Australian Convenience Store News & C-Store Exhibitions

You scream, they scream, we all scream for a product that can be a real winner in C-stores when the hot weather hits. Or does it have wider appeal? ASS&CSN takes a look at the ice cream market.

The dictionary defines ice-cream as a sweet, creamy frozen food that is usually flavoured. What it doesn't say is just how complex this simple pleasure has become.

The Australian ice-cream market is a multitude of divisions. There is the segmentation into indulgence, snacking, refreshment or fun - and all are hotly contested. Then there's another type of style division - the packaged impulse buy (individual), the take-home pack (both in multi-packs and tubs) and the food service offering (scoop or soft-serve).

They all have a role to play in the convenience market - the trick is getting the mix right. The good news for C-store operators is that the industry itself is keen to help. Expect some major promotions as the warmer weather approaches to kick-start sales for the new season.

"Route is very important to the ice-cream industry," says Steve Bullock, national account manager - petrol and convenience, for Streets Ice Cream. "It's where the greatest number of our customers are, and that's the basis of our business.

"That being said, we believe the ice-cream market has actually been stagnant for several years. The impulse market is showing no growth at all so we're pushing our well-known brands with some major media campaigns as well as developing and launching new products."

His thoughts are echoed by Dr Nigel Thomas, director of marketing and technology for PB Foods, which makes the Cadbury Ice Cream range. Dr Thomas sees a marked change in the movement of different products and he knows why.

"Although there is an increase in overall icecream sales through petrol and convenience stores, the packaged impulse (individual) products are declining. That has to be balanced against the fact that there is a definite growth in take-home and there are many reasons for that.

"Consider the fact that some of the major consumers are children between the age of six and 16 and they're spending less time 'roaming' the streets buying ice-cream and more time at home. They're playing computer games or on the internet rather than walking the dog or playing sport. So there are fewer trips out for individual icecreams and higher sales of family packs or multi-packs.

"One way for the convenience stores to capitalise on this trend is to stock a limited range of take-home ice creams, especially super-premium such as Connoisseur or Cadbury, the video night's best friend," Dr Thomas says.

Julie Weis, joint managing director of Weis Frozen Foods, has a slightly different tale to tell. She readily admits that her company's fruit bars are very small players in the market but says she can only be pleased with the latest figures.

"Because we're part of the refreshment market, we're very seasonal. We're very much about holidays and hot weather and we've had a fabulous year. Our sales in route are up about 15 per cent on the previous year. The hot summer has helped, but we've improved our distribution and we've also had a new advertising campaign and that has obviously made a big difference."

That being said, Weis is not prepared to rest on its laurels. Like its larger rivals, the 43-year-old Australian company realises that constant innovation - and new products - are a vital part of maintaining if not building the business, so it has a new product coming for the summer.

It's interesting to realise that no matter what the sales figures show, Australians are still some of the biggest ice-cream consumers in the world. We are second to our American cousins who devour 24-litres each per year whereas Aussies and New Zealanders are tucking into about 18-litres each per year. Compare that to the UK with a consumption rate of around seven or eight litres per person per year, and the Chinese, who are eating less than one litre each per year.

So when does ice-cream work? According to Steve Bullock, Streets' products are divided into indulgence (Magnum), snacking (Cornetto, Gaytime), refreshment (Calippo) and fun and value (Paddlepop) and their appeal ranges according to age and season.

"The trend in summer is obviously more to the refreshment end of the category while in winter it's more to the indulgence or chocolate end of the category. The younger ice-cream lovers - children and teenagers - are not so choosy. They'll eat their choice all year round, and our cup products (Calippo Frost, Paddlepop Thickshake etc) are also more year-round."

The fact that ice-cream now has wider appeal means we also see new products arriving year-round. Nestle Peters is one company which spreads its product arrivals across a 12-month span, and according to Marketing Manager, Peter Meek, it's a very successful strategy.

"It is still seasonal but it's true to say that some states are more seasonal than others. We launched three new products over winter and they've all enjoyed good growth because consumers are looking for innovation all year round. I guess you could say we're doing all we can as a manufacturer to reduce the seasonal nature of the market."

However, Nestle Peters has not finished work for the year. For the summer the company will add new varieties to its Drumstick and Heaven indulgence ranges, along with a new Frosty Fruits and a new Life Savers layered water ice for the refreshment category. Maxibon and Billabong are also receiving product enhancements.

Whatever the season, ice-cream is a good product to sell and sell well. Not only are the margins good, but because it's an impulse product, it is an additional sale that adds to the bottom line. The question is, how do you make ice-cream do the business for your outlet?

Streets' Steve Bullock says his company has a tried and proven method to drive sales and profits.

"Our Streets Sales Multiplier is a 10-point plan which covers stocking the best seller, outside pointers, location and presentation of the freezer, stock weight and so forth. We've been using this system for the last two years and we're finding it very successful."

Mr Bullock suggests operators keep a close watch on the products they're selling to work out what works best in your own area. Perfect presentation and full baskets are vital, as is talking to your distributor to keep on top of any promotions such as the ice-cream/drink combo deals Streets is looking to this summer.

"We're currently running our biggest annual consumer promotion Paddle Pop 'Lick-a-Prize', which has been in operation for the last 20 years. This coincides with the launch of the latest variant, Choc Rock Honeycomb. For the upcoming summer season, look out for innovations in both the Magnum and Calippo ranges backed by media support."

Mr Bullock says Streets' new Blue Ribbon Mini Hearts and Magnum Minis, which have been specially designed as smaller portions for in-home consumption, are already working well in the grocery channel.

PB Foods' Dr Thomas believes that one of the reasons for declining sales is the trend to single-unit freezers stocking a variety of different manufacturers' products, rather than each manufacturer having their own branded freezer. The real problem, he says, is that the point-of-sale material hasn't kept up with the changeover, and that is one area that a smart operator could look at.

"Seventy per cent of buying decisions are made at the point of purchase so people go into a convenience store knowing they want something but not having made up their mind. Ice-cream is competing with soft drinks and confectionery and snack foods now, rather than Cadbury versus Streets versus Nestle, and a lot of those other items have more prominent point-of-sale.

"So if it's going to work, then it has to be well-merchandised so consumers know it's there and have a clear view of the product and that it is another option as a snack."

Dr Thomas says the first step is making the point-of-sale is prominent and has 'equal billing' with other snack foods' PoS material. He also advises working actively with your supplier in any promotional programs that are on offer.

"It's obvious to suggest you position your fridge in the best position you can in the store, so people can see it, and always stock a broad range of well-known products. Our point would be that Cadbury is the second best-known brand to Coca-Cola and translates well into ice-cream. Power brands such as Flake, Picnic, Cherry Ripe, Crunchie and TimeOut are very different ice-creams to others on offer and so should be considered as part of the mix."

"You have to range the products across the segments," says Nestle Peter's Peter Meek.

"We see three key segments. There's the indulgence, which is mainly chocolate-coated and cones, refreshment which is water-ice based products, and everyday treats which are simple products. You have to stock products across all those segments if your freezer is going to work for you.

"You have to keep a well stocked and well maintained freezer - and plenty of point of sale material to point to it. If there's any gaps in the stock, because it's an impulse purchase, it is simply a lost sale. Make sure you always have plenty of stock on hand, and particularly the faster selling items, whatever is popular at that moment. Always give the quickest turnover lines the most space," Mr Meek says.

Aside from stock range and levels, carefully planning just where you will place the freezer could be the most important decision of all.

"All stores have planned purchase categories such as bread and newspapers and you can actually drive people through your store to get these items. This purchase corridor is a real opportunity to drive additional impulse sales. As they go to get the bread or the paper, they see ice-cream or confectionery and they pick them up.

"In the ice-cream manufacturer's ideal world, the freezer would be sitting slap-bang between whatever the planned purchase items are for that store, or pretty close by," Nestle Peter's Mr Meek suggests with a laugh.

Julie Weis is another expert advocating a careful mix of products as the best way of maximising sales - and getting the right advice on how to do that.

"We have a range of five different flavours and our reps know which products sell best in certain areas. Certain fruits are more popular in some states rather than others, so our reps will make recommendations on that basis to individual retailers.

"I think it's important to use the information your supplier can provide you with. Most companies spend a lot of money on research so draw on that, and watch what's walking out the door of your store.

"While there are a lot of new players out there with exciting new products, it's important to remember that a product like ours which has been around for 43 years has succeeded for a reason. So make sure you take careful note of what you're stocking, and when you're stocking it and weight your freezer accordingly," Ms Weis says.

"Our product is very much about refreshment and you see huge spikes in refreshment item sales in the hot weather. If you don't take notice of that, and match your freezer selection accordingly, then you'll just be throwing away potential sales. If they look and don't find, that sale doesn't come round again."