SUBSCRIBE

Breaking News on Food and Beverage Processing and PackagingWorldUSEurope

News > Supply Chain

Nestlé to re-organise bottled water division

By Chris Mercer , 10-Mar-2006

Nestlé Waters has confirmed it is examining how to re-organise its 75 bottled water brands into a more coherent unit, as rivals spring up from all sides.

The move, first reported in France's La Tribune newspaper this week, would likely see Nestlé Waters ditching some of its 75 brands in order to better focus marketing efforts.

A spokesperson for the group declined to comment on a timescale for the review. It was understood that big brands like Perrier were safe.

 

Nestlé Waters has just replaced arch-rival Danone as the world's biggest bottled water group by volume. It has an 18.3 per cent global market share by value, and grew sales by 8.6 per cent in 2005.

 

The success came largely thanks to double-digit sales growth for the group in North America last year, driven by a 50 per cent sales rise for its Pure Life brand.

 

Pure Life is an example of how Nestlé's strategy of focusing on fewer brands intensively could work. The drink gained a 70 per cent share of the Canadian flavoured water market within six months of being launched.

 

Nestlé Waters' sales in Europe were flat in 2005, reflecting the maturity of the market, the firm said.

 

A core brand focus there may help to get sales moving again. And, the group's need to consolidate its position has also taken on greater importance as new rivals emerge, looking to target the consumer shift from fizzy sodas to non-carbonated drinks like bottled water and juice.

 

Global bottled water consumption is expected to overtake fizzy soft drinks for the first time within five years, according to a recent report by Zenith International.

 

Increased competition in bottled water has come from established soft drinks market leaders, PepsiCo and Coca-Cola, and also from smaller producers.

 

Scotland's Highland Spring has risen to be the joint-second biggest bottled water brand on the fast-growing UK market, after a 30 per cent sales rise on the back of new production lines and marketing.

 

Functional water has also continued to creep in. UK-based firm Works With Water have just launched flavoured spring waters claiming to offer health benefits to consumers.

 

The drinks contain Orafti's Beneo brand, inulin and oligofructose ingredients - non-digestible soluble fibres derived from chicory root that are said to ferment in the gut and promote the growth of good bacteria.

 

A Nestlé Waters spokesperson told BeverageDaily.com last year that flavoured water was its main innovation focus, ahead of functional varieties. Flavoured water accounted for less than 5 per cent of the group's sales but showed great potential, she said, adding that functional water remained a bit too niche.

 

Moves into lower-priced bottled water with Nestlé Vera in Italy and Aquarel across Europe, have also helped the firm to boost sales volumes.

 

Subscribe to our FREE newsletter

Get FREE access to authoritative breaking news, videos, podcasts, webinars and white papers. SUBSCRIBE