Water – Chemistry in Everyday Life

Today’s topic has been in the spotlight, largely due to Nestlé $NESN (-0,35 %) has been in the spotlight over the past few months. But even on hot summer days, there’s constant discussion about this essential element of life and the business behind it.

What’s the story with Nestlé?

Nestlé is almost constantly the subject of criticism. I expressly ask that you refrain from commenting on the company’s activities or expressing personal opinions in the comments section below this post. The “Nestlé Waters” division operates production facilities in approximately 34 countries, for example, for the bottled water brand “Pure Life.” The criticism centers on production sites in areas where water is traditionally scarce, and where pumping further lowers the groundwater level. I’ll leave it open as to whether Nestlé should bear primary blame in this regard. In any case, it’s important to keep in mind that water licenses are officially sold to Nestlé in all of these countries. Nevertheless, some YouTubers have now realized that they can generate a lot of attention—and thus money—by denouncing international corporations. I hope, at least, that they’ll keep this in mind in the future when they’re enjoying their Wagner pizza or KitKat during live streams. Otherwise, that would amount to a double standard…

Whatever one’s stance on the matter may be. There is certainly a risk of nationalization in the event of water shortages at private water utilities. For that reason, I would generally rule out investing in such companies. However, the private sector is indispensable when it comes to drinking water treatment. The individual products have such a wide range of applications that they cannot be used specifically for water.

But what is the situation in Germany?

Based on the Food Act, Germany has the Drinking Water Ordinance. The ordinance’s goal is to protect human health and ensure quality and purity. Since the 2012 update, it has also addressed issues related to Legionella. Water utilities are responsible for compliance.

The details are defined more precisely in the annexes to the Drinking Water Ordinance itself. https://www.gesetze-im-internet.de/trinkwv_2001/BJNR095910001.html

But how do I go about making water usable?

Of course, this depends primarily on your region. Water always falls into different quality classes and must be treated accordingly. According to the Federal Environment Agency, just under 63% of drinking water is sourced from groundwater. However, there are significant differences, particularly when comparing the east and west. The unregulated and reckless planned economy of the former GDR has left its mark on the environment even today. However, there is generally significant contamination along the lines of major industrial centers. While the Saale, Oder, Ruhr, and Ems rivers in particular bear the marks of industrialization, the soils surrounding the chemical industrial sites in central Germany remain severely degraded. I have drawn these findings from the Water and Soil Atlas.

But why this lengthy introduction?

Both the air and the soil contain countless contaminants and even toxic particles. Rain washes these away, causing them to seep into the soil and ultimately into the groundwater.

As a result, we must now find suitable methods to maintain the quality of our drinking water.

We therefore have the option of selectively removing these substances from the water using mechanical, thermal, or chemical methods.

How does that work?

Due to differences in regional water quality, drinking water treatment must, of course, always be considered on a case-by-case basis. Nevertheless, the first step generally involves chemical treatment with ozone. Through mechanical separation stages—such as sedimentation and filtration—as well as chemical separation processes involving flocculation and pH regulation, the treated drinking water enters the public water supply. The authorities regularly take samples, which are then tested in independent laboratories.

But who actually benefits from drinking water treatment?

From a personal perspective, I view the plant as a private drinking water producer, such as Nestlé or Danone, $BN (+0,14 %) as risky. There is too great a risk of being criticized in the public eye, which makes it all the more likely that bottled water sales could be halted. Furthermore, especially in countries experiencing water shortages, one can certainly expect the nationalization of production and treatment facilities.

Beyond that, there are lucrative and promising opportunities to invest in suppliers.

An investment in drinking water treatment is inevitably linked to wastewater treatment as well.

The most prominent private-sector players in this field are American Water Works $AWK (+0,54 %) , known as the “Dividend King.” Its direct competitor—if one can even call it competition in geographical terms—is Essential Utilities $WTRG (-1,15 %) , as well as United Utilities $UU. (-0,62 %) in the United Kingdom.

Incidentally, Veolia $VIE (-1,87 %) , with its subsidiary Veolia Water, holds a dominant position. It holds countless stakes in municipal utilities and water companies. According to its own website, the company supplies approximately 5 million people in Germany with drinking water and treats their wastewater.

Even beyond direct drinking water treatment, there are highly lucrative suppliers of drinking water solutions and quality assurance services. The best-known example is probably Xylem $XYL (-0,72 %) . In addition to fluid technology—which includes pump manufacturing and other equipment—the analytics division is a bright spot for investors. Its broad portfolio covers the entire spectrum of water analytics. Thus, investors benefit not only from municipal water systems but, above all, from industrial customers who are subject to regulatory requirements. It is nearly impossible to identify a direct competitor with such a broad presence in this segment.

If one were to try nonetheless, KSB’s pump division $KSB (-1,09 %) is a prime example in Europe. In the U.S., however, IDEX $IEX (+0,05 %) can offer an alternative in the field of technical pumps.

Several companies have also specialized in the field of chemical water and wastewater treatment.

Ecolab $ECL (+0,62 %) , better known for cleaning and disinfecting agents, has been owned by Nalco Water since 2011. Its focus here is on water and wastewater treatment additives, which are also integral to any drinking water treatment process. Notable among these are slime inhibitors for biocides and Legionella, as well as corrosion inhibitors and hardness stabilizers.

Another notable competitor is DuPont $DD (-2,27 %) , specifically its “Water & Protection” division. Its focus is on special resins that can adsorb and filter specific substances from the water. Depending on the application, this extends into the nanofiltration and ultrafiltration ranges. Ion exchangers can also be used to ensure a higher level of water purity.

Have you used water today? If so, you’ve probably already come into contact with one of these products.