Frozen Foods

Nestlé to Move Pizza and Ice Cream Away from DSD

By Pan Demetrakakes, Senior Editor

May 17, 2019

Nestlé is moving away from direct store delivery for its frozen pizza and ice cream businesses, a decision that will allow it to cut some 4,000 supply-chain jobs.

Those businesses, which include brands like DiGiorno and Edy’s, will join Nestlé’s frozen-meal and snack businesses, which include Stouffer’s and Lean Cuisine, in going to a warehouse distribution model. The move will allow Nestlé to close eight company-owned distribution and cross-docking facilities, the company said in a presentation to investors earlier this month.

Direct store delivery has the advantages of allowing Nestlé to replenish supermarket freezer cases with its products faster and to keep eyes in the stores. But it was ultimately decided that the savings from warehouse-based distribution outweighs those advantages.

The company estimated that the change will incur a one-time capital cost of about $500 million, and a one-time sales cost of about $450 million. The changes will be implemented in the third quarter of this year.