Nestlé S.A. (NSRGY) is the largest food and beverage company in the world, with more than 2,000 brands sold in close to 190 countries. The Swiss multinational began as a producer of infant food in 1867. In 1905, the company merged with the Anglo-Swiss Milk Co. to become Nestlé Group. Nestlé survived World War I, and its products were a staple for U.S. servicemen in Europe during World War II. Since World War II, Nestlé has mounted an aggressive expansion strategy by making a long string of major acquisitions, helping it to expand and strengthen its product portfolio. Nestlé's total sales in 2020 were roughly $92.2 billion (CHF 84.3 billion), with a trading operating profit of $16.2 billion (CHF 14.9 billion). As of July 14, 2021, the company had a market cap of approximately $347.9 billion.
Nestlé's major strategic deals over the past 5 decades include producers of vitamins, baby food, pet food, frozen food, a meal delivery service -- and even a giant licensing agreement with Starbucks that dwarfs the size of many of its takeovers. More recently, the company has made no secret of its desire to expand into healthier foods as obesity becomes a bigger problem. Nestlé highlighted this new focus when it announced in 2018 the sale of its U.S. candy business to Ferrero SpA, one of the world's largest chocolate and confectionary companies. It's divested other assets since then. In 2019 it sold its U.S. ice cream business for roughly $4 billion. And in early 2021 it sold its regional spring water brands, purified water business, and beverage delivery service in the U.S. and Canada for $4.3 billion. Nestlé also has expressed interest in making acquisitions in organic products, which are increasingly popular with consumers concerned about the environment and their health.
Below, we'll explore seven of the most significant acquisitions in the company's history. Nestlé does not provide a breakdown of the profits and sales that these acquisitions contribute to the company.
Starbucks Corp. Licensing Deal
- Type of business: Coffee
- Licensing price: $7.2 billion
- Date of purchase: Aug. 28, 2018
One of the most important deals in Nestlé's history is not an acquisition, but rather a licensing agreement. We include it in this story because it constitutes one of the largest—and potentially most lucrative—deals in the company's history. In 2018, Nestlé agreed to pay Starbucks Corp. (SBUX) nearly $7.2 billion for the rights to sell Starbucks-branded coffee in retail stores outside of Starbucks locations. This deal does not allow Nestlé to put its name on Starbucks' products, only to sell those items in retail stores.
The Starbucks deal strengthened Nestlé's already strong footprint in the coffee industry with brands such as Nescafe and Nespresso. Within six months of the agreement, Nestlé already had launched 29 Starbucks products across 40 countries.
Gerber Products Co.
- Type of business: Baby Food
- Acquisition price: $5.5 billion
- Date of purchase: Sept. 3, 2007
Founded in 1927, Gerber Products Co. was acquired by Nestlé in 2007. At the time of the acquisition, Gerber had nearly $2 billion in annual sales and was owned by pharmaceuticals company Novartis AG. In 2020, Nestlé's Nutrition and Health Science division, which includes Gerber, accounted for 14.4% of the company's total sales. Prior to the Gerber acquisition, Nestlé had no major presence in the U.S. baby food market. In recent years, Nestlé has prioritized the development of non-GMO and organic products in order to expand the Gerber brand.
Ralston Purina Co.
- Type of business: Pet Foods
- Acquisition price: $10.3 billion
- Date of purchase: Dec. 12, 2001
Nestlé Purina PetCare was founded as the Robinson-Danforth Commission Co. in 1894 and later became known as Ralston Purina. Under Nestlé, the business has dramatically expanded its global sales and is now called Nestlé Purina PetCare, with popular brands such as Friskies, Pro Plan, and Felix. In 2020, Nestlé's PetCare segment represented 16.6% of the company's total sales. Ralston Purina fit well with the company's aggressive growth strategy, while also expanding its base beyond its traditional focus on food and beverages for consumers.
Atrium Innovations Inc.
- Type of business: Vitamins and Supplements
- Acquisition price: $2.3 Billion
- Date of purchase: Dec. 5, 2017
Atrium Innovations is a maker of vitamins and nutritional supplements. It started as a subsidiary of a Canadian biotech company before being spun off in 2006. It was acquired by an investment consortium led by private equity firm Permira Funds. As consumers grew more health-conscious, Nestlé moved toward healthier brands and purchased Atrium. The deal boosts Nestlé's participation in the vitamin and supplement market and serves a dual purpose: it expands Nestlé's overall business and helps it to market itself as a healthier company.
- Type of business: Frozen Foods
- Acquisition price: $105 million
- Date of purchase: 1973
Stouffer's was founded in 1922 and went on to build a national chain of restaurants over the next several decades. A key development for the company occurred in 1954, when Stouffer's began to create frozen meals for sale. Today, Stouffer's is best known for its line of frozen food products. Nestlé purchased Stouffer's in 1973 from Litton Industries Inc., a defense contractor that had expanded to offer retail products including microwave ovens. At the time of the acquisition, frozen meals were popular with consumers and Stouffer's was a major brand. Stouffer's, one of Nestlé's earlier deals, provided a template for future forays into healthier foods. In 1981, Stouffer's launched its successful Lean Cuisine line of low-calorie frozen entrées.
- Type of business: Meal Delivery Service
- Acquisition price: Up to $1.5 billion
- Acquisition date: Oct. 30, 2020
Freshly launched in 2012 as a meal delivery service providing fresh, fully-cooked meals to customers across the U.S. The company offers a weekly subscription service, capitalizing on a growing trend of subscription delivery services across a variety of product areas. In 2020, the company delivered more than 1 million meals per week to about 20,000 U.S. zip codes. Nestlé acquired Freshly in 2020, maintaining it as a standalone company with complete control of its products and subscription pricing. Nestlé's acquisition helped it to gain additional exposure to the growing market for healthy foods while also capitalizing on the recent rise of meal delivery services such as Blue Apron.
The Bountiful Company (core brands)
- Type of business: Supplements and Nutrition
- Acquisition price: $5.75 billion
- Acquisition date: April 30, 2021 (announced)
Launched in 1971, The Bountiful Company is a nutrition company providing vitamins, supplements, and related products. Nestlé acquired The Bountiful Company's core brands for $5.75 billion in spring 2021, including Nature's Bounty, Solgar, Osteo Bi-Flex, and Puritan’s Pride. Nestle's goal is to fold these brands into Nestlé Health Science to make it a global leader in nutritional supplements, vitamins and minerals. The transaction is expected to close in the second half of 2021.
Nestlé Diversity & Inclusiveness Transparency
As part of our effort to improve the awareness of the importance of diversity in companies, we have highlighted the transparency of Nestlé's commitment to diversity, inclusiveness, and social responsibility. The below chart illustrates how Nestlé reports the diversity of its management and workforce. This shows if Nestlé discloses data about the diversity of its board of directors, C-Suite, general management, and employees overall, across a variety of markers. We have indicated that transparency with a ✔.
|Nestlé Diversity & Inclusiveness Reporting|
|Race||Gender||Ability||Veteran Status||Sexual Orientation|
|Board of Directors|
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