Nestlé committed to confectionery in Europe, but may consider high number of brands

The company is already in the process of selling its US confectionery arm​​, which includes Butterfinger and Crunch.

‘Not sustainable managing the number of brands we have today’​

Speaking at Nestlé’s Investor Seminar​​ this week, Marco Settembri, Nestlé CEO of Zone EMENA (Europe, Middle East and North Africa), was asked if the company would also offload its confectionery business in Europe.

“That’s always an option – but why do it? It’s a huge category, a huge business and we are winning in many different places…We have different countries/brands in which we have 20% plus profitability.​

“…We believe in confectionery we can win. That does not mean we will not take some decisions with some brands because it is not sustainable managing the number of brands we have today,”​ he said.

A Nestlé spokesperson refused to disclose the brands under consideration.

Nestlé last year sold six of its Italian confectionery brands​​ including Rossana and Fondenti to Italian manufacturer Fida.

Local brands​

Marco Settembri said Nestlé was succeeding in some sub-segments of confectionery, but said there was still scope for growth.

“This category is a huge category for zone EMENA in terms of turnover, but it’s also a category in which we’ve grown thanks to many acquisitions in the past,”​ he said, particularly via historic acquisitions of local brands such as its 1988 deal for Italian chocolate brand Perugina, which is rolling out globally.​​

Confectionery is one of Nestlé's top four categories by revenue in Nestlé’s Zone EMENA.

“We have an opportunity to address the complexity we have in this category….We also have an opportunity on the cost side because overall we are not extremely competitive in terms of cost,”​ said Settembri.

Reviewing manufacturing footprint​

The regional CEO said many local brand acquisitions has led Nestlé to produce very similar products at multiple factories across Europe, such as several different varieties of chocolate Santas for Christmas.

He said there was scope to produce fewer products for more markets, leveraging scale rather than producing only for local markets.

“I’m not saying one line producing for Zone EMENA, but having more harmonized technology and fewer lines,”​ he said.

Settembri added Nestlé was reviewing its manufacturing footprint in the region. “We have closed many factories in the past 10 years in all categories,” ​he said.

KitKat going premium​

To grow confectionery revenues, the company is looking to premiumize KitKat in Europe, building on success in Japan.

“KitKat is on a premiumization journey in EMENA,”​ a Nestlé spokesperson told ConfectioneryNews.

“We are launching more premium variants, like Kit Kat Four Finger Dark 70%, which is performing very well in Italy and Spain, entering the tablet market in Russia, also with a higher price per kg, and starting to promote the Chocolatory concept,” ​they said.

Nestlé operates several KitKat Chocolatory retail outlets in Japan. It opened a Chocolatory pop-up store in London last year and says others will follow across Europe.

Atelier roll out​

Nestlé is also rolling out premium chocolate tablet brand Nestle Atelier – launched in France and Swizterland in 2014 - across the region.

The brand is now sold in 15 countries including Belgium, Czech Republic, Italy, Netherlands, Portugal, Spain,Turkey and the Baltic and Nordic regions.

“It is already the #3 premium tablet brand in Europe and our fastest growing brand within the Nestle Confectionery EMENA portfolio,”​ said Nestlé’s spokesperson.