In the c-store pecking order, frozen grocery typically bows to the heavy-hitting profit centers of, well, most everything else. But the recent renaissance of frozen foods—including innovation with entrees, pizza, handheld options and side dishes—is propelling the frozen opportunity northward across retail channels. Can c-stores be far behind in joining the movement?
While most operators don’t cultivate frozen categories well, ice cream offers a flatter learning curve. And with new packaged rollouts from Brio, Yasso, Halo Top, Eden Creamery, Arctic Zero and others, retailers have category expansions to consider.
“With frozen novelties, c-stores need to make in-store placement convenient and really work to tap into the impulse buyer,” says Susan Viamari, vice president of thought leadership for Chicago-based IRI. “They’re not known for low prices but for providing value; knowing what their core shoppers want at a reasonable price is an absolute must.”
A Numbers Game
Ice cream is a $1.3 billion business across the total U.S. convenience channel, accounting for 1% of total c-store sales, excluding gas and lottery, according to IRI. In the category-management realm, there’s much to chew on: The category actually declined 3% in the 52 weeks ending Dec. 31, 2017 (see sidebar below for performance data), but several subcategories and packages are begging for attention, including frozen yogurt/tofu, ice milk, frozen dairy desserts and ice-pop novelties, as well as bars, cups, cones and sticks.
Because grocery typically sits on the periphery of in-store priority, retailers often defer to wholesalers or suppliers to formulate sets and, as such, flagship brands soak up the lion’s share of space.
“Our guests mainly seek an indulgent snack, and we don’t have the merchandising space or the luxury to carry additional items beyond top sellers,” says Rick Staley, merchandising manager for TriStar Services/Twice Daily Convenience Stores, Nashville. Twice Daily merchandises Blue Bunny singles and pints from 4- to 6-foot freezer cases, where SKUs such as Big Vanilla Ice Cream Sandwich, Big Bopper Ice Cream Sandwich and Bunny Tracks Cone see impressive rings.
Las Vegas-based Fabulous Freddie’s stocks a single-door freezer set with Blue Bunny single-serve treats and pints, as well as Ben & Jerry’s pints. “We’ve worked with Blue Bunny to merchandise the flow of bars, as well as procure printed sign work with pictures of product to call out exactly what consumers can expect inside the package,” says Patsy Varpula, pricebook manager for the chain, which has eight stores in Nevada and Utah.
Weather is a major factor for Josh Lund, owner of Beaudry Express, a Shell-branded retailer in Elk River, Minn. He sees ice-cream and novelty volume take a hit when the mercury plunges, so he must work harder during warmer months to compensate for the lag.
“For 2017, our ice-cream and novelty sales were static, and winter months in Minnesota don’t promote prime selling,” says Lund, who allocates two full cooler doors to standard ice-cream fare, where pints and half-gallons of top brands dominate. He also merchandises from a drop-down “bunker” cooler, where singles and boxes of frozen novelties such as ice-cream sandwiches and cups reside.
Lund relies on the “tried and true” brands, with Ben & Jerry’s (Half Baked in particular), Good Humor/Klondike, Snickers ice-cream bars and Magnum as leading velocity drivers. He allocates space to one emerging homegrown Minneapolis brand: JonnyPops, a healthy frozen-yogurt pop that garnered a reputation in club and grocery stores before migrating to c-stores, Lund says.
Go Where the Growth Is
Likely to shape the ice-cream and frozen-novelty market is the integration of more natural ingredients and simpler formulations, even as suppliers seek to keep products indulgent, according to Mintel’s U.S. Ice Cream report. Chicago-based Mintel’s research suggests striking this balance: Twenty-seven percent of consumers are motived to make a purchase if a product “seems indulgent,” while 25% seek natural ingredients.
The report also shows consumers want seasonal and coffee/tea-inspired flavors. Flavor is the No. 1 factor taken into account when selecting ice cream. “While pre-existing favorite flavors may drive choice, offering new seasonal tastes and innovative flavors can also attract customers,” the report says.
Also noteworthy to consumers are nutritious, probiotic, protein and vitamin-enriched offerings, as well as bite-sized confectionery-inspired treats, according to Mintel’s data. Small portions are expanding as customers make healthier choices but don’t want to compromise on indulgence.
Viamari of IRI sees “handheld bars, sticks, cones, better-for-you [varieties], vanilla and fruit-flavored, Dutch chocolate and vanilla combos” all stepping up big time in 2018. “Gelatos have momentum, particularly among millennials seeking unique/worldly treats, while in the better-for-you segment salted caramel pretzel and mint chocolate chip have seen strength,” she says.
“Consumers are looking for experiences—flavor, texture, excitement—but they don’t necessarily want to sacrifice wellness goals,” she continues. “There is always a time for indulgence, and many of these new innovations allow a combination of indulgence with wellness. Have a treat, but you don’t have to blow your daily calorie goals out of the water.”
C-store sales, according to IRI; 52 weeks ending Dec. 31, 2017
- Ice cream/sherbet dollar sales fell 2.7% to $528.0 million, and unit sales fell 4.6% to 118.0 million.
- Private-label dollar sales are down 1.4% and units are down 3.8%.
- Frozen yogurt/tofu, at $2.6 million in sales, saw units increase 26.0%.
- Ice milk/frozen dairy desserts, at $10.8 million in sales, saw units decline 0.7%.
C-store sales, according to IRI; 52 weeks ending Dec. 31, 2017
- Frozen-novelty dollar sales fell 2.6% to $773.2 million, while units were down 4.1%.
- Among the top 10 frozen novelties, Nestle Drumstick (Nestle Dreyer’s) saw dollar sales drop 6.7% to $54.2 million and unit sales fall 9.2% to 18.9 million.
- Dollar sales for Klondike decreased 6.1%, and unit sales were down 8.8%.
- The subcategory of frozen ice cream/ice milk dessert saw units increase 6.4%.
- The subcategory of ice-pop novelties, at $1.1 million, saw units grow 9.4%.