The famous French fizzy water is in trouble
October 12, 2004 - The Star-Ledger
PARIS—The French fizzy water in the green bottle is facing 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 its powerful labor union, the CGT. Now, in the past month, events have reached a boil, raising questions about the wisdom of foreign ownership of a product some see as uniquely French.
The deadlock, the fourth major dispute in the 12 years of Nestlé ownership, has turned into a closely watched high-wire ballet.
“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 the beverage trade monthly, Rayon Boissons.
Clashes like these are far from common in France, where citizens crisp up at the thought of losing their corner café to a global conglomerate.
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, he became something of a national hero. Now, he’s leading groups of protesters by pulling up fields of genetically modified corn.
But Starbucks set up camp here in January and McDonald’s now has more than 1,000 restaurants across the country.
The Perrier struggle began earlier this year when Nestlé launched a plan looking for the early retirement of 1,041 employees of its French arm, Nestlé Waters France. The move would have affected 356 at Perrier’s facility in the southern town of Vergèze—the water’s sole source.
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.
Though it does not give out figures for Perrier alone, Nestlé Waters France, a conglomerate of 77 different brands, posted sales of 8.1 billion Swiss francs ($6.5 billion) in 2003. The company’s five export brands, Perrier, Vittel, Contrex, San Pellegrino and Acqua Panna account for about a quarter of those sales.
After Nestlé threatened a move, the labor union cried foul and used a recent law to bring events to a standoff. Nestlé, in turn, threatened to pack up camp and sell.
That created an uproar.
“Whether it’s dollars or yen that produces 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 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,” Moreau says.
In mid-September, the finance minister and 2007 presidential hopeful, Nicolas Sarkozy, called both sides in for negotiations.
The minister’s involvement was no accident; on the line were jobs in one of the regions of the country with the highest unemployment (13.8 percent for the region vs. 9.7 percent nationally in 2003), the reputation of a world-renowned brand, a source of national pride and a larger trend of French businesses fleeing the country.
Though not all Frenchmen know their darling brand is Swiss-owned, they do know it is a French product. As Poland Spring (also owned by Nestlé) is “What it means to be from Maine,” for the French, Perrier is the “French Touch” in a green glass bottle.
In France, where citizens drink 55 percent of the annual production, sales would almost certainly plummet if Perrier were suddenly bottled in Eastern Europe or Asia.
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.
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. What happens next is less than clear.
“Nestlé would rather have a conflict than give in to the CGT,” Moreau says. Perrier’s workers, on the other hand, pine for things as they used to be.
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 went as far as establishing special stores where employees received discount prices on goods. And he created the nearby plant that still makes Perrier’s trademark green glass bottles, though the water is now bottled in plants around the world.
In 1990, however, catastrophe struck. Just one year after Perrier’s North American launch, when worldwide output had reached 1.2 billion bottles produced per year, American laboratories found trace amounts of benzene in the drink. That forced a worldwide recall of 280 million bottles and cost the company nearly $200 million. It wasn’t until 2003 that Perrier finally broke even in the United States.
Nestlé snatched up Perrier for nearly $2.5 billion two years later.
“Many of the workers who are there worked under Leven, and now their children work at the plant, too,” Moreau says. “Even if they were born after the Nestlé acquisition, they still live Leven.”
So where is the exit? Moreau sees both sides taking a step toward one another. “Nestlé will announce they will reinvest and labor will give in a little more,” he predicts.
