The Ice Cream Man Cometh
by Lynn Petrak
Driven by market factors and consumer trends, processors strive to keep pace on sales of frozen treats.
Talk about a churning process. The ice cream category has been cranking it out in all directions over the past year, a time that has been marked by fluctuations as well as innovations.
On the good-news side, Americans still scream for their ice cream. According to information provided by the Washington, D.C.-based International Dairy Foods Association (IDFA), more than 90 percent of Americans are ice cream buyers, while the current market for ice cream products is estimated at more than $20 billion.
In addition, the ice cream category continues to open up, especially with the success of premium and superpremium varieties and, on the other end of the spectrum, the growth of better-for-you products. Manufacturers are racing to the marketplace with both types of products, trying to meet consumers’ fickle and sometimes conflicting demands.
The result is an almost dizzying array of ice cream products. David Shearn, national account manger for Lakewood, N.J.-based Mister Cookie Face Inc., began his career in the ice cream business at a major supermarket chain more than 20 years ago and has seen firsthand the remarkable growth of the category.
“People love their ice cream and they love variety in ice cream and novelties. It’s unbelievable how different it is today,” he says. “You now have up to 17 doors of ice cream in a store, but when I first started, we were using five doors in most of our stores.”
Rising butterfat and vanilla prices through most of 2004 spurred sticker shock among producers, retailers, foodservice operators and consumers alike. An economy that was still struggling to rebound, along with higher energy costs, didn’t help matters.
Smith Dairy, Orrville, Ohio, is like many dairies, introducing new products while trying to keep a lid on budgets. “Components in ice cream tend to be very volatile — butterfat, milk, vanilla and pecans, to name a few. These ingredients have dramatic effects on the cost of ice cream and the bottom line,” says vice president of marketing Bill McCabe, adding that most of the impact has been on the company’s private label sales, due to narrower profit margins.
Similarly, Pierre’s French Ice Cream Co., Cleveland, has invested in ongoing research and development, but has also experienced the effects of unstable prices. “Escalating costs for dairy ingredients, in addition to rising fuel and material costs, have had a negative impact and have been a financial strain,” says Laura Hindulak, director of marketing. “We are hoping that 2005 commodity costs stabilize so that we can successfully manage our business.”
TOP 10 ice cream brands*
 $ Sales(In Millions)% Changevs. Year AgoUnit Sales(In Millions)% Changevs. Year Ago
Private Label$836.4-3.5%$294.0-8.2%
Breyers523.1-4.1150.0-4.6
Dreyer’s/Edy’s Grand417.69.9123.714.3
Blue Bell245.23.675.62.1
Häagen-Dazs208.212.562.413.6
Ben & Jerry’s180.3-4.957.3-7.3
Dreyer’s /Edy’s Grand Light121.646.833.853.4
Wells’ Blue Bunny103.9-2.428.1-2.0
Turkey Hill92.57.832.610.7
Dreyer’s/Edy’s78.17.421.411.1
* Total sales in supermarkets, drug stores and mass merchandisers, excluding Wal-Mart, for the52-week period ending October 31, 2004.SOURCE: Information Resources Inc.
Industry consultant Malcolm Stogo, president of Malcolm Stogo Associates, Riverdale, Md., and author of several books on ice cream, agrees that it has been a tumultuous year in terms of production costs, but he foresees an improved selling environment. “The biggest thing next year, more than anything else, is the price changes going on with cream and vanilla extract. Next year, you’ll see manufacturers having a lot better year,” he predicts.
The Economic Scoop
Although concerns about terrorism, war and the economy helped boost sales of ice cream as a comfort food in the early 2000s, this past year has been a slightly different story. Recent sales figures indicate that demand has been stable at best. According to research from Chicago-based Information Resources Inc. (IRI), total sales of ice cream, frozen yogurt and sherbet (excluding novelties) rose 0.5 percent during a 52-week period ending in mid-November to more than $4.36 billion. Unit sales fell a bit for ice cream, down 2 percent to nearly 1.35 million.
Within the hard-pack ice cream category, figures are mixed. Dreyer’s Grand Ice Cream, Oakland, Calif., experienced a relative boom in sales, up 10.4 percent from last year. Private label manufacturers, second to Dreyer’s in the ranking of top vendors, saw their products drop 3.5 percent in sales over the past year. Meanwhile, although Unilever’s Green Bay, Wis.-based subsidiary Good Humor-Breyers and Brenham, Texas-based Blue Bell Creameries posted gains, sales at Unilever’s South Burlington, Vt.-based Ben & Jerry’s Homemade Inc. dimmed somewhat, dropping 2.2 percent, and Integrated Brands (a subsidiary of Canadian firm Cool­Brands International) lost 13.7 percent.
The frozen yogurt segment has also been marked by declines, with overall sales dipping 11.3 percent in 2004. Several frozen yogurt vendors lost ground, some by as much as 21 percent. Sherbet also was lower, by about 4 percent.
Beyond sales figures, companies made industry news in other ways last year. HP Hood, Chelsea, Mass., announced in the fall that it was consolidating its ice cream operations, after acquiring the Crowley and Kemps brands earlier in 2004. After obtaining the Häagen-Dazs brand in 2003, Dreyer’s expanded its reach once again by acquiring the Häagen-Dazs franchise operation. In the midst of the reduced-carbohydrate diet frenzy, CoolBrands acquired the licensing for Atkins Endulge™ packaged ice cream and novelties, while Mister Cookie Face (which markets Endulge ice cream in portion-controlled cups), announced a long-term licensing deal to make low-carb ice cream and novelties under the Keto banner.
Better is Good
Low-carb, in fact, was probably the biggest buzzword within the ice cream category for 2004. The year started with a bang in January, when market research firm NPD Group reported that as many as 10 percent of Americans were trying to follow low-carb, high-protein diets. Food and beverage manufacturers that weren’t already working or introducing such products scurried to perfect formulas for low-carb options and negotiate their distribution.
Low-carb ice cream and novelty products are the latest entries into the broad better-for-you segment, which was born about 20 years ago and has evolved to include low-calorie, lowfat, no-sugar-added and calcium-added varieties.
The market for better-for-you ice cream and novelty products can be a rocky road for manufacturers trying to balance consumers’ health and nutrition demands with the traditional taste and comfort-food status of ice cream.
That is an assessment shared by Palatine, Ill.-based food industry analyst Bob Messenger. “Consumers love ice cream. They know what good ice cream tastes like. But they’re also worried about health issues, like obesity, diabetes, cholesterol, and something has got to give,” says Messenger, publisher and editor of the online food industry newsletter The Morning Cup.
The potential problem for ice cream makers is that what typically “gives” is flavor. “Success with these products will get down to taste. That is always the end-game,” Messenger says.
Ice cream manufacturers understand well that consumers talk out of both sides of their mouths when it comes to demands for taste and health. “Consumers have a love-hate relationship with ice cream,” says Kim Goeller-Johnson, media relations manager for Dreyer’s. “They want to eat healthier, but are dissatisfied with less-flavorful light ice creams.”
To provide a solution for health-conscious but discriminating consumers, Dreyer’s launched a new “slow-churned” Grand Light product line in 2004. According to Johnson, the ice cream is made with a proprietary process that results in ice cream with half the fat and 30 percent fewer calories with the taste and texture of full-fat ice cream.
Since its introduction, the product has seemingly found its niche. “Sales of Dreyer’s better-for-you products rose 100 percent over the year due to the success of our Slow Churned Grand Light ice cream,” Johnson reports.
Many — if not most — other ice cream makers found themselves in the middle of the low-carb frenzy over the past year. Indeed, what started with a trickle in 2003 soon turned into a veritable flood of low-carb ice cream and novelty products.
One of the earliest players in the low-carb sub-category was Mister Cookie Face, which had helped develop the Atkins Endulge ice cream. “We were honestly the first ones to introduce a low-carb ice cream,” says Shearn.
In early 2004, Mister Cookie Face partnered with Keto, a company that markets the world’s largest line of low-carb foods. In a few months, they expanded the line to include several additional superpremium SKUs of ice cream and novelty bars. “We try to get away from bases like vanilla, chocolate and strawberry,” Shearn says. “It’s a vanilla world, but if you are making a specialty ice cream, vanilla isn’t your goal. Our goal is things like peanut butter, raspberry and chocolate-covered cherry bar flavors.”
What also sets Keto ice cream novelties apart, according to Shearn, are the ingredients. “We’ve gone after the approach that we will not use sugar alcohol in our base formulas to get the carb count down,” he explains.
Several other ice cream companies have jumped on the low-carb bandwagon in the past 12 months. Good Humor-Breyers was the first in the industry to introduce zero net carb ice cream products in early 2004, under its CarbSmart™ umbrella. “There are very few products currently available to meet the specific needs of serious low-carb dieters, those who are closely limiting their net carb intake,” says Dan Hammer, vice president of marketing and development. “Our new CarbSmart products meet the needs of this group of consumers.” The line includes Neopolitan and Chocolate and Vanilla flavors, while zero net-carb novelties include Orange and Mixed Berry CarbSmart™ Creamsicle® bars.
Ben & Jerry’s is another category leader with a piece of the low-carb action. This past year, the company rolled out its Carb Karma® line in Chocolate, Half-Baked and Vanilla Swiss Almond varieties.
Ice cream brands in the Dallas-based Dean Foods family have also unveiled new low-carb options in recent months. Mayfield Dairy Farms, Dean’s powerhouse in the Southeast, introduced its Less Carbs™ line in March.
Lancaster, Pa.-based Turkey Hill Dairy appealed to legions of carb-counting Americans by adding CarbIQ™ ice cream to its roster of better-for-you products. Blue Bunny, manufactured by Le Mars, Iowa-based Wells’ Dairy Inc., dubbed its low-carb products Carb Freedom™, available in several flavors for ice cream and novelties.
Several dairies with a strong local presence developed low-carb options or touted their no-sugar-added items to carb-counting consumers.
“With the success of our Splenda® brand sweetened Slender® Ice Cream, Pierre’s continued the momentum with a strong 2004 kick-off by introducing innovative, exciting Pierre’s Carb Success™ No Sugar Added Ice Cream,” says Hindulak. Pierre’s Carb Success was launched in chocolate and vanilla, with plans to add more varieties later.
Cherry Off the Sundae?
Despite all of clamor about carbs and the number of dairies that hurried to get in on the trend, the enthusiasm for strict eating plans like Atkins and South Beach already seems to be waning. The NPD Group reported that the 10 percent of Americans who said they were on low-carb diets earlier in 2004 had declined to 4.6 percent by the fall. Moreover, a report in The New York Times in November declared the low-carb phenomena had all but peaked, after more than 3,700 new low-carb items flooded the market within two years.
Such observations come as no surprise to some in the ice cream category. “A lot of people spent a lot of money on the marketing of low-carb product, but this is one of the worst collapses of diets in a long time,” says Stogo. “First, there was a lot of bad press about the diet. Second, a lot of manufacturers put too much fat in their low-carb product — it tastes good but isn’t as good for you.”
Still, such an approach to food intake has achieved a major purpose, say observers. “In my opinion, I don’t believe that low-carb will go away. I think it will be a niche out there on the market,” says Shearn, who draws a comparison to other better-for-you products that have been in the freezer for years. “Lowfat yogurt and lowfat ice cream are still around. They said every year that they would go away, but they are still here, and I think it will be that way with low carb.”
Indeed, manufacturers that brought new low-carb products to market seem to understand they were never the proverbial magic bullet, but a necessary new part of the whole. “We sense that the trend for low-carb products has peaked, though in our market sales for Pierre’s Carb Success remains steady,” says Hindulak. “Overall, better-for-you products and reduced-fat or lowfat offerings continue to perform very well for us, and the success we have had with our Pierre’s Slender No Sugar Added Reduced Fat Ice cream line proves this to be true for us.”
Walt Freese, chief “euphoria” officer for Ben & Jerry’s, agrees the next horizon of the better-for-you category is a more balanced approach. “Rather than focusing on a low-carb or no-sugar-added or even light ice cream, we’ve seen consumer expectations evolve toward a more integrated approach to vitality —looking at true combined health benefits,” he says.
As a result of such shifting consumer attitudes and behavior, Ben & Jerry’s has been working on another new group of products, set to debut in January. “We are moving to a new line called Body & Soul, with 25 percent less fat, sugar and calories,” Freese says. The Body & Soul lineup will include Ben & Jerry’s “icon” flavors like Cherry Garcia, Chocolate Fudge Brownie, Cookie Dough and Half-Baked, each with better-for-you profiles.
TOP 10 frozen novelty brands
 $ Sales(In Millions)% Changevs. Year AgoUnit Sales(In Millions)% Changevs. Year Ago
Private Label$329.91.6%$141.11.7%
Nestle Drumstick126.110.837.016.5
Klondike120.4-8.740.1-12.2
Weight Watchers Smart Ones101.02.023.6-1.5
Silhouette93.9-26.720.6-28.1
Dreyer’s/Edy’s91.19.530.76.6
Popsicle89.6-2.534.1-2.4
Klondike CarbSmart64.15,240.317.15,184.2
Häagen-Dazs54.713.318.217.6
Klondike Slim-a-Bear50.012.914.99.3
* Total sales in supermarkets, drug stores and mass merchandisers, excluding Wal-Mart, for the52-week period ending October 31, 2004.SOURCE: Information Resources Inc.
Similarly, Mister Cookie Face has also heeded the paradigm shift toward more true balance. The company is in the process of launching a Slender Reward line, which includes ice cream bars in red raspberry, orange cream and peanut butter flavors. “They address the issue of being reduced fat, low calorie and low carb, and they are only one point for Weight Watchers,” says Shearn. “That’s the next evolution of the category. It’s not so much being on a ‘diet’ anymore — it’s watching and monitoring your food intake.”
According to Johnson, the Dreyer’s slow-churned line also meets that demand for balanced nutritional profiles and real ingredient taste. “This is the first light ice cream that tastes just like full-fat but without any additional additives, fats or sweeteners,” she says. “Nearly eight out of 10 consumers thought that Dreyer’s Slow Churned Grand Light was either a full-fat premium or a full fat superpremium ice cream.”
At a Premium
Of course, there is a reason consumers want ice cream to taste like premium or superpremium. The rich taste and creamy mouthfeel of such varieties makes them perennial dessert favorites.
The indulgent segment of the ice cream category may be the polar opposite of the better-for-you niche, but has been just as prolific when it comes to new product development. For example, while Ben & Jerry’s is offering more better-for-you varieties, the company has also expanded its line of full-flavor items. “Again, it’s that balance between vitality and indulgence,” Freese says.
This winter, Ben & Jerry’s will begin distributing its latest superpremium flavors, including The Gobfather, made with chocolate ice cream, fudge-covered almonds and a nougat swirl; Marcia Marcia Marshmallow, made with chocolate ice cream with fudge chunks, toasted marshmallows and graham cracker swirls; and Fossil Fuel, made with sweet ice cream, chocolate cookie pieces, fudge dinosaurs and a fudge swirl.
Likewise, the development team at Pierre’s focuses as much on superpremium formulas as it does on ones that are lower in carbs, calories and fat. “Great-tasting premium ice cream is still in high demand. It’s one of those products that never goes out of style,” Hindulak says. “Our sense is that consumers are still looking for truly rich and indulgent premium ice creams and novelties. Even consumers who watch what they eat may splurge once in a while.”
To that end, Pierre’s has introduced new varieties such as Nuts About Buckeyes, French vanilla ice cream with chocolate-covered peanut butter buckeye candies and ribbons of peanut butter.
TOP 10 frozen yogurt/tofu brands*
 $ Sales(In Millions)% Changevs. Year AgoUnit Sales(In Millions)% Changevs. Year Ago
Private Label35.8-8.412.8-11.0
Dreyer’s/Edy’s35-10.09.2-7.6
Ben & Jerry’s21.5-24.46.6-26.3
Häagen-Dazs14.4-9.24.4-10.6
Turkey Hill13.6-1.94.41.7
Kemps8.1-5.12.1-5.4
Ben & Jerry’s 2 Twisted5.4-5.11.7-7.7
Tofutti4.6-5.91.5-10.2
Organic Soy Delicious4.315.91.119.3
Blue Bell3.7-8.50.8-13.2
* Total sales in supermarkets, drug stores and mass merchandisers, excluding Wal-Mart, for the52-week period ending October 31, 2004.SOURCE: Information Resources Inc.
Meanwhile, Smith Dairy’s Ruggles brand now includes more indulgent concoctions, such as Tootsie Roll and Tootsie Pop flavors introduced last summer, and Bumpy Road, launched in the fall.
Inclusions also are getting more creative. Mayfield rolled out its Caramel Popcorn ice cream in June, made of popcorn-flavored ice cream swirled with caramel and dark chocolate chunks.
Cake is another unique ingredient blended with ice cream these days. Franchises like Scottsdale, Ariz.-based Cold Stone Creamery and Randolph, Mass.-based Baskin-Robbins have added cake-studded ice creams to their menus. For retail customers, Blue Bell introduced Wedding Cake ice cream last summer, made with pineapple ice cream blended with crushed pineapple, pecans, vanilla wafers and shredded coconut with cream cheese icing. In its ingredient-laden Creamy Commotions line, Turkey Hill has introduced Tastykake Chocolate Cupcake and Jana’s® Sticky Bun ice cream, with pieces of real sticky buns.
Such gourmet flair is a hallmark of the indulgent segment. Dove® ice cream, distributed in pint-sized cartons by the Masterfoods USA Brands division of Olive, N.J.-based Mars Inc., is another example. Currently available in select markets, the superpremium ice cream varieties, such as Toffee Caramel Moment, feature a host of confection mix-ins and include a thick Dove® chocolate ganache coating on top. Häagen-Dazs also has expanded its line, adding White Chocolate Raspberry Truffle and Peaches & Cream.
As for future flavor trends, industry analysts have varying opinions on exactly which profiles will emerge, but agree that wide variety will continue to be what consumers are looking for. “I think that ethnic flavors are stronger than ever and all over the place. Especially flavors from the Far East and South America, the growth that is happening in last four years is big,” Stogo says, naming flavors like mango and green tea.
Another area to keep an eye on is organic, which is swiftly moving beyond a niche. Ben & Jerry’s recently introduced a line of organic ice cream, in Strawberry, Chocolate Fudge Brownie, Vanilla and Sweet Cream and Cookies. “Organic has been a solid performer in the natural foods class of trade but we are working to expand distribution and we think it has a solid base,” says Freese. “It is an excellent representation of our brand values.”
What’s more, he adds, the organic-buying consumer has broadened these days to include more affluent consumers and family customers.
In the better-for-you arena, there is still room for growth as well, especially with products that deliver on taste. “I think low calorie has a lot of potential, as the technology is getting better and better. It is an untapped demand,” says Stogo.
Likewise, Messenger believes the better-for-you sector is bound for yet another addition. “With trans fats scheduled to be revealed on labels starting in January 2006, it is going to be a very interesting year for the industry,” he says. “Already hundreds of manufacturers, including the industry’s big dogs, are looking for ways to remove trans fats — down to zero if possible — from their products, across almost all categories. Frankly, I don’t see how ice cream manufacturers cannot be part of that ‘removal’ activity.”
Selling Points
Manufacturers continue to execute marketing programs that encompass advertising, public relations and promotions on many levels.
Packaging is one component. To grab consumers’ attention at the freezer, processors continue to enhance packaging, especially as graphic capability improves.
Ben & Jerry’s, for example, will soon launch a new line of Mood Magic ice creams for retail and foodservice outlets. “If you remember the old mood rings, it’s like those. When you take this product out of the freezer case and touch the illustrated ring on the pint, it will change color,” Freese says of the packages made with cutting-edge thermochromatic inks.
The Keto brand from Mister Cookie Face has also commanded attention in the freezer because of its high-impact graphics and prominent logo, Shearn says, explaining the goal was to look striking but convey a distinct message. “We are low-carb ice cream, but we want people to know we are superpremium.”
The container itself also has been a focus of innovation, whether it’s downsized cartons or different shapes and lids. Pierre’s has received positive consumer feedback for its conversion to square-round, or “scround,” cartons nearly two years ago, Hindulak says. “The shape of the carton fits more conveniently in home freezers. Also, consumers do not have to dig as deep for their scoops of ice cream,” she says, adding that retailers also appreciate the format, since more units can be placed in displays.
Other marketing efforts continue to encourage consumers to buy ice cream. Ben & Jerry’s, Häagen-Dazs and Dreyer’s have launched new campaigns in print, radio and television to boost new and existing products.
Pierre’s rolled out a “Freezer Police” campaign in 2004 to radio listeners. Looking for “The Best Ice Cream In Ohio,” a Freezer Police “paddy-wagon” visited area retailers, pools, offices and local events.
Even with such creative campaigns, manufacturers have had to work with squeezed marketing budgets over the past year, mostly due to higher production costs. “Some investments in marketing programs weren’t what they would have been, but we pride ourselves in running a good operation and feel we weathered the storm in fine shape,” says Freese.
As for the outlook for 2005, some observers anticipate a marketing and product development climate that is anything but a deep freeze. “There will be more positive margins,” Stogo predicts, “and that may help innovations a lot.”  
Lynn Petrak is a freelance journalist based in the Chicago area.

The sweetest thing?
Tastes good. Good for you. Therein lies the quandary for ice cream manufacturers, who find themselves facing a double-edged spoon. Consumers’ demand for better-for-you ice creams and their ongoing love affair with indulgent tastes has left many manufacturers looking for ways to satisfy both cravings.
A team of researchers and product development specialists at SPI Polyols Inc., New Castle, Del., teamed up with food technologists at Pennsylvania State University and ingredient supplier FMC Biopolymers in 2003 to formulate a no-sugar-added (NSA) ice cream with all the flavor of the real thing. The result: people waiting in long lines at the popular Penn State Creamery to try the better-for-you ice cream that has been generating buzz around campus and among alumni.
Instead of ingredients like sorbitol, polydextrose, maltodextrins and high-potency sweeteners found in most NSA ice creams, this variety was made with maltitol syrup. Among other characteristics, SPI’s Maltisweet™ IC maltitol syrup is effective because its heavier molecular weight effectively replaces corn syrup found in traditional full-sugar ice creams.
“We were able to change the parameters of production to give us longer-chain carbohydrates in the maltitol matrix, which helped with texture and mouthfeel,” explains SPI’s marketing director Jerry Roland, adding that the NSA option is currently the only better-for-you variety sold at Penn State.
What’s more, a recent sensory evaluation showed ice cream made with Maltisweet™ IC is on par with regular ice cream. “We compared Penn State’s no-sugar-added with their renowned full-sugar, full-fat ice cream,” Roland says. “The survey showed there were no significant differences — you had a match for a full-sugar, full-fat ice cream with a no-sugar-added product.”
In addition to Penn State, SPI is working with several ice cream manufacturers to improve their formulas with Maltisweet IC. The need is a definite one, Roland says. “People are tired of paying high prices for products that don’t taste good. There are some that are good but others that are not. You can get away with that once, but you won’t get a return purchase.”