Nestlé posts steadier growth, then quietly parks its water business with an investor

Nestlé has managed the familiar corporate trick of improving the headline while the details remain less flattering. Organic growth rose to 3.6 per cent in the first half of 2026, helped by better volumes, yet revenue still fell by 2.5 per cent to 43.1 billion francs. Currency effects alone shaved 6.2 per cent off growth, which is a neat reminder that even the world’s most polished consumer groups are not immune to the messier parts of global finance.

The group said real internal growth came in at 1.5 per cent, with price increases of 2.1 per cent. In the second quarter, real internal growth improved to 1.8 per cent. But the profit figures told a less cheerful story: adjusted operating profit dropped 2.8 per cent to 7.1 billion francs, while the margin slipped to 16.4 per cent. Higher coffee and cocoa prices, the recall of infant formula and tariffs all took their share.

Net profit was hit even harder, falling 31 per cent to 3.5 billion francs. Nestlé pointed to higher restructuring costs and a non-cash impairment of 1.3 billion francs on businesses held for sale. Among them sits the water and premium drinks division, which is now being pushed into a new joint venture rather than kept on the balance sheet as a patient corporate headache.

That division has been treated as a separate unit since the start of 2025. In 2025 it generated around 3.5 billion francs in sales, or just under 4 per cent of group revenue. Roughly 3.1 billion francs came from mineral water, yet the adjusted operating margin was only 9.1 per cent, far below the group’s 16.1 per cent. For a company that likes margins the way politicians like slogans, the maths was not especially persuasive.

Nestlé will place the business into a 50-50 venture with Platinum Equity, the US investor that says it manages about 48 billion dollars in assets. The new company will hold around 120 brands, including San Pellegrino, Perrier, Vittel, Acqua Panna, Henniez and Nestlé Pure Life. The transaction values the business at 4.5 billion francs, of which Nestlé will receive 2.8 billion francs. Completion is expected in the first half of 2027.

The logic is plain enough. Nestlé is trimming away a slower, lower-margin activity and concentrating on categories that promise better returns: coffee, pet food, nutrition, culinary products and snacks. The group had already exited its North American water business in 2021. The bottled-water trade, once a tidy symbol of global consumer power, now looks more like a nuisance to be packaged and passed on.

There is also a less elegant backdrop. In France, Nestlé has faced proceedings over mineral water, after admitting the use of improper filtration and treatment methods on several brands. In 2024 it paid 2 million euros to avoid a criminal trial after preliminary investigations into alleged illegal water use and deception. Further investigations and court cases are still under way, and the authorities are still examining whether Perrier can continue to be sold as natural mineral water. That is not the sort of corporate gloss any board likes to frame.

For the full year, Nestlé is sticking to its guidance: organic growth of 3 to 4 per cent, a higher adjusted operating margin than in 2025 and free cash flow of more than 9 billion francs. The market will probably call that prudence. Others may see a company making the best of a difficult hand while quietly moving the awkward cards off the table.

Written by Thorben Thiede thorben.thiede@alpineweekly.com