Brazil: Nestlé considers selling off brands to clinch Garoto deal

Food giant Nestlé could soon be forced to sell several of its Brazilian brands in order to obtain the approval of the competition authority of that country, CADE, in its expected purchase of the confectionery company Garoto. Nestlé may get rid of chocolate brands like Serenata de Amor, Chokito, Lollo & Sensacion.

The merger between Nestlé and chocolate maker Garoto was agreed in 2002. Two years later, CADE vetoed and suspended the operation before Nestlé could integrate Garoto’s assets. The investigation and decision by CADE’s board at the time is now considered a turning point in the development of economic analysis and competition policy in Brazil.

In view of the ban imposed on the sale of brands to a major competitor, Brazil’s second largest chocolate producer, Lacta (part of the Mondelez group) will not be able to acquire these businesses. Nestlé currently has a 34% share of the Brazilian chocolate market. The acquisition of Garoto would increase this to 58%, surpassing Lacta’s 33%.

The expectation is that the assets will be purchased by smaller competitors such as Arcor or Hershey’s. The buyer must be presented before CADE’s board and be approved before the transaction can be completed.

Full Content: European Supermarket Magazine

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