In a strategic move to strengthen their position in the highly fragmented US ice cream market, Nestlé USA and the Pillsbury Company, Minneapolis, announced the formation of a 50/50 joint venture comprised of the Nestlé USA novelty ice cream business and Pillsbury's U.S. Häagen-Dazs frozen dessert business. The combined sales of these units amounted to about US$ 600 million in 1998.
Both partners offer complementary product lines in two distinct segments. Combining the strong appeal of the Häagen-Dazs brand name and its outstanding position in the superpremium category with Nestlé's unique novelty line and its leading frozen dessert technology provides the joint venture with strong growth prospects.
"Both partners are already known for their strengths and skills in marketing, and the formation of this joint venture offers us an outstanding opportunity to grow our business in the world’s largest ice cream market," said Peter Brabeck, Chief Executive Officer of Nestlé S.A., parent company of Nestlé USA. "Innovation will be fueled by Nestlé’s world class expertise in frozen dessert technology, and consumer availability will be strengthened by both HD’s direct store delivery and our out-of-home channel impulse strategy."
It is expected that the joint venture will provide additional distribution opportunities for the novelty sector, as well as cost reductions through operational and distribution efficiencies. "Bringing together two highly focused ice cream businesses will enable us to take advantage of the inherent synergies available in this joint venture," said John McGrath, Chief Executive Officer of Diageo, Pillsbury’s parent company.
The transaction, which is subject to the normal Federal Trade Commission/Department of Justice review process, includes the Nestlé ice cream production plants in Bakersfield, California and Laurel, Maryland, and the Häagen-Dazs plant in Tulare, California. The Häagen-Dazs shop system in the US and Häagen-Dazs' international activities will not be part of the joint venture. All the ice cream brands, together with all frozen dessert technology, of the two partners will be made available to the new company.