THE VIRGINIAN-PILOT
Copyright (c) 1994, Landmark Communications, Inc.
DATE: Saturday, July 23, 1994 TAG: 9407230152
SECTION: BUSINESS PAGE: D1 EDITION: FINAL
SOURCE: BY MITCHELL MILLER, ASSOCIATED PRESS
DATELINE: RICHMOND LENGTH: Medium: 72 lines
Back When...
Company lore has it that founder Christian Nelson came up with the chocolate-covered ice cream bar in 1920, when a boy entered a confectionery store in Onawa, Iowa, and told him he wanted a chocolate bar and a scoop of ice cream. The boy said he had only a nickel so he couldn't afford both. Nelson came up with a chocolate blend that would stick to ice cream - a patented creation that later became the Eskimo Pie Ice Cream Bar.
The decision to grab a chocolate-covered ice cream bar out of the freezer on a sizzling summer day seems simple enough: It's hot and you want a cool treat.
But now, you have more than 400 brands of frozen treats to consider. And many consumers are becoming more choosy, opting for frozen yogurt so they won't feel so guilty while they wolf down a decadent dessert.
Richmond-based Eskimo Pie Corp., like other companies in the $1.5 billion frozen novelty industry, is sweating the details of Americans' whims.
The company recently entered the frozen yogurt business, buying Sugar Creek Foods of Russellville Inc., a soft-serve yogurt mix manufacturer in Arkansas.
The $13 million purchase, effective in March, was made to get Eskimo Pie into a growth market, said John T. Herzog, Eskimo Pie's chief financial officer.
``We think the yogurt industry is ripe for consolidation,'' Herzog said. ``We don't see the business going away. We see it continuing to grow nicely.''
That's in contrast to the frozen novelty market, which has been relatively stagnant.
Sugar Creek has distribution in 36 states. The company also has agreements to sell yogurt in places like restaurants, hospitals and college campuses - areas where Eskimo Pie wants to expand.
Until now, Eskimo Pie has focused primarily on getting its products sold in grocery stores. In the coming years, the company hopes to sell a frozen yogurt under its name in places like airports and kiosks.
Sugar Creek, not as well-known as some competitors, will be able to use Eskimo Pie's marketing expertise.
``We thought that they could benefit from the Eskimo Pie brand name,'' Herzog said. ``So it seemed like a nice fit.''
Marketing studies indicate Eskimo Pie has the most recognized name in the frozen novelty industry, an industry it pioneered. The company, formerly a subsidiary of Reynolds Metals Co., went public in 1992. Net sales in 1993 grew to more than $66 million - nearly $20 million more than 1989.
Eskimo Pie's purchase of Sugar Creek ``was a very prudent move on their part,'' said Kurt Funderberg, an equities analyst in Baltimore with the brokerage firm of Ferris, Baker Watts. Funderberg also said Eskimo Pie has done well in niche markets, such as sugar-free ice cream bars and frozen juice bars.
The company's newest products, which are still being test marketed, include: A reduced-fat ice cream bar - which has 25 percent less fat; new flavors of ice cream sweetened with Nutrasweet that are 96 percent fat-free; and pudding bars made with 60 percent skim milk. Early sales have been encouraging.
Eskimo Pie will continue to emphasize the healthier aspects of its products, Herzog said. But he said company officials have not forgotten the most important thing about slurping down a frozen treat: the taste. ``It's supposed to be fun to eat ice cream,'' he said with a laugh. ILLUSTRATION: Color photo
John Herzog...
by CNB