Although growth opportunities are hard-won in this stable market, a renewed focus on health and nutrition alongside its longstanding pillars of fun, nostalgia and indulgence will reinvigorate the category, according to market research firm Packaged Facts.
Packaged Facts estimates that the total market for ice cream and frozen desserts will near $27.4 billion by 2018, reflecting annual increases of just 1% in 2016 and above 2% in 2018. Retail dollar sales of ice cream and frozen desserts are projected to outpace the overall market, growing at a CAGR of 1.39% to almost $11.7 billion in 2018.
Foodservice sales outpace retail
Sales of ice cream and frozen dessert topped $25.5 billion in 2013, a slight improvement of about 1% compared to the previous year’s sales of just under $25 billion. Retail sales approached $10.9 billion in 2013, a slight decrease from 2012 and a reversal of gains made over the previous two years. (Foodservice, on the other hand, grew by about 1% per year from 2010 to 2013, to top $14.6 billion.)
Packaged ice cream led retail ice cream and frozen desserts categories last year, accounting for more than 53% of total retail sales through mass-market channels (supermarket, drug and mass merchants). Frozen novelties account for a further 37% of the retail market. Frozen yogurt/tofu (and other non-dairy ice cream alternatives), ice cream desserts such as ice cream cakes, and sherbet/sorbet/water ices categories each generated between 2% to 4% of tri-channel retail sales, while ice pop novelties generated just 1.5% of total retail sales. (Could dairy-free be the next big growth opportunity for the category? Plant-based milk, frozen dessert and cultured products brand SO Delicious thinks so.)
The retail market for ice cream and frozen desserts is extremely competitive with the brands offered by multinational conglomerates going head-to-head in the freezer case with regional and locally produced favorites on what is essentially an even playing field, Packaged Facts says.
Nestle SA and Unilever dominate market share, with close to 40% of the retail market between them. Wells Enterprises (Blue Bunny) comes in distant third with an 8.5% share of the overall market, and Texas-based Blue Bell Creameries has just over a 7% share. After that there is a big drop down to Northeastern regional marketer Turkey Hill at 2.3%, followed by a number of companies jockeying for between 2 and a fraction of a percentage of market share, including Rich Products, Mars, Kemps, J&J Snack Foods and ConAgra.
Still, the major national premium brands took a hit in 2013, as consumers sought alternatives. But they did not go looking for private label, as these products saw a drop in sales at mass-market channels to the tune of 3% between 2012 and 2013, to $1.76 billion, according to IRI. This represents 18.4% of total dollar sales in the IRI-tracked channels.
Frozen yogurt gets probiotic, Greek: meet freezer
Aside from companies that specialize in healthier frozen desserts, most major ice cream and frozen dessert marketers have at least one product line positioned based on its nutritional profile. Over the past few years, marketers of the “healthy” standby frozen yogurt have been touting the probiotic value of their products' live and active cultures.
But the more recent entrant to healthy frozen dessert, Greek yogurt, could shake things up with its dual positioning of high protein content and probiotic value along with its distinctive flavor, as Packaged Facts research director David Sprinkle noted. Indeed, notable brands going Greek with their frozen yogurt include ConAgra's Healthy Choice, Dannon's Oikos, Stonyfield, Yoplait and Ben & Jerry's. (Read about Dannon's recent foray into Greek frozen yogurt.)
The move toward healthier frozen desserts has also brought with it new flavor trends, in particular the rising popularity of coconut. Coconut is already buoyed by a "health halo"—as it’s acknowledged both for its inherent nutritional properties and its potential as a substitute for sweeteners. But its growing appeal can also be attributed to consumers' increasing interest in world cuisine, including that from the tropical locales, Packaged Facts noted.
Neverias reaching the masses?
Another key trend to watch is the growing crossover appeal of Mexican-style ice cream parlors, or neverias, among non-Hispanic foodies. These shops, known for their innovative flavors (think pine nut, cucumber, mango, tequila and cheese) and unique combinations, are popping up all over US urban centers. That, coupled with rising sales of Hispanic brands of frozen novelties through major retail outlets means the broader consumer base may soon follow the foodies to Hispanic frozen desserts, Packaged Facts found.
Salted caramel, an import from Europe, remains a leading flavor trend in the frozen dessert and ice cream set, according to Packaged Facts. But manufacturers are also capitalizing on continued interest in indulgent mix-ins, ranging from confections to sweet baked goods. Brands such as Breyers, Good Humor and Turkey Hill are increasing their offerings of products with perennial favorites such as Oreos, Chips Ahoy!, Sara Lee cheesecake, Reese’s Peanut Butter Cups, Snickers, and Junior Mints mixed in, leveraging partnerships with the makers of these popular brands of cookies, cakes, and candies.
Access the complete report here.