How Perthshire-based Highland Spring aims to turn over £200m with 'nature’s magic potion'

Leading the charge is Simon Oldham, who was just over a year ago named sole MD of the firm, which has 420 staff, having previously led it with Mark Steven, who was retiring. Oldham says the duo had worked really well together as joint MDs for about a decade, and getting key strategic Highland Spring ducks in a row. “There's a lot going on,” he says.

The business, which is owned by Mahdi Al-Tajir who is worth more than £1.6 billion according to the 2024 Sunday Times Rich List, in March of this year announced an investment of about £10m to power up its manufacturing site at its base in Blackford, Perthshire, able to boost capacity by 25 per cent or 100 million litres a year, with the launch of a flavoured still water range.

Oldham says the broader flavoured water market produces 400 million litres a year, and offers the company (which started out in 1979) a wide pipeline for expansion. A report from Innova Market Insights on the bottled water market in Europe found that 58 per cent of launches of such a product in 2023 were flavoured.

Water is “bucking a lot of trends at the minute”, Oldham believes, saying other categories of fast-moving consumer goods have struggled in recent years, stymied by high inflation and the cost-of-living crisis.

But water has continued to grow in both volume and value, he says. The UK bottled water production industry was worth £1.3bn in 2023, according to a report from market research firm IBISWorld, which also flagged Highland Spring as one of the largest players.

The Perthshire business saw its UK sales overflow the 500 million litre waterline in 2022, up by about 3 per cent year on year, while it extended its market share to 13.9 per cent from 13.1 per cent over the same period. Underlying operating profit grew to £4.5m from £3.4m, “in spite of the challenging trading environment and inflationary pressures”.

However, plastic bottles are in the crosshairs of environmental campaigners, who say such products take 450 years to biodegrade, and have been found by Keep Scotland Beautiful to be the most littered item in Scotland’s rivers and waterways.

Oldham says Highland Spring aims to provide healthy hydration in an environmentally sustainable way, and says bottled water is the most sustainable product in its sector. “A bottle of water, especially if it's got a high level of recycled content, has the lowest carbon footprint of any beverage.”

He also says Highland Spring was the first brand in the UK to introduce a 100 per cent recycled and recyclable bottle, after trialling this in 2018. In 2022, then-First Minister Nicola Sturgeon officially opened its new rail freight facility in Blackford, facilitated with about £4.5m of Scottish Government funding, expected to reduce carbon dioxide emissions by 3,200 tonnes a year, and helping the business become net zero by 2040. Oldham says Highland Spring is in the nearer term focusing on halving key emissions by 2030, and is installing an on-site solar farm, “which will provide about a quarter of our energy requirements as well as additional benefits for the local community”.

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The FMCG veteran joined the organisation 14 years ago, originally as sales director, after spells at Procter & Gamble, behind household products such as laundry detergent brand Arial, where he latterly served as national sales manager of its petfood division. He then joined Scotch whisky-maker Whyte & Mackay, where he climbed the ranks to become UK MD.

The chance then came up to take a seat at Highland Spring, harnessing his understanding of and belief in brands. He saw in it a “sleeping giant” with great potential and strong purpose. It has been boosted by increased interest among consumers in health and wellbeing, accelerated by Covid, and provenance (people now “lift the bonnet up and look inside to see what brands really are about”).

He says the firm’s plain water offering will remain key, but looking beyond this will be essential to “continue to grow ahead of the market”. And there is further potential in the brand, which he says already competes with global giants including Coca-Cola (at one point reported to be eyeing a takeover of Highland Spring) and Pepsi.

Since the Perthshire water-bottler was founded 45 years ago, there have only been four years when it hasn’t grown, “which is quite phenomenal”, says Oldham – and he now wants it to exceed rather than achieve the £200m sales target, with some future growth areas yet to be determined. Innova Market Insights has predicted that “personalised water solutions tailored to individual needs and preferences” could be a driver of the bottled water sector.

Oldham says: “Do I think [Highland Spring] will just be doing bottled water and a little bit of flavoured in five years? Probably not. I can see us expanding as long as it's true to that core purpose that we have. I think the momentum we've got is really powerful. We've got the wind behind us.”