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Frugal consumers aren't downing as much ice cream as they once did
A Mintel Group Ltd. July 2011 report notes that 89 percent of American consumers say they eat ice cream. This should be terrific news to private label ice cream producers and retailers. But the good news disappears as quickly as a soft-serve cone left in the hot sun. Mintel’s study reports that the ice cream and frozen novelty category experienced “minimal dollar sales growth of four percent between 2006 and 2011 as recession-inspired frugality and increasing health consciousness combined to cool off growth for the overall category.”
In fact, the Chicago-based research firm points out that on an inflation-adjusted basis, total sales of ice cream and frozen novelties actually declined during this five-year period. And in a chilly forecast, it predicts that, during the next five years, dollar sales should increase by only one percent as “the category is forecast to remain virtually flat.”
There are small bits of good news sprinkled throughout the report: namely that frozen novelties, the single serving treats nestled next to the tubs of ice cream in the freezer case, should post stronger sales as consumers continue to weigh both health concerns and ways to stretch their wallets. Between 2006 and 2011, frozen novelties sales through food, drug and mass merchandisers excluding Wal-Mart, rose to nearly $3 billion.
Sales of ice cream and sherbet reached $4.4 billion in the 52 weeks ended July 10, 2011, in channels excluding Walmart, report Chicago-based SymphonyIRI Group. Sales of private label in that part of the ice cream world totaled $1.1 billion, up 1.61 percent for the 52-week period, showing that while consumers are cutting back on indulgences, when they buy they’re buying more private label.
On the frozen novelties side of the ice cream case, however. Sales of novelties hit $88.6 million in that 52-week period, down 8.6 percent from the prior year while sales of private label novelties stood at $21.8 million, down 0.02 percent n the same period. Private label sales were down in each sub-category of novelties. The private label star in the icy ice cream world, according to SymphonyIRI, was private label frozen yogurts and tofu, with sales up 21.27 percent in the period to $43.8 million.
Have Americans have fallen out of love with ice cream, which accounts for 87 percent of the frozen dessert market, according to the International Dairy Foods Association? No, but they’re still watching their wallets. Ice cream retail prices per half gallon have been rising and reached a record level $4.99 in February of this year, according to the IDFA. And consumers are definitely saying ‘no thank you’ to the better-for-you varieties, including low-fat and low or no-sugar ice cream. About five years ago, both private label and national brand ice cream makers jumped on the better-for-you bandwagon. After a flurry of interest, consumers (literally) didn’t buy it and voted with their scoops.
“After initial years of gains, sales of better-for-you slow churned ice cream have turned negative, even in spite of increasing health consciousness,” the Mintel report notes.
While a wide range of better-for-you food products seem to fly off the grocery, specialty and drugstore shelves, consumers draw a line in the sand and that line is right at the ice cream freezer door. Private label manufacturers know, and Mintel’s research shows, that the number one deciding factor when choosing an ice cream product is taste.
Matthew Thornicroft, spokesperson for Pierre’s Ice Cream Co., Cleveland, Ohio, agrees. “Customers are looking for bold and unique flavors made with high quality, premium ingredients. Even though consumer pocketbooks may be tight, people are becoming more interested in product quality and variety to ensure they receive the best tasting ice creams and frozen treats for their money. They want to know that what they’re buying is made with high quality ingredients and tastes delicious,” he says. Pierre’s has manufactured private label ice cream for several decades.
To indulge that taste sensation, consumers are buying frozen desserts, both private label and national brands, in full fat varieties. But now, due to either their budget concerns or wariness regarding calorie and fat counts, they are buying their desserts as separately packaged single-serve frozen novelties, like ice cream sandwiches, fudge sticks or juice bars. These frozen treats provide the best of both worlds: portion control and convenience.
While sales of frozen novelties were down in the 52-weeks ended July 10, they are expected to be 41 percent of the category sales this year, up from 36 percent in 2006, according to Mintel. Also experiencing more robust sales than ice cream are frozen desserts such as frozen yogurt, sherbet, sorbets, ices and treats made with soy or coconut milk base.
Thornicroft emphasizes that in this market, private label buyers should focus on making their ice cream and frozen novelty offerings as attractive as possible and promoting them as premium food items. “Ice cream and frozen treats, for many people, are experiences,” he says. To help ensure that your private label products exude the promise of a great experience Thornicroft suggests private label retailers invest in product displays that feature “eye-catching packaging and a temptingly creative flavor assortment” that emphasize quality and variety. “Knowing your customer goes a long way. It’s all about the experience and you want your customer to feel that buying your product will create the best experience possible,” he says.
So you know that your customers want to be indulged and love variety and innovation. What’s popular now?
Mintel data shows that private label sherbet, sorbets and ices increased their dollar share to about 42 percent in 2011, up from just 33 percent in 2006.
Pierre’s private label customers are stocking products like frozen yogurts and other products made with exotic fruits combinations. Thornicroft says the success of Pierre’s Hola Fruta! sherbet line, which includes flavors like Pomegranate and Blueberry and Mango and Black Cherry Lemon, “proved sherbet had a life beyond traditional orange and rainbow flavors sold in large plastic tubs and it could exist as a super-premium product.” He suggests that retailers encourage shoppers to experience their new flavors via sharing recipes and serving ideas as well as tastings.
So, if you offer great taste in a private label product, are health concerns irrelevant? Not entirely, but tread carefully here, Mintel warns. Health concerns matter to very few consumers in this category. “Health is not what brings consumers to the category in the first place… pushing too hard on a health message can create the impression that the product is a compromise on taste. However, health messages may prove to be a successful marketing tool, if communicated in conjunction with decadent taste.” While this seems like an impossible task, Pierre’s says its Yovation Probiotic Frozen Yogurt is one way for consumers to supplement their diets with probiotics but still enjoy a frozen treat that comes in flavors like Cappuccino and Vanilla Pomegranate Blueberry.
While consumers still buy most of their frozen novelties in supermarkets, both private label and brand sales of these frozen treats in drug stores and mass merchants excluding Wal-Mart, soared as retailers like Walgreens, CVS, and Target expanded their food selection and sections in recent years. Mintel data shows that total frozen novelty private label market share increased by three percentage points between 2006 and 2009 to reach 21. 6 percent as consumers looked for ways to spend less money or indulge their cravings with some portion control.
Consumers claim that they want to be healthy but they also long to soothe their worries or celebrate their victories with rich, delicious frozen desserts that meet their high standards. In other words, when the going gets tough, Americans shun health claims – unless the frozen treat tastes really, really good.