Frozen Novelties Could Soon Outpace Ice Cream

by Karl Greenberg, Jul 11, 2008, 10:35 AM

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Ice cream may rule dessert freezers, but as the overall category grows in coming years, ice cream will stay flat while novelties - sandwiches, bars and the like - and yogurt see growth, says Chicago consultancy Mintel.

Still, the firm says the other freezer sweets have some catching up to do. According to its latest report on the category, ice cream accounted for nearly 60% of sales of ice cream, frozen novelties, sherbet and frozen yogurt combined last year. Frozen novelties (which include products made from ice cream, frozen yogurt and sorbet) made up 36%, while sherbet and frozen yogurt accounted for just 5%.

Put another way, 89% of US consumers ate ice cream in the past year, while only 59% ate novelty products like ice cream sandwiches or bars. And, the proliferation of yogurt outlets not withstanding, only 37% and 34% of consumers partook of sherbet or frozen yogurt.

But the firm says that since 2005, supermarket sales of ice cream have slid 2.1%, while sales of frozen novelties, sherbet and frozen yogurt have increased 2.7%, 7.5% and 3.5%, respectively. Mintel says sales of frozen novelties grew 7.2% from 2002 to 2007.

While Mintel forecasts the market will grow 15% from 2008 to 2012, it also says ice cream sales will decline. The company forecasts that by 2012, U.S. retail ice cream sales will decline to $4.02 billion from $4.09 billion last year while frozen novelties will grow to around $2.75 billion from $2.56 billion last year. Sales of sherbet and frozen yogurt will grow from around $200 million last year to $206 million, and from $177 million to $200 million, respectively.

David Morris, senior research analyst at Mintel International says the overall market will increase 3.5% per year "for the next few years" through all sales channels. And ice cream won't see big declines. "Ice cream is the ultimate indulgence food, for one thing; and ice cream manufacturers have done a really good job of innovating." He says that lighter ice cream, such as Dryer's slow-churn process that creates a lighter ice cream without sacrificing taste and texture, has held off market share gains by water-based products and yogurt.

"These have been innovations that have met consumers half way. We found that people who eat frozen yogurt do so for health. When you have ice cream product that is also tasty and healthful, yogurt loses its edge."

He says yogurt will get a boost from new retail food-service chains like the Los Angeles-based Pinkberry chain and the Korea-based Red Mango. They focus on unadorned natural-flavored yogurt without additives or extra flavors, and fruit and nut toppings served in sterile-hip white-on-white settings. "They are offering frozen yogurt in a new way by focusing on the innate healthfulness," says Morris.

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