Raisio divests $120m confectionery business ahead of Nestlé to focus on healthy foods

By Douglas Yu

- Last updated on GMT

Raisio's confectionery business totaled $85.9m during Jan to Sept in 2017. Photo: vivaciousconfetti
Raisio's confectionery business totaled $85.9m during Jan to Sept in 2017. Photo: vivaciousconfetti

Related tags Confectionery business United kingdom Meal Europe

Raisio has sold its entire confectionery operations in the UK and Czech Republic to Valeo Foods Group for $120m.

Valeo Foods Group is an international food group with operations in Ireland, the UK and continental Europe. It mainly produces sweets and snacks, as well as baking and meal ingredients. Equity value of the deal paid by Valeo is around $92.76m.

Some of the confectionery brands Raisio manufactured include Poppets, Fox’s, Just and Pedro. During the January-to-September period of 2017, net sales for the company’s confectionery business totaled €71.3m ($85.9m).

“The British confectionery market is in slight decline at a volume level. Value is maintained primarily through price inflation, particularly around sugar products,”​ said the company.

Additionally, Raisio’s Q3 2017 earnings (ending September) showed its quarterly net sales increased by almost 6% despite its weakened UK confectionery business.

“The divestment of the confectionery business is an important strategic step for Raisio towards a responsible forerunner focusing on healthy foods,”​ said Pekka Kuusniemi, the company’s president and CEO. “Together with our already strong balance sheet, the proceeds from the deal enable extensive acquisitions that strategically fit our core business.”

Raisio’s move mirrors many other large CPG companies’ recent decisions to step away from confectionery to focus on other categories such as healthy snacks to drive growth: Nestlé​ is expected to sell its US candy business in early 2018 due to low market share, and chocolate giant Hershey​ has also been on acquisition spree recently to become a “snacking powerhouse.”

Upon selling its confectionery business, Raisio said its oat products (primarily under its Provena brand) would continue to gain popularity in 2018.

“Oat is a natural food raw material valued for its health effects, and Raisio continued to develop new oat products into new categories,”​ the company said. “[We are] also reducing the amount of added sugar in our foods.”

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