Dreyer's Grand Ice Cream, Inc. History

Address:

5929 College Avenue
Oakland, California 94618
U.S.A.

Telephone: (510) 652-8187
Fax: (510) 601-4905

Public Company
Incorporated: 1928
Employees: 2,500
Sales: $678.8 million (1995)
Stock Exchanges: NASDAQ
SICs: 2024 Ice Cream & Frozen Desserts

Company Perspectives:

Our mission is to make Dreyer's Grand Ice Cream, Inc. the leading premium ice cream company in the United States.

Company History:

Dreyer's Grand Ice Cream, Inc. is one of the leading ice cream manufacturers and distributors in the United States. The company sells its premium ice cream products under the Dreyer's Grand name throughout the western United States, Japan, and other markets in the Far East; the same product line is also available in the United States east of the Rocky Mountains under the Edy's Grand name. Dreyer's and Edy's products are sold through grocery stores, convenience stores, ice cream parlors, restaurants, and other food service outlets. The company utilizes nationwide direct-store distribution in conjunction with regional manufacturing to facilitate sales throughout the country. The company also distributes products manufactured by such other companies as Ben & Jerry's, Healthy Choice, Dove, and Nestlé.

Early History

Dreyer's Grand Ice Cream, Inc. was founded in 1928 by William Dreyer and Joseph Edy when the two men opened an ice cream and candy shop on Grand Avenue in Oakland, California. With their goal being to make and sell the best tasting ice cream possible, Dreyer (an ice cream maker) and Edy (a candy maker) focused on creative innovations to fuel their small venture. For example, the two men used Edy's knowledge and expertise in candy-making to create the original Rocky Road ice cream. The chocolate, marshmallow and nut flavor was created in late 1930 and was named Rocky Road as a means of describing the ice cream's texture as well as the troubled economic times of the Great Depression. Dreyer and Edy are also credited with originating the Toasted Almond and Candy Mint flavors.

Within a short time after its introduction, Dreyer's Grand ice cream gained a faithful following in the San Francisco Bay area. Prior to Dreyer's and Edy's exotic flavor creations, ice cream was available mainly in such basic flavors as vanilla, chocolate, and strawberry. The addition of traditional sundae-topping items such as nuts and candy into the ice cream itself was a novel approach to ice cream production. Such innovations were enthusiastically accepted by consumers, however, and Dreyer and Edy continued to experiment with different flavor combinations. At that time, Dreyer's Grand ice cream was delivered to and sold in ice cream shops and soda fountains throughout the San Francisco area.

It was not until the 1960s that Dreyer's Grand began to be packaged in containers for sale in supermarkets and other retail outlets. During the era surrounding World War II, the average home refrigerator had extremely limited freezer space in the form of small ice cube compartments, and therefore could not accommodate large containers of ice cream or other frozen foods. By the 1960s, however, most families had larger freezers that were suitable for food storage, and the popularity of quart and half-gallon size containers of ice cream increased dramatically. Dreyer's began distributing its ice cream to supermarkets and retail outlets around San Francisco and the surrounding areas.

Expansion in the 1980s

In the 1970s, the company's business expanded beyond the San Francisco area to other Northern California markets, and distribution throughout all of Northern California and Los Angeles was in place by 1976. In 1977, the $6 million company was sold by Kenneth Cook, a longtime Dreyer's employee, to T. Gary Rogers and William F. Cronk. Prior to the purchase, Rogers and Cronk had attended the University of California at Berkeley together in the 1960s. After graduating, Rogers joined the army and later went on to Harvard Business School, while Cronk became a stockbroker. The two men joined forces again in the 1970s to start a restaurant, and when the venture failed, they decided to purchase Dreyer's. Rogers became chairman of the board and chief executive officer of Dreyer's, while his partner, Cronk, was named as the company's president. Together, the two began formulating a plan to introduce the company's product nationwide and to make Dreyer's the leading premium ice cream in the country, filling the gap between Haagen Dazs (super premium) and Sealtest (generic), both of which were already found on the national level.

Under the leadership of Rogers and Cronk, Dreyer's had introduced its products into the states of Washington, Oregon, and Arizona by 1979, using the company's unique direct-store distribution system. Direct-store delivery was a strong advantage in Dreyer's quick expansion throughout the West, in that it allowed the company to tailor each delivery to the tastes of consumers in any particular area. Dreyer's was therefore able to ensure that it could meet the demands of its customers, making retail outlets more willing to stock Dreyer's products. Direct-store delivery also enabled Dreyer's to avoid the costs of building numerous manufacturing facilities to coincide with existing distribution companies throughout its market areas.

With a strong hold on the market in the western United States, Dreyer's became a public company in 1981, selling shares of its stock to fund further expansion and distribution around the United States. Because another premium ice cream company by the name of Breyers already existed in much of the eastern portion of the country, Dreyer's agreed to market its product east of the Rocky Mountains under the Edy's Grand name. Edy's Grand Ice Cream was introduced in Chicago and Kansas City in 1981, offering 23 different flavors to its retail customers. In 1983, as Edy's Grand Ice Cream began to be marketed in St. Louis, Milwaukee, and parts of Ohio, Dreyer's Grand Ice Cream, Inc. was named to Forbes magazine's prestigious list of "Up & Coming" companies. At that point, Dreyer's had experienced a 959 percent increase in sales since Rogers and Cronk bought the company, and its market value was estimated to be $192.2 million.

In December 1985, Dreyer's made a strategic move to accommodate its growing distribution needs in the eastern United States when it acquired Berliner Foods Corp., a distributor in Maryland, for $8.4 million. Prior to the purchase, Berliner had distributed 55 manufactured gourmet ice creams and ice cream novelty items, the most notable of which was Haagen Dazs, throughout the states surrounding Maryland. Dreyer's used Berliner as a means of distributing its Edy's Grand product line around the mid-Atlantic region to test the eastern market, and eventually used its success in that area as a springboard to enter the New England region and the remainder of the East Coast. Meanwhile, in December 1986, Dreyer's acquired Midwest Distributing Co., Inc. for $5.2 million and used it to enter the Minnesota, Wisconsin, and Michigan markets.

Dreyer's then expanded its product line in 1987 with the introduction of Dreyer's and Edy's Grand Light, the first premium light ice cream in the United States. The ice cream contained half the fat content and a third fewer calories than regular Dreyer's or Edy's Grand Ice Cream. Grand Light was quickly accepted by the many consumers who were becoming more and more health-conscious, and by the end of 1988 sales of the product had doubled from the previous year. In 1987 the company also established the Dreyer's Grand Ice Cream Charitable Foundation, an organization committed to supporting community, youth and K-12 public education programs. The Foundation soon spread its reach throughout the country, localizing itself mainly in the many communities where Dreyer's held operating facilities.

In 1989, the company once again led the market with the national introduction of frozen yogurt in quart and half-gallon containers. Available in almost every popular flavor, the frozen yogurt was the best-selling packaged yogurt in the United States within three years, and its success soon ushered in six flavors of Dreyer's completely fat-free frozen yogurt. Nineteen eighty-nine also marked the beginning of an extremely important partnership between Dreyer's Grand Ice Cream, Inc. and Ben & Jerry's Homemade, Inc. For $3.1 million, Dreyer's purchased the rights to distribute the Ben & Jerry's super premium products in selected areas of the nation, along with its own premium line of products. Because Ben & Jerry's butterfat level classified it as a super premium, and because it was packaged in pints only, it was the perfect complement to the Dreyer's and Edy's product line, without competing with it. Distributing the two products together also helped bolster the sales of each, as the availability of one item was often a selling point with retailers for stocking the other.

The 1990s and Beyond

In early 1990, drawing from the quick success of their distribution partnership with Ben & Jerry's Homemade, Inc., Dreyer's acquired Barkulis Bros., Inc., the Chicago-area distributor of Mars Inc.'s DoveBars, for $9 million. Dreyer's also sealed a distribution deal with NutraSweet in April of the same year, after NutraSweet's Simplesse fat substitute was approved by the FDA for use in frozen desserts and the introduction of Simple Pleasures fat-free frozen dessert began. Dreyer's received the rights to distribute Simple Pleasures throughout the country, and began delivering it to stores that summer alongside its own Dreyer's and Edy's Grand products, the DoveBar products, and Ben & Jerry's products.

With sales in its U.S. markets booming, Dreyer's expanded into the international market by entering a joint venture with the Japanese trading firm Nissho Iwai Corp., to market and sell the Dreyer's line of products in Japan. Because politically powerful dairy farmers had kept Japan's dairy prices at an extraordinarily high level for many years, Dreyer's sales potential in Japan looked very promising. Trade pressure from the United States had forced Japan to lift restrictions on the import of dairy products, making it possible for Dreyer's to ship its products to Japan directly from its manufacturing sites in California. Dreyer's hoped that its price advantage would help it gain ten percent or more of the Japanese market and even further increase its almost $300 million in annual sales.

Nineteen ninety also saw the introduction of Dreyer's American Dream, a 99 percent fat and cholesterol-free dessert made with the same ingredients as ice cream, but which did not contain a fat substitute. The product marked Dreyer's increasing commitment to serving the health-conscious consumer, and, within a year it became the leading premium nonfat brand in almost all of its markets. Dreyer's continued its product line expansion in 1992 with the unveiling of Dreyer's and Edy's No Sugar Added, which appealed to consumers who wished to limit their sugar consumption for health or dietary reasons. The success of these products, combined with Dreyer's successful expansion throughout the country during the 1980s, had solidly placed Dreyer's line of products as the second-leading premium brand in the United States in 1992, with competitor Breyers at the head of the premium market.

Continuing its emphasis on product development, Dreyer's began manufacturing frozen dessert novelty items in 1993. The company introduced Dreyer's and Edy's Ice Cream Bars and Tropical Fruit Bars, and set its sights on capturing an even greater number of consumers based on the variety and convenience provided by the new items. Dreyer's also created a soft-serve variety of its ice cream and frozen yogurt, dubbed Dreyer's Premium Soft, to be sold in restaurants, ice cream shops, and other outlets in the food service industry. In order to meet the demand for its increasing number and variety of products, Dreyer's utilized over fifty distribution centers around the country, which were served by five different manufacturing facilities located in Union City and Commerce, California; Denver, Colorado; Houston, Texas; and Fort Wayne, Indiana. The company's efficiency in manufacturing and distribution was recognized by Industry Week magazine when it named the Fort Wayne facility as one of the country's ten best manufacturing plants in 1993.

By the end of 1993, Dreyer's annual sales had increased to over $470 million, and it was poised to take the lead in the race with Breyers to become the country's leading premium brand. Dreyer's continued its nationwide expansion with successful entrances into the Florida and Texas markets, using its direct-store distribution system as its strongest strategic asset. By early 1994, Dreyer's products were being sold in every major grocery chain in the state of Florida, and the company had entered into an agreement with Sunbelt Distributors, Inc. of Texas to begin distribution of the Dreyer's line of products on a long-term basis. Within one year, Dreyer's had earned almost ten percent of the ice cream market in Houston. Furthermore, Dreyer's added Lactose Reduced Ice Cream to its product line, and began offering prepackaged Ice Cream Cones and Yogurt Bars as novelty item selections.

Taking into account the broad array of products it had on the market, and also its continued expansion around the country, Dreyer's began to focus more on advertising its product line in the mid-1990s. Using the slogan "Evidently it's not your normal ice cream," Dreyer's introduced a fantastically popular series of television commercials that humorously depicted the outrageous things people would do for a taste of Dreyer's or Edy's Grand products. In one television spot, grandpa jumps up and does the splits upon learning that Dreyer's is for dessert; in another, grandma lifts a car in a supermarket parking lot in order to retrieve a container of the product which has rolled underneath. Possibly the most popular version, however, was that in which a previously-bored baby stands up and begins break-dancing when his mother announces, "Mommy's gonna put you in your high chair and fix you some Dreyer's Cookies 'N Cream."

Having grown from a small neighborhood ice cream maker into one of the largest ice cream companies in the United States, Dreyer's Grand Ice Cream, Inc. entered the late 1990s in a position of dominance in the premium ice cream industry. The company began an aggressive marketing plan, which included quadrupling its advertising budget. These measures helped T. Gary Rogers' and William F. Cronk's company surpass its rival Breyers in market share in early 1995. In celebration of the success, the company chartered three DC-10 airplanes to fly all of its employees to a party in Oakland, California, near the site of the original Dreyer's Ice Cream Parlor. It also increased the scope of the Dreyer's Grand Ice Cream Charitable Foundation with the addition of a new foundation effort called the Grand Expectations Program. The purpose of the new program was to support creative projects around the country which affect a significant number of children and promote excellence in their actions.

Throughout the years, Dreyer's commitment to innovation and serving consumers' needs aided it in the development of numerous products focusing on both health and convenience. Furthermore, its direct-store distribution system had proven to be so effective that the company's portfolio of partner brands had grown to include Ben & Jerry's, ConAgra's Healthy Choice, Mocha Mix, Nestlé Ice Cream novelties, and Lemon Chill, among others. In 1995, its partner brands accounted for 34 percent of Dreyer's total revenues. With sales steadily climbing in the geographic areas already served by their distribution system, and with several other national and international market areas still open, Dreyer's possessed seemingly-unlimited potential for continued growth and success.

Principal Subsidiaries: Edy's Grand Ice Cream; Edy's of Illinois, Inc.; Dreyer's International, Inc.; Grand Soft Capital Co.; Grand Soft Equipment Co.; Systems International, Inc.; Portofino Co.; M-K-D Distributors, Inc.

Dreyer's Grand Ice Cream, Inc. History

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