Nestlé exploring sale of ‘the majority’ of its North American water unit

Nestlé is exploring the sale of ‘the majority’ of its Nestlé Waters North America unit, including its regional spring water brands, the Nestlé Pure Life brand and the ReadyRefresh beverage delivery service.

Nestlé Waters North America registered sales of CHF3.4 billion ($3.61 billion) in 2019, accounting for almost half of Nestlé’s global water sales ($8.25 billion). Regional spring water brands operated by the North American unit include the Poland Springs, Deer Park and Arrowhead brands.

A review of the North American unit is expected to be completed in early 2021.

The decision was announced as the company declared it would pursue a new strategic direction for its Waters business, with an increased focus on its international brands, premium mineral waters and functional water products.

In addition, Nestlé announced that it would seek to ‘explore strategic acquisitions’ in the functional water space, as well as investing in differentiated products such as functional water with health-enhancing ingredients.

The company reiterated that it was committed to growing its international brands such as Perrier, San Pellegrino and Acqua Panna both in the US and globally.

Nestlé Waters has experienced stagnant growth for the last few years, registering 0.2% sales growth in 2019, and this prompted an overhaul of the unit in October 2019.

Bottled water sales have come under pressure due to consumer concerns about plastic packaging, and Nestlé also announced a number of new sustainability commitments, including a pledge to make its entire water portfolio carbon neutral by 2025.

The company also made commitments to halve its use of virgin plastic by using more recycled PET (though the company did not provide a timescale) and increase its water stewardship efforts.

Mark Schneider, Nestlé CEO, said: “The creation of a more focused business enables us to more aggressively pursue emerging consumer trends, such as functional water, while doubling down on our sustainability agenda.

“This strategy offers the best opportunity for long-term profitable growth in the category, while appealing to environmentally and health-conscious consumers.

“Nestlé is one of the pioneers in the global water business and remains committed to healthy hydration. We are working tirelessly to ensure that consumers can enjoy our beverages in an environmentally responsible way.”