Poland Springs Create Private Label Bottled Water for Walmart

Case Type: new business; operations strategy.
Consulting Firm: LEK Consulting first round job interview.
Industry Coverage: consumer products; food & beverage; retail; general merchandisers.

Case Interview Question #00457: We are going to look at a growing trend in the Consumer Packaged Goods industry. Our client in this case is Poland Springs, a bottled water company. As a wholly owned subsidiary of Vevey, Switzerland based food and beverage company Nestlé (SIX: NESN), Poland Springs sells its bottled water in the United States only. Named after the Poland Spring in Poland, Maine, it is one of the top selling bottled water brand in North America.

Recently, a major retailer Walmart (NYSE: WMT) approached our client Poland Springs with a new business proposal. Walmart wants to create a private label version of our client’s product. In other words, in addition to our client’s bottled water which they already carry, they want the client to make an additional, lower-priced bottled water which will be sold under their own brand label, e.g. Walmart Great Value Bottled Water. Should the client take Walmart’s offer? What are the pros and cons of doing this?

Possible Answer:

As it was given in the interview setting, this case question is more of a situation analysis and brainstorming exercise rather than a business case to drill down on and crack. As such, there may be many more pros/cons beyond what is listed in the example solution below. In general, it is important to be structured and try to put the pros and cons into clear buckets. Considering the 3C’s framework (e.g. impact on Customer relationship, Company’s operational issues, and Competitive dynamics) could also be helpful in this case.

1. Pros