Nestle considers partially selling its North American water business including Pure Life

Nestle (ETR: NESR) said on Thursday that it is considering partially sell its North American water business. As the Swiss company commits to focusing on better-performing brands, the fate of its popular Pure Life brand is now in the balance.  

Shares of the company were reported 1% down on Thursday. At £87.07 per share, Nestle is roughly 2.5% down year to date in the stock market after recovering from a low of £75.71 per share in March. Learn more about the financial analysis of a company.

Nestle Waters grew only 0.2% in 2019

The review, Nestle added, will also include other prominent brands like Poland Spring that generated £2.87 billion worth of sales last year that represented roughly 50% of the company’s total annual revenue from water business.

Nestle Waters has not been a profitable business for the Swiss multinational company in recent years with an annual growth of only 0.2% in 2019. Consequently, Nestle started exploring its sale late last year. The Vevey-headquartered company had announced relief measures for its employees amidst the ongoing Coronavirus pandemic in March.

Known globally for Nescafe Coffee and KitKat chocolate bars, the company expressed confidence on Thursday that its strategic review will be completed by early 2021. In the league of carbonated and flavoured waters, Nestle is lagging behind its major competitors like LaCroix, Coca-Cola, and PepsiCo in the United States.

According to CEO Mark Schneider, however, Nestle will not entirely be withdrawing from the U.S. water market. The company will continue to bet on its international brands like Acqua Panna, S.Pellegrino, and Perrier that are quite successful in the U.S.

Nestle records robust growth in quarterly sales

Owing to the margin opportunities and potential for growth at large, Schneider added, the water market remains an attractive segment for Nestle in the country. Following excessive criticism from environmentalists, Nestle pledged that its entire water portfolio will be carbon neutral by the year 2025.

The food and drinks giant has been committed to pulling out of underperforming brands in various product categories. In April, Nestle recorded robust growth in its quarterly sales as COVID-19 pushed its customers into stockpiling popular brands.

Nestle performed fairly upbeat in the stock market last year with an annual gain of more than 25%. At the time of writing, it is valued at £259.11 billion and has a price to earnings ratio of 24.07.