Water risks ripple through the beverage industry

At New York's Del Posto, diners can share a €93 entree of wild branzino fish with roasted fennel and peperonata concentrato and a €2,600 bottle of Dom Perignon. They cannot share a bottle of Perrier or San Pellegrino water.

The Italian restaurant backed by celebrities Mario Batali and Joseph Bastianich is one of several shunning bottled water, along with the city of San Francisco and New York state.

"The argument for local water is compelling and obvious," said Mr Bastianich, who is phasing out bottled water across his restaurant empire, which stretches to Los Angeles.

"It's about transportation, packaging, the absurdity of moving water all over the world," he said.

As environmental worries cut into sales from traditionally lucrative bottled water, beverage companies such as Coca-Cola, PepsiCo, Nestle and SABMiller are becoming more attuned to the risks of negative consumer environmental perceptions.

Water is becoming scarcer, raising a fear that so-far manageable price increases could spike and leading drink companies to take action to maintain access to water and fight their image as water hogs.

"Water is the new oil," said Steve Dixon, who manages the Global Beverage Fund at Arnhold & S. Bleichroeder, repeating what has become a mantra as climate change and population growth tax water supplies.

About a third of the world's people now live in areas of water stress, said Brooke Barton, manager of corporate accountability for Ceres, a network of environmental groups and investors seeking to address sustainability challenges. By 2025, she said it will be more like two-thirds. Water is still cheap, but that is changing.