(Yicai Global) Nov. 26 -- Nestle is selling its Chinese unit Yinlu Foods Group’s lactose-free peanut milk and traditional eight-treasure porridge operations to Food Wise, a firm owned by the family of the original founder of Yinlu, for an undisclosed sum.

The transaction includes five factories that Yinlu operates in Fujian, Anhui, Hubei, Shandong and Sichuan provinces, the Swiss food and beverage giant said yesterday.

Yinlu was set up by Chen Qingshui in 2000 as a factory for canning foods. Handing it back to the original founders will ensure a smooth transition and the future success of the business, the statement said.

“Yinlu will continue to manufacture the Nescafe ready-to-drink products for Nestle and will distribute the products in several provinces. Yinlu will continue to manufacture and sell Nestea products under license from Nestle,” it added.

Nestle, meanwhile, will continue to focus on other key areas in China, such as instant coffee, infant nutrition, confectionary, dairy and pet care.

Nestle has been looking for a buyer for a while. Sales of Yinlu's peanut milk and porridge have been falling since 2015, and last year only reached CHF700 million (USD720 million), according to the Vevey-based firm.

Earlier speculation put Xiamen, southeastern Fujian province-based Yinlu's value at as much as USD1 billion.

Nestle paid CNY1.5 billion (USD228 million) for a 60 percent share in Yinlu in 2011. This gradually grew to 100 percent equity when it paid an undisclosed amount in two share expansions between 2017 to 2018. However, since Nestle’s takeover, Yinlu has failed to perform.

In August, Nestle divested its Chinese bottled water business to Qingdao-based Tsingtao Brewery, which included its stakes in Shanghai Nestle Drinking Water, Tianjin Nestle Natural Mineral Water and Yunnan Dashan Beverage.

Editor: Kim Taylor