Nestle has announced its interest in gaining full control of Haagen-Dazs. Nestle’s plans to buy the luxury ice cream brand will further intensify the rivalry between the Swiss firm and Unilever. Yet at the same time, a deal would further Nestle’s move towards high-margin areas. This would highlight the growing disparity between ‘superleague’ players such as Nestle and Unilever, and the rest of the food industry.
The US FTC’s approval of Diageo’s sale of Pillsbury to General Mills has opened the door for Nestle to buy up Haagen-Dazs. Nestle and Pillsbury currently own the ‘super-premium’ ice-cream brand in a joint venture. However, Nestle is likely to exercise its option to take control of the brand’s US operations if Pillsbury is taken over.
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Nestle would then have to deal with Pillsbury’s soon-to-be new owner, General Mills, to gain control of the ice-cream’s international operations. The Swiss firm will have significant leverage to wrest this from General Mills, given the close ties the two have in other areas such as cereals.
Nestle’s key rival, Unilever, is currently the number one ice-cream producer in the world, having purchased the Ben & Jerry ice-cream brand last year. As Haagen-Dazs’ new owner, Nestle would have a serious contender to compete with Unilever in the ‘super-premium’ category of ice cream and challenge the Anglo-Dutch firm’s dominance of the ice-cream business. Scooping the international arm of Haagen-Dazs may also compensate for Nestle’s failure to impact on the Unilever-dominated UK ice cream market, following its disposal of brands such as Lyons-Maid to Richmond Foods.
The move also highlights a wider aim of Nestle to focus on high-margin areas. Nestle has, like Unilever, aligned its strategy to focus on core strengths and promote its value-add brands. The potential Haagen-Dazs acquisition enables Nestle to continue adding to the value-add proposition it can present to retailers.
As companies such as Nestle continue to focus their vast resources on the creation of value-added areas, it will become increasingly difficult for second tier competitors to successfully compete for shelf-space. Slowly but surely, superleague players such as Unilever and Nestle are pulling away from the rest, leaving from their second tier competitors behind.
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By GlobalData
