Why world's biggest food company is exiting ice cream business
What's the story
Nestle, the world's largest food and drinks manufacturer, is in advanced negotiations to sell its remaining ice cream business to Froneri. The move comes as part of a strategy under new CEO Philipp Navratil to simplify operations and boost sales. The division includes popular brands like Haagen-Dazs and Drumstick and is valued at nearly 1 billion Swiss francs ($1.3 billion).
Business strategy
Ice cream brands a 'distraction' for Nestle
Under Navratil's leadership, Nestle is focusing on its coffee, pet care, nutrition, and food and snacks businesses. "We are focusing our portfolio on four businesses, led by our strongest brands," Navratil said in a statement. He also called the six ice cream brands a "distraction" from the rest of its portfolio which includes cereal, coffee confectionery and frozen foods, among others.
Competition
Unilever also spun off its ice cream unit last December
Froneri, a joint venture between Nestle and UK ice cream maker R&R, was formed a decade ago. In 2019, Nestle had sold its US ice cream unit to Froneri for $4 billion. The company is not the first consumer goods giant to exit the ice cream business. Unilever also spun off its ice cream unit last December to focus on fewer products.
Downsizing
Nestle cutting around 16,000 jobs globally
As part of its restructuring efforts, Nestle is also cutting around 16,000 jobs globally. The company is looking to cut costs through automation and artificial intelligence. However, these plans have been hampered by a major infant formula recall that could negatively impact sales volumes this year. Last month, the Swiss firm recalled some batches of infant formula from several countries after traces of cereulide toxin were detected in product samples in December.