Nestlé to sell Yinlu businesses to Food Wise Co.

Nestlé has announced that it has agreed to sell its Yinlu peanut milk and canned rice porridge businesses in China to Food Wise Co, a company controlled by the family of Yinlu founder Chen Qingshui.

The deal covers all of Yinlu's operations, including its five factories in Fujian, Anhui, Hubei, Shandong and Sichuan. Yinlu brands had sales of CHF700 million (AUD1 billion) in 2019. Both parties have agreed not to disclose the financial terms of the transaction.

The transaction allows Nestlé to focus on key categories in China: infant nutrition, confectionery, coffee, culinary, dairy and petcare, capitalising on the company's strong brands, digital capabilities and innovation engine to drive growth.

As part of the transaction, Nestlé will retain its ready-to-drink (RTD) Nescafé coffee business and distribute the products across most of the Greater China Region. Nescafé is a strategic growth driver for Nestlé, and the company continues to invest to further strengthen the brand across all channels in the market. The entire Nescafé business in China will be managed by one team, using synergies and strengthening capabilities that will help drive further growth in the business.

Yinlu will continue to manufacture the Nescafé RTD products for Nestlé and will distribute the products in several provinces. Yinlu will continue to manufacture and sell Nestea products under licence from Nestlé.

Nestlé is fully committed to the Greater China Region, which offers significant growth opportunities. The Greater China Region is the second-largest Nestlé market globally with sales of nearly AUD10 billion in 2019. Nestlé has invested about AUD1.1 billion there during the last five years.

The transaction is expected to close by the end of this year.

Image credit: ©stock.adobe.com/au/Alexey Novikov