Dusseldorf Mineral water from Vittel will soon disappear from the market in Germany and Austria. Nestlé will completely stop doing business with the brand in both countries before the summer, the group confirmed to the Handelsblatt. This also applies to the Contrex brand. The “Lebensmittelzeitung” reported first.
The reason for the step is Nestlé’s global focus on premium water and water with additional benefits. In Germany, Nestlé will in future focus on doing business with the San Pellegrino and Acqua Panna brands.
Vittel’s withdrawal comes as no surprise. Nestlé Waters had already stopped supplying Lidl in November. The discounter was previously the most important buyer of Vittel mineral water in Germany. The contract was not renewed. Instead, Lidl is replacing Vittel with Danone Waters’ rival brand Volvic. The water is also sold in non-returnable PET bottles.
The German Environmental Aid (DUH) criticized this step as a disservice to climate and resource protection: “The discounter should have used the delisting of Vittel to switch to climate-friendly reusable bottles,” demanded the Deputy DUH Federal Managing Director Barbara Metz. The newly listed Volvic mineral water is transported 400 kilometers further to Germany than Vittel. There were more than 180 wells in Germany, most of which bottled their water in returnable form and sold it regionally.
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Criticism of plastic bottles and use of sources
Conservationists have criticized the water business of the world’s largest consumer goods manufacturer for decades. The criticism is not only directed at disposable PET bottles made of plastic, but also at the excessive use of the sources. However, the criticism was not the reason for the withdrawal, Nestlé explained.
The water comes from the village of Vittel in the French Vosges. The groundwater level there has been falling for years, which is why Nestlé has already reduced the amount of water withdrawn. The Swiss group extracts around a quarter of the pumped groundwater in Vittel. Plans to supply Vittel residents with water via pipeline were abandoned after severe criticism.
Vittel’s withdrawal from Germany and Austria fits into Nestlé’s global water strategy. The group is withdrawing more and more from the bulk business with mineral water. After all, the division has the weakest margins in the group. In the first half of 2021, the operating profit margin was 8.9 percent, compared to 17.4 percent for the entire group. Water contributed just five percent to the turnover of the Swiss.
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In 2020, Nestlé had already divested its water business in China. In North America, the regional spring water brands, purified bottled water business and beverage delivery services were sold for $4.3 billion at the end of March 2021. At the same time, Nestlé acquired Essentia Water, a US premium brand for functional water products.
The acquisition is part of the new strategy. “Nestlé is realigning the global water business and increasing the focus on international premium and mineral water brands as well as on products for healthy fluid intake,” write the Swiss. This also includes entering the soda maker business with Refill plus. Because tap water is becoming more and more popular.
Germans drink less mineral water
In Germany, the consumption of mineral water has been declining for years. According to the Association of German Mineral Fountains, per capita consumption fell from almost 140 to 132 liters in 2020. Sales fell by 5.1 percent to less than ten billion liters. Still mineral water like Vittel only had a market share of 19.5 percent in 2020 anyway. The Germans love it fizzy.
Nestlé let its water division in this country dry up more and more. At the turn of the millennium, the group was still the leader in terms of sales for branded water. In 2020, Nestlé Waters was only ranked eleventh in terms of sales among all German mineral springs. Soft drinks were also recorded. Sales fell by 4.6 percent to 403 million liters, estimates the industry service “Beverage Info”.
“Vittel used to be a strong brand,” says an industry insider. “The mistake was that Vittel relied too much on mass discount business. There, the distance to inexpensive entry-level brands is only small. The brand became interchangeable.”
Nestlé Waters in Germany withdrew a few years ago from the reusable business, which is considered to be more complicated and has lower margins. The blue sources such as Fürst Bismarck Quelle, Rietenauer, Harzer Grauhof and Rhenser were sold. The largest German mineral spring is today the Mitteldeutsche Erfrischungsinstrumente GmbH, a subsidiary of the Schwarz Group (Lidl, Kaufland).
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