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June 12, 2020

Nestlé looks at selling Poland Spring, other North American water brands

File photo / Lori Valigra Poland Spring is one of several North American brands being sold by Nestlé in a deal announced on Wednesday.

Swiss food conglomerate Nestlé SA said Thursday that it's exploring the potential sale of most of its North American mass-market bottled water business, including its Maine-based Poland Spring brand.

The world's largest food company, the Vevey, Switzerland-based owner said it plans to sharpen its focus on S.Pellegrino, its iconic international brand, and leading premium mineral water brands. Nestlé  is also looking to invest in the "healthy hydration" niche, such as functional water products, via acquisitions. 

The company is targeting early next year to complete its review of Nestlé Waters North America, which had sales of around 3.4 billion Swiss francs ($3.59 billion) in 2019.

Poland Spring, owned by Stamford, Conn.-based Nestlé Waters North America Inc., sources its water from 10 locations primarily in western Maine. Poland Spring operates bottling plants in Poland, Hollis and Kingfield, and employs more than 800 people in the state.

While the company does not break down sales by brand, a December 2017 report showed an economic impact in Maine of more than $390 million the year before, including $201 million directly.

Besides Poland Spring, the portfolio includes the Deer Park, Ozark, Ice Mountain, Zephyrhills and Arrowhead brands, as well as the direct-to-consumer and office beverage delivery service ReadyRefresh by Nestlé, and the Nestlé Pure Life brand. A sale could fetch an estimated $7 billion.

Nestlé also pledged to make its entire global water portfolio carbon-neutral and replenish associated watersheds by 2025.

"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," said Nestle CEO Mark Schneider in a statement.

"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."

A spokesman for Nestlé declined to say whether the company had enlisted a financial or legal advisor to help explore strategic options or whether it had received any expressions of interest, telling Mainebiz it does not divulge that kind of information.

According to Bloomberg News, possible buyers for the company's North American bottled-water business include Coca-Cola Co. and PespiCo Inc., which lag Nestlé's North American 20% market share at 10% and 7.8%, respectively. Bloomberg also reported that Nestlé's North American bottled-water business last year had its worst performance in a decade.

Nestlé made the announcement after European stock markets closed on Thursday. 

'Fully committed' to international brands

Nestlé said it remains fully committed to growing its iconic International brands in the U.S. and globally, including Perrier, S.Pellegrino and Acqua Panna.

The company also said it will further build its leading 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's global Waters sales amounted to 7.8 billion Swiss francs ($8.24 billion) in 2019. 

The portfolio consists of 48 water brands and one tea brand on five continents, including internationally renowned 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 United Kingdom.

Nestlé shares are traded on the Zurich-based Swiss Stock Exchange under the symbol NESN.

By mid-afternoon local time Friday, shares were down 0.27% in Zurich at 103.78 Swiss francs, for a market value of around 308.85 billion Swiss francs ($326.13 billion).

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