Nestlé’s new CEO moves to sell sweets business
Mark Schneider, head of the world’s biggest food company, is putting the business on a diet
Nestlé’s new CEO is putting the world’s biggest food company on a diet, moving to shed its U.S. confectionery business as he seeks growth from healthier and more profitable businesses.
Half a year after taking the helm at the Swiss company, Mark Schneider put brands such as Butterfinger and BabyRuth up for sale late Thursday.
Analysts said the move signalled the new CEO, with a background in health care, was serious about transforming a company wrestling with the slow growth of the packaged food industry.
“Looks like the start of a new era for Nestlé,” wrote Jean-Philippe Bertschy, an analyst at Bank Vontobel. He said the move to divest a unit whose brands also include Gobstopper and LaffyTaffy raises the possibility of strategic reviews of other underperforming businesses, such as the Herta processedmeat brand, U.S. frozen foods, ice cream or pizza.
The review spearheaded by Schneider marks a departure from the approach of his predecessor as CEO, Paul Bulcke, who talked about selling ailing businesses but mostly clung to such units in the hopes of revamping them.
Food companies are under pressure to reduce costs after Kraft Heinz’s unsuccessful bid for Unilever earlier this year showed that even the largest players could become targets. Chocolate makers especially are grappling with weak U.S. consumption as Americans increasingly turn their backs on sugar.
Schneider, who took over at Nestlé after leading Germany’s Fresenius, is the first outsider to be given the Nestlé CEO job in almost a century. He has said he aims to boost the company’s health strategy as well as focus on the businesses that are growing fastest, such as coffee and pet food. The review of the U.S. confectionery business, which had sales of $923 million US in 2016, is his first major strategic move at his new employer and hints at other changes.
“Quiet man Mark Schneider is continuing to make waves,” wrote Martin Deboo, an analyst at Jefferies. “We doubt this will be the end of portfolio moves.”