Nestle-Campco deal goes sour - Views on News from Equitymaster

Helping You Build Wealth With Honest Research
Since 1996. Try Now

  • MyStocks


Login Failure
(Please do not use this option on a public machine)
  Sign Up | Forgot Password?  

Nestle-Campco deal goes sour

Oct 18, 1999

Processed foods major Nestle India Limited is planning an early exit from Central Arecanut and Cocoa Marketing and Processing Co-operative Limited's (Campco) production facility at Puttur in Karnataka. Nestle's current contract with Campco is scheduled to end by December 2000. Nestle is a market leader in infant foods, instant coffee and culinary products (noodles and ketchup) and has the second largest market share in chocolates. It has the widest portfolio of products in the food and beverage industry with some of the best known brands in the world such as Kit-Kat, Milo, Polo, and Maggi.

Campco's chocolate factory at Puttur contract-manufactures about 3,000 tonnes of finished products and some 2,000 tonnes of semi-finished products annually, for Nestle. Campco is earning approximately Rs 750 m by manufacturing finished products, mainly chocolates. Relations between the two turned sour when Nestle offered to take over the chocolate factory. It had offered Campco Rs 2.9 bn over a period of 30 years with an advance payment of Rs 200 m for the first year. Subsequently, Campco had decided to go on its own and launch a range of new products once the agreement with Nestle ended in December 2000.

However, Nestle has stated that it would be interested in working with Campco in the area of cocoa production and procurement, and also cocoa bean fermentation, drying and further processing, namely the production of cocoa mass, cocoa butter and cocoa powder.

Exiting from this arrangement will not hamper Nestle's chocolate producing capabilities and it has sufficiently enhanced its production facilities over the years. It will save the manufacturing cost of Rs 750 m, by producing in-house. But, Campco might be reluctant to accept the early exit offer because of lack of strategy in wake of such a sudden move.

Equitymaster requests your view! Post a comment on "Nestle-Campco deal goes sour". Click here!


More Views on News

Nestle India Sees Double-Digit Growth Across Segments in March Quarter (Company Info)

Apr 21, 2021

Key takeaways from Nestle's March quarter (Q1CY21) results.

NESTLE 2018-19 Annual Report Analysis (Annual Result Update)

Dec 9, 2020 | Updated on Dec 9, 2020

Here's an analysis of the annual report of NESTLE for 2018-19. It includes a full income statement, balance sheet and cash flow analysis of NESTLE. Also includes updates on the valuation of NESTLE.

NESTLE Announces Quarterly Results (2QFY21); Net Profit Down 1.4% (Quarterly Result Update)

Oct 26, 2020 | Updated on Oct 26, 2020

For the quarter ended September 2020, NESTLE has posted a net profit of Rs 6 bn (down 1.4% YoY). Sales on the other hand came in at Rs 35 bn (up 10.1% YoY). Read on for a complete analysis of NESTLE's quarterly results.

Burger King IPO: Should You Subscribe to This QSR Chain Business? (IPO)

Dec 2, 2020

Does the company with one of the fastest-growing QSR chains in India have sound prospects?

NESTLE Announces Quarterly Results (1QFY21); Net Profit Up 11.1% (Quarterly Result Update)

Sep 23, 2020 | Updated on Sep 23, 2020

For the quarter ended June 2020, NESTLE has posted a net profit of Rs 5 bn (up 11.1% YoY). Sales on the other hand came in at Rs 31 bn (up 1.7% YoY). Read on for a complete analysis of NESTLE's quarterly results.

More Views on News

Most Popular

India: Recovery Stalled by Vaccine Games? (The Honest Truth)

Apr 13, 2021

Ajit Dayal on how India's vaccine strategy will impact the markets.

A Stock with 700% Return Potential Comes with Additional Payoffs (Profit Hunter)

Apr 15, 2021

Narayana Murthy was one of the first unicorn founders to get the backing of this entity...

11x Bankruptcy to Bluechip Stock: A Rare India Revival Story (Profit Hunter)

Apr 16, 2021

There is no stopping this 11-bagger stock from significant upside.

Top 3 Nifty ETFs to Buy Now (Fast Profits Daily)

Apr 20, 2021

In this video I tell you the three Nifty ETFs I think are the best.

Why Did the Market Crash on Monday? (Fast Profits Daily)

Apr 13, 2021

In this video, I'll you what I think is the real reason behind yesterday's market crash.


India's #1 Trader
Reveals His Secrets

Secret To Increasing Your Trading Profits Today
Get this Special Report,
The Secret to Increasing Your Trading Profits Today, Now!
We will never sell or rent your email id.
Please read our Terms


Apr 20, 2021 (Close)