Fancy a Snack? Try Some Ice Cream!
As I said in my previous post, just because it's the last day of the conference doesn't mean the content and questions aren't thought provoking! And maybe hunger provoking too!
I had the chance to sit in on the Nestle's New Merchandising Location Strategy preso specifically covering ice cream cups presented by Russ Onish and Alex Sodek. The added bonus for sitting in? A chance to sample some of the great ice cream. Talk about a delicious multi sensory experience!
Nestle's ice cream brands include Haagen Dazs, Dreyer's, Edy's as well as Skinny Cow. All of these brands have cup options for a total of 30. Cups are an interesting concept because ice cream can be an intensely personal experience. Everyone has their own favorite brand or likes to eat ice cream in a certain way. Cups also let you be a little more adventurous. You can try a new flavor without committing to a whole tub. And, for us permanent dieters, cups are great for portion control.
For the retailer and manufacturer, cups are a huge revenue opportunity to expand ice cream to be more than ice cream, like desserts or snacks. Here's an interesting ratio to give a sense of scale $10 Ice Cream : $40 Dessert :$100 Snack. So, if these cups are crucial to expand into "snack" then the question becomes how to merchandise these cups properly: either with the parent brand or within a separate case? And how do you learn the answer quickly and reliably?
The answer lies in virtual shopping research! There were two questions:
- Should the cups be in a dedicated case or with the brand family?
- How should promotional pricing be communicated: 99 cents or 10 for $10?
I wish I could show you the virtual shopper research demo! We saw a video of how the shopper traversed the virtual grocery store and arrived at the ice cream aisle. The shopper could stop at any case and make any amount of purchase they desired. Here's a little of what they learned:
- The Skinny Cow branded cups performed better when placed with their parent brand and the 10 for $10 offer resonated more than the 99 cent each offer.
- The other branded cups performed better in a dedicated case. When placed in the dedicated area, people bought more within the category, they bought in multiple, they bought in variety yielding more dollar sales. People also traded up to more cups versus tubs ($1/serving versus $.31/serving).
- In terms of pricing the 10 for $10 offer yielded 21% sales penetration versus 18% for the 99 cent each offer. Also, people bought more cups when offered at 10 for $10.
Nestle made recommendations for retail implementation. Here are some of the results:
- 90% of stores now stock the cups together. These stores have sales 53% higher than the 10% that did not stock the cups together.
- 85% of the stores keep the Skinny Cow cups with the parent brand. These stores have sales 136% higher than the 15% that did not stock the cups with the parent brand.
- Sales are currently at $50MM which is up 45% over one year ago. 2011 Forecast shows $300MM in sales.
All in all, these are delicious results for Nestle. I really enjoyed this preso - what about you?
Parissa Behnia
Idea Chef
678 Partners