NOVELTIES ARE HOT

BARBARA MURRAY

It's another opening of another show: Frozen Novelties, 2000.

"We've done well this past year, and novelties seem to have picked up for us," said Pat Brooks, frozens category manager at Save Mart Supermarkets, Modesto, Calif. Over the past decade, novelty items grew by 150% in dollar sales, according to a study conducted for the National Frozen Food Association, Harrisburg, Pa.

Brooks attributed Save Mart's experience to the strong economy -- "People have a little more discretionary money" -- the weather, which plays a big part in the novelty ice cream business; and "some nice promotions from the manufacturers on ice cream novelties." The study done for the NFFA, which was based, in part, on data from Information Resources Inc., Chicago, found that novelties were expected to reach $1.9 billion in 1999, representing 7.6% of total frozen-food department sales. (Ice cream as a whole had sales of $4.2 billion, with ice cream accounting for 17% of the total frozens department sales.) Frozen novelties include ice cream bars, water ice, ice cream cones, sandwiches, cups, bags of pops and mini or snack items. Gross margins have increased since 1990. Based on an August, 1999, food-broker survey cited in the report, the estimated gross-margin percentage for the ice cream category was 36.4%. Novelties' percentage was about the same: 35.6%.

"These compare favorably with the percent of gross margin of 35.9% for the total department, and 29.8% for the total supermarket," according to the study's summary, prepared by Karl Kepner, a marketing professor at the University of Florida, Gainesville, and Van D. Spurgeon, president of Spurgeon Management, St. Louis.

Frozen novelties get an average of 6.4% of the departmental linear display feet, while packaged ice cream averages 11.5%, the study found. So it is apparent that these categories are achieving greater productivity than the departmental average. Novelty units were flat over the decade.

The importance of new items was demonstrated by the fact that, in 1998, 12 of the Top 100 ice cream/novelty Universal Product Codes covered products that were less than two years old, the study continued. During 1998, these items generated sales of nearly $140 million. And it's not surprising to see that the household penetration rate for novelties is 72%, while it is 92% for ice cream, compared with 44.6% for the rest of the frozen-food category.

"We believe growth is spurred by new product development," said Ken Johnson, vice president for sales and marketing at Fieldbrook Farms, Dunkirk, N.Y., a leading producer of private-label ice cream and novelties.

"I think the industry is focused on bringing more shapes, sizes and concepts to market, including co-branded themes, and in offering different varieties and different sizes, larger family packs, smaller single-serve convenience. It's not a static category, but continually evolving," said Johnson. Indeed, he views frozen novelties as a snack food, to be consumed year-round. "There's no reason that when people have their Super Bowl parties they shouldn't also think of novelties," he said.

New items shaping up for this season range from kids' Pokemon pops, designed with flavors and characters on them; and a Pez pop, with toys inside the box and pops flavored like Pez; to adult items like chocolate-dipped fruit bars that say they have extra calcium.

Among the novelties, a growing number offer something "good for you," noted Jeff Quintana, general manager of Unified Western Grocers, Commerce, Calif. "There's not a huge change in the category compared with last year. You have the fun-type items, and the premium and superpremium items that appeal to adults, but there is a new category, a smoothie nutrition-bar category, that ties in with fruit," Quintana said. FruitAFreeze, a regional brand, is introducing an Energy Smoothie Bar, which contains 25-mg of a natural stimulant that is reported to reduce fatigue, PMS and headaches, and 50-mg of Siberian ginseng, naturally grown, which is reported to increase stamina, energy and memory.

"It tells you the category is growing and changing, with good-for-you items that carry nutritional claims," Quintana said.

Popsicle brand has come out with some new items, which Quintana and others think will do extremely well. One is the i/Carum/ba bar, vanilla with chocolate coating. Another new product, also with a Spanish accent, is called La Fruta Loca, described by Quintana as a tropical pop. Both it and i/Carum/ba retail at about $2.29 for a pack.

Upscale novelty still continues to be strong, and in private label, Unified's Foremost brand is very strong, Quintana said, but more focused on the traditional items. Branded items, on the other hand, have more new introductions and a "fun" persona, which can also be faddish.

Among the Top 10 brands for the year ended Dec. 28, 1999, according to IRI, private label led the pack with dollar sales of $287 million, a 3.6% increase over the prior year, although unit share was down 3%. Private-label novelties have a 26.5% dollar share. Next among brands was Klondike with a 6.7% dollar share. Its sales of $116.6 million represented a 9.4% increase, and units were up, too, by 4%.

Private-label ice cream novelties do extremely well, said Rich Savner, spokesman for Pathmark Stores, Carteret, N.J. "It's got mass appeal," he said.

"I think it should be a very good season for novelties," said Tom Outlaw, vice president of merchandising for Ingles Markets, Black Mountain, N.C. "I have seen some pretty good introductory flavors. Popsicle has some good flavors, and Mayfield Rewards [a leading Southeast brand] has some upper-scale novelties, four new ones." Outlaw said Ingles has almost completed its ice cream sets for the spring, and they are comparable to the space allocated last year.

Save Mart took on some new items, including Klondike bars and some new Popsicles; Pokemon pops; the item called Scribblers, which looks like a crayon, for young children; Fruta Loca; and "a couple of the Tropicana cream bars, and a new product called Pez Pops," said Brooks.

In addition, Brooks said, his store has added Dreyers chocolate-dipped pops, banana and strawberry; and also Splash pops and I-Screamers, from Nestle, and a sweet tart ice pop. "We are getting a lot of candy-type items, sort of a blend, trying to emulate a lot of those flavors.

"Frappuccino [the new Starbucks bar from Dreyers] is doing fair for us, and we've added a Dove bar. We had gotten out of them for a while; now we're looking at them again," Brooks said.

He also said a few private-label items are being scaled back, since some did not perform as well as expected. The Super Star fudge bar, and cherry, lime and raspberry water ice did not do so well, he said, nor did a rainbow pushup. Private-label ice cream novelties, especially ice cream sandwiches and the toffee bar, are doing very well, however, Brooks added.

Russ Hahn, frozens category manager for Scolari's Food & Drug, Sparks, Nev., mentioned the adult indulgence items like the chocolate-dipped bars coming from Dreyers and Nestle, as well as the kids' varieties like Icys', Pokemon, and a new one from Popsicle called The Great White, which Hahn says has "no food coloring whatsoever, for kids who are allergic." He also likes the new Scribbles from Popsicle, and Breyers' dipped MegaBars. "They're a little bigger than the average bar, and they did well over in England, so now they're going to try them here."

This year shouldn't be too different from last, Hahn said he believes. "A lot of the same lines are out there, the economy is still good, and private label is increasing a little bit," he said.