In the $28bn ice cream category, ‘free from’ drives growth, says Packaged Facts

Photo: iStock/Magone

According to retail data company Packaged Facts, “food industry marketers are astutely churning out a variety of healthier, yet still decadent, frozen treats to please modern American consumers.”

Based on data from IRI sales tracking through US supermarkets and grocery stores, drugstores, and mass merchandisers with annual sales of $2mn or more, there has been an increased “introduction of products that fit in with the ‘free-from’ trend in the food and beverage industry in general,” the Packaged Facts report revealed.

Examples of this trend include Arctic Zero, which markets its lower sugar content and use of monk fruit as a sweetener. “In 2015, our business doubled from 2014, and in 2016, we’ll double again,” Amit Pandhi, Arctic Zero’s CEO, told FoodNavigator-USA.

There was also a slew of probiotic ice cream product launches last year, such as Foxy’s Thoughtful Ice Cream and Brio, which is positioning its ice cream as a snack food instead of dessert.

Leading tags for frozen packaged treats include non-GMO, gluten-free, and ‘made without rBGH milk,’ referring to the hormone injected into dairy cows to make them produce more milk.

Successful introductions hurt established brands

In addition to ‘free-from’ and ‘better-for-you’ positioned ice cream, “there has been an increase in gelato and super-premium ice cream introductions and sales,” according to the report—and this all comes at the expense of existing products and established brands.

“The market for ice cream and other frozen desserts is, as it has been for a very long time, an extremely mature market with little room for growth,” according to the report.

“Occasionally a new product will cause a stir that increases sales, but usually the success of a new product comes at the expense of existing products, rather than as added sales to the category overall.”

But for the frozen dessert industry in general, there has been sales growth. In calendar year 2016, there was a 3.1% increase of US sales of ice cream and other frozen desserts in the retail channel, hitting $12bn. From 2012 to 2016, the increase for retail sales is estimated at 4%, for a compound annual growth rate (CAGR) of 1%.

When combined together with the foodservice sector (which may also sell packaged products), the market increased nearly 5% in the same time period with a CAGR of 1.1%.

Nielsen: Dairy-free among biggest climbers in ice cream category

Sales may be on a steady increase, but according to Packaged Facts’ data, in terms of total households using them, ice cream and frozen desserts usage rates have seen declines in various degrees over the last several years.

The one category showing an increase has been non-dairy frozen desserts—mirroring data from Nielsen, which was published last summer. In Nielsen’s report, US retail sales of non-dairy ice cream surged 43.7% to $75.2m in the 52 weeks to May 28, 2016, as more consumers purchased almond and coconut-based products.

An innovator in the non-dairy category includes Nada Moo, a frozen coconut dessert that first hit shelves in 2005 targeting vegans and people with food intolerances before winning appeal from mass audiences in recent years.

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