Nestlé is divesting its remaining ice cream operations that are not part of its Froneri joint venture with PAI Partners, marking a significant shift in its strategy within the food and beverage industry.
During the announcement of its annual results the Swiss food and drink giant stated it is in “advanced negotiations” to hand over these assets to UK-based Froneri, a move aligned with its restructuring around four core business units.
CEO Philipp Navratil, who stepped into the role in September, elaborated during a media call that the ice cream segment slated for sale generates nearly SFr1 billion ($1.2 billion) in revenue and primarily operates across six markets.
Navratil noted, “There are times when we decide that focusing means exiting businesses. This is the case with our remaining ice-cream business – it’s strong but small, and it’s a distraction for us.” He emphasized that this business is well-suited for Froneri, and they have agreed to a phased sale.
Furthermore, he assured that the divestiture process is underway and should conclude by early next year. Importantly, he emphasized that “there is no plan to exit the JV with Froneri.”
Similar to other key players in the food and drink business, such as Unilever, Nestlé will maintain a minimal presence in this sector, albeit outside of its core corporate operations. Unilever previously divested its ice cream business by creating The Magnum Ice Cream Company, retaining a minority interest while planning a phased exit.
Nestlé’s partnership with PAI Partners began in 2016, merging its European ice cream operations with UK-based R&R Ice Cream, which is owned by the private equity firm. The initial joint venture combined Nestlé’s and R&R’s ice cream operations across multiple regions, including Europe, the Middle East, and parts of Asia and South America. While the U.S. and Israel were excluded at inception, Israel was integrated into the Froneri framework three years later, leading to Nestlé’s divestiture of its U.S. operations as well.
Navratil remarked, “We held on to those six businesses because we thought we could drive growth. Looking at it now, they don’t have any global scale, and we cannot drive this the same way as Froneri can. They have scale, they have the knowledge, and they have the brands.”
When queried about the specific markets involved, Nestlé confirmed that the remaining ice cream assets include Canada, Chile, Peru, China, Malaysia, and Thailand. However, the company stated it’s premature to discuss particular assets.
Sources close to the negotiations have indicated that PAI Partners is making “good progress” toward acquiring the ice cream assets but declined to comment publicly.
In October, PAI Partners restructured its shareholding in Froneri with minority investment from the Abu Dhabi Investment Authority (ADIA). The ADIA, which invests on behalf of the Abu Dhabi government, acquired a minority portion of PAI’s 50% stake as a co-investor.
Navratil concluded, “We’re really happy with the performance that Froneri is driving. Selling the remaining ice cream businesses of Nestlé into Froneri reflects our strong belief that Froneri is the right owner for those businesses and will enhance performance going forward.”
This strategic move underscores a broader trend in the food and beverage industry, reflecting how companies are realigning their operations to focus more effectively on growth and consumer demand in a competitive landscape.