Calistoga Beverage cuts 80 jobs

Calistoga’s largest employer, the Calistoga Beverage Co., is slashing more than 75 percent of its work force because of sluggish sales of bottled water and a decision to shift production to plants in Southern California, the company said Friday.

This week, parent company Nestlé Waters gave layoff notices to 80 workers at the bottling plant on the east side of Calistoga, namesake for the iconic brand founded in 1924. On Monday, Calistoga Beverage will employ just 24 workers at its Napa Valley production facility.

While Calistoga Beverage is expanding sales of its sparkling mineral waters and organic juices, the plant no longer bottles Arrowhead spring water, a sister brand that accounted for about 80 percent of its production.

“When your production volume goes away, you’ve got to justify the people who stay. It’s a tough time,” said Chris Canning, Calistoga Beverage’s director.

The layoffs are in response to poor sales for other brands in the Nestlé Waters portfolio. U.S. sales of nonalcoholic beverages are expected to grow only 1 percent this year, with little increase projected next year as consumers cut back on purchases in the face of higher energy and food costs, job losses and falling home values.

Nestlé Waters, which produces a handful of bottled waters, including Calistoga and Arrowhead, projects 2 percent growth in 2008 compared with 12 percent in 2007. Sales could pick up by 5 percent in 2009, but that would be only a modest gain, Canning said.

“As discretionary incomes got tighter and tighter, we felt the squeeze,” he said.

Sluggish sales have opened up capacity at two Nestlé Waters plants in Southern California, in Ontario and Cabazon, where bottling is more efficient and less costly than in Calistoga.

Moving Arrowhead spring water bottling out of Calistoga eliminates two of the plant’s three production lines. The Napa Valley facility will continue to bottle Calistoga sparkling mineral waters and Arrowhead sparkling spring water, Canning said.

Workers who lost jobs will be paid through the end of the year. They get full pay as severance for a minimum of four weeks and up to 26 weeks, depending on how long they worked for the company. Laidoff employees also continue receiving health benefits through their severance periods, Canning said.

The company is offering employee assistance, including possible job placement. Several beverage, transportation and other companies in the region have contacted Calistoga Beverage about hiring its former workers, Canning said.

The loss is a major blow to the Calistoga operation and the city, where the company was the largest employer.

Calistoga Beverage Co. grew after Nestlé Waters purchased it in 1980 — Nestlé’s first U.S. bottled-water acquisition.

Nestlé built a new plant a year later, expanding twice to its 125,000-square-foot size today.

The first expansion increased production of Calistoga spring water. The second added production capacity for bottling Arrowhead sparkling and spring waters.

But Nestlé pared back sales of the Calistoga brand seven years ago to emphasize Arrowhead, a brand with greater name recognition outside Northern California.

Then Nestlé returned its considerable marketing strength to the Calistoga brand two years ago, following with a new label, sales campaign and broader distribution.

Calistoga also introduced its line of sparkling organic juices, which are bottled under contract in Sonoma County.

The label wasn’t a hit and is undergoing another revision, but sales have been strong, Canning said.

Last year, sales of Calistoga products rose 11 percent and projections this year call for 9 percent growth. Next year, sales could increase 17 percent, as Calistoga products are sold in more markets across the West, Canning said.

“As the volumes increase, we will obviously re-examine the need to expand on that,” he said. “The brand has been here 84 years. Our desire is to see it continue.”

You can reach Staff Writer Michael Coit at 521-5470 or mike.coit@pressdemocrat.com.