Core Viewpoint - Nestlé is facing a significant scandal regarding its Perrier mineral water brand, with allegations of consumer fraud and inadequate regulatory oversight by the French government [1][3][4]. Summary by Sections Scandal Overview - The French Senate's investigation revealed that Nestlé's Perrier brand engaged in illegal water treatment practices, failing to meet "natural mineral water" standards and posing health risks due to contamination [3][4]. - The scandal was first reported by French media in early 2024, leading to the establishment of a special committee for investigation [3]. Financial Impact - Prior to the scandal, Perrier was a high-end bottled water brand, but its sales have been declining. In Q1 2025, Nestlé's water business revenue grew by only 1.6% to 809 million Swiss francs (approximately 706.4 million RMB), accounting for just 3.5% of total revenue [6][7]. - In 2024, the water business revenue declined by 1.0% to 318 million Swiss francs (approximately 277.69 million RMB), maintaining a 3.5% share of total revenue [7][9]. Market Context - The overall bottled water market in China is contracting, with competitors like Nongfu Spring reporting a 21.3% decline in revenue in 2024 [9]. - The high-end water segment is particularly affected, with a 16% drop in offline sales in 2024 [9]. Brand and Market Position - Despite the scandal, the overall impact on Nestlé's total sales may be limited due to the relatively small size of the water business [10][12]. - The Perrier brand, once known for its natural purity, is now facing challenges in maintaining its market position amid increasing competition and price wars [10][12]. Leadership Changes - Nestlé China is undergoing a leadership transition, with a new market head appointed to address growth pressures in the region [13][16]. - The company is focusing on operational efficiency and marketing investments to enhance its product portfolio and adapt to market demands [14][15].