Snacks & Candy

What Does Nestle’s Candy Deal Mean for Convenience Stores?

Ferrero now the 3rd-largest confectionery company in the U.S.

ALBA, Italy, and VEVEY, Switzerland -- In a deal that shakes up the confectionery world, Nestle on Jan. 16 said it will sell its U.S. confectionery business to The Ferrero Group.

With this transaction, Ferrero will become the third-largest confectionery company in the U.S. market, adding Nestle's chocolate brands such as Butterfinger, Crunch, Baby Ruth, and 100 Grandas well as sugar brands such as SweeTarts, Laffy Taffy and Nerds. All told, Nestle’s U.S. confectionery business represents about 3% of U.S. Nestle group sales.

Nestle CEO Mark Schneider said the move allows his company to invest in and innovate across the categories in which it currently holds leadership positions and sees growth potential for, including pet care, bottled water, coffee, frozen meals and infant nutrition.

Giovanni Ferrero, executive chairman of the Ferrero Group, Alba, Italy, said this transaction, in addition to Ferrero’s recent purchases of Fannie May Confections Brands and the Ferrara Candy Co., gives Ferrero substantially greater scale, a broader offering of high-quality products, and new growth opportunities in the world’s largest confectionery market.

A Ferrero representative—who requested not to be named—could offer little insight into the future of Nestle’s confectionery brands. “It’s quite early to talk about how this acquisition will impact our trade strategy, if at all,” she told CSP Daily News. “We are still finalizing our plans for the brands, but at this present stage, we are not planning on phasing out any of the brands we will be acquiring from Nestle.”

The transaction, which is expected to close at the end of first-quarter 2018, does not include Nestle’s Toll House products, nor its Kit Kat brand, which Nestle remains committed to developing in its international confectionery activities around the globe.

Ferrero is best known for Tic Tac breath mints, Ferrero Rocher pralines, Nutella hazelnut spreads, the Fannie May and Harry London chocolate brands and the Ferrara Candy Co., which was recently acquired by a Ferrero affiliated company and whose portfolio of brands includes Trolli, Brach’s and Black Forest Gummies.

Ferrero's acquisition will include Nestle’s U.S. manufacturing facilities in Bloomington, Franklin Park and Itasca, Ill., and the confectionery-related employees. The company will continue to operate through the Nestle offices in Glendale, Calif., as well as from its other current locations in Illinois and New Jersey.

The United States is Vevy, Switzerland-based Nestle’s largest market, with sales of $27.4 billion across all brands in 2016. Nestle products can be found in 97% of U.S. households under brands such as Purina, Nestle Pure Life, Coffee-Mate, Gerber and Stouffer’s.

Nestle in the U.S. consists of eight main businesses: Nestle USA, Nestle Waters North America, Nestle Nutrition, Nestle Professional, Nespresso, Nestle Health Science, Nestle Skin Health and Nestle Purina PetCare Co.  The company employs 50,000 people in more than 120 locations across the United States in 77 factories and 10 research and development centers.

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