Big Mineral Water Companies Halt Production After Contaminants Found

Israel's two biggest mineral-water bottling companies have suspended production after tests indicated contaminants in their product. Moreover, Mayanot Eden and Neviot knew of the problem days before informing the public.

The first announcement came from Mayanot Eden, known colloquially as Mey Eden. Late Sunday evening the company announced that it was suspending all bottling due to irregular test results. The next morning, rival company Neviot released a similar statement.

Both said that all products already on the market are safe for consumption.

Mayanot Eden and Neviot also claimed to have released the announcement at their own initiative, after discovering a problem with test results. But in fact, as we now know from Health Ministry revelations, Neviot knew about the problem on the preceding Thursday, and Mey Eden had been aware of the problematic test results more than a week and a half earlier.

Nor was it the companies that discovered the problem, as they claimed. It was testing performed by the national water utility Mekorot that revealed contaminants in the spring water.

The precise nature of the contaminants is not known at this time. It may be bacterial and may have been caused by rainwater carrying sediment into the springs.

The two companies were in no hurry to inform consumers. Both are listed on the Tel Aviv Stock Exchange, and both delayed issuing formal notification to investors (as they must upon any substantial event).

Therefore, trade in their stock continued while the two companies were aware of the problematic test results, but failed to provide timely disclosure to investors.

According to the notice to the stock exchange the companies filed yesterday, the date and time that Mayanot Eden first discovered the problem with water quality was Sunday, at 2:30 P.M. Neviot listed the date and time as Sunday, 6 P.M.

As noted, Neviot was aware of the problem by Thursday at the latest, and Mayanot Eden had known for 10 days.

Neviot explained that during the situation assessment held at 6 P.M. on Sunday, the firm's management learned that if the test results of the next day continued to be irregular, there would be a shortage of the company's product. "We still hoped and thought that the results would be good, and that there would be no shortage," the spokesman said.

Mayanot Eden's chief executive Ben Artzi said that the issue was technical. "We notified the exchange that the problem had been discovered in recent days," he said. "We have been aware of it for a week and a half, but all of the products we distributed were perfectly fine. Even if product was drawn on questionable dates, it was not drawn at questionable times on those days."

The Tel Aviv Stock Exchange offered no comment.

The Health Ministry's Northern District officer, Dr. Michal Cohen Dar, described the events as they unfolded. "On February 3 (Tuesday, two weeks ago) contamination was found in the water at Mey Eden's Salukia spring during a routine test performed by Mekorot. The result was repeated on retesting."

On February 9, Cohen Dar let them resume pumping, she said, after obtaining normal results. "But on the 10th (last Tuesday) the poor test results were repeated, and we ordered them to stop pumping again. Following these results it was decided to perform tests at other springs in the area," Cohen Dar said.

Indeed, contaminants were found last Thursday at Neviot's spring, Ein Zahav, at Kiryat Shmona. "That same day we ordered Neviot to stop bottling and marketing the water, but we have no control over the timing of the company's decision to inform the public," she said.

Mayanot Eden's chief executive Lior Ben Artzi said the firm had been aware of the problem for some days, but did not report to the public because "anomalies are sometimes found during testing, and pumping is suspended for a few hours, but when we found that the disruptions were continuing for more than a day we decided to issue warnings and announcements."

The deviations found from the standard didn't refer to contamination, Ben Artzi said, adding that they were merely deviations from standards for natural mineral water.

The Central Bottling Company owns 78% of Neviot's stock, and 11% is owned by the Central Bottling Company's chief executive, Ronnie Kobrovsky.

A spokesman for the holding company said Central Bottling has been monitoring the problem with the Health Ministry since the rain last week.

"We have not been pumping since late last week, but made no announcement until Monday because it was only then that we learned that there would be market shortages. There was nothing to announce earlier since the distributed water was untainted," the Central Bottling spokesman said. "We had hoped to be able to resume pumping today, but it turns out that the test results prevent us from doing so, and that as a result, there will be a shortage of our product."

Neviot and Mayanot Eden are the two central players in the mineral water market, together commanding more than half the market.

Mayanot Eden has sales of more than NIS 400 million a year, with Neviot at nearly NIS 300 million. Even a day of shortage spells serious financial damage for the companies.

In any case, once production resumes, it will take days to get the water to customers, once tests clear the way for pumping to resume.

Retailers are not feeling the shortage yet. A source at one of the large retailers said the chain has been careful to prepare extra stock of mineral water produced by competitors Ein Gedi, Aqua Nova and others.

A source from another retail chain said their stock is sufficient to last through the coming week, but he is nevertheless concerned that the sector will be hurt by the affair, and people will be buying less mineral water.

If the situation continues, consumers could become skeptical about mineral water here.