March 17, 2015

By Lynda Kiernan

In its latest move toward achieving its goal of becoming a key player in the global ice cream market, England’s R&R Ice Cream has acquired Nestle’s South African ice cream business for an undisclosed amount.

The bolt-on South African Nestle acquisition will position R&R to profit from various demographic shifts on the horizon for Africa. As the African population grows it is expected to become both more affluent and younger, driving demand for dairy products, including ice cream. The United Nations forecasts that by 2020 the under 50 population of sub-Saharan Africa will increase by 23%, reaching 700 million, and the median age for the continent as a whole will be only 20 years. Given this fact, what better business to be in than ice cream?

Gaining Global Presence

In 2001, the group, which is currently the third largest ice cream manufacturer in the world with sales approaching €1 billion (US$1.06 billion), bought Nestle’s UK ice cream business, giving it control of brands including Rowntrees Fruit Pastilles, Rolo, Smarties, and Fab. In the ensuing years R&R bought UK-based Fredericks Dairies, frozen yogurt business, YooMoo, and ice cream businesses in Germany, France, and Italy.

In 2013, Paris-based private equity firm, PAI Partners acquired R&R from Oaktree Capital Management for €850 million (US$903 million) and continued supporting R&R’s campaign of global expansion. Within a year, in May 2014, R&R expanded beyond its European footprint with the acquisition of Australian ice cream maker and former Nestle business, Peters Food Group, from private equity firm Pacific Equity Partners.

Expanding Into the African Market

Now just one week after Nestle sold its Mexican ice cream business to Grupo Herdez for US$64.7 million, R&R has maneuvered to take a share of the €160 million (US$170 million) South African ice cream market with its latest acquisition of Nestle’s South African ice cream business.

R&R Ice Cream CEO Ibrahim Najafi told FoodBev.com, “This acquisition is a major milestone towards our goal of becoming a leading global player in ice cream. As a business we have enjoyed a successful partnership with Nestlé for nearly 15 years in the UK. This relationship was extended with the acquisition of Peters in Australia, also a former Nestlé business, and now we are looking forward to working together in South Africa.”

The South African deal includes a Johannesburg-based manufacturing facility with nine production lines, 22,000 freezers serviced by a network of 14 distributors in South Africa and across sub-Saharan Africa, and a brand portfolio that includes names like Country Fresh, Eskimo Pie, King Cone, KitKat, and Dairymaid. Nestle’s existing management team will be retained to help drive R&R’s local business and help the company achieve its global goals.