Nestlé Forms Overseas Ice Cream Joint Venture

Nestlé on Wednesday announced the formation of a joint venture that will combine many of its frozen food offerings with British ice cream giant R&R.

The joint venture, called Froneri, will be headquartered in the U.K. and employ about 15,000 people.

Froneri will sell products in more than 20 countries. In addition to Europe, the venture plans to be active in the Middle East, Australia, Brazil, Argentina, the Philippines and South Africa. Sales are expected to reach $2.8 billion.

The transaction includes Nestlé ice cream in those countries, along with its European frozen food business and its Filipino chilled dairy business. The world's largest food company will retain its pizza and retail frozen food operations in Italy and will continue to solely own its North American ice cream business.

R&R CEO Ibrahim Najafi will take over that position at Froneri, whose board will consist of three senior Nestlé executives and three members appointed by R&R owner PAI Partners, a French private equity firm.

Financial details of the deal were not disclosed.

"This is an exciting growth opportunity in a dynamic category," said Nestlé CEO Paul Bulcke. "Froneri will capitalize on complementary strengths and innovation expertise, combining Nestlé’s strong and successful brands and experience in ‘out-of-home’ distribution with R&R’s competitive manufacturing model and significant presence in retail.”

Bloomberg reported that Nestlé’ particularly hopes to share the costs of ice cream production, a low-margin business that grew more slowly than its other operations. Eventually, the company could depart that segment entirely.

Frozen and packaged foods have struggled of late amid growing consumer preferences for foods perceived to be fresher and healthier.