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August 31st, 2005 Adrian Chen | News Stories
 

WHEN SIZE MATTERS: THE HALF-GALLON CHALLENGE

How typhoons in Madagascar are cheating ice-cream lovers and stressing out Oregon's Umpqua Dairy.

     
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Will the real half-Gallon please stand up? Umpqua delivers a full 64 oz (left) in its half-gallon of cold comfort, while competitors have embraced a leaner, meaner, 56 oz serving.
Recently, WW received an email from a reader incensed over a "weird insidious virus attack on ice cream." Her complaint: Ice-cream container sizes are shrinking, but prices aren't. And that's true-thanks, in part, to freakish weather on the island nation of Madagascar.

The effect of all that has been to lock Southern Oregon's tiny Umpqua Dairy in a heated battle against the downsizing trend, struggling to hold on to tradition in the face of Big Ice Cream's profit-mongering.

Within the past two years, much of the ice-cream industry apart from Umpqua began quietly shifting from the traditional 64-ounce container( a half-gallon) down to 56 ounces, says Malcolm Stogo, who wields the enviable title of international ice-cream consultant. What manufacturers don't want you to notice (and you probably didn't): They're still charging half-gallon prices

Tracing the reduced-size trend to its source leads back to drowned vanilla-bean fields in Madagascar. Beginning in 2000, a series of typhoons struck the Southern African island, the world's largest producer of vanilla beans. Unusually low yields resulted, and vanilla-extract prices shot through the roof, shaking the ice-cream world to its chocolate-swirled foundations, says Stogo.

Skyrocketing milk prices and packaging costs compounded the vanilla fiasco, and manufacturers started seeing their profits slump.

One easy way to boost profit margins, Big Ice Cream realized, was to sell slightly less ice cream for the same price, screwing consumers-but discreetly. "The public doesn't notice much, because the [56 ounce] packages look almost exactly the same" as the half-gallons, Stogo says.

By now, Stogo estimates, about half of all manufacturers, including heavy-hitters like Breyers, Blue Bunny and Dreyer's, have made the switch. This puts pressure on the rest to follow suit, and many are.

Roseburg-based Umpqua Dairy might be the next casualty in the war on the half-gallon. As a smaller operation, Umpqua is more susceptible to market pressures, and it's feeling squeezed when it comes to the half-gallon. "It definitely puts us at a cost disadvantage," says Tamara Hamilton, Umpqua's marketing coordinator.

Umpqua, Hamilton says, is dedicated to keeping its traditional size as long as economically possible. "We want to give [consumers] a whole half gallon; we have cartons dating back to the 1930s with the Indian head on them, and those are half gallons-it's hard to see those go away."

"If we do change," says Hamilton, "we will have been forced to" by container suppliers ditching the old half-gallon for the new, smaller industry standard. It's also possible the rest of the market may come back to Umpqua.

Like any commodity, ice cream is subject to cycles, so the new sizes may not last. Vanilla prices have fallen since January and the dairy market has stabilized, setting the stage for a possible return to the old half-gallon, Stogo says. He adds that if the 64-ounce does make a comeback, don't be surprised if Big Ice Cream touts its "new, bigger size!"

But don't be fooled-you know the truth.

 
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