Article Date 13/12/2019

Image from : Nestle

Nestlé sells US ice cream business to joint venture in $4B deal

Source Food Dive

Nestlé will sell its U.S. ice cream business to Froneri, an ice-cream-focused joint venture the Swiss company created in 2016 with PAI Partners, in a deal that valued the business at $4 billion. 

The deal, which includes iconic brands Edy's, Haagen-Dazs, Outshine and Drumstick, is expected to close in the first quarter of 2020. Nestlé's U.S. ice cream business ?had sales of $1.8 billion in 2018.

For much of the last two years, Nestlé ?has been overhauling its portfolio to capture growth in the food space and shed underperforming or slow-growing businesses. Last year, Nestlé ??sold its U.S. chocolate business, a deal that included more than 20 American candy brands like Butterfinger and Baby Ruth, to Ferrero for $2.8 billion.

Similar to its exit from candy where it competed with sweet giants Hershey and Mars Wrigley in the U.S., Nestlé's biggest competitor in the ice cream space domestically is Unilever. The European company's portfolio includes well-known brands such as Ben & Jerry's, Talenti, Breyers, Klondike and Popsicle. GlobalData estimated Unilever? has almost twice the global market share of its nearest competitor.

The announcement Wednesday that it is selling its U.S. portfolio of frozen ice cream brands underscores the Swiss food giant's efforts to avoid the financial heartaches facing other companies in the CPG space. As consumers shift away from processed, center-store items and toward better-for-you and popular products, food companies have regularly unloaded less "healthy" brands, or purchased ones that cater to these trends.

Nestlé will continue to manage its remaining ice cream businesses in Canada, Latin America and Asia once the transaction closes.

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