Ice cream industry faring relatively well

July 22, 2010 | by Alicia Kelso

Collectively, we just endured the hottest June on record. Ever. Perhaps, then, it’s no wonder we’re all ravenously craving ice cream.

Although a handful of QSR brands have rebounded from last year’s sales, ice cream companies have been double-digit-solid in some cases. Whether those numbers are attributable to weather, marketing efforts or cost-effectiveness, however, remains debatable.

Lynda Utterback, executive director of the National Ice Cream Retailers Association (NICRA), said members’ sales have been up as much as 25 percent from 2009.

“It doesn’t surprise me. Last year was a really bad year for ice cream and it wasn’t because of the economy, but more because of the moderate and rainy weather,” she said.

The U.S. frozen dessert category was down 2.4 percent in sales last year, according to foodservice consulting firm Technomic, Inc. In Utterback’s opinion, weak economies rarely, if ever, affect the ice cream industry. In fact, they may be a boon.

“I’ve been in the industry for 25 years and have been through a couple of recessions. Ice cream always does well in recessions,” she said. “It’s something affordable for a family to do together. At $2 to $3 a cone, you can take your entire family out to get ice cream much cheaper than you can to a movie, a ballgame or paying to get into a pool. It tugs at the heart strings more than the stomach and it is more of a family activity than a meal.”

Pleasantly surprised

Most members of the NICRA are independent mom-and-pop shops, but larger brands have also been excited about their numbers.

“Given the economy and the (QSR) industry as a whole, we’re having a surprisingly good year. We always aspire for more growth, but there are many areas where we have done extremely well,” said Michael Keller, chief brand officer at International Dairy Queen.

For example, sales for the company’s flagship Blizzard have increased by 15 percent from last year. Keller said he expects sales to get even better after the Aug. 2 nationwide launch of the new Mini Blizzard. The test market launch of the product began in April to mark the iconic Blizzard’s 25th anniversary, and has been received “extremely well,” according to Keller.

The Mini Blizzard launch is a direct response to customer requests for something smaller, more affordable and more convenient.

“We picked up on a trend we were seeing with our Blizzard fan club that indicated those types of changes would affect purchase frequency,” Keller said.

Dairy Queen isn’t alone. Although sales numbers are undisclosed for the privately-owned Cold Stone Creamery, president Dan Beem said the company has been “fortunate to have this year be our best performance in the last few years.”

Baskin-Robbins has also found reason to be “pleased,” according to Brian O’Mara, Baskin-Robbins’ vice president of marketing.

“We’ve seen (sales) increases month after month and a couple of our categories, such as our scoop business and ice cream cakes, are even up in the double digits,” O’Mara said.

Strategic promotional efforts

The Mini Blizzard’s soft launch was coupled with various other promotional events facilitated by a new Blizzardmobile mobile truck. Keller said such conscious strategic marketing efforts are necessary to stay constant or be successful in the current economic climate.

In addition to the Blizzard-centered efforts, Dairy Queen has also rolled out a new national media-advertising strategy, coupled with new social media campaigns.

Promotional opportunities have aided the industry greatly. Baskin-Robbins’ Major League Baseball Sunday partnership, for example, has catapulted its scoop numbers.

Additionally, Cold Stone Creamery recently launched eGift Social, a social media platform that brings virtual gifting to reality and drives sales for its franchisees, according to Beem.

Innovative thinking

Besides hot weather and strategic marketing/promotion plans, the ice cream industry has relied on innovative thinking to bolster growth.

Some companies have looked to international expansion; for example, most of Dairy Queen’s growth this year has occurred in China, and Baskin-Robbins has more than 6,000 units worldwide.

Cold Stone Creamery stayed afloat by specifically focusing on its franchise base.

“In late 2008, we knew we were going to be dealing with a difficult economic environment and it was important to ensure we were in sync with our franchisees. We took a three-month bus tour to meet with them and get feedback to evaluate potential challenges and possibilities,” Beem said.

Resulting from that tour, Cold Stone was able to determine a growth strategy that focused on franchisee profitability and product innovation.

“Consumers began giving up luxury dinners and cruises, but they still needed that 10-minute vacation and a way to spend time with family and friends,” Beem said. “We introduced new and innovative products that encouraged them to spend that vacation with Cold Stone. It drove same-store sales increases for our franchisees.”

Baskin-Robbins also considered its customers’ desires when it invented the Double Header cone last year. The unique cone is designed to hold a swirl of soft serve and a scoop of ice cream simultaneously. It was developed as a result of a Baskin-Robbins survey that found more than half of Americans cannot decide between soft serve and traditional ice cream.

Also, although Baskin-Robbins was founded on the premise of offering 31 flavors, it now offers a “31 Below” line for the soft serve crowd.

“The key to staying strong is understanding what the consumer needs and wants and filling those needs and wants. This is why Baskin-Robbins has an incredible range of beverages and has for a long time. We developed the Cappuccino Blast in 1994,” O’Mara said. “We were also pretty innovative in our soft serve category, with 31 Below and with offering soft serve ‘Flavor of the Month,’ as well. You have to know what consumers are looking for and present it in a fun and easy way.”

Embracing new flavors

Although traditionalists may balk at the thought of replacing their beloved French vanilla ice cream, many companies are adding a plethora of unique options to the flavor palette.

Flavors of the month promotions are common. Marble Slab’s “Taste of Summer” campaign, with Sandra Lee, has featured an unusual flavor combination every week.

Even the classic Blizzard has switched things up a bit. “The Oreo Blizzard remains our No. 1 seller, but we recently came out with pecan pie flavor and it more than exceeded our sales expectations,” Keller said. “Although people love their familiar comfort flavors, they still crave variety every now and then.”

Cold Stone has always prided itself on customized flavor options. This year, the company launched Gold Cone, a rotation of 10 new flavors throughout the year, including Oreo Crème Filling and Key Lime.

“Our guests can create their own original and creative ice cream concoctions,” Beem said. “We’ve been successful in offering the ultimate ice cream experience.”

Good, old-fashioned icon

Gimmicks and strategies aside, ice cream’s iconic status alone could always put up a good fight against even the most dismal economic forecasts. And, although most companies caution against getting too optimistic – “I prefer the term ‘hopeful,’” Keller said – ice cream will always have those few intangibles working in its favor.

“We believe that in tough times, consumers look for little respites during the day and the ice cream category fits that niche really well,” O’Mara said. “We don’t just sell ice cream, we sell fun. We sell an experience.”


Alicia Kelso / Alicia has been a professional journalist for 15 years. Her work with, and has been featured in publications around the world, including NPR, Good Morning America, Voice of Russia radio, and Franchise Asia magazine.
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