Nestlé today (12 April) hinted that it would focus on growing its existing nutrition businesses in the wake of the Gerber baby food acquisition.
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The world’s largest food manufacturer has agreed a deal to buy Gerber, the biggest baby food brand in the US, for US$5.5bn.
Gerber, which commands some 82% of the US baby food market, gives Nestlé global leadership of the baby food category.
The deal is part of Nestlé’s shift towards health and nutrition and comes after three nutrition-focused acquisitions in the last 12 months.
CFO Paul Polman said the company is targeting sales growth of around 10% a year from its nutrition business. Polman said further acquisitions were not necessary to meet that target as Gerber is growing faster than Nestlé’s existing nutrition operations.
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By GlobalData“If an opportunity arises to fill out our white spaces like we have with this marvellous acquisition in the US, then it’s a no-brainer,” Polman said.
“But, if you look at the nutrition unit, it has growth of around 6.1%,” Polman said. “We are now getting a business (Gerber) with a company growth rate higher than that, so I think we have enough space to grow the business to 10% sales growth. We don’t need acquisitions for that.”
The acquisition of Gerber will propel sales from Nestlé Nutrition, the company’s stand-alone business, to CHF10bn (US$8.2bn). Last year, Nestlé achieved group turnover of CHF98.5bn.
Nevertheless, Richard Laube, the head of Nestlé’s nutrition unit, said Gerber “has a good meaning” in a number of markets outside the US. Some 21% of Gerber’s sales are generated outside the US, with “strong positions” in markets ranging from Mexico to Poland.
Nestlé plans to grow the brand in other markets worldwide but declined to reveal specific details.
Laube said Nestlé aims to extract some $95m in synergies in the next five years due to an overlap in sales and distribution in the US. He added: “We like the business and the people that we see; some of these synergies may come from the Nestlé side.”
