Highland Spring in play as Coke pursues water brand

Coca-Cola GB is plotting to buy a bottled water brand, almost two years after the Dasani disaster, in yet another attempt to crack the UK water market.

It is thought that Highland Spring, the third-best selling water in the UK after Volvic and Evian, is the most obvious prey for Coca-Cola.

The drinks giant is known to have created a secret project team to work on buying an established bottled water brand to fill the only major hole in its current portfolio.

Sources confirm that Highland Spring has been talking to potential buyers for some time.

Coke owns the Malvern water brand, but wants to re-enter the lucrative UK bottled water market on a larger scale. In March 2004, Coke was forced to withdraw Dasani just four weeks after its &£7m launch. Rather than being a natural mineral water bottled at source, Dasani was tapwater that had been filtered and had minerals added to it. A cancer scare surrounding chemicals found in the water fuelled negative press coverage of the brand.

An industry source says: “Highland Spring’s target market is older than the market Coke aims at, but first and foremost Coke desperately needs a source of water. The brand is the secondary consideration and can come later.”

Another source says: “Coca-Cola would pay a premium for a top brand, so it would not make commercial sense to then use the water to create another brand from the source. Any buyer would expand the Highland Spring brand, perhaps by moving into flavoured water, for instance.”

The UK water market is worth &£1.6bn and is anticipated to grow by eight per cent in 2005.

Highland Spring, which owns Gleneagles natural mineral water, has 6.4 per cent of the UK market by volume.

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