Nestle's Water Division Replaces CEO Who Left for Chobani

(Bloomberg) -- Nestle SA will elevate pet-care veteran Fernando Mercé to the job of running its $4.5 billion bottled-water business in North America, replacing an executive who left to join yogurt maker Chobani LLC in March.

Mercé, who started at the company in 1992 as an industrial engineer, will take the helm at Nestle Waters North America on May 1, according to a statement Friday. In the new role, the 46-year-old will oversee operations in the U.S. and Canada, as well as joining the global Nestle Waters board.

Bottled water has been a key source of growth for Nestle, especially as demand for other categories wanes. The product began outselling soda in the U.S. for the first time last year, and Nestle owns top brands such as Perrier and Poland Spring. Still, it’s a business with tight profit margins and mounting competition.

Mercé’s leadership will “ensure that we build on our growth legacy to retain our leadership position in the category,” Maurizio Patarnello, head of the global waters business, said in the statement. The North American division represents more than half of Nestle Waters’ worldwide revenue.

The move fills a role vacated by Tim Brown, who left to become Chobani’s operating chief. Mercé previously led Nestle’s Purina pet-food business in Latin America and the Caribbean.

As the new chief, Mercé will need to protect Nestle’s brands from more aggressive incursions by soft-drink makers. New products such as PepsiCo Inc.’s Lifewtr are looking to take market share from more established water brands. The category also is one of Nestle’s lowest-margin areas, but the Swiss food giant’s CEO, Mark Schneider, has said it’s a division he aims to expand.

The business also has attracted controversy. Nestle’s Arrowhead Spring brand taps a spring in California’s San Bernardino mountains, and the company announced plans last year to bottle water in Phoenix. With severe drought afflicting much of the western U.S. in recent years, activists criticized the expansion as “irresponsible.”

To contact the reporters on this story: Molly Smith in New York at msmith604@bloomberg.net, Thomas Mulier in Geneva at tmulier@bloomberg.net.

To contact the editors responsible for this story: Nick Turner at nturner7@bloomberg.net, Eric Pfanner at epfanner1@bloomberg.net.