Nestlé tightlipped on frozen snack partnership with Hostess Brands

By Douglas Yu contact

- Last updated on GMT

Hostess entered the frozen aisle segment last year with the launch of Deep Fried Twinkies. Pic: China Candy
Hostess entered the frozen aisle segment last year with the launch of Deep Fried Twinkies. Pic: China Candy

Related tags: Ice cream

Nestlé has confirmed it is partnering with the Twinkies maker Hostess to roll out a line of Hostess ice cream in early 2017, but won't release details.

According to a release from China’s confectionery trade body, China Candy, the new ice creams will feature Twinkies, mini muffins and Sno Balls.

Making its move

China Candy said ice cream is one of the biggest “potential for growth”​ categories in the market and is worth $71bn worldwide. Euromonitor also predicted that the category will reach $107bn by 2020.

Nestlé currently commands around 11.9% of the total ice cream market, making it the second largest ice cream maker in the world, Euromonitor data shows. The number one brand is Unilever, which owns 19.5% of the market.

Nestlé has been making moves in the ice cream category over the years, in order to “dominate the market,”​ China Candy said.

In 2001, the company paid General Mills $641 to acquire a 50% ownership stake in Ice Cream Partners USA. Under the terms of the agreement, Nestlé will have a 99-year, paid-in-full license for Häagen-Dazs in the US in connection with frozen dessert products, according to a statement.

A year later, Nestlé merged its US ice cream business with Dreyer’s Grand Ice Cream in a $2.4bn deal. China Candy contented the brand now commands 19.1% of the US ice cream market, making it the biggest seller in the country.

In October 2016, Nestlé also created a joint venture with one of the largest ice cream makers in the UK, R&R.

Competing in China

China Candy added that, even though Nestlé only has 3.2% of the ice cream share in China against domestic brands like Yili (伊俐)and Mengniu (蒙牛), the company has invested billions of dollars in ice cream manufacturing and cooling equipment in the Tianjin and Guangdong provinces.

The company launched several new frozen desserts under its four Chinese brands last year, including 笨 NANA, Quan Zhen Cheng Xin (全新呈真), 8次方 and Wu Yang(五羊). Nestlé’s local Cantonese brand Wu Yang, is also a top seller of the category in the region.

Euromonitor shows China’s ice cream market reached $6.65bn in sales by the end of 2016, an 8% increase over the previous year.

Expanding into frozen snacks

This is not the first time that Hostess has partnered with a renowned confectioner. In early 2016, the company entered the brownie segment through a partnership with Mars.

In August 2016, Hostess also expanded into the frozen snack category for the first time by launching two deep-fried Twinkies​ exclusively at Wal-Mart stores across the US.

Hostess vice president of marketing, Ellen Copaken, told BakeryandSnacks then that the extension into the frozen aisle was an example of how Hostess is thinking about its “innovation and growth strategy.”

CEO and president of Hostess, Bill Toler​, also told BakeryandSnacks the company is expected to build more “unique partnerships between retailers and other companies and brands”​ in 2017.

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