Speaker 1: Bloomberg Audio Studios, podcasts, radio news. Perier conjures a certain
Speaker 1: image those green pear shaped glass bottles with that golden cap.
Speaker 1: For more than a century, the brand of French mineral
Speaker 1: water has built up a reputation.
Speaker 2: The Champagne of table waters is how they like to
Speaker 2: frame it.
Speaker 1: Bloomberg's Dasha Afanasiva covers European consumer goods companies, including Nesle,
Speaker 1: which owns Perier.
Speaker 2: It's the kind of thing that you can find in
Speaker 2: the most expensive hotels all over the world. I was
Speaker 2: just in India and all the fancy hotels had these
Speaker 2: tiny bottles of Perier. So it's really retained this prestige
Speaker 2: in the elite status as far as mineral watersk.
Speaker 1: But today Perier is facing several challenges. There's heightened scrutiny,
Speaker 1: problems posed by climate change, and fallout from an investigation
Speaker 1: by French regulators that could ding its image.
Speaker 2: From the previous year. But it was leaked in April.
Speaker 2: Says that there's fecal matter, there's forever chemicals, and there's pesticides,
Speaker 2: and that includes pesticides that it was sort of ban
Speaker 2: two decades ago.
Speaker 1: Regulators only found trace amounts of these pollutants, But Dasha
Speaker 1: says the report and other issues facing the brand put
Speaker 1: it at a tricky crossroads.
Speaker 2: So it's a really bad look. And there was never
Speaker 2: a suggestion that the waters were unsafe to drink. It's
Speaker 2: more a question of what do you produce and what
Speaker 2: do you tell consumers about what it is that you're
Speaker 2: selling them.
Speaker 1: I'm David Gura and this is the big take from
Speaker 1: Bloomberg News today on the show, how pollutants ended up
Speaker 1: in a well used by one of the world's best
Speaker 1: known brands of bottled water and Perier's reputation survived, And
Speaker 1: is its broader business sustainable enough to weather other storms?
Speaker 1: What is it that makes Perrier water Perrier water? What
Speaker 1: is it about it that makes it stand out?
Speaker 2: So it's very much about where it is sourced and
Speaker 2: the sources in the south of France in this very
Speaker 2: quite rural area. There's not too much going on.
Speaker 1: That it's just outside of Rugez, a town in southern France,
Speaker 1: not too far from the Mediterranean, with a few thousand residents.
Speaker 2: It's just quite sleepy and quiet. And the idea is
Speaker 2: that it allows this water to be sourced from really
Speaker 2: Christine sources. It's supposed to be completely unspoilt.
Speaker 1: Dasha says. Perrier keeps the exact location of each well secret,
Speaker 1: but the water has been a draw for thousands of years.
Speaker 2: Since fifty eight BC, you know, that's when the Romans
Speaker 2: first built a bath, and then in the nineteenth century
Speaker 2: Napoleon signed a decree for this water to be exploited
Speaker 2: and for there to be a spa on the site.
Speaker 2: English nobility come and visit and stay in the spa
Speaker 2: and drink this water to sort of rejuvenate. It was
Speaker 2: a wellness fad back in the nineteenth century, and eventually
Speaker 2: someone called Sir John Harmsworth bought this site and started
Speaker 2: bottling the water, but closed down the spa. So it's
Speaker 2: got this incredibly rich history that sort of focuses on
Speaker 2: this heritage of something being healthy, of rich people enjoying it,
Speaker 2: of being its elite status.
Speaker 1: To this day, all Perrier water must come from that
Speaker 1: same sought after source. And because it's sold as natural
Speaker 1: mineral water, that's what it says on the label, it's
Speaker 1: also subject to strict regulation.
Speaker 2: It can do some basic, very basic filtering, but it
Speaker 2: pretty much has to come to the consumer. The actual
Speaker 2: water as you found it. You can carbonate it, but
Speaker 2: you're not supposed to disinfect the water in any way,
Speaker 2: because really, what's the point of having this this heritage water,
Speaker 2: all of these mineral properties if you're going to then
Speaker 2: boil it.
Speaker 1: So how did contaminants make it into Perrie's water. The
Speaker 1: company says it has to do with the weather.
Speaker 2: They blamed it on torrential rain that had disturbed the
Speaker 2: balance of the different pools of water underground.
Speaker 1: Perrier pumps its water from an aquifer more than five
Speaker 1: hundred feet below the earth's surface, where it's already been
Speaker 1: naturally filtered and protected from contaminants. That can affect pools
Speaker 1: that aren't as deep. But Dasha says, intense rain can
Speaker 1: saturate the local water system and that can cause different
Speaker 1: pools to mix.
Speaker 2: A shallow one can come into contact with a much
Speaker 2: deeper one which has been protected by clay and rock,
Speaker 2: so you're getting your water from the deeper one, but
Speaker 2: actually it's got shallow water mixed in and that can
Speaker 2: cause contamination.
Speaker 1: And this isn't the first time Perrier has run into
Speaker 1: a contamination problem.
Speaker 2: Nineteen ninety, which is before Nessa even owned Perie. There
Speaker 2: are traces of benzene found in the water and benzines,
Speaker 2: a carcinogen, and the company was forced to or chose
Speaker 2: to do one of the biggest recalls in the world
Speaker 2: as one hundred and sixty million bottles one hundred and
Speaker 2: twenty countries, and that really created a massive hit to
Speaker 2: its reputation.
Speaker 1: Decades later, Nesley was accused of using illegal filtration methods
Speaker 1: like activated charcoal and UV filtering in Perier's production process.
Speaker 1: Both steps are against the rules for anything labeled as
Speaker 1: natural mineral water in France. The company settled the case,
Speaker 1: but it was still a big hit to Perier's image.
Speaker 2: So it got sued by Consumer Watchdog and there was
Speaker 2: another lawsuit where it's had to pay a fine two
Speaker 2: million eurofine, but it didn't actually admit wrong doing in
Speaker 2: that and food watch is suing again because this consumer
Speaker 2: group thinks they shouldn't have been let off the hook.
Speaker 1: This issue has not gone away. Perier faces similar allegations
Speaker 1: in other countries.
Speaker 2: So they kind of really have to watch out for
Speaker 2: the reputational damage of that. I don't think typically the
Speaker 2: fines are very big, you know, two million euros is
Speaker 2: a very much atol for such a massive company, But
Speaker 2: it's being in the headlines for misleading consumers that's potentially
Speaker 2: really damaging. You know, you need trust when you're asking
Speaker 2: people to eat drink your stuff.
Speaker 1: Neslie Waters France declined to comment on the lawsuit, but
Speaker 1: reaffirmed that the safety and quality of Perrier have always
Speaker 1: been guaranteed that all its brands now comply with French rules.
Speaker 1: The company told Bloomberg quote, we have invested significantly and
Speaker 1: will continue to do so to protect this unique heritage
Speaker 1: and ensure its future.
Speaker 2: They had a new boss come in twenty twenty and
Speaker 2: she was told, oh, we've been doing this filtering. So
Speaker 2: then she started a modernization plan, a multie plan which
Speaker 2: costs one hundred and fifty million euros, and that included
Speaker 2: sort of re cleaning all of the pipes and having
Speaker 2: a system for doing that so that contaminants don't get in.
Speaker 2: It also included introducing automation into the factories so that
Speaker 2: they're super high tech and so that humans don't actually
Speaker 2: touch the water or touch even the products a lot
Speaker 2: of the time.
Speaker 1: But Dasha says revamping the production process is only part
Speaker 1: of the solution.
Speaker 2: It also has a whole program to reduce pesticide use
Speaker 2: in the area, so it allows wine makers to make
Speaker 2: wine on its land so long as they do it organically.
Speaker 1: Nesley is encouraging more environmentally friendly farming practices near Perier's source.
Speaker 1: But France has been one of the world's biggest users
Speaker 1: of pesticides and the country is still struggling to deal
Speaker 1: with the legacy of that.
Speaker 2: Arguably, there's not an awful lot Nessley can do about it.
Speaker 2: But I guess the issue is does a mineral water
Speaker 2: still have integrity when we've been using pesticides for so long.
Speaker 1: The other big challenge for Perrier it fights to keep
Speaker 1: its product and its image intact a rapidly changing climate.
Speaker 1: That's after the break. Bloomberg's Dasha Afanasieva has been reporting
Speaker 1: on Perier, the French luxury bottled water brand, and the
Speaker 1: challenges it faces, from recent scandals to increased scrutiny. Another
Speaker 1: big one is climate change.
Speaker 2: So in this region there's many more droughts and also
Speaker 2: instances of torrential rain that are impacting Perie. So with
Speaker 2: the droughts, it's obvious you know you're running out of water,
Speaker 2: and if you can't kind of take water out when
Speaker 2: there's not enough for other uses.
Speaker 1: It's the same problem the company pointed to as a
Speaker 1: reason for contamination from pesticides and fecal matter torrential rain.
Speaker 2: If that happens more and more often, then even if
Speaker 2: you're testing loads, you can catch that and you can
Speaker 2: prevent that water going to market. But it will. An
Speaker 2: essay admits that it does, actually it will in the future.
Speaker 2: Course fluctuation. In its fluctuations and its production.
Speaker 1: Levels, Perrier has turned to other strategies to keep consumers
Speaker 1: interested and to grow the brand. Earlier this year, it
Speaker 1: introduced a new sparkling water called Maison Perier. Its ad
Speaker 1: campaign is fronted by Emily and Paris actor Lily Collins.
Speaker 1: The water comes from the same source in France, but
Speaker 1: it's not branded as a natural mineral water, so it's
Speaker 1: not subject to the same stringent regulations.
Speaker 2: So they're not going to run into problems with filtering
Speaker 2: when they're not really allowed to with their drink. And
Speaker 2: they're hoping that that's going to be forty percent of
Speaker 2: Perrier revenue. So that's great because there's all this water
Speaker 2: that they wouldn't have had a useful that they can
Speaker 2: actually just filter and put into Mason Perier. But there
Speaker 2: are questions over why a water that isn't even a
Speaker 2: mineral water needs to travel from south of France all
Speaker 2: the way to New York or California to appeal to
Speaker 2: sort of, you know, millennial Americans who maybe don't drink alcohol.
Speaker 2: So it's a great marketing ploy but is it really
Speaker 2: consistent with corporate efforts to sort of bring down carbon
Speaker 2: emissions and to have products travel fewer miles.
Speaker 1: Perier also sells water in plastic bottles, which Daja says
Speaker 1: raises other concerns.
Speaker 2: Nassi's solution is having fifty percent recycle content by twenty
Speaker 2: twenty five, and which again there are issues with that
Speaker 2: because you know, plastic leaches into water, and the more
Speaker 2: you recycle it, the greater the risks that even more
Speaker 2: types of chemicals leach into the water. But Nasie is
Speaker 2: still kind of a proponent of this idea that recycling
Speaker 2: is a lot of the solution, and they've all say,
Speaker 2: to be fair to them, they've also reduced the quantity
Speaker 2: of plastic that they use, things like redesign packaging, redesign
Speaker 2: bottles in their mineral waters.
Speaker 1: Neslie says, it's doing everything it can to shrink its
Speaker 1: environmental footprint. It's pushing for more bottle return programs and
Speaker 1: reducing its use of non recycled plastics. Dasha, with all
Speaker 1: of these issues surrounding Perier, right now, where does this
Speaker 1: leave its parent company Nesley?
Speaker 2: I mean, look, water isn't a huge chunk of nesle revenue.
Speaker 2: It's I think it's about three and a half percent.
Speaker 2: So this isn't a situation where, you know, Neslei's biggest
Speaker 2: business is under threat at all. But it's more a
Speaker 2: question of has this company been run effectively? Is it
Speaker 2: biting off more than it can chew? Are its operations
Speaker 2: not as smooth as they could be? So it raises
Speaker 2: those kinds of questions. And for investors who are concerned
Speaker 2: about ESG, they do worry about, you know, is Nesleigh
Speaker 2: being a good corporate citizen and is it, you know,
Speaker 2: walking the walk in terms of ESG. But In says
Speaker 2: can look to this story as an example of maybe mistakes,
Speaker 2: maybe mistrust, maybe scrutiny that it could have done without.
Speaker 1: This is the big take from Bloomberg News. I'm David Gera.
Speaker 1: This episode was produced by David Fox. It was edited
Speaker 1: by Aaron Edwards and Alyssa MacDonald. It was mixed by
Speaker 1: Alex Segura. It was fact checked by Adriana Tapia. Our
Speaker 1: senior producer is Naomi Shaven. Our senior editor is Elizabeth Ponso.
Speaker 1: Our executive producer is Nicole Beemster. Bor Sage Bauman is
Speaker 1: Bloomberg's head of podcasts. If you liked this episode, make
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