Nestle opened a pilot parlor late last year in Buenos Aires and is rolling out 14 more this year as franchises, followed by 20 a year. That will make it the country's biggest ice cream chain.
"We see huge potential for growth in the parlor segment," said Matthias Casanova, executive manager of Nestle Argentina's ice-cream business.
Argentines spend $170 million a year on ice cream, buying 45% of it at family-owned parlors and premium chains.
To compete, Nestle's idea is to offer 40 flavors at mid-range prices and steadily roll out new varieties, luring customers looking for "better ice cream, innovation and a well-known brand" that is 25%-75% cheaper than premium brands, Mr. Casanova said.
Nestle will promote the chain by handing out fliers near parlors and distributing material with newspapers and the home-and-office delivery of Nestle mineral water. It plans to consolidate the task in one agency.
The expansion comes as Frigor faces stiffer competition at kiosks, a segment it has dominated for years with a 56% share. While Unilever is withdrawing its Kibon brand, citing low margins despite a 24-25% share of sales at kiosks, Arcor entered the ice-cream wars in August with the slogan "Know what you like." Arcor already dominates kiosk candy and chocolate sales.