Staying Cool with Ice Cream

Freezer Case

The freezer case doesn't have to be a frozen sales opportunity for c-stores

Ice cream and frozen novelties were down in sales for the channel last year; average store sales decreased 1.4 percent in 2009 to $12,037, while the combined category's percent of instore sales dropped from a little more than 1 percent (1.04 percent) in 2008 to just under that mark (0.98 percent) in 2009, according to Convenience Store News' 2010 Industry Report. Total channel sales dropped 1.7 percent to $1.7 billion.

And the packaged ice cream/ novelties downturn in c-stores continues this year. Dollars sales for the 52 weeks ended July 10, 2010 dropped 2.1 percent to $1.03 billion and unit volume dropped 4.4 percent to 517 million, according to The Nielsen Co./Scantrack data. Breaking down the subsegments, frozen novelties decreased in dollar sales 0.9 percent to $592.7 million; ice cream saw declines of 3.6 percent to $431.6 million, and frozen yogurt/sherbet and sorbet experienced the greatest drop — 7.3 percent — to $13.6 million for the same time period.

But the bigger picture outside of the convenience channel shows ice cream is scooping up nice profit despite a chilly economy. The U.S. market for ice cream and related frozen desserts (including frozen yogurt and frozen novelties) increased 2 percent to reach $25 billion in 2009, despite a recessionary climate that significantly affected frozen dessert sales, according to the latest ice cream and frozen desserts research by Packaged Facts. A wide variety of "discounts and deals" have helped keep volume up in the mature category, and sustaining such strategies is expected to be essential to its future, with Packaged Facts forecasting sales of $27 billion by 2014.

PRIVATE PINTS AND MORE

In the grocery channel, private label ice cream is "meeting or exceeding" customers' expectations for branded ice cream, according to Howard Waxman, analyst for Packaged Facts and editor and publisher of Ice Cream Reporter, a monthly newsletter.

But what about the private label opportunity for c-stores?

"For c-stores that have a dairy or a following for grocery items that goes beyond simple convenience, there's an opportunity to build on the relationship with private label ice cream, especially if they can offer lower price points than branded'" Waxman told CSNews. "With a shaky economy' consumers who can't afford to indulge in other ways will turn to lower-cost indulgences to feel good — ice cream has historically benefited from that."

"The recession has raised consumer commitment to finding the best price/ value balance in their frozen desserts," stated Don Montuori, publisher of Packaged Facts. He added: "frozen desserts represent an opportunity for relatively inexpensive indulgence" and that "marketers are offering bargains in order to keep volume flowing, and retailers are improving and upscaling their private label offerings."

Support of good quality and affordable ice cream from the c-store channel is logical — last year, retailers named "premium ice cream" as one of the weakest new-product introductions due to "poor wholesale support and price resistance."

Conversely, retailers like 7-Eleven are chilling with their own frozen brand. The c-store giant extended its proprietary brand name, 7-Select, to pints of ice cream in the summer of 2008 with the flavors of vanilla, chocolate, strawberry, chocolate chip cookie dough and watermelon sherbet. In late 2008, the 7-Select ice cream sandwich was unveiled. And the line continues to grow — last year a S'mores Ice Cream Sandwich was added and this spring, key lime pie flavored pint ice cream was unveiled.

This summer, the convenience giant partnered with Zynga in one of the broadest product promotions in its history, offering virtual game FarmVille-branded items on many proprietary products, including its 7-Select ice cream — specifically the 7-Select Vanilla ice cream pint.

"Attracting millions of consumers to 7-Eleven stores with exclusive items for Zynga games creates an additional opportunity for them to try some of our newest products, like our proprietary 7-Select ice cream and candy, along with longtime favorites, such as Slurpee and coffee drinks," said Rita Bargerhuff, 7-Eleven vice president and chief marketing officer. "The Zynga universe of gamers is vast, and we knew we had to come up with a promotion fit for this demographic."

Turkey Hill Minit Markets stocks its freezers with a vast selection of private label ice cream flavors. In fact, its stores claim to have the largest selection of Turkey Hill frozen treats anywhere — at last count: 31 flavors of Turkey Hill premium ice cream, eight flavors of Turkey Hill "Stuff'd Pints," 11 flavors of Turkey Hill Frozen Yogurt, 12 flavors of Turkey Hill Light Ice Cream, three flavors of Turkey Hill No Sugar Added Ice Cream, seven flavors of Turkey Hill Duetto, four flavors of Turkey Hill Dynamic Duos, five flavors of Turkey Hill Venice Premium Ice, six flavors of Turkey Hill All Natural Recipe Ice Cream and three flavors of Turkey Hill Sherbet.

LOCAL LOGIC

Of course, not all dairy-minded c-stores will be able to make a private label ice cream connection. Rutter's Farm Stores used to carry its own Rutter's label ice cream through a third party and even manufactured it in-house roughly 10 years ago — but not anymore, according to Scott Hartman, president and CEO.

"Ice cream is a product that is economical to make private label only in large batches," he stated. "We do not currently sell enough ice cream to rotate the product through such large batches."

But the chain does offer a close-second to private label — a regional brand. "We have a good local supplier — Jack and Jill — that does really well in our stores, so we really focus on that brand now," Robert Perkins, director of marketing, told CSNews.

Packaged Facts identified a growing consumer need for ice cream products that "are simple and from identifiable sources, such as ingredients by local producers."

In addition to Jack and Jill, Rutter's also carries Ben & Jerry's, Haagen Dazs and some ice cream novelties.

Perkins maintained that ice cream and frozen novelties is a category Rutter's offers primarily "for convenience and indulgence. We're seeing some small gains, but do not really consider it a big growth area." He added: "ice cream has probably had some healthy increases in pricing the last four or five years, but at the end of the day, consumers are still willing to pay up to $3 or $4 for a pint of their favorite ice cream treat."

SELF-SERVE YOGURT WILD CARD?

Single-serve novelties are a logical opportunity for c-stores in the ice cream category, according to Waxman, but he suggested they think outside of the freezer case as well and consider frozen and consider frozen yogurt machines with all the toppings, much like customers can get in a dedicated ice cream store.

"Self-serve frozen yogurt is an area of explosive growth lately — it started on the West Coast and is now trading in smaller markets all over the country," he said. "Big brands like Red Mango have brought increased awareness in airports and other places where people are used to having food on-the-go."

His logic is that "self-serve is synonymous with convenience" and can naturally extend beyond frozen drinks and microwavable foods that consumers are already used to serving up for themselves at their local convenience stores.

"Consumers dispense icy drinks for themselves at c-stores, why not go over and fill a cup with frozen yogurt, put toppings on it, weight it, and then pay for it based on weight?" he asked.

For comments, please contact Renée M. Covino, Contributing Editor, at [email protected].

Bottom Line

• Packaged ice cream/novelties dropped 2.1 percent in c-store dollar sales in 2009.
• 7-Eleven is chilling with private label; Rutter's with a local brand.
• Self-serve yogurt with all the toppings could be the channel's next frontier.