Frozen dessert year in review.

The creation of Ice Cream Partners USA, the 50/50 joint venture of Nestle USA and Haagen-Dazs, is without question Ice Cream Reporter's "1999 Frozen Dessert Industry Story of the Year." At the time the joint venture was announced we described it as "remarkable for its combination of boldness

and caution." To date, not much has happened to make us think different about the venture itself; but the larger impact of this move by two of the major players in the frozen dessert industry can be seen in some of the key events that have taken place since, including the partnership of Dreyer's and M&M/MARS and Unilever's bid for Ben & Jerry's. The rush is on to consolidate: get bigger, fill out the product line, and wrap up the best distribution. The international competition in frozen desserts looks like it's finally going to get interesting in the U.S.

Beyond the possibility of the introduction of a Haagen-Dazs Bon Bon, as noted in ICR 8/99, what the joint venture represents is more distribution opportunities for Haagen-DaZ5 through Nestle's proprietary freezer cases which are strategically located in stores to encourage impulse purchases; and improved distribution for Nestle's products via Haagen-Dazs' strong direct store delivery system. In addition, the companies expect to see cost reductions through these distribution and operational efficiencies.

But the concern among the competition is that the two companies, once they have worked out the kinks in their joint venture, will begin to look for greater opportunities. Thus the willingness of M&M/MARS to enter into a long-term partnership with Dreyer's to produce and market a new line of premium packaged ice creams. (ICR 11/99)

The line will feature M&M/MARS candies as mix-in ingredients in Dreyer's ice creams. M&M/MARS has its own frozen dessert production facility, in Burr Ridge, IL, but that site is dedicated to the manufacture of frozen novelties. A company spokesman indicated that it was considered more prudent to partner with Dreyer's than to begin making packaged frozen desserts at that site.

Concern over the venture's potential is a major factor in Unilever's interest in acquiring Ben & Jerry's. (ICR 12/99) But even without that incentive, Unilever would eventually have proposed a deal to Ben & Jerry's after the successful launch of a superpremium ice cream line, Dreamery, by Dreyer's, its national rival in the premium ice cream category. (ICR 8/99)