Ice cream sector reduces reliance on seasonal sales

Few will look back on last summer with fond memories except, perhaps, the ducks. But it was particularly miserable for ice cream manufacturers who have historically relied on long, hot summer days to drive sales.

Despite early promise following a sunny spell in April, the weather began to steadily decline, leading to severe flooding across a large part of the south Midlands in June and July. Indeed, Unilever, which makes several of the sector’s leading brands, had a storage unit and factory put out of action for several weeks as a result of the floods.

There is no doubt that sales were affected by the adverse weather but the exact losses vary. According to IRI, the overall value of the market is £750m and it declined by 4.5% last year, while Mintel says the market is now worth more than £1.25bn and dropped in value by 6.6% in 2007.

While it would be difficult to argue that the market is not affected by bad weather, there is growing confidence that customer insight and new product development is reducing the sector’s reliance on seasonal sales.

Unilever, which is poised to appoint Lowe to handle the £150m global advertising account for its Walls ice cream brand (MW last week), is optimistic about ice cream as a category.

Anuj Lal, the business director for ice cream at Unilever, describes the past year as “a rollercoaster”. He adds: “The lack of sun does impact on out-of-home sales because people are not out as much but in-home sales are more about desserts or a treat in front of the TV. In that sector, it doesn’t matter about the weather.”

He points to last year’s launch of Magnum Ecuador Dark, which builds on the growing consumer demand for dark chocolate products while introducing the concept of provenance to the ice cream sector. According to IRI data, the premium product has achieved £75m of retail sales since its launch early last year.

While the indulgent end of the market has continued to grow despite the weather, at the other end of the spectrum, healthier products are also popular with consumers.

Charlotte Hambling, brand marketing manager at R&R Ice Cream, which owns number one low-fat ice cream brand Skinny Cow, says: “There is growth in the healthier products market because it suits a consumer need, it is less seasonal. It is an option for a dessert.”

Smoothie lollies
Unilever has launched Frusi, a frozen yogurt, fruit and muesli product, into the healthy market. Lal says that it has been developed from a belief that consumers want products that offer them pleasure and goodness at the same time. Brands including Glaxo SmithKline-owned Ribena are also moving into this market with the launch of smoothie lollies, which are fat free and contain just 70 calories.

Industry observers say that it is the more traditional segments of the market, including ice lollies and staple ice cream tubs such as soft scoop, that are under the most pressure from own-label brands and concerns over health.

Biggest hit
Hambling agrees that ice lollies “took the biggest hit” last year, seeing a 15% decline in value sales, and also continue to be affected by promotions in the major retailers.

Ice cream makers are increasingly focusing their new products and advertising investment across the year rather than just on the summer, although a burst of hot weather will always boost sales. However, as Lal points out, it is important for brands to work closely with retailers to develop strategies for pushing winter sales in order to smooth sales across the year.

Latest from Marketing Week

NOT REGISTERED? IT'S FREE, QUICK AND EASY!

Access Marketing Week’s wealth of insight, analysis and opinion that will help you do your job better.

Register and receive the best content from the only UK title 100% dedicated to serving marketers' needs.

We’ll ask you just a few questions about what you do and where you work. The more we know about our visitors, the better and more relevant content we can provide for them. And, yes, knowing our audience better helps us find commercial partners too. Don't worry, we won't share your information with other parties, unless you give us permission to do so.

Register now

THE BEST CONTENT

Our award winning editorial team (PPA Digital Brand of the Year) ask the big questions about the biggest issues on everything from strategy through to execution to help you navigate the fast moving modern marketing landscape.

THE BIGGEST ISSUES

From the opportunities and challenges of emerging technology to the need for greater effectiveness, from the challenge of measurement to building a marketing team fit for the future, we are your guide.

PERSONAL AND PROFESSIONAL DEVELOPMENT

Information, inspiration and advice from the marketing world and beyond that will help you develop as a marketer and as a leader.

Having problems?

Contact us on +44 (0)20 7292 3703 or email customerservices@marketingweek.com

If you are looking for our Jobs site, please click here