China's Unsafe Water Is Nestlé's Opportunity

A television ad in China for Nestlé’s Pure Life brand of bottled water shows children making unhappy faces after tasting water. One child pours his glass into a fish tank instead of drinking it; his face lights up when his mother offers Pure Life instead. Water quality is a big concern for Chinese consumers. They’re turning to bottled water as a safer alternative, and that’s bolstering Nestlé’s bottled-water sales. “You don’t dare drink the tap water in China,” says Hope Lee, a Euromonitor International analyst in London. Sales are also up because “so many people are moving from rural areas to work in the cities,” where bottled water is more common, she says.

The Swiss company, which Euromonitor says is the world’s No. 3 producer of bottled water, has seen growth in its business in parts of the West slow because budget-conscious shoppers are turning to tap water and environment-conscious consumers are concerned about the growing number of plastic bottles entering the waste stream. In China, where industrial and agricultural expansion have polluted water supplies, environmental concerns of a different kind are driving Nestlé’s growth. Sales of bottled water in the country will climb to $16 billion by 2017, up from $9 billion in 2012 and $1 billion in 2000, according to Euromonitor. The market in Western Europe will remain flat at $21 billion, while North America will increase 18 percent by 2017, to $26 billion, Euromonitor predicts.