Nestlé, the M&A Leader, Even Acquired Starbucks (Sort Of)
What’s interesting about Nestle is…that it is the M&A leader, even acquired Starbucks (sort of)
What is Nestle doing?
- Some major brands you know
- KitKat, Nespresso, and Maggi
- Sells products across 188 countries
Worldwide company: CHF93bn 2023 revenue spread nearly equally across regions
Nestle revenue in 2023
Revenue by segment
All about diversifications
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The world’s most valuable food brand
Nestle the world’s most valuable food brand
Nestlé S.A. – Switzerland – Founded 1905
Cons. Staples sector, 270,000 employees, US$102bn revenue
Main segments/products
- Nescafe
- Nestlé Pure Life
- KitKat
Its competitive advantage
Competitive advantage through diverse brand portfolio, global reach, and acquisitions.
How it achieved its competitive advantage
By building a diverse brand portfolio and expanding globally, it solidified its position in the consumer goods market.
Key M&A milestones (1929 to 1988)
- 1929 – Bought Switzerland’s largest chocolate company Peter-Cailler-Kohler
- 1947 – Merged with a Swiss company Alimentana, which produces Maggi products
- 1962 – Bought the Findus frozen food brand from Swedish manufacturer Marabou
- 1988 – Bought a UK confectionery company
- Adding KitKat, After Eight, and Smarties brands
Key M&A milestones (1929 to 1988)
Key M&A milestones (2001 to 2022)
- 2001 – Bought US pet food business Ralston Purina, a leading pet care company
- 2002 – Acquired the licensing rights to premium ice cream Häagen-Dazs in the US and Canada
- 2012 – Acquired Pfizer Nutrition, a global infant nutrition business
- 2022 – Acquired a majority stake in Orgain, a leader in plant-based nutrition
Key M&A milestones (2001 to 2022)
Nestlé’s deal of a lifetime
- In mid-2018, Nestlé gained perpetual global rights to sell Starbucks consumer and food service products (adding RTD in 2021)
- Nestlé paid Starbucks US$7.15bn upfront cash (Which came in handy for Starbucks during Covid lockdowns)
- Nespresso & Dolce Gusto can sell Starbucks
- Nestlé also acquired rights for Starbucks teas
- Boosted Nestlé’s premium coffee profile
Let’s understand recent transactions
- JAB Holdings paid
- 3.1x price-to-sales for Keurig Green Mountain
- 2.5x price-to-sales for Peet’s Coffee and Tea
- 2.8x price-to-sales for DE Master Blenders
- Nestle paid 3.6x price-to-sales for limited, by perpetual rights to Starbucks
Innovate, innovate and innovate
- In 2017 alone, Nestlé launched 1,000 new products
Is the company financially world class?
I use my World Class Benchmarking scorecard to measure if a company has a competitive advantage
I developed this scorecard ten years ago; here’s how we construct it
- My team gathers the yearly and quarterly financial data of 26,000 companies worldwide
- We then calculate each company’s Profitable Growth score
- Which is a composite measure of both profitability and growth
I use my FVMR methodology to determine the attractiveness of the company
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