Nestlé has agreed to sell its Yinlu peanut milk and canned rice porridge businesses in China to Food Wise Co Ltd, a company controlled by the family of Yinlu founder Chen Qingshui, the world's largest packaged food group said on Wednesday.
It gave no financial terms for the deal, which it expected to close by the end of this year.
Nestlé has been ditching underperformers and put North American waters and Yinlu under strategic review.
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 (€645.4 million) in 2019.
Focus On Key Categories
The transaction lets Nestlé focus on key categories in China: infant nutrition, confectionery, coffee, culinary, dairy and petcare, it said, adding it remained fully committed to the greater China region, its second-largest market with sales of nearly CHF7 billion (€6.5 billion) in 2019.
As part of the transaction, Nestlé will retain its ready-to-drink (RTD) Nescafe coffee business and distribute the products across most of the greater China region.
Yinlu will continue to manufacture the Nescafe RTD products for Nestlé and distribute the products in several provinces. Yinlu will continue to manufacture and sell Nestea products under licence from Nestlé.