Unilever conquered the ice cream market. Home delivery is the final frontier

Overheated buyers just weren’t buying the company’s specialty sausages. Then Wall had a revelation: Selling ice cream could help counter the seasonal decline in sales.

The idea was canceled when the First World War began a year later. But the arrival of a commercial freezer from the United States in 1922 catalyzed his ambitions. From a factory in West London, Wall’s ice cream was soon brought to Londoners by horse-drawn cart and then by vendors on tricycles. By 1939, there were 8,500 company tricycles on the streets of Great Britain.

The Anglo-Dutch company has acquired around two dozen other major ice cream brands, including Klondike and Ben & Jerry’s, while pioneering its own Magnum line. According to market research firm Euromonitor, the company sells ice cream in 63 countries around the world and generates almost a fifth of global ice cream sales, a larger proportion than the next four competitors combined.

Unilever is now the undisputed king of ice cream. But while the coronavirus pandemic rages on and the lockdown continues, the company is taking inspiration from the delivery tricycles of its early years to conquer one final frontier: ice cream that can be delivered to your home on request.

Ice cream on every corner

It won’t be far to travel. You are probably no more than a few hundred meters from Unilever ice cream by the time you read this article.

The company owns five of the ten most valuable ice cream brands in the world, including Breyers, Cornetto, Carte d’Or and Ben & Jerry’s. But his realm goes far beyond these familiar names.

There is Frigo in Spain, Adityaa in India, Holanda in Mexico, Langnese in Germany, Selecta in the Philippines, Ola in South Africa and Pingüino in Ecuador. In recent years, Unilever has also expanded its premium offering to fend off a growing number of innovative competitors and track down gelato and sorbet brands such as America’s Talenti, Italy’s Grom and Australia’s Weis.

Many of these may be unknown, but you’ve likely stumbled upon the brand that heralded Unilever’s ice cream ambitions more than anyone: Magnum.

Magnum’s sales, the world’s top-selling ice cream brand, are projected to reach $ 3.8 billion this year, ahead of sister brand Cornetto ($ 2.4 billion) and General Mills’ (GIS) Häagen-Dazs ($ 3.2 billion), Euromonitor said.

Unilever “got serious” about ice cream when it launched Magnum in 1989, said Matt Close, executive vice president of global ice cream. Vanilla ice cream bars on sticks, dipped in chocolate that cracks with the first bite and then dissolves in your mouth, was a decadent new taste experience.

“It really revolutionized the ice cream industry, but also our ice cream business,” Close told CNN Business. “All of a sudden, we went from being some kind of treat for kids by the sea to something that people ate in many other places.”

The realization that ice cream could be a treat for adults changed the business. It ushered in a wave of increasingly forgiving, upscale brands that have given way to healthier, plant-based alternatives as consumer preferences evolve.

Unilever’s approach was to pursue the entire market rather than targeting a specific segment. The 35 ice cream brands are available at any price, for all occasions and in almost any size, shape and packaging. There’s Breyer’s natural vanilla to eat with apple pie; cheap and cheerful popsicles on sticks for teenagers; Magnum Bites in small portions to satisfy cravings late into the night; and pints from Ben & Jerry’s or Talenti for something more extravagant.

Sales have spiked during the coronavirus pandemic as families who need to eat at home turn to ice cream to pamper themselves. Unilever home-consumed ice cream sales rose 26% between April and June and 16% year-over-year in the subsequent quarter, offsetting a collapse in goodies consumed on the go, buying groceries online, including ice cream. This has given Unilever’s e-commerce business a shot in the arm and paved the way for its newest market: ice cream on demand.

How to do the good things

Making ice cream is difficult enough without adding the logistics of getting it to people whenever they want before it melts.

The ice cream business has changed since Wall started factory production almost 100 years ago. Now companies have almost limitless opportunities to combine milk, cream and sugar with other ingredients to create new flavors and formats. Unilever sells 431 different flavors of ice cream in the UK and Ireland only, while Magnum alone is available in around 35 flavors per year in standard sticks, mini sticks, pints and truffles.

Andrew Sztehlo, Unilever’s global vice president of research and development for ice cream, compares the manufacturing process to a vehicle assembly line. Take the cornetto, which combines chocolate-coated vanilla ice cream and pieces of hazelnut in a waffle cone.

Cornetto ice cream cones in a freezer in Bangkok, Thailand in December 2019.

“Making a cornetto is the food equivalent of making a car,” he told CNN Business. “You have hot things, cold things, things that are in funny nooks and crannies, things that like water, things that hate water. And they all have to come together to make this cone. It’s very complex and goes at high speed.”

Despite all this precision and years of experience, technical challenges remain. According to Chris Veitch, a former senior process engineer at Unilever, there are projects every year to address the problem of cornetto cones occasionally getting damp within their expiration dates.

“Ice is an incredibly complex material that is very difficult to model and process, and there are several highly sensitive processing steps that affect quality,” Veitch said in a briefing earlier this year by the London-based Institution of Chemical Engineers was hosted.

This means that if Unilever wants to bring a new ice cream to market or even optimize an existing product, for example by injecting the sauce a little differently, it often has to develop a new device. That’s why Unilever’s ice cream factories have “a lot of stainless steel” and a lot of engineers, according to Sztehlo, who referred to them as “Willy Wonka Territory”.

“There are a lot of swirling things going up and down, in and out and so on,” he added. “This is how we make billions and billions of ice cream products in our factories around the world every year.”

Twister ice lollipops on the assembly line at a Unilever factory in Konya, Turkey.

On a mission

Unilever executives say they haven’t strayed from Wall’s strategy of making ice cream as ubiquitous as possible. Apart from the fact that the one-wall display case is built into every possible grocery store, people no longer have to search for ice cream.

“I suppose we are a bit messianic as an ice gang,” said Close. “We believe that people want it, we just have to find a way to get it to them.”

Keeping ice cream on demand is an integral part of Unilever’s efforts to reduce reliance on summer sales. This makes the company vulnerable to changing weather conditions and has a narrow window to generate the majority of its revenue. “For Unilever, this meant repositioning ice cream as a snack at any time,” Euromonitor said in a report earlier this year.

A century after Wall’s tricycles first hit the streets, the need to have ice available at all times means that Unilever is once again using workers on wheels to distribute its wares.

Ice Cream Now, the company’s home delivery business, saw a boom during the pandemic. What began as a pilot program at Deliveroo’s London headquarters in 2016 with a single freezer and virtual store is now available in more than 100 cities in 36 markets through partnerships with companies like Uber Eats, DoorDash. Grubhub (RODEN), Just EAT (JSTTY) and Dominos pizza (DMPZF).Magnum ice boxes in a hypermarket in Kuala Lumpur, Malaysia in June 2019. Customers can get ice cream from any number of retail partners, restaurants, or cloud kitchens within 30 minutes. “It’s about getting ice out [one of those freezers and] in someone’s house, “Sztehlo said. And it doesn’t stop at bicycles. The company partnered with Terra Drone Europe to investigate air delivery.

It helps that Unilever’s ice cream is already available in millions of freezers around the world as part of its traditional business. On-demand ice pick-up points have increased to 11,000 worldwide, a nearly four-fold increase since the pandemic broke out. And more pick-up points are being added all the time to get people ice cream as quickly as possible – crucial for a product that starts to melt at temperatures above -18 degrees Celsius.

Global e-commerce sales of ice cream and frozen desserts grew strongly even before the coronavirus. However, the pandemic is accelerating the shift towards online grocery shopping and is benefiting Unilever and competitors with e-commerce companies like Halo Top and Häagen-Dazs.

There is room to grow. Euromonitor estimates that online ice cream sales, including frozen yogurt, will hit around $ 1.7 billion this year – a small fraction of the total of $ 76.4 billion in ice cream sales to consumers.

For Unilever, the growth in home ice cream spearheaded by brands such as Ben & Jerry’s and Magnum is on track to offset the collapse in illegitimate ice cream revenues this year, including sales to restaurants and caterers to more than make up for it.

The company also benefited from a little luck. About two months before much of the world fell into coronavirus lockdowns, Ben & Jerry launched Netflix & Chilll’d, a new peanut butter ice cream with near-perfect messaging for 2020.

Ben & Jerry's Netflix & Chilll'd is a peanut butter rice with sweet and salty pretzel strudel and fudge brownies.With the path of the pandemic still very uncertain and some major economies stalled again, Unilever is now faced with the daunting task of deciding which approach to take over the next year. Should there be more Carte d’Or tubs for personal consumption or Magnum Singles for on the go?

Plans for 2021 are “in the works”, says Sztehlo, who joined the ice cream parlor as an apprentice 35 years ago. He admits it was harder to come up with the next big idea via video calling, especially without afternoon tastings in the office. These informal gatherings usually take place at a table in New York that is passed around 20 kilograms of different types of ice cream, but these are kept on hold until further notice.

“We missed the social, creative and interactive moment. It’s a little more sterile,” he said. The good news, he added, “is that people want to be happy,” and they are looking for ways “to enhance their happy moments at home”.

Netflix & Chilll’d anyone?

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