- Nestlé said on Tuesday it was buying the alkaline watermark Essentia at an unknown price.
- This is the latest step in the refurbishment of Nestlé’s global bottled water business.
- “Functional waters” that offer health benefits are becoming increasingly attractive to investors and founders.
- Visit the Insider Business Department for more stories.
It goes out with the old and inside with the new at one of the largest bottled water companies.
Nestlé pays an unknown amount for the bottled alkaline water manufacturer Essentia and adds the brand to its range, which includes Perrier, S. Pellegrino and Acqua Panna. Essentia’s sales in 2020 amounted to $ 192 million, Nestlé said on Friday when it announced the agreement.
Last month, Nestlé announced that it would sell some of its cheaper spring water resources in North America, including Poland Spring and Pure Life, to One Rock Capital Partners and Metropoulos & Co for $ 4.3 billion.
The Essentia agreement adds another brand to Nestlé’s collection of high-quality waters, which tend to be more profitable for the company. CNBC reported in 2018 that Essentia was looking for a buyer under Nestlé, PepsiCo, AB InBev and Danone. The outlet added that a sale could raise $ 500 million.
According to the brand, the ionization process provides better hydration than ordinary water – a feature that places it in the category of “functional water” of the beverage industry. “Essentia gives us an immediate strong presence in the growing, functional water segment and supports our efforts to seize opportunities with emerging consumer trends such as healthy hydration,” Nestlé CEO Steve Presley said in a statement.
The use of these trends has been a focal point for Nestlé over the past year: In June, the Swiss consumer giant launched a review of its $ 3.4 billion bottled water business, saying it wants to focus on fast-growing brands and later its more downward-selling brands such as Poland Spring.
“The basic water industry is an attractive category,” Presley said at a conference in September after Nestlé announced the review. But he added that the company decided on a “much more sharpened focus on the premium space”, with functional waters “a much more structurally attractive space.”
Bottled water sales rose 5.2% in 2019 to $ 34.6 billion, two years after sales of the beverage sugar soda surpassed becoming the largest beverage category in the U.S., according to Beverage Marketing Corp. But not all types of water grow at the same rate: products, including alkaline water, water with added nutrients and other functional waters, are growing faster than all bottled water, the trade publication Beverage Industry reported, citing figures from data provider Spins .
There are also still forwards competing for market share. Flow Water, which includes celebrity supporters, including Post Malone and Shawn Mendes, recently named former Nestlé Waters CEO Maurizio Patarnello to be its new CEO. The brand, which makes mineral water with different flavors, as well as versions with health ingredients like collagen, plans to become famous in the spring.