Facing a steady decline in sales of traditional ice cream, domestic frozen treat makers are turning their eyes to the upscale market — a growing sector so far dominated by Haagen-Dazs.
In April, Meiji Dairies Corp., a leading ice cream maker, launched its premium Aya line with 11 different flavors. A 120-ml cup retails for 250 yen.
The company hopes to increase annual sales of high-end ice cream from 2 billion yen in the past business year to 10 billion yen in 2005.
Meiji Dairies originally introduced the Aya line in 1990 during the height of the bubble economy.
But the firm found a brand overhaul was needed to secure a larger consumer base as more adults have started eating ice cream, said Masaru Haresaku, manager of the Aya brand division.
“Given the declining number of children, we have to think seriously about ice cream for adults,” he said.
According to the Japan Ice Cream Association, the frozen treat market has been shrinking since 1994, with total sales estimated at around 340 billion yen in fiscal 2002.
Yet the market for upscale goods has been growing steadily. Meiji Dairies estimates the market size for such ice cream will reach around 45 billion yen this year, and will expand to 50 billion yen over the next three.
Unlike regular ice cream, Haresaku said brand perception matters most for consumers of high-end goods, and the challenge is to promote the proper image for the products.
“In many cases, grownups buy this ice cream on the way home from work as a little treat for themselves,” he said. “We are trying to make a connection between eating our ice cream and a happy moment.”
But it is unclear how far Meiji Dairies and other companies will be able to penetrate the Haagen-Dazs dominated upscale ice cream market.
Haagen-Dazs Japan Inc., established in 1984, today has a market share of around 90 percent, with annual sales standing at 39.4 billion yen for 2002.
First marketed at high-street supermarkets and department stores in Tokyo, Haagen-Dazs took a leap around 1990, when it started sales at mass retail outlets, such as convenience stores.
In 1995, the firm set up a research and development center in Yokohama, the first such facility outside the United States, to better cater to local tastes. It released a green tea flavored ice cream the following year.
The company said that behind its overwhelming popularity in Japan is its meticulously cultivated brand image, with many consumers readily associating Haagen-Dazs with luxurious indulgence.
The existence of Haagen-Dazs shops, 68 outlets in Japan and hundreds of others overseas, plays a big role in building such a perception. With many located in posh areas, such as Tokyo’s Aoyama district, these shops make the ice cream experience more like a fashion statement, according to Haagen-Dazs officials.
“What makes us different from other ice cream makers is that we have these shops,” said company spokesman Ayato Minamino. “So, in a sense, we operate more like a brand-apparel maker, like Nike.”
Some other companies, meanwhile, are taking a different approach.
While Haagen-Dazs touts its upscale image, Lotte Co. is hoping to cash in on the childhood familiarity of Lady Borden ice cream products and their relatively low price.
The company has been licensed to produce and market the product in Japan since 1994, but the brand was originally brought here in 1971 by Meiji Dairies. Meiji canceled its contract with the U.S. firm in 1991.
After hitting a low of 1.8 billion yen in 1999, annual sales of Lady Borden frozen treats grew to 3 billion yen last year. The company — known for its vanilla, chocolate and strawberry mainstays — is planning to introduce new flavors this fall.
Lotte officials say the brand is becoming popular among adults as many grew up eating the ice cream.
And Lady Borden’s competitive price is another appeal — a pint cup is sold for between 300 yen and 500 yen, almost half the price of Haagen-Dazs.
The company claims it can offer quality products at lower prices since it makes Lady Borden ice creams in Perth, Australia, where raw materials cost much less.
“People may not be able to eat Haagen-Dazs every day, but they can with Lady Borden,” said Kazuhiro Watanabe, a Lotte official.