The real thing? Coke's water comes straight from the tap with a cool mark-up of 3,000 per cent

A company takes ordinary mains water, puts it into fancy blue bottles, slaps on an exotic name and sells it for thousands of times more than it cost out of the tap. It sounds like an idea dreamt up in a boardroom that was too outrageous to implement, or a far-fetched plot of a television comedy. But the idea is, with a few modifications, behind Coca-Cola's latest drink, a bottled water called Dasani.

Consumers buying Dasani are no doubt impressed with the claims of purification and its stylish blue bottle. Consumer champions are less impressed by the company's admission yesterday that, before it is "purified", Dasani comes straight out of the tap. Or more specifically, Thames Water's pipes. The location? Unglamorous Sidcup, Kent.

More gallingly for shoppers, perhaps, is the profit apparently being made by Coke on its new water product. Half a litre of tap water costs 0.03p. Half a litre of Dasani costs 95p - a mark-up of up to 3,166 per cent.

The National Consumer Council said: "It sounds like the episode from Only Fools and Horses when they sold tap water from what they called the Peckham Spring."

But Coca-Cola is serious about Dasani. Targeted at fast-living young adults, Dasani was launched in Britain last month with a £7m marketing drive. If all goes well, Coca-Cola could be left with a sizeable chunk of Britain's growing £1bn a year market in bottled water, currently dominated by the likes of Evian and Perrier.

Coca Cola has staked much on the belief that customers will taste the difference arising from its complex-sounding purification process. After filtering for sand, carbon and microns in a "multi-barrier" filtration, Dasani water then undergoes "reverse osmosis", a technique used by Nasa to purify fluids on spacecraft. The third stage involves the addition to "a perfect balance of minerals" to the water.

But by the time the water has reached Coca-Cola is it already fit for human consumption. The water companies point out that during treatment water has to go through nine processes, including screening, clarification, filtration and chlorination.

Water UK, which represents the water companies, has to tread carefully because drinks manufacturers are among its members' customers. But a spokesman said: "We don't think there are impurities in tap water. People don't need to buy this stuff to get excellent quality water. If they like the bottle, the convenience, then fine but I don't think that is the way they are marketing this product. Tap water is pure, and that's the opinion of the Drinking Water Inspectorate which carries out three million checks a year."

Thames Water, which supplies the Sidcup area, has passed 99.92 per cent of quality tests. "If the water regulator thought that any more treatment was needed they would ask us to implement it," said Chris Shipway, the utility company's spokesman.

Cynics might claim that turning something that comes out of a tap into an expensive lifestyle choice is the ultimate marketing ruse. But Coca-Cola is sticking to its formula and denies any claims that consumers are being exploited. Judith Snyder, brand PR manager for Dasani, said: "The basic product is derived from municipal sources but it is purified from there. We are not surprised about the accusation that we are bottling tap water at a premium price but that is not the case."

Marketing experts said it was time that Coca-Cola branched out into healthier products at a time when fizzy drinks were increasingly being cited as a cause of childhood obesity. Last year the trend towards low-sugar drinks was confirmed when the company revealed that sales of Diet Coke had outstripped those of the original for the first time.

The bottled water market in the UK is highly competitive, with 700 lines, compared with 300 for fizzy drinks. Len Hooper, senior buyer for Budgens supermarkets, told The Grocer magazine: "This year looks to be 'the year of obesity', or at least of tackling the issue and water will be a key component of any diet that looks to deal with the problem. In schools - the launch-pad for future trends - water is often the only liquid refreshment allowed to be taken into or sold on the premises."

Simon Mowbray, marketing editor of The Grocer magazine, said: "It will be interesting to see whether consumers buy into it or understand what it is. It doesn't have the provenance of Evian, Highland Spring or Buxton but Coke would argue that it is a fabricated water and they offer a consistent product. It is the same as selling anything. There are two important areas: what does the brand look like and is it deemed cool."

The potential rewards for getting it right are massive. Sales of bottled water rose by 18 per cent last year - boosted in part by the heatwave and government advice in case of a terrorist attack. Sales last year were £1.2bn - having broken the £1bn mark the year before. The market is expected to grow even further because with an average annual per capita consumption of 28 litres, Britain is still some way behind Italy and France with 140 litres.

Certainly the experience of Coca-Cola has ensured that, in the drive to promote its new healthy line, no stone is left unturned. On a website dedicated to the drink, doctors expound the benefits of drinking water. One of five experts, Steve J Errey, a professional life coach, reveals how drinking Dasani could help change your life: "I'm sure that Dasani - being the UK's first mainstream purified water - will contribute towards the clarity and focus that we all look for in our lives."

The taste challenge

By Maytaal Angel

Consumers seemed unable to tell the difference between Coca-Cola's expensive "pure" water and common tap water. In a blind test on London's streets, some people plumped for Dasani and others preferred the normal water. The Independent ensured both waters were presented in the same transparent glasses, at the same temperature. Many found difficulty distinguishing between the two.

One tester, Kwasi Kramo, 29, from Chingford, London, chose tap water over Dasani, but he added: "Water's just water, you can't taste the difference." His sentiments were echoed by Nicole Brown, 26. Like Mr Kramo, Ms Brown instinctively selected the tap water after tasting the two types. She then decided to withdraw her selection and insisted both waters tasted "exactly the same". Two out the five members of the public tested preferred Dasani. Ruth Lobb, 38, from Middlesex, thrust the Dasani forward and indicated that it was the better drink, with a smile. Barbara North, 54, from Wanstead, London, was also a Dasani supporter, though she was surprised she selected "the right one". "It tastes better," she said. However Danny Brown, 24, a construction worker, was definite about his preference. In no uncertain terms he chose the tap water as the water with the superior taste: "I drink tap water all day at work, so this one tastes better to me."