Chillin’ with ice cream

Retailers can make shoppers happy with feel-good category that’s growing again.

September 6, 2013

From the upcoming September issue of Facts, Figures & the Future.

The distinctive music of ice cream trucks, and the laughter of their patrons, will soon wind down for the season. Our youthful exuberance for one of the nation’s favorite treats will move indoors and further away from the trucks and dipping shops that motivate many summertime strolls.

Supermarkets will be front and center once more for the ice cream experience. They’ll have more opportunities to entice family traffic beyond peak season by associating the buying and eating of ice cream with the fun times of family, friends and summer, we feel at F3. Imagery of people at play, or enjoying cones and other colorful treats, or feeding kids, could help induce sales.  

So could displays of ice cream cakes (birthdays come every day), create-your-own sundae parties, branded mobile dipping counters at tween ice cream socials or neighborhood sports events (high school football games, little league fields) from spring through autumn, and cross-merchandise and coupon placements near pies, cakes and toppings. 

Looking at pure performance, ice cream isn’t a bellwether category. Promoted often to move volume, it doesn’t advance a store’s healthful food image. Yet ice cream has a knack for making people happy, it’s affordable, and it could serve as a great canvas for a store’s merchandising creativity.  

These uplifting traits helped ice cream post at least three straight years of dollar sales gains, culminating in 1.7% growth to $5.81 billion in the U.S. all outlets combined including convenience stores, during the 52 weeks ended July 6, 2013, show Nielsen data. This was achieved on a 2.3% unit sales gain in the latest 12 months.

By contrast, dollar sales grew 1.3% and 5.4% in the previous two years, despite unit sales dips of 2.6% and 3.0% in those respective periods.

In the most recent 52 weeks, branded category dollar sales were up 3.0% to $4.50 billion on a 3.9% unit sales rise, while private label sales slid 2.7% to $1.31 billion on a 2.2% unit decline, according to Nielsen.

Including all kinds of ice cream and frozen novelty retailers, Mintel says the market grew 4.1% in 2011 to $10.7 billion, and was expected to rise another 4% in 2012. Mintel says 94% of customers base their purchase decision on flavor, 83% on price, 72% seek a sale or promotion, and 68% select based on brand alone. F3 notes the importance of flavor makes sampling, such as the tiny paper cups at frozen yogurt shops, a key to stimulating sales and breaking customers out of their narrow taste choices.

Greek yogurt has found its way into the ice cream and frozen novelty case, and “could be one reason that total U.S. retail sales of frozen yogurt were up 9.7% between 2011 and 2012,” adds Mintel.

Other trends shaping the category:

  • Vending. Walmart brought in Mini Melts automated kiosks this summer to sell beaded ice cream flash frozen with liquid nitrogen.
  • Flavors. Vanilla is #1, chocolate is #2, butter pecan is #3, and coffee, Neapolitan and Rocky Road tie for #4, according to a manufacturer survey by the International Ice Cream Association.
  • Type. Premium ice cream is the top seller, 70% of respondents say.  Frozen yogurt and no-sugar-added ice cream are growing more popular, they add.
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