Tension bubbles over Perrier
November 15, 2004 - Miami Herald - Business Monday
PARIS - The French fizzy water in the green bottle is in trouble.
Perrier, a source of pride within France and one of the best-known brands in the world, is caught in a labor dispute that smacks of a culture clash between Old-World France and the New-World trend toward globalization.
For the past six months, Perrier’s owner, the Swiss food giant, Nestlé, has tightened the screws on the sparkling water company and the powerful labor union, the CGT (Confédération Génerale du Travail), with events reaching a boil over the past month. At one point Nestlé Waters France, Nestlé‘s French subsidiary, even threatened to move production out of the country.
‘‘Since Nestlé took over in 1992, it’s always been like this; it’s always been a stressed relationship,’’ says Benoit Moreau, bottled water specialist and editor-in-chief of Rayon Boissons, a beverage trade monthly.
The French don’t always take kindly to multinationals. When pipe-smoking French farmer José Bové did his best to level a McDonald’s with his tractor in the French city of Millau in 1999, for example, he became something of a national hero. Now, he’s leading groups of protesters by pulling up fields of genetically modified corn.
DOWNSIZING
The Perrier struggle began earlier this year when Nestlé launched a plan looking for the early retirement of 1,041 employees of Nestlé Waters France, including 356 at Perrier’s facility at the water’s sole source in the southern town of Vergze.
While denouncing the labor union, Nestlé Waters France also publicly pushed to triple Perrier’s output of 860 million bottles per year and threatened to move production out of the country. After the threat to move, the labor union cried foul and used a recent law to bring events to a standoff.
Then Nestlé threatened to pack up camp and sell, and that really set off an uproar.
‘‘Whether it’s dollars or yen that produce Perrier, the owner doesn’t matter much, but it’s got to be made in France,’’ says Georges Lepré, who has devoted his life to the relationship between the French and their beverages, most notably as the one-time head sommelier at the Ritz Hotel in Paris.
Most analysts believe Nestlé knows this and has been using the possibility of a sale as a threat to make the labor union back down.
‘‘When you want to sell something, you don’t talk about its problems,’’ agrees Moreau, echoing a point often heard from workers in Vergze.
NEGOTIATIONS
In mid-September, Nicolas Sarkozy, the finance minister and 2007 presidential hopeful, decided not to take any chances and called both sides in for negotiations.
There were plenty of reasons for the minister to get involved.
On the line were jobs in a region with one of the country’s highest unemployment rates (13.8 percent vs. 9.7 percent nationally in 2003), the reputation of a world-renowned brand, a source of national pride, and a dispute emblematic of a larger trend of French businesses fleeing the country.
Though not all French citizens know their darling brand is now Swiss-owned, they do know it is a French product. For them, Perrier is the ‘‘French Touch’’ in a green glass bottle.
In France, whose citizens drink 55 percent of the annual production of Perrier, sales would almost certainly plummet if the water were suddenly bottled in Eastern Europe or Asia where labor is cheaper and less demanding.
To the French, the thought borders on the sacrilegious.
‘‘It’s unthinkable,’’ states Lepré. ‘It’s a brand of such huge notoriety, that we use the word ‘Perrier’ like we use ‘Frigidaire’ [common French for refrigerator], it’s closer to a common noun than a proper one.
‘‘It would be like making Bordeaux in Czechoslovakia!’’ he exclaims with more than a hint of exasperation in his voice.
Anne Bory and Clement Charbonnier, part-owners of the popular Rendez-Vous des Amis café in the Montmartre district of Paris, don’t necessarily agree.
‘‘Not everybody knows where it’s made in France,’’ says Bory, who includes herself in that number. “It’s more of a French image than a French-made product.’‘
Charbonnier sees no long-lasting effect if Perrier were bottled elsewhere: “People might stop for a month, then they’ll go back to drinking it. The image is on the brand, not that it’s made in France.’‘
Soon after the negotiations with Sarkozy, the CGT withdrew its outright opposition to the retirement plan and Nestlé backed away from its threat to sell the subsidiary.
MURKY WATERS
What happens next is less than clear.
For its part, Nestlé publicly states that it would much prefer not to sell Perrier or move production elsewhere, but it hasn’t ruled those options out.
‘‘These are only hypotheses that could only happen if we don’t succeed in significantly improving our productivity level on the Perrier production site. If we don’t get there, we would have to look at other hypotheses,’’ says Hubert Genieys, who heads external communications for Nestlé Water, the holding company that owns Nestlé Waters France.
Repeated calls to the CGT were not returned.
Moreau, the editor of the beverage magazine, describes what’s happening in Vergze as something of a 12-year-long wrestling match.
‘‘Nestlé would rather have a conflict than give in to the CGT,’’ he says. Perrier’s workers, on the other hand, pine for things as they used to be.
Prior to Nestlé‘s arrival, most of the population in and around Vergze were used to working for Perrier under a system very different from current operations. Between the end of World War II and 1992, the company ran under the watch of Gustave Leven, whose relationship with his workers Moreau describes as ``very close, very paternal.’‘
Leven even established special stores where employees received discount prices on goods and worked to create the nearby plant that still makes Perrier’s trademark green glass bottles.
In 1990, however, catastrophe struck. When worldwide output had reached 1.2 billion bottles per year, American laboratories found trace amounts of the benzene in the drink, forcing a worldwide recall of 280 million bottles and costing the company nearly $200 million. It wasn’t until 2003 that Perrier finally broke even in the United States.
FAMILY STRUCTURE
Nestlé snatched up Perrier for nearly $2.5 billion 1992 and inherited its labor groups and family-like structure.
‘‘Many of the workers who are there worked under Leven, and now their children work at the plant, too,’’ says Moreau, “Even if they were born after the Nestlé acquisition, they still live Leven.’‘
The current deadlock between the two sides is the fourth major dispute in the 12 years of Nestlé ownership.
But Moreau is predicting both sides will take a step toward one another: “Nestlé will announce they will reinvest, and labor will give in a little more.’‘
Joe Ray is a freelance journalist in Paris. He can be reached through his website at www.joe-ray.com