Nestlé takes bigger scoop of US ice cream market

Nestlé is taking a big scoop out of the US ice cream business Keystone Archive

The Swiss food concern, Nestlé, is set to become number one in the US ice cream market after clinching a deal with the country's largest manufacturer.

In a statement released on Monday, Nestlé said it merge its US ice cream business with Dreyer’s, resulting in Nestlé ownership of 67 per cent of the combined company.

The Vevey-based company said its subsidiary Nestlé Holdings USA, which already owns 23 per cent of Dreyer’s shares, had entered into “a definitive agreement” to combine its business with Dreyer’s in return for 55 million shares.

Under the terms of the agreement, the company will make no initial cash payment.

A second phase, which could result in Nestlé taking full control of Dreyer in 2006, is an option that would cost the company about $2.5 billion (SFr3.91 billion).

“Unique opportunity”

“We have seized a unique opportunity to combine two organisations that share a similar outlook and similar cultures,” Nestlé CEO Peter Brabeck commented.

“This move underscores our commitment to growing and improving our ice cream business…in the world’s highest per capita consumption market, the USA,” he added.

The move further strengthens Nestlé’s position in the US, following its acquisition of the luxury ice cream brand, Häagen-Dazs, last year. It also fits in with a general expansion of Nestlé’s ice cream business, which led to the acquisition of the German manufacturer, Schöller, in 2001.

Further expansion

“This is another step in a series of recent moves we have made in the ice cream sector,” Brabeck commented.

“After the Häagen-Dazs and Schöller acquisitions, Nestlé now proposes an innovative deal… that will allow us to significantly grow sales and the performance of our ice cream business in the world’s highest per capita consumption market, the USA,” Brabeck said.

Dreyer’s is the largest manufacturer and distributor of ice cream and ice cream products in the United States, selling ice cream throughout the US and in parts of Asia. In addition to the Dreyer’s name, it also markets ice cream under the Edy, Dreamery, Starbucks and Godiva brands.

Last year, Dreyer’s recorded sales of $1.4 billion and an operating profit of $60 million.

Nestlé said that combining the two operations would lead to “significant operating efficiencies” and annual savings of $170 million.

The new organisation will have its headquarters in Oakland, California.

swissinfo with agencies