Ice cream maker gears up for tip top time

By Duncan Bridgeman

Friday 6th December 2002

Tip Top Corner on Auckland's southern motorway has for many years marked the place where work finished and holidays began. Unfortunately these days the landmark is probably just as famous as the place where south-bound traffic grinds to a halt during rush hour on a Friday.

But despite the bottleneck, the Mt Wellington ice cream factory has long been a comforting sight for motorists looking to cool off after a long drive.

Last week the Auckland factory celebrated its 40th birthday just in time to prepare for what is hoped to be a busy holiday season.

And while owner Fonterra Co-operative Group has been shuffling its divisions to different parts of the country, Tip Top is not about to move from its post yet.

"There has been talk at various times of moving but we are dug in here for the duration," managing director Ray O'Connor said. "Brands like Tip Top have a huge value and we'd be foolish to up and leave now."

With the summer holiday period just around the corner, Mr O'Connor was looking to up the tempo in marketing Tip Top products.

The same consumer would buy different products on different occasions, he said.

"Most consumers either go for the full treat factor or the low fat products so we try to cover for both occasions."

In an industry driven by impulse sales, the recent fine weather break in the north had come at just the right time for the brand, which competed head on with multinational giant Unilever.

According to a recent study, every one degree change in temperature brings a 15% change in sales for ice cream makers.

Mr O'Connor said in the ice cream business consumers normally decided when summer started and when it finished.

"I think we are just about there now," he said.

New Zealanders were traditionally big consumers of ice cream cone, none more so than in Nelson where every person in the province guzzles 6.46 litres of the stuff every year, according to recent figures.

Nelson's cone eaters were well ahead of Auckland's, who consumed only 1.5 litres each last year.

Marlborough-Tasman came top apparently because of the high number of holiday-makers to the region and the temperate climate.

While in the past Tip Top had capitalised on the popularity of blockbuster movies its R2D2 ice cream sold three million sticks in three months during the first Star Wars episode in the 1970s there were fewer opportunities now.

Even if Tip Top obtained the licence to duplicate Lord of the Rings figures or Harry Potter figments, there was a high risk involved, Mr O'Connor said.

"In a general sense, we've struggled to get our bait back on movie partnerships because of the timing ... the life cycle only lasts a few weeks and there are huge logistical problems."

Jurassic Park had been the last successful partnership for the brand, he said.

Instead Tip Top would focus on new yoghurt flavours, low fat products and fast-moving brands such as FruJu, Mr O'Connor said.

Tip Top is one of a number of strong regional brands under Fonterra's New Zealand Milk division.

The business of New Zealand Milk is primarily in sales, marketing and distribution and tends to be counter-cyclical to the rest of Fonterra's business. It is more profitable when the milk payout is low and less profitable when payout is high.

This was because NZ Milk bought its raw materials at prevailing international dairy prices but sold into retail markets that reacted more slowly to changes in international prices.

Mr O'Connor said other factors such as the price of sugar and chocolate also drove profitability. The exchange rate between the Kiwi and US dollars was also a key factor.

While not disclosing sales figures or other financial details, Mr O'Connor said Tip Top had maintained a good lead in market share of impulse products in New Zealand over major competitor Unilever. Tip Top had captured 70% of that market in New Zealand, he said.

"The challenge is to make sure we get a good mix of traditional icons like hokey pokey and new innovations."

Hokey pokey was one of the top three ice cream flavours in New Zealand and Tip Top sold over two million litres of it a year.

Tip Top exports the flavour to the Pacific and Japan, where it sells well but not as well as here.

Mr O'Connor said Kiwis were less precious about eating ice cream in a cone than their overseas counterparts, who generally saw it as a treat for children.

"I guess it is just part of the Kiwi lifestyle."

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