After a tough year in 2021 due to lower delivery usage and decreased mobility, the ice cream category bounced back in 2022, experiencing significant growth of more than 12 per cent, delivered by both ice cream and icy pole singles, according to the 2022 AACS State of the Industry Report.
Parita Parekh, Category Manager of Convenience and Specialty at Peters, explains that the ice cream category is highly impulsive, with 64 per cent of consumer purchases being unplanned.
“The P&C channel plays an important role in Peters ice cream business for satisfying the needs of consumers looking to consume ice cream while out and about,” says Parekh.
“Our major brands like Maxibon, Drumstick, and Connoisseur as well as those that offer fun and novelty, such as the Milo cup, are some of our strongest ice cream brands in the channel.
“The category is highly impulsive, and seeing point of sale, the freezer or other marketing activations in store can help trigger the desire for ice cream. It’s a channel where our ice cream is often eaten immediately after purchase, so it is imbued with a sense of joy and anticipation even at the point of purchase.”
But Parekh adds it’s not all about impulse buying.
“The channel has had to evolve and shift, especially since the pandemic. We now have consumers coming into the channel to purchase tubs to take home and eat later. This segment of the category has grown from 21 per cent share of channel sales in 2019 to almost 23 per cent by the end of 2022,” says Parekh.
“A lot of this growth has been driven by shifting habits during COVID and the rise of home delivery within some P&C retailers that sees products delivered straight to people’s homes. It’s a whole new stream of convenience for this channel and taps into the treating need when staying at home, sitting on the couch and watching a movie.”
Dimi Kyriazis, Director of Sales and Marketing at South Australian ice cream company Golden North, says the P&C channel provides new opportunities for ice cream manufacturers to reach a wider audience.
“The P&C channel is frequented by a range of different consumers every day,” Kyriazis says. “It gives us the opportunity to build up the Golden North brand and tap into new audiences that we wouldn’t necessarily have access to via a supermarket.
“While we are most known for the popular Simply Indulge tub range, our current focus in the P&C channel is promoting our ‘Giant Twins’ product, which comes in a variety of flavours, from traditional vanilla to liquorice, banana, salted caramel, strawberry, and spearmint.
“While we do face some challenges in regard to the price, the product does reflect great value for money for consumers and our data shows that the Giant Twins are the highest value turn over multipack within the supermarket sector, demonstrating consumers are generally happy to pay for the quality,” says Kyriazis.
Cian Dawson, co-founder of Gym Bod, says the P&C channel aligns with Gym Bod’s key customer demographic and is therefore a key focus for the ice cream manufacturer.
“We are focusing more on the P&C channel as we grow our distribution network across Australia to target a growing sector of consumers whose focus is on convenience and day by day purchases,” says Dawson.
“As a result, we’re seeing our presence is increasing in convenience stores like Woolworths Metro across the east coast of Australia. I think it’s great when you see P&C retailers out there supporting small Australian businesses and putting brands like Gym Bod on their shelves. It’s a win for us in terms of getting our brand out there, but it’s also a win for the retailers wanting to attract health-conscious consumers with a low-calorie, indulgent ice cream option.”
Market trends
The 2022 AACS State of the Industry Report, also reported that ice cream singles returned to positive growth in 2022 for the first time since 2019. Dawson has recognised this growing consumer focus on single serve ice cream.
“We’re definitely seeing more consumers reaching for single serve, low calorie options, which is working really well for our brand which offers ‘better-for-you’, high protein and low sugar ice cream,” says Dawson.
“Our core ice-cream range is the fastest growing ‘better for you’ 475ml tub range. Our strongest performers come in a white chocolate, raspberry ripple flavour and chocolate pudding ice cream.
“On the flip side, there is also a real focus on ultra-indulgent options, which I think is a result of people trying to save money due to the rising costs of living. Consumers are choosing to eat in more, so they are spending more on luxury items as opposed to eating desserts out at a restaurant.”
Andrea Hamori Head of Marketing at Peters, says that Peters indulgence segment makes up over a third of impulse sales.
“In more recent times, we have started to see the merging of indulgence and snacking – a trend we can see playing out across many difference categories and that really exploded throughout the COVID pandemic,” says Hamori.
“During the pandemic we saw consumers beginning to take regular snacking items and transform them into super indulgent creations. At Peters we couldn’t think of a better brand than our Connoisseur brand to capture and bring this trend to life for the ice cream category.”
Current challenges
Parekh says there is still a lot of uncertainty around what comes next for the ice cream category from an economic point of view.
“The uncertainty around when interest rate rises will stop, when inflation will start to turnaround, wage growth and continued supply chain challenges, cyber-attacks, and the unrest in Ukraine continue to challenge businesses everywhere,” says Parekh.
“For Peters, our focus is on gauging what impact this will have on Australian ice cream lovers and shopper behaviour in the short and long term.”
Kyriazis adds that the availability of ingredients and transport are also key challenges facing the industry.
“Challenges still exist, especially in regard to supply chain, however they are improving,” says Kyriazis.
“The availability of dairy ingredients is always becoming more finite in Australia. As an ice cream manufacturer, you’re constantly looking at other innovations and technologies that can help you stretch your milk and cream further.
Another challenge, Kyriazis explained, is the consideration of the availability of freezer transport and freezer space.
“We recently lost Scott’s Refrigerated Logistics – a major player in transporting goods between states – so the cost of logistics has certainly increased due to that event.”
In-store selling
Point of sale (POS) is critical to drive engagement and penetration when it comes to positioning ice cream brands in store, says Parekh.
“Ice cream in P&C is highly impulsive – most shoppers do not plan to buy ice cream when they enter an outlet. Instead, the majority will buy an ice cream once they get to a freezer.
“The key to conversion is getting shoppers to the ice cream freezer, aided by emotive point of sale along their path to purchase. That’s why Peters continue 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.”
This is becoming increasingly challenging for the category, as brands compete for real estate against other food and beverage offers in these outlets.
“We believe that innovation is key in this channel to continue to drive excitement and attract consumers to the freezer. Shoppers are highly likely to trial new products in P&C with the majority of these shoppers repeat purchasing the product,” explains Parekh.
Dawson says that Gym Bod is best sold next to the most indulgent options in store.
“We want to be right next to the Ben and Jerry’s and Connoisseurs,” says Dawson. “We want people to be able to make ‘better-for-you’ choices right there in the moment rather than going to a specific health food section. We want to be right there with our major competitors.”
Kyriazis says the major drawcard for Golden North is the fact that it has been rated as Australia’s number one ice cream by Canstar Blue for an unprecedented five years in a row.
“The significant award acknowledges Golden North for having the ‘Most Satisfied Customers’ for our ice cream tubs nationally – a title we have held consecutively since 2018.
“Golden North has proudly been making ice cream from fresh milk and cream in the regional town of Laura, South Australia since 1923. Our ice cream is palm-oil free, nut free and gluten free, and we have recently launched a dairy free range which caters to a section of the community that has minimal offerings. We’re also a proud South Australian family owned and operated business so we enjoy working with other independent family businesses,” says Kyriazis.
This article was written by Lizzie Hunter for the August/September issue of Convenience and Impulse Retailing Magazine.
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