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Nestlé to Sell its U.S. Confectionery Unit

The maker of Baby Ruth, Butterfinger and Crunch candy bars wants to shed that section, but will keep its Toll House baking products.
June 19, 2017

​GLENDALE, Calif. – Nestlé SA will jettison its U.S. confectionery unit, The Wall Street Journal reports. The unit produces Baby Ruth, Butterfinger and Crunch candy bars. However, Nestlé indicated the Toll House baking products would not be part of the sale. Last year, the candy unit brought in $922 million in sales, 3% of the company’s total U.S. sales.

CEO Mark Schneider has been tasked with moving more aggressively into healthier foods. By selling off the candy side of its business, Nestlé could focus more intently on water, pet food and coffee, as well as health sciences. “Chocolate is [a] category under pressure amid the trend [toward] health or fitness bars,” said Jon Cox, who leads Swiss equities at Kepler Cheuvreux.

Nestlé has long been a leader in the confectionery market, ranking third by market share behind Mars Inc. (No. 1) and Mondelez International Inc. (No. 2). The company ranks No. 4 in the United States.

U.S. candy makers have stiff competition from healthier snacks and technology and social media too, which siphons off the idle time of consumers. “They are fighting against more competitors than ever before,” Nielsen analyst Jordan Rost said.

Nestlé isn’t the only food and candy company that is considering more healthy options. Earlier this year, Hershey’s pledged to lower the calories for half of its king-size and regular candy bars, plus acquired a chocolate-covered fruit company and beef jerky products. Mondelez International also announced it would debut a line of snacks without artificial or GMO ingredients.