March 26 - Nestle Waters North America has invested US$ 15.6 million dollars in Sweet Leaf Tea, with an option to completely buy out the company in three years.
The US subsidiary of the world’s largest food company, Nestle SA, is thought to be extending its portfolio from bottled water following a drop in sales triggered by the economic downturn. Consumers are believed to be turning to tap water in ever-increasing numbers, hitting sales of canned beverages and bottled water.
The deal could see Texas-based Sweet Leaf Tea transformed from a niche player to a mainstream brand in the ready-to-drink tea market – particularly if Nestle takes up its option of taking over the company completely in three years at an already agreed price.
Sweet Leaf declined to say what the price would be or what Nestle’s current stake in the company amounted to.
Sweet Leaf Founder and Chief Executive Clayton Christopher said the biggest challenge for any independent beverage brand was with procurement and distribution. The deal with Nestle is intended to help boost distribution and widen the brand's reach beyond its presence in specialty stores – although it is already available in national outlets such as Safeway and Kroger.
Nestle spokeswoman Jane Lazgin said: “It does give us an opportunity to grow and expand our portfolio for healthful on-the-go beverages."
Nestle Waters North America executive Dan Costello will become president of Sweet Leaf Tea.