Nestlé sharpens focus on functional drinks

  • 11 June 2020
  • News
The new strategy will see the Swiss food giant invest in differentiated healthy hydration and explore strategic acquisitions to grow in this category
Functional drink water

Nestlé’s Board of Directors has approved a new strategic direction for its waters business. The company will sharpen its focus on ts premium mineral water brands and invest in differentiated healthy hydration, such as functional water products. The company also confirmed its intent to explore strategic acquisitions to grow in this category.

Reviewing the new strategy, the Swiss food giant concluded that its regional spring water brands, purified water business and beverage delivery service at its Nestlé Waters North America unit lie outside this focus. As a result, the company has decided to explore strategic options, including a potential sale, for the majority of the Nestlé Waters business in the US and Canada, excluding its international brands.

This review is expected to be completed by early-2021.

The Nestlé Waters business in North America, excluding international brands, had sales of around CHF 3.4 billion in 2019 ($3.62 billion).  

Nestlé has made these announcements while pledging to make its entire global water portfolio carbon neutral and replenish associated watersheds by 2025.

Chief executive Mark Schneider said the creation of a more focused business enables the company 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,” he explained.

Sustainability pledge

The company’s new sustainability commitments across the waters business build on existing efforts to reach ambitious milestones across the category.

Nestlé outlined key driving action include:

  • Prioritising international brands Perrier, S.Pellegrino and Acqua Panna to achieve carbon neutrality by 2022.
  • Support the environmental sustainability of watersheds by replenishing 100% of the water it uses. 
  • Commitment to halve the use of virgin plastic by using more recycled PET and supporting the roll-out of alternative delivery systems.

The expanded sustainability actions include international and regional brands, and the direct-to-consumer and office beverage delivery service ReadyRefresh by Nestlé, and the Nestlé Pure Life brand.

This strategy will see Nestlé strengthen its premium mineral water brands around the world and invest in differentiated products under the Nestlé Pure Life brand, such as functional water with health-enhancing ingredients.

Nestlé reported its Waters business recorded global sales of CHF 7.8 billion in 2019 ($8.3 million). 

The portfolio encompasses 48 water brands and one tea brand on five continents, including internationally positioned brands such as Perrier, S.Pellegrino and Acqua Panna, as well as regional premium brands like Erikli in Turkey, Sohat in Lebanon and Buxton in the UK.

Schneider said 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.”