Global companies disillusioned with ice cream: Nestlé also shuts down business, begins cleanup operation; focus on core profitable segments
The world’s largest food and beverage company, Nestlé, is planning to put its ice cream business on hold. A trend has been observed in the global FMCG sector for some time: large companies are becoming disillusioned with the ice cream business. Nestlé has confirmed that it is in talks to sell its remaining ice cream portfolio to joint venture partner Froneri.
The deal includes iconic brands like Häagen-Dazs and Drumstick, valued at approximately $1.3 billion (approximately Rs. 11,800 crores). Nestlé’s new CEO, Philippe Navratil, has decided to consolidate the company’s fragmented empire upon assuming office.
According to Navratil, the ice cream brands had become a distraction from the company’s core business. The company will now focus its full attention on the four segments where it has the greatest dominance: coffee, pet care, nutrition, and snacks.
Navratil clarified, “We cannot grow these brands at the pace that specialized companies like Froneri can.” Nestlé, a giant, is now leveraging AI and automation to reduce costs and plans to cut 16,000 jobs worldwide. As such, the company wants to invest capital in sectors where margins are higher and more stable.
These companies also retreated
Nestlé is not alone in moving away from frozen sweets. This is a structural shift among FMCG and dairy giants worldwide. Unilever spun off its famous ice cream division, Magnum, last December.
American giant General Mills has already sold its ice cream unit to Lactalis. Fonterra, the world’s largest dairy exporter, is also in the process of selling its global consumer and ice cream business. French company Lactalis has placed a hefty bid of over ₹20,000 crore for this.
Why the move away from the ice cream business?
Market analysts believe that complex cold-chain logistics, high power consumption, and seasonal dependence have made ice cream a “difficult business.”
Sugar Taxes and Strictness on Unhealthy Products
People are becoming more conscious about their sugar and calorie intake. Rising sugar taxes in many countries and stricter regulations on unhealthy products are driving companies to shift toward plant-based and nutrition-based products.
