Nestle hopes to expand in bottled water, functional food markets.(Chicago Tribune)

When the bidding war for Quaker Oats Co. heated up in November, Swiss food concern Nestle SA kept being mentioned as a possible suitor. Analysts figured the world's largest food company would covet Quaker's Gatorade sports drink, one of the fastest-growing beverage brands, to complement its bottled water business.

Indeed, Nestle took a look at Chicago-based Quaker but decided it wasn't "completely crazy" about a potential deal, says chief executive Peter Brabeck-Letmathe.

"For us, it didn't have the same strategic importance as it might have had for some of our competitors," said Brabeck, who prefers to drop the second half of his surname. "Especially knowing about the price expectations which were out there, frankly speaking, it was far away from our interests."

It turns out that, Brabeck, who was in Chicago this week to attend a marketing conference at the J.L. Kellogg Graduate School of Management at Northwestern University, had his eye on another Midwestern company, even as Quaker fell to PepsiCo Inc.

Last month, Nestle announced a $10 billion acquisition of pet food-maker Ralston Purina Co. of St. Louis. If the proposed deal goes through, Nestle, which already owns Friskies cat food, would add the well-known Purina Dog Chow brand and become the largest pet food-maker in the world.

The acquisition also furthers Nestle's goal of focusing on higher-growth markets. Besides pet food, which is growing at a 4 percent yearly clip, the company hopes to expand in such areas as bottled water, food service and products with added health benefits, also known as functional foods.

In turn, Brabeck is determined to dispel Nestle's reputation as a big-spending monolith with too many brands and organizational layers that slow product development. The company boasts a mind-boggling array of more than 8,000 brands, ranging from its famous Nestle chocolates to Stouffer's prepared meals to Nescafe instant coffee. Nestle employs more than 230,000 people and runs more than 500 factories in 83 countries, including 59 in the United States. It posted sales of 74.6 billion Swiss francs ($45.8 billion U.S.) in 1999.