Nestlé Plans to Take Up Water Pricing
in 1st Quarter of 2006.

Informed source says Nestlé -- biggest player in U.S. bottled water business -- plans to "reduce the depth of its promotional offerings in 1st quarter next year," meaning it will increase on-promotion pricing in supermarkets. On-promotion pricing accounts for significant and increasing percent -- more than 50% for major brands/ companies -- of water volume sold in U.S. supermarkets. Source says Nestlé's on-promotion pricing "could increase from $3.99 to $4.99" for 24-packs of half-liter. Source adds, "Nestlé seeks to improve margins but isn't willing to sacrifice market share."

Context. Overall water pricing YTD through early September is down -5.6% in supermarkets. Nestlé down -5.8%. Aquafina down -8%. Dasani -7.4%. Dannon -14.3%. Private label down -6.2%. Reason major brands down more than overall category is due to "mix effect" of some higher priced brands growing faster than overall category.