Nestlé US Ice Cream Unit Becomes Latest Restructuring Victim

Nestlé US Ice Cream Unit Becomes Latest Restructuring Victim

about 4 years ago2 mins

Nestlé, the world’s largest listed food company, is getting a little smaller – announcing this week the $4 billion sale of its US ice cream business to a separate company it jointly owns with private equity firm PAI Partners. But the consumer goods giant may simply be stooping to conquer… 🙇‍♂️

What does this mean?

Nestlé originally set up Froneri as an equal-share “joint venture” with PAI back in 2016, merging its European ice cream marques with the own-brand operations of PAI’s R&R. It’s been such a success that Froneri is now taking on the American unit as well, assuming responsibility for shifting the likes of Häagen-Dazs and Drumstick Stateside on top of, er, Bum Bumin Europe.

But Mutti, it has ein Kaugummi-Stiel!
But Mutti, it has ein Kaugummi-Stiel!

The idea is that a standalone firm focused solely on churning out chilly fatty sugar may stand a better chance of besting Nestlé’s arch-rival Unilever owner of the mighty Ben & Jerry’s – in the fiercely competitive ice cream wars. Unilever, where ice cream represents a tenth of company revenue, controls 18% of the global market – but Froneri will now have a solid 10% share of the $60-odd billion (and counting) gelato racket 😯

Why should I care?

Nestlé has been feeling the heat ever since an activist investor amassed a $3 billion stake in the company last year and publicly called for a faster selloff of slow-growth businesses – and a focus on high-growth areas like coffee and pet food instead. Nestlé, melting under the pressure, duly popped off its US candy unit in January and shed its skin health segment for $10 billion in May. But it’s also expanding into new areas it thinks could win big – meaning yet more competition for the likes of Beyond Meat.

Investors in the plant-food company got a little carried away this year…
Investors in the plant-food company got a little carried away this year…

Private equity firms, meanwhile, continue their relentless march on. Check out our Pack to go behind the scenes of the industry... 😏

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