Unilever, Nestlé’s Rio Ice Cream Wars

By Felicity Clarke, Senior Contributing Reporter

RIO DE JANEIRO – Two of the world’s largest food corporations, Unilever and Nestlé, have been battling over the license to sell ice cream on the streets of Rio de Janeiro. In a ruling that ends Nestlé’s thirty year monopoly in the city’s public spaces, Unilever has been granted a license to sell in all zones including major points such as Ipanema and Cinelândia.

The license granted on June 28th means that Unilever’s “Heartbrand” ice creams will be sold by up to one hundred vendors in each zone. Under its international heart logo, the Heartbrand is known as Kibon in Brazil, Good Humor in the USA and Canada and Wall’s in the UK and produces ice cream products such as Magnum, Cornetto, Solero and Vienetta.

With its Kibon products, Unilever already has roughly a 70 percent share of the ice cream market in Rio’s supermarkets, shops and bars; with the license allowing street sales this percentage could potentially increase.

Although the case was only a three month process, it is a long fought success for the world’s biggest ice cream manufacturer, who has been filing for a license for the last three decades. Nestlé was granted the license in 1980 and it has been continually renewed with all competitors rejected, a policy that could have been influenced by pressure from the powerful Nestlé lobby.

The decision to open up the license is part of a campaign by Rio de Janeiro mayor Eduardo Paes to transfer the maintenance of public spaces to private businesses operating in the area. Under the terms of their license, Unilever is required to clean, provide security and develop specific parks around the city including Praça Nossa Senhora de Paz on Rua Visconde de Pirajá in Ipanema and Praça Mahatma Gandhi in Cinelândia.

Annual maintenance costs for each of the parks has been stipulated, with Praça Nossa Senhora de Paz due to receive an annual investment of R$245,355, although Unilever estimates that the actual costs will be higher. The maintenance costs are additional to the R$3 million Unilever has paid the Municipality of Rio de Janeiro in the procurement of the license.

It is unclear what this means for Nestlé’s operations in Rio. The world’s largest food company has lost its street selling monopoly but not lost its own license, the terms of which do not require the company to invest in public spaces. As such, a representative of Unilever’s legal team anticipates the case will continue: “I think there will be further litigation. I don’t think the Nestlé license will necessarily be revoked; they are still definitely able to sell on the beach for example, but there is confusion over what it means on the streets.”

Speaking about Unilever’s motives in filing the tender, the representative says the main interest is marketing. “The actual operation of selling ice cream from the carts isn’t profitable, but for the visibility of the brand it’s important.” He also reveals there was an intention to agitate their competitor and that “really Unilever wanted to bother Nestlé.”

Following the win, Unilever is now manufacturing carts and plans to have its ice cream on the streets within the next few months.