Beverage industry reacts to backlash against plastic bottles.

Beverage companies are beginning to take heed of the vocal backlash against bottled water and the potential environmental damage the plastic beverage bottles they produce may cause. Months of unflattering news coverage, press releases and even a resolution by the U.S. Conference of Mayors calling for research into the impact of discarded bottles on municipal waste, are forcing the beverage industry to increase efforts to promote recycling and use more recycled plastic in production of its soda, water, juice and tea bottles. Some companies are reformulating containers to reduce the amount of plastic.

Coca-Cola Co., with a 36% share of the $106 billion-ayear U.S. nonalcoholic ready-to-drink beverage business, says it plans to build a plant that will be able to recycle as many as two billion 20-ounce bottles a year.

Meanwhile, the American Beverage Association trade group has formed a task force of executives from Coke, PepsiCo Inc. and Nestle SA's U.S. water unit to look for ways to spark more consumer interest in recycling. The task force had its first meeting Aug. 6.

One big reason why beverage marketers are mounting a counterattack is that bottled water is widely seen as part of the answer to the soda sales slump. Bottled water has just a 17% U.S. market share, compared with 66% for sodas, according to Beverage Digest, a trade publication. But bottled-water volume rose 11% in the first half of 2007. Soda volume decreased 5.9%.

The tidal wave of bottled water has increased the beverage industry's ravenous appetite for plastic. Demand for recycled polyethylene terephthalate (PET) is especially fierce, because it can cost as much as 50% less than newly made plastic. PET bottles are cheap, lightweight and far more convenient than refillable glass bottles that require gallons of water to be cleaned and are heavier to transport.

Deposit laws have had mixed success in spurring recycling. In the U.S., just 23% of recyclable PET bottles and jars were actually recycled in 2005, down from 40% a decade earlier, according to the National Association for PET Container Resources. However, the Government Accountability Office said in a December report that a federal bottle-deposit bill could help boost municipal recycling rates. The Container Recycling Institute, a nonprofit group that supports deposit laws, says the beverage-container recycling rate in deposit states is about 70%, while it is about 34% nationwide.

Fending off the specter of a federal bill could require the beverage industry to show continued signs that it is willing to change. Coke and Pepsi both have reduced the amount of plastic in their soft-drink bottles, which are heavier than water bottles to preserve carbonation. Pepsi, which already gets about 10% of the PET it uses in the U.S. from recycled materials, says it has trimmed the amount of plastic in its half-liter Aquafina water bottles by nearly 40% since 2002. The company is working on an even lighter version, a spokesman says. Nestle, with regional brands Poland Spring and Arrowhead, recently introduced even lighter bottles.