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Haagen-Dazs : brand profile

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Haagen-Dazs invented the category of luxury ice cream for adults. Before its creation, ice cream was almost always cheaply produced and cheap to buy, largely targeted at a family or kids' market. Haagen-Dazs ushered in a new age in which ice cream could be exclusive, prestigious, sophisticated and even sexy. It remains the best-selling brand in the super-premium segment despite stiff competition from other players, most notably Ben & Jerry's. Sales of both brands were affected in the 2000s by concerns over healthy eating and Haagen-Dazs' high calorific content. That prompted the launch of several low-fat variants. The ice cream is available in around 80 countries worldwide. Ownership is effectively split between General Mills and Nestlé. Although the brand is actually owned by General Mills, Nestlé has an exclusive long-term license to manufacture and distribute Haagen-Dazs in its biggest market by far, North America.

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Competitors

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Analysis

Haagen-Dazs is the world's best-known super-premium ice cream, but has come under pressure from the rapid growth of premium private label competitors and a shift away by consumers from high-fat food products. Performance in North America has improved significantly since full control was taken by Nestlé's Dreyer's division. Combined worldwide sales were estimated by Euromonitor at almost $2.1bn in 2015, putting it in second place behind Magnum among the world's top-selling ice cream brands. General Mills declared its own share of sales to be $1.3bn for 2016.

Despite the Old World image conjured up by its name, Haagen-Dazs was actually invented in the 1960s in New York's Bronx district. The Scandinavian heritage displayed on the product's original wrapper was entirely fabricated to add to its prestige. Before Haagen-Dazs, ice cream was almost always cheaply produced and cheap to buy, largely targeted at a family or kids' market. Haagen-Dazs ushered in a new age in which ice cream could be exclusive, prestigious, sophisticated and even sexy. It remains the #1 brand worldwide in the "super-premium" segment which it invented. Launched in three flavours (chocolate, vanilla or strawberry), it is now available in a bewildering variety with names as delicious as the ice cream itself. Pralines & Cream, Strawberry Cheesecake, Cookie Dough Chip, Chocolate Fudge Swirl... Many countries have their own local specialties, such as Azuki Red Bean and Custard Pudding or Black Sesame in Japan, Lychee Cream & Ginger in France, or Chocolate Peanut Butter in the US.

Inevitably the US market is by far the most advanced, with around 30 regular flavours in the main ice cream range, accompanied by limited edition specials, and sorbets, frozen yogurts, single-serve cups and ice cream bars. In the US, the company belatedly introduced a low-fat "light" formulation in 2005, with some success (although it trails behind stablemate Dreyer's Slow Churned). The company introduced a Haagen-Dazs Cream Crisp sandwich ice cream treat in Japan in 2003, and this has gradually been introduced into other markets. In 2007, Nestle began introducing a new super-super-premium extension in the US, Haagen-Dazs Reserve, offering even more exotic flavours (such as Hawaiian Lehua Honey & Sweet Cream, Pomegranate Chip, Amazon Valley Chocolate and Toasted Coconut Sesame Brittle). This line was later discontinued, and replaced by Haagen-Dazs Five, a stripped-down "natural" style of ice cream, in which each variety was composed of only five ingredients (milk, cream, sugar, eggs and the particular flavour). This too was eventually discontinued, and succeeded in 2013 by Haagen-Dazs Italian-style Gelato frozen desserts. A line of ultra-sophisticated "artisan" flavours was introduced in 2015 including Applewood Smoked Caramel Almond, Ginger Molasses Cookie, Spiced Pecan Turtle, Chocolate Caramelized Oat, Banana Rum Jam and Tres Leches Brigadeiro. A more recent innovation in the USA is Haagen-Dazs Trio blending three different flavours separated by layers of chocolate.

According to IRI figures (52 weeks to Jan 2017, all retail channels, Grocery HQ), Haagen-Dazs was the #3 take-home ice cream brand in the US by value, behind Unilever's Breyer's and Ben & Jerry's. Its combined US retail sales of ice cream, frozen yogurt and sorbet totalled $468m, or 8.1% share by value. The combined total for Ben & Jerry's and high-end stablemate Talenti was $773m or around 13.4% share. The brand's single-serve tubs and bars were also among the top six by value in the separate frozen novelties segment. In the UK, the positions are reversed: Haagen-Dazs has around 4% share of the take-home market (Mintel 2007), while Ben & Jerry's has 5%. For the year ending 2018, General Mills reported direct revenues from Haagen-Dazs internationally of $804. The 50/50 joint venture in Japan generated total sales of $430m.

Reflecting the fact that they are produced by two different companies, the Haagen-Dazs product ranges vary widely between the US and international markets. In Europe, General Mills also markets Haagen-Dazs Secret Sensations ice cream cups with liquid centres. The brand is also being rolled out, in both US and international markets, in the form of novelty bars to compete with Unilever's Magnum (which has in turn responded by moving into tub ice cream).

Haagen-Dazs is sold through traditional retail channels, as well as a global network of over 1,000 Haagen-Dazs cafes and ice cream parlours, spread across more than 50 countries. General Mills manages almost 880 international stores, and there are around 210 immensely popular ice cream cafes in the US, controlled by Nestle USA subsidiary the Haagen-Dazs Shoppe Company. Outlets also also sell cakes, sundaes and frozen drinks, and were ranked by customers as the 4th most popular limited service food outlet in the NRN Consumer Picks 2015 survey (though rival Ben & Jerry's was #3). Almost all outlets are franchised, although recently General Mills has begun to buy up master franchisees in some international markets. Top international markets include Japan (about $370m in sales), China ($100m) and France ($80m). The single biggest Haagen-Dazs parlour in the world in is the Champs-Elysees in Paris, and sells almost $10m of ice cream annually.

In 2016, General Mills agreed a five-year deal with the Wimbledon Tennis Championships to make Haagen-Dazs the tournament's official ice cream.

The brand's ultimate owner is General Mills, which distributes the brand in around 80 countries. It was acquired from Diageo in 1999 as part of the Pillsbury business unit. In the US, the brand was distributed until 2001 by Ice Cream Partners, a joint venture between Pillsbury and Nestlé. The acquisition of Pillsbury by General Mills triggered an option for Nestlé to take full control of the venture. In 2001, the Swiss group paid $641m to buy out General Mills and take a 99-year royalty-free license on the brand within that territory. Responsibility for Haagen-Dazs was subsequently transferred into Nestlé's local ice cream division Dreyer's Grand. In Asia, the product is handled through a joint venture with Suntory's foods division and Takanashi Dairy Co. General Mills has a 50% stake.

Background

Haagen-Dazs was invented in 1961 by Reuben Mattus, the son of Polish Jewish immigrants. Mattus had already spent years working in his family's New York-based ice cream business, Senator Frozen Foods. As head of the business during the 1940s and early 1950s, he began selling the family's ice cream through the new supermarkets then springing up all over America. However Senator found itself at a significant disadvantage to large dairy corporations who could manufacture with ease the huge quantities supermarkets required. As a result Mattus decided to focus his attentions on a smaller part of the market where bulk was not quite so important.

After almost a decade of experimentation, he launched a new high quality ice cream in 1961. Unlike the cheap and cheerful version sold in supermarkets this product was made with full cream and fresh eggs. At the time, scoop ice cream sold for around 50 cents a gallon. Mattus on the other hand priced his new invention at 75 cents for a single pint. The name Haagen-Dazs was literally plucked out of the air in order to sound grand and vaguely Danish - Denmark was regarded favourably by New York's immigrant Jews because the country had helped its Jewish community escape from the Nazis during World War II. Mattus even printed a map of Denmark on the wrapper to add to the illusion. Rueben's wife Rose Mattus took charge of marketing, delivering samples of their product to retailers all over the city. Initially the brand was sold only through upscale gourmet delis in New York, but its fame spread quickly through word-of-mouth, and by 1970 it was the only premium ice cream brand in America with national distribution.

Reuben's daughter Doris opened the first Haagen-Dazs cafe in 1976. When this proved successful, the family began franchising further outlets around the country. In 1983 the Mattus family sold the business to Pillsbury for $70m. Mattus remained a consultant until 1990, when he began inventing a luxury low-fat ice cream of his own. Mattus's Low Fat Ice Cream launched in 1993. Its inventor died a year later aged 81. That business is still run by the Mattus family.

Meanwhile Pillsbury had begun to roll out the brand internationally, starting with Japan in 1984, though a joint venture with local licensee Suntory and dairy manufacturer Takanashi. Haagen-Dazs reached Europe in 1987, initially through luxury stores such as Harrods. In 1989 Pillsbury was itself acquired by British company Grand Metropolitan (later to become Diageo). They ramped up the marketing, launching a mainstream campaign in the early 1990s which caused something of a sensation. The ads (made by Bartle Bogle Hegarty) were loosely inspired by the eating scene in movie 9 1/2 Weeks, and featured couples feeding each other the ice cream in provocative and sensual poses, under the banner "pure indulgence". Diageo finally sold the whole Pillsbury portfolio in 1999 to General Mills.

By this time, Haagen-Dazs was faced with a number of competitors. Chief amongst these was Ben & Jerry's, which sold ice cream of a similarly high quality, but at a substantially lower price. Crucially, Ben & Jerry's under-cut Haagen-Dazs's luxury image with a more socially conscious "charitable" image which threatened to leave the original looking simply snooty. The brand was also caught unawares by the sudden popularity of frozen yogurt in the late 1980s, and was comparatively slow to launch its own range (in 1991). Although sales remained strong in the US, the European business came under some pressure in the 1990s, and a change of agency (to Euro RSCG) and strategy (targeting a wider audience) failed to repair the damage. In 2003, the account was shifted again to TBWA. However sales remain under some pressure. The brand was withdrawn from Australia altogether in 2004 as a result of poor performance. Since 2004 however, worldwide sales appear to have stabilised, bolstered by the resilience of the luxury market. However the concept of "pure indulgence" has been diluted in most markets to accommodate increased concerns over healthy eating.

Last full revision 28th April 2017

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