Nestlé USA will simplify the route to market for its pizza and ice cream products – including brands like Breyer’s, Häagen-Dazs and DiGiorno – by exiting its frozen direct store delivery (DSD) network and transitioning to a new warehouse model.
The company said that the “change will leverage the highly efficient warehouse network that Nestlé already uses for its frozen meals and snacks”, meaning it can better meet the needs of both retailers and consumers.
The planned transition will commence in the third quarter of this year, and is expected to be complete early in the second quarter of 2020.
Steve Presley, chairman and CEO of Nestlé USA, said: “Ice cream and pizza are growing categories in which we hold strong leadership positions. As we continue to focus on driving long-term profitable growth, leveraging a simpler route to market unlocks resources we can use to fuel our efforts in demand generation, such as product innovation and brand building.”
The food industry is facing unprecedented shifts in consumer behaviour as the nature of how consumers eat, shop and engage with brands continues to change.
At the same time, retail customers are also changing how they do business. Nestlé said it is adapting to this new environment, with the transition part of its broader efforts to transform its organisation and accelerate growth.
“Moving to a warehouse model has numerous benefits for us and our retail customers,” Presley added. “By taking advantage of the unmatched breadth and depth of our existing frozen warehouse network, our retail customer partners can better leverage their existing networks. This change is a win-win for Nestlé and our customers.”
Presley added: “This decision came after careful consideration and, while critical to achieve our business goals, it will impact employees in our sales and supply chain teams, and will result in the closure of eight company-owned frozen distribution centres and our frozen inventory transfer points. These employees have worked incredibly hard to serve our customers. Treating them with respect through this process is a top priority for us, and we are committed to doing all we can to provide them information, resources and support.”
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