Scandal on the Mineral Water Square: famous brands, accused of treating water as a contaminated

An investigation of the French press could cause major changes for bottled water suppliers, warns analysts. Basically, the investigation revealed that several brands of mineral water, including crystallines, produced by Sources Alma, and Vittel, Hépar, Contrex, Perier from the range owned by Nestlé were treated with ultraviolet or microfiltrate, a process commonly encountered in preparation for potentially contaminated water.

The scandal of mineral waters shakes the European market. Photo archive

One third of the types of French mineral water would be involved. Methods are used for water of “tap“But contravenes the European regulations for mineral water, which should be untreated, mirroring the structure and purity of the source, warns the XTB analysts.

The spring of Vergeze, France, is known and used in Roman times, but the water there began to be bottled by Dr. Louis Perrier in 1898. The mineral water brand that bears his name, which became famous, was developed internationally at the beginning of the last century, and is in the Nestle portfolio.

A sentence in the process that will determine whether in its case the name of natural mineral water can be used in its case, the following months is expected, the XTB Claudiu Cazacu analyst. According to him, the issue is not related to public health, but the use of names that involve expectations from consumers, which have in mind a product obtained naturally, not treated or filtered as in the case of the network.

Authorities change rules for mineral water industry

According to Le Monde information, the mineral water industry, which contributes with 1 billion euros to exports and has over 38,000 jobs, has been considered strategic in France. Thus, the authorities reformulated the rules and allowed a certain degree of micro-filtration. After the press disclosures, the Government asked the European Commission to establish to what level the micro-filtering is acceptable. Current rules prohibit filtration to remove microflora or reduce biological contamination. In July, after a request for the local prefecture, Nestle announced the replacement of the 0.2 micron filtration system with a 0.45 microns, Claudiu Cazacu shows.

The thirst for mineral water meets the changes in recent years, effects of climatic transformations. An official hydrology report from the department where the springs used by Perrier has recommended to cease using the name of “natural mineral water”. After 5 years of drought, including deeper aquifers begin to be affected, in an area of plain with intense agricultural activity, which means an increasing risk of contaminations with fertilizers or biological residues, the more concentrated the lower reserves, explains Claudiu Cazacu.

How does the scholarships react to these challenges

Nestle, the Swiss giant, lost on the Zurich Stock Exchange this year. Organic sales increased by 2.9% in the first half of the year, but total sales decreased by 1.8% to 44.2 billion francs, partly as a result of the powerful Franc. The company is facing an increase in prices of raw materials compared to previous years, including those in cocoa and coffee, while consumers are attentive to the expenses and private brands of the retailers. Its profit margins are under pressure.

On the American market, in order to maintain the participation quotas, the company absorbed from the effects of increasing customs duties. The division of vitamins, minerals and supplements is in a restructuring process, and some brands could be sold due to weak performance.

The problems of the Nestle Water Division, which includes the mineral water brands in France, are added to the difficulties that the management team already under pressure, after the change of management from last year. Sales of 3.5 billion francs of the segment represent 4% of the company's turnover.

Unlike Nestle, the titles of the competitor Danone advanced by 10.4% this year. The company that owns the brands Evian and Volvic, produced in the Alps and in the French region Aurgne, had its part of controversies in the past, from studies that have detected microplastic to the presence of a pesticide, below the legal limit, but unexpected in the mineral water obtained from a mountain area considered untouched by chemicals.

Protests in France and Spain

Local communities and farmers in Auvergne have sever Volvic for exhausting water reserves. The dissatisfaction with the transport of remote water was manifested in regions of Spain, after devastating floods, when the locals were forced to buy bottled bottles from sources in their own regions, adds the analyst.

The tendency of the protests could be emphasized in the following years, given that the drought episodes have increased in frequency, and business from agriculture or fish farming. The Danone Water Division had sales of almost 5 billion euros last year, exceeding 17.8% of the company's business. Although it has performed well recently, aided by growing sales to China, in the distant future Danone, with a higher share of the turnover provided by the mineral water segment than Nestle, is more vulnerable to possible limitations of production volumes as a result of resource pressure.

“A rethinking of public policies, economic incentives and perceived value of primary resources, especially water, could bring major changes for bottled water suppliers. In the future. Long -term investors will have to consider pressures and vulnerabilities for bottled water production segments. Changing labels and lowering products that really offer “natural mineral water” could be just one of the effects, within a broader trend of adaptation and conservation of essential resources.“Adds Claudiu Cazacu, a strategy consultant within XTB Romania.