Regarded as the ultimate snack indulgence, ice cream and frozen novelties are an important, albeit often overlooked, retail segment. The category’s understated consistency in delivering a mix of premium, super premium and regular brands with just the right amount of new frozen novelty product introductions and seasonal flavors keeps customers coming back for more.
The 65 convenience buyers to participate in CSD’s Brand Preference Study voted Wells-Blue Bunny, Ben & Jerry’s and Unilever (Good Humor, Breyers, Klondike and Popsicle) as the category’s top performers. Honorable mentions were Nestle USA and Masterfoods’ Dove brand.
The 65 chains operate nearly 10,000 stores and totaled $109 million in ice cream and frozen novelty sales. But that number is expected to jump over the next five years.
Despite unchanging consumer demand and fickle consumer tastes, the market for frozen desserts is expected to grow by more than $4 billion by 2012, according to "The U.S. Market for Ice Cream and Related Frozen Desserts," a new report from market research publisher Packaged Facts.
Dollar sales continue to grow annually, but not because Americans are eating more frozen desserts: instead, the population is paying more for what it eats. Prices of all dairy products are at an all-time high, and frozen desserts are no exception. Although these higher prices make shoppers hesitant about purchasing frozen desserts at the retail level, they sure don’t hesitate at the foodservice level. This phenomenon is driving foodservice sales while retail sales are slowing.
Although ice cream accounted for 59.2% (or $13.8 billion) of all U.S. frozen dessert sales in 2007, ice cream’s place at the dessert table dropped 0.3 percentage points from 2006. Sales likely went to frozen yogurt. Frozen yogurt’s 4.1% annual growth rate from 2003 to 2007 is the highest of all frozen desserts categories.
In 2007 alone, frozen yogurt sales grew 12% from the 2006 level. With consumers seeking better-for-you indulgence in a frozen form, frozen yogurt manufacturers have engaged in more innovation and new flavors, helping to revive the packaged frozen yogurt business.
"Because this is a mature market, growth for one marketer often comes at the expense of another. And within a company, growth of an individual product line or flavor often cannibalizes sales of another item. This is particularly true with frozen novelties, where product life cycles are extremely short," said Cathy Minkler, who headed the study for Packaged Facts. "Shoppers tend to browse shelves, actively on the lookout for new tastes, informative and exciting packaging, interesting product innovations or products offering a ‘surprise’ factor."
Trends Worth Watching
Fresh flavors. Vanilla continues to be America’s flavor of choice in ice cream and novelties, according to the International Dairy Foods Association (IDFA). However, ice cream flavors are only limited by the imagination. To keep consumers looking to see what’s next, individual processors often release limited time seasonal flavors, such as gingerbread, peppermint or caramel ice cream.
Quality segments. While the majority of ice cream sales have long been regular-fat products, processors continue to diversify their lines of frozen desserts in order to fit into various lifestyles, often called "better for you" products. Consumers can find an array of frozen desserts to fit specific dietary needs, such as reduced-fat, fat-free, low-carb, "no sugar added," added calcium or other nutrients, or even lactose-free ice cream, IDFA reported. Novelty/single-serving products are also an important part of this trend, as some consumers prefer the prepackaged portion when counting calories, carbs or fat grams.