Nestlé Waters (France)

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Nestlé Waters is the world's leading mineral water company by revenues, a key part of the vast Nestlé worldwide portfolio. Although its best-known brands are the two mineral waters which made up its old name of Perrier Vittel, the company also has a large portfolio of almost 50 other international or regional brands including Pellegrino, Panna, Buxton, Poland Spring and Arrowhead. Although it is best-known for its premium brands, the company is aggressively targeting less affluent consumers in Asia and Latin America as well as in the West with its company-branded products. Nestlé Pure Life is now the word's best-selling bottled water, supported in several markets by Nestlé Aquarel. The group has an unrivalled global footprint, even though the largest proportion of sales are still generated in developed markets. Despite its size, Nestlé Waters faces considerable competitive pressure, not just in Europe from traditional global rival Danone, but more seriously from soft drink giants Coca-Cola and PepsiCo. Another challenge came during the recession of 2008/09 as consumers were tempted to trade down from more expensive bottled products to simple tap water.

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Brands

Vittel Perrier
Arrowhead S Pellegrino

Recent stories from Adbrands Weekly Update:

Adbrands Weekly Update 24th Aug 2017: Nestle's US bottled water Poland Spring is the target of a class action lawsuit brought by residents of Maine - where the brand originates - and neighbouring states where it is distributed. According to the suit, Poland Spring is not spring water as Nestle claims, but actually common groundwater collected from man-made wells in Maine's "most populous counties", in several cases, these are situated near land fill sites and waste dumps. The suit alleges that Nestle has piped well water into artificial springs to give the appearance of being natural: "If consumers knew where the defendant’s wells were actually located, rather than being misled by defendant’s falsely reassuring labels depicting pristine scenes, and knew the extent to which defendant treated or purified the water, they would not buy, or would not pay premium prices for, Poland Spring Water products." Nestle denies the allegations.

Adbrands Weekly Update 30th Mar 2017: Ads of the Week: "Invincible". Here's a clever campaign from Marcel from Nestle's vitamin-enhanced Contrex mineral water, which celebrates the power and potential of womanhood, but also acknowledges its physical frailty. That's perhaps a slightly controversial subject, but it's executed here with style and gentle humour (and an incomparable soundtrack). "We are invincible. Nothing and no one can stop us. There are no limits to what we can achieve. We are invincible... but our bodies are not. They need minerals every day. Contrex is for your body." 

Adbrands Weekly Update 9th Jun 2016: Ads of the Week: "The Extraordinary Tower". Ogilvy France unveils this ad for flavoured Perrier. Mint, strawberry, lime and more but all with a distinct Old Spice vibe. Not in its taste, you understand, but its style. Crazy visual trickery abounds, but still with that unmistakable Gallic tang. Tasty and refreshing, just in time for summer. Enjoy!

Adbrands Weekly Update 4th June 2015: Ads of the Week "Extraordinaire". Ogilvy Paris has unveiled its spectacular new spot for Perrier, featuring an army of hot air balloons and much digital trickery, as well subtle references to the water brand's involvement in sport, music and other areas. Our only reservation? Pity they couldn't have found a less overused piece of music than Greig's Peer Gynt climax. Other than that, a great piece of work. 

Adbrands Weekly Update 2nd April 2015: Pepsi regained its position as the #2 soft drink in the US last year, pushing Diet Coke back into third place. In fact it's not so much Pepsi's gain, according to researcher Beverage Digest, as Diet Coke's flagging popularity amid health concerns over sweeteners and the continuing erosion of the overall carbonated soft drinks market, which slipped almost 1% in total volumes as traditional brands continued to lose share to energy drinks. Diet Coke's 6.6% slide in sales volumes was more than three times higher than Pepsi's 1.8% decline. Regular Coke held onto the top spot with a marginal 0.1% volume lift. Yet it wasn't all gloom for old school carbonates. There was solid growth for Fanta (up 5% to a best-ever volume total) and Sprite (up 1%). Yet no question about who the real winners are in the wider liquid refreshment market: water brands. Nestle Pure Life jumped 8.9% in volume sales, while regional brand Poland Spring added 7.9%, and Coke's Dasani water brand climbed 8.2%. Pepsi's AquaFina, though still outside the Top 10, was up 7%. Nestle Waters also overtook Dr Pepper Snapple to become the overall #3 in the US liquid refreshment sector behind Coke and Pepsi. 


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Background

Free for all users | see full profile for current activities: Nestlé's flagship water Perrier is in fact one of the world's oldest brands. The spring or source situated at Vergeze in southern France was in use more than 2,000 years ago. Unlike the majority of springs, the water from Vergeze is carbonated naturally with gas released by geothermal activity deep underground, so it actually comes out of the earth warm and bubbling. The source is known to have been used by the Roman army after their invasion of what was then Gaul. Several hundred years later it was temporarily blocked up by Hannibal after he crossed the Alps. 

With a few minor exceptions such as this, the mineral water from the spring was freely available for hundreds of years to anyone and people came from around the world to bathe in "Les Bouilliens" or "boiling waters". As a result, attempts to commercialise the source during the 19th century were very unpopular, but in 1863 Emperor Napoleon III sold rights to develop a hotel and spa on the site. The spa was ravaged by a fire in the early 1880s, and the site closed down altogether for several years, until acquired by local businessman Louis Rouviere in 1888. He repaired the facilities and sold the business on to the Societé des Eaux Minerales, Boissons et Produits Hygieniques de Vergeze, run by Dr Louis Perrier. One of the good doctor's wealthier English patients, St John Harmsworth (brother of the British press baron who founded the Daily Mail newspaper), was very taken with the spa and established the Compagnie de la Source Perrier in 1906 to bottle and sell its water. Green bottles were designed in the shape of the clubs used by Perrier's patients to strengthen arm muscles, and Harmsworth sent samples to virtually the whole British aristocracy, advising them to mix it with whisky.

Although French in name and location, Perrier was a British-owned business for the next 40 years. Harmsworth died in 1933, and the company passed to his heirs. However the disruption of war and a general lack of interest persuaded them to sell the company in 1945 to a group of French businessmen led by Gustave Leven. Back under French ownership the business expanded rapidly. Between 1914 and 1950, output increased from 2m bottles to 150m bottles a year. At the same time, the company was forced to find new ways to ensure that the water remained consistently bubbly in such quantities. As a result, the carbonic gas in Perrier is still natural but is now collected separately and added to the spring water in the laboratory rather than underground. 

During the late 1970s and early 1980s, as a result of skilful mass-market marketing which emphasized its chic French origins and health benefits, Perrier was established as one of the world's most fashionable brands, an astonishing achievement for a product that came virtually untreated out of the earth. Between 1976 and 1979 alone, US sales jumped from just 3m bottles to more than 200m. By the end of the 1980s, the drink was one of the best-known brands on the planet, distributed worldwide, and with a virtual stranglehold on the mineral water market, especially in the key US market. In just ten years from 1980 to 1990, sales grew from 20m litres a year to 420m. In the meantime, the group had also built up substantial interests elsewhere, acquiring regional mineral water brands Poland Spring, Calistoga and Arrowhead in the US, Buxton in Britain, and Contrex, Vichy and Volvic in France. Company president Gustave Leven also established a holding company for Perrier named Exor. Backed by Italy's wealthy Agnelli family, the beneficial owners of Fiat, Exor diversified widely, acquiring substantial amounts of property in Paris, a share in the Chateau Margaux vineyard, as well as Roquefort cheese and even electric heaters. 

Then disaster struck. In 1990 traces of benzene, a natural substance known to be carcinogenic, were found in the water during routine tests in the US. What happened next has become a textbook lesson in how not to manage a contamination crisis. The Perrier management's biggest mistake was initially simply to ignore the problem, thinking it would just go away. At first the company blamed the contamination on a cleaner's dirty cloth, but was later forced to admit that managers had actually neglected to change the filters at the main bottling plant. At first Perrier ordered only a small bottle recall in the US. But as negative press coverage grew elsewhere, the public began to stop buying Perrier in all its markets. By the time Perrier finally initiated a full recall, the brand had lost a huge amount of public goodwill. The scale of the exercise was enormous - Perrier was forced to take its products entirely off-sale, recalling 160m bottles worldwide, at a cost of around $150. For over two months, Perrier was completely removed from the world market. President Gustave Leven resigned, and was replaced by his deputy.

Filters were quickly altered and the company was forced to wait while the spring gradually replenished the supply chain. But the hiatus gave Perrier's competitors a huge advantage as a host of local companies rushed to fill the gap in the market, especially outside France. Perrier struggled to regain its market dominance. Even before the benzene scare, its biggest still rival Evian was doubling the size of its business in the key US market year on year, while Perrier was growing by only 1% a year. With the company's shares at an all-time low, Perrier was an ideal takeover target. In 1992, Nestlé launched a hostile bid. The Agnelli family put up a spirited defence as a potential white knight for Perrier, but was unwilling to match Nestlé's $2.7bn bid. 

The Swiss company was already owner of Vittel, France's #2 still water behind Evian. Like Perrier, the Gérémoy spring in eastern France from which Vittel was collected had originally been commercialised as a spa in the 1880s. Bottled for retail sale from the 1890s, the Vittel brand grew quickly during the 20th century, becoming the country's #3 mineral water business by the 1960s. It was also the first company to utilize PVC bottles in 1968, and later expanded its presence with acquisitions in other markets including the US. Nestlé initially acquired a minority stake in Société Generale des Eaux Minerales de Vittel in the late 1960s, and took majority control of the business in 1987. 

Following the acquisition of Perrier, Nestlé was forced by French regulators to sell off Volvic to France's Groupe BSN (later Danone) for $550m, but acquired the remaining minority shares in Vittel, consolidating the two businesses as Perrier Vittel. Shortly afterwards, Perrier Vittel acquired a 49% stake in Italian mineral water company San Pellegrino, acquiring the remaining 51% in 1996.

The group has developed or acquired numerous other mineral water brands since. Nestlé Pure Life was launched in Pakistan in 1998, the first water to carry the Nestlé name. Pure Life quickly captured 60% of Pakistan's small bottled water market and has gradually been rolled out in other developing nations. As competition from Danone increased in early 2000, Perrier Vittel launched new brand Aquarel, backed with $100m of investment. Drawn from springs in Spain and Belgium, the still version of Aquarel was launched in early 2000; a carbonated version of the brand launched in the second half of the year in Germany. Also in 2000, the group acquired a number of additional brands including Hungarian mineral water company Kekkuti Asvanyviz, Poland's Mazowzanka, Valvita in South Africa and Fresh Water in Argentina. The following year, the group added a number of other brands in markets where it already had a presence, and moved into Saudi Arabia with the purchase of 51% of Al Manhal, the dominant Saudi water bottler.

In a major shakeup to the marketing of main brand Perrier, the company introduced its first plastic bottles in summer 2001, initially in Europe. The group also moved aggressively into the Home & Office Delivery (HOD) watercooler market, acquiring a number of cooler supply companies, including Aqua Cool, a leading home and office supply water brand in the United States, United Kingdom and France, for $220m. In early 2002 the group entered the mainstream soft drinks market with the launch of Perrier Fluo, a range of fruit-flavoured fizzy drinks. At the same time the company changed its name from Perrier Vittel to Nestlé Waters. 

Gradually, the Perrier brand had itself come to be seen as one of the weaker strands within the ever-larger portfolio. In 2004, Nestlé began a shake-up of its main Perrier plant in order to boost productivity, which remained very low compared to other springs. (The average worker at the Perrier source in Vergeze produced 600,000 bottles a year, around a third of the number produced by a worker at San Pellegrino). When unions opposed the introduction of an early retirement scheme for older workers, Nestlé threatened it would sell Perrier unless its plans were accepted. That ploy worked, and as a result the Perrier factory regained profitability for the first time in many years in 2006. See full profile for current activities


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