Nestlé sells its US confectionery off tea brands to sharpen focus on bottled water

Zurich — Nestlé has sold two of its iced tea brands in North America as the world’s biggest food maker presses ahead with reshaping its business to focus on new trends and consumer healthcare.

Private equity firm Fireman Capital Partners said on Monday it had linked up with Dunn’s River Brands to buy the Sweet Leaf Tea and Tradewinds businesses from Nestlé North America.

The deal, for an undisclosed sum, is expected to be completed by the end of 2017.

Nestlé, which is also looking to sell its US confectionery business, declined to say if other sales within the drinks business were planned.

The sale was part of its strategy of focusing on its core waters brands in North America, which include Poland Spring and Arrowhead, Nestlé said.

"We took this difficult but important step to position us to further deliver upon our healthy hydration ambitions," a Nestlé spokeswoman said.

"We are confident that these changes to our portfolio will allow us to sharpen our focus on legacy brands, while identifying new areas of growth and innovation," she said.
The spokeswoman declined to give the size of the business, but said tea was only a small part of the Swiss company’s overall operations.

Under CE Ulf Mark Schneider, who took over in 2017, Nestlé has embarked upon an overhaul of its brands and strategy as it seeks to overcome sluggish growth in its traditional businesses which has come under the spotlight from activist investors.
In September, Schneider said the company was intensifying its focus on high-growth categories such as bottled water, coffee, pet care and baby food.
The company announced in December the purchase of Canadian vitamin maker Atrium Innovations for $2.3bn, its fourth purchase in recent months.

It bought Sweet Earth vegetarian foods and Blue Bottle coffee in September and Chameleon Cold-Brew coffee in November as it adjusts to a market  in which customers favour smaller, independent brands.

The maker of Gerber baby food, Purina pet food and Nescafe coffee came under pressure in 2017 to improve returns from shareholder Third Point. It has since announced a share buyback and a margin target.
As well as making acquisitions, Nestle has also been  trimming its operations, including cutting jobs in its skincare health business.
Nestlé said in June it might sell its US confectionery business, which includes regional mass-market brands such as Butterfinger, Crunch and 100 Grand and could be valued at around $2bn.

Reuters