Nestlé will sell confectionery business in the US
Food Corporation of Switzerland is likely to sell its confectionery business with about $923 million in annual revenue in the US in its biggest bid to restructure its portfolio.
The world’s largest packaged food maker said on Thursday it would “explore strategic options,” including selling its confectionery business that produces popular brands like 100Grand. , SkinnyCow and Raisinets.
According to the South China Morning Post , the reason why Nestlé wants to exit the confectionery business in the US may be due to the fact that the health and nutrition market has no longer aligns with their strategy, especially when the entire The packaged food industry is battling a decline in sales as a new generation of savvy consumers are moving towards fresher and healthier foods.
According to Reuters, annual revenue of $923 million from Nestlé’s US confectionery business represents only 1% of the company’s total revenue. “The above figure may not seem too significant compared to Nestlé’s global revenue. However, in our view, selling the confectionery business in the US could be an important step by new CEO Mark Schneider towards a more prudent and efficient capital allocation strategy, especially is when profitability and competitive position are diminishing,” said Edwardes Jones, an analyst at RBC Capital Markets.
In addition to the confectionery segment, Nestlé’s other product portfolio is diverse, including instant coffee, mineral water and baby food. However, according to Berstein analysts, Nestlé’s 3.2% revenue growth last year was among its slowest in a century, and the fifth year in a row of slow growth. again.
Faced with that situation, the Swiss food group has been forced to shift its focus to promoting activities in the fields of health, nutrition science, as well as buying and investing in a series of biotechnology companies, medical equipment. Not only that, Nestlé has also sold off underperforming businesses, including the healthy drinks segment and the PowerBar snack brand.
