Slow churning innovation

by Allison Sebolt
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If there is a single significant trend dominating the market for ice cream in the United States it is slow churned formulations, said Krista Faron, senior analyst with Mintel Custom Solutions, Chicago. And leading the way are the Dreyer’s/Edy’s brands of Dreyer’s Grand Ice Cream Co., Oakland, Calif. Dreyer’s launched its formulation in 2004.

"Through their patented technology, they offer the same mouth-feel, taste and texture of full-fat ice cream but with significantly less fat and fewer calories," Ms. Faron said. "This was kind of a watershed product for ice cream because in the past low-fat, low-calorie ice creams didn’t taste good; they didn’t offer that traditional ice cream experience. With the Slow Churned line, consumers finally have the opportunity to buy a lower fat, lower calorie ice cream that really tastes good."

In addition, Euromonitor International, Chicago, predicted the Dreyer’s/Edy’s Slow Churned light ice cream bars will do well because they offer indulgence along with health and portion control.

Market influences in play

While slow churned products might be gaining the most attention, there are plenty of other new product innovations in the ice cream market. According to Mintel, new product introductions of frozen novelties and impulse ice creams increased 96% between 2002 and 2006 with new product launches of take-home ice cream increasing 29%.

According to The Nielsen Co., New York, 85.5% of U.S. households purchased bulk ice cream at least once during the year ended June 30 with the average annual amount these households spent on ice cream totaling $36.46.

Despite the broad demand for ice cream, sales of bulk ice cream in retail channels excluding Wal-Mart were down 2.1% to $3,990,939,975 for the year ended Dec. 29, according to Nielsen. At the same time, sales of ice cream mixes were up 12.9% to $1.4 million in 2007.

Because of an overall decline in ice cream sales, market researcher Packaged Facts, Rockville, Md., estimated market share shifted in the frozen dessert category from ice cream to frozen yogurt. According to Packaged Facts, ice cream accounted for 59.2% of the frozen dessert segment in 2007. This was down 0.3 percentage points from 2006.

Ms. Faron said somewhat declining sales have forced manufacturers to work harder to offer value-added products for their customers.

"Ice cream manufacturers really need to cast themselves with being particularly innovative whether it’s packaging, flavor or functionality," Ms. Faron said. "Innovation across the board will be important so consumers can justify those rising costs for an indulgence or treat like ice cream."

Ms. Faron said the majority of new product introductions are new flavors. She said manufacturers are experimenting with different fruits, combinations of ingredients, co-branding with candy manufacturers as well as dessert-inspired flavors such as cake, pie and cookies. Interestingly, despite the abundance of new flavors in the market, the most popular flavors continue to be vanilla, chocolate and strawberry.

"When it comes to the flavors, it’s really becoming more about flavor blending," said Dan Beem, president of Cold Stone Creamery, Kahala Corp., Scottsdale, Ariz. "Consumers are finding blending two or three flavors together is far better than any single flavor."

To introduce new and different flavors, Cold Stone has begun experimenting with exotic fruit flavors. The company also is looking to appeal to consumer desires for healthier options.

"The health-conscious consumer is becoming really prevalent in today’s society … we need to find a way that will give them that indulgent taste profile in a product that is better for them," Mr. Beem said.

To this end, Cold Stone has "sinless" products with no fat and no sugar added and has placed a focus on its smoothie line.

With the emergence of health and wellness options in the ice cream market, Ms. Faron issued a word of caution for manufacturers wanting to take the trend too far, saying such products could become a bit far removed from consumer preference.

"Products that are still primarily focused on taste, like churned ice creams, will always do well, but ice creams that are focused on other benefits and lose the taste will inevitably fail," she said. "At the core, the ice cream category is about taste and enjoyment from consumers, so if that’s missing, it’s unlikely that any product will be successful."

Euromonitor echoed this idea saying functional and fortified ice creams likely will fall out of favor with consumers as they turn to ice cream to indulge and not improve health.

All about the consumer

With dairy prices are at all-time highs, consumers are becoming more hesitant to purchase such items at the retail level, but they continue to spend the money at food service channels, leading to increased food service sales and declining retail sales in the ice cream category, Packaged Foods said.

The idea is consumers are willing to pay more and wait longer for an upscale experience with personalization — a trend Packaged Facts attributes to the growth of Starbucks.

Mr. Beem said with the current state of the economy, people are really starting to watch their bigger item purchases but consumers still want to indulge.

While supermarkets represent more than half of at-home ice cream sales, sales in convenience stores and other channels are increasing, pressuring supermarket sales, according to Mintel. Convenience stores saw a 17% increase in ice cream sales during 2004-2006 with supermarket sales stagnating. In addition, consumption of ice cream away from home has been a major competitor as every type of restaurant has ice cream on the menu, Mintel said.

New trends to watch

Ms. Faron said several trends found in the food industry have translated into the ice cream market, including portion control in 100-calorie packaging.

According to Euromonitor, single-portion dairy ice cream products are expected to grow by 9% between 2007 and 2012. These items are usually indulgent but offer portion control and are available in many convenience stores.

Probiotic ice creams have been introduced in China and Southeast Asia, and Ms. Faron said she wouldn’t be surprised if some of these products are introduced in the United States in the near future. In addition, Ben & Jerry’s, a Unilever brand, has introduced ice creams with Fair Trade certified ingredients in Europe, and Ms. Faron believes this concept could also make its way to the U.S. market.

There is also a growing market for all-natural ice cream products. Ruby Jewel, Portland, Ore., focuses on gourmet ice cream sandwiches with natural ingredients made from hormone-free milk and cream. The company also boasts a commitment to social responsibility, supporting local farmers and businesses and buying 100% renewable energy in production and distribution.

Archibald Frozen Desserts, West Palm Beach, Fla., also recently launched a new line of natural premium soft ice cream. For these products, the company has partnered with Naturally Iowa, Inc., Clarinda, Iowa, a dairy that uses no rBGH at its dairy farms.

"This announcement is important for Archibald and our customers who want ‘better-for-you’ products without sacrificing taste, flavor or variety," said Basil Bennett, chief executive officer of Archibald. "The demand for all-natural products is enormous and growing across all food and dessert categories."

Ms. Faron said the ethnic trend is just beginning to take hold in the ice cream category with the introduction of kulfi — a dense, solid, frozen milk that is a traditional Indian food — to the U.S. market. Empire Trading Inc. recently launched a line of kulfi bars under the KoolFreeze brand.

Haagen-Dazs has introduced a product called Haagen-Dazs Reserve Amazon Valley Chocolate Ice Cream, which Ms. Faron noted as interesting because it shows a trend of linking ice cream ingredients with a sense of place. The line also features flavors such as Brazilian Acai Berry Sorbet.

Even Kosher certification has picked up with 154 newly-launched ice cream products having kosher certification in 2006, according to Mintel.

Future market trends

Given the fact supermarket ice cream sales have declined somewhat recently, analysts have mixed opinions on the outlook for at-home ice cream indulgence.

"We really have a very fragmented marketplace when it comes to ice cream," Ms. Faron said. "Ice cream’s market share is being eroded by other categories … I don’t think ice cream monopolizes the indulgence category the way it used to. Supermarkets are certainly facing an uphill battle with maintaining their market share."

Ms. Faron said often if consumers want an indulgent treat they might choose a different option such as a cake, pie, cookie or yogurt.

Euromonitor disagreed with this idea, saying ice cream offers a taste experience more indulgent than its rivals and the availability of freezers in homes and the presence of ice cream in various stores and locations means consumers easily may obtain and store ice cream.

Ms. Faron said one area for potential growth in the frozen novelty segment is in frozen yogurt. While many recently introduced products are currently food service concepts, she said she anticipates more in retail. In fact, Haagen-Dazs has a line of frozen yogurts and introduced new varieties in 2007. According to Nielsen, frozen yogurt sales were $127 million in 2007, up 1.4% from the previous year.

This article can also be found in the digital edition of Food Business News, February 19, 2008, starting on Page 29. Click here to search that archive.




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