Nestlé is cutting its frozen pizzas loose

Nestlé is selling its frozen pizza branch to investor PAI. The FMCG manufacturer is continuing to cut back, as it is currently only growing through price increases.

Consumers accept higher prices

In the last quarter, Nestlé’s sales rose by 5.6 % to 23.5 billion Swiss francs (24 billion euros). Organic growth was 9.3 %, but this was entirely due to price increases. Consumers were reluctant to switch to cheaper variants, despite prices being 9.8 % higher on average. “The teams worked diligently to protect volume and ensure a resilient mix”, CEO Mark Schneider said.

In Europe, organic growth was 9.7 %: 10.7 % came from price increases, but volume contracted by 1 %. The Purina PetCare division performed best, while e-commerce also grew strongly (+ 13.6 %). E-commerce already accounts for 16.2 % of total group sales.

Pizza spin-off

Nestlé and private equity firm PAI Partners have agreed to create a joint venture for the frozen pizza business in Europe. “The new partnership offers the best platform to develop the full potential of this business”, Schneider explained. Nestlé will retain a non-controlling stake with equal voting rights alongside PAI, as it will also continue to invest in the business and category.

The deal is expected to close in the second half of 2023. Nestlé’s frozen pizzas came under scrutiny just a year ago after two children died from E.coli contamination. Over fifty infections were found to be linked to Buitoni Fraîch’Up pizzas, made at a factory in the northern French town of Caudry. The Paris public prosecutor’s office also opened a judicial investigation.