Dippin' Dots - The Rise and Fall...And Rise Again

[Music] if you've ever had dippin dots it's an experience i wouldn't say it's better than regular ice cream but it's different when i was younger maybe 15 or 20 years ago i was completely convinced that by this time traditional ice cream would be gone and it would all just be dippin dots these things were getting popular they had to stand at my local mall and i don't remember seeing it personally but they were available at certain mcdonald's locations i do remember seeing this machine somewhere that would automatically get them for you they just seemed so cool and new and different they even branded themselves as the ice cream of the future i don't know how many people were actually convinced by that but i was one of them and i can admit when i'm wrong dippin dots obviously did not become the new ice cream in fact they almost went away completely in late 2011 they filed for bankruptcy and look at the headline from the wall street journal dippin dots tries to avoid meltdown the ice cream of the future is struggling to survive relax they did survive and many would say are actually doing better now than ever before so let's take a look at their rise and fall and rise again kurt jones is the man who invented dippin dots in 1987 and quickly established the company to sell them he was a microbiologist working at a research center in lexington kentucky when he came up with a promising new process for making food for cattle it involved freezing yogurt at a ridiculously low temperature using liquid nitrogen and in doing so he would create these cattle food pellets that better maintain nutritional value that's how i understand it but let's face it that's no fun now i suspect that he was a little excited about this new process and looking for some other uses for it so one day when he just happened to be making some homemade ice cream he figured why not test it out here ice cream is a logical step from yogurt and it would make it freeze pretty fast he tested it out and it worked pretty well because it formed these cool little beads and that turned into his new project he spent a good few months perfecting it and eventually went in full time when he teamed up with his wife to open a dippin dots ice cream store most of the perfecting and initial production had taken place in its parents garage in his hometown of what's now called new grand chain illinois which has to be one of the smallest towns you've ever seen a population of about 200 so they chose the much larger city of lexington kentucky for the location for their store despite moving to this more populated area i'd still say that their biggest issue early on was simply reaching their customers see this was a brand new futuristic take on ice cream unlike anything that anyone else had ever seen before so obviously before you can sell it you have to let everyone know about it but how do you do that this was a new company so it didn't exactly have a tremendous advertising budget ideally i would think that being in person would be especially effective but here they were in a building that served as a barrier between the product and the potential customers the combination of factors made them somewhat detached from the population and as a result the business struggled kurt jones and his wife were spending more money than they were making to make up the difference they sold their car maxed out some credit cards his father mortgage part of the family farm was getting to a point where they finally realized that they had to make some changes in what looks to me like a final hail mary type effort they took out a loan and used the money to distribute their product to carnivals and amusement parks and that pretty much solved all their problems it provided a cheap and effective way to get the word out and reach the population directly breaking down just about every barrier that had held them back before they sold the dippin dots in small containers for just over a dollar and even gave out some free samples people were hooked and actually anxious to tell their friends about this new futuristic ice cream that they had found and then they leaned into that perception by marketing it as the ice cream of the future kurt jones realized that for the product to be successful he had to bring it to the people rather than the people coming to him by the 1990s the business was growing like crazy because they just kept following that same mentality opening these new freestanding locations just about anywhere you would typically find a large group of people walking around shopping malls became a big part of this plan along with movie theaters arcades ballparks zoos by the end of the decade you could find dippin dots in over 350 locations in almost every state and internationally as well they had made their way into the japanese market most of europe it all totaled to around 20 million dollars in sales each year now that's impressive in about a decade's time the company had transformed from a single struggling ice cream store into an international success but then over the next decade they went from an international success down to bankruptcy so let's look at how that happened and i have three pretty big reasons for it one is availability because dippin dots can be hard to find remember they really seem like they sell better when they're brought to the customer rather than the customer coming to them the ultimate example of bringing food to a customer is through a grocery store that's how we get our food and as part of their distribution plan i imagine they would be tremendously successful in selling them at our local supermarkets the issue is these things are so cold that they have to be stored at an extremely low temperature it's something like negative 40 degrees fahrenheit and the existing freezers at the store simply aren't cold enough they would have to bring in separate ones and have their own separate location and even if they did that you wouldn't be able to store them at home you would have to eat them in your car on the way home or something it all becomes troublesome and there's just not a practical way to do it it's a similar situation for online sales so right there it takes away some potentially major sources of revenue that i suspect would be especially effective with this product looking at the period leading up to their bankruptcy this made things pretty bad they are so reliant on people going to malls or movies or carnivals and that just wasn't happening as much during the poor economy it was a big factor that caused their sales to drop from 46 million dollars in 2007 to 30 million by 2010. the fact is they're just hard to get watching this video may have made you want to try some and if that's the case they probably won't be the easiest for you to find or the cheapest and that's my next reason it's hard to make an exact comparison because prices vary but on a per ounce basis i'm willing to bet dippin dots is pricier than any other ice cream you typically buy it's because there's higher costs involved it has to be made in this process involving liquid nitrogen has to be shipped and stored in special containers using special materials or more energy leading up to the bankruptcy all of this was compounded the obvious part is fewer people are buying high-priced ice cream in the poor economy but also they had to deal with an unlucky spike in dairy prices liquid nitrogen prices and transportation prices so not only were their sales down their costs were higher than ever when you combine low sales and high costs it's not good became very hard for them to make a profit the third one is patent issues this is interesting and maybe the biggest part of it a patent essentially means that you invented something so now for the next 20 years or so you have the exclusive rights to make it and sell it like say if you were to invent this process using liquid nitrogen that flash freezes ice cream into these little beads you can go and apply for one and if it's granted you'd be the only one legally able to make and sell that kind of ice cream that's what happened when kurt jones filed for his patent on march 6 1989 then in 1996 only seven years later there was this product called mini melts that dippin dots felt was infringing on this patent so dippin dots sued mini melts for that reason and then mini melts sued dippin dots claiming that they were wrongfully trying to create a monopoly over the flash frozen ice cream market this case actually lasted until 2007 and when it was finally resolved it was not good for dippin dots the details get a little tricky but here was a big part of it the law says that once you invent something and start selling it you have one year to submit that application in this case the application was filed in march of 1989 but it turns out he was selling them as far back as july of 1987 well over 12 months earlier they failed to state that in the application which did not go over well in court dip and dots claimed that it was a slightly different process used for those 1987 sales but it didn't hold up the end result was a settlement that required dippin dots to pay about 10 million dollars to mini melts and maybe even more importantly it said that they could no longer stop anyone from selling a similar product meaning the market was now open for competition minnie melts continued selling their product and others started popping up which was harmful for dippin dots so let's recap here dippin dots had always had issues with where and how to get their product to the customer in a convenient low-cost manner but all of a sudden a combination of factors made their costs even higher and their sales even lower when right around the same time they were dealing with a 10 million dollar payment to their competitor while the market was now able to become more competitive than ever before they had built up an 11 million dollar debt that they were unable to pay the creditor ended up suing them threatened to foreclose on the loan it all got messy and did force them into bankruptcy following the bankruptcy in 2012 they were sold for about 12.7 million dollars to this guy named scott fisher who is generally thought to be responsible for their recovery he said that he was attracted to the company because of the value of the brand and the fact that the bankruptcy allowed him to buy only certain parts of it referring to when he bought it he said it was a company that was in dire financial stress coming out of bankruptcy they had very little cash they were having a hard time keeping the lights on so i think that helps demonstrate what they were like at their lowest point right away he went all in on expanding the business he scaled things up by opening a big new production plan in 2013 they introduced this new popular yogurt version called yo dots sort of bringing it full circle 2014 they bought doc popcorn a somewhat similar company that relies on franchising it opened up some opportunities for co-branding actually the effective leadership and expansion of their franchises is thought to be a huge factor in their comeback plus we can't underestimate just being able to pick out the best parts of the company and getting a fresh start most of those pressing issues from before have passed and the company has some wiggle room now i don't know their exact sales numbers but i'm confident in saying that they've been growing and likely are larger now than they ever were before the bankruptcy you know with everything that's gone on with them i argue that their single greatest setback as far as the public's perception has been that slogan the ice cream of the future has become heavily associated with the brand and that's a hard promise to live up to should we consider them a serious innovative ice cream brand or an interesting novelty i'm seriously asking you because i can't tell i used to think it was serious and then i thought it was more of a novelty and now i don't know what to think but consider if they had set expectations a little lower and marketed themselves as more of a gimmick i think we would be more impressed by their success turns out they didn't become the ice cream of the future nor do i think they ever will anymore but looking back they've done pretty well overall let me know in the comments what do you think of all of it is this a gimmick or the way of the future is your perception of it now different than it was before and what do you think will happen in the future it's all been so unpredictable have you ever even tried dippin dots i'm guessing most people have tried it at some point but if you haven't go out see if you can find it and come back to me with your opinion i'd like to hear what you have to say thank you for watching [Music] you

Channel: Company Man

Views: 775,019

Rating: 4.9517975 out of 5

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Id: n2ox6GwkysY

Length: 12min 17sec (737 seconds)

Published: Wed Jul 29 2020

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