Nestlé and Lotte Wellfood are to wind down their joint venture in South Korea.
Lotte-Nestlé Korea, set up more than a decade ago, will cease operations in the first quarter of next year, according to a statement issued by the Swiss giant’s subsidiary in the country.
Go deeper with GlobalData
Established in 2014, Lotte-Nestlé Korea marketed pet-food products, as well as coffee and culinary lines for the foodservice sector.
Thomas Caso, the CEO of Nestlé’s operations in South Korea, said: “Nestlé and Lotte have collectively made this decision after comprehensively considering various factors. These factors include: our overall global priorities, as well as the domestic market conditions and our shared abilities to win. Both companies will strive to ensure stable operations and change management until the end of joint venture operations.”
Next month, Nestlé will set up a new pet-food business in South Korea, Nestlé Purina PetCare.
Just Food asked Nestlé what impact the decision will have on jobs and whether the new pet-food unit would handle the coffee and culinary brands locally. The company said it could not comment beyond the official statement.
Earlier this month, the world’s largest food group announced it had acquired full control of Chinese confectionery business Hsu Fu Chi.
Nestlé bought a 60% stake in Hsu Fu Chi in 2011 and snapped up the remaining 40% shareholding from the founding Hsu family.
In a statement, Nestlé said the transaction would “enable wider and easier access to Nestlé global brand and product resources for Hsu Fu Chi to achieve its growth agenda”.
The KitKat maker reported its 2024 financial results last month. Organic net sales grew by 2.2% year-on-year to SFr91.4bn ($100.8bn), led by coffee, confectionery and pet care and driven by performance in emerging markets and Europe. Net profit was down 2.9% to SFr10.9bn.
Nestlé said its “real internal growth” – which excludes the impact of pricing from organic sales – was up 0.8%.
The company has launched a three-year cost saving strategy, which is intended to save the company SFr2.5bn by the end of 2027.
CEO Laurent Freixe – who became CEO in September – said: “We are on a journey. It will take time until we are firing on all cylinders.”
