Friday, April 22, 2011

Norfolk ice cream makers call for VAT cut

Norfolk provides a vast range of premium, locally-produced ice cream products, which despite the tough economic conditions, have continued to tempt customers. But beyond the ever-growing queues outside ice cream vans and farm shops, things behind the scenes are not always so rosy with manufacturers battling against massive hikes in ingredient prices.

Alongside increases in fuel costs and VAT charges, coupled with the cumulative effect of recent wet summers and hard winters, there are fears that some producers could be forced out of business, according to The Ice Cream Alliance.

The not-for-profit organisation, which supports the production and vending of high quality ice cream, has now written to chancellor George Osborne calling on the government to classify ice cream as a food 
rather than a luxury item – thus ending its VAT loading which is currently 20pc.

Zelica Carr, chief executive officer for The Ice Cream Alliance, said: “The ice cream industry plays a major part in the economy of the UK with sales of around £1.3bn a year but many businesses are fearing for the future after being hit by a succession of swingeing price increases.

“I have written to Mr Osborne asking him to reconsider the classification of ice cream as a luxury product and re-classify it as a food and reduce the VAT levied on it to zero. “Ice cream plays an important, if often under appreciated, role in British life. It provides an affordable feel good factor which in today’s economic climate is sadly lacking for many families.”

According to the organisation – which has more than 600 members –producers have seen sugar rise from £460 a ton in January to £800, with fears that it could rise to £1,400 in June. Skimmed milk powder has increased from £1,800 per ton in January to £2,900, while cocoa powder has virtually trebled from £1,250 per ton to £3,600.

Manufacturers in Norfolk said despite the sunny weather providing a healthy kick-start to sales, any help to counteract the spiralling production costs would be welcomed. Simon Edye, director of Ronaldo Ices, based in Lothian Street, Norwich, said the shelving of the VAT loading would do a “tremendous amount of good” for his business, but was sceptical that whether the reclassification of ice cream as a food would be successful or even correct.

“I think nowadays ice cream is a luxury and the fat value of some ice creams is so high is it food?” he said. “The ingredients prices are soaring. They are up about 17-20pc in key foods such as cream. Chocolate prices are going up 20pc. It’s a nightmare. I think we’re all worried about the price of chocolate.”Mr Edye, who formed the company in 1983, said he has been forced to pass on some of the cost to his customers through increasing sale prices by 3-4pc, although this is still not enough to cover the full cost of the ingredients.

But he added: “We’re busier than we have ever been so I’m not complaining about business. If the sun keeps shining then it’s boom time here.”Bosses at Norfolk’s oldest family –run ice cream producers, Parravani’s, in Chedgrave, near Loddon, which was founded in 1898, said they have also had to increase prices to combat rising costs but this had not put off loyal customers.

Dominic Parravani said: “Within 113 years we have seen quite a few recessions but still ice cream is something that has lasted. “We go to a lot of events and fairs and people do bring pack lunches because they do not want to pay for food but they will pay for an ice cream. We’re very lucky – we have fantastic support and very loyal customers.”

He added that the loss of local dairy herds was also putting a strain on ice cream producers and wanted more help directed towards farmers. Producer Judy Clarke, of Clarke’s Ice Creams, based at Manor Farm, in Wattlefield, near Wymondham, welcomed an idea to shelve the VAT loading, although the four-year-old company is able to keep some costs down through having its own dairy herd.

“VAT does cause us problems – it adds such a lot to the cost. I don’t think people realise there is VAT on it,” she said. “We are busy and we have got a premium product that people are prepared to pay for but there will come a point where there is only so much they can take on.”
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Wednesday, April 13, 2011

Scrap VAT on ice cream, ICA urges Osborne

ICA chief executive Zelica Carr is calling for ice cream to be reclassified as a food, rather than a luxury item, exempting it from VAT, after duty rates rose to 20% in January; the sector is also facing unprecedented input costs and seasonal difficulties.

“You will be aware that the ice cream industry within the UK has suffered a number of setbacks in recent years,” she wrote in her April 8 letter to Osborne, where the ICA represents around 600 UK producers. “Such a move would be welcomed by a struggling ice cream industry, and would have a significant and positive impact upon the spirit and morale of the nation,” she said. Restore profitability.

Sugar now costs £800 per tonne, up from £460 in January, the ICA said, and it warned that prices could hit £1,400 in June. Skimmed milk powder now costs £2,900 per tonne, compared to £1,800 in January, while cocoa powder is up from £1,250 to £3,600.

But would scrapping VAT solve the problem of high commodity prices for food manufacturers, given that there was no guarantee supermarkets, for instance, would raise the prices they paid producers for ice cream?

“I guess there are different sectors, and that some would benefit less than others, who as you rightly suggest, are quite heavily squeezed by the retailers anyway,” an ICA spokesman told

“Beyond retail there are also artisan producers and dairy farmers, guys with mobile ice cream vans, ice cream parlours, etc.

“If VAT is not levied on the final product, then perhaps the big producers would see some benefit as well, if the supermarkets gave them a bit more leeway.”

Swingeing price increases

Asked what realistic response Carr expected from her letter, he said: “You’ve got to at least try and raise awareness. To a certain extent people take ice cream for granted, and not everyone appreciates the problems faced by the sector.”

Carr wrote that many ice cream businesses “fear for the future after being hit with a succession of swingeing price increases”. She also blamed wet summers and extremely cold and prolonged winters that have adversely affected sales in what is an extremely seasonal business.

Speaking to last week , one food sector M&A expert noted that a number of ice cream firms have gone bust in recent years, and blamed a highly cyclical market coupled with retailers turning the screw on producers.
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Wednesday, April 6, 2011

Ice Cream Daze

Ice Cream DazeSure, it’s rainy and windy out there, but spring is in the air. Note those daffodils poking their heads up and the restaurants that are already setting chairs out on patios. It’s undeniable. To ring in the new season, how about marking your calendars for some sweet treats?

Thursday (April 7) is the anticipated opening of Pinkberry in Harvard Square (1380 Massachusetts Avenue). Stop by from 7:30-9:30 p.m. for free swirls. And be sure to try the new for spring, limited-edition lychee flavor. April 12th marks the return of Ben & Jerry’s free cone day (it’s a holiday in my book). Line up early for free scoops of ice cream, frozen yogurt and sorbet.

On April 27, Baskin-Robbins will be selling scoops of ice cream - up to three per person - for 31 cents each from 5-10 p.m. Part of a fundraiser for the National Fallen Fire Fighters Foundation, the shop is introducing a new flavor of the month with the event in mind. Firehouse #31 is “a crunchy atomic fireball ribbon laced throughout with hot cinnamon and packed with red hot candy pieces in vanilla ice cream.” Hot stuff.

Brigham’s ice cream is once again available in a local ice cream shop. Beacon Hill’s boYO (175 Cambridge Street) has added the frozen treat to its lineup of natural frozen yogurt and 50-plus toppings. Brigham’s flavors available now include chocolate, vanilla, chocolate chip, peppermint stick, strawberry and coffee.
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Tuesday, April 5, 2011

Yogurt won't be confused with ice cream

A national advertising self-regulatory group Monday determined that television ads for Golden Valley-based General Mills' "Yoplait Splitz" are not likely to confuse children into thinking the yogurt product is actually ice cream.

The Children's Advertising Review Unit of the Council of Better Business Bureaus was acting on a complaint from a consumer who teaches an after-school advertising literacy program. The commercial involves a boy who peels back the lid of Splitz, a new dessert yogurt aimed at kids, and hears ice-cream truck music. A bunch of other kids hear the music, too, and start yelling "ice cream, ice cream, ice cream." The boy with the Splitz then says "No, it's yogurt.

The Children's Advertising Review Unit noted that such techniques could potentially create a "misimpression" but didn't in this particular case. The Splitz commercial didn't show an actual ice cream truck or children eating ice cream, and the "animated visual" of an ice cream sundae at the end of the ad conveyed a connection to the yogurt's flavor, the review board said.
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