Nestle freshens image with vegetarian meals takeover

GENEVA (AP) — The maker of Hot Pockets wants to go vegetarian, California-style.

Nestle, the world’s biggest food and drinks company, is buying startup Sweet Earth, which sells frozen burritos stuffed with quinoa, beans and other vegetarian ingredients.

The move echoes efforts by packaged food conglomerates across the world that have been trying to appeal more to consumers who favor fresher foods, smaller, local brands and are worried about the ingredients they eat.

Nestle, whose frozen food brands include Lean Cuisine and Stouffer’s, recently invested in online meals company Freshly, which delivers cooked meals to customer’s doorsteps that it says are gluten-free and don’t contain refined sugars. In 2012, Campbell Soup bought natural foods maker Bolthouse Farms.

On Thursday, rival Unilever said it was buying Pukka Herbs, a fast-growing organic herbal tea business.

“This segment has been identified for us globally as a key area a few years ago,” said Wayne England, head of strategic food operations at Nestle. “Giving the world better access to vegetarian-based or plant-based food is something we want to do.”

Nestle, which is based in Vevey, Switzerland, said Sweet Earth, which reportedly had $25 mlllion in revenue last year, will remain a stand-alone business, and stay at its headquarters in Moss Landing, Calif. It declined to specify the cost of the deal.

Gaurav Gupta of the strategy management firm Kotter International said the Sweet Earth and Pukka deals amounted to “another reminder that food businesses need to look outside for innovation and growth.”

Nestle will need to scale up Sweet Earth and draw on its knowledge if it hopes to reap the full benefits from the deal and alter the consumer’s conception, he said. Many people associate Nestle with chocolate and coffee.

“Really changing consumer perceptions will take a shift in products within the core brands, not just adding on some healthier products through acquisitions,” said Gupta in an e-mail.

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