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Wednesday, December 1, 2010

Part 1: Nestlé Celebrates Kit Kat's 75th Birthday - What Other Chocolate Franchise is Celebrating a Meaningful Anniversary?

A few weeks back, in our Weight Watchers (WTW) post, we shared the 7th Nestle International Nutrition Symposium, which was in late October in Switzerland:
Per our mention at the time, we found the topic truly fascinating and recommended viewing at least some of the presentations. Worth at least a brief review.... But, wait a second - Nestlé and nutrition?

Admittedly, when thinking of Nestlé, nutrition may not immediately come to mind. In the U.S., Nestlé (NSRGY.PK) may be best known for selling chocolates and competing against Hershey (HSY), Mars, and other giants such as Cadbury (Kraft/K).

Yet, chocolates and confectionery -- e.g. Nestlé, Crunch, Galak/Milkybar, Kit Kat, Smarties, Butterfinger -- represent only ~11% of the company's highly diversified business. Further, Nestlé's motto is "Good Food, Good Life" and the Nestlé Research Center conducts extensive research in "food, nutrition, and life sciences." From its Web site:
  • Welcome to the Nestlé Research Center.
  • Located in the rolling hills above Lausanne, Switzerland, the Nestlé Research Center (NRC) is one of the world’s leading research institutions in food, nutrition and life sciences. With a diverse staff of premier researchers from a broad range of scientific competencies, NRC possesses a unique blend of talent and expertise.
  • The role of the Nestlé Research Center is to help fulfil Nestlé's vision of Good Food, Good Life, with good food central to a balanced, healthful lifestyle for consumers. Knowledge on Nutrition and Health, Food Science, Food/Consumer Interaction and Food Quality and Safety are combined to develop Good Food as a source of Good Health throughout life.
However, in this post, we focus on chocolate.

This year, Nestlé is celebrating Kit Kat's 75th birthday* this year (*acquired brand in 1988 with acquisition of U.K.-based Rowntree):

If you were confused at Halloween and saw Hershey on the Kit Kat label, that's correct. In the United States, Hershey sells the brand under a longstanding license agreement that pre-dates Nestlé's ownership. For those interested, the Nestlé press release (link above) includes the full history of KitKat, including this statistic: "around 540 Kit Kat fingers [are] consumed every second worldwide and 17.6 billion fingers [are] sold every year as noted by the Guinness Book of Records in March 2010."

While we have no position in Nestlé, we hold an ownership position in another chocolate franchise that happens to be celebrating a major birthday this year - can you guess which one? Please take a stab -- comments below are welcome!

Five hints:
  1. Older than Kit Kat.
  2. Smaller scale than Nestlé.
  3. Growing nicely and gaining market share.
  4. U.S. domiciled and focused.
  5. Previously mentioned here on CS$.
We'll come back with more.

Happy investing,

Jeffrey Walkenhorst

Disclosure: long WTW, SOFO.

© 2010 Jeffrey Walkenhorst
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  1. The answer is Fannie May Chocolate owned by 1800-flowers.com It is the 90th birthday for Fannie May

  2. Anonymous - thank you for your comment and for sharing your insight! Your answer is correct! More to follow on the blog soon.



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