Ice cream remains a highly profitable category in the petrol and convenience channel (P&C).
According to Theo Foukkare, CEO of the Australian Association of Convenience Stores (AACS), the ice cream category backed up a strong performance in 2019 growing 5.6 per cent and adding more than $17 million of value over the last two years*.
Harry Hayward, Assistant Category Manager – Ice Cream, Unilever, says shifts in consumer behaviour during the pandemic have led to new shopper missions emerging within the convenience store channel, as well as the ice cream category within P&C.
“If we have learnt anything from COVID -19, it is that consumers are living more flexible lives resulting in the merging of once strict occasions such as working, leisure and consumption. Consequently, consumers are driven even more by convenience and fulfilling their ‘need state’.
“The ‘needs for today’ mission is the most prolific shopper mission for ice cream and as such consumers are favouring quicker shopping trips in nearby convenience channels to instantly satisfy their hunger or craving.”
According to Foukkare, the increase in ice cream spend was driven by single serve, which increased 32 per cent to $10. Take home ice cream share increased from five per cent in 2019 to eight per cent in 2020, while the snacking mission being the main mission for ice cream shoppers increased six points to 40 per cent in 2020*.
According to Hayward, many other customer trends have emerged and have been accelerated due to changes in the macro environment over the last 12 months.
“Firstly, we have seen ‘fluid living’ become a major trend where homes get upgraded to fluid hubs for work, rest, and play. Secondly, as we experience a K Shaped recovery coming out of COVID -19, we are seeing diverging consumer behaviour between trading up and trading down with their purchasing.
“We have also seen considerate consumption take priority when it comes to consumers buying less but buying better. Lastly, consumers are now prioritising mindfulness and self-care as they look to move to a new way of living through the emerging expectation of permissible treats.”
Market opportunities and challenges
Romalie Cascini, Category Manager, Peters, says the company has also witnessed new consumer trends, including accelerated growth in the digital space.
“Driven by the physical separation caused by the pandemic, this has steered consumers towards digital experiences, gaming and increasing usage of delivery and online platforms.”
Cascini says there is increased local and domestic travel; motivated by a heightened sense of giving back, supporting local and Australian made products.
“The events of last year forced people to explore their own local surroundings which also created a real sense of belonging and community spirit.”
Consumers are also seeking more depth and meaning in their consumption choices.
“There’s been a major movement towards plant-based and better for you, better for the environment solutions, products that are ethically sourced.”
The major opportunity to shift the dial for the P&C market moving forward is to increase the ice cream penetration rate.
“Currently, ice cream in P&C has about a seven per cent penetration rate in comparison to grocery where the penetration rate exceeds 93 per cent,” explains Hayward.
“The keys to capturing this opportunity depend on the proper and effective execution of availability, visibility, and ranging.”
Another opportunity is the shift in shopper snacking tendencies through the uptake in take home ice cream through delivery services.
“The online food delivery platforms industry has grown 81.1 per cent between 2015 and 2020 and is expected to grow +12.1 per cent 2020-21. Therefore, we see this is a major opportunity for the P&C market to capture moving forward.”
According to Hayward, one of the challenges for the P&C market is the decline in foot traffic in-store due to the decrease in fuel consumption (14 per cent decline in 2020 or 3.5bn litres).
“It is expected this decrease in fuel consumption will continue due to the increase in the prevalence of fuel-efficient cars as well as the evolution of electric cars. However, this can be seen as both a challenge and an opportunity for the channel as it will increase the competitive landscape of those who install charging stations but also create a food consumption opportunity while the consumer is waiting for their car to charge.
“The retailers that will benefit from this increase in dwelling time in-store will be the ones that can increase the shopper’s basket size. We see this as an opportunity moving forward for ice cream and other snacking categories through bundling deals.”
Innovation and category growth
Innovation is integral to the growth of the category.
“The P&C channel is a growth engine for Peters and we have shown our commitment to supporting the channel and our retail partners through tailored strategies that meet the needs of our retailers as well as fulfilling our loyalist base that shop our category,” says Cascini
She says Peters has been focussed on creating a core offering coupled with a solid innovation platform designed to encourage shoppers to keep coming back.
“The core offering represents 76 per cent of total category sales. Peters has three of the top five brands in the category and pleasingly, these brands are delivering both value and unit growth in the latest YTD read.
“Interestingly, the category has experienced increase in average price over the last two years, as price continues to creep in the category, the category will be dependent on genuine consumption growth,” says Cascini.
Hayward says Unilever has consistently seen its iconic Golden Gaytime Original be the number one impulse product in Australian convenience, with the latest quarter no different.
“We are also really excited to see it is growing at over 23 per cent in this same period.”
According to the company, the Magnum brand is the number one impulse brand in Australian convenience with the Classic, Almond and Double Caramel Ego being the top three indulgent products in the market.
“Further, due to the highly seasonal nature of the ice cream market, we see the refreshment segment within ice cream greatly over index in summer where our Calippo Raspberry Pineapple is the number one product and growing by over 40 per cent.
“In saying this, through Ben & Jerry’s, the number one take home brand, we are trying to de-seasonalise the ice cream market by driving sales in the winter months largely driven through our popular Half Baked, Choc Fudge Brownie and Choc Chip Cookie Dough products.”
New flavours and formats
Cascini says shoppers are constantly seeking ‘new news’ and are excited by genuine format and flavour innovation.
“We have some exciting NPD coming to freezers that will tap into the strength of confectionery as well as leveraging the strength of pop culture.”
Unilever also has an exciting line up of new products hitting the market in 2021.
“Ice cream is currently experiencing great growth in the P&C channel, growing over eight per cent year to date and we expect this to continue. It is due to this growth, driven by changing consumer behaviours, that we consider the channel to be strategically important,” explains Hayward.
Building on from the recent success of its Golden Gaytime collaborations, Unilever will be releasing Golden Gaytime Kellogg’s Crunchy Nut.
In addition, the company will be tapping into Aussie’s pent up travel desire by inviting them on a taste bud adventure through its new Magnum Las Vegas Caramel Choc Cookie. This will be a P&C exclusive product with an “exciting consumer prize promotion to go with it”.
Unilever will also be delivering exclusively to market a Cornetto Dragon which will deliver a “multi-sensorial snacking experience through its highly differentiated flavours, textures and aesthetic”.
Last but not least, two Disney products will also be released this summer with its Paddle Pop Spiderman in a soft ice texture design as well as a Calippo Star Wars in an exciting lightsaber format.
When it comes to the placement of ice cream products in stores, Cascini says point of sale is crucial.
“Point of sale is used as a vehicle to engage with shoppers and a means of driving shoppers to the freezer. Once the shopper gets to the freezer, conversion is high, with ice cream being purchased more than 66 per cent of that time.
“Therefore, the key to conversion is getting shoppers to the ice cream freezer, and Peters continues to invest in a broad suite of POS and off location freezer solutions that help engage the consumer in-store across the entire path to purchase.”
For Unilever, it is critical that the company work in collaboration with retailers to ensure they have availability, visibility, and the most efficient freezer ranging in order to cater to the P&C shopper.
“It is vital for retailers to have available stock and space allocated for their core products as core accounts for around 80 per cent of ice cream sales in P&C. Consequently, retailers must ensure core products are ranged, double faced, and have high stock weight under basket.
“Further, it is also critical for retailers to drive disruption at store level through effective POS to bring people to the freezer and target the ‘need state’ of the shopper. This can be further maximised by ensuring the freezer is in the impulse zone to capture the attention of the shopper.”
*Source: 2020 AACS State of the Industry Report
This article was written by Claire Hibbit and originally appeared in the August/September issue of Convenience & Impulse Retailing magazine.