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Ice Cream Makers Put Containers on a Diet

Three of the largest firms shrink tub sizes -- but not the price -- as ingredient costs rise.

November 19, 2002|Melinda Fulmer | Times Staff Writer

Ice cream makers have found an easy way to sweeten the bottom line: Shrink the package.

The ubiquitous half-gallon is quietly giving way to smaller tubs as ice cream companies look for ways to hold on to profits as ingredient prices rise.

Three of the nation's largest ice cream makers have put their containers on a diet and are selling 1.75 quarts, rather than the half-gallon "brick," which has been the standard for decades and constitutes three-quarters of all ice cream sold. Other companies could follow suit.

Oakland-based Dreyer's Grand Ice Cream Inc., the nation's largest ice cream maker, switched to a smaller tub in March, more than a year after rival Unilever began selling its Breyers Ice Cream Parlor line in 1.75-quart receptacles. The new containers look the same and cost the same but weigh slightly less than the previous two-quart tubs.

The size adjustment was triggered by a $30-million run-up last year in the cost of butterfat and other ingredients, Dreyer's says.

"We have over 100 flavors, and many of them -- because people are preferring indulgent, chunky flavors -- cost more to produce than regular flavors like vanilla," said spokeswoman Dori Bailey. "We'd like to keep the cost at a price that's more affordable."

Butterfat prices have since fallen, said Rachel Kaldor, executive director of the Dairy Institute of California. But, she said, ice cream makers have a long memory when it comes to steep price increases.

Many producers would rather reduce volume than raise prices, which have shot above the $5-a-tub mark for many premium brands.

"They don't want their customers looking for alternatives" for dessert, Kaldor said.

There has been no adverse effect on sales, manufacturers say. "We've had a few people say, 'Wait a minute, there's less ice cream in this package,' " said John Nabholz, a spokesman for Schwan's Inc., a Minnesota-based home-delivery service that began selling reduced-size tubs last year.

But, he said, most people prefer the new packages to the brick, which often opened at both ends, creating a mess.

Analysts aren't predicting an ice cream industry meltdown.

"Most consumers view ice cream as a luxury purchase, a small indulgence, and are somewhat more price-elastic," said Eric Katzman, food analyst for Deutsche Bank.

Much of the industry, however, intends to stick with the half-gallon to hold onto consumers concerned about cost.

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Associated Press was used in compiling this report.

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