Nestlé’s confectionery business in the US is in trouble due to change of preference of the customers from Butterfinger and Crunch candy bars to healthy snacks. The total worth of this confectionery is expected to value at least $3 billion. According to the reports, their US confectionery unit manages to generate total revenue of $922 million in sales which was equivalent to only 3 percent of their total sales in the US. This is considered to be the biggest decision taken till date by the current Chief Executive Mark Schneider since he took the position of the chief executive in the company in January. He is assigned with a very important responsibility to promote the current food products like the Nesquik chocolate mix as a healthier food product to the US customer.
The shift from traditional candy business towards healthier food products could be only possible when they divert their focus from candy business like Baby Ruth and Nerds to currently demanding and fast growing sectors like coffee, water, and healthier food products. According to the reports, the chocolate industry along with sugary drinks and salty snacks are under pressure to cut down their cost and provide healthier benefits to the consumer to convince them to buy it. No doubt the US is one of the most potential markets for Nestle and hence they have set up 87 factories producing a variety of food products with total employee strength of 51,000 generating total sales revenue of $27 billion for the company.
They have managed to successfully introduce some famous brands like DiGiorno pizza, Haagen-Dazs ice cream in the US market and had a turnaround in their sales revenue of their frozen food brand name Lean Cuisine. Nestle has confirmed that they have focused on selling their candy bar business only and wanted to retain their most popular brand Kit Kat and another confectionery brand since their total revenue from these brands is very important for them. The confectionery market is facing rigorous competition from the companies producing healthier snacks due to shifting in consumer preferences and has decided to shut down their business. Major food processing companies like Kellogg Co. and Campbell Soup Co. have shut down their operations and Hershey decided to reduce their human resource force by minimum 15 percent in coming two years. This proves that the consumer prefers yogurt and fruit and nut bar over traditional chocolates which are assumed to be full of carbs.