Winning Bizness Desk
Mumbai. Nestle, the world’s largest food and beverage company, is preparing to put its ice cream business on the back burner as global FMCG giants rethink their portfolios. The company has confirmed it is in talks to sell its remaining ice cream brands to its joint venture partner Froneri. The move signals a wider structural shift in the industry, where big players are stepping away from frozen desserts and turning towards higher-margin and more stable categories.
Portfolio clean-up under new CEO
The proposed deal includes well-known brands such as Haagen-Dazs and Drumstick, with an estimated combined value of around 1.3 billion dollars. Nestle’s new Chief Executive Officer, Philip Navratil, has moved quickly to streamline what he sees as a scattered empire. He believes ice cream has become a distraction from the company’s core strengths.
Nestle will now focus on four priority segments where it holds strong market positions:
- Coffee
- Pet care
- Nutrition
- Snacks
Navratil has said these brands can grow faster under a specialist like Froneri. At the same time, Nestle is pushing an internal clean-up. The company plans to cut 16,000 jobs worldwide and is investing in artificial intelligence and automation to reduce costs and improve efficiency. Capital will be directed towards businesses that offer higher and steadier returns.
Global shift among FMCG giants
Nestle is not alone. The retreat from ice cream is part of a broader shift across global FMCG and dairy majors. In December, Unilever separated its well-known ice cream division, Magnum. US-based General Mills has already sold its ice cream unit to Lactalis. Fonterra, the world’s largest dairy exporter, is also in the process of divesting its global consumer and ice cream operations. French dairy giant Lactalis has reportedly placed a bid worth more than Rs 20,000 crore for Fonterra’s assets.
Industry observers describe this as a structural reset rather than a temporary correction.
Why ice cream is a tough business
Market analysts say the economics of ice cream have become increasingly challenging. The business faces several operational hurdles:
- Complex cold-chain logistics
- High electricity consumption
- Heavy dependence on seasonal demand
Ice cream must be stored and transported at minus 18 degrees Celsius or lower. This requires specialised freezer trucks, cold warehouses and constant temperature monitoring. Rising power costs and global pressure to cut carbon emissions have made this supply chain expensive and difficult to sustain.
Low margins, high volatility
Margins are another concern. Ice cream sales peak during summer but slow sharply in winter and monsoon months. Compared to beauty and personal care products, which can offer margins of 20 to 25 percent, ice cream typically delivers only 10 to 14 percent. For investors seeking stable and higher returns, this gap is significant.
There is also growing pressure from health regulations. Consumers are becoming more cautious about sugar and calorie intake. Many countries have introduced sugar taxes and stricter rules on unhealthy products. As a result, companies are shifting towards plant-based and nutrition-focused offerings that align better with evolving consumer preferences.
A sign of changing priorities
The exit from ice cream reflects a deeper change in strategy. Global food companies are prioritising efficiency, sustainability and profitability over legacy categories. What was once seen as a sweet and steady business now appears complex, seasonal and carbon-intensive.
For Nestle and its peers, the message is clear: growth lies in focused portfolios and resilient segments, not in frozen indulgence that melts under financial pressure.
