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Nestlé Puts Ice-Cream Businesses In Venture With PAI Partners

By Publications Checkout
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Nestlé Puts Ice-Cream Businesses In Venture With PAI Partners

Nestlé SA, which makes Skinny Cow and Moevenpick ice cream, set up a joint venture to run most of its ice-cream business outside North America, as the Swiss company looks to simplify its operations.

The new company, called Froneri, will have annual sales of about 2.7 billion CHF ($2.8 billion) and operate in more than 20 countries, Nestlé and R&R Ice Cream said in a recent statement, without disclosing financial details. The new operation, to be based in the UK, will have approximately 15,000 employees.

Nestlé is looking to share the cost in a lower-margin business as it loses market share in ice cream to Magnum-bar-maker Unilever. The world’s largest food company, struggling to revive sales growth, has divested more than 25 business units in the past four years, according to Jean-Philippe Bertschy, an analyst at Bank Vontobel AG. Nestlé’s milk and ice-cream sales rose 1.7 per cent last year, less than half the rate of the whole company.

'The Froneri JV is fully in line with Nestlé's strategy to better manage its product portfolio,' Bertschy wrote in a note to investors.

Founded in 1985 in North Yorkshire, England, R&R is the world’s third-biggest ice-cream manufacturer, producing products under the Cadbury and Oreo brands, as well as private labels. It previously acquired Nestlé’s ice-cream units in the UK and South Africa. PAI Partners, its owner, said that it plans to keep supporting the company.

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The 50-50 venture includes Nestlé’s European frozen-food business excluding Italy and pizza, plus a chilled dairy business in the Philippines. Froneri will also have operations in the Middle East, Argentina, Australia, Brazil and South Africa.

In October, the Swiss company said that it was in talks over the alliance with R&R. Nestlé veteran Luis Cantarell, who runs the company’s business in Europe, Middle East and North Africa, will be chairman of Froneri, while R&R’s chief executive officer, Ibrahim Najafi, will be CEO.

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

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