Nestlé SA (Switzerland)

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Ice cream had been an important growth area in recent years, with sales rising by well over 60% between 2000 and 2006, mostly through acquisition. The group's international ice cream products include the Drumstick, Maxibon, Extreme and Sin Parar novelty brands, and it also experienced considerable success with a range of low fat home-serve ice creams. In fact, in 2006, Nestlé claimed to have overtaken Unilever to become the global #1 after bolting on key regional ice cream businesses including the Moevenpick ice cream brands in Germany and Austria; and control of Haagen-Dazs and Dreyer's in the US. In 2003, Nestlé acquired rights to Moevenpick in the rest of the world (except New Zealand), and acquired Delta Ice Creams of Greece at the end of 2005 for €240m. Most of the group's regional ice cream businesses were rebranded under the Nestlé umbrella. Those that remain with separate brands include Frisco (Switzerland), Boci (Hungary), Motta (Italy), Camy (Spain) and Savory (Chile). The group became local market leader in several key markets including Spain, Switzerland, and Scandinavia; the USA, Canada, Peru, Chile and Argentina; and several Asian territories.

However after nine years of trying to break the stranglehold of Unilever and Mars in the UK, Nestlé conceded defeat in 2001, selling its operations there (the former Lyons Maid business) to R&R Foods, a leading manufacturer of own-brand supermarket ice creams. A similar strategy resulted in the sale of Peters ice cream of Australia to private equity backers in 2012. (Peters was itself subsequently acquired by R&R in 2014). South Africa ice cream followed suit in 2014, and late the following year the group began talks to offload most of its remaining operations outside the US to R&R in return for a 50% stake in the enlarged business. A deal was finally reached in April 2016 and completed in October. The new business, named Froneri, took charge of all of Nestle's remaining ice cream business in Europe, the Middle East, the Philippines, Argentina and Brazil. Froneri also controls Nestle's other frozen foods businesses in Europe, excluding pizza, as well as chilled dairy in the Philippines. The key ice cream markets excluded from the deal are the US and Canada, which Nestle continues to manage itself. Nestle reported total ice cream sales of SFr 3.95bn (€3.7bn) in 2015.

According to Euromonitor estimates, Haagen-Dazs was the #2 ice cream brand in 2015 with sales of $2.1bn. Unilever controlled the remaining six top-sellers. Nestle's biggest brand was Dreyer's/Edy's in the US, ranked #7 with sales of $773m. Drumstick (a version of Unilever's Cornetto) was the company's next biggest brand, ranked #11 with global sales of $616m. It was followed by Nestle-brand tub ice cream at $449m and Dreyer's/Edy's Outshine frozen juice and yogurt bars at $436m.

Unilever is the dominant competitor in this sector. Euromonitor estimated Nestle's global share by value of ice cream at 10.8% in 2015, to Unilever's 22.8%. R&R had 0.8% share that year, ranking 6th behind General Mills, Lotte and Mars.

Nestlé Nutrition was spun out of the Milk Products business as a separate unit in 2006. It now operates across two sectors: infant nutrition and healthcare nutrition. The largest of these is infant nutrition, operating under the overall umbrella of the Nestlé Baby brand. There are numerous sub-brands, which vary widely from market to market. They include Cerelac and Nestum infant cereals, Nan milk formula and key local brands Beba in Germany, Mucilon in Brazil, Nestlé Good Start, Lactogen and several others. NaturNes is a new brand launched in 2008, the umbrella for an extensive range of more than 40 different flavours of 100% natural fruit and vegetable purees. However the most significant brand of all is Gerber, which dominates the US baby food sector with more than 80% local share and is also present in Mexico and other Latin American markets. This was owned until 2007 by another Swiss company, Novartis. After several months of negotiation, Nestlé was able to persuade Novartis to part with the business in early 2007 for $5.5bn. In 2012, following a fiercely competitive auction, Nestle agreed to acquire Pfizer's Wyeth infant nutrition business as well, with brands including SMA, Progress, Promil and S-26, for a lavish $11.85bn, more than five times annual revenues. Some regional brands were sold to comply with regulators, and others were divested (including Alete and Milasan in Germany) in 2014 to better streamline the portfolio. Nestle was already the global leader in the milk formula sector with over 17% share (Euromonitor 2010). The addition of Pfizer increased that to just under 23%. Mead Johnson ranks #2 with over 15%, followed by Danone (13%) and Abbott (11%).

The group operates in the healthcare or medical nutrition sector under the banner of Nestlé Health Science. Older brands in the portfolio include Nutren for children, and Peptamen and Clinutren for older or geriatric patients. These were strengthened in 2006 by a separate agreement with Novartis to acquire its US medical nutrition business, including adult nutritional products Boost, Resource and Isocal, and medical dieting formula OptiFast. The purchase price was around $2.5bn. In 2017, it announced the purchase of Canadian company Atrium Innovations, owner of a broad range of vitamins, minerals and dietary supplements sold through health food stores and pharmacies. Its top brands include US-based Garden Of Life and Pure Encapsulations and Germany's Wobenzym. Once completed that deal would push Nestlé ahead of Abbott to become is the leader in healthcare nutrition.

Two other nutrition businesses have been sold. The group developed an involvement in performance nutrition in 2005 with the acquisition of sports brands such as PowerBar, Pria and Musashi. These brands were sold in 2014 to US cereal group Post Holdings. Also in 2005, Nestlé moved into a fourth sector with the acquisition of Jenny Craig, a leading brand of weight management snack bars and prepared food products, marketed mainly in North America, Australia and New Zealand. The Jenny Craig brand launched in France and the UK for the first time in 2010. However, the business failed to gain ground. The European units were later shut down and the US and Australian arms of Jenny Craig were sold in 2013.

Combined sales for Nestlé Nutrition & Health Science in 2016 were SFr 15.04bn (€13.8bn), of which around three-quarters was contributed by the infant nutrition portfolio. However, in 2017, Nestle took steps to break up what had previously been a single global business, and instead split it into regional units in order to react more effectively to local requirements.

Prepared Dishes & Cooking Aids encompasses a wide range of convenience foods and sauces, with combined sales in 2016 of SFr 12.15bn (€11.1bn). The biggest international brand in this portfolio is Maggi, encompassing frozen foods and a wide range of sauces, soups and prepared dishes. In 2004 Nestlé acquired a 49% stake in Germany's #2 frozen pizza brand, Wagner, and increased that to a controlling stake during 2005. Stouffers is the leading brand in the US frozen dinner/entree segment, supported by the Hot Pockets frozen filled sandwich range (now also marketed in Europe under the Maggi umbrella). Buitoni markets Italian cuisine, while Herta is the leading name in the chilled processed meat market in continental Europe with a wide range of charcuterie, pates, sliced meats and frankfurters. Thomy and Torchin are dressings and condiments brands in Western and Eastern Europe respectively. Winiary in Poland markets a range of local sauces and mayonnaises. In 1999 the group took an 80% stake in Totole, a leading chicken bouillon brand in China. Also that year, Nestlé sold off its Findus frozen food brand in Europe (apart from in Switzerland and Italy) to buyout fund EQT Scandinavia, but retains the Lean Cuisine prepared meals brand in Australia and in North America (as part of Stouffer's). The UK's Crosse & Blackwell ambient condiments portfolio was sold in 2002, and the remaining US sauces and preserves were divested to JM Smucker in 2004. The Ortega Mexican foods business was also sold in 2004. However, in 2009, some of the competition with Kraft was defused with Nestle's acquisition of its rival's extensive frozen pizza business in North America, led by DiGiorno. In 2017, it sold a collection of frozen meals and vegetables in Italy, including the brands La Valle Degli Orti, Mare Fresco and Surgelafish, to local rival Frosta. The group's main global rivals in culinary foods are Unilever and, to a lesser extent, Kraft Heinz.

Nestlé Professional is the group's food service division, supplying hotels, restaurants and other such institutions and organisations. It offers a broad range of branded Nestlé consumer products as well as specific foodservice-only products and solutions. Branded subsidiary businesses include Chef, Davigel and Minor's.

Petcare reports separately following the creation of Nestlé Purina Pet Care (see separate profile). Sales in 2016 were SFr 12.07bn (€11.1bn or $12.3bn). Rivals include Mars, Colgate-Palmolive, JM Smucker and Spectrum Brands.

Nestlé is a major manufacturer of Chocolate & Confectionery, with a leading position in several continental European markets. The group has a strategic partnership with German manufacturer Barry Callebaut to supply chocolate mass in France, Italy and Russia, and agreed an alliance in 2007 with Belgian luxury chocolatier Pierre Marcolini in 2007 to pool the latter's technical and artistic expertise with Nestlé's global marketing skills. Nestlé is the world's #3 confectioner (behind joint leaders Mars and Mondelez. Confectionery sales in 2016 were SFr 8.68bn (€8.0bn or $8.8bn). Chocolate contributed just under three-quarters of that sum, with the rest split more or less equally between sugar confectionery and biscuits. Euromonitor estimated 12.1% share of the global chocolate confectionery market in 2013.

The group markets sugar confectionery in selected markets, notably the US, UK and Australia, as well as parts of Latin America and Asia. It sells biscuits in Latin America as well as Israel and Italy. Many of the company's biggest brands derive from its UK-based division, previously Nestlé Rowntree. The two biggest confectionery lines are the Nestlé megabrand and Kit Kat. Other international products include Smarties, Lion, Quality Street, Crunch, After Eight, Willy Wonka, Fruit Pastilles (or Frutips) and Polo (or Lifesavers). Popular regional brands include Baci (a version of Hershey's Kisses), Perugina (in Italy), Cailler (in Switzerland), Rossiya (in Russia), Orion (in the Czech Rep), Caja Roja, Sao Luiz and Star. In 2007, the group acquired premium Russian chocolatier Ruzskaya Confectionery, which makes local brands Comilfo and Ruzanna. In 2011, it acquired a 60% stake in Chinese confectioner Hsu Fu Chi for around SFr 1.4bn. Nestlé owns biscuit brands Sao Luiz, Passatempo and McKay in South America, and acquired La Universal in Ecuador and Excelsia in India in 1999.

Until recently Pharmaceutical Products comprised two businesses. Alcon Laboratories was sold to pharmaceutical group Novartisin 2010. It is the world leader in ophthalmology, producing drugs Patanol/Opatanol, Travatan and Colxan, a range of contact lens cleaners (including Opti-Free), and instruments and equipment for eye surgery. Nestlé spun off a stake of around 23% in Alcon to the public in 2002. In 2008, it agreed to sell its remaining shares in the business for around $39bn. That transaction took place in two installments. Novartis acquired an initial 25% holding immediately for $11bn, and absorbed Nestlé's remaining shares in summer 2010.

Separately, Nestlé is also the single biggest shareholder in cosmetics giant L'Oreal, although it reduced its shareholding from just under 30% of equity to 23% in 2014. At the same time, L'Oreal exited a long-running pharma-based joint venture, Galderma which specialises in treatments for skin conditions, including topical acne treatments Differin and Epiduo, and Clobex for psoriasis. Nestle took full control of that business, which became the core of new division Nestlé Skin Health. (A second joint venture, Laboratoires Inneov, which marketed nutritional beauty supplements to promote healthy skin and hair was wound down in early 2015). Also in 2014, the group added to its portfolio with the acquisition for $1.4bn of a range of skin fillers from Valeant Pharmaceuticals, including Botox competitor Dysport as well as Restylane, Perlane and Sculptra. Nestle ramped up the operations of this now wholly controlled Skin Health business with the creation in 2016 of a joint venture with direct sales giant Guthy Renker to market its $1bn-selling skincare treatment Proactiv. Nestle has a 75% stake in the business. However, the Skin Health division has not been the success Nestle had envisioned. Over-expansion led to a sharp decline in performance during 2016, leading to a sharp down-scaling of the unit's operations.

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