Danone continues water cooler expansion

- Last updated on GMT

Related tags: United kingdom, Canada, Danone

Already the world's leading water cooler supplier, France's Danone
has further strengthened its business with the acquistion of the
Canadian firm Sparkling Spring, giving it strong positions in the
UK and the Netherlands as well as Canada and parts of the US.

Danone, the diversified French group which operates in the dairy, biscuits and bottled water markets, has further extended its presence in the fast-growing water cooler sector with the purchase of Sparkling Spring Water Holdings.

The Canadian company is active in the home and office delivery (HOD) segment in the UK, Canada and the US, and just last week acquired​ the Sun Spring business in the Netherlands.

The Sparkling Spring Group has developed leading positions in Canada (where it is the number two player), the United Kingdom (number three) and in the US (number one in the Pacific North-West). It is also now the number three player in the Dutch market following the Sun Spring deal.

The business has annual revenues in excess of €100 million and owns 210,000 water coolers, making it one of the five largest HOD players in the world and one of the most profitable businesses in the HOD market.

Danone is already the number one player in the Canadian HOD sector, but the Sparkling Spring deal will allow it move outside of its traditional strongholds in Ontario and Quebec. Sparkling Spring has market leading positions in the Maritime provinces along the Atlantic coast, in Alberta and in British Columbia.

In the US, Danone will now become the number one HOD supplier in the Pacific North-West region, reinforcing its existing presence in Washington State and giving it a first foothold in Oregon. In the United Kingdom, where Danone recently entered the HOD marketplace with the acquisition​ of French-based Chateaud'eau, the company will now have national coverage and become the leading supplier in Scotland.

The Sun Spring deal is Danone's second in Canada in as many months - in October it acquired​ Patrimoine des Eaux du Quebec - and shows the French group's determination to carve a substantial niche for itself in the global water cooler sector. The Chateaud'eau business also gave it strong market shares in France, Spain and Italy, and Danone now claims to be the leading HOD operator in the world.

But as with the bottled water market, Danone faces strong opposition from Switzerland's Nestle. Just as Danone's Evian and Volvic brands compete with Nestle's Perrier and Vittel brands, the French company's HOD operations are challenged by Nestle's own burgeoning business, which recently became a major player in the French market with the purchase​ of the Saphir operations.

The rivalry is not unexpected, given the potential for growth in the HOD market worldwide. Bottled water is already one of the most dynamic sectors in the soft drink industry, and while there is still room for growth in many markets, some countries such as France, Germany and Italy are more mature.

But HOD sales account for just a fraction of total water turnover in these - and other - countries, offering the major players further opportunities to build their water businesses and push their leading brands. So the pace of growth in this sector is likely to continue in the months to come.

Related topics: Danone, Soft Drinks & Water

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