It should have been a historic year for ice cream. Unfortunately, events - in the shape of the second-wettest year on record and commodity price hikes - cancelled out any uplift from the ‘summer of celebration’. While sales climbed 6.7% in value, this was primarily thanks to price inflation. Volumes fell 3.7% [Kantar Worldpanel 52 w/e 25 Nov 2012].
Only premium ice cream hit the sweet spot, with chocolate sticks - led by the category’s new hero, Magnum Infinity - enjoying particularly strong value and volume growth.
In the absence of an Olympics or Jubilee, we can expect to see even more brands push posh this year. “In cash-conscious times, consumers’ desire for indulgence means they are more likely to purchase luxury ice cream - it is seen as a low-cost, permissible treat,” reasons Matt Fulbrook, out of home sales director for Fredericks, licence holder for brands including Cadbury and Britvic.
Mini formats are also likely to gain ground as suppliers look to engineer price points and meet demand for smaller, ‘healthier’ portions. But will either of these trends be enough to restore ice cream to volume growth?
The stark fact is that ice cream is not the low cost treat it used to be. A litre of ice cream costs an average of 11% more than it did a year ago [Kantar], thanks largely to rising raw material costs. That said, the resulting slump in volume sales would have been even worse had it not been for the steady flow of NPD and format developments, primarily from players at the premium end of the market.
Indeed, without brand extension Core - a range of premium ice creams with indulgent sauce centres - Ben & Jerry’s impressive 2012 results (see right) tell a rather different story. While Core has racked up a whopping £14m in sales since launch last January, Ben & Jerry’s standard lines have seen sales fall 6.8% on volumes down 14.3% [SymphonyIRI 52 w/e 8 December 2013].
“In cash-conscious times, consumers are more likely to purchase luxury ice cream” Matt Fulbrook, Fredericks Dairies
No wonder Unilever is expanding the Core range. “Following phenomenal success in 2012, we launched two new additions in February,” says Holly Ashton, trade category and marketing executive for ice cream impulse at Unilever UK. “Peanut Butter Me Up and Blondie Brownie will be supported with a £5m media campaign and a Ben & Jerry’s Core Tour’ sampling programme in 2013.”
While Ben & Jerry’s backed up its NPD last year with a 57.8% hike in ad spend, premium rival Häagen-Dazs actually cut its spend by 34% [Ebiquity 52 w/e 30 November 2012], choosing instead to increase its featured space promotions following the January launch of Secret Sensations, 100ml mini pots of luxury ice cream featuring a liquid ‘heart’ of gooey sauce in three flavours - crème brulée, chocolate fondant and, later, meringue and raspberry fondant.
The new launch did not have as much of an impact on Häagen-Dazs’ overall performance, which showed a sales hike of 6.6% on volumes down 4% [SymphonyIRI], though brand owner General Mills is hoping to rectify the volume performance, measured by weight and not packs sold, with the introduction of larger packs of Secret Sensations, the details of which are currently being finalised.
Infinity and beyond
Sticks - up 21.7% on volumes up 20.6% [Kantar] - also has a lot to thank more indulgent offerings for. “There’s been a lot of NPD to draw people into the category at the expense of others,” says David Taylor, deputy MD of Fredericks. “Also, sticks are very clean, there are no messy hands and people see sticks as something they don’t just have on impulse, but as a dessert offering.”
One brand in particular drove the growth in sticks: Magnum. Unilever unveiled brand extension Magnum Infinity a year ago. Billed as the ‘most intense chocolate ice cream experience ever’, Infinity has racked up an impressive £17.5m [SymphonyIRI], helping the brand seize a 4.9% share of the impulse market, claims Unilever.
That’s just the start, says Ashton. “Magnum Infinity provides consumers with a high-quality offering, which has brought excitement into the category and tapped into the trend for consumers wishing to reward themselves,” she says. “We’re backing the range with an additional £6m marketing investment in 2013.”
Infinity has certainly given Magnum a boost. Overall, the brand’s sales have grown 16.3% on volumes up 14.4%. Strip Infinity out of the equation and the brand’s performance is more modest, although going in the right direction, with sales of standard Magnum and the new Magnum ice cream in tubs (launched in September) up 2% on volumes up 3.8% [SymphonyIRI].
‘Wave of patriotism’
Cadbury’s chocolate sticks sales have also surged following the March launch of the Nuts About Caramel stick, which Fredericks’ Fulbrook says has netted the brand £4.5m in sales so far. Cadbury also benefited from being the sole provider of packaged ice cream at the London 2012 Olympics, which generated £3m in incremental sales for Fredericks.
The deal also allowed the ice cream maker to buck the ongoing decline of filled cones - which have slipped 0.1% in value over the past year on volumes down 6.9% [Kantar] - with Flake 99 cones racking up £1m of the incremental sales. To drive further growth Flake cones will be advertised on TV for the first time from June in a six-week campaign.
As a result of Flake’s growing profile - and in a clear attempt to cash in on the ongoing success of premium tubs - the brand has been extended into the 500ml tub format this month. “This high-profile presence drove mass exposure and has laid the foundations for growth in 2013 and beyond,” says Fulbrook.
While the summer of celebration didn’t boost sales for everyone, those who did benefit enjoyed significant uplifts - and not just if they were major players. Cotswolds-based Marshfield Farm Ice Cream supplied ice cream for The Queen’s Diamond Jubilee concert in June, and the following month the family-owned company celebrated its best trading week on record.
“We introduced a new flavour for the ‘summer of celebration’ - strawberries in clotted ice cream - and we found traditional flavours sold really well,” says Will Hawking, owner of Marshfield Farm. “Both sellers and consumers were really riding on a wave of patriotism. The current trend for all things classically British and the importance placed on heritage shows no signs of stopping and will continue to inform our future NPD decisions.”
Others are using increasingly exotic flavours to stand out from the crowd. Kent-based Taywell Ice Creams is gearing up for the spring launch of a Mexican range, which will include cactus and piquin pepper and margarita flavours, after the success of its Asian ice cream and sorbet range - including black sesame, Japanese green tea, kaffir lime leaf and chocolate & wasabi variants - in 2012.
“People see sticks as something they don’t just have on impulse, but as a dessert” David Taylor, Fredericks Dairies
“In spite of the continuing downturn, we continue to see incredible growth our premium ice creams and sorbets,” says Taywell MD Alastair Jessel, pointing to the company’s 75% growth in 2011 and 85% growth last year following investment in its production capacity. “It demonstrates that, even when finances are stretched, demand for high quality and affordable treats remains robust.”
Consumers are also looking for healthier options, says Dan Brown, founder and CEO of natural frozen treats company It’s Only Natural, which launched its pure fruit sorbet Orb Mango last year. “It’s a premium, indulgent product made from the highest quality fruit and nothing else,” he says. “It is naturally low calorie, contains no fat and only good stuff. Orb is guilt-free pleasure.”
All this growth in sticks and more indulgent tubs of ice cream and sorbet has left filled cones rolling around at the bottom of the freezer. The only bigger casualties have been chocolate ice cream bars and standard ice cream in two litre tubs, although the latter’s performance was impacted by the move into different size tubs by some players.
Fredericks is hoping to inject some growth back into filled cones following the February launch of Oreo Cones (it also launched Oreo Ice Cream in 500ml tubs). The packs of four 100ml cones mark Oreo’s UK ice cream debut and feature a unique black Oreo-flavoured cocoa cone with Oreo cookie pieces in the ice cream. A national sampling campaign is set to run between May and June, supported by a £3.6m advertising push.
Hopes are high. “Worth £1.3bn worldwide, Oreo has grown by 12% since 2011 and is now worth £21m in the UK,” says Taylor. “We’re confident that consumers will love the new ice cream product, recruiting new shoppers into the category.”
“Premium ice cream is an area own label can really start to grow in. It offers everyday value” Charlotte Hambling, R&R
Innovation continues in another sub-category in meltdown: adult lollies, where value is down 4.9% and volumes 18.5%, [Kantar]. In 2012, Fredericks began manufacturing and marketing Fruit Shoot squeeze-ups and R White’s Lemonade Ice Lollies under a 10-year licensing deal with Britvic, and the manufacturer says both products beat expectations, achieving £4.5m in sales in their first year.
When it comes to lollies, others are focusing on a sub-category that appears to be in much finer fettle: kids’ lollies, which have risen 6.3% in value, although volumes are down 2.3% [Kantar]. This month R&R Ice Cream launched multipacks of Fab, Milkybar and Nobbly Bobbly ‘minis’.
Macro and micro
“Minis bring portion control, which is another macro trend that we’re seeing,” says Charlotte Hambling, senior marketing manager at R&R. “Mums want to give something as a treat without too many calories. You’re also getting a lot more portions in a pack so they’re good value.”
The format has certainly worked for Icefresh Foods. This month, it secured listings in Morrisons and The Co-operative Group for its Peppa Pig strawberry and vanilla ice cream lollies, after the product racked up nearly £6m last year, says Icefresh brand manager Scott Wilson. “Getting the balance right between creating something fun that engages children and is also appealing to their parents is difficult to achieve,” he says. “We’re delighted with the success.”
Other suppliers are also hoping to capitalise on the growing popularity of licensed kids’ lollies and ice creams. Later this year, Beechdean Group’s new Sponge Bob SquarePants product will roll into freezers and in April It’s Only Natural will launch its first dairy product, Moshi Monsters Ice Scream Surprise, into Spar. Produced in partnership with Mackie’s of Scotland, the product represents a format first for the UK, says Brown - a dual compartment tub with one section for the ice cream and another for a free Moshi Monsters toy and a spoon.
Despite the optimism surrounding premium, mini and kids’ formats, there remain clouds on the horizon, however. “The poor summer weather in 2012 was offset by major events, but we will not have that to fall back on in 2013,” says Kantar Worldpanel analyst Simon Arnell. “There’s an expectation that commodity costs will continue to increase, in which case ice cream manufacturers will continue to combat this is any way they can, through price increases or pack re-engineering.”
“Own label delivers a low price offering, while brands further grow the category” Ed Culf, Häagen-Dazs
All this could play into hands of own label, which last year took a back seat, climbing 7.1% in value but slumping 5.1% in volume, while the nine bestselling brands achieved combined growth of 11% on volumes that inched up 0.8% [SymphonyIRI].
Own label was also impacted by changes in promotional tactics, adds R&R’s Hambling. “Historically, own-label ovals were sold on two-for-£3 promotions, but that’s not sustainable now,” she says. “This is having an impact on own label. However, premium ice cream is an area own label can really start to grow in. It offers value on an everyday basis and I think the growth in premium ice cream will come from own label in 2013.”
Nevertheless, when it comes to innovation, the brands will always retain the upper hand, believes Häagen-Dazs marketing director Ed Culf. “There are clear roles for both own label and branded ice cream,” he says. “Own label delivers a low price offering while brands further grow the category, drive footfall into the frozen aisle and recruit new shoppers.”
Magnum is now looking to recruit new shoppers with yet more indulgence. This time with a decidedly Gallic flair. It’s currently rolling out a Tarte aux Pommes variant Magnum into the impulse sector, as well as two new variants under the Magnum Kisses Mini banner - Créme Brûlée and Meringue Et Fruits Rouges. It’s clear that if own-label players are going to compete with the Magnum force and its rivals in 2013, they will have to step up the innovation.
The question is, do they feel lucky?
Focus on Ice Cream: Magnum force
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Focus on Ice Cream: Magnum force