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Speaker 1: Bloomberg Audio Studios, podcasts, radio news. Perier conjures a certain

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Speaker 1: image those green pear shaped glass bottles with that golden cap.

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Speaker 1: For more than a century, the brand of French mineral

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Speaker 1: water has built up a reputation.

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Speaker 2: The Champagne of table waters is how they like to

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Speaker 2: frame it.

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Speaker 1: Bloomberg's Dasha Afanasiva covers European consumer goods companies, including Nesle,

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Speaker 1: which owns Perier.

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Speaker 2: It's the kind of thing that you can find in

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Speaker 2: the most expensive hotels all over the world. I was

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Speaker 2: just in India and all the fancy hotels had these

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Speaker 2: tiny bottles of Perier. So it's really retained this prestige

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Speaker 2: in the elite status as far as mineral watersk.

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Speaker 1: But today Perier is facing several challenges. There's heightened scrutiny,

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Speaker 1: problems posed by climate change, and fallout from an investigation

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Speaker 1: by French regulators that could ding its image.

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Speaker 2: From the previous year. But it was leaked in April.

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Speaker 2: Says that there's fecal matter, there's forever chemicals, and there's pesticides,

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Speaker 2: and that includes pesticides that it was sort of ban

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Speaker 2: two decades ago.

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Speaker 1: Regulators only found trace amounts of these pollutants, But Dasha

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Speaker 1: says the report and other issues facing the brand put

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Speaker 1: it at a tricky crossroads.

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Speaker 2: So it's a really bad look. And there was never

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Speaker 2: a suggestion that the waters were unsafe to drink. It's

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Speaker 2: more a question of what do you produce and what

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Speaker 2: do you tell consumers about what it is that you're

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Speaker 2: selling them.

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Speaker 1: I'm David Gura and this is the big take from

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Speaker 1: Bloomberg News today on the show, how pollutants ended up

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Speaker 1: in a well used by one of the world's best

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Speaker 1: known brands of bottled water and Perier's reputation survived, And

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Speaker 1: is its broader business sustainable enough to weather other storms?

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Speaker 1: What is it that makes Perrier water Perrier water? What

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Speaker 1: is it about it that makes it stand out?

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Speaker 2: So it's very much about where it is sourced and

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Speaker 2: the sources in the south of France in this very

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Speaker 2: quite rural area. There's not too much going on.

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Speaker 1: That it's just outside of Rugez, a town in southern France,

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Speaker 1: not too far from the Mediterranean, with a few thousand residents.

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Speaker 2: It's just quite sleepy and quiet. And the idea is

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Speaker 2: that it allows this water to be sourced from really

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Speaker 2: Christine sources. It's supposed to be completely unspoilt.

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Speaker 1: Dasha says. Perrier keeps the exact location of each well secret,

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Speaker 1: but the water has been a draw for thousands of years.

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Speaker 2: Since fifty eight BC, you know, that's when the Romans

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Speaker 2: first built a bath, and then in the nineteenth century

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Speaker 2: Napoleon signed a decree for this water to be exploited

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Speaker 2: and for there to be a spa on the site.

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Speaker 2: English nobility come and visit and stay in the spa

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Speaker 2: and drink this water to sort of rejuvenate. It was

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Speaker 2: a wellness fad back in the nineteenth century, and eventually

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Speaker 2: someone called Sir John Harmsworth bought this site and started

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Speaker 2: bottling the water, but closed down the spa. So it's

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Speaker 2: got this incredibly rich history that sort of focuses on

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Speaker 2: this heritage of something being healthy, of rich people enjoying it,

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Speaker 2: of being its elite status.

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Speaker 1: To this day, all Perrier water must come from that

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Speaker 1: same sought after source. And because it's sold as natural

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Speaker 1: mineral water, that's what it says on the label, it's

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Speaker 1: also subject to strict regulation.

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Speaker 2: It can do some basic, very basic filtering, but it

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Speaker 2: pretty much has to come to the consumer. The actual

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Speaker 2: water as you found it. You can carbonate it, but

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Speaker 2: you're not supposed to disinfect the water in any way,

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Speaker 2: because really, what's the point of having this this heritage water,

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Speaker 2: all of these mineral properties if you're going to then

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Speaker 2: boil it.

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Speaker 1: So how did contaminants make it into Perrie's water. The

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Speaker 1: company says it has to do with the weather.

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Speaker 2: They blamed it on torrential rain that had disturbed the

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Speaker 2: balance of the different pools of water underground.

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Speaker 1: Perrier pumps its water from an aquifer more than five

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Speaker 1: hundred feet below the earth's surface, where it's already been

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Speaker 1: naturally filtered and protected from contaminants. That can affect pools

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Speaker 1: that aren't as deep. But Dasha says, intense rain can

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Speaker 1: saturate the local water system and that can cause different

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Speaker 1: pools to mix.

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Speaker 2: A shallow one can come into contact with a much

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Speaker 2: deeper one which has been protected by clay and rock,

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Speaker 2: so you're getting your water from the deeper one, but

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Speaker 2: actually it's got shallow water mixed in and that can

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Speaker 2: cause contamination.

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Speaker 1: And this isn't the first time Perrier has run into

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Speaker 1: a contamination problem.

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Speaker 2: Nineteen ninety, which is before Nessa even owned Perie. There

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Speaker 2: are traces of benzene found in the water and benzines,

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Speaker 2: a carcinogen, and the company was forced to or chose

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Speaker 2: to do one of the biggest recalls in the world

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Speaker 2: as one hundred and sixty million bottles one hundred and

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Speaker 2: twenty countries, and that really created a massive hit to

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Speaker 2: its reputation.

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Speaker 1: Decades later, Nesley was accused of using illegal filtration methods

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Speaker 1: like activated charcoal and UV filtering in Perier's production process.

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Speaker 1: Both steps are against the rules for anything labeled as

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Speaker 1: natural mineral water in France. The company settled the case,

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Speaker 1: but it was still a big hit to Perier's image.

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Speaker 2: So it got sued by Consumer Watchdog and there was

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Speaker 2: another lawsuit where it's had to pay a fine two

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Speaker 2: million eurofine, but it didn't actually admit wrong doing in

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Speaker 2: that and food watch is suing again because this consumer

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Speaker 2: group thinks they shouldn't have been let off the hook.

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Speaker 1: This issue has not gone away. Perier faces similar allegations

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Speaker 1: in other countries.

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Speaker 2: So they kind of really have to watch out for

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Speaker 2: the reputational damage of that. I don't think typically the

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Speaker 2: fines are very big, you know, two million euros is

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Speaker 2: a very much atol for such a massive company, But

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Speaker 2: it's being in the headlines for misleading consumers that's potentially

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Speaker 2: really damaging. You know, you need trust when you're asking

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Speaker 2: people to eat drink your stuff.

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Speaker 1: Neslie Waters France declined to comment on the lawsuit, but

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Speaker 1: reaffirmed that the safety and quality of Perrier have always

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Speaker 1: been guaranteed that all its brands now comply with French rules.

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Speaker 1: The company told Bloomberg quote, we have invested significantly and

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Speaker 1: will continue to do so to protect this unique heritage

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Speaker 1: and ensure its future.

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Speaker 2: They had a new boss come in twenty twenty and

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Speaker 2: she was told, oh, we've been doing this filtering. So

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Speaker 2: then she started a modernization plan, a multie plan which

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Speaker 2: costs one hundred and fifty million euros, and that included

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Speaker 2: sort of re cleaning all of the pipes and having

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Speaker 2: a system for doing that so that contaminants don't get in.

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Speaker 2: It also included introducing automation into the factories so that

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Speaker 2: they're super high tech and so that humans don't actually

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Speaker 2: touch the water or touch even the products a lot

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Speaker 2: of the time.

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Speaker 1: But Dasha says revamping the production process is only part

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Speaker 1: of the solution.

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Speaker 2: It also has a whole program to reduce pesticide use

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Speaker 2: in the area, so it allows wine makers to make

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Speaker 2: wine on its land so long as they do it organically.

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Speaker 1: Nesley is encouraging more environmentally friendly farming practices near Perier's source.

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Speaker 1: But France has been one of the world's biggest users

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Speaker 1: of pesticides and the country is still struggling to deal

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Speaker 1: with the legacy of that.

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Speaker 2: Arguably, there's not an awful lot Nessley can do about it.

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Speaker 2: But I guess the issue is does a mineral water

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Speaker 2: still have integrity when we've been using pesticides for so long.

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Speaker 1: The other big challenge for Perrier it fights to keep

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Speaker 1: its product and its image intact a rapidly changing climate.

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Speaker 1: That's after the break. Bloomberg's Dasha Afanasieva has been reporting

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Speaker 1: on Perier, the French luxury bottled water brand, and the

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Speaker 1: challenges it faces, from recent scandals to increased scrutiny. Another

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Speaker 1: big one is climate change.

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Speaker 2: So in this region there's many more droughts and also

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Speaker 2: instances of torrential rain that are impacting Perie. So with

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Speaker 2: the droughts, it's obvious you know you're running out of water,

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Speaker 2: and if you can't kind of take water out when

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Speaker 2: there's not enough for other uses.

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Speaker 1: It's the same problem the company pointed to as a

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Speaker 1: reason for contamination from pesticides and fecal matter torrential rain.

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Speaker 2: If that happens more and more often, then even if

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Speaker 2: you're testing loads, you can catch that and you can

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Speaker 2: prevent that water going to market. But it will. An

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Speaker 2: essay admits that it does, actually it will in the future.

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Speaker 2: Course fluctuation. In its fluctuations and its production.

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Speaker 1: Levels, Perrier has turned to other strategies to keep consumers

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Speaker 1: interested and to grow the brand. Earlier this year, it

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Speaker 1: introduced a new sparkling water called Maison Perier. Its ad

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Speaker 1: campaign is fronted by Emily and Paris actor Lily Collins.

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Speaker 1: The water comes from the same source in France, but

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Speaker 1: it's not branded as a natural mineral water, so it's

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Speaker 1: not subject to the same stringent regulations.

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Speaker 2: So they're not going to run into problems with filtering

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Speaker 2: when they're not really allowed to with their drink. And

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Speaker 2: they're hoping that that's going to be forty percent of

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Speaker 2: Perrier revenue. So that's great because there's all this water

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Speaker 2: that they wouldn't have had a useful that they can

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Speaker 2: actually just filter and put into Mason Perier. But there

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Speaker 2: are questions over why a water that isn't even a

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Speaker 2: mineral water needs to travel from south of France all

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Speaker 2: the way to New York or California to appeal to

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Speaker 2: sort of, you know, millennial Americans who maybe don't drink alcohol.

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Speaker 2: So it's a great marketing ploy but is it really

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Speaker 2: consistent with corporate efforts to sort of bring down carbon

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Speaker 2: emissions and to have products travel fewer miles.

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Speaker 1: Perier also sells water in plastic bottles, which Daja says

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Speaker 1: raises other concerns.

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Speaker 2: Nassi's solution is having fifty percent recycle content by twenty

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Speaker 2: twenty five, and which again there are issues with that

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Speaker 2: because you know, plastic leaches into water, and the more

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Speaker 2: you recycle it, the greater the risks that even more

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Speaker 2: types of chemicals leach into the water. But Nasie is

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Speaker 2: still kind of a proponent of this idea that recycling

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Speaker 2: is a lot of the solution, and they've all say,

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Speaker 2: to be fair to them, they've also reduced the quantity

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Speaker 2: of plastic that they use, things like redesign packaging, redesign

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Speaker 2: bottles in their mineral waters.

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Speaker 1: Neslie says, it's doing everything it can to shrink its

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Speaker 1: environmental footprint. It's pushing for more bottle return programs and

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Speaker 1: reducing its use of non recycled plastics. Dasha, with all

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Speaker 1: of these issues surrounding Perier, right now, where does this

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Speaker 1: leave its parent company Nesley?

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Speaker 2: I mean, look, water isn't a huge chunk of nesle revenue.

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Speaker 2: It's I think it's about three and a half percent.

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Speaker 2: So this isn't a situation where, you know, Neslei's biggest

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Speaker 2: business is under threat at all. But it's more a

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Speaker 2: question of has this company been run effectively? Is it

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Speaker 2: biting off more than it can chew? Are its operations

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Speaker 2: not as smooth as they could be? So it raises

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Speaker 2: those kinds of questions. And for investors who are concerned

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Speaker 2: about ESG, they do worry about, you know, is Nesleigh

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Speaker 2: being a good corporate citizen and is it, you know,

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Speaker 2: walking the walk in terms of ESG. But In says

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Speaker 2: can look to this story as an example of maybe mistakes,

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Speaker 2: maybe mistrust, maybe scrutiny that it could have done without.

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Speaker 1: This is the big take from Bloomberg News. I'm David Gera.

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Speaker 1: This episode was produced by David Fox. It was edited

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Speaker 1: by Aaron Edwards and Alyssa MacDonald. It was mixed by

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Speaker 1: Alex Segura. It was fact checked by Adriana Tapia. Our

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Speaker 1: senior producer is Naomi Shaven. Our senior editor is Elizabeth Ponso.

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Speaker 1: Our executive producer is Nicole Beemster. Bor Sage Bauman is

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Speaker 1: Bloomberg's head of podcasts. If you liked this episode, make

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Speaker 1: sure to subscribe and review The Big Take wherever you

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Speaker 1: listen to podcasts. It helps people find the show. Thanks

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Speaker 1: for listening. We'll be back tomorrow