General Mills, the US food group, is to exit Venezuela after striking a deal to sell its business in the country to private investment firm Lengfeld Inc.

The transaction, announced today (18 March), includes the Underwood, Rico Jam and Frescarini brands. General Mills employs around 611 staff in Venezuela and said all employees would remain with the operations. Financial details were not disclosed.

“This is a decision to prioritise other growth opportunities within our Latin American portfolio,” Sean Walker, president of General Mills’ Latin American arm, said. “We would like to thank members of the General Mills Venezuela team, who have performed well despite challenging external conditions.”

A number of international food manufacturers have recently signalled the challenges of operating in Venezuela’s ailing economy. Venezuela’s GDP fell 10% in 2015 and The International Monetary Fund estimates the country’s economy will contract a further 8% this year. Inflation was over 180% last year and the IMF expects the rate to soar past 700% this year.

Amid the volatility in Venezuela’s economy, PepsiCo last year booked an impairment charge on its Venezuela business of US$1.36bn.

General Mills said it would provide more details on the sale of its operations in the country when the Cheerios maker reports the financial results for its third quarter on Wednesday (23 March).

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By GlobalData