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Nestle Contemplates Shedding Its Water Business In North America


06/12/2020


Nestle Contemplates Shedding Its Water Business In North America
As a part of its changed corporate strategy to focus to better performing brands, Nestle is exploring a potential sale of a portion of the company’s water business in North America, the said, and added that the sale will include the Pure Life brand.
 
Regional spring water brands like Poland Spring will be included in the business that the company is contemplating to put up for sale. These brands generated sales of 3.4 billion Swiss francs ($3.61 billion) last year which accounted for almost half of total revenue generated from the water business of the company.
 
An overhaul of the water business was prompted by continued slack performance of the division for years with the business reporting just 0.2 per cent growth last year.
 
“We are withdrawing from a bulk business to focus on high-value (water) specialities,” Nestle Chief Executive Mark Schneider told the media. “We can then grow...organically and through acquisitions.”
 
"The creation of a more focused business enables us to more aggressively pursue emerging consumer trends, such as functional water, while doubling down on our sustainability agenda. This strategy offers the best opportunity for long-term profitable growth in the category, while appealing to environmentally and health-conscious consumers,” Schneider said.
 
The company was expecting to conclude a strategic review by early 2021, said Nestle which is known across the world for KitKat chocolate bars and Nescafe coffee. In the sparkling and flavored waters business in the US, Nestle’s rivals include PepsiCo, LaCroix and Coca-Cola which have a much higher market share cop[are dot the brands of Nestle.
 
“We are not withdrawing from water in the U.S.”, Schneider said, adding that he wanted to keep pushing international brands Perrier, S.Pellegrino and Acqua Panna that were “very successful” in the country.  “In the right segments, water remains very attractive,” he said, pointing to growth and margin opportunities.
 
More people in North America have preferred to drink from the tap because of environmental concerns about plastic waste and transportation which has put the sales of bottled water under pressure.
 
In the face of criticism by environmentalists, Nestle has pledged to transform its entire water portfolio business carbon neutral by 2025.
 
A US passport holder himself, Schneider reacted to questions about the “Black Lives Matter” protests ongoing in the US by saying that the events had touched upon him at a personal level and the company was concerned about the situation was monitoring it closely.
 
 “Two challenges arrive at the same time here, this debate and the COVID-19 crisis which is not yet over.”
 
In the first quarter of the current year, the best quarterly performance in terms of sales growth of the company in almost five years was posted by Nestle which has been trying to scale down and sell off its underperforming brands in other product categories as well. The first quarter saw people stocking up products of well known brands because of stay at home requirements during the novel coronavirus pandemic.
 
(Source:www.reuters.com & www.globanewswire.com)


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