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Focus on ice cream.

* BEW weathers change in the freezer cabinet

* McFlurry was a threat

* Industry seeks out new need states and occasions

* Impulse in decline with pressures on pocket money

A `make or break' year was the industry's prediction for 2001 -- the first full year of a freezer the whole industry could get stuck into. On the whole, it wasn't a bad one. The total market hit the 601m [pounds sterling] mark, up 5.4% [TN Sofres] and most of the major players made gains.

Innovation, led by brands, helped fuel growth and drive chocolate sticks and bars and premium ice cream. Multi-packs and tubs were also successful tools to maximise sales, and much of 2002's repertoire are geared towards them.

Rivals hoping to make huge gains in the freezer cabinet may have been disappointed. Birds Eye Wall's out-of-home category manager Griffiths admits the company was hit and says its share of wrapped impulse at 65.7% was down 2.9% due to the scrapping of exclusivity [ACNielsen]. "But it wasn't as big a decline as predicted," he adds.

Manufacturers have been ruthless with their ranges. BEW has culled slow sellers, improved lines such as Cornetto Whippy and Solero Shots, and brought in products using the best ideas from snacking categories.

Richmond Frozen Foods has cut 20% of the Richmond/Nestle `cabinet cloggers' and installed lines with better potential. A major casualty was Kit Kat Chunky -- another in a long line of biscuit based products to fail. However, marketing director Kate Needham says there are other brands in the confectionery portfolio it may look at.

Masterfoods has axed four lines, and is recommending just 12 lines to maximise impulse sales, sticking to its high profile confectionery branded tubs and just one new line -- Maltesers ice cream stick, a lighter eat for women. "We need to ensure products are relevant and offer something not out there," says marketing manager Patrick Kalotis. "If the Maltesers stick takes off, why not then a tub in different sizes?"

RFF claims it increased its value share in impulse following its recent acquisition of Nestle's ice cream. "FMD and a poor start to the summer contributed to a 4.8% decline in impulse but it was a vast improvement on the 18% fall in 2000," says Needham. "Even after our purchase of Nestle ice cream, we grew our value share in impulse to just over 24% last year but, with multiple outlets now taking an estimated 4.7% value share, we can expect to see further encroachments on impulse this year. Retailers need to review their freezer space and make it work harder.

"Our aim is to be the UK's most cost effective ice cream manufacturer. We now have a broad range and access to Nestle's expertise across Europe which we can tap into."

RFF has already invested 4.2m [pounds sterling] in improving Nestle brands to strengthen its kids offering. Its core range will be: Smartie's Pop-up, Ribena Ice, FAB and Rowntree's Fruit Pastil lolly. It also has a Monsters Inc lolly, a Willy Wonka sour ice lolly and Munch Bunch fromage frais ice cream lollies, and is expanding its Treats value-for-money lolly range.

BEW aims to compete in the children's sector with Chupster, a combination of ice cream and a surprise Chupa Chups lolly.

Soft ice cream is a trend that started with the launch of McDonald's McFlurry in 1999. BEW's Griffiths says people like soft ice cream and McDonald's made it more available. Its aim to bring a McFlurry style product into the home has resulted in the Wall's Whipster.

Frederick's Dairies marketing director Peter Elvin says McDonald's was a threat. "Many people went to McDonald's just to eat McFlurry. It is aimed at teenagers and the big brands hadn't come up with anything like it for young adults," says Elvin.

"Individually wrapped lines out of newsagents and corner shops have declined, as youngsters' discretionary income is being mopped up by mobile phone cards and other things."

He says everyone needs to create new products, new routes to market and think about how to get ice cream into places where people spend their leisure time, such as in shopping malls.

In spite of impulse as a whole declining, he says Frederick's has doubled its impulse business thanks to forecourts where most shops stocked Cadbury's. Its biggest sellers were Cadbury's 99 Flake and Cadbury's Dairy Milk ice creams. This year it has high hopes for Dream and strawberry flavoured Cadbury's 99.

However, Frederick's is still more dominant in take home. Its ice cream is worth around 40m [pounds sterling] and Elvin says 75% of that is take home.

The company says Cadbury's Flake grew 47% last year because of high repeat purchase levels. "We had 35% of purchasers buying it every four weeks which is particularly good as ice cream is a low loyalty product," says Elvin.

The big challenge for Cadbury, he says, is to get more consumers exposed to the ice cream brand. A lot of sampling is planned such as road shows and Virgin concerts. "We have 100 summer events confirmed where both Cadbury's ice cream and chocolate will be attending."

BEW's research showed that at home consumers wanted small products and a wide choice of flavours in affordable packs so, taking cues from confectionery, it launched Magnum Moments -- 18 bite-size chocolate coated ice creams. It also found its niche in miniaturising already successful lines such as Cornetto Miniatures.

Another idea is a pick `n' mix format. It trialled this in Tesco last summer and is following it up in 2002 with an offering of five from a choice of seven ice creams in a bag. Taking cues from the soaring smoothie sector, it has launched mango and passion fruit flavoured Solero Smoover in a pouch.

In the super premium arena, Haagen-Dazs has launched Minissime, a five pack of 45ml mini sticks consisting of chocolate and macadamia nuts coated vanilla ice cream, and chocolate and chocolate cookie coated chocolate ice cream.

Senior brand manager Reemah Sakaan says: "We are looking for new occasions and need states. We've already filled the gap for snacking with our mini cups in a multipack format and we've just launched a second mini cup format, Minissime, to complement that."

It is working with retailers to make the fixture a better place to shop and work, such as introducing spring-loaded shelves which propel products forward to eye level.

Ben & Jerry's has been left to its own devices by Unilever Bestfoods on the premise that if it ain't broke, don't fix it. Although predominant in 500ml tubs, it has made gains in 100ml which it claims grew 27% in 2001. Every year it introduces two flavours and this year's variants are Honey I'm Home, comprising honey vanilla ice cream and chunks of fudge covered honeycombe, and One Sweet Whirled, a mix of caramel and coffee ice cream with caramel and marshmallow swirls and coffe flavoured chocolate chunks.

Helping to promote its quirky image is its wacky web site. In 2001 this received 1.1 million hits and it now has 25,000 members of its Cool Club targeting 18- to 35-year-olds which it hopes to double this year.

Other companies in the super premium sector are last year's newcomer, Yeo Valley Organic. and Hill Station.

Yeo Valley Organic hopes to replicate in ice cream its success in organic yogurts. In January it launched a four-pack of 100ml tubs and recently a trio of super premium 500ml tubs in creme fraiche with blackcurrant, triple chocolate truffle, and orange and chocolate truffle flavours.

This year Hill Station gained its first national listing with Tesco. It now has 10 ice creams for grown ups, the latest being dark roast coffee made with freshly brewed espresso with a sprinkling of roasted ground coffee beans.

BEW heads the big spenders with 19m [pounds sterling] behind its brands. However, Masterfoods and Frederick's can rely on their confectionery might to provide extra support.

Cadbury's 27m [pounds sterling] on ambient products will help push ice cream. Launching Cadbury's Dream ice cream bar and Cadbury's Dream chocolate bar together was a first, and more cross selling and merchandising and even joint advertising are planned.

Its limited edition Cadbury's Creme Egg ice cream running alongside the chocolate Creme Egg was a coup for Frederick's. "This is added value marketing," says Elvin. "As time goes by we are upping our forecasts. We thought we'd sell between 1.5 and two million, but now we may sell three to four million."

All the major players have invested in scooping, a key driver for growth. RFF now has a range called Napoli via its acquisition of Allied Frozen Foods, Frederick's has developed a range it will be piloting and promoting, while Ben & Jerry's says scooping outlets make up 20% of its business.

According to BEW, scooping and desserts were up 25% in value last year [Information Resources]. Eighteen flavours of Carte d'Or are now being scooped from more than 2,000 cabinets. Its other ice cream stalwart, Viennetta, will get a boost this year to maximise its 20th birthday.

RFF is the leading own label manufacturer even though it now has a foothold in brands, and this year plans to launch 50 own label lines.

RFF's Needham says there is a definite trading up trend to dairy ice cream. "One litre and 500ml saw significant growth. For example in the year ending December 2001 own label retail sales of premium rose 3.8m [pounds sterling] while super premium 500ml lines increased 70% -- equivalent to a 19m [pounds sterling] increase."

It makes Asda's Really Creamy range which, it says, outsold Carte d'Or at Christmas, showing own label can compete successfully with brands such as Carte d'Or when they deliver superior quality and value for money.

IN A FLURRY

McFlurry was launched by McDonald's in July 1999. It was an instant hit. Spokeswoman Amanda Pierce says: "It's the same ice cream we use in our restaurants but the toppings, which are also whipped into it, come from Cadbury." Sales are consistent, says Pierce. "There are no seasonal trends like you get with other ice cream products and it appeals to a wide variety of people."

TOP STUFF AND TOP MOVIES

Accompaniments to ice cream is a burgeoning sector of the ice cream market and companies are keen to expand to target new users.

Askeys, well known for its upmarket Cafe Society range of shaped wafers, claims the accompaniments sector is worth 23m [pounds sterling] at rsp and estimates that its share is 80%.

Now it is hoping to grow its share further by moving into topping syrups.

Banana, chocolate and strawberry flavoured Top Stuff will be available from April in squeezy tubes to appeal to kids, with the added advantage that they are drip free.

Children are also being targeted by Silver Spoon. It has launched a Treat's branded limited edition blue syrup aimed at kids linking it with Twentieth Century Fox's digitally animated film Ice Age.

This movie comes out on March 22 and the company is planning a raft of activity based on the Ice Age theme.

[ILLUSTRATION OMITTED]

YOU CAN DISPENSE WITH IT

Rivals Birds Eye Wall's and Richmond Frozen Foods will be going head to head with branded ice cream dispensers.

BEW's Cornetto Soft was trialled in the UK last year following a successful European roll out and it aims to place 5,000 in UK outlets by the end of April.

Brand manager Lily Donagh says that in addition to the dispenser, cups, cones and spoons, the benefits are that anyone can operate it, everything is pre-portioned so there is no wastage, and there is no need for extra food safety measures. "And it appeals to consumers because it's made in front of them," adds Donagh.

Soft ice cream is a key driver in the market, worth nearly 276.8m [pounds sterling], she says, accounting for 29% of the total market.

In January RFF acquired Ice Creamery from the Dairygold Co-op. The 561,000 [pounds sterling] deal enabled the company to tap into the potential of soft serve ice cream and dispensers. Future plans include using Nestle brands in machines.

[ILLUSTRATION OMITTED]

TRENDS AND DEVELOPMENTS

Consumers looking for healthier alternatives are getting a response from companies.

Birds Eye Wall's hopes to tap more into the yogurt and fromage frais trend, while Richmond Frozen Foods has plans to produce lollies with added vitamins.

Scottish ice cream specialist Mackie's claims to have brought out the first mood enhancing ice cream under the Vibrant sub-brand.

This low fat, low calorie strawberry and raspberry dessert contains orchid flower essence, said to give consumers that feel good factor Marketing director Karin Hayhow says: "This isn't a slimmer's product but a move to a healthier option, and we feel there is room for a higher quality offering of that type of product.

"People are more open to try alternative remedies, that's why we can add flower essences without them being alarmed."

Meanwhile, Belfield Farms is targeting women with a guilt free dessert called So-Lite. Claimed to be 99% fat free, this vanilla flavoured iced dessert is coated in fruit sorbet. Two flavours are available: peach and strawberry, in 4x90ml packs.

A revolutionary new sorbet has been launched by Tramore Performance Foods aimed at fitness enthusiasts. Called Isorbet, this tow calorie, vitamin enhanced isotonic sorbet comes in four flavours in a push up tube, and is claimed to rehydrate and cool the body during and after exercise.

Confectionery brand-stretching is well known but now juice producers are getting in on the act with Tropicana moving its premium orange juice brand into the freezer.

Tropicana premium orange juice and orange `n' cream lollies, and an orange sorbet are already available in the US, and now they are here in the UK handled by Brand Innovations.

[ILLUSTRATION OMITTED]
% SHARE OF VOLUME SALES

 52 w/e % chg
 Feb 3 '02 y-o-y

Birds Eye Wall's 22.13 -3.3
Masterfoods 3.83 17.5
Frederick's Dairies 2.51 66.2
Richmond Frozen Foods 1.87 -17.6
Mackie's 1.09 22.5
Haagen-Dazs 1.07 9.2
Ben & Jerry's 0.59 84.4

Source: Taylor Nelson Sofres Superpanel


RELATED ARTICLE: Research notes.

The ice cream market can be broadly subdivided into dessert ice cream and handheld multipacks. Dessert ice cream accounts for about three-quarters of volume sales but less than half of value sales. Standard ice cream is the largest sector in terms of volume (46%), with premium ice cream being the second largest (20%). However, in terms of value, chocolate sticks and bars is the largest sector, accounting for 27% of sales, while premium ice cream accounts for 25%.

In the last year the British population bought 312 million litres of ice cream, costing 601m [pounds sterling]. While the actual volume of ice cream bought was marginally down this year compared to last year, we actually spent 5% more money on it.

These trends are largely driven by a shift away from standard ice cream into premium ice cream. Value sales of standard ice cream have declined 10%, while those of premium ice cream have increased by 10%. Also, among handheld multipacks, the increased appeal of filled cones and cups/tubs has helped drive growth in the ice cream category, although this has been coupled with a large decline in adult lollies sales.

The ice cream sector is dominated by own label and Wall's ice cream. The next largest manufacturers are Masterfoods, Frederick's Dairies (which makes Cadbury's ice cream), Richmond Frozen Foods, Mackie's, Haagen-Dazs and Ben & Jerry's. These six manufacturers only account for a fraction of volume sales. However, it is these smaller manufacturers, which make a range of premium and niche products, that are driving growth in the sector. The most successful of these manufacturers, Frederick's and Ben & Jerry's, have increased sales by 65% and 82% respectively.

As with frozen food sales in general, the top four supermarkets (Tesco, Sainsbury, Asda and Safeway) and Iceland account for more than 70%. Of these five supermarkets, Sainsbury and Safeway significantly overtrade in ice cream compared with their frozen food sales in general.
VALUE OF THE SECTORS (000 [pounds sterling])

 52 w/e Feb 3 '02 % chg y-o-y

Total 601,382 5.4
Dessert 278,104 7.4
Standard 86,101 -5.4
Complete desserts 35,608 -4.4
Premium ice cream 151,682 20.6
Sorbet 4,713 -0.9
Handheld multipacks 323,283 3.7
Adult refreshment lollies 25,854 -28.1
Children's lollies 57,629 6.4
Chocolate snacks/bars 102,951 -0.1
Chocolate snacks/sticks 64,981 0.2
Cups/tubs 15,809 86.6
Filled cones 53,527 27.8
Other multipacks 2,532 -27.9

Source:Taylor Nelson Sofres Superpanel


By Mark Phillips, senior account executive, Taylor Nelson Sofres Superpanel
COPYRIGHT 2002 William Reed Ltd.
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 2002 Gale, Cengage Learning. All rights reserved.

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Author:Eggleston, Sheila
Publication:Grocer
Geographic Code:4EUUK
Date:Mar 16, 2002
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