Nestle May Sell Its U.S. Candy Business

June 15, 2017
Swiss parent begins review that should be concluded by year-end, but recommits to global confectionery.

Nestlé SA, which has been on a health kick lately, "will explore strategic options for its U.S. confectionery business, including a potential sale," the company said. Any deal should be completed by the end of this year.

The Swiss company long has been a third-place finisher in the competitive U.S. market, behind Mars and Hershey, although it said its 2016 U.S. candy sales amounted to about $900 million.

Nestle owns such popular chocolate brands as Butterfinger, BabyRuth, 100Grand, SkinnyCow, Raisinets, Chunky, Crunch, OhHenry! and SnoCaps, as well as sugar brands SweeTarts, LaffyTaffy, Nerds, FunDip, PixyStix, Gobstopper, BottleCaps, Spree and Runts.

The review covers only Nestle's U.S. market and also does not involve Toll House baking products, "a strategic growth brand which the company will continue to develop in the U.S. market.

"Nestlé remains fully committed to growing its leading international confectionery activities around the world, particularly its global brand KitKat," the company statement said. Nestlé’s global confectionery sales amounted to about $9 billion in 2016.

Nestle also appears committed to transforming the company into a business more aligned with health and health care products.

When Nestle's board of directors went looking for a new CEO last year, it hired Ulf Mark Schneider away from a German healthcare products company – and called it a "reconfirmation of the long-term strategy" of turning Nestle into a "nutrition, health and wellness company."

Nestle has made a number of recent acquisitions in healthcare products. In 2014, the Swiss company created Nestlé Skin Health SA to pursue "the field of specialised medical skin treatments," filling it first with the 50 percent stake in Galderma it didn't already own (L’Oréal held the other half) and then with Valeant Pharmaceuticals' rights to several key injectable aesthetic dermatology products.

While the U.S. is Nestlé’s largest market, the confectionery business here represents only about 3 percent of U.S. sales.

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