Nestlé Will No Longer Produce Dairy Ice Cream in the U.S.

Swiss food giant Nestlé will no longer produce dairy ice cream in the U.S.

The world’s largest food and drink company has sold off its ice cream business to Froneri for $4 billion. This includes brands such as Drumstick, Häagen-Dazs, and Dreyer’s.

Froneri is an international, fast-growth ice cream company started by Nestlé and R&R — a unit of the French private equity firm PAI Partners — in 2016. This sale will consolidate Nestlé and Froneri’s portfolios to create one large market share.

“(We) are convinced that Froneri’s successful business model can be extended to the U.S. market,” Nestle’s Chief Executive Officer Mark Schneider said in a statement.

In recent years Nestlé has focused on premium products in high growth categories including plant-based alternatives. The company has also sold off underperforming areas, such as dairy ice cream.

Milk sales in the U.S. dropped more than $1 billion last year, and consumption has reached an all-time low. Even America’s largest milk producer, Dean Foods, recently filed for bankruptcy.

Recent SPINS data reveals that U.S. plant-based food industry is booming, now valued at $4.5 billion. Vegan milk makes up 13 percent of retail milk sales. Dairy-free ice cream saw a 66.7 percent increase in sales from April 2017 to April 2019.

Nestlé’s Plant-Based Portfolio

In recent years, Nestlé has added plant-based meat brands to its portfolio, including Sweet Earth. It launched the Awesome Burger and Awesome Grounds under the Sweet Earthat American retailers last month. The company has also released similar vegan products in the EU through its Garden Gourmet range.

Last, February, the company announced it was considering dropping its lunch meat charcuterie brand Herta.

“It really shows how we are positioning the company towards what is benefiting from higher growth and future areas such as plant-based offerings that are very much on-trend with where consumers are heading,” Schneider said in a statement.

Nestlé has announced plans to debut meat-free versions of two of its traditional frozen food items: the DiGiorno Meatless Supreme and Stouffers Meatless Lasagna. Both items will be available in 2020 and are made using Sweet Earth’s Awesome Grounds.