Nestle, Unilever strike deals for niche rivals

LONDON. - Nestlé and Unilever have sought to respond to rapidly changing consumer tastes with separate purchases of two niche companies in voguish consumer goods sectors.

Nestlé, the Swiss food group, has acquired Sweet Earth, a California-based maker of chilled and frozen vegetarian and vegan foods, which follows its purchase of a stake in June in Freshly, a New York-based online ready meals company.

Unilever strengthened its position in the tea market with the purchase of Pukka Herbs, a British organic herbal tea company founded in 2001. The owner of mass-market Lipton and PG Tips wants to capitalise on the fast-growing €1,6 billion herbal, fruit and green tea market. Earlier this year, it launched a range of Pure Leaf herbal and speciality teas and bought the T2 premium brand in Australia in 2013.

Neither company disclosed the price paid for their respective acquisitions. Pukka’s revenues of £30 million and Sweet Earth’s sales of $25 million last year were tiny compared to annual revenues of €52,7 billion at Unilever and Nestle’s $94 billion.

But large multinationals are finding slower demand for their big brands, while entrepreneurial start-ups have been cashing in on fast-changing consumer tastes for new and niche products.

It makes sense for Unilever to expand into organic by acquisition which means it will acquire the organic supply chain instantly. Maria Mascaraque, analyst at Euromonitor, said: “Multinationals are following on the health and wellness trends closely, as they have to respond to a fast-changing consumer’s demand.”

Hope Lee, analyst at Euromonitor, said: “Unilever at the moment has very little presence in organic tea and Pukka ranks sixth in global organic tea, [and rival] Associated British Foods (Twinings) ranks fourth. It makes sense for Unilever to expand into organic by acquisition which means it will acquire the organic supply chain instantly.”

Kevin Havelock, head of Refreshment at Unilever, said: “Pukka is a premium player in the natural, organic, health and wellness segment which is fast-growing, attractive and scalable?.?.?.? The acquisition strengthens our tea business, addressing a gap in our portfolio.”

Nestlé is under pressure in the US, where it has lost market share in the ready meals sector. Mark Schneider, who became Nestlé’s chief executive at the start of the year, wants to expand in fast-growing food sectors and promote “nutrition, health and wellness”.

He is expected to set out more details at a strategy presentation later this month. Nestlé said the US “plant-based food” segment — a term that includes vegetarian and vegan foods — was growing at “double digit” rates, and was expected to become a $5 billion market by 2020.

A growing number of companies, including Coca-Cola and Danone — through its recent acquisition of WhiteWave — have made investments in plant-based foods.

Sweet Earth’s frozen meals, burritos and other products are sold in 10 000 stories. The acquisition was part of “the company’s evolution into new products and categories to match changing consumer preferences,” Nestlé said. – FT

It makes sense for Unilever to expand into organic by acquisition which means it will acquire the organic supply chain instantly

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