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Nestlé to cut back on US confectionery category due to low market share

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Douglas Yu

By Douglas Yu+

Last updated on 19-Jun-2017 at 13:59 GMT2017-06-19T13:59:45Z

Nestlé currently ranks fourth in terms of market share in the US confectionery category.  Pic: ©iStock/robtek
Nestlé currently ranks fourth in terms of market share in the US confectionery category. Pic: ©iStock/robtek

The group said it may even sell one of its confectionery businesses by the end of 2017 to boost its efforts in other categories where it has a stronger presence. 

Instead of making significant investment in the US confectionery category, it would rather focus on other growth opportunities, said Nestlé.

The global company produces domestic brands, such as Butterfinger, BabyRuth, 100Grand, SkinnyCow, Raisinets, Chunky, as well as the international chocolate brand Crunch in the US.

No.4 in US confectionery

Latest Euromonitor data shows Nestlé currently ranks fourth in terms of market share in the US confectionery category. Mars, Hershey and Mondelēz are the top three players.

“We usually aim to hold number one or two positions in categories in which we operate, most often leveraging our global brands,” a Nestlé’s spokesperson said. However, “in the US confectionery market, our brands are mostly local and Hershey holds the license for our global KitKat brand.”

In 2016, Nestlé reported “disappointing” performance of its US confectionery portfolio, hampered by a competitive environment and low growth in the mainstream chocolate market. 

Its division produced sales of $923m, which represented only 3% of its US business.

Only cutting back in US

Nestlé said the strategic review of its confectionery business is a “US-only consideration, meaning it is market specific to the US.”

It also did not specify which business could be stripped, saying “it is premature to speculate about specific outcomes of the ongoing strategic review.

“At a global level, Nestlé remains committed to growing its leading international confectionery activities around the world, particularly its global brand KitKat.”

Nestlé’s global confectionery sales amounted to $9bn in 2016, growing by 1.8% compared to the year prior, the company reported.

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