The first Big Food merger of 2018 is poised to be a sweet one: Italian chocolate maker Ferrero SpA announced its intention to buy Nestle’s U.S. candy business for $2.8 billion. Bloomberg reported the rumor last week, and today Nestle confirmed the deal. In addition to its namesake foil-wrapped truffles, Ferrero Rocher also makes Nutella and Tic Tacs.
Nestle’s confectionery division includes numerous iconic candy bars such as Butterfinger, Baby Ruth, Kit Kat, and Nestle Crunch. Though the world’s biggest food and beverage brand has long been synonymous with chocolate in the U.S., it’s pivoting away from sweets as sales of sugary products have declined in recent years. Nestle has instead poured its money into indie coffee brands, acquiring a majority stake in Bay Area-based Blue Bottle last year and also snapping up Austin-based Chameleon Cold Brew.
“This move allows Nestle to invest and innovate across a range of categories where we see strong future growth... such as bottled water... [and] coffee,” Nestle CEO Mark Schneider said in a statement.
Bloomberg notes that Nestle rival Hershey has also made moves to diversify its business, recently coughing up more than $900 million to buy the snack brand that produces SkinnyPop popcorn. Falling sales have plagued the soda industry, too, with companies like Coca-Cola investing in less-sugary options like Topo Chico mineral water.
Of note: The sale excludes KitKat and Toll House. A Ferrero-Nestle merger will certainly present some intriguing chocolate possibilities: Nutella Baby Ruths? Butterfinger rochers?
• Ferrero Near Deal to Buy Nestle’s U.S. Chocolate Unit [Bloomberg]
• Nestle Wants Out of the American Chocolate Industry [E]
• Nestle Buys Hipster Coffee Brand Blue Bottle [E]