Danone and Suntory a HOD of the game

Related tags Bottled water

Danone and Suntory are to combine their US home and office delivery
bottled water businesses, a move which will make them the leading
global players and which lays down a challenge to European rival
Nestlé.

Danone's entry into the home and office delivery (HOD) market for bottled water has been rapid and spectacular, with the French company taking leading positions in a number of key markets through strategic acquisitions. But the group behind Evian and Volvic has now gone one step further, becoming the leading player in the massive US market via an agreement with Japan's Suntory group.

The two companies have agreed to combine their North American HOD businesses to form a company - as yet unnamed - which they claim will be the largest player in the US market and the world's biggest HOD company with revenues in excess of $800 million (€730m).

The company will be controlled jointly by the two companies, and will combine Suntory Water Group​'s regional brands Belmont Springs, Crystal Springs, Kentwood Springs, Hinckley Springs and Sierra Springs with Danone​'s Sparkling Spring business in the US and Canada.

Franck Riboud, Danone chairman and chief executive, said that the agreement would create significant financial benefits, including sales, operating and cost synergies beyond what either company could achieve on its own - an important factor for the French group as it seeks to further increase its presence in this highly lucrative and underdeveloped sector.

In only a few years, Danone has acquired leading positions in the HOD market across the world. It claims to be the number one operator in Canada, China, Indonesia, Turkey and Argentina, as well as being a major player in Mexico, the world's leading market in volume. In April, it reached an agreement with Switzerland's Eden Springs to create Europe's number two HOD company.

Suntory Water Group is a subsidiary of Suntory, Japan's leading producer of alcoholic and non-alcoholic beverages. SWG is the fifth largest bottled water company in the US and since its creation in 1985 it has expanded rapidly though the addition of numerous regional operators.

Only Nestlé can rival Danone in terms of the rapid expansion into the HOD sector. The Swiss group, which owns the Perrier and Vittel mineral water brands, has also been snapping up smaller operators in recent months, adding brands such as Clear Water in Russia and Powwow in Europe to its HOD portfolio of more than 75 brands.

Danone's push into the US market through the Suntory joint venture will be a major challenge for Nestlé, which is already well established in that market. Nestlé Waters estimates that the HOD market accounts for 30 per cent of all bottled water sales in the US, and with growth of around 25-30 per cent each year, it is a market with huge potential for profit growth.

Related topics Manufacturers Danone

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