Nestlé Waters positive in US but down in Europe

10/03/05 Nestlé Waters, which accounts for almost 10% of the Nestlé Group’s consolidated sales has reported highly disparate results for 2004. Nestlé Waters reported a growth in sales greater than market growth in North America and a drop in sales in terms of value in Europe as a result of unfavourable weather conditions and negative trends in household consumption. Turnover amounted to almost 5.2 billion euros and has remained at a virtually stable level in comparison with 2003. On a like-for-like basis with a constant exchange rate, sales rose by + 0.6%. This progression takes account of internal growth of + 2.4% and a negative price effect of -1.8%.

Performances were “exceptional” in the US region, which generates almost 45% of Nestlé Waters’ sales, despite unfavourable factors such as heightened competition with the soft drinks giants, a general reduction in prices and sluggish growth in HOD activity (delivery of water in large formats to homes and offices). In 2004 Nestlé Waters achieved – on a like-for-like basis – an almost double-digit growth rate of +9.7%, clearly above the market growth, which is estimated at 7.5%. In addition, Nestlé Waters recorded a notable gain in market share.

In Europe however, Nestlé Waters saw its sales decrease by -8.4% in 2004. Traditionally a mineral water market, Europe has become a real market for bottled water, where the price factor has emerged as one of the prime consumer purchase motivations. This trend, which is reflected in the growth of low-cost and private label brands, as well as by the development of hard and soft discount distribution chains, has hit the entire industry. Nestlé Waters is currently present in 12 European countries and is aiming to introduce the European multi-site brand, Nestlé Aquarel, into these markets.

The company wrote that in other regions of the world, results were satisfactory overall. In Africa/the Middle East, Nestlé Waters maintained a double-digit growth rate of +17.7%, thanks to solid local partnerships and the development of Nestlé Pure Life. In Asia, problems in connection with parallel imports and prices, affecting our international brands in Japan, actively contributed to a drop in sales for the region of –2.2%. If Japan is excluded from calculations of performance for the region, the growth of Nestlé Waters’ sales, on a like-for-like basis, amounts to +19.2%. Finally, in Latin America, Nestlé Waters’ activities – although affected by an unfavourable global economic climate – posted encouraging double-digit growth of +14.2%, exceeding even +30% mark in certain countries.
Mr Carlo Donati, the new Chairman and CEO of Nestlé Waters commented, “It is now clear that, after establishing a strong presence in Europe and North America, we must work on consolidating our position as worldwide leader, matching it with an overall improvement in our performance in terms of both growth and profitability, in line with Nestlé’s expectations.”