R&R’s deal with Nestle to sell ice cream around the world

Ibrahim Najafi CEO of R&R Ice Cream
Ibrahim Najafi CEO of R&R Ice Cream
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Multinational food giant Nestle has struck a deal with Yorkshire-based R&R Ice Cream to form a joint venture that will see it sell ice cream and frozen food in over 20 countries.

It’s the latest attempt by Nestle to adapt to a changing, more competitive packaged food market.

The agreement caps months of formal talks between Nestle and R&R’s owner, PAI Partners.

Ibrahim Najafi, chief executive of R&R, told The Yorkshire Post: “This is great news for us. It’s something that we’ve been working on ever since our first deal with Nestle back in 2001, when we had an agreement with them in the UK.

“We’ve been partners with Nestle, we know Nestle very well so we’ve been working really hard on this one for a while.

“I feel thrilled about it, Nestle’s a great company and a great partner.”

The venture follows a portfolio review aimed at improving Nestle’s performance, which has been weakened by slowing emerging markets, a change in consumer tastes toward fresher foods, and heightened competition.

The 50/50 joint venture, to be called Froneri, will combine the Nestle and R&R ice cream businesses in Europe, the Middle East, Argentina, Australia, Brazil, the Philippines and South Africa, marrying Nestle’s strong brands and presence in convenience stores and ice cream stands with R&R’s manufacturing agility and footprint at traditional retailers.

Luis Cantarell, head of Nestle’s Europe, Middle East and Africa business, will be chairman of a six-strong board of directors that will be split between Nestle executives and those named by PAI, the French private equity firm.

Mr Najafi will take on the role of CEO at Froneri. He said that there will be a focus on “selling more” and “growing the business”.

“We complement each other in terms of the channels,” he added. “We’ve got a very strong presence in retail.”

Mr Najafi said that the skills of the people at both businesses complemented one another and that the brands fit “like a glove to a hand”.

R&R currently employs 800 people at its headquarters in Leeming Bar. The joint venture will not lead to any job losses, Mr Najafi explained.

He added: “Leeming Bar has always been key to our business, regardless. It’s one of the biggest factories in the world anyway. So the impact it’s going to have on them is that they’re going to be part of a bigger company.

“They’re going to have bigger support from stronger shareholders, i.e PAI and Nestle. As a group we’ve invested something like £80m over the last three years.

“The UK is a key market for us. We’re always proud of our origins having started in Yorkshire, so that’s never going to stop. Leeming Bar is always going to be a key part of this business.”

In fact Mr Najafi said that they were looking to add more people to the business and invest further.

He added that this was a positive story of a Yorkshire-based business going global.

“We are proud of our Yorkshire origins, we are proud of our British origins as well, but also we’re a European company that’s gone global,” said Mr Najafi.

Financial terms were not disclosed, but the venture will be a close number three player, with annual sales of £1.9bn and 15,000 employees.

Froneri will be based in the UK, where it plans to eventually list on the London Stock Exchange.

Frederic Stevenin, partner at PAI, said: “Long term, the objective will be to list the entity as we believe this will be quite an attractive growth story.

“We think it’s a natural outcome.”

The deal is expected to close around the end of the year, subject to employee consultations and regulatory approval.

Until the deal is closed it’s business as usual says Mr Najafi.

“Now until the end of the year, when we complete the deal, we’ll be two standalone businesses competing with each other,” he said.

Nestle was advised by Credit Suisse on the deal, while PAI was advised by Rothschild.

The clue is in the name

The name Froneri is derived from a combination of frozen, Nestle and R&R.

“It’s a combination of everything and also it’s almost got that Italian ring to it,” said Mr Najafi.

R&R can trace its roots back to 1932 when ​an enterprising young Italian, Regina Roncadin, opened her first ice cream parlour in Germany​.

In 1970 her nephew established Roncadin’s ice cream parlours across the country.

In Yorkshire, farmer Jonathan Ropner and businessman James Lambert formed Richmond Ice Cream in 1985.

Richmond Foods merged with Roncadin in 2006 and R&R was born.