Resizing the ice cream market, the Dreyer's way

Size matters.

If you enjoy ice cream like I do, you probably like getting your ice cream from the store by the half gallon.

Well, not anymore.

In 2002, Dreyer's, the leading producer in the ice cream market, decided to downsize its half-gallon cartons to 1.75 quarts, shaving a half-pint out of every carton.

It was done to save money, said Dreyer's.

In marketing-speak, that means, "We're going to protect our profits."

After hearing of Dreyer's strategy, I decided to mount my own, one-person boycott. I wasn't going to support Dreyer's unilateral attempt to resize the market. There were other, good off-brands available in half-gallon sizes, so I bought those. It made sense. More ice cream for the same or less money. Sure, Dreyer's tasted a little better, but it wasn't enough to level the new playing field.

And for almost three years, I haven't missed Dreyer's.

Many consumers, who weren't aware of the resizing, probably kept buying Dreyer's and couldn't tell the difference. The carton is the same height as the half-gallon size, and is almost imperceptibly slimmer. It takes a sharp eye to spot the smaller carton.

Recently, I've noticed that the market has finally turned. It seems every ice cream maker has jumped on board and adopted Dreyer's resizing strategy. Now, it looks as though the half-gallon carton has been made extinct, gone the way of the dodo.

Maybe I'm taking it too personally.

Producers

Food producers resize their products from time to time. It's a part of doing business, and indeed, it is a part of saving production costs. Ice cream makers have been hit hard by the rising cost of milk products, and demand for ice cream has been declining proportionally. So from that perspective, it is possible to see Dreyer's reasoning.

Dreyer's could not have convinced its rivals to adopt its resizing plan if they were the only company seeing declining profits. The rest of the industry has no incentive to change if the market on average is healthy. So it appears the trend was driven by rising costs across the industry.

From a producer's point of view, it makes more sense to cut supply rather than raise prices, because consumer satisfaction tends to be price sensitive. No matter how you slice it, though, we're still paying more.

Consumers

I readily admit to having an emotional attachment to the issue, but that's an honest part of consumerism. People get used to the things they like, and if that level of comfort is disrupted, a consumer's loyalty can change. Market standards become ingrained and are hard to change without an equal and opposite reaction.

Coca Cola found that out when they replaced its flagship product with "New Coke," a Coke with a new taste, in the early 1980s. Many loyal Coke drinkers were outraged, and reluctantly, Coca Cola was forced to reintroduce the original Coke as "Classic Coke" to satisfy their purist market. As a result, "New Coke" was dead almost from the time it reached the shelves, and "Classic Coke" eventually became good old Coke again.

I'm not saying my rant about the ice cream business is a perfect analogy to the New Coke debacle. Of course it isn't. But the comparison is about product loyalty, and how a company or industry can negatively effect that loyalty.

I grew up drinking milk from half-gallon bottles, and I ate ice cream from half-gallon cartons. If gallon milk bottles were downsized to a 3-liter size at the same price, I'm not sure the market would support it.

The ice cream business is essentially cutting supply while maintaining its price point. And they're hoping demand will at least remain steady to support the supply curve.

Consumers are being asked to spend the same amount of money for less product. Eventually, prices will rise, so we will have to pay more to get less.

I can do the math. If anything gets too expensive to buy in quantity, I will adjust my spending accordingly.

So what am I going to do, as one consumer?

I'm going to buy less ice cream.