Update: March 6, 2020: A Nestlé Waters North America spokesperson said the Elmsford, New York facility will close in May.
- Nestlé Waters North America said in a filing with the New York State Department of Labor that it will close a direct-to-consumer beverage delivery service plant in Elmsford, New York. The plant currently has 105 employees.
- The Nestlé Waters North America facility is expected to close June 1, the company said in the notice filed Feb. 28. Employees have been offered the opportunity to transfer to a different Nestlé Waters North America location. The routes from Elmsford will be assigned to two new facilities that will open in New York and an existing plant in Connecticut.
- "These, along with other new facilities we opened over the past year in the New York area, are strategically positioned to be closer to our customers," a Nestlé Waters North America spokesperson said in a statement to Food Dive. "They will allow us to increase capacity to grow routes in the New York metro area, manage operational costs and enhance the customer experience."
Nestlé Waters North America's decision to close the New York water distribution center is the latest in a string of closures for its Swiss giant parent company.
In an effort to cut costs, Nestlé announced last year that it would close one manufacturing plant a month, with functions being transferred and consolidated between facilities.
Food and beverage companies across the CPG space have been closing plants and laying off hundreds of workers during the last few years in an effort to streamline production and curtail costs. Tyson Foods said in a regulatory filing last month it will eliminate about 500 jobs, with most of the layoffs coming at corporate offices in Chicago and Springdale, Arkansas. Smithfield Foods recently announced it is closing its San Jose facility in California and laying off 139 workers, marking its departure from the Bay Area after decades in business. Del Monte, Halo Top, Kellogg, Kraft Heinz and Kind Snacks have also recently announced layoffs or plant closures.
Nestlé Waters, the company's bottled water division, is the biggest in the world with brands including S.Pellegrino and Poland Spring. But the division has been struggling for the company. Nestlé CEO Mark Schneider said in an Oct. 17 earnings call Nestlé Waters would restructure from a globally managed business to one that is managed locally in each of the company's three geographic regions.
The move, the company said, would improve proximity to the customer and allow for Nestlé to focus on higher-margin segments. An analyst told The Wall Street Journal at the time that Nestlé had been losing share in still water and has been slow to respond to rapid growth in sparkling and flavored water. It's possible the closure of the water plant in New York is part of the company's ongoing effort to boost efficiencies in the division.
Nestlé has taken steps to bring its water more in line with trends today. In December, the company said it will introduce two new lines of bottled water in 2020: Poland Spring energy water and Nestlé Pure Life Plus. Poland Spring energy water will contain the same amount of caffeine as a cup of coffee, but the stimulant will be derived from green tea extract. Nestlé Pure Life Plus will be the brand's initial foray into functional water.
For a division that is important to Nestlé's sales, jobs cuts and plant closures amount to a temporary bandage for the company. The Wall Street Journal said Nestlé has been gradually watching its market share in bottled water slip as competition increases, consumer concern about waste generated from plastic bottles mounts and costs crimp operations.
With soda giants Coca-Cola and PepsiCo increasing their presence in sparking water in a big way through the acquisitions of Topo Chico and SodaStream, respectively, as well as the introduction of their own sparking water brands, Nestlé will need to continue to innovate and improve the efficiency of its valuable beverage business.