Nestle sees growth, innovation: U.S. water exec

  @ibtimes on August 21 2007 6:50 PM

Nestle SA, the world's largest food company, expects U.S. volume growth of its bottled water brands to improve in the next few months as comparisons with last year become easier, an executive said on Tuesday.

Kim Jeffery, chief executive of Nestle Waters North America, said in an interview that sales of bottled water in the United States have shown signs of slowing, due to higher prices and cool summer weather across much of the country.

This is the first time in seven years that pricing is not going down, Jeffery said, due in part to the high cost of raw materials and the lack of a price war like the one last year between PepsiCo Inc's Aquafina, Coca-Cola Co's Dasani, and Nestle brands like Poland Spring, Nestle Pure Life, and Deer Park.

There was a lot of competitive fire in the industry last year that is really not there this year, Jeffery said.

Sales of bottled water grew 11 percent in the first half of 2007, according to industry newsletter Beverage Digest, about half as fast as during the year-ago period. Beverage Digest counts enhanced water drinks like Coke's vitaminwater and Pepsi's SoBe Life Water as bottled waters.

We start to go against some very easy comparisons in the last few months of the year, Jeffery said, noting that a lack of hurricanes last year failed to spur disaster-related demand for bottled water.

So I expect that volume is going to pick up a little bit in the next couple of months, he said, on the same day that Hurricane Dean slammed into Mexico's Caribbean coast, flooding streets, toppling trees and blowing roofs off houses. There were no immediate reports of any deaths.

NEW DRINKS

Jeffery said the company, which also makes Arrowhead, Ice Mountain and Ozarka, is working on new brand line extensions.

You can expect us to be extending these brands in some fashion in the coming years, Jeffery said. Most likely in 2009. Jeffery declined to say exactly what the new drinks would be, but he noted that the cutting edge in bottled water is drinks with functionality, such as added vitamins or minerals.

Bottled water drinks enhanced with functional ingredients are the latest craze in the beverage industry, especially since Coke paid $4.1 billion to acquire Glaceau, maker of vitaminwater, in June.

Aside from SoBe Life Water, PepsiCo has Propel Fitness Water. In June an executive from Cadbury Schweppes PLC told Reuters the North American drinks unit was working to develop an enhanced water product but declined to elaborate.

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