European food giant Nestlé has steadily expanded its footprint across North America with a succession of important acquisitions in niche sectors as well as the main stream. The first key purchase was Carnation in 1985; more recent deals include local brands Purina petfood, Dreyer's ice cream, Gerber baby food and DiGiorno frozen pizza, each of which has delivered the group a dominant position in a particular sector. However, Nestlé has found it far more difficult to establish a strong US presence for its major European brands such as Maggi or Nescafe, and some products which play an important role in its international profile - breakfast cereals, for example - are not sold at all in America. It has begun to consider scaling down other weaker US segments, such as confectionery, for example. It announced a strategic review of that particular business in 2017 which could lead to sale.
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|Hot Pockets||Nestlé Good Start|
|Stouffers||Dreyer's Ice Cream|
|Nestlé Tollhouse||Lean Cuisine|
Adbrands Weekly Update 15th Sep 2017: Having missed out on a string of major acquisitions initiated by new rival Jacobs Douwe Egberts and its controlling shareholders, Nestle finally took steps to protect its key global coffee franchise with a deal for fast-growing US firm Blue Bottle Coffee. The target company retails a wide variety of premium speciality coffee blends direct to consumers via ecommerce subscription or through a small but expanding chain of retail outets. Blue Bottle is hoping to have 55 stores in the US and Japan by the end of this year. Despite its small size, Nestle is understood to have acquired a 68% shareholding in the business for around $500m. Current management led by CEO Bryan Meehan and founder & chief product officer James Freeman will continue to run the company and control the remaining shares. It will operate as a standalone entity, partnering Nestle's existing Nescafe and Nespresso brands.
Adbrands Weekly Update 24th Aug 2017: Nestle's US bottled water Poland Spring is the target of a class action lawsuit brought by residents of Maine - where the brand originates - and neighbouring states where it is distributed. According to the suit, Poland Spring is not spring water as Nestle claims, but actually common groundwater collected from man-made wells in Maine's "most populous counties", in several cases, these are situated near land fill sites and waste dumps. The suit alleges that Nestle has piped well water into artificial springs to give the appearance of being natural: "If consumers knew where the defendant’s wells were actually located, rather than being misled by defendant’s falsely reassuring labels depicting pristine scenes, and knew the extent to which defendant treated or purified the water, they would not buy, or would not pay premium prices for, Poland Spring Water products." Nestle denies the allegations.
Adbrands Weekly Update 22nd Jun 2017: Nestle effectively put its US confectionery division up for sale, with the announcement it is exploring strategic options for the business. This is an oddly local business, lacking most of the group's main international brands, not least Kit Kat, rights to which are controlled in the US by Hershey. Instead, Nestle USA's confectionery products are led by Butterfinger, Baby Ruth, Raisinets, Oh Henry and various other brands sold almost exclusively in North America. The sole international brand is Nestle Crunch. Clearly behind-the-scenes attempts by Nestle to acquire Hershey (or perhaps Lindt) have got nowhere. The company said local confectionery sales were around $915m in 2016, so finding a buyer among big-hitters Mondelez, Mars, Hershey and possibly even Ferrero shouldn't be too tough. Separately, Nestle has acquired a small stake in US healthy meal kit company Freshly as part of a modest fundraising exercise to inject $77m of capital into the business. "Acquiring a position in Freshly not only gives us access to this growth market, but it also brings reciprocal benefits for both companies," said Nestle USA CEO Paul Grimwood. "Nestle will gain visibility into Freshly's advanced analytics and its highly effective distribution network and Freshly will benefit from our R&D, nutrition and sourcing expertise."
Adbrands Weekly Update 13th Nov 2014: Nestle reduced its digital roster to eight agencies. The big winners here were Dentsu Aegis-owned 360i - a new addition - which collected several accounts including Lean Cuisine and Skinny Cow ice cream; Interpublic's Huge, which added Nestle's coffee brands; and Engine Group's Deep Focus, which gained Edy's/Dreyer's, Tombstone pizza and Nesquick.
Adbrands Weekly Update 10th Jul 2014: Nestle continued to prune its US portfolio, selling the shrinking Juicy Juice brand to investment firm Brynwood Partners, somethingof a specialist in orphan brands divested by major manufacturers. Its other assets include Zest soap (ex-Unilever), VO5 (ex-Alberto Culver), LA Looks and Soft&Dri (ex-Henkel).
Adbrands Weekly Update 9th Feb 2014: Nestle announced the sale of sports nutrition snack PowerBar, and its Australian counterpart Musashi, to cereal group Post Holdings. Its disposal had been rumoured for several months. The transaction price was not disclosed, but PowerBar generates sales of around $175m annually. Last year the group sold the Jenny Craig slimming business to private equity and other non-core disposals are expected this year as Nestle moves to streamline its portfolio.
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Free for all users | see full profile for current activities: Nestlé opened its first facility in the US in 1900 to make powdered milk. During the 1930s the company began to extend its influence into other areas, launching the Nestlé Crunch chocolate bar in 1938, and Nestlé Tollhouse baking products a year later. Extending the technology it had developed in the coffee market, it introduced its first Nestea powdered tea in 1948, along with Nesquik chocolate powder (originally marketed as Nestlé Quik). During the 1970s and 1980s the company expanded rapidly through a string of acquisitions, starting with Stouffer's. Founded by the Stouffer family in the 1920s as a coffee-shop, the business later expanded to a chain of restaurants. When customers began asking for take-out orders in the 1950s, the family had the idea of freezing its most popular dishes for convenient home preparation, and Stouffer's had became a substantial brand by the time it was acquired by Nestlé in 1973. Nestlé's most significant add-on was the Carnation Company in 1985, which added Friskies petfood and the Libby's brand to the portfolio along with Carnation and Coffee-mate.
Also that year the group acquired Hills Brothers and MJB ground coffees in an unsuccessful bid to break the stranglehold of Folgers and Maxwell House on the US coffee market. (The brands were later sold to Sara Lee). Wonka sugar confectionery joined the portfolio in 1988 through the acquisition of Sunmark; Baby Ruth and Butterfinger in 1990, from Nabisco; sports nutrition product Powerbar in 2000. Also in 2000, Nestlé made its biggest acquisition to-date with the capture of Ralston Purina for $10.3bn, followed by the $2.6bn acquisition of Chef America, marketer of frozen "stuffed sandwiches" under the Hot Pockets, Lean Pockets and Croissant Pockets brand names (combined sales of around $930m in 2013); and the reverse takeover of Dreyer's in 2003. Although it has grown substantially in recent years, Nestlé has also taken the opportunity to divest some of its less profitable products, such as Peter's chocolate, Ortega Mexican foods and the Crosse & Blackwell preserves range. Wonderball, a confectionery product loosely based on Ferrero's Kinder Surprise eggs and launched in 2002, also proved unsuccessful and was later sold. See full profile for current activities
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