Companynews // 08/31/2004

Gerolsteiner holds its own on a difficult market

Maintained national market leadership despite a drop in sales - Gerolsteiner continues to be German export champion - Gerolsteiner Naturell keeps up enormous growth of almost 50 percent - Office Line and Apfelschorle in the 0.75 liter PET reusable bottle added to the range of goods

The Gerolsteiner Brunnen GmbH & Co. KG is holding its own in 2004 against a trend toward private brands and cheap articles. With a value based market share of 9.4 percent, Gerolsteiner - as the company with the largest turnover - remains leader of the German mineral water industry, securing its position as German export champion. The company from the Eifel announced a net goods turnover of 115.9 million euro in the first seven months of the year - turnover dropped by 7 percent compared to the previous year. Sales are at 4.15 million hectoliters of mineral water and mineral-water-plus products - down by 8 percent compared to 2003. Nevertheless, with these figures Gerolsteiner is doing a lot better than its direct competition on the German market for branded mineral water. According to the market research institute AC Nielsen, the competition is losing by an average of 9.2 percent only in the water segment, while Gerolsteiner's losses are only at 6.5 percent. (Source: AC Nielsen, dated July 2004)

"The branded waters are under immense pressure through the growing market share claimed by discount stores. By now the discounter's share of total water sales is at about 25 percent," explains Jörg Croseck, Gerolsteiner's Managing Director of marketing, distribution and personnel commenting on the market data from the first four months of 2004. "Nevertheless, neither now nor in future will Gerolsteiner products be found in this segment. In the quality and brand world of Gerolsteiner there is no room for dicounters". Involvement in, or cooperation with a mineral water company concentrating on the supply to discounters is however not out of the question. Nevertheless there are no talks going on at present.

The Gerolsteiner Brunnen will remain true to its strategic focus on the umbrella brand Gerolsteiner in the foreseeable future. "Due to our consistent brand policy we are again able to hold our own this year - even managing to further strengthen our position in the branded mineral water segment", explains Jörg Croseck, Gerolsteiner's Managing Director of marketing, distribution and personnel. "We expected a drop in sales in 2004 and have planned accordingly. One of the major causes is the growing strength of the discount market. And of course, summer 2003 was an absolute record summer, unbeatable regarding water consumption."

At the Gerolsteiner Brunnen GmbH & Co. KG, consistent brand policy goes hand in hand with an innovations campaign for 2004 and 2005. The Apfelschorle (apple spritzer) in the new 0.75 liter PET reusable bottle, that was introduced in June, started off exceedingly well. Production almost failed to cover the immense demand temporarily. The roll out of the Gerolsteiner Office-Line will begin in September. Gerolsteiner will be the first mineral water company to participate in the bulk bottle market for offices.

The product with the most growth in Gerolsteiner's line of goods is again Gerolsteiner Naturell. During the first seven months sales were up by 47.1 percent compared to the previous year, reaching a total of 300,043 hectoliters. The non-carbonated mineral water thus has reached a value based market share of 5.1 percent, belonging to the top 4 brands in the market segment for "non-carbonated mineral waters" in Germany. The varieties Gerolsteiner Sprudel and Gerolsteiner Stille Quelle retain their position as Germany's most popular branded mineral waters, with a value based market share of 9.6 percent and 13.9 percent. (Source: AC Nielsen, dated July 2004)