Haagen-dazs Hopes To Scoop Bay Area Market

Haagen-Dazs ice cream can be found just about anywhere in the Bay Area, from small corner markets in inner cities to giant grocery stores in outlying suburbs.

But the company behind the ubiquitous, super-premium ice cream is convinced there's room to grow in the Bay Area, a market company executives see as ideal for expansion, and plan to double the number of shops here, from the 11 now in the region to as many as 25.

"We think the market could hold a total of 25 stores," said Dan Ogiba, director of franchise development for Minneapolis-based Haagen-Dazs Ice Cream Shoppe, which currently has 255 ice cream shops nationwide. "Haagen-Dazs is very well known in the Bay Area. Consumers here seem to be pretty discerning as far as wanting quality and have high expectations for food products." The expansion is slated to start with the opening of new locations in Walnut Creek, San Francisco and Marin County sometime next year once leasing deals are finalized, according to Ogiba.

The Haagen-Dazs name may sound exotic but the product is definitely local, even though the company's roots trace back to New York City.

Part of Dreyer's Today, the Haagen-Dazs ice cream company is part of Oakland-based Dreyer's Grand Ice Cream, which itself in 2006 became a subsidiary of food giant Nestle. Dreyer's � the nation's largest ice cream maker � holds both the ice-cream shop franchise rights and the license to manufacture and market Haagen-Dazs ice cream in the United States and Canada. (General Mills holds the rights to the Haagen-Dazs brand and the rights to sell it in more than 50 other countries.) Whether it ends up in a store freezer or an ice cream shop, Haagen-Dazs is made at a Dreyer's plant in Tulare in Southern California. Haagen-Dazs declined to provide sales figures for its U.S ice cream sales, calling the information proprietary.

Gourmet ice cream under the Haagen-Dazs name was first sold in 1960 in New York. In 1976, the first Haagen-Dazs ice cream shop opened in Brooklyn.

The Bay Area should be a good market for the planned expansion, said Howard Waxman, editor and publisher of the Ice Cream Reporter.

"It's a very sophisticated, urbane kind of place. That's very good for them," he said.

"Ice cream has generally been recession proof. ... The thing about the upscale products, the Haagen-Dazs and Ben & Jerry's and brands like that, is that they have done pretty well (during good and bad economic times). When you can't go out and buy a new car, or a real expensive piece of clothing or take that vacation ... you can still go out and pluck down an extra buck and get the best ice cream," he said.

And because Haagen-Dazs ice cream shops also offer frozen yogurt, adding more locations here also helps the company fend off the growing popularity of that popular offering, he said.

Still, super-premium ice cream makes up a small part of all ice cream sales nationwide.

Super-premium market Waxman estimates that the super-premium frozen desserts industry, which includes frozen yogurt in addition to ice cream, sherbets, sorbet and water ice products, accounts for less than 15 percent of the entire $25 billion frozen desserts industry in the United States.

Jessica Zhang of Union City contributed to the super-premium ice cream economy when she walked out of the Haagen-Dazs shop at the Westfield San Francisco Centre on Market Street with a cone of coffee ice cream.

"I just like the ice cream," said Zhang as to what prompted her to spend $3.25 for the treat.

"If you go into a Haagen-Dazs shop, you are getting the best commercial ice cream in America. It's super premium, it's the top of the heap," said Waxman.

A softening commercial real estate market has helped the company's expansion plans.

"Any franchise group that has the capital to expand right now is going to absolutely benefit from the deals on lease rates in the Bay Area," said Steve Cutter, president and principal broker at Lockehouse Retail Group, which has offices in Burlingame and Walnut Creek. "Those who have capital to expand right now are going to be able to take advantage of lease rates that are 20 to 30 percent lower than two years ago," he said.

Also, at times of high unemployment, people who have been out of work are more likely to consider starting a franchise, Waxman said.

"It's not necessarily because of the recession. Even in good times, when people retire, a lot of retirees look for a franchise and one of the most appealing is an ice cream franchise. It's happy-making. It's focused. It's not like a restaurant where you have to have 65 different kinds of goods," Waxman said.

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