USA – Nestle USA has said that it is simplifying its ice cream and pizza delivery network by adopting a warehouse model, which it says will enable further growth in the category.
The transition from the frozen Direct-Store-Delivery network to warehouse model is expected to be completed in the second quarter of 2020.
The new model will leverage on Nestle’s warehouse network that is already being used for its frozen meals and snacks to better serve the retail customers and consumers.
“Ice Cream and Pizza are growing categories in which we hold strong leadership positions” said Steve Presley, Chairman and CEO of Nestle 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 move is driven by the changing retail environment as well as consumer tastes and preferences including their buying and shopping behavior.
Enabling further growth
According to Nestle, this transition is part of the company’s broader efforts to transform its organization to accelerate growth and win in the market.
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.
“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,” said Steve Presley.
“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 retail environment is quickly changing, and retailers led by Amazon are fighting to meet consumer and customer needs in the most convenient way.
Consumers are looking for easier dinner options and seek indulgences in their increasingly busy lives, and Nestle is betting on the frozen foods segment, which is quickly growing.
In 2017, Kellogg announced transition of its distribution model from direct store delivery to a warehouse model, with a goal to invest distribution savings in retail margins and snack portfolio.