London, Ontario (Rajeev Sharma): In a strategic shift to simplify its global portfolio, Nestlé has announced it is in advanced negotiations to sell the remainder of its ice cream business to Froneri, its long-standing joint venture partner. The deal, which includes operations in Canada, Asia, and parts of Latin America, marks a definitive move by the Swiss food giant to exit the direct management of a category it now deems a “distraction.”
The potential sale specifically impacts the Canadian market, including the significant production facility in London, Ontario. Employing over 750 people, the London plant on Wilton Grove Road has been a local fixture for over 50 years and produces iconic brands like Häagen-Dazs, Drumstick, and Parlour.
Timeline and Operational Impact
Despite the magnitude of the negotiation, Nestlé Canada has moved quickly to reassure its workforce and the public regarding immediate stability.
- Transition Period: The ownership change is expected to take 12 to 18 months to finalize.
- Business as Usual: Catherine O’Brien, senior vice-president of corporate affairs for Nestlé Canada, stated that operations will continue without immediate changes to staffing, customer service, or partnerships during the transition.
- Strategic Focus: Under the leadership of new CEO Philipp Navratil, Nestlé is pivoting to prioritize four high-growth core categories: coffee, pet care, nutrition, and snacks.
Union Concerns and Local Investment
While the company emphasizes a “responsible transition,” the news has sparked anxiety among local labor leaders.
- Labor Uncertainty: Gary Bast, a representative for Teamsters Local 647, expressed concern over the long-term future of the London facility once the current collective agreement—which has two years remaining—expires.
- Recent Expansion: The plant recently underwent a $51.5 million expansion, a project supported by the Ontario government. This recent investment is seen by some industry experts as a sign of the plant’s operational strength, potentially making it a valuable asset for Froneri rather than a candidate for closure.
The Global Trend
Nestlé’s move mirrors a broader trend among consumer goods giants. Just last year, competitor Unilever spun off its ice cream division (including Ben & Jerry’s and Magnum) into a standalone entity to sharpen its own corporate focus. By offloading these assets to Froneri—which already manages Nestlé’s former U.S. and European ice cream businesses—Nestlé maintains a financial stake in the category’s success through its 50% ownership of the joint venture, while removing the operational complexities of the cold chain from its main balance sheet.
