Nestle’s focus on premiumisation is the right strategy

Global food conglomerate, Nestle has increased its focus recently on premium brands such as San Pellegrino, Perrier and Acqua Panna, while strengthening the sale of most of its North America waters business.
This is probably the right marketing strategy now as there are thousands of water brands in various markets across the globe, from manufacturers’ brands to house brands belonging to major supermarkets to unbranded water shipped to rural and remote areas.
At present, Nestle does not have the economies of scale of a beverage company in terms of distribution, however it has the financial capability to invest and ‘premiumising’ its offering to increase its product price per litre.
By establishing its position in a smaller but rapidly growing segment, Nestle, coupled with its well-established brands, will not have to compete with the large number of mass-market water brands which compete mainly on the basis of price, distribution and packaging.
Meanwhile, Nestle has also recently announced its plan to dispose its underperforming China water brands which include its locally-sourced Nestle Pure Life and Da Shan Yunnan Spring.