Nestlé USA will exit its company-owned frozen direct-store-delivery (DSD) network for its pizza and ice cream businesses and transition to a warehouse model.
The company says the change will leverage the warehouse network that Nestlé already uses for its frozen meals and snacks. 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.”
Nestlé says it is adapting to “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.”
“Moving to a warehouse model has numerous benefits for us and our retail customers,” Presley said. “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.
“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,” Presley added. “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 news release does not say how many employees will be impacted, but sources told The Shelby Report that approximately 4,000 to 5,000 jobs will be eliminated.