Perrier Founder Resigns; Recall Reserve Increased

From Times Staff and Wire Reports

The founder and chairman of French mineral water bottler Source Perrier has resigned, months after benzene contamination forced the company to pull all of its product from store shelves around the world and temporarily halt sales.

The company also said it would set aside $71 million more in 1990 to cover the costs of the recall. It had already made a provision of $78 million in its 1989 accounts.

Gustave Leven, 76, who set up the sparkling water business in the south of France and turned Perrier into a world-famous brand, told an annual shareholders meeting he was leaving the company after 42 years at the helm.

“The time has come to think about my successor, given my age and the new distribution of shareholdings,” he told the meeting.


Jacques Vincent, Perrier’s 67-year-old vice chairman and chairman of Exor, a holding company that has raised its stake in Perrier to 31.8% over the past three years, was named as Leven’s successor.

The discovery in February that bottled Perrier contained minute traces of benzene, a hydrocarbon thought to cause cancer in large quantities, undermined confidence in the drink favored by health-conscious consumers and billed as absolutely pure.

Perrier said it had traced the problem to a neglected filter at the Vergeze plant and withdrew stocks worldwide and replaced them with uncontaminated supplies.

Despite an expensive advertising campaign for the relaunch, Perrier sales are still only about 60% of those before the scare, Leven said.


In the United States, where Perrier is facing legal action by a group of consumers, the group is still having problems regaining its market share, especially in cafes, hotels and restaurants.

“Obviously, we are coming back slowly. It is difficult after disappearing for two or three months,” Leven said.

The scandal focused attention on the company’s secretive and old-fashioned management style, and Leven’s resignation had been widely predicted by stock market analysts.

Financial director Marcel Richard said a 25% increase in output should compensate for the 1990 provisions, leaving the net cost of the callback at only $78 million.

Some analysts interpreted Vincent’s election as a sign that Exor, which owns the world-famous wine Chateau Margaux and properties in Paris, was tightening its grip on the family-held company.

Perrier shares rose on the Paris stock exchange after the announcement, briefly touching $287, up $7 from the previous day.

“People feel (Perrier) has been a bit of a closed door. Hopefully, the prospects of new blood will change that,” said one analyst.

Leven will remain as Vincent’s permanent adviser and will chair Perrier’s mineral water subsidiary, Societe Generale des Grandes Sources d’Eaux Minerales Francaises.