Green bottler takes aim at entrenched water market

A plastic water bottle manufactured by Green Planet Bottling is seen in this handout photo. The start-up beverage company produces recyclable bottles derived from plant starches that emit no harmful chemicals.

CHICAGO (Reuters.com) - Bradley Schulman spends a lot of time setting fire to plastic bottles. He carries a small cooking torch on sales calls to help promote his start-up beverage company, Green Planet Bottling, a producer of drinking water packaged in recyclable bottles derived from plant starches.

When Schulman ignites a typical petroleum-based plastic water bottle during a recent demonstration, black smoke fills the air, soon accompanied by a noxious chemical smell, the result of carbon emissions. The same treatment applied to one of Green Planet's 16.9- ounce biopolymer bottles delivers a clean burn with virtually no odor.

Showing this dramatic difference is one way Schulman hopes to force change in the multi-billion-dollar bottled water market, an entrenched industry where large beverage companies, backed by a strong plastics industry, dominate the field.

"The front end, they get it," says Schulman, a veteran of the coffee and tea business whose former venture, Chicagoland Beverage Company, is credited with launching premium brands such as Intelligentsia Coffee and Mighty Leaf Tea, both now nationally recognized.

"The back end, they worry about it because they get tremendous pressure from the petroleum lobby, and the Cokes, the Pepsis, the Nestles who butter their bread and say, ‘Don't approve this guy,'" adds Schulman, who is Green Planet's founder, CEO and majority owner.

Even so, the winds may be shifting favorably for the company, whose eight full- time employees are primarily dedicated to making distribution inroads that will give Green Planet the ability to serve large customers on a national basis. Recent reports about contaminated tap water in parts of the United States and a recall of reusable Sigg brand aluminum water bottles containing trace amounts of the harmful substance bisphenol-a (BPA) may provide some momentum to bottled water sales, which have been hurt by the downturn in the economy.

Meanwhile, the safety of PET plastics, which can leach harmful compounds, continues to be scrutinized. Add to this green initiatives prompting some institutional purchasers to seek more sustainable alternatives, and you have a climate that Schulman believes could view Green Planet with a friendlier eye.

"We're trying to promote change," says Schulman, whose company is staking its claim primarily in non-retail environments such as schools, hotels and corporate campuses. "No petroleum, no carbon - they love it."

Green Planet, which to date has relied on angel funding of less than $2 million from Schulman and other partners in the company, projects sales of between $5 million and $10 million for the fiscal year ending in June, eking out just a tiny fraction of a bottled water market that research firm Mintel International estimated to be worth about $11.5 billion in 2008.

Already the water can be found in about a dozen markets, including Chicago, Seattle, Boston and central Florida, where it has been picked up by large food service providers such as Sysco (SYY.N) and U.S. Foodservice, and offered as an alternative to often cheaper national brands, such as Dasani and Ice Mountain.

After water, Schulman hopes to repackage other beverages, including milk and juice, in the biopolymer containers. The idea for Green Planet, which to date has received virtually no publicity, began about four years ago when Schulman started to map out plans for bottled beverages that could deliver on ecologically friendly initiatives such as using no petroleum and keeping a low carbon footprint by manufacturing within 500 miles of the customer.

Green Planet water typically costs more than other brands due largely to its commitment to sustainability. Resin for the 100-percent recyclable bottles is made by NatureWorks LLC, which sells biopolymers under the Ingeo brand. The ink on the labels is soy-based. Bottles are blown at what will soon be five plants around the country and filled by local suppliers using municipal water that has been treated by vapor distillation and then infused with minerals.

Pricing is determined on a case-by-case basis; in some places, like hotels, the water sells for as much as $4.50 a pop. Elsewhere, it can go for as little as $1.10, on a par with Aquafina and Dasani.

Among the toughest of the sustainability commitments is recycling; Schulman explains that it simply costs more to clean up and reuse rather than dump and his company builds those costs into its price. Eventually Green Planet aims to recycle all of the bottles it sells. For now, however, it's working on getting buy-in from waste haulers in the markets it serves. That is a tough sell in many areas, where profitable landfills have a tight hold on the waste stream. Schulman believes if he can educate influential voices like parent-teacher organizations and community groups, they'll help to push for change.

Customers like the Quaker Valley School District in Sewickley, Pennsylvania, northwest of Pittsburgh, are placing a premium on sustainable choices despite the price. The district started offering Green Planet water at the start of the school year on August 31. "We basically wanted to have a product that was more ecologically friendly," said Betsy Klasnick, the district's director of food service. "The sales have been similar, we haven't seen a decrease because of the price."