Neviot and Mei Eden Are Off the Shelves

The springs are not currently providing new product to the market, and the companies' combined losses already top NIS 20 million.

Mineral water bottlers Neviot and Mayanot Eden continue to be hurt by the discovery three weeks ago of contaminants in their springs. At the time, the companies stopped production and sale of their mineral water, but resumed production briefly after subsequent water testing showed the water was normal. Since late February, however, when additional evidence of contamination surfaced, the Health Ministry barred bringing additional production to market.

The springs are not currently providing new product to the market, and the companies' combined losses already top NIS 20 million. Mei Eden's market share, as measured in liters, dropped by 70% from more than 31% at the end of January, before the problem surfaced, to about 9.5% last week.

TheMarker has found that in the past several days, Mei Eden and Neviot products have essentially disappeared from the shelves at major retailers. During visits to Super-Sol branches, neither brand was seen, and Rami Levy stores report the same situation. Blue Square Israel, which operates under the Mega name, reports a shortage of the brands.

From information obtained by TheMarker, Mei Eden is thought to have been harder hit by the contamination problem than Neviot, according to figures provided by StoreNext Israel, a market research firm.

Mei Eden's annual mineral water sales are estimated at about NIS 420 million. Even a day of product shortage could mean approximately NIS 1.7 million in damage to the company. Estimated mineral water sales at Neviot are NIS 290 million annually, resulting in a corresponding one-day shortfall of NIS 1.1 million in sales.

A drink industry executive notes that Neviot's owners are less threatened than Mei Eden by the contamination problem because Neviot is owned by the Central Bottling Company, which has a wider product line.

Another Israeli mineral water producer, Ein Gedi, which is jointly owned by Jafora-Tabori and Kibbutz Ein Gedi, has been benefiting from the crisis. When measured by number of liters sold, the company's market share jumped from 40% before their competitors' contamination problems, to 53% afterward. Aqua Nova and San Benedetto brands, which are distributed by Tempo, now have a collective market share of 17% as opposed to 8% previously. Super-Sol's house brand of mineral water now commands a 4% share, up from 3%. Aqua Nova has already announced that it is stepping up production since news of its competitors' problems broke. Ein Gedi is drawing on mineral water stocks that were produced for the higher-demand summer months.

In practice, since the end of February, Mei Eden and Neviot have not received permission from the Health Ministry to resume mineral water production, and the ministry says it is not clear when a green light to resume production might be forthcoming.

The companies did get the go-ahead for a few days in late February, when retesting of the springs showed normal results, but the ministry again blocked production when results showed a return of contaminants.