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Nestle Considers Selling Its U.S. Candy Business as Demand Wilts

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Credit: Nestlé
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Nestle said it may sell its U.S. confectionery business including the Butterfinger and Crunch brands as it explores strategic options for the unit amid sluggish demand for chocolate.

The review will be completed by the end of the year, according to a statement Thursday from the Vevey, Switzerland-based company. The unit had sales of about 900 million francs ($923 million) in 2016.

The food industry is under pressure to reduce costs after Kraft Heinz Co.'s unsuccessful bid for Unilever earlier this year showed that even the largest companies in the industry could become targets. Chocolate makers especially are grappling with weak U.S. consumption as Americans increasingly turn their backs on sugar. In March, Hershey Co. announced plans to cut 15% of its workforce six months after rebuffing a takeover bid from Mondelez International Inc.

This is the first major strategic shift from Mark Schneider, who became Nestle's CEO this year. He has said he aims to boost the company's health strategy as well as focus on the businesses that are growing fastest, such as coffee and pet food. The Swiss company, which owns Cailler, the brand that invented milk chocolate, is now taking a step away from the category.

Nestle's confectionery sales declined for a fourth year in 2016. Sales in the U.S. were "disappointing" as competition increased, the company said in February.

The review doesn't include Toll House chocolate chips and baking products, as that brand remains strategic, Nestle said. The company said it remains committed to its chocolate business in the rest of the world, especially its KitKat brand.

Nestle spent $722 million on U.S. measured media in 2016, up slightly from $721 million in 2015, according to data from Kantar Media.

-- Bloomberg News, with additional data from Ad Age

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