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|Source: Nestle USA|
Nestle USA is moving its headquarters from Glendale, CA to Arlington, VA, just a stone's throw away from DC, it announced last week.
Nestle will move into the region's tallest building, which has been vacant since it was completed in late 2013, bringing 750 jobs with it. Its been in the LA area since Nestle acquired Carnation in the early 1980's. Nestle is reportedly receiving more than $16 million in state and county subsidies.
In the U.S., Nestle product sales topped $26 billion in 2015, and it employs 51,000.
I lived in Northern Virginia for a long time and never heard of any chocolate being made there, though chocolate is now only one segment among many for Nestle. Mars Inc. moved its headquarters to nearby McLean, VA, some years ago, though I don't think it has any significant operations there.
But the DC area is hardly a consumer products hotbed, so for that reason I found the move a bit odd. The talent pool just isn't there, along with the types of agencies and support services a company like Nestle needs, though I imagine some of its there due to Mars. Being closer by plane to Nestle headquarters in Switzerland may have been another reason for moving, as well as proximity to DC and the FDA.
Nestle also intends to move its corporate IT function, with about 300 jobs, to St. Louis where its Purina pet food unit is based.
But my question is whether the Philadelphia area was even considered, and if so, why wasn't it chosen? The Washington Post reported that Nestle considered 20 locations across the country but by October had narrowed its search to Rosslyn (in Arlington) and Atlanta.
The Philly area would have provided Nestle with more of a consumer products, food marketing and pharma ecosystem, closer access to the multitude of agencies and marketing services firms in New York and New Jersey, and proximity to some of its operations as well. Nestle has been for some time positioning its nutritional businesses closer to the life sciences.
Nestle has divisions and plants all over the US, but more are concentrated in the East. Near Allentown, its has a huge bottling plant for Nestle Waters employing 475 (Nestle's philosophy is to build huge plants and let the marketing guys figure out how to pay for them), some pet food operations, and a distribution hub. In New Jersey, The Nestle Institute of Health Sciences and Nestle Nutrition Corporation are located in Florham Park. And the plan is for Nestle Health Sciences to open a large R&D center in Bridgewater sometime this year.
Also, the Philly area provides a sense of community for Swiss and German executives, or so I've been told, given SAP and the life sciences and chemical companies that have a presence in the area.
There is also the issue of whether Nestle would want to buy Hershey's or Mars. These companies know each other like kissing cousins, and Nestle would like to strengthen its position in the US chocolate market, where it is fourth. But Hershey's is so intertwined with the Trust and its troubles that it is difficult to unravel the two, as the Inquirer's Bob Fernandez has observed in his coverage of Hershey's. Nestle did make a joint bid for Hershey's in 2002, which was surpassed by the Wm. Wrigley Jr. Company (now owned by Mars); the latter was rebuffed, as was Mondelez International's bid last year.
Mars is privately held, and very closely so (perhaps more secretive than the nearby CIA headquarters), but the passing last summer of one of its heirs and a former executive, Forrest E. Mars Jr, led to some speculation that it could be more open to a sale. Mars Chocolate North America is based along I-80 in Hackettstown, NJ. Mars just made a huge pet care acquisition, but that also could fit well with Nestle, forming a dominant pet nutrition and health giant at a time when the guessing is that antitrust will be more relaxed.
But I'm just wondering if inquiries were made by Nestle to Pennsylvania, or New Jersey for that matter, and if so what happened as a result.
Update: From Nestle internal memorandum announcing the HQ move:
You may wonder why we chose the metropolitan D.C. area. We did comprehensive research on many locations, including Southern California, Cleveland, Texas and Atlanta. The Washington D.C. area scores very high across the key elements of our location strategy:
· Proximity to our operations, customers and key opinion leaders: The Eastern U.S. has 75% of NUSA factories and 85% of our top customers; 72% of key regulatory groups and relevant NGOs are in the D.C. area
· Sustainable access to talent to meet current and future needs
· Excellent infrastructure (space, housing, schools, airports, networks)
· Pro-business state and county
· Appealing location for employees – housing, schools, culture, favorable income tax framework vs. CA
Nestle is no stranger to M&A, says CEO (CNBC)
And the pace may pick up with Kraft Heinz pursuing Unilver.