Innovation needed in mature frozen dessert market

By Laura Crowley

- Last updated on GMT

Related tags Ice cream Marketing Us

Frozen desserts manufacturers must continue to develop innovation
to get ahead in this mature but competitive market, according to a
new report from market research publisher Packaged Facts.

The US market for frozen desserts is set to grow by more than $4bn by 2012, with frozen yoghurts experiencing the strongest growth, according to the US Market for Ice Cream and Related Frozen Desserts.

This represents an 18 percent increase over the next five years, from the market's 2007 value of $23.3bn across retail and foodservice.

However, despite the prospects, the world of ice cream is cutthroat, meaning that innovation is crucial to success.

"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, editor of Packaged Facts.

"Shoppers tend to browse shelves, actively on the lookout for new tastes, info rmative and exciting packaging, interesting product innovations, or products offering a surprise factor."

The ingredients industry has gone to work to help manufacturers dream up new products that, at the same time, overcome technical issues.

For example, earlier this month Cargill got together with MolliCoolz to develop cryogenically frozen ice cream beads that do not melt and fuse together during distribution and storage using its proprietary Daritech stabilizer.

Ice cream beads are small, individual pellets of ice cream in a variety of flavors and colors.

More developments in the industry include Kerry Bio-Science's launch last year of a new functional system called Sherex Enlite to improve creaminess, stability and shelf life of low fat ice cream.

Meanwhile, research has found that tasteless and edible antifreeze proteins made from gelatin hydrolysate could prevent the formation of ice crystals in ice cream, and maintain the smooth, silky texture.

The frozen desserts market has had to adapt in order to address two challenges arising from almost contradicting consumer desires.

On the one hand, consumers want luxury via premium products, but also look for products that are low in fat, sugar and calories.

Although ice cream sales accounted for 59.2 percent of all US frozen dessert sales, equating to $13.8bn, its lead has dropped by 0.3 percent since 2006.

The other frozen dessert categories are frozen novelties, frozen yoghurt and tofu, and sherbet, sorbet and ices.

Researchers consider the ice cream sales to have switched to frozen yoghurts.

Frozen yogurt's 4.1 percent compound annual growth rate from 2003 to 2007 is the highest of all frozen desserts categories.

In 2007 alone, frozen yogurt sales grew 12 percent from the 2006 level.

With consumers seeking healthy indulgence, frozen yogurt manufacturers have engaged in more innovation and new flavors, helping to revive the packaged frozen yogurt business.

Although sales are reported to have grown annually, the report says that Americans are not actually eating more desserts, but that the population is paying more for what it eats.

Dairy products are at an all time high, as a result of increased cereal prices rippling through the food chain, and frozen desserts are no exception.

The price hikes are blamed on poor weather, limited grain availability and an increase in biofuels.

The report says that the higher prices are making shoppers hesitant about purchasing frozen desserts at the retail level, but not at the foodservice level, driving foodservice sales while retail sales are slowing.

Related topics Suppliers Dairy-based ingredients

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