Unilever plc ( “>UL ) is about to chill the $9.3 billion US ice cream market for the first time with its Magnum Bars. According to company sources, Magnum bars sold in the U.S. will be available for a suggested retail price of $2.59 each, or $3.99 for a multipack of three.
Unilever plc, a subsidiary of The Unilever Group, and based in London, UK, had introduced the Magnum bars, a premium ice cream on a stick wrapped in a thick chocolate shell, in the U.K. in 1987. Since then it has become the world’s top individual frozen dairy snack, accounting for 6.8% of the global market in 2009, according to Euromonitor International.
The Magnum bars were later rebranded as Magnum Classic. In Australia and New Zealand, the product is sold under the brand name Streets Ice Cream. In Greece and Romania, the Unilever ice cream uses the name Magic.
Despite its popularity across Europe, the indulgent Magnum bars couldn’t capture the U.S. ice cream market until now. However, the first Magnum bars started shipping to large U.S. supermarket chains and convenience stores last week, and will be available nation-wide by mid-April. It is expected to woo the US ice cream connoisseurs with six varieties, namely Double Caramel, Double Chocolate, Classic, Almond, White and Dark.
The super-premium bars account for 4% of the ice cream novelty market in the U.S, and management feels that the launch of Magnum in the U.S. will at least double the size of the market for “super-premium ice-cream” novelties.
The launch of the premium brand in the US market is a part of the program carried out by the company to spread its existing successful brands into new markets through big, rapid rollouts. Unilever had also introduced the Magnum bars in Brazil and Indonesia, which have been hugely successful.
The rollout is one of the biggest launches of the consumer-product giant in recent years. The Magnum rollout is backed by a national campaign worth more than $10 million. Unilever, which owns brands like Ben & Jerry’s, Popsicle, Good Humor and Breyers, will pose a great threat for big players like Mars Inc.’s Dove bars and Nestlé SA’s Haagen Dazs bars with its popular vanilla ice cream bars in the US market.
Unilever, which competes with Kraft Foods Inc. (KFT) and Procter & Gamble Co. (PG), currently holds a Zacks #3 Rank. On a long-term basis, we maintain an Outperform rating on the stock with a short-term Hold rating.
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