Nestlé's bottled water business, under pressure since the revelations concerning prohibited treatments applied to mineral water, is once again at the heart of a major reorganization, launched by the new boss who must restore the group's results.
(AFP / FABRICE COFFRINI)
One of the first decisions of Laurent Freixe, who took control of Nestlé at the beginning of September following the ousting of his predecessor, was to announce a strategic review of this activity which generated a turnover of 3.3 billion Swiss francs (3.5 billion euros) in 2023.
From January 1, 2025, water activities will be grouped into a separate entity.
Its management will be entrusted to Muriel Lienau, who was already at the head of the European water sector, with the mission of evaluating the strategy, in particular by exploring partnership possibilities.
“It's going to take a little bit of time, but we're creating options for the future,” Mr. Freixe said at an investor conference in November during which he unveiled his plans to turn around sales of the band.
His predecessor, Mark Schneider, also reorganized the water activities in 2020 and pruned the portfolio, notably by selling several local brands in North America to the funds One Rock Capital Partners and Metropoulos & Co in 2021 for 4.3 billion dollars.
He thus wanted to refocus the portfolio on the biggest brands, which include S. Pellegrino, Perrier and Acqua Panna, responding in part to criticism from investors who point out that water has been losing momentum for several years.
Bottled water was growing strongly when Nestlé bought the French brand Perrier in 1992. But consumption habits have gradually changed, particularly in the face of criticism regarding single-use plastic.
In 2023, water was Nestlé's smallest business. It represented only 3.6% of its turnover worldwide, far behind coffee and powdered drinks (including Nesquik and Milo) which contribute to more than a quarter of its sales or pet products which exceed 20% of turnover.
Water is also the activity which suffered the biggest drop in its sales volumes last year, down 5.1% over one year.
And over the nine months of 2024, their sales volumes fell further by 0.8% against a backdrop of scandal concerning treatments applied in France and Switzerland.
In January, an investigation by Radio France and the daily Le Monde revealed that producers of bottled water, including Nestlé, had used purification techniques authorized for tap water but prohibited for natural mineral water or water. source, which must be naturally pure.
The reorganization announced by the new boss was therefore favorably received by investors. Because it could open the way to “a partnership or even a sale”, reacted Patrik Schwendimann, analyst at the Zurich cantonal bank.
