloged many examples of the serious internal problems within the Birmingham Water Works and illustrated the need for resolute action now,” Waggoner added.
Sen. Waggoner is expected to carry the bill again in the 2015 session.
Despite a grim outlook in terms of feasibility, and a broad mistrust of the BWWB in general, the board is planning to march forward with a plan to have Birmingham bottled water on the shelves in August.
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— Elizabeth BeShears (@LizEBeesh) January 21, 2015
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