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Holly LaFon
Holly LaFon
Articles (10163)  | Author's Website |

David Winters Comments on Nestlé SA

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March 07, 2019 | About:
Nestlé SA (“Nestlé”) (XSWX:NESN) remains a solid long-term portfolio holding of the Fund. Nestlé, the world’s largest food and beverage company, is highly respected and does business in 189 countries around the world. In 2017, management underwent a transition to a new CEO who was tasked with accelerating Nestlé’s ongoing restructuring and portfolio review. New CEO Mark Schneider was the first outsider hired as Nestlé’s CEO since 1922, and we believe that this fresh perspective has benefitted shareholders. Under Mr. Schneider’s leadership, Nestlé has made opportunistic acquisitions, including the purchase of the exclusive rights to sell Starbucks-packaged coffees and teas around the world, and divestments including its U.S. confectionary business and Gerber Life Insurance business.

Nestlé has increased focused on its Health Sciences division, and believes that this business segment has the potential to surpass confectionary sales as consumers are increasingly focused on healthier choices. Products like Boost Nutrition beverages and Carnation Nutrition Drinks have become familiar in grocery stores, but many others, while not household names, serve an increasingly important, and growing, customer base. For cancer patients, it sells Resource Support Plus, a high-protein, high-calorie supplement specifically formulated for the increased nutritional needs of cancer/oncology patients. For the obese there’s Optifast, a line of shakes, soups, and snack bars intended to be taken under the supervision of a doctor. Some of the products are regulated as “medical foods” by the FDA.

Nestlé’s pet care business, led by Purina, along with infant nutrition, coffee, and the previously mentioned Health Sciences business, continue to make significant contributions to the company’s organic growth. We believe all of these product lines help distinguish Nestlé from other well-known food and beverage companies – many of which are left with legacy brands that haven’t adapted over the years, and face dwindling sales. Combined with an ongoing commitment to returning capital to shareholders in the form of buybacks and a compelling dividend yield, we believe there continues to be many ways for Wintergreen shareholders to win by owning Nestlé.

From David Winters (Trades, Portfolio)' Wintergreen Fund (Trades, Portfolio) fourth-quarter 2018 shareholder letter.

About the author:

Holly LaFon
I'm a financial journalist with a Master of Science in journalism from Medill at Northwestern University.

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