about 4 years ago • 2 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… 🙇♂️
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.
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 😯
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.
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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