A group called Corporate Accountability International has been pressuring bottled water sellers to curb what it calls misleading marketing practices.
Aquafina is the single biggest bottled water brand, and its bottles are now labeled "P.W.S." The new labels will spell out "public water source."
"If this helps clarify the fact that the water originates from public sources, then it's a reasonable thing to do," PepsiCo spokeswoman Michelle Naughton said Friday.
The corporate accountability group is also pressing for similar concessions from The Coca-Cola Co., which owns the Dasani water brand.
Dasani's Web site says that Dasani comes from local water supplies and is then filtered.
"We don't believe that consumers are confused about the source of Dasani water," Coca-Cola spokeswoman Diana Garza Ciarlante said. "The label clearly states that it is purified water."
Sales of bottled water has been a growing source of revenue for companies such as PepsiCo Inc., based in Purchase, N.Y., and Atlanta-based Coca-Cola as they lessen their dependence on sales of traditional carbonated sodas, as consumer concern over health issues has weakened demand.
PepsiCo shares fell 55 cents to $66.29 in morning trading Friday amid a broad market pullback.