• The Financial District


Nestlé might soon dump some of its local food and water brands in China, telling Laura He of CNN Business on the night of July 21, 2020 that it is exploring options for its bottled water business in the country, "including a potential sale."

The Swiss firm sells some of its upscale international brands in China, including Perrier, Acqua Panna, and San Pellegrino. But the company's best-selling water brands in China are a locally sourced version of Nestlé Pure Life and Da Shan Yunnan Spring. Competition is fierce: Domestic brands such as Nongfu Spring and Yibao dominate the water market. Nestlé's share was less than 2% in 2019, according to a research report by Chinese brokerage firm Guoyuan Securities.

A sale of Nestlé's water business in China would fit with an overhaul the company announced last month, when it said it wanted to focus on its premium brands, including Perrier and San Pellegrino. The company said at the time that it would potentially sell the majority of its North American water brands. Nestlé has also been weighing a sale of its Yinlu Foods division in China. The unit makes peanut milk and ready-to-eat canned rice porridge. Bloomberg reported last week that Nestlé had narrowed its list of bidders for Yinlu Foods, and could sell it for $400 million. The company said Tuesday that its "strategic review" of Yinlu is ongoing.

Even if Nestlé sells some of its local brands in China, the company will retain a huge presence there. It has more than 30 production facilities in the country, employing over 40,000 people. Its products in China range from coffee and infant formula to candy. The market is also Nestlé's second largest, behind the United States. The Greater China region generated $7.4 billion in sales last year, nearly 8% of its global sales. Because of the coronavirus pandemic, though, the company posted a double-digit decline in sales in the first quarter of 2020 as China locked down to stop the spread of the virus.

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