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Nestlé In Advanced Talks With R&R On Ice-Cream Joint Venture

Published on Oct 6 2015 9:55 AM in A-Brands tagged: Featured Post / Nestlé / Ice Cream

Nestlé In Advanced Talks With R&R On Ice-Cream Joint Venture

Nestlé, the world’s biggest food company, is in advanced talks with Britain’s R&R Ice Cream to create a joint venture to run most of its ice-cream business outside North America, a move that analysts said could presage an eventual exit.

Nestlé and R&R would own an equal share in the partnership and operate in 20 countries, the Vevey, Switzerland maker of Nespresso coffee and Cailler chocolate said in a statement. The joint venture, which also includes Nestlé’s European frozen-food business excluding pizza, would be established in 2016 and feature brands such as Cadbury, Moevenpick and Kelly’s of Cornwall.

For Patrik Schwendimann, an analyst at Zuercher Kantonalbank, the move illustrates Nestlé’s plan to revamp its portfolio and focus on faster-growing sectors. Over the past two years, Nestlé has jettisoned PowerBar snacks, Jenny Craig diet centres, and Juicy Juice drinks. Nestle generates $7.4 billion in ice-cream sales globally, according to data-tracker Euromonitor, yet the gap between it and market-leader Unilever has widened since 2010, as Unilever pushes brands like Magnum into new markets.

“This would be seen as an intermediate step towards an exit, in whichever form that would be,” Schwendimann said. “Ice cream has been performing below average for a long time.”

North Yorkshire, England-based R&R, formed in 2006 through the merger of the UK’s Richmond Foods and German ice-cream-maker Roncadin, had sales of £838 million ($1.3 billion) last year, according to its annual report. It is owned by private equity firm PAI Partners and has made some 20 acquisitions since 1995, including Nestlé’s South African and UK ice-cream units.

Nestlé said that the joint venture would be composed of senior executives from both companies, with Luis Cantarell becoming its chairman. He is currently head of Europe, Middle East and North Africa and has worked for Nestlé since 1976.

Nestlé has a history of forming joint ventures, including a breakfast-cereal partnership with General Mills, Inc. and an alliance with Coca-Cola Co. to make Nestea drinks in Europe and Canada.

News by Bloomberg, edited by ESM. To subscribe to ESM: The European Supermarket Magazine, click here.

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