Nestle Just Sold Its Chocolate Brands To Ferrero, Here’s Why

There were rumors last week that Ferrero was going to buy the Nestle U.S. confectionary unit, and the speculation is now over as the deal officially went through, as of today.

The deal doesn’t mean that Nestle is selling off it’s entire operation, though, just its U.S. sweets division.

For $2.8 billion, Ferrero will now be in control of Nestle’s chocolates and candy such as Butterfinger, Baby Ruth, Crunch, 100 Grand, Laffy Taffy, and Sweet Tarts.

This immediately makes Ferrero the third largest candy brand in the U.S., as the company seems to have a bit of a sweet tooth itself, also buying Ferrara Candy, who makes Lemonheads, for a cool $1.3 billion.

Nestle brought in over $900 million in sales from its U.S. confectionary products in 2016, so why sell it?

According to a press release after the sale, Nestle CEO Mark Schneider said the company would rather focus on building its coffee, bottled water, pet care, infant nutrition, and  frozen meals.

While its chocolate seemingly sold a lot in the U.S., that 900 million seems paltry when you see that Nestle’s overall sales, from all its brands, were over 27 billion in 2016.

Sure, when you think Nestle, you think chocolate, but they also own brands such as Gerber baby foods, Purina pet food, PureLife water, and even Stouffer’s frozen meals.

On top of that, thanks to some tricky loopholes, the U.S. is the only country where Nestle doesn’t own Kit Kat Bars (Hershey owns it in the U.S.), the 5th highest selling candy in America. Outside of the U.S., where they have full control of the Kit Kat brand, it is the 3rd highest selling chocolate in the world, so they’re still doing well with the sweets, globally.

You can add the fact that candy sales have been slowly declining as Americans become more health conscious. Not to mention the growth of self-checkout doing away with last-second impulse candy buying, costing candy companies billions, according to QZ.

It’ll be up to Ferrero to add or detract from the established candy brands, but knowing that they own a particularly popular chocolate hazelnut spread, we can only hope some cooler Nutella chocolates will be coming to the U.S. soon.