Nestlé Waters, the Swiss group which owns the Perrier and Vittel mineral water brands, among others, has reported a 9.6 per cent increase in organic sales for 2002, a performance which it claimed allowed it to extend its leadership of the market.
Sales for 2002 reached SF7.7 billion (€5.1bn), boosted by seven acquisitions during the year, which added a further SF135 million to turnover. The good performance was continued into the first quarter of the current year with growth of 10.9 per cent lifted by two acquisitions in the home and office delivery (HOD) sector.
In real terms, sales were up 4.1 per cent, impacted by currency exchange rates during the period. EBITDA was ahead 11.9 per cent to SF696 million.
With a global market share of 17 per cent in value, Nestlé Waters claims to be the leading bottled water supplier. Most regions contributed to overall growth in 2002, despite an often difficult market context.
There was weak growth from premium brands in Europe, but this was offset by the development of low-priced brands, while in North America, sales were impacted by the arrival in force of the two main cola groups in the bottled water business - a factor which will surely impact sales in Europe in the future.
In South America, the company performed well despite the highly unfavourable economic situation, and the markets in Asia and Africa/Middle East were characterised by high price competition.
In addition, each type of brand (Nestlé, international, local) contributed positively to Nestlé Waters' performance. Accounting for just 2.5 per cent of overall sales, Nestlé brands showed the strongest growth, currently posting sales close to 700 million litres in over 20 countries.
The company is pursuing different growth strategies for different regions. In Europe and North America, it is focusing on strong brands, the HOD business and acquisitions, while in other regions, it is concentrating on building the Nestlé Pure Life brand, as well as expanding through acquisitions.
These acquisitions were mainly in the HOD sector, and took place in seven countries. By the end of the year, the company's brand portfolio totalled 77 brands, thanks to the addition of new local brands such as Saint Springs in Russia or Aqua Spring in Greece, the emergence of Acqua Panna among the international brands, three new launches of Nestlé Aquarel in Hungary, Finland and Switzerland, as well as in HOD in France, Germany and Italy, and the opening of five new Nestlé Pure Life markets (the US, Canada, Egypt, Turkey and Uzbekistan).
There were also a number of innovations in 2002, such as Perrier Fluo in France during the first quarter. Available in three flavours, Perrier Fluo surpassed sales forecasts almost immediately, the company said, giving a boost to the Perrier brand as a whole.
Like its chief European rival, Danone, Nestlé Waters has expanded significantly in the HOD market in recent months, a sector which the company said was showing annual growth of 25-30 per cent. With its experience and leading position in the US - where HOD accounts for 30 per cent of bottled water sales - Nestlé Waters has established significant positions in seven European countries in less than three years, thanks to several acquisitions.
In the small format sector, Nestlé Waters posted strong organic growth in the US in 2002. Growth reached 18.1 per cent on a comparable basis, with the company increasing its market share by 4.6 per cent.
The excellent 2002 performance has continued into the current year, the company said, with sales rising 10.9 per cent to SF1.7 billion at constant rates. The quarter also saw further developments in innovation, including a new product which is due to be launched imminently on the lightly sparkling water segment in France and in Belgium. Intended to widen consumption occasions for the brand, the drink is called Eau de Perrier.
The quarter also saw the acquisition of more HOD businesses in Europe: Powwow and Clear Water. Powwow is the European HOD leader, while Clear Water is the leader of the HOD category in Russia, giving Nestlé Waters a solid base for developing its European business.
Confident in the Nestlé Waters' business model, CEO Frits van Dijk, reaffirmed the company's objectives for 2003 objectives: "We will maintain a growth rate higher than that of the market, improve operating margins, continue to develop Nestlé brands to make them the top brands in their category in the following years, and successfully complete the integration process of the latest HOD acquisitions."