Problems at Perrier
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- Category: Politics: Economics
- Date Submitted: 09/30/2012 06:21 PM
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Problems at Perrier
A militant French labor union, CGT (Confédération Générale du Travail aka General Confederation of Labour), representing 93 percent of the workers at Perrier’s mineral water plant in Vergèzy, France, has led the resistance to Nestlé S.A.’s efforts to reorganize its unprofitable Perrier mineral water plant. (Palmer, Dunford, & Akin, 2009) (Colorado State University-Global Campus, 2012). Nestlé, a Swiss company headquartered in Vevey, Switzerland, in 1992 acquired the nearly bankrupt Perrier after its benzene disaster of 1990. Even after the acquisition, Perrier continued to struggle, with 0.6 percent pretax profit margin on sales of $300 million in 2003, compared with 10.4 percent profit for the Nestlé Waters Division overall. (Palmer, Dunford, & Akin, 2009).
According to Nestlé CEO Peter Brabeck-Letmathe, “We have come to the point where the development of the Perrier brand is endangered by the stubbornness of the CGT.” (Palmer, Dunford, & Akin, 2009). Between 1992 and 2000, Nestlé fought the CGT to cut 1,000 jobs while at the same time investing about $250 million to launch new brands. "From a technical point of view, we're in a good position," said Pierre Mineraud, Perrier's co-general manager in charge of production. The other half of the plant management team is human resources director André Sembelie, who has years of experience dealing with the CGT. He insists that the time for diplomacy is over: "The CGT says, 'Be charitable.' From my point of view that isn't the question. The main purpose of a private company isn't charity but profitability." (Tomlinson, 2004).
When Perrier’s management put bottles of Badoit Rouge (which had just been launched by rival Danone to go head-to-head with Perrier's new super-bubbly brand, Eau de Perrier) in the factory cafeteria, the union’s reaction was that "[i]t was a provocation," recalls one Perrier truck driver. "We took the bottles and dumped them in front of the factory...
A militant French labor union, CGT (Confédération Générale du Travail aka General Confederation of Labour), representing 93 percent of the workers at Perrier’s mineral water plant in Vergèzy, France, has led the resistance to Nestlé S.A.’s efforts to reorganize its unprofitable Perrier mineral water plant. (Palmer, Dunford, & Akin, 2009) (Colorado State University-Global Campus, 2012). Nestlé, a Swiss company headquartered in Vevey, Switzerland, in 1992 acquired the nearly bankrupt Perrier after its benzene disaster of 1990. Even after the acquisition, Perrier continued to struggle, with 0.6 percent pretax profit margin on sales of $300 million in 2003, compared with 10.4 percent profit for the Nestlé Waters Division overall. (Palmer, Dunford, & Akin, 2009).
According to Nestlé CEO Peter Brabeck-Letmathe, “We have come to the point where the development of the Perrier brand is endangered by the stubbornness of the CGT.” (Palmer, Dunford, & Akin, 2009). Between 1992 and 2000, Nestlé fought the CGT to cut 1,000 jobs while at the same time investing about $250 million to launch new brands. "From a technical point of view, we're in a good position," said Pierre Mineraud, Perrier's co-general manager in charge of production. The other half of the plant management team is human resources director André Sembelie, who has years of experience dealing with the CGT. He insists that the time for diplomacy is over: "The CGT says, 'Be charitable.' From my point of view that isn't the question. The main purpose of a private company isn't charity but profitability." (Tomlinson, 2004).
When Perrier’s management put bottles of Badoit Rouge (which had just been launched by rival Danone to go head-to-head with Perrier's new super-bubbly brand, Eau de Perrier) in the factory cafeteria, the union’s reaction was that "[i]t was a provocation," recalls one Perrier truck driver. "We took the bottles and dumped them in front of the factory...