The ownership of the Arrowhead Water Bottling Company has changed, and with it the identity of its parent company. Unclear yet is how or if the ownership shift will change the company’s controversial drafting of water from the San Bernardino National Forest.
Last month, Nestlé S.A., a Swiss multinational food and drink processing conglomerate corporation headquartered in Vevey, Vaud, Switzerland shed its Nestlé Waters North America division, selling that portion of its operations pertaining to bottling drinking water in the Unitied States and Canada to One Rock Capital Partners, LLC, in partnership with Metropoulos & Company in what was represented as a $4.3 billion transaction.
One Rock and Metropoulos obtained from Nestlé Waters North America its American/Canadian water portfolio including everything but the North American marketing rights to Perrier. Now in the possession of Poland Spring® Brand 100% Natural Spring Water, Deer Park® Brand 100% Natural Spring Water, Ozarka® Brand 100% Natural Spring Water, Ice Mountain® Brand 100% Natural Spring Water, Zephyrhills® Brand 100% Natural Spring Water, Arrowhead® Brand Mountain Spring Water, Pure Life® and Splash, One Rock and Metropoulos have consolidated those holding under the name BlueTriton Brands.
“I am very excited to join with my One Rock partners and lead this company as we begin a new chapter together as BlueTriton, building on the rich heritage of our historic, iconic, and beloved brands,” said Dean Metropoulos, chairman and interim chief executive officer of BlueTriton Brands. “We have all become increasingly aware of how critical our products and their rapidly evolving innovations are to human wellness and our communities. Our unique U.S. and Canadian platforms provide us opportunities to touch every consumer, in all facets of their lives, and we look forward to strengthening our bonds with consumers and communities by leading with innovation and relevance.”
Tony W. Lee, the managing partner of One Rock, said, “The company has an established reputation as a top provider of water and hydration that is favored by consumers across North America. We see significant opportunity to further the market leadership of BlueTriton and look forward to building on the strong foundation that exists in the business today.”
Triton is a god of the sea in classical Greek mythology. Combined with the color blue, representing water, the new name reflects, the company said, its “role as a guardian of sustainable resources and a provider of fresh water.”
That representation may be put to the test with regard to its Arrowhead Brand holding. There is uncertainty as to whether Nestlé Waters North America had rights to the water it obtained high in the San Bernardino Mountains which it bottled and sold under the Arrowhead brand.
Over the past five years, the Arrowhead water withdrawals in the San Bernardino National Forest have been under a great deal of scrutiny. These withdrawals occur at the Strawberry Creek headwaters around 5,000 feet elevation using a series of mountainside horizontal borehole wells and tunnels that annually drain multi-millions of gallons of forest groundwater through a two-mile pipeline that terminates at a holding area along Old Waterman Canyon Road, above the City of San Bernardino. The water is then picked-up by large tanker trucks and hauled to a bottling plant. The groundwater withdrawals are reported to the San Bernardino Municipal Valley Water District, which two months ago was undertaking to initiate litigation against Nestlé Waters of North America over those withdrawals. On March 2, 2020 the San Bernardino Municipal Valley Water District Board of Directors met in closed session to discuss pending litigation against Nestlé Waters of North America, Inc. Upon the board reconvening, it was announced that the board gave direction to legal counsel, but no further information has been forthcoming.
There are questions as to whether Nestlé formerly had or BlueTriton currently has a legitimate claim to and any future guaranteed access to the water that is the centerpiece of the Arrowhead Spring Water Bottling Enterprise.
The California State Water Board, which has ultimate determinative authority over water right issues throughout the Golden State, has an ongoing investigation into the Arrowhead operation and the company’s water claims. The board’s authority extends to water on federal lands.
Decades ago, Nestlé inherited the Arrowhead water bottling operation from Perrier, which had itself purchased the operation from BCI-Arrowhead. Previous to that, corporate predecessor Arrowhead Puritas was extracting water from Strawberry Canyon based on a ten-year permit issued by the National Forest Service in 1978 and renewed annually at a cost of $524 per year. Arrowhead Puritas was bought out by Beatrice Foods and then morphed into the BCI-Arrowhead Drinking Water Company, which acquired the still-active permit. The BCI-Arrowhead Drinking Water Company applied to extend that permit and, in 1987, while that application process was still uncompleted, Perrier purchased the BCI-Arrowhead Drinking Water Company. The then-pending water extraction permit renewal required a U.S. Forest Service review of the water drafting arrangement and its environmental/ecological impact, which at that point the U.S. Forest Service did not have the immediately available resources to carry out. In a gesture of compromise, Perrier was allowed, pending the eventual Forest Service review, to continue to operate in Strawberry Canyon by simply continuing to pay the $524-per year fee to perpetuate the water extraction under the terms of the expired permit. In 1992, when Nestlé acquired the Arrowhead brand from Perrier, it inherited the Strawberry Canyon operation and continued to pay the $524 annual fee without renewing the permit, which at that time existed under the name of the “Arrowhead Mountain Spring Water Co,” one that was never listed legally in corporate filings, but which is currently operating under Nestlé Waters of North America, Inc.
In 2017, the California State Water Board’s initial investigation limited Nestlé’s temporarily authorized water withdrawals in the San Bernardino Mountains to 26 acre-feet a year.
An acre foot equals 325,851.4 gallons or 43,560 cubic feet, the amount of water that would cover one acre, 43,560 square feet, to the depth of one foot.
The 26 acre-feet allotment is about 20 percent of the 192 acre-feet (62.56 million gallons) Nestlé was previously siphoning from Strawberry Canyon annually. Records indicate that Nestlé has not complied with the reduced authorized water orders, and that the company took 144 acre-feet in 2017, 141 acre-feet in 2018 and 210 acre-feet in 2019, with no indication of compliance in 2020 or 2021.
In this way, Nestlé’s Arrowhead Spring Water bottling division was potentially vulnerable to enforcement action and hefty fines. BlueTriton has inherited that vulnerability. Moreover, continued depletion of the Strawberry Canyon water source is likely to prompt the state water board to make an exhaustive review of the water rights pertaining to the Arrowhead Spring Water operation that grew out of that company’s corporate predecessor’s claims to the water drawn at the 5,000 foot elevation in Strawberry Canyon.
The Sentinel’s review of the public record indicates those rights were erroneously conflated with a spring much lower down the mountain at the 2,000 foot elevation proximate to the historic Arrowhead Springs Hotel. It thus would appear that Nestlé did not, in fact, have a valid claim to the Arrowhead water it sold to One Rock Capital Partners, LLC and Metropoulos & Company.
In a recent correspondence obtained by the Sentinel, state water board officials indicated that the new owners would need to comply with California laws and regulations and be the respondent to the water rights being investigated.
The US Forest Service permit for the Arrowhead pipeline expires in August 2021. According to the permit terms, the permit is non-transferable; the new owner would need to reapply for the permit with conditions attached. If the water rights case rules against Nestlé/BlueTriton and a determination that environmental damage has been done to Strawberry Canyon and/or forest property dependent upon the aquifer Strawberry Creek supplies, specific liability on Nestlé’s/BlueTriton’s part could follow, including accountability for making false claims to the federal government to obtain a permit. This legal trouble was only a fraction of the liabilities that were mounting for Nestlé Waters North American water bottling operations in the U.S. and Canada prior to the sale to One Rock Capital Partners, LLC and Metropoulos & Company. Across the country there was further litigation over Nestlé’s water drafting including a class action lawsuit involving Poland Springs in Maine.
Metropoulos & Company publicist, Hannah Arnold, has not responded to the Sentinel’s inquiries as to whether the company’s officers are aware of the full extent to which the rights to the water in Strawberry Canyon are under challenge and if the company would be willing to forsake that part of BlueTriton’s water portfolio if the California State Water Board makes a determination that the company’s claim is invalid.
-Amanda Frye & Mark Gutglueck