Nestle has been in the candy game since the 19th century. But the candy game is becoming rougher — as the health problems with excessive sugar consumption become more visible. Nestle has gone so far as to try to create a more healthy form of sugar, but it looks instead that it’s just getting out of the candy game entirely, at least in the US, and is selling its US candy operations to Ferrero, owners of Nutella.
The $2.8 billion deal — which sells off Butterfinger, Crunch, and Baby Ruth (Kit Kat is excluded from the deal since it’s owned by Hershey in the US) to the company best known for putting hazelnuts in everything — is more interesting for what it means for Nestle as a company. The candy sales were about 1% of the company, which has diverse interests in just about every type of packaged food on the planet and will still be making candy for the rest of the world. But Nestle has been moving away from junk food, buying up vitamin companies and looking to pick up other consumer health arms.
For Ferrero, this opens up a US market where it’s mostly known for hazelnut spread and those chocolates you give to your grandmother every holiday. Ferrero’s been trying to get in on the candy market in the US for years now, buying the chocolatier Fannie May last year. This puts the brand in far more stores and places in the US than it had access to, previously, and, of course, opens the door to more collaborations. Nutella Butterfingers, anyone?
Still, for both involved, it’s a question of where our overall eating habits are heading. Nestle’s been well behind both Hershey and Mars in the American market for years, which is part of the reason it happily unloaded a bunch of beloved US brands to have more cash for vitamins. And as American tastes have shifted to fancier chocolates in smaller proportions, as our overall chocolate consumption lags well behind Europe, and as climate change threatens to end the very idea of chocolate, it may also be a question of whether Nestle is simply getting out of the market while the getting is good.
(via Reuters)
