Credits: www.ft.com
Only a few days have passed since the announcement from Magnum Ice Cream reporting results below expectations, and now Nestlé makes a surprise announcement: the company has decided to sell its entire ice cream business in a $1.3 billion deal to Froneri. Right on the verge of spring, when production should be ramping up, showing a clear giving up signal.
But why this decision? In 2025, total sales fell by 2%, settling at $116 billion, while net profit dropped 17% to $11.6 billion. Organic sales recorded a 3.5% increase, but still fell short of market expectations. Ice cream thus becomes the sacrificable branch of the company: costs for cocoa, milk, and energy rising, demand declining in key markets, just like Magnum, partly due to new anti-obesity drugs and healthier consumer choices, seasonality increasingly unpredictable, and margins compressed.
To worsen the situation, additionally, rumors suggest that beyond ice cream, water and beverage divisions may also be up for sale. At the same time, a plan for 16,000 layoffs over the next two years has been announced, about 6% of the 280,000 global employees, with the goal of saving 1 billion Swiss francs per year by 2027. And let's not forget the recent trouble with the contaminated milk for toddlers.
But if a group with over $100 billion in revenue must sell historic brands and cut thousands of jobs to optimize, are we witnessing the decline or the end of Nestlé?
These moves tell us a story of cuts and transfers and sound like a last attempt to save the sinking ship. The part which saddens me more is that when the numbers start creaking and companies face trouble, it is not the executives who pay, but the workers.
References: https://www.aa.com.tr/en/economy/nestle-to-sell-ice-cream-business-as-part-of-reorganization/3834712