Zurich, June 18: Nestle SA unveiled a deal with Colgate-Palmolive on Tuesday to make gum that cleans teeth and freshens breath, continuing its move away from low-margin foods into more lucrative well-being products. The initial product from the agreement, which is set to take effect in early ‘04, will be Colgate Dental Gum in the test markets of Britain, Ireland and Canada, Nestle said. More products could follow if the initial tests go well.
No financial details were disclosed although analysts said its impact on earnings at the world’s biggest food group would be negligible. Nestle shares rose 1.4% to 284.50 francs.
The global gum market is worth around $12bn, according to Rene Weber, Bank Vontobel analyst. Dental gum is a fraction of that amount and the gum market is dominated by Wrigley and Cadbury-Schweppes.
“But this is a deal that goes in their new strategic direction of products that improve health,” he added.
Bureau Report