Nestle Waters eyes acquisitions to plug sales leak

LISBON (Reuters) - Nestle's bottled water business is eyeing acquisitions in emerging markets to help end a slump which has made it the worst performer in the food giant's sales, Nestle Executive Vice-President John Harris said.

In an interview with Reuters after an inauguration of a plant near Lisbon, Harris said Nestle Waters, which represents around 10 percent of the group's total sales, was focusing on emerging markets like Brazil after struggling recently in Europe and North America.

Nestle controls 19 percent of the world's bottled water market, followed by Coca-Cola on 9 percent, and posted total sales of around 6 billion euros ($8.4 billion) last year in 37 countries with water brands such as Vittel, San Pellegrino and Perrier.

But decreased consumption due to the economic crisis, rising fuel costs and environmental concerns have had a strong impact on the division.

It posted a 2.5 percent drop in organic sales in the first quarter, while all other divisions at the Swiss group posted increases.

Harris, who heads the water division, said emerging markets have been the division's growth drivers despite the economic crisis.

"We will continue to look at drivers in emerging markets. We're still looking at acquisitions in some markets, and we're looking to expand our market share organically in those markets too," he said.

Nestle acquired a source and bottling plant in Brazil late last year and the head of Nestle Brazil said in June the company was negotiating at least another two purchases.

"We've identified Brazil as a key growth opportunity and are developing our business there," Harris said.

The strategy for emerging markets may also include divestments, he added. In Russia, for example, Nestle sold its Saint Spring bottling company in April.

"We've divested that business in Russia and, yes, we've identified markets we are going to focus on," Harris said.

"Our objective is to be number one or number two in every marketplace, and when it becomes clear that we can't do that, we may divest," he said.

(Editing by Axel Bugge and Jon Loades-Carter)

($1 = 0.7173 euro)