Dairy products like ice cream and milk can prove productive parts of the c-store sales mix in the months to come provided retailers and suppliers are open to aggressive merchandising, flexible pricing and flavor innovation.
According to Mary Chapman, senior director of product innovation for Chicago-based research and consulting firm Technomic Inc., 73% of consumers said they buy ice cream as a snack at least occasionally, or at least once every 90 days. “Most of those snack options are most often consumed mid-evening and at retail,” she said. Interestingly, 47% said they buy frozen novelties for snacks.
Curt Rolland, director of retail operations for Golden Gate Petroleum in Martinez, Calif., which operates 25 convenience stores, said that in his stores ice cream novelties sell better than gallon or half-gallon containers.
To reinvigorate sales of large packages, Golden Gate has started running two-fer specials on gallons for the first time. “One thing we’ve found that helps is that we have lowered the gallon price and raised the half-gallon price 60 cents to compensate for it,” he said. Gallon containers of ice cream are priced at $3.99, half-gallons at $2.79. “It has not cut into our half-gallon sales, and has definitely helped our gallon sales. It worked,” Rolland added.
FLAVORFUL CHANGES
New ice cream flavors always stimulate trial. New products that are striking a chord at some convenience stores include Lemon Bliss (Blue Bell Creameries); Fireside S’mores and White Chocolate Raspberry Yum (Tillamook); Avocado, Coconut, Lychee and Thai Tea (Magnolia); and Muddy Boots, Appalachian Trail and Mount Katahdin Crunch (Gifford’s).
Fluid white milk sales continue to decline despite efforts to promote its protein content. Golden Gates’ sales, Rolland said, have been flat at best. “It doesn’t seem to be as big a part of my sales as it has been in previous years.”
“There have been some new (dairy) items and brands, but growth has been slow,” said David Crawford, vice president of operations for Green Valley Grocery in Las Vegas, which operates 55 convenience stores. “We are expanding f’real in some of our locations.”
For Robert Morgan, a 40-year industry veteran and president of C-Store Consulting Inc. in Port Orange, Fla., the key to strong dairy sales in 2015 will hinge on merchandising.
“Most of the time it gets tucked away in the cooler,” Morgan said. “The operator doesn’t do a whole lot of product placement. They don’t do banners, they don’t do signs; very rarely will you see that. It’s the same thing with their ice cream category. Most of it is stuck in a freezer along a side wall, or in their walk-in. It’s there because they’ve got to have it, but you don’t see them doing too much with it.”
The challenge, Morgan continued, is that dairy products, including ice cream, are low-margin items.
“It’s hard to justify moving them into a better spot when you can move stuff there that you can be making twice as much money on,” Morgan said. “So if they really want to promote that stuff they’ve got to something to really draw attention to it.”
Opportunities to do that exist. For instance, retail sales of dairy alternatives made from soy, almonds, rice and coconut milk in the U.S. should top $1.7 billion by 2016, according to Marketresearch.com. In addition, with new FDA labeling regulations set to be finalized soon, dairies, which will be required to add a considerable amount of nutritional information to their labeling under new industry guidelines, can use the opportunity to revamp their traditionally drab carton designs, adding color and eye-catching graphics.
