Haagen-Dazs Says Company Violated ‘Loyalty’ : Ice Cream Distributor Frozen Out

When Two Count Co., a San Francisco-based ice cream distributor, decided to market Double Rainbow Gourmet Ice Cream and Perche No! gelato, little did it realize that it would put its nine-year relationship with Haagen-Dazs in the deep freeze.

Haagen-Dazs, the doyenne of the super premium ice creams, abruptly cut off Two Count’s distributor rights because, Haagen-Dazs said, it had violated “distributor loyalty” in agreeing to market the other two brands. The move has triggered a messy legal battle over distribution--the crucial tie between lesser-known brands and consumers.

Two Count and Perche No! (pronounced pair ‘- kay no ) each have filed separate suits, alleging that Haagen-Dazs’ distribution policy violates antitrust laws. Haagen-Dazs, a unit of Pillsbury, sued Double Rainbow last week, alleging that officials of the privately held company told other distributors that Haagen-Dazs’ policy was illegal.

The skirmish is the latest in Haagen-Dazs’ continuing battle to protect its dominance of the fast-growing gourmet ice cream market as new brands jostle for a share of sales estimated at more than $3.5 billion. Few, even the Frusen Gladje brand now owned by Dart & Kraft, come close to matching Haagen-Dazs’ sales, according to John Bierbusse, an analyst at Duff & Phelps in Chicago.

Nevertheless, Haagen-Dazs isn’t waiting for the competition to catch up. Some see the company’s move as biting the hand that once scooped out its success.

Haagen-Dazs itself was once a fledgling ice cream maker with its own distribution problems. Two Count, which is operated by the Walsh family, introduced Haagen-Dazs into the Northern California area in 1976, according to Bob Walsh. “It was a time when you couldn’t give away super premium ice cream. No distributor wanted it. We worked our tail off building it up,” he said.

But Haagen-Dazs defends its requirement that its distributors not handle competing products, saying it is also common to other industries, such as beer and soft drinks.

Steven Fink, one of the owners of Double Rainbow, says other distributors such as Adohr, a unit of Southland Corp., distribute Haagen-Dazs and his brand to 7-Eleven stores, while Dreyer’s Grand Ice Cream sells Haagen-Dazs to other distributors, which in turn, sell Haagen-Dazs and Double Rainbow.