Shortly after offloading its North American water business last month, Nestlé is back in the water game.
The Swiss conglomerate announced today its acquisition of premium water brand Essentia for an undisclosed fee.
“With the addition of Essentia we continue to transform and best position our water business for long-term profitable growth here in the U.S. and globally,” said Steve Presley, chairman and CEO of Nestlé USA, in a press release. “We are excited to welcome the Essentia team to the Nestlé family as we expand our premium water portfolio. Essentia gives us an immediate strong presence in the high-growth, functional water segment and supports our efforts to capture opportunities with emerging consumer trends such as healthy hydration.”
Founded in 1998, Bothell, Washington-based Essentia has emerged as a leader in the premium water space over the last decade through nationwide DSD coverage. The brand is currently the top selling bottled water in the natural channel, with $192 million in dollar sales in 2020.
According to data from IRI, Essentia reported a 17.4% year-over-year increase in MULO (plus C-store) dollar sales through January 14, 2021.
Last month, Nestlé announced an agreement with private equity firm One Rock Capital and family owned investment firm Metropoulos & Co. for the sale of its Nestlé Waters North America (NWNA) division for $4.3 billion.
The deal includes NWNA’s complete portfolio of bottled water brands — Poland Spring, Deer Park, Ozarka, Ice Mountain, Zephyrhills and Arrowhead — as well as the Nestlé Pure Life and Nestlé Splash brands and the delivery service ReadyRefresh.
Essentia will slot in alongside Perrier, San Pellegrino and Acqua Panna Nestlé USA’s water portfolio. The company is unique in that it is not source dependent.
UPDATE:
In an email to BevNET, Essentia CEO Scott Miller called the acquisition “an incredible opportunity for Essentia to accelerate its already high growth and momentum as a brand on the rise.” He added, “I look forward to the many exciting possibilities this partnership opens up for Essentia.”
A spokesperson for Nestle said that the deal was signed and closed today, and that all employees will join Nestle as part of the purchase.
In offloading its mass-market water brands and buying Essentia, Nestle has narrowed its focus on the premium still water segment, valued at $22 billion and 10% of global category share for bottled water, according to Nielsen data. At the time of NWNA’s sale in February, Nestlé CEO Mark Schneider said the sale would enable the Swiss conglomerate to “create a more focused business around our international premium brands, local natural mineral waters and high-quality healthy hydration products” as it continues to position its global water business for long-term profitable growth.
The company made previous attempts to create premium sub-lines within existing brands, such as with Poland Spring Origin in 2019, but with limited success. Unlike Nestle’s other premium still water Acqua Panna, which has a larger presence in on-premise and hospitality accounts, Essentia has virtually no presence outside of the U.S and is not source dependent.
For Essentia, the sale closes a nearly 23-year run as an independent company, though it had been working with investment bank Credit Suisse on exploring a potential sale since at least 2017. Reports at the time cited Essentia as seeking a valuation north of $500 million.
In the meantime, the industry’s major brands have restructured their respective premium water rosters through various means; Keurig Dr Pepper acquired CORE in 2018 for $525 million, and PepsiCo launched LIFE WTR in 2016. Elsewhere, Coca-Cola added premium sparkling water brand Topo Chico for $220 million in 2017.