Photo courtesy of Son of Groucho
In the sweltering hot days of summer, nothing beats an ice cold treat. But while ice cream was once upon a time the choice snack to chow down on when the mercury was rising, it would seem that it is no longer the go-to for American consumers.
In fact, Ice Cream Market in the US is only expected to post a CAGR of 2.09 and 1.46 percent by revenue and volume respectively from now through 2018.
So what is causing Americans to turn their back on the all-American snack? What is edging out Ben & Jerry’s, and giving Häagen-Dazs a run for their creamy, chocolaty swirled money?
I Scream, You Scream We All Scream for…..Froyo?
If you live in any major city (and even some not so major cities) you’ll probably have noticed a whole lot of specialty frozen yogurt bars popping up. These places often have a ‘build your own’ vibe, with an entire wall of froyo flavours that can be mixed and matched with any number of toppings.
Frozen yogurt is often considered a healthier alternative to ice cream, as it tends to be lower in fat and sometimes even contains less sugar. Some products even make the same probiotic claims as regular yogurt. Mix that with the sheer number of flavours available and you get one popular dessert, which is stealing customers away from plain old ice cream.
Rise in Sugar Prices
For ice cream producers who are already struggling to move their product, a rise in sugar prices has been a severe challenge. Sugar is obviously an essential component in ice cream, but federal law in the US limits the amount of sugar that can be grown or imported, meaning that manufacturers have to pay to obtain sugar the sugar they need. Consequently, domestic manufacturers face stiff competition from overseas counterparts.
Increased Health Consciousness
No one would class ice cream as a health food, and in an increasingly health-conscious society the frozen treat’s high fat, sugar and calorie content might end up being its undoing. Consumers are moderating their consumption of desserts, and no amount of creative marketing on the part of ice cream manufacturers will be likely to change the perception that ice cream is anything more than a sometimes treat.
The Market Hasn’t Melted Yet
All these factors are giving ice cream a pretty tough time at the moment. Between 2009 and 2011, Cold Stone Creamery’s annual sales dropped from US$430 million to US$366 million, and its store count dropped from 1,198 in 2009 to 1,086 in 2011. Baskin-Robbins also saw a drop in ice cream sales from US$570 million in 2009 to US$496 million in 2011 with store counts dropping from 2,597 to 2,457 during the same period.
But it’s not quite time to sing ice cream’s swan song yet. There are a few interesting trends in the market that, while not necessarily leading to astronomical market projections, will still buoy the market over the projected period.
Launch of Innovative New Products
The launch of new flavored products, Kosher-certified ice creams, products with all natural ingredients, and premium ice cream products has helped vendors gain more consumers over the past five years. For instance, the market witnessed the launch of around 2,243 new ice cream products between November 2008 and November 2011. The launch of an increasing number of health-oriented ice cream products and low-fat/reduced-fat/low-sugar ice cream products has also helped the market grow in recent years.
Ice cream manufacturers also update their offerings to better their brand image. For instance, Jeni’s Splendid Ice Creams, a small Ohio-based chain, established a new gourmet segment with flavors such as goat’s cheese with red cherries and Riesling poached pear. Cold Stone has also begun to offer ice cream cupcakes to cash in on this dessert’s popularity. Similarly, Dairy Queen recently introduced fruit smoothies, which includes a “light” version. Advances in technology such as cold extrusion technology also helps marketers introduce more creamy flavors with reduced fat content, such as Unilever’s Carte d’Or Light.
Innovative new ice cream products will continue to penetrate the market over the next few years, and these will help ice cream cling on to its spot in the pantheon of American desserts.
For more information, view our report on the Ice Cream Market in the US 20140-2018.
