Switzerland’s food manufacturing giant Nestlé is considering selling off its struggling US confectionary business, at the same buying a minority stake in healthy ready meal company Freshly.
Nestlé’s US confectionery business had sales of around $925 million in 2016. It 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. The strategic review does not cover Nestlé’s Toll House baking products.
In statement, the company said: “Nestlé remains fully committed to growing its leading international confectionery activities around the world, particularly its global brand KitKat. Nestlé’s global confectionery sales amounted to CHF 8.8 billion [around $9 billion] in 2016.
“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.”
This announcement was made shortly before news broke about the acquisition of a stake in New York-based Freshly. The company was founded in 2015 and has around 400 staff operating in Arizona.
Nestlé USA Chairman and CEO Paul Grimwood said in a statement: “Acquiring a position in Freshly not only gives us access to this growth market, but it also brings reciprocal benefits for both companies. Nestlé will gain visibility into Freshly's advanced analytics and its highly effective distribution network and Freshly will benefit from our R&D, nutrition and sourcing expertise.”
It is no coincidence that this deal emerges days after Amazon said it would buy Whole Foods Market for $13.7 billion - a deal that could transform the high-end organic chain into a mass-market supermarket.