Is the ice cream business still appealing?

Food companies are facing challenges in the ice cream industry, leading them to explore new strategies for profitability. While Nestlé made changes years ago, Unilever is just beginning to reorganize its ice cream business. The president of Glacesuisse, the association of Swiss ice cream manufacturers, notes a significant decline in sales for June compared to previous years. The summer months are crucial for ice cream sales, with more than half of the annual volume sold during this time.

Although the industry has seen some growth up to mid-May, the overall outlook for the year depends heavily on sales in the summer months. Ice cream sales in Switzerland have typically increased by 3 to 5 percent in recent years. Factors such as weather dependence, expensive logistics, and increased consumption of store-brand ice cream have influenced the industry. Major consumer goods manufacturers like Unilever and Nestlé are reorganizing their ice cream divisions to adapt to changing market dynamics.

Unilever announced plans to spin off its ice cream business in March, while Nestlé has already restructured its ice cream division. The formation of the joint venture Froneri has allowed Nestlé to streamline its operations and maximize production efficiency. Froneri has gained market share in recent years by offering a variety of well-known brands, including private labels for retailers. The company’s success in the ice cream business has positioned it as a key player in the industry.

Despite challenges like competition from private labels, complex logistics, and health concerns, companies like Ferrero are investing in the ice cream sector to expand their brand portfolios. The rise of weight loss trends and health-conscious consumers have impacted ice cream sales, particularly in the US market. However, the partnership between Nestlé and Froneri has enabled Nestlé to mitigate some of these challenges and maintain a strong position in the market.

Looking ahead, potential scenarios include a sale of Froneri to financial investors or an IPO, as well as further restructuring within the ice cream industry. While challenges persist, companies are adapting to changing consumer preferences and market dynamics to remain competitive in the ice cream business.