Nestlé to spin off water brands into a standalone business
That will include global heavyweights such as San Pellegrino and Perrier.
The Swiss food giant released its action plan today in the face of a challenging market and lowered growth expectations: setting out a strategy to drive operational excellence, increase investment in advertising and marketing by 9%, and deliver further cost savings of at least CHF 2.5bn ($2.83bn) by 2027.
As part of this action plan, Nestlé will separate its water and premium beverages activities business from the rest of the company - with the future of this division yet to be determined.
Adjusting to a new business environment
Nestlé's plan is focused around having “fewer, bigger, better" innovations, CEO Laurent Freixe explained to investors in his presentation this morning.
“Over the last 10 years and more our strengths have underpinned strong performance within the business and for our shareholders,” he said during the Capital Markets Day 2024.
“But, as you know, in 2024, our business has slowed with the fast normalization of pricing and our performance in 2024 is below our potential.”
That has prompted an evaluation of each sector in the business.
“We are going to reorganize Waters into a separate global standalone unit headquartered in Paris," said Friexe. "This will allow us to have the right focus to drive performance in our leading brands and this includes exploring possible partnerships as we have done successfully in other areas in the past.”
The new water business will be led by Muriel Lienau, who is currently Head of Nestlé Waters Europe, as of January 1, 2025.
Brands split off into the new waters business will include Perrier, San Pellegrino, Acqua Pana and flavored waters linked to the brands, such as Maison Perrier, a Nestlé spokesperson told us.
Nestle’s water division posted mid-single digit growth in FY2023, with San Pellegrino and Acqua Panna highlighted as the top performers.
Lienau and the management team will be tasked with setting out the strategy for this business which will include “exploring partnership opportunities to enable Nestlé's iconic brands and growth platforms to achieve their full potential.”
Nestlé puts focus on core growth businesses
While Nestlé's bottled water business includes globally-known brands such as San Pellegrino and Perrier, it only accounts for a small percentage (around 3.5%) of the group's sales.
Dating back to 1899, Italian brand San Pellegrino has been part of Nestle since 1997, with its principal production in San Pellegrino Terme.
Perrier, meanwhile, is a French mineral water founded around the same time: obtained from its source in Vergeze. Over the last few years, the Perrier brand has done a lot to expand into new formats and flavors: such as the launch of Maison Perrier earlier this year with a focus on flavors, creativity and premiumization.
In the US, Nestlé has already offloaded a lot of the water brands it previously owned: with Poland Spring, Deer Park, Ozarka, Ice Mountain, Pure Life and several more all becoming part of BlueTriton Brands in 2021 (BlueTriton is now merging with Primo Water, with that deal set to complete next year).
However, Nestlé still owns premium international brands such as San Pellegrino and Perrier in the US.
In October, Nestlé lowered its growth expectations for the year after a disappointing third quarter: noting soft consumer demand consumer hesitancy towards global brands.
