MEMORANDUM

Subject: Ice Cream Industry Report

As you requested, I developed an overview of the ice cream industry. In it, you will find useful
information to assist you in your understanding of this industry. This document will highlight the
industry overview, products and services, target demographics, major players, trends, and
markets.

Industry Overview
Current Outlook of the Industry
The ice cream industry over the past five years has slowly been decreasing as many people are
becoming more health-conscious and cutting back on their favorite frozen treats. As the demand
for these basic frozen treats decreased, the demand for premium ice cream has grown, resulting
in growth in the industry as a whole (Yucel, 2016). Furthermore, with milk and sugar prices
plummeting, profit margins have grown (Yucel, 2016).

Future of the Industry

Products/Services
Products
In the ice cream industry, there are a wide variety of products and services. Ice cream is the most
popular product, but other products such as frozen yogurt are becoming more popular. The main
difference between the two is that frozen yogurt incorporates yogurt into the ingredients which
adds probiotics to aid in digestion (Peak, 2015). Since people are becoming more health-
conscious, frozen yogurt offers a slightly healthier alternative to ice cream. Some other products
include frozen bars such as fruit bars and popsicles, as well as variations of ice cream like gelato
and custard. These different variations all use ice cream as the main ingredient and then add their
own special twists to distinguish themselves.

Services
Ice cream products are sold in many different places such as grocery stores, ice cream trucks, and
specialty stores. Specialty stores have become very popular where a customer has the choice of a
variety of ice cream and then they can choose from multiple toppings to customize their ice
cream dessert. Many restaurants also have ice cream as dessert options for their customer in case
they want to finish their meal with a sweet treat. There are many ways to prepare and serve ice
cream and it has become a staple in the food industry.

Target Demographics
Ice cream targets all age groups. It is a universal snack that everyone can have. Since it is
considered a dessert and is very sweet, it is very popular with children.
The graph below compares the consumption of each age group in 2005 and 2010.

(Canada, 2012)
Notable graph information shows:
The age range from 6-12 had the highest consumption rate at 62% and the age range 65+
had the second highest consumption rate at 58%.
Households with children were more likely to consume ice cream than households
without children.
Consumption is close to even across income brackets, education levels, and gender.
The ice cream industry caters to everyone, but children help drive the demand for the frozen
treats. (Canada, 2012)

Major Players
Unilever
Unilever is a major corporation that has many different brands of ice cream such as Good
Humor, Popsicle, Ben & Jerrys, Klondike, Magnum, and Breyers. They employ over 171,000
workers worldwide and generated over $59 billion last year (Yucel, 2016). Unilever has gained
market share of the industry over the years through acquisitions of smaller companies. One of its
newer acquisitions, Magnum, has become one of the best-selling brands of ice cream and is
expected to hit $2.69 billion in sales in 2016 (Zhu, 2016). Through brand acquisitions, Unilever
has become a leading player in the ice cream industry and is expected to increase its revenue by
1% over the next five years to $1.8 billion (Yucel, 2016).
Nestle
Nestle is a major corporation founded in 1866 with different brands of ice cream such as
Dreyers, Edys, Haagen-Dazs, and Nestle Drumstick. Nestle also has some lower calorie brands
such as Skinny Cow and some healthier alternatives such as Slow Churned Frozen Yogurt
Blends. Recently, Nestle has experienced a decline in revenue since the market is starting to shift
towards more premium ice cream. Nestle is starting to adjust to the market demand by removing
artificial coloring and flavorings from its products, but is still projected to post a 2% loss of
revenue each year for the next five years to $1.8 billion (Yucel, 2016).

Trends
Flavors
As ice cream and frozen yogurt continue to gain popularity, many companies are discovering
new ways to attract customers. Many places are starting to focus on what kind of unique flavors
they can add to attract new people to their stores. The main driver in the ice cream industry is
flavor, so many companies are starting to develop new tastes besides the basics of vanilla and
chocolate. According to Technomics 2015 Flavor Consumer Trend Report, 52% of millennials
would prefer a combination of flavors and a lot of variety (Decker, 2016). Ice cream is a great
market to test these different flavors because they can easily come and go using seasonal or
monthly flavor variations. This allows ice cream vendors to capture market share since it attracts
new people to their stores.

The graph below compares the average number of times per year Americans eat ice cream and
the average number of times per year Americans eat frozen yogurt. Ice cream remains the more
popular option as a frozen dessert.

(Vandermey, 2014)

Frozen Yogurt
Ice cream has been around since the 17th century, but frozen yogurt has only recently been
gaining in popularity. Since 2008, the number of frozen yogurt stores has doubled, so companies
have had to find ways to separate themselves from their competition (Vandermey, 2014). For
example, TCBY (The Countrys Best Yogurt) has started to release 12 new flavors a year, as
well as introducing Greek yogurt to their product line (Allison, 2012). This attracts new people
to their stores and constantly refreshes their choices so customers have options other than the
standard flavors. TCBY also creates and tests their own flavors. If it does not do well, they will
remove it and possibly use it later with modifications (Allison, 2012). Companies continually
develop new strategies to capture market share and attract new customers to their products.

Markets
United States
The market for ice cream in the United States has increased over the past year. Some reasons for
this is the weather patterns with 2015 being warmer than a typical year. This results in more
people seeking cold snacks which helps boost the ice cream industry. One problem with this
increase in demand for ice cream is the price of vanilla is increasing as well which raises
production costs (Encyclopedia, 2016). As a result, companies are not experiencing increased
revenues on their products.

Since there is a lot of pressure from health-conscious people, markets for both healthier ice
cream and ice cream with no dairy are becoming more popular. Since people still want to eat ice
cream, but they want to watch their weight, they tend to gravitate towards the healthier
alternative ice creams to fit in with their diet. Also, people who are allergic to lactose can eat ice
cream now because of new ice cream products without dairy (Encyclopedia, 2016). Americans
love eating their ice cream, and will continue to eat it for the foreseeable future.

International
The market for ice cream in other countries is changing as well. In Asia, single-serve lines for ice
cream are the most popular with 40% of people getting their ice cream in this way (Williams,
2016). Even though this style has a summer only image associated with it, the market in many
countries is trying to shift to individualized snacks for all ages throughout the year. Places such
as France and the U.K. are starting to produce limited edition Twix ice cream bars and Kit Kat
ice cream in a cone (Williams, 2016). This encourages people to buy these new flavors using
brands they already know and like in order to drive the market. These shifts help companies sell
to a wider audience and do not have to rely on the seasons and weather as much.

The industry overview, products and services, target demographics, major players, trends, and
markets outline the current state of the ice cream industry. Thank you for the opportunity to
develop an overview of the ice cream industry. Please contact me at
mcoulombe@gmail.arizona.edu if you have any questions or concerns.
 Works Cited
Allison, G. (May 2012). Dispensing innovation. Restaurant Businesses, 111(5). Retrieved from
Business Source Complete database

Canada (February 29, 2012). Ice cream and frozen desserts. Agriculture and Agri-Food Canada.
Retrieved from http://www.agr.gc.ca/eng/industry-markets-and-trade/statistics-and-
market-information/agriculture-and-food-market-information-by-region/united-states-
and-mexico/market-intelligence/ice-cream-and-frozen-desserts/?id=1410083148491

Decker, K. (May 2016). Consumers are sweet on savory. Dairy Foods, 117(5). Retrieved from
Business Source Complete database

Encyclopedia of American Industries (November 2016). Ice cream and frozen desserts. Business
Insights: Essentials. Retrieved from Business Source Complete database

Peek, A. (May 13, 2015). The real difference between ice cream, soft-serve, gelato, custard, &
fro yo. Spoon University. Retrieved from http://spoonuniversity.com/lifestyle/the-real-
difference-between-every-type-of-ice-cream

Vandermey, A. (August 11, 2014). Do we still scream for ice cream? Fortune, 170(2). Retrieved
from Business Source Complete database

Williams, L. A. (February 2015). Global ice cream, novelty trends. Prepared Foods, 184(2).
Retrieved from Business Source Complete database

Yucel, I. (2016, August). IBISWorld Industry Report 31152. Ice Cream Production in the US.
Retrieved from IBISWorld database

Zhu, Y. (June 21, 2016). The worlds top-selling ice cream brands. Forbes. Retrieved from
http://www.forbes.com/sites/yehongzhu/2016/06/21/the-worlds-top-selling-ice-cream-
brands-2/#4ea7b3476a24