Nestlé USA plans to exit its company-owned frozen Direct-Store-Delivery (DSD) network for its Pizza and Ice Cream businesses, in order to transition to a warehouse model. The change will leverage its highly efficient warehouse network, which Nestlé already uses for frozen meals and snacks. According to the company, this will enable it to better meet the needs of retail customers and consumers alike.
The phased transition will begin in the third quarter of 2019 and is expected to be completed early in the second quarter of 2020.
“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,” said Steve Presley, chairman and CEO of Nestlé USA.
As the food industry continues to evolve, Nestlé is adapting to the new environment, and the transition is part of the company’s broader efforts to transform its organization to accelerate.
“Moving to a warehouse model has numerous benefits for us and our retail consumers. 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,” continued Presley.
The decision will impact employees in Nestlé’s sales and supply chain teams and will result in the closure of eight company-owned frozen distribution centers and frozen inventory transfer points.
However, Nestlé believes that the transition from DSD is a critical building block of the company’s business strategy and will be a key step towards its profitable growth agenda.
Nestlé’s pizza brands include DiGiorno, Jack’s, California Pizza Kitchen and Tombstone. The company’s ice cream brands include Drumstick, Skinny Cow, Häagen-Dazs, and Edy’s/Dreyer’s.