NESTLE SHIFTS ICE CREAM TO DREYER'S DSD SYSTEM

JAMES TENSER

COLUMBUS, Ohio -- Nestle USA is shifting distribution for part of its frozen ice cream novelty business from a brokered system to a store-door delivery system.

Effective Jan. 1, Dreyer's Grand Ice Cream, Oakland, Calif., will begin direct store delivery distribution of Nestle Ice Cream Co. products in about one-third of its markets, said a Nestle spokesman. Areas of the country affected include the Pacific Northwest, northern California and sections of the Midwest.

The remainder of Nestle's ice cream distribution will continue to be handled by food brokers, he added.

The announced change fulfills the expectation raised by the two companies on May 6 of this year, when Nestle announced a strategic investment in Dreyer's worth a minimum of $96 million. With the subsequent exercise of certain stock warrants, Nestle's stake in Dreyer's is currently about 20%, the company said.

"We have a firm belief that the Dreyer's DSD system is strong and one that will enhance our business," said the Nestle spokesman.

He added, "This doesn't indicate any dissatisfaction with the previous system. It is just a change in direction."

The spokesman also described the DSD distribution plan as "a way of optimizing our investment in Dreyer's."

Nestle's ice cream brands include Nestle Crunch Cones and Bars, Bon Bons, Nuggets, Drumstick, Dole Fruit 'N Juice Bars, Butterfinger bars, Flintstones Push-Up novelties, Heath Bars and Carnation Ice Cream.

The move away from broker coverage in Nestle's ice cream distribution system comes at a time when the company is moving toward greater use of brokers elsewhere in its frozen food business. As reported, the company is eliminating its frozen entree field sales force and replacing it with brokers by year end. The move is part of a realignment of the sales forces at the Nestle Frozen Food Co. and Nestle Refrigerated Food Co.