Nestle SA (OTC: NSRGY) has agreed to sell its U.S. candy unity to Ferrero SpA, the maker of Nutella.
The sale, which includes the Butterfinger and Baby Ruth brands, is the first major divestment by the Swiss food giant since Chief Executive Officer Mark Schneider took over last year.
Nestle is planning to shift its focus to healthier and faster-growing categories like coffee, pet food, and water as the food industry grapples with declining demand for sugary products.
“Our commitment to invest in the U.S. is as big as ever,” Nestle UA chief Paul Grimwood said.
The chocolate industry in the U.S. has been suffering as of late. Hershey Co. has cut 15% of its workforce, and Lindt & Spruengli AG reported its weakest organic sales growth since 2009 on Tuesday amid sluggish demand from North America.
The Nestle unit—which also includes brands like Laffy Taffy and Nerds—has been suffering a decline in revenue and had sales of roughly $900 million in 2016. Nestle said in its statement announcing the sale that it would remain “fully committed” to its chocolate business worldwide. That business includes KitKat, which is produced globally except for in the U.S. where Hershey Co. owns the rights.
Nestle’s U.S. candy unit will be a nice compliment to Ferrero’s goals. The company has been pushing into the U.S., and recently purchased the maker of Red Hots and Lemonheads candies—Ferrara Candy Co.,—and bought the confectioner Fannie May.
The sale to Ferrero does not include the Toll House baking products brand, and is expected to close by the end of the first quarter, according to Nestle. The U.S. candy unit represents roughly 3% of Nestle’s U.S. sales.