Could Hain Celestial purchase be the next step for Nestle?

23 Nov 2017 --- As consumer tastes shift to healthier food, makers of organic and vegetarian food Hain Celestial Group sits in the “sweet spot” of current trends, and speculation is mounting over what companies are eyeing a possible takeover bid of the on-trend company. Coming out as one of the potential top suitors is Nestlé.

On top of the attraction, Hain has in terms of on-trend products and brands, Nestlé has made no secret of the fact that it is considering a possible sale of its US confectionery business as it explores “strategic options” as part of an on-going review examining the future growth of the company.

Global chocolate sales have been stagnating as consumers switch to healthier alternatives and Nestlé has been struggling to boost profits and market share.

Appointed at the beginning of the year, Nestlé chief executive Mark Schneider is under pressure to boost profitability at the Swiss Group which has stated that rather than invest in the US confectionery business further, Nestlé will focus on other growth opportunities.

Exactly what they are in the longer term remains to be seen, but Nestlé USA did signal its intentions to diversify its coffee portfolio recently by snapping up organic cold brew coffee company, Chameleon Cold-Brew, a leading provider of premium-crafted coffee sourced consciously and grown sustainably.

A possible purchase of Hain could be Nestlé’s next move into the healthy food market which is gaining traction in markets all over the world, however, there is no official line coming from either company. 

That is not stopping market analysts and US financial media in particular from speculating over the future of Hain. 

Stressing that no official bids have been launched, Bloomberg suggests that talks have already taken place between Nestlé and Hain.

Ed Hammond, from Bloomberg News, recently spoke about the potential for Nestlé to bid for the US food giant. 

He said: “Hain sits in the “sweet spot” of current trends towards health and wellness which we’ve seen going back over the last few years. WhiteWave, which Danone bought last year, was a great example of that.”

“Consumers are moving away from eating chocolate bars and low-quality cereals and other things and are supposed to be thinking healthier and this fits into that trend of slightly healthier snacks.”

“I think this is going to be one of those companies where there is going to be a lot of interest in a little bit of the company. There are some really attractive assets in Hain, they have some good businesses, but they also have a lot of not very good businesses so it’s unclear to us at the moment whether the people looking at doing this are looking at doing a whole company transaction or if they’re just going to try to cherry-pick brands.” 

“Although it is unclear whether potential suitors for Hain are looking at a whole company transaction or select certain brands, and if the latter is the case, how will Hain react to companies essentially cherry-picking what they do and don’t want?”