Nestle sells its U.S. confectionery business to Ferrero
Sheetal Sukhija - Wednesday 17th January, 2018
This was CEO Mark Schneider’s first big sale
Nestle is heading towards more healthier products
Nestle is the world’s biggest packaged food company
LONDON, U.K. - As it makes efforts to move towards healthier products, the Swiss food group Nestle announced on Tuesday that it had agreed to sell its U.S. confectionery business to Italy’s Ferrero.
Nestle said that the cash deal worth $2.8 billion marked CEO Mark Schneider’s first big sale and was a small step for the world’s biggest packaged-food company towards implementing its new strategy.
Announcing the sale, Nestle cited the unit’s weak position in the United States as the reason for the deal.
Nestle’s U.S. unit trails Hershey, Mars Inc and Lindt in the U.S.
Meanwhile, for Ferrero the deal offers a chance to build scale quickly in the U.S. market.
According to Euromonitor International, the maker of Nutella spread and Ferrero Rocher pralines will become the third-largest chocolate company in the U.S. and globally.
Giovanni Ferrero, executive chairman of the Ferrero Group, said in a statement, “We are very excited about the acquisition of Nestle’s U.S. confectionery business, which has an outstanding portfolio of iconic brands with rich histories and tremendous awareness.”
The Swiss company aspires to focus on “nutrition, health and wellness,” in a conscious shift away from junk and sugary foods, although the company has said it is committed to its non-U.S. confectionery business.
Analysts predict that the company could dispose of other weak brands, or even step away from candy altogether.
CEO Mark Schneider said in a statement said, “This move allows Nestle to invest and innovate across a range of categories where we see strong future growth and hold leadership positions, such as pet care, bottled water, coffee, frozen meals and infant nutrition.”
However, for now, Tuesday’s deal only accounts for about 1 percent of Nestle’s sales.
It is said to be part of a larger shake-up by chief executive Schneider, a healthcare industry veteran, who has been on the job for a year now.
Schneider’s main focus is to accelerate Nestle’s growth strategy in an increasingly tough environment for multinational food companies.
Currently, Euromonitor figures reveal that the United States accounts for nearly 19 percent of a global chocolate market worth $102.3 billion at retail.
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