From the infant formula recall to the potential sale of Waters, Nestl\u00e9\u2019s full-year results promised several headline-making stories \u2013 yet, it was the group\u2019s small ice cream business that made the biggest news.<\/p>\n
The Swiss CPG major announced that ice cream had become a \u2018distraction\u2019 for the company, which is executing a cost savings programme and sharpening its portfolio into four distinct pillars<\/a>: coffee, petcare, nutrition, and food and snacks.<\/p>\n Nestl\u00e9 CEO Philipp Navratil told investors its remaining ice cream business is \u201cstrong but small, and it\u2019s a distraction for us\u201d.<\/p>\n \u201cThis business is a great fit for Froneri and we have agreed to sell [it] in a phased way,\u201d he explained.<\/p>\n Ice cream generates shy of CHF 1 billion for Nestl\u00e9 (around CHF 780 million) and most of it is concentrated in the Americas (Canada, Chile, Peru), plus China, Malaysia and Thailand, with some marginal activity in Europe.<\/p>\n The businesses will be integrated into Froneri, Nestl\u00e9\u2019s pure-play ice cream joint-venture with PAI Partners, during 2026 and early 2027. <\/p>\n There are no plans for Nestl\u00e9 to exit Froneri in which it holds a 50% stake. <\/p>\n \u201cWe are really happy with the performance that Froneri is driving,\u201d Navratil said. \u201c[It is] our strong belief that Froneri is the right owner for those businesses, and will drive a better performance than we would do going forward.\u201d<\/p>\n Why Froneri remains important to Nestl\u00e9<\/p>\n Nestl\u00e9 set up Froneri as a 50:50 joint venture with private equity firm PAI Partners in 2016.<\/p>\n To form the company, Nestl\u00e9 and PAI-owned R&R Ice Cream contributed their ice cream businesses across parts of Europe, the Americas, Southeast Asia and South Africa.<\/p>\n In 2020, Nestl\u00e9 offloaded its US ice cream division, complete with key brands Haagen-Dazs and Dreyer\u2019s. Since 2024, Froneri expanded into Uruguay through acquiring local player Crufi and also bought Food Union\u2019s ice cream business in Europe. <\/p>\n More broadly, Froneri has established itself as one of the two biggest ice cream companies globally<\/a>, rivalling only Unilever\u2019s ice cream business (Magnum, Ben & Jerry\u2019s, Cornetto, Wal\u2019s) in scale and brand might. <\/p>\n The JV\u2019s FY24 profit rose eightfold from a loss the prior year; revenue grew 5.5%, and volumes increased 3%.<\/p>\n Froneri is strategically important to Nestl\u00e9 for two reasons. It has paid a dividend of around CHF 2bn to the Swiss major in the last two fiscal years, helping it reduce its net debt; while simultaneously giving its well-known brands a more efficient growth platform.<\/p>\n Unilever echoes<\/p>\n Philipp Navratil repeatedly called ice cream \u2018a distraction\u2019 for Nestl\u00e9, which he wants to pivot into a leaner business built around high-growth categories such as coffee and petcare.<\/p>\n Navratil\u2019s tone echoed that of Unilever chief executive Fernando Fernandez, who called ice cream \u2018an outlier\u2019 in the portfolio and told investors<\/a> last year that Unilever needed \u2018to leave that [business] behind\u2019. <\/p>\n What Unilever did next was spin off ice cream into The Magnum Ice Cream Company (TMICC), a pure-play firm in which the CPG major still holds a 20% stake. <\/p>\n The parallels are clear \u2013 but why is it that major food and beverage companies are shunning a high-growth category like ice cream?<\/p>\n Why ice cream is high-growth but tricky business<\/p>\n According to Nestl\u00e9\u2019s chief executive, the ice cream category shows mid-single digit growth consistently and isn\u2019t being impacted by trends such as GLP-1 drugs that have shaken up the wider snacking and confectionery space.<\/p>\n This is likely thanks to innovation in formats, such as mini bites and sticks, and the understanding that consumers \u2013 even those looking to lose weight \u2013 want to treat themselves occasionally, particularly with premium, portion-sized products.<\/p>\n On an operational level, however, ice cream is tricky business \u2013 there\u2019s high seasonality, distinct supply chains, and capital intensity including high branding and marketing costs. It therefore makes sense that such businesses are managed within a focused company rather than as part of a diverse portfolio.<\/p>\n This strategy of separating ice cream isn\u2019t unique to Nestl\u00e9 and Unilever. Belgian dairy co-op Milcobel sold YSCO<\/a>, one of the continent\u2019s largest private-label ice cream manufacturers, to investment firms Davidson Kempner Capital Management LP and Afendis, in a bid to focus on its cheese and milk powder business. (The co-op is now being integrated into FrieslandCampina<\/a>, itself a sign of Europe\u2019s increasingly consolidated dairy market.)<\/p>\n In sum, ice cream requires a nimbler approach to succeed: and in Froneri, Nestl\u00e9 already has a strong base to influence the category from without diluting its resources and, ultimately, its balance sheet.<\/p>\n","protected":false},"excerpt":{"rendered":"From the infant formula recall to the potential sale of Waters, Nestl\u00e9\u2019s full-year results promised several headline-making stories…\n","protected":false},"author":2,"featured_media":14094,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":"","_share_on_mastodon":"0"},"categories":[126],"tags":[8516,10179,10180,5722,10181,10182,10183,10184,10185,10186,457,8526,35,10187,10188,5736,5737,10189,3824,10178,10190,10191,8535,10192,2118,199,8536,3049,10193,486,10194,8542,10195,10196,10197,10198,789,10199,10200,10201,704,10202],"class_list":["post-14093","post","type-post","status-publish","format-standard","has-post-thumbnail","category-nestle","tag-agriculture","tag-animal","tag-animals-and-pets","tag-blue","tag-blue-sky","tag-bull","tag-cattle","tag-concepts-and-ideas","tag-cow","tag-dairy-farm","tag-environment","tag-farm","tag-food","tag-grass","tag-grazing","tag-healthy-eating","tag-healthy-lifestyle","tag-holstein-cattle","tag-industry","tag-livestock","tag-mammal","tag-mammals","tag-meadow","tag-meat","tag-nature","tag-nestle","tag-non-urban-scene","tag-outdoors","tag-pasture","tag-power","tag-ranch","tag-rural-scene","tag-save-energy","tag-standing","tag-steak","tag-sustainable-resources","tag-technology","tag-tower","tag-turbine","tag-warming-up","tag-wind-power","tag-wind-turbine"],"share_on_mastodon":{"url":"","error":""},"_links":{"self":[{"href":"https:\/\/www.europesays.com\/ch\/wp-json\/wp\/v2\/posts\/14093","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/ch\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/ch\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/ch\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/ch\/wp-json\/wp\/v2\/comments?post=14093"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/ch\/wp-json\/wp\/v2\/posts\/14093\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/ch\/wp-json\/wp\/v2\/media\/14094"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/ch\/wp-json\/wp\/v2\/media?parent=14093"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/ch\/wp-json\/wp\/v2\/categories?post=14093"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/ch\/wp-json\/wp\/v2\/tags?post=14093"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}