CASE STUDY CHANGE MANAGEMENT - CASE STUDY CHANGE MANAGEMENT Perrier may well be the iconic brand in the world of mineral waters However regardless of

CASE STUDY CHANGE MANAGEMENT - CASE STUDY CHANGE MANAGEMENT...

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CASE STUDY CHANGE MANAGEMENT Perrier may well be the iconic brand in the world of mineral waters. However, regardless of the profile of the brand, the company that produces the bottled sparkling mineral water is having tough time. It is the focus what one commentator describes as “a vicious struggle underway for soul of the business.” The company that was formed in 1898 bought a mineral water source near Vergeze, France. Demand escalated in the late 1980s when it became highly fashionable and championed by a range of admirers including Wall Street yuppies. At its peak (1989) Perrier sold 1.2 billion bottles down to 830 million in 2003, almost half to consumers in the United States. However in 1990, the finding of minute trace of benzene (an oil particle) in the bottle led to the collapse of US sale. By 1992 the company was close to a bankruptcy. Nestle bought Perrier for $1.2 billion attracted by the combination of bottled water as fast-growing business and world’s best known mineral water brand. However Perrier struggles to turn a profit. In 2003 its pretax profit margin on $300 million of sales was only 0.6% compared with 10.4% for Nestle’s Water division overall. In 2004 it again recorded loss. The Perrier factory is on 234-acre site on the Mediterranean coastal plain near Nimes which is nondescript and from distance can be mistakenly identified as power station or auto plan. Perrier employees work a 35-hour week and earn an average annual salary of $32,000 which is relatively high for this industry. However average worker produces only 600,000 bottles a year, compared with 1.1 million bottles of Nestle’s two other international French mineral- water brands (Vittel and Contrex). Relations between management and workers are not good. Almost all (93%) of Perrier’s 1,650 workers belong to the CGT, a union that is viewed by the management as consistently resisting Nestle’s attempts to improve Perrier’s financial performance. According to Nestle’s CEO Peter Brabeck-Lethmathe, “We have come to the point where the development of the Perrier brand is endangered by the stubbornness of the CGT.” Jean-Paul Franc, head of the CGT at Perrier, sees the situation differently. In regard to the company’s plan to cut 15% of its workforce, he protests, “Nestle can’t do whatever it likes.” He says, “There are men and women who work here…morally speaking the water and the gas stored below this ground belong to the whole region.”
In 2004 Danone launched a new product (Badoit Rogue) that was designed to directly compete with Parrier’s new super-bubbly brand, Eau de Perrier, Perrier’s management put bottles of Badoit Rogue in the factory cafeteria. This had been done to emphasize the point to Perrier employees that they were involved in a head-to-head battle for that niche in the market. However, this act was not well received.

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