Evolution of a brand: under new leadership, Baldwin Ice Cream is reaching beyond its Windy City roots - Baldwin Ice Cream Co - includes related article

Dairy Foods,  Oct, 1993  by Jeff Reiter

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Eric Johnson has always been an ice cream lover. He's practically addicted to the stuff. Never, though, did he figure to one day make a living from it.

Less than two years ago, Johnson, now 42, was in his fourth year as president and chief executive officer of Chicago-based Johnson Products Co., a pioneering company in the ethnic hair-care business. The firm, founded by Johnson's father, was prospering with Eric at the helm. In March 1992, however, Johnson abruptly left the company, reportedly because he and his mother, Johnson Products' chairman, couldn't agree on the company's future direction.

In any case, Johnson had grown tired of the health and beauty care industry and longed to own his own business. What happened next is largely a matter of perfect timing. One of the companies Johnson looked into was Baldwin Ice Cream Co., a small black-owned business with a rich Chicago heritage. To Johnson's delight, Jolyn Robichaux, Baldwin's owner since 1967, was ready to sell, and a deal was completed in September 1992. The purchase price was not disclosed, but Johnson reportedly financed the acquisition with the $480,000 severance package he received upon leaving Johnson Products.

Johnson says it was the company, not so much the ice cream business, that attracted him.

"What I saw in Baldwin was an unbelievable potential for growth. I saw a company with an outstanding product that really had never had the benefit of any significant advertising or promotion. Clearly, what was selling the product was in the package."

Johnson also figured that his experience with other packaged consumer goods could be readily applied to ice cream. Distributing and selling to supermarkets is nothing new to him. And in addition to his work at Johnson Products, Johnson's qualifications include a three-year stint at consumer products giant Procter & Gamble, plus an M.B.A. from the University of Chicago.

Southern exposure

Johnson says Baldwin was profitable when he acquired it, but the company's annual growth rate was a sluggish 5 or 6 percent. This year's sales are up more than 30 percent, however, and Johnson forsees no problem keeping the pace for at least the next several years. Revenues for 1993 are approaching $4 million.

Current growth is primarily the result of geographic expansion. In 1991, Baldwin's previous owner took the brand outside Chicago, establishing footholds in Alabama, Arkansas, Mississippi and Tennessee through authorization in more than 170 Kroger stores. As of early September, year-to-date sales with Kroger's Memphis and Nashville divisions were up 24 percent and 28 percent, respectively, Johnson says.

In May, Baldwin entered northern Georgia via the Atlanta division of A&P, operator of 52 stores. And this fall, Baldwin enters 54 stores in southern Illinois and Missouri (including St. Louis) through the National Tea chain.

A year ago, only 10 percent of Baldwin's sales occurred outside Chicago. Now the percentage is 35. Johnson believes the company's expansion progress is due in large measure to flavor selection.

"We have flavors that are very dominant in the South and Southeast," says Johnson. Black Walnut, Butter Pecan and New York Cherry are the company's three best-selling flavors after Vanilla. Baldwin fills a niche in many stores because it's often the only premium brand available in these varieties. Johnson notes that Baldwin is "almost unique" for offering Pineapple ice cream as well.

All of Baldwin's flavors are 12-percent butterfat with 85-percent overrun. Half-gallon squares, retailing for $3.69 to $3.99, account for most of the company's sales. Pints and 3-gallon tubs, sold primarily in Chicago, contribute less than 10 percent of total revenues.

Keeping things simple

Johnson clearly recognizes that focus can be a powerful strategic advantage. Compared with most other frozen dessert marketers, Baldwin's product line is compact: nine flavors of ice cream and three flavors of sherbet. Two more ice cream flavors--Butter Crunch and some variety of Chocolate--will join the line this fall, but no plans are in place to extend into frozen yogurt, light ice cream or novelties. For now, the company will grow by concentrating on what it does best: premium ice cream with extra-large quantities of fruits and nuts.

"I'm very confident that we have an ice cream that will stack up against anyone's, and having a great product makes it possible to develop market share," says Johnson. "Our job is to gain the opportunities and then prove that we're worthy of the shelfspace."

Repeat business for the Baldwin brand is very strong, Johnson claims, so the company's chief objective is to generate trial. Marketing activities outside Chicago consist mainly of ad/price features and in-store demos, usually implemented with the help of food brokers. Baldwin's own sales team handles the Chicago market, where the brand is supported with regular price promotion and recently, for the first time, small flights of TV and radio.

Johnson, in fact, sees tremendous growth potential in Baldwin's home town, where stepped-up marketing with existing customers is having a significant impact. For example, Baldwin's sales to Jewel, Chicago's largest chain, rose 12 percent during the first half of 1993 thanks to a more active promotion schedule. This year, Jewel and Dominick's (the No. 2 chain) have featured Baldwin for $1.99 per half-gallon, helping lift the brand's local market share to just over 2 percent in both volume and dollars.