Horace Greeley, the 19th century New York Tribune editor, famously told a young man to “go West.” But west is not an option for a 21st century dairy processor based in Akron, N.Y. Lake Erie, a huge natural barrier, lies west of Akron. For that matter, north is out of the question, too, because of another Great Lake (Ontario) and Canada, which does not freely allow imports of dairy products without quotas or duties.
Geography complicates marketing, as Mike Brown wryly notes. Brown is the senior product manager for Perry’s Ice Cream Co. He points to another complication - demographics. Buffalo is not gaining population; it dropped 5.7% from 2000 to 2006, according to the U.S. Census Bureau.
So what’s a packaged-goods company to do? In recent years, Perry’s has invested in its plant, advertised more heavily, entered new markets, created new products, sought and captured private label business (both domestically and internationally) and developed its distribution business. Has it all worked? In a year when ice cream sales declined about 4%, according to Chicago-based market researcher SymphonyIRI Group, Perry’s revenues were up 8%, says Robert Denning, president and ceo.
Perry’s Ice Cream Co. ranks 87th on the Dairy 100, Dairy Foods’ ranking of the nation’s largest dairy processors. Its 2010 revenues from dairy products, private label manufacturing and distribution services were about $77 million.
Relationships provide market intelligenceIn response to Buffalo’s declining population, Perry’s entered the Pittsburgh market in 2007 and sales there have since doubled. One reason Perry’s chose the Steel City was because of its existing relationships with dollar-store retailers through its direct-store-delivery (DSD) operations. Perry’s drivers deliver more than 500 products (“partner brands” in company parlance) to retail accounts. The foods include frozen pizzas, snacks and other ice cream brands, including Nestlé’s Edy’s and Good Humor.
Besides the DSD operations, Perry’s gains important market intelligence about consumer preferences from its dip stands (what others call scoop shops). The typical dip stand is a seasonal, walk-up operation (with no indoor seating) and carries 16 to 20 flavors, explains Tim Cooley, vice president, sales and distribution. Perry’s provides these family-owned businesses with flavor boards and signs.
Flavors that have proved popular at the stands have been integrated into Perry’s year-round offerings. Banana Cream Pie ice cream is one example. It sold well at dip stands so Perry’s added it to the line. The company also re-introduced White Lightning (dark chocolate with mint-flavored white fudge revels) because of consumer surveys. Perry’s avidly watches SymphonyIRI sales data to see what ice cream flavors are popular. Other ice cream ideas come from Perry’s flavor vendors. Every spring, the flavor houses descend on Akron, each with eight to 10 samples. Some have been proposed by Perry’s, while other flavors have been developed by the vendors themselves, based on their own market intelligence.
Popular flavors are not immune from review. Every Thursday afternoon, a team meets for an ice cream tasting (or “cutting” in Perry’s terms). Team members, recruited from the research and development, marketing and production departments, taste new and existing flavors and record their impressions on score sheets. Ice cream containers are quartered in order to inspect the distribution of revels and inclusions.
Last year, Perry’s launched gelato in response to consumer interest in more intense flavors, Brown says. The company developed four gelato flavors in June and July 2009 and launched the products in February 2010. That’s the typical launch cycle of products -development in the summer, production in the fall and introduction in the winter. Retailers are receptive to new products at the beginning of a new year when they re-set their stores.
Perry’s supported the gelato launch with free-standing inserts, through traditional and social media communications and samplings at wine events at Watkins Glen, N.Y., The Buffalo Zoo and an Italian festival in Buffalo.
Competing with national brandsBesides the state of New York, Perry’s distributes products in Maryland, Massachusetts, New Jersey, New York, Ohio, Pennsylvania and Virginia. National and regional accounts include Shurfine, Tops Supermarket, Wal-Mart and Wegmans Food Markets.
In addition to the grocery chains, Perry’s sells to convenience stores and foodservice and hospitality accounts, including schools and prisons. The school products meet or exceed the state’s “Choose Sensibly” guidelines for fat, saturated fat, sodium and sugar content.
Perry’s has long-time and close relationships with Olean Wholesale, Wegmans and Tops. Perry’s began servicing supermarkets in 1985 when then vice president of sales Art Lowder (who was like a brother to Marlo Perry, Brian Perry’s grandfather) secured key supermarket customers and Perry’s reached $10 million in annual sales. Today, Perry’s manufactures a private-label ice cream line for Wegmans and Olean Wholesale. It also developed frozen custard for Wegmans’ new restaurant in Pittsford, N.Y., called The Food Bar. The restaurant promotes its use of this ice cream in milkshakes, sundaes and banana splits.
Perry’s holds the No. 1 market share in the western New York market, where it has been making ice cream since 1932. But because Buffalo’s population is not growing, Perry’s seeks new consumers elsewhere. The brand is less well known in Rochester, 50 miles to the east. Last May, Perry’s began a television advertising campaign consisting of 30-second spots, which were later followed by 15-second spots. When the campaign ended in September, first-mention recall of the brand had increased more than 23%, from 31% to 38%, says Brown, the senior product manager.
The brand also got a bump up in recognition after it appeared on an episode of NBC’s “The Apprentice” in September 2010. Perry’s sent two trucks to Manhattan, where teams of men and women vied to sell the most novelties.
Nationally, Nestlé’s Dreyer’s Grand Ice Cream and Unilever’s brands dominate print advertising, with private-label brands third, according to Market Track, a Chicago-based research firm that follows brands’ activity and positioning in printed circulars, run-of-press and mailers.
In western New York, however, private-label brands lead in printed promotions, followed by Dreyer’s, Unilever’s brands and Perry’s.
“It’s really interesting what’s happening with Perry’s,” says Todd Birchenough, Market Track’s research director. “In contrast to the national numbers, ice cream promotion in Perry’s markets has shown a steady increase in volume with fewer text-only ads.” Text-only ads decreased to 12% in 2010 from 15% in 2008.
Promotions of Perry’s at supermarkets increased from 2008 to 2010; promotions by Tops supermarkets increased 36% in the same period. Budget-priced Jubilee supermarkets heavily promoted Perry’s frozen novelty products.
Perry’s is “competing with the big boys on the front page” of Tops’ circulars, Birchenough says. Excluding novelties, Perry’s “share of voice” is greater than Unilever’s and Dreyer’s Grand. Share of voice is Market Track’s term for a company’s percentage of print-promotion activity in the total marketplace.
As for pricing, Market Track noticed a significant change over three years. In 2008, Perry’s average sale price for a 48- to 56-ounce container dropped from June to August. In 2009, prices were steady in the three-month period. Then last year, Perry’s prices rose from $2.31 in June to $2.94 in August. In contrast, Dreyer’s Grand average unit sale price was steady (ending at $2.99 in August 2010) and Unilever’s seemed “to fluctuate with little pattern,” spiking at $3.78 in July 2009 and ending at $2.86 in August 2010, Birchenough says.
Continuous improvementIn 2006 and 2007, Perry’s turned to Insyte Consulting, a Buffalo-based not-for-profit management consulting firm that provides guidance on strategic planning. Insyte, which is funded by the federal government and New York, has facilitated meetings on a number of projects over the years, including operations and order selection, along with corporate strategy. The conclusion of one consulting project led Perry’s to focus future investments and upgrades within bulk and packaged goods-production capabilities versus novelty products. This allowed Perry’s to leverage its core competencies in manufacturing and provided the foundation for sustained, profitable growth, according to Insyte.
“(Perry’s) management has the right attitude. They want to get better and be successful,” says John Murray, an Insyte account executive.
The packaged-goods strategy led to plant improvements and investments of more than $9 million in 2007 and 2008. Additionally, Perry’s has invested in human capital totaling $1.5 million for skill-based and leadership training.
Having a clear-cut strategy and vision for world-class manufacturing systems helped Perry’s land its first export sales account, making private-label ice cream products for a Fortune 500 company.
“Our international customer believed in our packaged goods vision, shared our mission for world-class quality products and wanted in,” Denning says.
In conjunction with the strategy and to support this new business, Perry’s made the decision in 2007 to build a $3.5 million state-of-the-art distribution center and warehouse. The on-site distribution center and warehouse eliminated the vast majority of the need for use of an off-site leased facility and associated shuttling expenses. Moving the majority of frozen storage onsite eliminated more than 90,000 miles of truck travel between the off-site warehouse and the manufacturing plant. Besides the savings in labor hours and fleet maintenance, there were sustainability benefits-less fuel consumed and reduced greenhouse gas emissions.
“The project benefits and results have exceeded our expectations and the project was cash-flow positive after the first 36 months,” Denning says.
A focus on sustainabilityThe elements of sustainability - people, planet and profit - have always been part of the Perry’s culture. Last summer, Perry’s established a cross-functional team, led by director of sustainability Gayle Perry Denning, a fourth-generation family member. The 10-member team, drawn from marketing, finance, information technology, distribution, operations, sales and purchasing, is focusing on four specific areas in 2011 - energy awareness, vendor collaboration, waste management and organizational development/communications.
Regarding non-operational waste management, the company wants to eliminate excess materials and packaging. Reducing the excess materials (such as shrinkwrap) that enter its facility also reduces its costs to dispose of the packaging material. Less packaging around Perry’s own products being distributed also means lighter loads on trucks and hence fuel savings. In the office, the company is embracing the technologies to allow for electronic reporting and asking for PDF invoices rather than paper copies. Perry’s also changed its copy machine settings to print on two sides. By making this change, Perry’s reduced its paper purchases by 25% and saved on toner. The company also is investigating whether it can turn its trash into cash.
Perry’s constantly evaluates ways to conserve energy, water and fuel. Perry’s sourced a company to purchase its dairy waste to be converted into energy. To cut electricity consumption, Perry’s team members participate in the NYS Power shedding program by turning off non-essential appliances for one hour each time the program is offered. The company’s flavor family-friendly production schedule has dramatically reduced water usage by 2.78 million gallons versus 2009. Additionally, Perry’s delivery trucks use routing software to find the most efficient routes and to minimize idling time. Perry’s also maximizes the load capacity of trucks before they leave the warehouse. In addition, DSD customers have a minimum order quantity to meet in order to ensure efficiency of each delivery.
Looking aheadPerry’s Ice Cream Co. is pretty nimble for a 93-year-old dairy processor. (See “Corporate History.”) While it has stayed true to the original recipe and vat pasteurization process from 1932, the company also has modernized its facilities and adopted modern business practices. The food landscape has changed since H. Morton Perry first sold milk to local residents in 1918. Perry’s today is fighting for “share of stomach,” Denning says. Competition comes not only from other ice cream brands but also from salty snacks and other foods.
As it looks to win its share of customers’ spending, Perry’s is evaluating the mini-cup segment. These small cups offer a number of benefits, including convenience, portion-control, portability, sampling and the ability to satisfy the different preferences of family members. New products, like gelato, also expand the customer base. But there is a limit to what Perry’s Ice Cream will develop. Brian Perry says they are “passionate ice cream craftsman” who will remain true to his family’s heritage of making slow-cooked ice cream products one batch at a time.
In terms of expanding Perry’s marketing area, Denning speaks of a “leapfrog strategy,” one that leaps over the states bordering New York. For any dairy processor, getting picked up by a grocery store chain is expensive because of slotting fees to get on the shelf and distributors’ fees. Perry’s will be deliberate about future market expansion. Several points south are under consideration but Denning has not announced any new retail partners.
Wherever the next new market is to be found, Perry’s Ice Cream will arrive there only after analyzing sales data, understanding customer preferences and establishing market-based relationships.
Sidebar: HistoryH. Morton Perry purchased a small dairy in Akron, N.Y., in 1918. It operated as a home delivery and wholesale business until 1932. That year, Perry’s Ice Cream began making ice cream at the request of Akron High School. Perry used a family recipe given to him by his mother, and made small batches on his kitchen stove.
Demand for the ice cream increased, and Perry and his son, Marlo, sold the product to stores and restaurants. Eventually Marlo’s son Thomas oversaw the running of the business. Thomas’s children, Brian and Gayle Perry Denning, and his son-in-law Robert Denning, lead the company today.
In 1970, Perry’s built a storage freezer and distribution facility on 8.5 acres. In 1982, the company expanded again and moved its administrative, manufacturing and storage facilities to its current location. Other renovations and expansions occurred in 1984 (additional frozen warehouse), 1987 (key production expansion), 1991(truck garage), 1997 (new employee services area and new training center) and 2008 (production, equipment and tanking upgrades and new frozen distribution warehouse).
Sidebar: In The CommunityPerry’s Ice Cream supports community organizations with donations of products and cash. In addition, employees volunteer their time. Among Perry’s community partners are:
• Buffalo Bills (NFL football)
• Buffalo Philharmonic Orchestra
• Buffalo Sabres (NHL hockey)
• Buffalo Zoo
• Camp Good Days
• Darien Lake Theme Park
• Food Bank of Western New York
• Junior Achievement of Western New York
• Make-A-Wish Foundation
• Martin’s Fantasy Island Theme Park
• Ryan Miller’s Steadfast Foundation
• Shea’s Performing Arts
• Strong National Museum of Play
• United Way
• University of Buffalo Corporate Champions