Bud Gunter (from left), Jeanene Gunter, Pam Van Horn and Scott Van Horn, owners of Sugar Creek Foods produce a soft-serve frozen yogurt mix for store owners.
Almost everywhere you look these days you’ll find a frozen yogurt offering. Sales are up and restaurants are adding it to their menus — the industry is booming.
Technomic Inc., a Chicago-based consulting and research firm, reports a 23% increase of frozen yogurt items showing up on restaurant menus since 2010, according to its MenuMonitor menu database. Data from Mintel, Chicago, shows that total United States frozen yogurt sales increased 6.6% in 2011 and are expected to gain an additional 9.7% in 2012 to reach $307 million.
Riding this frozen yogurt wave is Sugar Creek Foods which produces private label frozen yogurt and its national brand Honey Hill Farms soft-serve frozen yogurt. Owned by Scott Van Horn and Bud Gunter, Sugar Creek provides frozen yogurt mix for many independently owned and operated end-users throughout the United States. They also produce ice cream, frozen custard, sorbet and smoothie mixes. The company sells Honey Hill Farms mix through over 200 distributors reaching all 50 states, whose customers include schools, universities, hospitals and fast-food restaurants.
Gunter, who is also vice president of sales and marketing, noted that the self-serve frozen yogurt business is growing at a fast pace throughout the country. In May of this year Sugar Creek reported record frozen yogurt sales, with a 70% growth in the first quarter 2012 versus 2011, just after a record 73% growth the previous year.
Mary Chapman, director of product innovation at Technomic also spoke of the growing interest in self-serve. “[We] see an increase in concepts offering self-serve frozen yogurt — both emerging concepts and the bigger chains. It’s generally meant to indicate value (you can get a small portion and pay less) as well as appeal to consumer demand for customization (made just for me),” she said. “And of course it appeals to someone looking for a better-for-you treat (they can top their frozen yogurt with fruit) and someone who is looking for something more indulgent (there’s plenty of fudge sauce and candies on those self-serve bars).”
This growing interest is exactly what Gunter and Van Horn were hoping for when they teamed up to buy Sugar Creek Foods in 2007. The company was facing closure after its sale to an international company, but Gunter and Van Horn saw a niche in the soft-serve frozen yogurt market and decided to buy the company back. They had both previously worked with Mac Van Horn (Scott’s father) from the mid-‘80s through the mid-‘90s, when Sugar Creek Foods was first rescued from closing.
The company runs a 60,000-square-foot production facility in Russellville, Ark., where it manufactures all products, including Honey Hill Farms soft-serve frozen yogurt, which is made from real dairy and contains live active cultures L. Bulgaricus, L. Acidophilus, S. Thermophilus and B. Lactis, and a probiotic. The facility has a capacity of 10 million gallons annually. All of the products are produced on the same equipment, using vat and HTST pasteurization processes. Sugar Creek buys its milk from Dairy Farmers of America, Kansas City, Mo.
Honey Hill Farms frozen yogurt has over 40 SKUs and comes in non-fat, low-fat, no sugar added, non-dairy and non-fat sorbet mix. The Sugar Creek private label brand has five SKUs in ice cream mix (soft-serve), gelato base, milk shake mix, frozen custard mix, two SKUs in batch frozen yogurt mix (which contain the same live active cultures and probiotic as Honey Hill Farms yogurt) and one SKU of smoothie and sorbet mix.
Gunter noted that indulgent flavors are starting to overtake the once popular tart-style in frozen yogurt. New and exciting flavor selections are the key to success in the self-serve frozen yogurt shop business, he said. This is why Sugar Creek devotes so much time to creating unique, indulgent soft-serve flavors, like its three new additions this summer — Ooey Gooey Cinnamon Bun, Sea Salt Caramel Pretzel and Peach Medley. Gunter notes that he’s seen no regional preferences in flavors and inclusions.
“I think you get more consumers when you move over to indulgent because it tastes more like an ice cream product. Our self-serve yogurt shops have seen [a] growth in customers because they’ve started adding these indulgent flavors along with their tarts,” said Gunter.
The key to pursuing these indulgent flavors has been the bulky flavoring system. Sugar Creek is said to be a pioneer in using bulky flavorings such as fruit purees, cookies, flavor droplets, and nuts in its soft-serve yogurt products. “Bulky flavoring systems provide more of an intense flavor profile versus just common extract flavors. It makes a higher-quality, indulgent product,” said Gunter.
The bulky flavoring system is unique for Sugar Creek because it’s something one doesn’t see in the soft-serve frozen yogurt business, according to Van Horn, president of the company. It’s common in the hard packed ice cream, but not soft-serve.
“In our industry the hard part is …it has to be able to run through multiple brands of soft-serve equipment in the field,” said Van Horn.
A lot of companies opt to not use this method because it’s harder to deal with, it’s more costly, and the amount of time it takes for research and development, Van Horn explains. “But we feel [this bulky flavoring system] gives us the quality that we want to present to our partners out there in the field.”
Sugar Creek offers something else to its customers besides its flavoring system – personalized training. Gunter created what he calls “Yogologist training”; at no cost or obligation. Anybody who’s in or looking to get into the frozen yogurt shop business can come to their plant and learn about the business. During the one-on-one seminar attendees learn about the industry from Gunter or Van Horn, including how to run a shop, how to open a shop, what trends are going on, what flavors are working well and what toppings are working well. They can even try the soft-serve machines.
Van Horn believes it is this hands-on approach and the personal relationships they’ve built that helps to grow their business.