What happened with Nestlé's water brands?

French authorities launched an investigation into Nestlé over allegations that the company used unauthorized filtration methods for its bottled water brands, including Perrier and Vittel. The investigation stems from a consumer group complaint that questions whether these products were deceptively marketed as natural mineral water when they may have undergone more processing than disclosed.

Why might this investigation create investment opportunities?

When a market leader faces regulatory scrutiny or consumer trust issues, competitors often benefit as consumers seek alternatives. In this case, companies offering alternative water brands, filtration technologies, or regulated water utilities could gain market share as consumers shift their purchasing habits away from brands under investigation.

What types of companies are included in this theme?

This theme includes three main categories: beverage companies with competing water brands (like PepsiCo and Coca-Cola), alternative beverage companies that could attract health-conscious consumers (like Celsius and Vita Coco), and water technology/utility companies that provide filtration solutions or regulated water services (like Xylem and American Water Works).

What is a "water utility" company?

Water utility companies provide essential water services to homes and businesses. They manage the infrastructure for water treatment, distribution, and sometimes wastewater management. These companies are typically heavily regulated by government authorities to ensure water safety and quality. Examples in this theme include American Water Works (AWK) and California Water Service Group (CWT).

What does "event-driven" investing mean?

Event-driven investing refers to strategies that aim to profit from market price movements caused by specific corporate or economic events. In this case, the event is the investigation into Nestlé's water filtration practices, which could create short to medium-term opportunities as consumers potentially shift their preferences to alternative water brands and solutions.

16 handpicked stocks

Pure Water Plays: Investing in Trusted Alternatives

Following investigations into Nestlé's water filtration practices, consumers may seek more transparent water options. These carefully selected stocks represent companies that could benefit from this shift, from beverage competitors to water purification technology providers.

Han Tan | Market Analyst

Updated 2 days ago | Published at July 11