Nestlé: Divesting Perrier?

Abstract

The case describes Nestle and Nestle Waters' social conflict with trade unions at the Perrier plant in France in 2005 and its consequences for the future of the brand within Nestle Waters' portfolio. The performance of Perrier, one of Nestle Waters' strongest international brands is problematic. Perrier sales grow at less than the overall growth rate for Nestle Waters. Its position in the US and European markets, the largest bottled water markets, continues to be strong, but its productivity remained low, it was barely making any profit, and the restructuring of the Perrier production remains difficult because of the opposition of strong trade unions, restrictive French laws, and governmental intervention. In February 2006, Nestle and Nestle Waters faced several difficult questions about the future of Perrier: (1) does Perrier still fit within Nestle Waters' brand portfolio? (2) does Perrier contribute to Nestle Waters' brand portfolio? (3) should Nestle divest or relocalise Perrier? (4) would this divestment or relocalisation affect Nestle's image and reputation in France or Globally? (5) if Nestle Waters decides to sell Perrier, to which company should it be offered? Danone, Coca-Cola, PepsiCo, a private financial group? and (6) what would be the risks of each choice?