Pfizer Nutrition acquired by Nestle: Baby food for emerging markets

Nestle has reached an agreement to acquire the Pfizer Nutrition business for $11.85 Billion. A big focus of the merged enterprise will be serving emerging markets in Asia,Latin America and Africa where baby birth rates are not declining as in the developed world. Dual earner families want the best for their infants and the Pfizer pharmaceutical pedigree coupled with Nestle's grocery marketing prowess should help both organizations as the deal seeks regulatory  approval. Pfizer would like to focus on prescription drugs and try and replace the revenues of the blockbuster cholesterol drug Lipitor that has gone out of patent. With sales of $2.4 Billion the Pfizer Nutrition portfolio of brands (see ad alongside) is a wonderful addition to the  lineup of Nestle baby foods and its great distribution channel in emerging markets. Nestle has access to tiny villages and retailers in far-flung corners of emerging markets where it takes its dairy products. The depth of Nestle's distribution channel is certainly more than Pfizer's reach into pharmacies in these markets because very often the pharmacy might not be a viable business in a small village and yet the small grocery store will need milk powder. It will be interesting to see how Nestle changes the medicine like positioning of the Pfizer Nutrition brands as it integrates the Pfizer supply chain and distribution channel to its own. Contact StratoServe.

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