Nestle SA announced in a statement that it plans to start manufacturing capsules under the brand Coffee-Mate that are compatible with the U.S.-based machines of Keurig Green Mountain Inc. According to their joint statement, the two companies intend to start selling the capsules on the territory of the U.S. in autumn 2014.
The announcement of the partnership with Keurig Green Mountain Inc. comes after Nestle SA just sold its Juicy Juice brand to buyout firm Brynwood Partners. This move is the latest step made by the Switzerland-based company to lean its business by disposing of its withering brands with declining profitability.
Nestle SA, which has struggled to popularize Nespresso in the US, recently presented a new type of machine on the American market in an attempt to attract more customers. The company revealed that about one fifth of its $100-billion sales are generated from java.
One of the analysts who work at Kepler Cheuvreux – Mr. Jon Cox – commented on Nestles partnership with Keurig Green Mountain Inc. for Bloomberg, saying that this move is an “example of Nestle looking to crack the U.S. single-serve market on multiple fronts after its Dolce Gusto system largely failed in a first step”.
On the other hand, the sale of the juice brand stemmed from the companys desire to focus on its more profitable businesses instead of Juicy Juice, whose share on the juice market has been constantly shrinking. The sale follows Nestles series of disposals of other brands that the Swiss company sold in the past year, including the sports-nutrition line called PowerBar and the diet business called Jenny Craig.
Nestle SA rose by 0.36% by 08:36 GMT in Zurich to trade at 69.65 Swiss francs per share, marking a one year change of +11.44%. The food company is valued at 223.80 billion francs. According to the Financial Times, the 26 analysts offering 12-month price targets for Nestle SA have a median target of 70.50 francs, with a high estimate of 80.00 francs and a low estimate of 57.00 francs. The median estimate represents a 1.59% increase from the previous close of CHF 69.40.
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