CONSUMERS FAVOR FULL-FAT ICE CREAM FLAVOR

LIZA CASABONA

Bathing suit season may be upon us, but retailers say better-for-you ice cream is still swimming against a tide of indulgent, full-fat flavors.

Seven of the Top 10 best-selling ice cream brands have experienced positive growth over the last year -- and all are full-fat, premium or super-premium items.

"We're seeing consumers go back to full indulgence," said Bob Roden, category manager for dairy and frozen foods at Lund Food Holdings, Edina, Minn.

Quality high-fat segments have continued to show strong signs of incremental growth. Among the best-selling brands of ice cream are Haagen-Dazs, Ben & Jerry's, Turkey Hill and Blue Bell.

"Overall, I think that people are getting more perceptive to a better-quality ice cream out there. If they're going to pay the dollar ring, then they're going to get something they want, something that tastes good," said Russ Hahn, buyer/merchandiser for Scolari's Food & Drug Co., Sparks, Nev.

Data from Information Resources Inc., Chicago, supports that conclusion, showing that the frozen yogurt and tofu category had sales of $227.7 million last year, while regular full-fat ice creams generated over $4 billion in sales.

"Health-conscious items are still kind of flat out there in regard to the fat-frees and other products like that. They're not really making a comeback; they're just laying flat in sales," Hahn said.

Retailers note that, conversely, their sugar-free items are doing increasingly well in this otherwise flat segment, but there is no real agreement as to what forces are shaping that trend.

"The NSA [no sugar added] ice cream category seems to be growing as the baby boomer generation gets older. More people seem to be diabetic and, for this reason, I think this category will grow," Nate Fisher, vice president of frozens, Ingles Markets, Black Mountain, N.C., observed.

Hahn also predicted future growth in the sugar-free or low-sugar arena. Products such as Velvet Ice Cream's new line of light ice cream made with Splenda -- a new, no-calorie sweetener that is safe for diabetics and people who count calories -- continue to appear on the market.

Roden thinks some of the sugar-free growth could be connected to a desire on the part of parents to keep their children from eating too much sugar, which would explain why sugar-free popsicles are one of his top-selling novelty items.

One of the key trends for 2001 was the continued proliferation of co-branded ice cream products that incorporate ingredients from well-known candy and baked-goods manufacturers. While this trend has been growing over the past few years, candy-flavored ice cream saw the highest rate of individual flavor growth in 2001, according to the International Ice Cream Association, Washington, a constituent of the International Dairy Foods Association.

"The overall goal is to keep the category exciting," explained David Landau, spokesman for the IICA. "The thing that ice cream manufacturers do so well is keep the category interesting."

Introducing ice creams branded with well-liked, trusted candy brands that complement ice cream has been a very successful tactic, Landau added.

The trend shows no signs of abating. In the past few months, a number of co-branded ice cream flavors and novelty items have launched. These include: Nestle Toll House Cookie, Nestle Turtles and A&W Root Beer Ice Cream & Sherbet flavors from Dean's Ice Cream, Franklin Park, Ill.; Minute Maid Fruit & Cream Swirl novelty pops from J&J Snack Foods Corp., Pennsauken, N.J.; and Mayfield's Rewards Nestle Crunch and Butterfinger Ice Creams manufactured by Mayfield, Athens, Tenn. Good Humor-Breyer's Klondike bars have added Oreo pieces and Planters Peanuts to its novelty items, and Blues Clues' title character has graced the front of an ice cream carton.

Roden sees the increase in new products as a way to invigorate the ice cream category, a realm where supermarket retailers still dominate the market, at least for the time being.

"Supermarket business has been able to continue to defend ice cream. Mass will probably get there eventually, but ice cream at this point is still a supermarket grocery store's game."

Lunds and Byerly's stores merchandise and market ice cream as a destination aisle, carrying a much larger number of the premium and super-premium brands than their competitors in the region, a factor that has strengthened the aisle's position as a signature for the chain, according to Roden.

Ice cream is displayed in coffin freezers placed in the center of the frozen-foods aisle in the majority of the company's stores, a tactic Roden views as instrumental to sales in the category. No more space has been allotted to the proliferation of newly branded items and flavors, but the section is carefully managed to achieve a balance of old, tried-and-true brands and new ones that generate excitement with unusual flavor combinations and ingredients.

Retailers agreed that, with respect to merchandising efforts, these new product introductions, line extensions and branded products have necessitated a new approach. "The category has grown," Hahn said. "The hardest part about the whole category is trying to figure out where you want to expand for certain sectors, even though you are kind of capped on the space issue itself."

For him, the process is one of finding a balance between stimulating interest in the category without eliminating too many other flavors or products in other categories. During the summer, for example, he might reduce the space allotted for pies, traditionally a big holiday seller, in favor of a hot summer item. Cutting back temporarily on items that aren't as popular during the summer months can open up an extra door or two for ice cream and novelties. Overall, Hahn said, it's a continual process of editing and revising category offerings.

Yet even in the face of new, super-premium, extreme flavors and proliferated offerings, private-label ice cream is outselling all the other top brands in stores, bringing in more than $1 billion last year in sales, a 23.3 dollar share as of this April, according to IRI data. While seemingly contradicting the premium trend, retailers that spoke to SN said it speaks to the success of private-label endeavors at high-quality ice cream.

Hahn estimates that Scolari's private-label ice cream matches its branded competition in terms of quality. Consumers appear to agree, since Scolari's wide range of private-label ice cream products leads the category in sales for the chain.

Lunds and Byerly's also sell a private-label, premium ice cream that performs very well, partially due, Roden said, to ongoing year-round sampling and promotional efforts that have made products from the line the fourth and fifth most popular ice cream products his stores sell. The chain's ice cream is sampled in-store at least once a month, accompanied by a promotional push.

Scrounds are also big news for Lunds and Byerly's private-label lines, Roden explained. Scrounds is the rounded-edge packaging that started to become popular three years ago when brands such as Breyer's started selling their half-gallons in containers that were neither round nor square. As little as two years ago, Roden said, only about 50% of ice cream brands used scrounds. Now, almost all of the brands have made the switch, including many supermarkets' private-label lines. Lunds will launch scrounds packaging this summer, he told SN.