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Light brands scoop up heavy sales in soft but sweet ice cream market.

Light Brands Scoop Up Heavy Sales In Soft But Sweet Ice Cream Market

The next area of major development in frozen ice cream related desserts will be in so-called "light brands" or low calorie and low cholesterol products. This category, which did $120 million in volume during 1988, is expected to double within the next few years.

The prognostication was made by Tim Murphy, director of sales planning and development for Kraft Inc. Dairy Group, at the 34th Frozen Food Show of The Eastern Frosted Foods Association in East Rutherford, N.J., U.S.A. He was leading a seminar themed "Ice Cream Merchandising for Tomorrow."

In the past nine years the big growth in the ice cream field in the United States - now valued at over $10 billion - has been spearheaded by the introduction of a wide variety of high quality, single-serve novelties that succeeded in elevating the category out of the children's preserve and into a staple area for adults.

Almost at the same time, high quality, high butterfat and high priced ice cream in packages established itself as a major part of the market, giving the consumer a choice other than various quality levels of half gallons (the biggest selling size portion in North America).

In addition to the advertised brands, this segment has long attracted private label interest from retailers. While some have used their store's name on own label, many have selected exotic sounding names and utilized upscale packaging to produce products that give not the slightest hint in appearance or quality to be anything other than an advertised brand.

Citing running A.C. Nielsen Co. surveys, Murphy reported that sales of almost all categories of frozen ice cream type desserts have leveled off (indeed, novelties slipped 1.2% in 1988 to $1.75 billion). "Light brands, which are displaying previously unsuspected strength with peaking nowhere in sight, are the exception."

Health concerns of the public have become a major factor in the sale of all foods today, not just ice cream. The marketplace fallout has been so great that some hard-hit farmers are reportedly feeding their chickens special diets so that they produce eggs with 20% less cholesterol than regular eggs and sell for about 20% more.

Ice cream seemed exempt from this trend as richer brands successfully entered the market with butterfat content approaching the point of non-edibility (too high a level can be sickening to many people). That trend has not been reversed, but the industry has created a new branch of low calorie and lower cholesterol ice cream and related frozen desserts.

To accomplish this there is a heavy reliance on NutraSweet, the non-carcinogenic sweetener already popular in many diet soft drinks. It is going into ice bars, fudge bars, ice cream bars, regular packaged ice cream, and a variety of specialty items. Projections are for a high rate of continuous growth through most of the 1990s. The sweetener is even going into frozen yogurts which are being promoted as 97% fat-free with a commensurate reduction in calories.

There has been a major revolution in the ice cream and frozen ice cream related desserts in the past years that would make the category unrecognizable to a Rip Van Winkle merchandiser awakened from his sleep.

The first radical upheaval in consumer sales occurred along with the spread of domestic freezers which made ice cream a product that could be stored in quantity at home. With the universality of central heating in the United States, this transformed ice cream from a seasonal hot weather product to a dessert eaten the year 'round. As the "standard" size moved up to the half gallon unit, those eating ice cream at home tended to scoop out quantities far in excess of what they would consume under the former method. Previously, the product had to be eaten almost immediately to avoid melting.

The last decade has seen the addition of ice cream related items like frozen yogurt and tofu, the upgrading of specialty products, and the diversity of varieties. This, coupled with the return of super-premium grades, has turned the category into one of the largest growth areas that food merchandising has yet seen. Today, ice cream averages 44 turns per year as compared with average supermarket stock turns of 15 per year. The value of such products at retail is $9.4 billion. Novelties, once a small seasonal segment, contribute $2.18 billion to the total. What is more, these products collectively enjoy a gross profit of 31%, while the total store shows a gross margin of 25%.

Of all ice cream sales, supermarkets now account for 30% of the total. Surprisingly, the second largest percentage is restaurants, which claim 19% of all volume. Restaurant movement, primarily in three-gallon units, reflects a much larger percentage of true ice cream rather than sherbets, novelties and other specialties.

Strangely enough, what are termed "dip shops" - stores that sell ice cream by the cone or cup - account for a substantial 18%, and a respectable amount of this is soft ice cream in which ingredients are mixed in a machine on the premises. The later segment has not been growing, while quality high-priced hard scoop ice cream has been increasing at a faster rate. Ice cream cones that sold for a nickel during the 1930s are today being priced as high as $2.50, but the serving is much greater and in some cases the quality is superlative. Dip shops are highly seasonal, moving tremendous volume on impulse during the hot months. Many of them close altogether in the winter.

The small independent grocery stores still account for 12% of the ice cream sold in the U.S., with quality and price depending entirely on the economic strata of the residents in the neighborhood.

Who's Eating It?

As for demographic markets, most ice cream is purchased by people over the age of 55! They tend to eat it at least once a week. Substantially below them in consumption, but tied for second place, is the 35-54 age group which eats ice cream 1.2 times in a two-week period. Matching that is the 13-17 year old segment. Children 12 years of age and under generally consume ice cream once every two weeks. Those least fond of the product line are 18-34 year olds, who will eat ice cream less than once in a two week period.

There are differences in the eating habits of the various groups. The senior one - 55 years of age and older - tends to buy the higher-priced, higher-quality ice creams. And since there are fewer children remaining in the home, they will also purchase pint and quart size nesting containers. The lion's share of the novelties are consumed by the youngest age group, while those 18-34 and 35-54 are the heavy purchasers of the low and medium-priced half gallons. The reason: larger families and children require greater quantity.

Purchase Preferences

Market research published as recently as 1988 indicates that 45% of the ice cream purchased by the family household or individuals is selected from several preferred brands, with consumers switching back and forth to take advantage of promotional discounts. The fluctuation can be great since half-price sales are not uncommon. Another 25% select among preferred brands, but according to flavor preference. They will switch if their favorite flavor is not available, or if another brand has a flavor with a special appeal for them.

Only 11% of the households buy just one brand. There is another category that purchases by flavor only and does not care what the brand is as long as they can satisfy their taste preference.

Then there is a group representing 5% of consumers that consistently buys one flavor of one brand. And if that brand or flavor is not available, they will not buy any ice cream at all.

When asked what product characteristics most heavily influenced their purchase of ice cream, texture rated extremely high with consumers. At the top of the list (76%) was the importance of a fresh taste remaining after opening the container. The lack of ice formation was cited by 74%, and consistency of quality by 62%. The reason for the heavy emphasis on the maintenance of character is that most ice cream is purchased in half-gallon sizes which are not generally consumed at one sitting. Also, such packages may be opened or closed a number of times before being used up.

A good price/value relationship was indicated by 56%. That is why the large retail supermarket chains usually have a special sale on ice cream every week. Since many stores feature private label brands, and since own-labels may have three or four levels of quality, the specials may vary in price. The least expensive ice cream usually contains 10% butterfat, the lowest amount that can be used in any product called ice cream under Food and Drug Administration standards of identity. Below that it must be labeled as something else such as ice milk, custard or sherbet.

Higher quality usually is accompanied by an increase in the percentage of butter fat, which can reach as high as 18%. Beyond that the ice cream becomes so rich that it is difficult to eat any quantity of it. Of course, quality depends on whether true flavors are used instead of artificial ones, smooth texture, and other factors. Canned fruits are widely used in the making of ice cream. But because these have a higher water content than the milk and fat mixture, they freeze harder, which makes for more difficult eating as well as a loss in flavor and color. The same is true of fresh fruit. The most satisfactory fruit for manufacturing ice cream is fruit frozen in sugar. The sugar absorbs the excess water, making a syrup. As the fruit is frozen in the ice cream it has the same texture as the cream, thereby when it dissolves in the mouth of the consumer the true flavor is realized instead of something tasting like a piece of ice.

The same problem occurs with many high-priced brands that feature mixes of cookies, candy and other items with ice cream. In almost every case these ingredients freeze harder or softer than the cream, adversely affecting quality. Particularly satisfactory results have been obtained by mixing a syrup of any flavor in layers or swirls.

Certain brands are related to quality in the consumer's mind, noted 45% of the respondents to a survey. All natural ice cream (no artificial flavors, colors or additives) are preferred by 32%. It should be pointed out that a product may be "all natural" but not be of high quality because of the lack of butter fat, true flavor, proper texture after freezing, and other factors.

Unique factors are looked for by almost one fifth of U.S. consumers. Vanilla is by far the best selling taste, followed by chocolate. The third in popularity used to be strawberry, but it is sometimes surpassed by butter pecan or at various times per year by a seasonal flavor.

Price is the key factor to 22% of the purchasers who buy only when ice cream is on sale, or purchase only the least expensive brand. Frequently these are low-income families with children who are interested in something sweet in quantity for the least money.

In packaging, a very substantial 51% considered easy re-sealing to be of paramount importance. Again, this is an indication of the larger sizes that are not eaten at one time.

The predominant consumption of ice cream takes place during snack occasions. Some 67% is eaten this way, whether at home, at work, in the street, or at a place of amusement. The second largest usage - 25% - is as a dessert after dinner. It should be pointed out that probably the greatest amount of dessert use is in restaurants. Ice cream is usually on dessert menus at foodservice establishments, while it may not always be available in the home. Some 8% of ice cream is consumed as a lunch dessert, and most of this would undoubtedly be in a restaurant or its equivalent in a school or at the workplace.

The great rise in sales of frozen desserts of all kinds in the last five years is underscored by the fact that this category had a 46% increase in that period, while all other frozen foods (other than ice cream related frozen desserts) showed only a 20% gain.

Up until seven or eight years ago, frozen foods and ice cream were regarded as two separately distinct categories for good reason. Ice cream had to be stored, distributed and retailed at lower temperatures than prescribed for frozens. Thus, more specialized systems and equipment were required all along the line. In fact, in parts of the United States - particularly in the Southeast - store delivery of ice cream is still predominant. However, as transport equipment and the glass-door frozen food cabinet have become better able to sustain low temperatures, economies of scale are being achieved by increasingly handling frozen food and ice cream together. A good part of the rocketing sales of ice cream products in recent years may be attributed to the fact that they have been sold in multi-level, glass-door, lighted display cases which accentuate the appeal of colorful packaging. This is vitally important since ice cream is still primarily an impulse-driven business. Indeed, the art of dramatic displays has only been mastered in the last 20 years.

PHOTO : Isaly aims to cash in on America's mania for light, low-calorie foods with the introduction of Klondike Lite, a 2.5-ounce Nutra-Sweet flavored chocolate-coated ice cream bar that contains no sugar. The Clearwater, Florida packer's vanilla bars are said to be the top selling ice cream novelty in America.

PHOTO : Borden's Light Fudge Bars, at just 60 calories per pop, also feature Nutra-Sweet brand sweetener.

PHOTO : Sugar Free Creamsicles boast only 25 calories per unit. Available in orange and berry variety packs, they are manufactured by Gold Bond Ice Cream of Green Bay, Wisconsin, a Unilever subsidiary.

PHOTO : Premium frozen yogurt from Elan claims to be "everything you love about ice cream ...with half the calories and 80% less fat."

PHOTO : Loft's Tofulite is not only cholesterol free, but it also contains no lactose. The product is distributed by Haagen-Dazs.
COPYRIGHT 1990 E.W. Williams Publications, Inc.
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Author:Martin, Sam
Publication:Quick Frozen Foods International
Date:Jan 1, 1990
Previous Article:Awaiting replacement for CEO McGovern, Campbell tightens up business strategy.
Next Article:Thirty years around the world with frozen foods: a look back.

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