The early entrepreneurial mentality that proclaimed Dippin’ Dots “The Ice Cream of the Future” is back. Product innovation, consumer-focused branding initiatives and expanding distribution position the Paducah, Ky.-based specialty ice cream processor for a return to growth and profitability.
“All of the ingredients are being put together right now for that to happen. I’m as excited now as I have ever been about our potential,” says Curt Jones, founder and president.
The company’s namesake core product, Dippin’ Dots, is a flash-frozen beaded ice cream widely available at theme parks, stadiums and other major entertainment venue concessions as well as mall-based kiosks, events and movie theater vending machines. Jones pioneered the processing concept in 1987 when his love of homemade ice cream and a work project studying encapsulation methods for cultures dovetailed into an extra-curricular experiment: use of liquid nitrogen to flash-freeze homemade ice cream mix. The resulting ice cream beads provide minimal ice crystal formation with maximum cold, creamy mouthfeel.
Within a year, Jones left his career as a microbiologist to launch Dippin’ Dots from a 24-foot by 24-foot garage on the Jones family farm and a Lexington, Ky., storefront. Created in -320°F liquid nitrogen, Dippin’ Dots require special handling compared to conventional ice cream. Products are stored, delivered and merchandised in custom freezers that maintain the ice cream’s free-flowing nature with -40°F temperatures.
As Dippin’ Dots developed a track record with initial accounts including Nashville’s Opryland, its distribution and processing capabilities grew steadily, moving to rented space in Paducah, then to a custom-built facility opened in 1995. A $7.5 million investment in a two-phase processing, freezer and distribution operation expansion grew facilities to 120,000 square feet by 2006. Separate assembly of kiosk and merchandising equipment in an adjacent 18,000-square-foot building supplies franchisees and accounts.
Gains of the late ’90s to early-2000s gains found Dippin’ Dots on numerous business publication rankings of fastest-growing companies and franchise opportunities and consistently recognized by accounts as a top vendor. The business structure was formalized, and in 2005, added outside leadership that allowed Jones to step out of the day-to-day-operations.
Then a series of potentially insurmountable challenges hit simultaneously: record-high dairy pricing along with transportation and liquid nitrogen price spikes; loss of a costly, drawn-out legal battle related to processing patents; and subsequent banking challenges. “We’d been knocked so far back down, we had to treat it as a start-up again,” Jones says of his return as president in 2009. “I’m not planning on stepping out again any time soon.”
Mall traffic declines and resulting Dippin’ Dots franchise closures combined with plummeting theme park attendance further strained sales performance. “People do spend more money on small treats during a recession; it just didn’t work with our product. We got hit as a luxury item,” Jones says. The company’s 2007 sales of $40 million were un-profitable, a first since the company was launched. Sales declined to roughly $30 million by 2010.
But Dippin’ Dots is focused firmly on the future, developing new products, using social media and targeted marketing to build the brand, and expanding distribution into new channels. Combined with the turnaround of previously slumping theme park sales in the latter part of 2010 and positive franchisee sales reports, Dippin’ Dots has potential for a “nice little increase” of up to 10% for 2011, Jones says. “And from there, the picture gets better.”
Dots developmentsThe core beaded Dippin’ Dots ice cream line has developed to encompass more than 40 varieties. Inclusion-laden Cookies ’n Cream with Oreos is the current top seller. Other popular flavors include banana split, chocolate chip cookie dough, chocolate and vanilla.
New product additions are created as niches of basic market trends, and designed to maximize capacity and add sales growth without pulling sales from the core Dippin’ Dots business, says Stan Jones, director of research and development. A college pal and long-time colleague of Curt Jones, Stan Jones is unrelated but part of the business since its inception.
A vanilla frozen yogurt version of Dippin’ Dots is slated to roll out this summer via participating franchisees as a better-for-you smoothie line addition to the shakes and sundaes initially introduced in 2007. The vanilla yogurt dots include live and active cultures, and are sweetened with all-natural, plant-derived Truvia. Yogurt dots also open up the breakfast daypart for Dippin’ Dots products. “You add blueberries and granola, it’s a breakfast item when you wouldn’t ordinarily be selling ice cream before 11 a.m. at the earliest,” Stan Jones says.
The technology behind flash-frozen beaded ice cream is also creating a whole new take on coffee. Dippin’ Dots Coffee, first introduced to the trade in 2009, extends the brand to a new segment with flash frozen espresso. The line features frozen edible espresso dots as well as Forty Below Joe “no-ice-needed” frappé in caramel, mocha and vanilla flavors. The versatile espresso and frappé dots can also be heated to create espresso or coffee-based drinks with fresh-pressed taste. A hot beverage cart test is in place at Universal Studios in California.
Several theme parks are testing spoonable coffee dots and cold coffee drinks in stand-alone carts and kiosks featuring graphics aimed to let consumers know Dippin’ Dots is “more than just ice cream,” says Michael Barrette, v.p. of sales and franchising.
The company is also introducing Fruit Twisters, the working name of an all-natural ‘just add beverage’ beaded product line. The product creates frozen-style beverages without ice and blenders, and will be tested in the beverage segment with support from major theme park customers in Texas and Florida.
Managing calorie, fat and sugar content as well as taste led to development of low-fat and non-fat Dippin’ Dots products. The brand also uses Truvia sweetener to create a sugar-free chocolate dairy dessert and a sour blue raspberry ice. While developing formulations for alternative sweeteners is always tricky, for Dippin’ Dots, the change in the freeze point was a positive. “We don’t have to keep it as cold,” Stan Jones says.
To support potential school foodservice distribution, Dippin’ Dots is also developing a low-fat, low-calorie, Truvia-sweetened product that surpasses federal lunch guidelines as a better-for-you item. “If it passes muster with the grownups, we like our chance that we’re going to get trial,” Barrette says.
Products designed specifically for conventional frozen product distribution rather than specialty handling offer definite growth opportunities. Dippin’ Dot Ice Cream Cakes, dot-infused ice cream cakes introduced in 2010 with the help of a co-packer, are now created on a new processing line at the Paducah facility. Customers include a 165-store chain in the Northeast and a 90-store chain in the Southeast, with new distribution through a frozen foods home delivery company. The cakes are also available through participating franchisees.
A second retail freezer product, Dots ’n Cream, is a half-gallon conventional ice cream product infused with dots. Available in select Midwestern retail outlets and in participating franchisee locations, the product rolled out in 2006, was re-introduced with new flavors and packaging in 2008 and expanded to club stores in 2009. A 6-ounce single-serve is in development.
Branding initiativesThe Dippin’ Dots marketing expansions beyond leisure and entertainment venues are a direct response to consumer demand. “One of the top comments we get from consumers is ‘Where can I find Dippin’ Dots?’ Our fans want greater distribution,” says Dana Knudsen, director of marketing and graphic design.
Dippin’ Dots conducts product-based marketing aimed at its core demographic teens and tweens ages 8-18, and secondarily to mothers with younger children. A growing base is comprised of older people who have tried the product and liked it, or to consumers who have grown up with the brand.
Brand initiatives, including promotions, marketing programs, packaging design and graphic design of all POP and marketing materials are handled in-house; social media outreach teams Dippin’ Dots with an agency.
Hollywood product integration includes trademarks and products found in “Fat Albert,” “Kicking & Screaming” and “Cheaper by the Dozen.” Segments produced for Food TV, The Travel Channel, The Oprah Winfrey Show and the Food Network have also showcased the brand.
Corporate programs are integrated with POP marketing and “charged through social media,” Knudsen says. Launched in 2007, the Dippin’ Dots Facebook page is now 3.8 million fans strong. Queries such as, “What would you do with a million dots? A billion?” generate thousands of fervent fan comments.
The ability to customize social media programs allows Dippin’ Dots to tailor marketing for individual customers and channels. Fan interaction has helped name Dippin’ Dots menu items and likewise determined the final flavor in the set offered by a large regional water park account. Social media programs likewise support the company’s web site and Forty Below Zero Club, an email-based consumer fan club that creates geo-targeted email blasts.
A rebuild of the Dippin’ Dots website provides additional consumer-brand engagement and allows timelier and more cost-efficient direct content updates. Site upgrades unveiled in mid-February feature a more intuitive online ordering system and allow consumers to order an array of products in the same shipment. “We have seen an increase in the number of products people are ordering as well as the total amount of the average order,” Knudsen says.
Broad corporate marketing initiatives provide brand notoriety with consumers and supports national, regional and local accounts with additional POP messaging. Examples include a recent promotion featuring rising country duo the JaneDear Girls; sweepstakes prizes included a $250 Visa gift card, a $250-value Dippin’ Dots party pack and a copy of the duo’s new self-titled CD. Similar contests pair Dippin’ Dots with movies such as “Despicable Me” and video games such as de Blob 2.
Curt Jones chose the company’s Paducah location as a way to provide opportunities in the largely rural, economically-distressed region; he is a native of Pulaski County, Ill., about 35 miles away, and notes roughly half of the company’s 170 employees commute from Illinois. “I’ve been very proud that we’ve been able to create jobs in this area.” Jones says.
The Dippin’ Dots Foundation – run by an 11-member board that includes Curt Jones, his wife Kay, daughter Tracey and father Milford – additionally supports the community with scholarships to students attending Curt Jones’ alma maters as well as to Dippin’ Dots employees and their families.
Stand and deliverMore than 20 years of exposure has led consumers to virtually expect Dippin’ Dots at theme parks, water parks, museums, professional sports stadiums and minor league sports venues. Direct accounts sales include 1,500-plus entertainment venue locations and comprise the majority of Dippin’ Dots sales, with 165 Dippin’ Dots franchise operations a “robust minority,” Barrette says. Beyond domestic sales, Dippin’ Dots currently distributes to nine countries and has licensed manufacturers in Korea and Canada.
Free-flowing Dippin’ Dots products provide serving efficiencies critical to concessions with time strictures such as sporting event intermissions. “Everyone comes out of their seat at the same time. We can serve 12 customers a minute. If you are pouring soft serve or something else, it takes much longer,” Barrette says. “The quality of the taste is the reason we get the repeats. We have a great track record with the velocity of the repeats.”
At the end of the first quarter, Dippin’ Dots overall business was up nearly 9%, with sales up almost double at business partners including Universal Studios in Orlando, Barrette reports. “We’re not out of the recession. But the business is growing in today’s environment. We’re reaching out to other outlets to meet the demands,” Barrette says. “The brand is going to start flexing its muscle, but in an intelligent way. Chasing every customer everywhere, we’re not that kind of brand.”
Dippin’ Dots account managers work closely with customers on a national, regional and local account level to support the brand and drive sales growth. Along with products, Dippin’ Dots supplies 10-foot by 10-foot mall kiosks, 4-foot by 6-foot mobile fiberglass carts and various other sales units equipped with freezer technology to hold product at -20 to -40