Saudi Arabia has oil. New Zealand has sheep. Iceland has water. Lots of it. It boasts 11,400 square kilometers of glaciers, innumerable rivers and more than 10,000 waterfalls. But while the notion of exporting what already covers 70 percent of the Earth’s surface may seem absurd and contradictory to the island’s green image, many voices extol the simple virtues of H20 as the elixir that may help restore the country's economic vigor.
Published in Atlantica No. 1. 2009, January-February. By Eliza Reid, photo by Páll Stefánsson.
Few other nations on earth are blessed with such a plentiful and clean supply of water. Fresh water accounts for only 2.5 percent of the world’s water, and most of that is frozen in polar ice. With its high precipitation, low population density and virtually non-existent levels of pollution, Iceland’s supply of fresh water is immense, clean—and coveted. In areas like the water-starved, yet wealthy, Middle East, this combination is irresistibly appealing. In fact, the international water market is growing by 15 percent year-on-year.
Like a Texas oilman in the 1930s, Iceland is finally getting in on the game. There are about ten brands of Icelandic bottled water available on the market. Two facilities are already up and running, shipping millions of bottles to a market thirsty for designer water: film stars, athletes and discerning consumers around the globe. At least five other plants are in the pipeline, with plans to export water for consumption (as plain water or in spirits) or for the pharmaceutical or fragrance industries. If each plant opens according to plan, hundreds of jobs will be created around the country.
“Icelandic water is the best, cleanest water in the world,” Kuwaiti investor Habib Tannous told me when I asked what made this northern nation’s resource so attractive.
It seems the perfect business: supply is plentiful and better quality than in most other places in the world. The energy required to prepare it for human consumption (collection, testing, etc.) is minimal in a country with extensive geothermal reserves. And any concerns about the ethics of bottled water in general are tackled within some importing countries by interest groups with objections to the sector as a whole. Certainly the export of water has generated none of the controversy surrounding aluminum production in Iceland.
But is this the right climate in which to be piggy-backing on the brand of Iceland as clean, pure and almost perfect? Is the country, now in the throes of a deep recession, maximizing the potential revenues from its most plentiful natural resource?
Iceland’s modern day prospectors aren’t worried. Water, they say, will help to make this country rich again.
Upon entering the new premises of Icelandic Water Holdings near Thorlákshöfn in southern Iceland, one is greeted by a poster of the pristine Nordic face of former Miss World Unnur Birna Vilhjálmsdóttir (the third Icelander to hold the title), standing in front of a glacial lagoon and clutching a bottle of Icelandic Glacial water to her bosom.
The message is clear: Iceland is a beautiful, pristine country with beautiful, pristine people. Drink our water and you too might look as good as a Miss World.
Launched and still majority-owned by father-son duo Jon Olafsson and Kristjan Olafsson (American beverage giants A-B InBev, formerly Anheuser-Busch, own 20 percent), founders of Icelandic Water Holdings, the 6,600-square meter premises were formally opened by Minister of Energy and Industry Össur Skarphédinsson at the end of September this year.
It’s an impressive operation, full of the latest equipment from Germany. A narrow conveyer belt snakes through the facility, whooshing bottles from the pre-form PET stage to filling, labeling and packing. The plant has the capacity to bottle and ship 100 million liters of water per year, all of it sourced from the nearby Ölfus spring. That may seem like a lot of water, but the spring is so large, its daily overflow alone is roughly double the total quantity of bottled water consumed worldwide.
Icelandic Water Holdings has been garnering publicity since its launch for its efforts to cater to the environmental lobby; Icelandic Glacial was the first bottled water to be certified officially carbon neutral for both its products and operations, and everything from shipping to the electricity used in shaping the PET bottles to the fuel employees burn driving to and from the factory, is offset by donations to various environmental projects around the globe.
Their market targets the “premium” water consumer. The brand was launched at the Cannes Film Festival in 2005 and has featured in television shows like Desperate Housewives, Entourage, Scrubs and House.
Five hundred meters from the main building where the air is almost as pure as the water, at the base of a hill, a small (but brand new) corrugated iron hut stands emblazoned with the Icelandic Glacial logo. As the place where liquid gold emerges from under the nearby hills, the structure is less auspicious than one might imagine (even the security cameras have yet to be installed), but inside, a large glass-covered floor shows the point where the churning water gets sucked into a pipe and into the factory.
“We are in the early stages,” says Thorsteinn Karlsson, production manager of the factory. Their expansion plans include forays into both new countries and new market sectors.
These plans continue despite the current crisis. “The country has suffered a huge setback,” acknowledges owner Jon Olafsson in a telephone interview. “It will take a few years to repair this. Iceland will have some problems in the UK, there’s no doubt. Half of the Brits feel sorry for us and half of them think Iceland has done a bad thing.”
But Olafsson says he loves what Iceland stands for. According to him, the country stands for “purity, honesty, and determination,” which is not an uncommon perception among the nation. But Olafsson has taken it a step further. He has managed to bottle those virtues and sell them at USD 1.19 a pop. And with the success he’s had (although profits are not posted, the brand has grown extensively in the US and won numerous awards), it would appear the world is thirsty for Iceland’s image.
To be continued…
Water, water everywhere
Iceland is rich in fresh water because of its glaciers, snow and other precipitation. What you drink has often fallen to the Earth hundreds or even thousands of years before. Much of the water exported by Iceland f lows through ancient lava, which removes bacteria and unhealthy minerals. It generally has a high pH level, helping to balance acids in the typical diet.
“Icelandic water is unique,” says Jon Olafsson of Icelandic Water Holdings. “It has no aftertaste and tastes like water should taste: pure and clean.”
There really is water everywhere, including:
• Reykjavík: Iceland Spring owns its own water supply in Heidmörk.
• Thorlákshöfn: Icelandic Glacial f lows from the Ölfus spring.
• Hafnarfjördur: Site of a new facility owned by Glacier World, slated to open early next year.
• Ísafjördur: Access to up to 600 liters of water per second from the mountains above this town.
• Hvammstangi: Entrepreneur Hreinn Hreinsson’s company, Icelandic Water Export, has access to a source of water, a completed factory and a pipeline between the two, and hopes to start exporting “very soon”. (According to IWE’s lawyer, Ólafur Egilsson, negotiations with potential partners are at an advanced stage.)
• Westman Islands: The new facility here, funded by Canadian investors Sextant Capital, should be up and running by the end of 2008. The facility is designed for medium bulk containers.
• Rif: Also funded by Sextant Capital, construction is underway on a new bottling facility in this community on the Snaefellsnes peninsula, with export set to begin in the fall of 2009. The capability of the plant will be 35,000 bottles per hour with the possibility to expand as necessary.
• Reydarfjördur: A factory is currently being refurbished here with plans to export both bottled water and to medium to large bulk markets.