I am one of those people who grew up drinking tap water. My family did not have a ton of money, so the last thing we had cash for was something that could be obtained by turning on a faucet. I can honestly say that this is still the case for me. I would rather drink what is free than to spend money on something that is right there. With that said, there are many people, like the residents of Flint, Michigan, who do not have water coming from the faucet that is fit to drink. In that case, bottled water should be offered by the government.
Yes, it is probably wasteful to spend money on water in most cases, but the idea of having dirty water for your children to drink is enough to make some people head to the store with a quickness. There are filters that can help in some cases, but when the water is so filthy that you can barely see through it, bottled water is actually the only option. Again, this should be offered free to people that live in areas where the water is not fit for consumption.