Monday, December 14, 2009

Cherry-bottled Water Tax Threatens Michigan Manufacturers, Jobs and Economy, According to Nestle Waters North America

STANWOOD, Mich., Dec. 14 /-- Nestle Waters North America (, parent company of west Michigan-based Ice Mountain bottled water company, said an unconstitutional proposal put forward by Lt. Governor and gubernatorial candidate John Cherry this week threatens the thousands of clean, good paying jobs Michigan's water bottlers provide and would weaken producers' viability to operate in Michigan.

"Like every Michigan employer, we rely on an educated workforce. The Lt. Governor's proposal, however, will only penalize Michigan employers and risk jobs. The proposal could also drive some bottlers to supply products from outside the state to remain competitive on the price consumers pay for bottled water products," said Brian Flaherty, Vice President of Government Affairs for Nestle Waters. "The proposal would create an uneven playing field for those of us invested in Michigan that could not reasonably be sustained.

"Our team at Ice Mountain focuses on responsibly providing a purely Michigan product that is healthy, well liked, and often necessary in times of disaster. The jobs we provide in Michigan are important to the families of our employees, the community and state. We will protect these jobs by opposing any tax proposal that unfairly singles out our business."

Lt. Gov. Cherry announced a proposal to place 10-cent tax per bottle on bottled water manufactured in Michigan to fund education scholarships cut in recent state budget scale-backs. The tax would not be imposed on the hundreds of beverage products manufactured outside the state but which are sold at Michigan retailers.

"Let's look at the math," said Flaherty. "Most bottled water is purchased in cases of 24 bottles of .5 liter size, for about or less than $4.00 per case -- putting the price per bottle at about 16 cents. A 10-cent per bottle tax on Michigan manufactured products nearly doubles the price for consumers, and would be unsustainable in the highly competitive beverage marketplace.

"Consumers are very savvy, and rarely could be convinced to pay nearly double for Michigan-produced bottle water when lesser-priced options exist," said Flaherty. "I challenge you to ask consumers if they'd pay $6.50 for a case when they can pay less than $4 for the same product made elsewhere."

The proposal would also halt or slow further investment by Michigan bottlers into new Michigan facilities and manufacturing equipment upgrades that would create additional jobs.

Water bottlers are an important part of the Michigan economy, and provide tax revenues locally and to the state.

Michigan bottlers employ approximately 15,000 people in the state, either directly or indirectly through suppliers and vendors. In 2008, bottled water production was responsible for nearly $2.4 billion in total economic activity in Michigan, with the industry and its employees paying over $16.3 million in property, income and sales taxes.

Nestle Waters employs 250 – 300 people at its Stanwood, Michigan operations, with an annual payroll of more than $16 million. Worker wages and benefits, including health, dental and vision insurance, and retirement savings, exceed $40,000 annually. Nestle Waters is among leading local taxpayers, generating approximately $2 million annually for local government services and schools.

As presented, the Cherry proposal is unconstitutional, as since 1974, Michigan's state constitution exempts food products from sales or use tax. (Mich. Const. of 1963, art. IX, sub section 8). In addition, bottled water is classified by the U.S. Food and Drug Administration and the State of Michigan as a packaged food product.

"This proposal sends up a perverse incentive that would work against good Michigan jobs and the state collecting revenues. It reveals an approach to governing that would punish good Michigan jobs and reward out of state companies. It doesn't make sense for a state looking to retain and grow good jobs necessary to supporting valid priorities like education."

About Nestle Waters North America

Central to the leadership of Nestle Waters North America Inc. is its 33-year history and single-focus on producing bottled water products. The company's dedication to product quality, manufacturing expertise, employee development and environmental stewardship, especially in the areas of water use, energy and packaging, has helped Nestle Waters become the number one bottled water company in the U.S. To reach success, the company follows its credo: Respect for each other, respect for the environment, and respect for the community. To learn more, visit

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