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Dippin’ Dots Invests $3.1M In The Ice Cream Of The Future


by Heather Blount/staff writer

Dippin’ Dots LLC, the maker of novelty ice cream and frozen treats, announced plans for a $3.1 million modernization and renovation at its Paducah, Ky., manufacturing facility in mid-January. Company executives told The Shelby Report that this investment opens many new doors for Dippin’ Dots, including new products and new distribution.

The tiny, flash-frozen beads of ice cream were invented in 1988 when Curt Jones, founder and CEO, applied technology to homemade ice cream that had been developed originally to freeze lactobacillus cultures. He got the idea while making ice cream with a neighbor: “We were talking about homemade ice cream and how icy it tasted and wanted to try to freeze it faster. We decided to use this technology that I had developed…That’s how the first Dippin’ Dots were made,” Jones said.

Since its first retail location in Lexington, Ky., opened in 1988, the company has primarily dealt in foodservice, selling its products directly to consumers either at branded stores, franchise stands or at its 1,000 vending machines found in movie theaters, water parks and other venues.

The Paducah facility is one of two manufacturing plants; the other is in South Korea. The South Korea plant supplies South Korea as well as Japan, while Paducah sends Dippin’ Dots not only to all 50 states in the U.S. but also overseas to eight countries, from Canada and Mexico to Australia, Vietnam and The Netherlands.

The investment in the Paducah facility includes new technology, including the use of ammonia and carbon dioxide as natural refrigerants, Stan Jones, VP of operations, research and development and international sales, told The Shelby Report. “It’ll reduce our power consumption by over 15 percent, so from an operational standpoint alone, it’s great because it’s saving money,” he said. “It’s allowing us to increase our production and also allowing us to keep up with the trends and being environmentally proactive.”

The company also plans to pursue LEED—Leadership in Energy and Environmental Design—certification for the project.

The $3.1 million investment also will expand the 40-below-zero freezer, which at 17,000 s.f. altogether, is one of the largest in the U.S., according to Scott Fischer, president and owner of Dippin’ Dots. With an expanded freezer, the company will be free to make and store more of its beaded ice creams as well as other products in the development pipeline.

Dippin’ Dots sets sights on drug, convenience and grocery channels

According to Stan Jones, Dippin’ Dots expects 2013 to be a big year in terms of expanding its reach and implementing new products.

“We’ve been working a lot (on) healthier products,” he said. “Some of the products we’re working with are sorbet lines, which are made with pure fruit purees, and then we’re also developing a frozen yogurt line that’s nonfat with live probiotics.”

These “better-for-you” products “are healthy but still fun to eat and taste great,” he noted. These include YoDots, the company’s answer to the frozen yogurt craze that is slated to debut later this year. The company also is working to include “very clean ingredient declarations” for its products, he said.

Mark Liebel, VP of business development and new ventures, added that these new products should work well for school functions, including “school football games or basketball games,” pointing out that Dippin’ Dots franchisees do a lot of fundraising with schools.

With new products comes new channels for Dippin’ Dots; however, with a product that needs to be kept at 40 degrees below zero, retail has presented challenges and traditionally kept Dippin’ Dots ice cream out of the freezer aisle.

Curt Jones said the company has a few products that can be kept at a higher temperature, “and retail is something we’re very interested in,” he said.

The beaded ice cream won’t be seen in the freezer aisle anytime soon, but Michael Barrette, VP of marketing and sales, said, “We’re looking at primarily the drugstore channel and higher-end convenience store channel and looking at front-end real estate where we can have our freezer up there by the check lane.” He added that the company’s core Dippin’ Dots beaded ice cream has been tested for the past 12-15 months, primarily at Walgreens locations.

“We’re finding that that is proving to be a pretty successful, if not very successful, model for us.”

The company plans to implement a model currently used in South Korean locations. “We’ve taken the Korean model and just begun in the U.S. market,” Barrette said.

It’s currently in about 160 locations, but that is expected to multiply “by eight to 10 times its current distribution over the next 12-24 months,” he said.

In addition to the drug and convenience store channels, Barrette said the company is in negotiations with select mid-sized grocery retailers. Though he declined to name names until the talks are finalized, Barrette described the retailers as “regional chains that would be known by the consumers.”

Since the company uses its own freezers for retail operations, shelf space isn’t an issue, but front-end positioning is “very precious real estate for the retailers,” Barrette acknowledged.

For Dippin’ Dots, going into retail requires careful consideration to be sure that sales will “offset the cost of the equipment, the shipping and the setting up of that equipment,” Barrette said, in addition to the cost of that high-priced front-end real estate.

The company also is looking at co-branding and partnering opportunities with restaurant chains, Liebel said, including some quick-service restaurants as well as upscale venues.

“That’s another means for us to create those ‘points of presence’ and be able to get our product to people who have not enjoyed it,” Liebel said.

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