Nestlé USA today announced that it will exit its company-owned frozen Direct-Store-Delivery (DSD) network for its Pizza and Ice Cream businesses and will transition to a warehouse model. This change will leverage the highly efficient warehouse network that Nestlé already uses for its frozen meals and snacks, which will enable the company to better meet the needs of retail customers and consumers. The phased transition will commence in the third quarter of 2019 and is expected to be complete early in the second quarter of 2020.
“Ice Cream and Pizza are growing categories in which we hold strong leadership positions” said Steve Presley, Chairman and CEO of Nestlé USA. “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 behavior; how they eat, shop and engage with brands. At the same time, retail customers also are evolving how they do business. Nestlé is adapting to this new environment, and this transition is part of the company’s broader efforts to transform its organization to accelerate growth and win in the market.
“Moving to a warehouse model has numerous benefits for us and our retail customers,” said Presley. “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 centers 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.”
The transition from DSD is a critical building block of Nestlé’s business strategy and will be a key step towards its profitable growth agenda, which is focused on accelerating its value creation model, driving efficiency and building sustainable growth.
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