Champion focuses on natural pet foods, which is gaining demand, amid customers’ shift to healthier choices for both themselves and their furry friends. More and more food companies are investing in pet foods to tap into fresh revenue streams. Nestle already has a pet foods business which is its second fastest-growing unit and Champion will add to this growth.
Nestle has been trying to revive its packaged foods business for some time and has come under intense pressure from investors. Daniel Loeb, the founder of the hedge fund Third Point, has been calling for some serious change at Nestle. After a year since making a $3 billion investment in Nestle, Loeb is calling for the company to split into three business units – beverage, nutrition and grocery, each with a CEO and marketing chiefs of its own. He believes this will simplify the company’s complex organizational structure to enable better growth.
Loeb, who has been watching Nestle’s performance for over a year now, feels the company is not doing the best it can in terms of its potential and wants the KitKat-maker to capture market opportunities to stay ahead in the competition. The activist investor seems to be running out of patience with Nestle’s slow growth and stock decline and went on to point out that even in an environment where deals in the food industry were flourishing, the Swiss confectionery-maker had not made any sale or acquisition efforts.
Loeb blamed the management for being complacent and lethargic and thus missing too many trends. As trends in food consumption rapidly move towards healthy products, smaller rivals have managed to grab market share from Nestle and if the company does not change its strategy soon, it will end up going extinct.
Loeb wants Nestle to sell more parts of its business that do not fit with its nutrition and health-focused strategy. This includes the company’s stake in the cosmetics brand L’Oreal. He suggested that the sales proceeds could be used for share buybacks or strategic acquisitions. Nestle shares were up about 1% in the SIX Swiss Exchange today.