Nestlé has grabbed a great opportunity with both hands by buying the highly profitable Chef America brand of frozen savory snacks. Chef America will provide Nestlé with a fast growing, high margin business that is tune with the on-the-go phenomenon; the question now is how far Nestlé can take this brand on the international stage.
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Nestlé, the world’s largest food manufacturer, has agreed to buy one of the key players in the US on-the-go market, Chef America, for US$2.6bn The demand for hand-held snack foods is being driven by increasingly just-in-time lifestyles that are resulting in a more pervasive snacking culture and growing on-the-go consumption, making Chef America an attractive proposition.
Chef America is a frozen food snack company that owns the Hot Pockets microwaveable sandwiches brand as well as Lean Pockets and Croissant Pockets. This year the company is expecting sales of US$720m – a 15% increase on the previous year. In addition, the company is described as being high margin and very profitable.
The company has a firm position in the market with an estimated 38% share of the US frozen hand-held meal and snack category. Chef America’s narrow focus on hand-held meal solutions means that innovation is a major strength of the company, reflected in its diverse flavour and type offering for hand-held snacks. In addition, its range and product quality is well suited to meet consumers rising demand for more varied and more substantial snacks compared to traditional snacking options, such as confectionery and potato chips.
With these strong credentials to Chef America’s name and its strong growth potential, Nestlé looks to have done very well from the deal, even if it decides not to take the business overseas. However, Nestlé will surely want to take the US-centric Chef America onto the international stage and target the growing demand for on-the-go foods in Europe and elsewhere.
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By GlobalDataAll in all, Nestlé’s directors can be very pleased with themselves, but tomorrow the task of taking Chef America to the next stage begins.
Related research: Datamonitor, “Hand-held Savory Snacks 2002” (DMCM0073). To buy this report through just-food.com, click here.
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