Nestle will terminate its joint venture with Lotte Group’s confectionery subsidiary, Lotte Wellfood, in the first quarter of next year.
The 50-50 joint venture, which formed more than a decade ago, primarily produced, distributed, and sold Nestle’s Nescafe instant coffee and coffee mix, chocolate powder drinks, fruit powder drinks, and pet food in South Korea.
“Nestle and Lotte made this decision after comprehensively considering various factors such as overall global priorities, domestic market conditions, and the two companies’ shared capabilities,” said Thomas Casso, CEO of Nestle Korea.
“Both companies will strive to ensure stable operation and change management until the joint venture ends.”
According to a Lotte Group representative, both companies are splitting up due to “the wrong business strategy”, and the termination of the joint venture has been planned for several years.
Nestle has not revealed any plans for its operations in South Korea.
In addition, Nestle Korea is apparently planning to acquire Nestle Purina PetCare from Lotte-Nestle Korea next month, with additional business lines scheduled to be transferred in the next 12 months.
Earlier this month, Nestle acquired the remaining 40 per cent ownership in Chinese confectionery company Hsu Fu Chi for an undisclosed sum, after purchasing 60 per cent in 2011.
