Chocolate for sale.
Nestle SA (NSRGY) announced Thursday that it's exploring strategic options, including a possible sale, for its U.S. confectionery business.
The U.S. confectionery business generated sales of 900 million Swiss francs ($740.6 million) in 2016, or about 3% of the Swiss food giant's total U.S. sales of 26.7 billion Swiss francs. Global confectionery sales for Nestle were 8.68 billion Swiss francs in 2016.
The assets on the block include well-known chocolate brands such as Crunch, Butterfinger, Baby Ruth, 100 Grand, Raisinets, Oh Henry and Sno-Caps. The business also counts Skinny Cow ice cream as a brand, as well as SweeTarts, Laffy Taffy, Nerds, Fun Dip, Pixy Stix, Gobstoppers, Battle Caps, Spree and Runts.
Nestle's global confectionery sales fell 2.2% to 8.68 billion Swiss francs during the 2016 fiscal year, with operating profit in the division down 4.5% to 1.19 billion Swiss francs. The U.S. confectionery business' "disappointing" performance was attributed to "the competitive environment and low growth in the mainstream chocolate market."
Hershey and privately held Mars Inc. control 64% of the chocolate share in the United States, according to Euromonitor data, with no other company maintaining a market share above 4%. Euromonitor expects stagnant and slightly declining chocolate retail volume sales through 2021, noting FDA sugar labeling requirements and "consumers that have increasingly villainised sugar in the context of rising diabetes rates and concerns with childhood obesity." At 14% market share, Hershey also commanded the largest piece of the non-chocolate sugar confectionery market in 2016.
Nestle expects to complete the review by the end of the year.
Visit here for the latest business headlines