Warehousing & Logistics

Nestlé to Exit Frozen DSD Route in USA, Many Jobs at Risk

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Arlington, Virginia-headquartered Nestlé USA has announced plans to shift
away from company-owned and operated frozen Direct-Store-Delivery
(DSD) network for its pizza and ice cream products in favor of a warehouse
model. According to a report by Reuters, the move could put as many as
4,000 jobs on the line, which equates to more than 8% of the 48,000-person
workforce in the United States.

1 Dreyers button 2019Dreyer’s ice cream is one of many offerings from Nestlé in North America. Among others are Häagen-Dazs, Edy’s, Skinny Cow, Drumstick and Outshine.

Nestlé says the change will leverage a highly efficient warehouse network it
already uses for storage and distribution of 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 chief executive
officer 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 in North America is facing unprecedented shifts in
consumer behavior – from how they eat, shop and engage with brands. At
the same time, retail customers also are evolving how they do business. In
adapting to this changing environment, this transition is part of the
company’s broader efforts to transform its organization to accelerate growth.

2 Tombstone pizzaOriginal Tombstone Pizza is manufactured and distributed by Nestlé, as are the DiGiorno, Jack’s, Outsider’s and California Pizza Kitchen brands.

“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.”

The CEO 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.”

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