Market Analysis of Haagan-Dazs

Topics: Ice cream, Marketing, Sorbet Pages: 6 (1683 words) Published: February 2, 2013

Jan Phillips is the newly hired ice cream product-market manager for Canada for Häagen-Dazs—the world’s leading brand of super premium ice cream (now available in 55 countries) and the market leader in the U.S. Haagen Dazs although owned by Pillsbury, in Canada is licensed to Nestle. (

Pillsbury says Häagen-Dazs is profitable globally, with total sales of more than $900 million. The company saw its sales grow rapidly during the 1990s, but now its markets are facing significant change and very aggressive competition. Phillips is responsible for Häagen-Dazs’ ice cream strategy planning for Canada.

Overall, hard ice cream sales in Canada. have stayed flat at just under 300 million litres. Still, some new entries have made a big splash. Starbucks, the coffee king, is one such brand. In its first year in grocery-store freezer sections, its Frappuccino bars—in several flavours—were a big hit. Häagen-Dazs, along with a few other super premium producers, are continuing to grow at rates of 2 to 3 percent. But most other Canadian super premium producers are reporting flat sales, and some are going out of business. The easy availability of super premium ice cream in supermarkets has hurt some of these producers who sell through ice cream stores, which specialize in take-out cones, sundaes, and small containers of ice cream. It is also thought that, at least in part, the decline in sales growth of super premium ice cream in Canada since the early 1990s is due to competition from other products such as lower-calorie yogurts and low-fat ice cream.

Despite a real concern about healthy diets, Canadians seem to swing back and forth in their yearnings for low fat and rich taste. There is some evidence that “dessert junkies” who want to indulge without too much guilt are turning to low-fat frozen yogurt and low-fat ice cream. This has encouraged a number of super premium ice cream competitors to offer these products too. Pillsbury’s Häagen-Dazs, International Dairy Queen, and Baskin Robbins are selling frozen yogurt. The Canadian ice cream market is dominated by Nestle and Unilever and both are promoting gourmet versions of low-fat ice cream.

Because of the competition from low-fat products, Häagen-Dazs introduced a line of low-fat super premium ice cream. The low-fat line contains no more than three grams of fat per serving. That compares with six times more grams of fat in a half-cup serving of its full-fat versions. Häagen-Dazs believes that its low-fat super premium ice cream is better tasting than other alternatives. Its belief is that “people like to make every calorie count.” Having worked on the low-fat item for more than two years, it developed a process whereby a concentration of dairy proteins from lactose-reduced skim milk give a mouth-feel that approximates that of a higher-fat product. Häagen-Dazs sells its low-fat products in a variety of flavours.

Most ice cream products are considered economy and regular brands—priced at $3.00 to $7.00 for 2 litres. Super premium ice cream retails for $4.50 to $5.95 a half litre,. The retail price for a half litre of Häagen-Dazs is usually over $5.00. The low-fat version is comparably priced to the full-fat product.

Many other Canadian ice cream producers have turned to frozen yogurt for growth. Frozen yogurt sales were in a slump for a long time because many people didn’t like the tart taste. But after the product was reformulated it started to win customers. The difference is that today’s frozen yogurt tastes more like ice cream.

The yogurt market leader, TCBY (, which had sales of only about $2 million in 1983, has risen to over $100 million in sales. It numbers over 2,500 shops worldwide and is franchised in over 67 countries. In Canada, yogurt makers are using aggressive promotion against ice cream. TCBY ads have preached: “Say goodbye to high calories—say goodbye to ice cream”...
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