Uncertainty Surrounding Danone's Bottled Water Operations

Ildiko Szalai, Packed Foods Industry Analyst at Euromonitor, explains that despite the slow recovery of bottled water sales in developed markets, Danone's bottled water division is rumoured to be on the negotiating table again. However, Danone has strongly denied all speculations over its intention to divest its water division. Szalai explains that even though the bottled water sector is the core of Danone's portfolio, it has been the weakest performer, especially during the recession.

In recent years, Danone has restructured to focus more on the following sectors:

• fresh dairy
• baby nutrition

and  recently exited it's Wahaha Joint Venture in China, which reduced its overall bottled water market size.

Danone's two  main water brands are Evian and Volvic, which were responsible for 2.9 billion dollars in sales in 2009.

Szalai then explores the possible scenarios of the divestment of Danone's water industry:

• Handing it's water industry to an independently listed and managed company, in a similar fashion to Cadbury/Schweppes in 2008
• The independent sales of emerging market brands
•  Selling to leading Japanese players such as Suntory or Kirin

Again, Danone has strongly denied all speculations over its intention to divest its water division.

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