Bubble Trouble -- Perrier Struggles To Regain Place In U.S. Market

NEW YORK - Perrier is back. But whether the French water will recapture its once-sparkling position in the U.S. bottled water market isn't clear.

Hotels and restaurants, the staple of Perrier's sales, stopped carrying the water when benzene contamination forced a worldwide recall by the company on Feb. 9. Many haven't taken it back.

``None of our customers want it. I think the recall really frightened people,'' said Mark Schachern, manager of the Washington Square Bar and Grill in San Francisco.

Some distributors and industry officials say Perrier has received a tepid reception from hotels and restaurants since it was reintroduced in the United States in late April. The return included a $25 million advertising campaign and such publicity events as a give-away of cases of the familiar pear-shaped bottles in New York's Central Park and Rockefeller Center.

``There's still a certain amount of reluctance on the part of many hotels and restaurants,'' said Hellen Berry of Beverage Marketing Corp., an industry trade group. ``Many customers are happy with what's been substituted.'

Perrier Group of America Inc., based in Greenwich, Conn., said it had no concrete sales figures for the year. But company spokeswoman Jane Lazgin said, ``We are right on target for where we should be at this time.''

Lazgin admitted that the response from restaurants since the reintroduction hasn't been what the company hoped it would be.

``We are working hard to regain our accounts,'' she said. ``But it won't be a quick fix. We have a lot of work to do.''

Experts say Perrier probably has done better at recapturing lost shelf space in supermarkets because it was able to offer its other brands - Poland Spring, Calistoga and Arrowhead - as alternatives to its contaminated sparkling water.

Perrier distributors agree, but say many customers still are reluctant to take Perrier back.

The Pepsi-Cola Buffalo Bottling Corp. in Buffalo, N.Y., a Perrier distributor, is sending its salespeople to supermarkets it once served in the Buffalo area to help boost customer confidence.

``We feel we owe it to them to meet face to face and explain that it's OK to take Perrier back,'' said manager Scott Pastor.

Pastor said his Perrier customers now number fewer than the 800 restaurants and supermarkets he had before the recall, but he declined to be specific or to release recent sales figures.

Perrier recalled its water from worldwide distribution after tests showed traces of naturally occurring benzene, a cancer-causing chemical, in its product in several countries. The contamination stemmed from improper filtration of the water, the company said.

Its absence from the U.S. market was a blow to Perrier, which built the U.S. sparkling mineral water market nearly from scratch in the 1970s, Berry said.

In 1989, Perrier posted U.S. sales of $102 million. That accounted for 4.4 percent of the industry's $2.3 billion in U.S. sales.

The company estimates the recall cost it $78 million.

Berry said competitors took advantage of Perrier's absence to increase their own market share.

Sandy Klinzman, a spokeswoman for Evian Waters of France, which also is the parent company of Saratoga Bottled Mineral Water, said, ``Anytime you have a major player like Perrier gone, everyone benefits.''

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BOTTLED WATER MARKET SHARE

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Top 5 brands of bottled water. Percentages

of total U.S. market ($2.2 billion in 1988

$2.34 billion in 1989)

1988 1989

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Arrowhead 8.3% 8.7%

Sparkletts 5.8% 8.1%

Poland Spring 3.5% 4.8%

Perrier 4.7% 4.4%

Hinckley-Schmitt 3.4% 3.8%

Market includes imports, home delivery,

sparkling waters and other small regional

market brands.

Source: Beverage Marketing Corp.

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