Nestlé, the world’s largest food and beverage company, is moving to streamline its portfolio, announcing plans to sell its remaining ice cream business to its joint venture partner, Froneri. The move, revealed on , is part of a broader effort by new CEO Philipp Navratil to focus on core businesses and improve sales growth.
The ice cream division, which includes well-known brands such as Häagen-Dazs and Drumstick, is valued at just under 1 billion Swiss francs (approximately $1.3 billion). Nestlé intends to transfer ownership to Froneri over the next year, but will remain a shareholder in the joint venture. The company’s share price saw an initial gain of 3% in Zurich trading before partially retracting.
Navratil, who took over from Laurent Freixe in , is prioritizing coffee, pet care, nutrition and food and snacks. He characterized the ice cream business as a “distraction” from these key areas, arguing that its six brands lack the global scale necessary to achieve optimal growth. “We cannot drive (growth) the same way that Froneri can,” he stated in a call with reporters.
Froneri was established a decade ago as a 50/50 joint venture between Nestlé and UK-based ice cream maker R&R. In , Nestlé sold its US ice cream business to Froneri for $4 billion. The current sale will see the remaining global ice cream operations integrated into Froneri throughout and into early . Nestlé has no plans to exit the joint venture, expressing satisfaction with Froneri’s performance.
This decision mirrors a trend among large consumer packaged goods (CPG) companies to simplify their portfolios and focus on higher-growth areas. Unilever, for example, recently spun off its ice cream business, creating The Magnum Ice Cream Company, as it sought to concentrate on fewer product categories.
The move comes as Nestlé undertakes a broader cost-saving program and organizational restructuring. The company is planning to cut approximately 16,000 jobs globally, leveraging automation and artificial intelligence to improve efficiency. The company also recently navigated an infant formula recall, which is expected to have a slight negative impact on sales growth this year.
While Nestlé did not provide specific details regarding the impact on its operations in Peru, the company stated it is “evaluating details and next steps” for its ice cream business in the country and will provide further information “in due course.” Nestlé acquired the Peruvian brand D’Onofrio in , adding it to its portfolio alongside panetones, chocolates, and other confectionery items.
The sale of the ice cream business is not solely about financial performance. The industry presents unique challenges, including seasonal demand and the complexities of maintaining a frozen supply chain. These factors, combined with the desire to focus on core competencies, appear to have driven Nestlé’s decision.
Navratil emphasized that the ice cream business, while “strong,” is relatively small within the larger Nestlé organization. He believes that Froneri, as a dedicated ice cream company, is better positioned to unlock its full potential. The transaction is expected to allow Nestlé to allocate resources more effectively to its prioritized business segments.
The broader context of this divestiture is a shift in strategy for Nestlé under new leadership. Navratil’s focus on streamlining the portfolio and improving operational efficiency signals a commitment to delivering sustainable, long-term growth. The sale of the ice cream business is a significant step in that direction, demonstrating a willingness to make difficult decisions to reshape the company for the future.
The transaction is subject to regulatory approvals and is expected to close within the next 12 to 18 months. Analysts will be closely watching to see how Nestlé’s strategic shift impacts its financial performance and market position in the coming quarters.
