August 29, 2018 / 12:34 PM / 22 days ago

Danone fund invests in German home mineral water machine

* Mitte raised $10.6 mln in financing round led by Danone's fund

* Mitte's system purifies tap water at home, adds minerals

* Move is part of push into health, environment protection

By Dominique Vidalon

PARIS, Aug 29 (Reuters) - Danone, the maker of Evian and Volvic, is investing in a German company developing a purifier that will enable households to turn tap water into mineral water, as the French group seeks ways to adapt to growing demand for healthier food and drink.

Berlin-based Mitte told Reuters it has raised $10.6 million in a financing round led by Danone Manifesto Ventures, a New-York-based fund set up in 2016 to invest in companies responding to changing consumer tastes for food and drink produced in ways that protect the environment.

Backing a company that could lead some consumers to ditch bottled mineral water may seem counterintuitive but Danone Manifesto Ventures's head, Laurent Marcel, disagrees.

"We do not see Mitte as a threat," Marcel said, "We think that bottled water still has a nice future and we view Mitte as offering a complementary solution that will contribute to the overall growth of the water category."

The global market for bottled water is forecast to reach $250 billion by 2021 from $210 billion in 2017, according to Euromonitor, as consumers move away from carbonated drinks and governments urge people to consume less sugar.

But consumers are increasingly aware of the damaging impact of plastic, with millions of tonnes of food packaging and bottles ending up in landfills and in the oceans, and companies around the world are trying to improve their green credentials.

Danone Manifesto Ventures bought a minority stake along with Singapore-based VisVires New Protein Fund and Karcher New Venture, the venture capital unit of cleaning technology firm Alfred Karcher SE & Co.

Mitte, founded in 2016, targets launching sales of its sleek, countertop device by mid-2019. It both purifies tap water and then adds minerals via cartridges.

HEALTH-CONSCIOUS CONSUMERS

It plans to use the funds to finance expansion in the United States, particularly in health-conscious California, as well as in Europe, Mitte Founder and CEO Moritz Waldstein said.

"Mitte is on a mission to improve lives with healthy water in an environmentally friendly system, Waldstein said. "We will start with a focus on some countries like the U.S. though we want to build a global presence."

Danone, the world's third-largest bottled water company after Nestle, and rival food and beverage companies are locked in a fierce race to gain access into the homes of more environment- and health-conscious consumers.

PepsiCo last week said it will buy carbonated drink-machine maker SodaStream, for $3.2 billion, as it battles Coca-Cola for an edge in the beverage market.

Mitte has not yet set the cost of its system. They were pitched at 429 euros in a kickstarter campaign last year, but may retail for less once launched, Mitte said.

The start-up expects its cartridges to last 250 litres before needing replacing, allowing it to undercut the typical cost of bottled water. Evian, Danone's main label, retails at 41 cents per litre in some Paris stores.

A dedicated mobile phone app will allow users to dispense water at a specific temperature, monitor mineral cartridge levels and order new ones.

Reporting by Dominique Vidalon; editing by Richard Lough, editing by Louise Heavens

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