Nestle to sell US chocolate business to Ferrero Group for $2.8bn

(qlmbusinessnews.com via bbc.co.uk – – Wed, 17 Jan 2018) London, Uk – –

Nestle is selling its US sweets and chocolate business to Ferrero Group for 2.7bn Swiss Francs ($2.8bn; £2bn).

The Swiss food giant said it was offloading brands such as Crunch, Nerds, Runts and Butterfinger to focus on other products.

Italy’s Ferrero, which makes Nutella spread, Tic Tac and Ferrero Rocher, will become the US’s third biggest confectionery maker.

The deal is expected to go through by March this year.

Ferrero said the brands would give it “substantially greater scale” and “a broader offering of high-quality products” for US customers.

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The US confectionary market is the largest in the world, worth about $8bn a year according to Ibis World.

But Nestle lags behind the likes of Mars, Hershey and Lindt, and said its candy business made up just 3% of its US sales.

The deal would allow it to “invest and innovate” in other areas where it saw future growth or where it was already a market leader, said Nestle’s chief executive Mark Schneider in a statement.

These include pet care, bottled water, coffee, frozen meals and infant nutrition, he added.

Some analysts see the decision to get rid of the business, which also includes children’s favourites like Laffy Taffy, Chewy Gobstopper and BabyRuth, as another step by Nestle to focus on healthier products.

Since Mr Schneider took over last year, the Swiss business has bought companies that make vegetarian meals, vitamins and luxury coffee.

However, Nestle has said it is still wholly committed to its international chocolate brands such as KitKat.

Last year it said it was opening its first factory in Japan for quarter of a century on the back of demand for ‘exotic’ versions of the multi-fingered sweet.