Something For Everyone

Frozen novelty manufacturers have built their empires on consumers' proclivity for impulsive indulgence. They have taken advantage of that inclination by strategically placing ice cream sandwiches, fruit-flavored pops and other tasty treats in supermarkets, video stores, near convenience store check-outs and in refreshment stands at popular events such as baseball games and concerts. Recognizing that one size�or flavor�definitely does not fit all when it comes to frozen treats, novelty manufacturers have always been careful to produce an array of choices. By offering low-fat, kid-friendly ice pops to thick, rich chocolaty-nutty affairs and everything in between, manufacturers have set out to ensure that no one leaves the freezer case, proclaiming, "Nothing looks good to me." For the most part, they seemed to have achieved that goal. During the 52-week period ending January 27, 2002, frozen novelty sales rose 7.8 percent in dollars, although unit sales were up only 2.4 percent, according to data from Chicago-based Information Resources Inc. (IRI). Just as there's an assortment of novelties, there's also an assortment of explanations for the disparity between dollar and unit sales growth.

"With butter fat costs up last year, general market pricing increased significantly," says Rachel Kyllo, vice president of marketing for Minneapolis-based Marigold Foods. "Therefore, some of it is due to raw ingredient costs, but there is also certainly a trend toward premium quality novelties." However, some processors argue that volatility in butter fat pricing doesn't impact the novelty category all that much and, therefore, cannot take the lion's share of the blame for the less-than-spectacular increase in unit sales experienced over the past year.

"The higher raw material costs can be absorbed more in the frozen novelties because many of these products don't use the large amounts of milk and cream," says Carl Breed, director of marketing, Blue Bell Creameries, Brenham, Texas. "In many instances, these products don't even have any raw dairy ingredients." Although Kyllo expresses hope that business will bounce back this summer, she admits that things have been "a little big sluggish" in the upper Midwest, where Marigold sells its Kemps brand novelties. She believes that processors and retailers have cut back on promotional activity due to the increased raw ingredient costs.

That could very well be just a regional trend, as Claudio Garcia, director of marketing for the grocery novelty business at the San Ramon, Calif.-based Nestle' Ice Cream Co., reports seeing a great deal of consumer and trade merchandising activity. He brands the novelty category as "very competitive and dynamic" and last year's growth as "pretty robust from a dollar standpoint." CATCHING CONSUMERS Despite their differences of opinion in other areas, Kyllo and Garcia are in complete agreement over the importance of innovation in driving the category forward. Although certain evergreen products continue to sell season-after-season, the fact is that consumers visit the freezer case expecting to find new and exciting frozen novelties to tempt their taste buds each year when summer rolls around.

"It's absolutely critical to the category," says Kyllo. "With the exception of the mainstay items�multi-pack water-ice, sandwiches, bars�it's all about what's new and different and what catches the consumer's eye at retail." In recent months, Marigold has rolled out several new items in an attempt to catch consumers' eyes. Last fall, three novelties hit freezer cases�Kemps Fun Fruit & Juice Bars, a fruit juice-based bar; Kemps Scooter Rockets, a water ice core with a flavored and colored gel core; and Kemps Scooter Fudge Pops, a 14-pack of fudge bars with a thick fudge core on the inside. In spite of all their time and effort spent developing exciting new novelties, for a regional brad like Kemps, competition seems to come from all directions these days. "There's a lot of activity on the part of the national branded novelty companies and on the part of the major supermarket chains in terms of upgrading their private label product lines," says Kyllo. "That just makes it a really competitive business for the regional branded novelty companies." Regional brands haven't cornered the market on challenges, however. Although they may be sitting on top of the novelties heap, even the big players have their fair share of challenges, particularly in the R&D area. "Our challenge as a premium, national branded manufacturer is to make sure that we are putting out high-quality and consumer-relevant items and not falling into a trap of putting out new line extensions for the sake of simply having news at shelf," says Garcia. That being said, several line extensions are at the top of the Nestle''s list as new products make their way to grocery freezer cases for the summer of '02. The Flintstones Push-Up line will welcome the new Bamm-Bamm Sherbet Sundae in three flavors�Vanilla, Chocolate and Caramel. Meanwhile, the legendary Drumstick brand is being bolstered with the addition of Classic!, a line of flat-top cones, which "leverage classic American recipes." The initial rollout includes three-varieties�S'Mores, Fudge Sundae and Strawberry Cheesecake. "Our research showed very high purchase intent scores for these items," reports, Garcia. "There is nothing like that in the cone category, so they are good examples of quality innovation." FEELING FRUITY Although he believes that the trend towards indulgent, full-fat products will remain strong, Garcia also sees a great deal of demand for products at the other end of the spectrum, that being healthier, low-fat novelties. Furthermore, he believes Nestle' is a good position to capitalize on that demand, thanks to its Haagen-Dazs yogurt bars and Dole Fruit & Juice Bars. Just recently, in fact, Nestle' added a new variety to its Dole line�Pineapple and Orange Twist�which Garcia claims will be the only blended fruit bar on the market featuring real fruit pieces and all-natural juice. "We are betting on a resurgence in the area of better-for-you and wholesome sort of fruit products, which got soft on us over the course of the past couple of years," he says. Not surprising, Happy & Healthy Products Inc., Boca Raton, Fla., is also betting on strong demand for low-fat alternatives to indulgent frozen novelties. That's not to say they expect consumers to abandon the indulgent segment altogether, but rather they are confident there is room for products along every stage of the spectrum. "They are leaning towards premium, they are leaning towards quality, but they are also leaning towards healthier products," reports Linda Kamm, president and chief executive officer. "Don't get me wrong. They love the fattening things all the way, but there's a strong market category of people who go out of their way to see the sugar content and things like that." Kamm's company focuses on fruit-based novelties that deliver real fruit to health- and weight-conscious consumers, primarily women. Its staple product line, Fruitfull�, consists of 17 different 100 percent natural frozen fruit bars that contain little or no fat and no additives. What's more, Kamm claims Fruitfull� is the only fruit bar she knows of that does not contain sucrose, only fructose, which is the naturally occurring sugar in fruit. What's more, the product is both Orthodox Kosher and Halal (Muslim) approved, making it feasible for those with religiously restricted diets to enjoy them. Because Fruitfull� delights in such a strong ethnic following, Kamm says the company has plans to add two new flavors�Guava and Tamarind�within the next couple of months. For those consumers who prefer just a little big of indulgence in their novelties, Happy & Healthy has introduced Happy Indulgence� bars, which boast two-thirds less fat than premium ice cream bars. The line currently consists of four flavors�Key Lime Pie, Peach Cobbler, Cappuccino Biscotti and Berry Cobbler. In addition, consumers who can afford to gobble up 15 to 25 fat grams in a frozen treat may want to reach for Happy Indulgence� Decadent Dips�, a line of fresh fruit blended in cream and dipped in chocolate. Six flavors are currently available�Banana Split, Mud Pie, Banana Cream, Coconut Cream, Strawberry Cream and Cherry Cream. The individually boxed bars are geared towards upscale consumers and priced at $1.50 to $2.25 each. For the first time since its inception in 1991, Happy & Healthy recently entered the grocery store market with a four-pack of Fruitfull� bars in its top selling flavors: Strawberry Juice, Coconut Cream, Banana Cream and Strawberry Cream. The introduction came as a direct result of consumer requests for a means of buying the bars in bulk, which previously had only been sold in single-packs in hospital cafeterias, colleges, military bases, gyms, museums, zoos, health food stores and the like.

While Happy & Healthy has long enjoyed success in so-called alternate channels and has just recently begun moving into traditional grocery stores, the majority of frozen novelty manufacturers have been doing exactly the opposite. Garcia reports "very healthy growth" for Nestle' in convenience stores, gas mini marts, stadium events and amusement theme parks. A spokesperson for Green Bay, Wis.-based Good Humor-Breyers reports demand for more expensive, super-size novelties in the convenience store arena. This spring, the company is rolling out several new products specifically for the away-from-home arena. They include Klondike Giant Cookie Sandwich with Hershey's Chocolate Chips, Klondike Caramel & Peanut Ice Cream Bar with Planters Peanuts, and Good Humor Strawberry Shortcake Cone.

Meanwhile, Blue Bell continues to reap the rewards of its focus on the impulse market, which has also included the development of products specifically designed to please hungry, on-the-go consumers. Perhaps the most infamous example has been the Country Cookie, an enormous 5.75-ounce cookie sandwich.

"Convenience stores have always been a good part of the business and a part of the business that we are trying to nurture," says Breed. "It's not as big, of course, as the supermarket sales, but it's nice added volume."

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