Iconic Kiwi brand in Tip Top shape to sell
Icecream company’s ownership likely to move into overseas hands
Tip Top’s next master would be taking on one of New Zealand’s strongest brands — and that master is likely to come from abroad, according to an advertising expert.
Veteran ad man Mike Hutcheson said yesterday that Tip Top’s ownership looked likely to go overseas.
“It will be someone with deep pockets, and those deep pockets will most likely be international,” Hutcheson said.
Tip Top’s owner Fonterra confirmed this week that the icecream company was up for sale as the dairy giant seeks to reduce its debt.
Hutcheson said whoever takes over the company will inherit one of the nation’s best-loved brands.
“It’s got positive connotations for anyone who likes icecream,” Hutcheson said.
Tip Top has had several different owners over the years, after starting off as an icecream parlour in Wellington in 1936.
By 1962, its Mt Wellington plant had become the Southern Hemisphere’s biggest icecream factory.
Two years later, Tip Top had expanded and a parent company — General Foods — was formed.
The company went to Goodman Fielder in 1987, Heinz in 1992, West Australia’s Peters and Brownes in 1997, Kiwi Dairy Co in 2000, and to Fonterra in 2001.
In its various incarnations, the company has sometimes struggled to perform.
“As they have had this revolving door of ownership over time, I think they have lost their way a bit in terms of what the brand is about,” Hutcheson said.
“One of the problems is that an iconic brand like that gets under the fiefdom of various public companies,” he said. “The imperatives for public companies are driven by accounting principles rather than marketing principles.
“Costs are cut, things are shaved, and the brand does not get the love and attention that it deserves,” he said.
“It’s such a ubiquitous brand now and the quality of the product seems pretty good, so there is no reason why it should not perform well,” he said.
“There is no reason why it should not perform, and I guess that’s why Fonterra is looking to quit because it’s such a good cash cow.”
Tip Top’s Mt Wellington factory had fallen into disrepair before Fonterra spent about $40 million sprucing it up over 2010-12.
From an earnings before interest and tax perspective, the company rates as “mid-range” in the socalled fast moving consumer goods market.
In New Zealand, Tip Top competes with Streets, which is part of Unilever, but there have been myriad newcomers on the scene in recent years.
In terms of profile, Tip Top is the envy of the marketing world, with 95 per cent brand awareness among New Zealanders.
The company is inwardly focused, with exports forming a small part of its sales.
New Zealand is the second largest consumer of icecream per capita in the world, consuming a whopping 23 litres per year.
Fonterra Brands is the largest player in New Zealand’s icecream and frozen desserts industry, with 53 per cent of retail value sales, according to a report by Euromonitor International last year.
Sixty per cent of all of sales are made throughout December, January
and February.
"As they have had this revolving door of ownership over time, I think they have lost their way a bit in terms of what the brand is about. "Mike Hutcheson
Chocolate Trumpets, closely followed by Choc Bars and then Boysenberry Trumpets, are Kiwis’ individual ice lollies of choice, according to Tip Top.
Premium brand Ha¨agen-Dazs is the newest entrant to New Zealand’s icecream industry and is set to take on Swiss rival Mo¨venpick.
Ha¨agen-Dazs launched in New Zealand last year and fellow US icecream brand Ben & Jerry’s launched two years ago.
The company has also faced increased competition from local players who have entered the market with premium or dairy-free alternatives to the Tip Top range.
With consumer tastes continuing to evolve, this competition will only increase in the coming years.
Which is to say that whoever takes over Tip Top better have the appetite for a commercial stoush.