- Nestlé said Tuesday that it was buying the brand of alkaline water Essentia for an undisclosed price.
- It is the latest step in Nestlé’s review of its global bottled water business.
- “Functional waters” that promote health benefits are increasingly attractive to investors and founders.
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It comes with the old and the new in one of the biggest bottled water businesses.
Nestlé is paying an undisclosed amount by the manufacturer of bottled alkaline water Essentia, adding the brand to its line, which includes Perrier, S. Pellegrino and Acqua Panna. Essentia’s sales in 2020 totaled $ 192 million, Nestlé said on Friday when announcing the deal.
Last month, Nestlé said it would sell some of its low-priced mineral water brands in North America, including Poland Spring and Pure Life, to One Rock Capital Partners and Metropoulos & Co. for $ 4.3 billion.
Essentia’s business adds another brand to Nestlé’s luxury water collection, which tends to be more profitable for the company. CNBC reported in 2018 that Essentia was looking for a buyer among companies like Nestlé, PepsiCo, AB InBev and Danone. The agency added that a sale could yield $ 500 million.
The brand claims that its ionization process provides better hydration than ordinary water – a characteristic that places it in the “functional water” category of the beverage industry. “Essentia gives us an immediate strong presence in the high-growth functional water segment and supports our efforts to capture opportunities with emerging consumption trends, such as healthy hydration,” said Steve Presley, CEO of Nestlé USA, in a statement.
Capitalizing on these trends has been Nestlé’s focus for the past year: in June, the Swiss consumer giant launched a review of its $ 3.4 billion bottled water business, saying it wanted to focus on fast-growing brands and, later, sell more lower-market brands, such as Poland Spring.
“The basic water business is an attractive category,” Presley said at an industry conference in September, after Nestlé announced the review. But he added that the company decided “a much sharper focus on premium space”, with functional waters “a much more attractive space from a structural point of view”.
Bottled water sales increased 5.2% to $ 34.6 billion in 2019, two years after beverage sales surpassed sugary soft drinks to become the largest beverage category in the U.S., according to Beverage Marketing Corp . same rate: products, including alkaline water, waters with added nutrients and other functional waters, are all growing at faster rates than all bottled waters, reported the commercial publication Beverage Industry, citing data from data provider Spins.
There are still beginners vying for market share as well. Flow Water, which has celebrity sponsors, including Post Malone and Shawn Mendes, recently hired former Nestlé Waters CEO Maurizio Patarnello to be its new chief executive. The brand, which manufactures mineral waters with different flavors, in addition to versions with health-oriented ingredients, such as collagen, plans to go public in the spring.