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NESTLE

Swiss giant Nestlé makes $2.8 bn sweet deal with Ferrero

Nestlé said on Tuesday it has agreed to sell its US candy business to Italy's Ferrero for CHF 2.7 billion ($2.8 billion/2.3 billion euros) in cash as the Swiss food giant shakes up its product portfolio.

Published: 17 January 2018 08:24 CET
Swiss giant Nestlé makes $2.8 bn sweet deal with Ferrero
Photo: Joe Raedle/Getty Images North America/AFP
Ferrero, known for its Tic Tac, Nutella and Ferrero Rocher brands but which has traditionally preferred organic growth to acquisitions, will now be picking up Crunch, Butterfinger and Baby Ruth from Nestlé.
   
The sale will make Ferrero the third-largest confectionary company in the US market.
   
According to media reports, Ferrero competed with major chocolate manufacturer Hershey and private funds, including Rhone Capital, to secure the deal.
   
Executive chairman Giovanni Ferrero said that after the acquisition the Ferrero Group “will have substantially greater scale, a broader offering of high-quality products to customers…” in the United States, the world's largest confectionary market.
   
Nestlé's chief executive Mark Schneider said the deal “allows Nestlé 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.
 
$8 billion market
 
Nestlé has begun to reposition itself since Schneider, who previously headed up German healthcare group Fresenius, took over the reins of the Swiss firm at the start of last year.
  
It has snapped up companies that make vegetarian meals, vitamins and luxury coffee.
   
Its US candy business registered sales of some 900 million Swiss francs in 2016, in a market worth an overall $8 billion, according to Ibis World.
   
The figure only represented around three percent of its overall US sales, Nestlé said.
   
The company added it remains fully committed to growing its leading international confectionery activities around the world, particularly its global brand KitKat.
   
The family-run Ferrero businesses has 22 production sites and 30,000 employees.
   
In ten years the company has more than doubled its turnover, to more than ten billion euros.
   
Since 2014 it has acquired the Turkish group Oltan, specializing in hazelnuts, and the British chocolatier Thornton's before starting its offensive in the US.
   
The deal is expected to be finalized by the end of March, Nestlé added.
 

NESTLE

‘Unlimited resources’: Switzerland’s Nestle goes vegan

Swiss food giant Nestle, which has made billions with dairy products, said Monday it will host start-ups that want to develop vegetarian alternatives.

Published: 29 September 2020 15:33 CEST
'Unlimited resources': Switzerland's Nestle goes vegan
Photo: SEBASTIEN BOZON / AFP

Nestle could thus find itself at the forefront of a sector that has strong growth potential, an analyst commented.

It plans to open its research and development (R&D) centre in Konolfingen, Switzerland to “start-ups, students and scientists” a statement said.

In addition to testing sustainable dairy products, the group plans to encourage work on plant-based dairy alternatives, it added.

Chief executive Mark Schneider was quoted as saying that “innovation in milk products and plant-based dairy alternatives is core to Nestle's portfolio strategy.”

The group unveiled a vegetable-based milk that had already been developed with the process, and technical director Stefan Palzer told AFP it planned to focus on 100-200 such projects a year.

Jon Cox, an analyst at Kepler Cheuvreux, noted that while Nestle had missed some consumer trends in the past, it has now “taken something of a lead in the plant-based alternative market for food”.

And “given its pretty much unlimited resources, Nestle is going to come out one of the winners in the space,” Cox forecast in an e-mail.

Nestle said that “internal, external and mixed teams” would work at the R&D centre over six-month periods.

Nestle would provide “expertise and key equipment such as small to medium-scale production equipment to facilitate the rapid upscaling of products for a test launch in a retail environment,” it added.

The Swiss food giant has long been known for its dairy products, but faced a boycott in the 1970s for allegedly discouraging mothers in developing countries from breastfeeding even though it was cheaper and more nutritious than powdered formula.

On Monday, the group's statement also underscored that the research initiative was part of its commitment to help fight global warming.

“As a company, we have set ambitious climate goals. This is part of our promise to develop products that are good for you and good for the planet,” it said.

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