Nestle Will Sell It’s US Confectionery Business To Ferrero For $2.8 Billion

Swiss food company, Nestle, has announced that it will sell its US confectionery business to Italian chocolate and candy maker, Ferrero, for $2.8 billion. Nestle CEO, Mark Schneider confirmed the deal on Tuesday. According to Nestle, its US confectionery sales in 2016 were an estimated $900 million, totaling to about 3 percent of the American subsidiary’s sales. The move stems from Nestle’s desire to steer toward the manufacturing of healthier products.

“This move allows Nestle to invest and innovate across a range of categories where we see strong future growth and hold leadership positions,” Schneider said.

According to the Nestle CEO, the company will focus more on pet care, bottled water, coffee, frozen meals, and infant nutrition. Nestle apparently wants to shift from manufacturing of junk and sugary foods to focus on “nutrition, health, and wellness”. However, they still claim to remain committed to its non-US confectionery business.

In addition, the food company has cited the branch’s lackluster profits in the United States, with rivals, Hershey, Mars, and Lindt, leading in sales. Regardless, Nestle still remains the world’s largest packaged-food company, according to the 2017 Forbes Global 2000.

The research company, Euromonitor International, states that Luxembourg-based Fererro is the third-largest chocolate maker in the world.

Rachel Moreau, a senior food and nutrition analyst at Euromonitor International, claims that Ferrero’s latest acquisition will help the company cut a bigger stake in the US food industry.

Nestle’s latest deal only accounts for an estimated 1 percent of its sales, however, the move is reportedly part of a shake-up initiated by Schneider, who is also a healthcare industry veteran. He became CEO of the company last year.

The CEO took it upon himself to boost Nestle’s revenue by focusing on products that have untapped potential. For example, Nestle’s flagship chocolate bars, such as Butterfinger and Crunch, have barely matched sales with other rivals such as Lindt, who have swayed consumers into buying fruit bars and similar chocolate brands.

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