Innovative Ice Cream Products Combat Health Concerns

Driven by intense product innovation, the ice cream industry averaged 3.4% growth from 1999-2004 according to research conducted by Mintel International Group. 2004 was an especially popular year, as product launches were up 57.5% from 2003. Product developers have focused on opposite ends of the health spectrum, namely "light" and "indulgent" ice creams.

Health conscious consumers looking for an ice cream treat now have options beyond frozen yogurt. Companies have launched products with a variety of health claims such as Dreyer’s version of Edy’s Grand Light that asserts its unique slow churning process stretches fat molecules making it taste more like full-fat ice cream. However, consumers have also opted for indulgent products such as those that mix in chunks of cookies and candy. Despite the prevalence of "light" options, Mintel found that 76% of Americans still consider ice cream an "indulgent treat."

Ice cream has widespread appeal with Mintel finding that 9 out of 10 households purchase ice cream products. Additional evidence of ice cream’s market penetration is that households consume 2.8 quarts of ice cream per month. The ice cream category includes a number of products including frozen yogurt, frozen soy-based desserts, sherbet, sorbet, ices, and frozen novelties in addition to traditional ice cream. However, the majority of sales and product launches derive from ice cream and frozen novelties and these two segments combined to account for 95% of 2004 sales.

The ice cream market has centralized in recent years as a result of mergers and acquisitions. The combined share of the two largest companies, Unilever and Dreyer’s Grand Ice Cream Holdings, accounted for 43% of the 2004 market. Consolidation has led to an increasingly competitive environment where marketing and advertising will become become crucial.

Mintel believes that product innovation will continue to be focused on the "healthy lifestyle" and "indulgent" segments with a shift away from the recent low-carb trend. A challenge facing ice cream producers will be how to create products that cater to the aging US population, as consumption of full-fat ice cream decreases with age. Also, look for greater portion control, as Americans become increasingly aware of obesity and diabetes. It will be the frozen novelty products that will experience the most growth, with traditional ice cream sales declining 7% at constant prices. Mintel expects the ice cream industry to experience a real decline of 1% through 2009.

To learn more about the new U.S Ice Cream (June 2005) report from Mintel, please contact Jenny Husek at 312.943.5250. All NFRA members are entitled to a special 15% discount on this report.