Health is an obvious driver. Darryl David, CEO of Darryl’s Ice Cream Solutions LLC, a private-label ice cream consulting firm in St. Petersburg, Fla., said more often than not, U.S. consumers are bending toward better-for-you dairy items.
“Many of my clients are eliminating high-fructose corn syrup in their products and making products sweetened with cane sugar.”
While there might be a higher demand for soy milk in some markets, the best sellers in convenience stores, he added, are still the super-premium ice cream pint at $4.79 and the $1 novelty item.
“Over the past year, we’ve seen a proliferation of new product introductions and sustained growth of key products, including chocolate milk and whole milk,” said Kikke Riedel, vice president of strategy and insights for the Washington, D.C.-based National Milk Processor Education Program (MilkPEP).
The group found that c-stores can and should step up their game with milk. A retail study recently commissioned by MilkPEP found that convenience stores, in particular, have lost ground to other channels for milk sales, resulting in a loss of more than $1 billion in potential sales and $321 million in potential profits since 2008. “That’s a loss that we believe can be regained with smart merchandizing and milk product mix optimization,” Riedel said.
Riedel made the case that c-stores are not taking full advantage of opportunities when it comes to selling milk. “Ninety-four percent of milk purchases are quick trips, and convenience stores have a competitive advantage over other retailers if they stock appropriately to deliver the variety their shoppers are demanding.”
She also suggested that c-stores are missing target shoppers like Millennials and those looking for recovery after exercise. “Convenience stores are losing ground with Millennials, who are gravitating to mass-merchandisers and dollar stores for flavored varieties and added-value milk for recovery, added protein/calcium, etc.”
Price remains an impediment. Amer Hawatmeh, the principal of three-store St. George Oil Inc. in St. Louis, echoed many operators about the economics of milk. “The cost has become so high I can’t compete against the grocery stores on price. We’re getting the milk from the same distributors, but because we buy such small quantities in comparison to the grocery stores I’ve stopped carrying the gallons.”
As for frozen novelties and ice cream, Hawatmeh said he sees consumers willing to spend more for desired products.
“What I’ve noticed with ice cream is that higher-end products, things that cost $2 and above, are selling better than the cheaper products. I think we’re becoming more conscious of health; that fat is not our enemy, but carbs and chemicals are our enemies. I have noticed that the Ben & Jerry’s pints are selling more than the Prairie Farms pints, even though they’re twice the price.”
Frozen novelties, he added, remain quite strong. “As always, a clean and well-organized freezer in a visible area that is well-lit is so important. As you merchandize the pieces in the unit, place different colors next to each other to maximize the packaging.”