Coke Gets a Pass in Bottle Bill

NEW YORK (TheStreet) -- An "essence water" company in San Francisco is furious about additions to the New York bottle bill, complaining that it gives an unfair advantage to large companies such as Coca-Cola(KO).

At issue is the Returnable Container Act of 1982, which was recently expanded to require a five-cent deposit on bottled water, in addition to the carbonated soft drinks already included in the bill. The expansion, which went into effect at the end of October, also includes a measure allowing the state to keep 80% of unclaimed deposits. Here's the sticky part: The bill defines "water" as any beverage identified through the use of letters, words or symbols on its product label as a type of water, including any flavored water or nutritionally enhanced water, provided, however, that water does not include any beverage identified as a type of water to which a sugar has been added." (Italics added for emphasis.)

That clause exempts products such as Vitamin Water, a so-called "functional water" product owned by Coca-Cola, which bought the company for $4.1 billion in 2007. Each bottle of Vitamin Water contains 32.5 grams of sugar. (In fact, the British Advertising Standards Authority last month banned three ads touting the health benefits of the drink.) Hint Inc., a 25-person company that sells naturally flavored essence waters in specialty markets as well as upscale grocery chains such as Whole Foods Market(WFMI), says the exemption gives sugary water an unfair price advantage, if only by the price of a nickel deposit.

"As far as bottled water as a replacement for tap water, we are 100% against that," says Theo Goldin, Hint's chief operating officer. The small business declines to release financial figures, though annual retail sales amount to less than $10 million, Goldin says. "Our product is a replacement for sugary beverages and beverages that contain artificial crap," he says. "Unlike the healthy-perception beverages like Vitamin Water, this is actually good for you." Hint offers highbrow essences such as hibiscus vanilla, blackberry, pear and cucumber. But the product contains no calories or sugar. The company's slogan is "drink water, not sugar." And so it must comply with New York's bottle bill. (Bottles of Hint retail for $1.99 in New York, but the deposit will push the price over the $2 price point.)