ARLINGTON, VA. — In December 2016, Nestle S.A. made what the company termed a “groundbreaking” discovery that structures sugar crystals in a way that fools the tongue into thinking products have the same level of sweetness even though the one using the technology has up to 40% less sugar.
While Nestle predicted the technology would appear in new products by 2018, the company’s most notable moves this year in the confectionery sphere were very different. In January 2018, 13 months after the announcement, Nestle said it was selling its U.S. confectionery business to The Ferrero Group in a $2.8 billion transaction. In July 2018, Nestle said it was selling confectionery brands in New Zealand.
While still upbeat on prospects for the new technology globally, Rui Barbas, Nestle USA’s chief strategy officer, said the sale of the confectionery businesses demonstrates the company is highly focused in pursuit of success in each of the regions in which it competes.
Speaking Aug. 1 with Food Business News, Mr. Barbas said two overarching metrics determine whether a category represents a good fit for Nestle: the attractiveness of the category and the company’s prospects for winning.
“The new technology represents transformative confectionery innovation,” he said. “It will be a global platform around the world allowing sugar reduction.
“There is nothing wrong with the confectionery business. The company reached the conclusion it didn’t have what was necessary to win given its low market share but great brands. Nestle targets to be No. 1 or No. 2 in the categories in which it competes. More often than not, No. 1. So, we are shifting to other portfolio priorities, to pursue the other opportunities.”
With that in mind, the company debated what to do with its confectionery brands such as Baby Ruth and Butterfinger.
“Confectionery is a very big and important business for us around the world,” he said. “But not the United States.
“In the United States, we had a very low market share. So we didn’t feel we have the ability to win. That was the rationale behind the decision to dispose of the business. We continue to have a successful confectionery business around the world.”