Danone bets on bottled-water as health trends reshape drink choices

By Dominique Patton

EVIAN-LES-BAINS, France, April 2 (Reuters) - Danone DANO.PA said on Thursday rising health awareness among consumers in Britain and France is driving a shift from sugary drinks to bottled water, boosting sales of the French consumer goods giant's brands like Evian.

Food companies from Nestle NESN.S to Unilever ULVR.L have spent the past decade grappling with a shift by health-conscious consumers towards fresher, less sweet products.

This trend has been amplified by the rise of GLP-1 weight loss drugs in Europe and the United States.

Europe's 18 billion euro ($21 billion) bottled-water market grew 5% in value and 3% in volume last year, its fastest pace in recent years, said Antoine Portmann, managing director of Danone Waters Europe. That was led by 7% growth in value in France and 9% in Britain.

"What is driving this, I think, is more and more consciousness from consumers about the importance of healthy hydration," he told Reuters in an interview in Evian-Les-Bains at the foot of the French Alps.

"So I think that's why, structurally, we believe that this growth will continue."

Portmann acknowledged that in some markets, sugary drinks still dominated. Water sales of some 4.85 billion euros last year - under a fifth of Danone's total - were up 1.9% globally, and 3.3% in Europe.

BUSY CONSUMERS HELP ON-THE-GO WATER SALES

Portmann said busy consumers with little time for sit-down meals were helping sales, too.

"They go for options that they can eat on-the-go, and each time they will need to carry some water with them," he said.

Danone is stepping up investment in its water brands, committing 20 million euros to upgrade its Evian bottling facility, and 8 million euros to preserve its Evian, Volvic, Badoit and La Salvetat sites.

The push comes as rival Nestle seeks to sell a 50% stake in its water unit, which includes Perrier and San Pellegrino.

($1 = 0.8678 euros)