Nestle, the world's biggest consumer food company, and Colgate-Palmolive, the world's No. 1 maker of toothpaste, have signed an agreement to develop and market on a worldwide basis a new range of "portable oral care" products that "taste good, clean teeth and freshen breath."
The first product will be Colgate Dental gum currently being test-marketed in the UK, Ireland and Canada. The Swiss group hopes to capitalize on Colgate-Palmolive's leadership in dental care products, while the latter will have access to Nestle's strong marketing and distribution expertise in confectionery.
Nestle's shift into a specialist sector of the chewing gum market comes only six months after Cadbury Schweppes, a smaller rival, bought Adams, the second biggest manufacturer of chewing gum. Nestle, a rumored bidder for Adams, was also one of the unsuccessful suitors for Hershey, the U.S. chocolate manufacturer which is the world's No. 3 maker of chewing gum.
The deal would boost Nestle's weak No. 3 position in the U.S. confectionery market and help reassure investors that Nestle was not dependent solely on making big acquisitions to achieve its growth objectives.
GlaxoSmithKline, Europe's biggest pharmaceutical company recently launched Aquafresh Dental gum and Wrigley has teamed up with Procter & Gamble to develop a new range of chewing gums with dental benefits.
Although the initial product will be rolled out under the Colgate brand, Nestle said that it was thinking of co-branding future products if the collaboration was successful. "This deal shows that where there is a category which could be interesting, we are able to work with somebody else in order to develop the market. We clearly have global ambitions in this area," said Nestle spokesman Francois Perroud.