In a conference call presentation on bottled water hosted by Bernstein Research analyst Andrew Wood, the CEO of Nestle Waters North America, Kim Jeffery, revealed growth numbers suggesting that the category is in trouble.
Latest growth figures
Jeffery pointed to data for the first half of the year from Neilson and Beverage Digest showing an 11.8 percent decline in enhanced water sales compared to last year.
He went further suggesting that the launch of the 25-calorie drink Vitamin Water 10 from Glaceau actually helped cover up the extent of the problem with enhanced waters.
What Jeffery called water ‘plus’products have been hailed as having big potential, but the Nestle executive said they “lack the benefits of water that people want”.
He said: “As soon as you start adding things to water, it’s not water any more.”
Bottled water defense
The comments on enhanced waters were made in the context of a defense of ordinary bottled water.
The products have come under fire from consumer groups like Corporate Accountability International (CAO), who attack the environmental credentials of bottled water through its “Think Outside the Bottle” campaign. This has led some commentators to question the future of the entire category.
Conference call host Andrew Wood said one of the three most asked questions he hears from Nestle investors is the following:
“Is bottled water now a fundamentally low growth or negative growth category?”
Wood predicted that the industry would be able to adapt and innovate its way back to growth but Jeffery actually denied that there is a growth problem with bottled water.
Jeffery said growth in the bottled water market should be looked at in the context of the beverage market as a whole.
Pointing to the Neilson and Beverage Digest data mentioned earlier, he said that bottled water with 0.5 percent growth in the first half of 2009 is outperforming other beverage categories. Juice drinks, sports drinks, and enhanced water all showed double digit drops.
Jeffery said that “water is a winner” and is poised to grow further, especially as the tap infrastructure continues to decline in quality.