Coca-Cola is rumoured to have made a fresh approach to the owners of Scotland’s Highland Spring mineral water, sparking talk of a possible £500 million deal.

Speculation of a deal comes after Coca-Cola’s purchase last week of glacéau, an American vitamin-added water, for $4.1 billion (£2.1 billion), and suggestions that it is preparing to launch Chaudefontaine, its Belgian water, in Britain this summer.

The American soft drinks behemoth has been looking for a way of reentering the mass UK bottled water market since the acute embarrassment three years ago of having to withdraw its Dasani water brand after just a few weeks.

Although Dasani had proved a success in America, it was a marketing disaster in Britain. First, it was revealed that it was merely mains tap water that had been purified. Then tests showed that it had been contaminated with bromate, a cancer-causing chemical.

Coca-Cola was forced to withdraw Dasani from supermarket shelves and it has not returned, leaving the company only with the small Malvern brand, which came with a portfolio of Schweppes mixer drinks, to satisfy the growing British thirst for mineral water.

Since 1989, consumption of bottled water has risen from 350 million litres to two billion litres, creating a market worth more than £1.6 billion. The market is predicted to grow to five billion litres a year as summers become longer and hotter.

Highland Spring, the second-biggest-selling mineral water in the UK behind Evian, of Danone, is owned by the al-Tajir family of Dubai. Mahdi al-Tajir, who has an 18,000-acre estate in Perthshire, has built a £2 billion fortune from metal trading, oil and gas and property.

Based in Blackford, Perthshire, Highland Spring was founded in 1979. For more than decade it lost money, but in the 15 years since Joe Beeston became chief executive it has been revived and now exports to more than 50 countries. Last year, it made a pretax profit of £3.2 million from turnover of £51 million.

In 2001, it acquired the neighbouring Gleneagles water brand and in the same year Mr Beeston recognised the potential of the children’s market when he launched a brand extention featuring cartoon characters such as Bugs Bunny under a licensing deal with Warner Brothers.

In an interview with a Scottish newspaper last year, Mr Beeston said: “We have talked to Coke on and off for three years and discussed every conceivable possibility, but we have never ever got to the stage where we could put something together that could suit everybody.” Last night, the rumour was that a solution may have been found.

A spokesman for Highland Spring said: “The rumour has been going around for some months. It’s all speculation at the moment.”

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