By merging its US ice cream operations with market leader Dreyer's, Nestle will also be propelled to the number one spot in US ice cream.
Under an agreement hammered out this week, Nestlé °lans to increase its current 23% stake in Dreyer's to 67% of the combined company, giving it 20% of the US market.
Although Dreyer's margins have been hit by rising raw material costs, the combined scale of the new business will yield cost savings of $170m by 2005, said the company.
It will give Nestle access to Dreyer's nationwide distribution system to increase the penetration of its brands.
Analysts said this could put rival Unilever under pressure if Nestlé§³ brands are competing for space on Dreyer's trucks with Unilever's Ben & Jerry ice cream, which is distributed by Dreyer's in the US.
Unilever said there was no reason to believe the relationship with Dreyer's would change.