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Nestle weighs sale of Pure Life, Poland Spring brands

Nestle SA said it’s considering a sale of its U.S. mass-market bottled water business as the world’s largest food company focuses the unit on premium hydrating products.

The strategic review of most of the North American business, including brands like Pure Life, Poland Spring and Deer Park, is expected to be completed early in 2021, Nestle said Thursday after European markets closed.

It’s another strategic shift from Chief Executive Officer Mark Schneider, who has made more than 50 deals since taking charge in 2017 and promised that this year would show investors a more interesting M&A pipeline than 2019. A sale could cut Nestle’s total bottled-water sales by almost half.

“The divestment is consistent with Nestle’s strategy to focus on higher-growth, higher-margin businesses with stronger returns,” Alain Oberhuber, an analyst at MainFirst Bank, wrote. He said the business could fetch about 6.5 billion francs ($6.9 billion), adding that Nestle is putting bigger brands up for sale than he had expected.

The shares were little changed Friday morning as European stock markets fell.

Nestle’s bottled-water business had its worst performance in a decade last year. The North American water unit in particular has been facing fierce competition from discount brands, as well as consumer resistance to plastic packaging. Nestle has been trying to come up with creative alternatives, such as water dispensers for refillable bottles.

Schneider hasn’t hesitated to part ways with underperforming businesses — and has been getting good prices for them. Last year, he shed a dermatology unit for 10 billion francs. The U.S. confectionery business fetched $2.8 billion.

Nestle’s North American water business had sales of about 3.4 billion francs in 2019, excluding international brands like Perrier and San Pellegrino.

Possible buyers include Coca-Cola Co. and PepsiCo Inc., which lag behind Nestle’s North American 20% market share at 10% and 7.8%, respectively. Soft-drink bottlers like Cott and National Beverage Corp. could also be interested, according to Bloomberg Intelligence’s Duncan Fox.

The company also pledged to make its entire water portfolio carbon-neutral by 2025.

“The real benefit is getting a strategic distraction and an environmental burden off the books,” Jefferies analyst Martin Deboo wrote in a note.

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OTTO Motors raises $29M to fill factories with autonomous delivery robots

When Clearpath Robotics CEO and co-founder Matthew Rendall looks at the “miles” of roads inside industrial factories, he sees them filled with autonomous vehicles.

And in the past five years, the company has inched toward that goal through its industrial division OTTO Motors. The division, which launched in 2015, has landed a number of customer contracts to bring its autonomous mobile robot platform into factories, including GE, Toyota, Nestlé and Berry Global.

OTTO Motors is preparing to expand with a fresh injection of $29 million in funding. The Series C funding round announced this week was led by led by Kensington Private Equity Fund, with participation from Bank of Montreal Capital Partners, Export Development Canada (EDC) and previous investors iNovia Capital and RRE Ventures . To date, the company has raised $83 million in funding.

OTTO Motors’ autonomous mobile robot platform, or AMRs, are used to handle materials within warehouses and factories. These robots, which were once viewed as a luxury, are now a necessity, according to Rendall, who believes the COVID-19 pandemic and the need for companies to enhance work safety will only accelerate the trend toward robots.

Robots, and more broadly automation, are often viewed as job killers in manufacturing. But Rendall argues that AMRs help fill roles that are currently sitting vacant and allow humans to take on the higher-skilled and higher-paid jobs.

“We tend to see more situations where the operation is not at peak output, not operating peak performance because they just can’t find the people,” Rendall said in a recent interview, noting that one of its customer shut down an entire wing of its facility because they just can’t get people.

Factories are often located near smaller towns or sprawling communities with a limited labor pool, a shortfall that can be compounded when Amazon opens up a facility nearby.

“There’s a kind of vacuum that pulls qualified talent out of the established manufacturing or warehouse base,” he said.

A 2018 study by Deloitte and The Manufacturing Institute forecast that a skills gap is projected to leave 2.4 million positions unfilled between 2018 and 2028 in the United States. The skills gap has popped up in other countries where OTTO Motors is now focused, including Japan, where the aging population is larger than the younger generation. Even China, which has historically been viewed as a place with an expanding labor pool, now has a national robotics strategy, Rendall said.

The company developed its AMRs to help manufacturers outsource the lower-value tasks to robots. “One of the least valuable things you can pay your people to do is walk from Point A to Point B,” Rendall said. “If you’re strapped for talent you want to have that team focused on what is at Point A or at Point B, like assembling an automobile. Walking to a warehouse with a part is something that can be outsourced to a machine.”

OTTO Motors’ initial customer base grew out of the automotive and transportation industries. It now works with six of the 10 OEMs. But Rendall says it has also seen success in the medical device and healthcare sector, as well.

COVID-19 has spurred demand, Rendall said, as essential businesses in the food, beverage and medical device industries attempt to lessen risks associated with the disease.

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