Nestle restructures its bottled water sector

Nestle restructures its bottled water sector

Thursday, 17.10.2019

Nestle Waters sales declined 0.5% to CHF 6.1 billion in the first nine months. (Keystone)

Nestle Waters, Nestle's bottled water subsidiary, has been the "poor relative" of the group for the first nine months and will be reorganized as of 1 January. Its turnover has decreased slightly in annual comparison, with in particular a difficult evolution in Europe.

Nestle Waters sales declined 0.5% to CHF 6.1 billion in the first nine months. Exchange rates had a negative impact of 0.8%. Real internal growth (RIG) was also negative (-2.5%).

"Sales in Europe have suffered from" a disappointing summer season, "says the multinational, while organic growth" has been flat in North America. "Among the thinning in the water business, flavored and" functional " "have sparked consumer interest in the high-end, where Nestle sees prospects.

A reorganization is necessary. By 2020, Nestle Waters will be integrated in the three geographical areas of the group, and no longer managed in a global manner, and this subsidiary will become a "Strategic Business Unit" (UAS) directly attached to Patrice Bula, a member of the Executive Board. charge of UAS, marketing and sales at group level.

This change has yet to be approved by staff "where necessary", the statement said. It aims to better respond to "the rapid evolution of consumer preferences (…) and create synergies" in a highly competitive sector.

Nestle Waters was born in 1992 following the acquisition of Perrier. Today, the entity includes around fifty brands, including, besides Perrier, also S. Pellegrino, Acqua Panna or Nestle Pure Life.

In doing so, the bottled water activity remains "a strategic sector" for Nestle, told the media manager Christoph Meier to AWP. The goal of the restructuring is to bring the group's water closer to the global growth of the sector, averaging 5 to 7% a year.

"Too early to encrypt"

For now, it is "too early" to quantify, either in terms of jobs or results, the impact of synergies and reorganization, Meier said. Nestle Waters employs some 28,000 people worldwide. In Switzerland, Nestle is present via Henniez or Cristalp, but the restructuring will initially concern other markets.

The water sector is "a fairly local affair", Meier explains, with the majority of sales being made with regional brands. The takeover within the group must allow the structure to be adapted to a business model already applied for all other Nestle activities and to better benefit from local expertise.

The last overhaul of this type was made in 2017 with infant nutrition, which has also become a UAS.

The change is accompanied by the departure of Maurizio Patarnello from the group's senior management on 31 December. Mr Patarnello, currently Deputy Managing Director and Head of Nestle Waters, will ensure "a smooth transition" into the new structure.

He is replaced by Sanjay Bahadur, currently Acquisitions and Business Development Manager, as Deputy Chief Executive Officer and a member of the Group's General Management from January 1st. (AWP)