Nestle Confirms Potential Sale of US Confectionery Business
16 Jun 2017 --- Nestlé is considering a possible sale of its US confectionery business as it explores “strategic options” as part of an on-going review examining future growth of the company. Only focusing on the US market, Nestlé’s review should be finished by the end of the year, but the announcement signals that the confectionery giant is clearly considering pulling out as a likely option.
Global chocolate sales have been stagnating as consumers switch to healthier alternatives and Nestlé has been struggling to boost profits and market share.
With sales of around CHF 900 million (US$924million) in 2016, Nestlé's US confectionery primarily includes popular local chocolate brands such as Butterfinger, BabyRuth, 100Grand, SkinnyCow, Raisinets, Chunky, OhHenry! and SnoCaps, as well as local sugar brands such as SweeTarts, LaffyTaffy, Nerds, FunDip, PixyStix, Gobstopper, BottleCaps, Spree and Runts. It also comprises the international chocolate brand Crunch.
According to Nestlé, the strategic review does not cover its iconic Toll House baking products, a brand which the company will continue to develop in the US market. The company also stresses that it remains “fully committed to growing its leading international confectionery activities around the world”, with particular emphasis of the global brand KitKat.
Nestlé's global confectionery sales amounted to CHF 8.8 billion (US$9 billion) in 2016.
With sales of CHF 26.7 billion (US$27.4 billion) in 2016, the US is Nestlé's largest market. The confectionery business represents about three percent of US sales and Nestlé products can be found in 97% of US households under brands such as Purina, Nestlé Pure Life, Coffee-Mate, Gerber and Stouffer's.
The company employs more than 51,000 people in around 120 locations across the US, including 77 factories and 10 R&D centers.
Nestlé chief executive Mark Schneider was appointed at the start of 2017. He in under pressure to boost profitability at the Swiss Group.
However, rather than invest in the US confectionery business further, Nestlé will focus on other growth opportunities.
“Nestlé will continue to invest and grow in the US, where it has leadership positions across a large number of categories such as petcare, bottled water, frozen meals, infant food and ice cream. Nestlé will continue to innovate across these categories to meet rapidly-changing consumer demand,” says a statement.
