In recent days the news is going around the world, Nestlé is preparing to leave the world of ice cream and has started negotiations to sell its share in Froneri, the joint venture that controls some of the most famous packaged ice cream brands in the world. Among these also the Maxibon and the Coppa del Nonno, which are therefore about to change owners.
Nestlé’s decision is not a bolt from the blue, but the result of a precise strategy and a market that is changing profoundly.
What is Froneri and what does it have to do with our ice creams
Froneri was founded in 2016 as a joint venture between Nestlé and the French investment fund PAI Partners, with the aim of bringing together the main packaged ice cream brands of the Swiss multinational under one roof. Today the company controls brands such as Maxibon, Coppa del Nonno, Häagen-Dazs, but also Nuii, Pirulo, Extreme and lines branded with famous names such as Oreo, Kit Kat and Lion. A huge portfolio, which generates over 5 billion euros in revenues.
Nestlé currently holds 50% of the joint venture, with the other half split between PAI Partners, Abu Dhabi’s sovereign wealth fund and the investment arm of Goldman Sachs. Froneri was valued at around 18 billion dollars: this means that, if the sale goes through, Nestlé could collect around 9 billion dollars.
In all likelihood, PAI Partners will purchase the share, which would thus become the sole owner of the joint venture.
Why Nestlé wants to exit the ice cream business
The decision of CEO Philipp Navratil – at the helm for less than two years – is part of a broader relaunch plan, which aims to simplify the group’s structure and concentrate resources on the sectors considered most strategic: coffee, pet food, health foods and snacks.
It’s not just a question of future numbers: Nestlé is going through a difficult time. In the space of just 18 months, three CEOs have alternated, net profits have suffered a contraction and consumer confidence has been shaken by the huge global recall of baby formula milk contaminated with cereulide, an affair that led to the investigation of Nestlé together with Danone and Lactalis after the death of two children. Added to this is a plan to cut approximately 16,000 jobs over the next two years, announced precisely to reduce costs and accelerate automation.
Paradoxically, the news of the sale was welcomed positively by the markets: after the announcement, Nestlé shares rose by 4%.
It is worth noting that, in parallel with the sale of the ice cream division, Nestlé has also started the sale of a share of the water division, which includes brands such as Sanpellegrino, Acqua Panna, Levissima, Evian and Perrier.
What changes for consumers
For consumers, at least in the short term, not much will change: Froneri will continue to produce and distribute the brands we know, regardless of who owns them. Maxibon and Coppa del Nonno, as well as all the other ice creams of the group, will remain on supermarket shelves.
What is changing is the more general picture: the large giants of the food industry are gradually abandoning packaged ice cream, leaving room for more specialized companies. Whether this will lead to a greater focus on quality – or simply a restructuring of margins – we will find out in the coming years.
