Business News

CCTV Script 17/01/18

— This is the script of CNBC's news report for China's CCTV on January 17, Wednesday.

Swiss food group Nestle agreed to sell its U.S. semi-finished business to Italy's Ferrero for $2.8 billion, it said on Tuesday, the first major sale from CEO Mark Schneider and a small step on its path towards healthier products.

The U.S. unit, home to local, mass-market names Butterfinger, BabyRuth, Nerds, Laffy Taffy and Crunch, has been underperforming rivals for years, suffering from consumers' preference for healthier snacks like fruit and nut bars and premium brands like Lindt.

The company's confectionery business saw only 915 million USD in sales in 2016, while decline was continuously seen in 2017.Nestle Toll House Cafe is a separate franchise and is not covered by the deal, and the company's international confectionery business is not affected either.

The trend of eating healthier has made many food and beverage companies rethink their strategies and products. For example, both Coca-cola and Pepsi have been pushing for low or no sugar products.

The same trend has brought changes to Nestle as well, as the company now plans to focus on categories like coffee and pet food as the industry grapples with a drop in demand for sugary products.

In December last year, the company sold two of its iced tea brands in North America as the world's biggest food maker presses ahead with reshaping its business to focus on new trends and consumer healthcare.

Meanwhile, the company is emerging as the lead bidder to acquire Merck KGaA's consumer-health business.

Before this, Nestle has already bought Canadian vitamin maker Atrium Innovations for $2.3 billion, acquiring Sweet Earth, a plant-based foods manufacturer based in California, and son on.

But still, it's going to be a long way to go for Nestle to become a total consumer-health products provider. While the Swiss giant has been moving toward healthier fare, it's holding on to its prepared-dishes, ice cream and global confectionery businesses. Those product categories made up roughly 40 percent of total sales last year.

So it's possible that we will continue to witness the company's transition.

CNBC's Qian Chen, reporting from Singapore