Blue gold is still golden, Chris Mayer tells us.
“Industry is worried about water,” he continues. “It should be, because it uses a lot of it. J.P. Morgan finds that the ‘big five’ food and beverage companies use 150 billion gallons of water per year, enough to satisfy the daily water needs of every person on the planet.
“The Economist ran a good piece recently highlighting industry’s reliance on water and water’s relationship in producing so many goods. In Silicon Valley, for instance, 25% of the water use is for making computer chips. Across the country, 40% of the water drawn from lakes and aquifers goes toward cooling power plants. The link between water and energy is strong and largely unappreciated, but not by industry insiders.
“According to a recent survey by the Marsh Center for Risk Insights, 40% of Fortune 100 companies recognize that the impact of a water shortage on their businesses would be ‘severe’ or ‘catastrophic.’ Some are taking measures to mitigate water intake as water scarcity issues become more important.
“I was impressed to read that Nestle has reduced its water usage by 29% since 1997. Yet 49 of its 481 factories are in water-stressed regions. It takes about 1 gallon of water to make 1 gallon of product. That understates true water usage, though, because it doesn’t factor in the amount of water needed to produce the food products Nestle uses as raw materials. According to Jose Lopez, executive vice president, that’s about 793 gallons for 1 gallon of product.
“The Mayer’s Special Situations “Blue Gold” portfolio remains in good position to profit on freshwater scarcity issues.”
Bill Bonner
for The Daily Reckoning Australia
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About the Author
Best-selling investment author Bill Bonner is the founder and president of Agora Publishing, one of the world's most successful consumer newsletter companies. Owner of both Fleet Street Publications and MoneyWeek magazine in the UK, he is also author of the free daily e-mail The Daily Reckoning.
