We dusted off the jukebox to play the songs that best represent dairy foods and beverages. Our annual State of the Dairy Industry report examines the prospects for all dairy categories. For the ice cream category we are rocking out to 'Cold as Ice,' as ice cream is starting to make a comeback.

Well, it wasn’t the best-performing dairy category, but give ice cream processors a little R-E-S-P-E-C-T. Sales of their product rose 2.1% to $5.4 billion on a unit-sales increase of 1.4% to 1.4 billion packages, in the 52 weeks ended Aug. 10, 2014, according to IRI, Chicago. That’s an improvement from last year’s report when we noted that sales barely budged (up 0.3%) on a unit-sales increase of 1.4%.

Retail prices have been on a downward trend since January 2013, when a half-gallon sold for $5.26, according to the Bureau of Labor Statistics. Prices fell, then increased, then fell again in the 20 months since. By August 2014, a half-gallon cost $4.75. That’s a good deal for consumers, who have watched retail prices for a gallon of milk and a pound of American cheese increase steadily.

Ice cream is making a rebound. In 2010, production was 929 million gallons, and then tumbled to 888 million gallons in 2011. But since then, plants have been humming, churning out 894 million gallons in 2012 and 897 million gallons last year, according to the U.S. Department of Agriculture.

Blue Bell, Brenham, Texas, is the nation’s top-selling ice cream brand, with $628.1 million at retail, a 6.2% increase, according to IRI. Private label ice cream brands, however, racked up $1.1 billion, or 20% of the sales in the entire segment.

Frozen novelties is the next largest segment in IRI’s ice cream/sherbet category. Unit sales dropped 3% and dollar sales dropped 1% to $4.1 billion. Sales of private label products were down 3% to $450.7 million. The top novelty brand, Nestlé Drumstick, increased sales to $316.9 million due to a price increase because unit sales increased just 0.1%. Dreyer’s Edy’s Outshine, another product from Nestle, showed a 103% increase in unit sales (to 75.1 million) and a 115% increase in sales (to $173.9 million). Dreyer’s Edy’s re-launched the stick novelties last year, renaming them from Fruit Bars, and then developing versions made with fruits and vegetables.

As for frozen yogurt, processors kept making more but consumers were buying less. Sales in IRI’s frozen yogurt/tofu segment fell 5.5% to $337 million and units dropped 6.6% to 92 million. But frozen yogurt production actually increased 28% to 80.3 million gallons in 2013, according to the U.S. Department of Agriculture. Kemps defied the category trends; sales for this unit of Dairy Farmers of America rose 16% to $33 million and unit sales increased 18% to 8.9 million. Newcomer Dannon Oikos landed in the top 10 with sales of $9.2 million.

Benvenuti, gelato

Perhaps 2013 will be known as the year that gelato, ice cream’s Italian cousin, took root in Americans’ freezers. Nestlé’s Häagan-Dazs was the first national brand to break into the category back in February 2013 with pints. This year, rival Unilever shipped its first units (made in Italy, now made in the United States) under the Breyers brand in distinctive 28.5-ounce clear plastic tubs. The flavors are vanilla caramel, raspberry cheesecake, tiramisu and triple chocolate.

Another processor to jump in this year is Graeter’s, the family-owned Cincinnati, Ohio-based processor known for its premium ice creams. The company incorporates specially made truffles from a family-owned confectioner in Pennsylvania into its flavors, which include caramel truffle, hazelnut truffle, and vanilla with milk chocolate and dark chocolate truffle.

Forte Gelato, part of Figo Brands Inc., Greens Farms, Conn., came out with what it called the first high-protein gelato (15 grams in a 4-ounce cup). Forte makes four flavors (vanilla, espresso, ginger and chocolate) with cage-free egg yolks, rBST-free skim milk, cream and milk protein, and organic agave nectar.

But Häagen-Dazs was not sitting on the sidelines. It came out with new flavors in its pints and launched a line of stick novelties. The new flavors, which came out in February, are tiramisu, pomegranate swirl, caramelized banana chip and pistachio. The gelato bars are made in three flavors: vanilla caramel pizzelle, tiramisu dark chocolate and strawberry dark chocolate. Pizzelle is a crunchy Italian-style cookie. The bars are sold in packages of three for a suggested retail price of $4.99.

It is not just the big consumer packaged goods firms that have jumped on gelato’s bandwagon. Entrepreneurs have jumped on the gelato food truck, so to speak. In Miami, HipPOPs sells handcrafted desserts, including gelato, sorbet and frozen yogurt from its food truck. HipPOPs makes its gluten-free, kosher frozen stick novelties at its creamery in Dania Beach, Fla.

Follow the flavor trends

Ice cream processors keep an eye on food and flavor trends from top chefs and restaurants. Many ice cream companies are pairing sweet with salt. Hudsonville Ice Cream, Holland, Mich., brought its Chicago Caramel Popcorn flavor to Chicago this year. The ice cream has a salty ribbon of caramel and crunchy clusters. Blue Bell developed Sea Salt Caramel Ice Cream made with vanilla ice cream and a salted caramel sauce swirl.

Sweet n’ Salty Pretzel (sold only to foodservice and wholesale accounts) is from Gifford’s Famous Ice Cream, Skowhegan, Maine. Other new flavors from the company are caramel cookie crunch, espresso latte, chocolate toasted coconut, peanut butter pie and Sugarloaf mint chip frozen yogurt. Gifford’s makes what is arguably the best ice cream in the United States. For the fifth consecutive year, the company won the Grand Champion award in the World Dairy Expo Championship Dairy Product Contest run by the Wisconsin Dairy Products Association. Three Gifford’s flavors — old-fashioned vanilla, French vanilla and vanilla bean, the base for many of the company’s unique flavors — also won first place awards in their individual categories.

The local cocktail lounge is another place processors seek flavor ideas. Ari Fleischer and Aly Moler, co-founders of the craft beer ice cream company Frozen Pints, this year developed a line of liquor-based desserts. (They also renamed the company The Ice Cream Bar.) The new ice cream and sorbet flavors are Mojito Sorbet, Bourbon Butter Pecan, White Russian and Brandy Alexander Chip. The alcohol by volume content ranges from 8% to 8.4%. They spent two years on the festival circuit gathering feedback on their idea.

Ice cream makers also turn to grocers’ candy aisle for ideas. For example, there is Blue Bell’s butter crunch ice cream made with vanilla ice cream and chunks of crunchy chocolate peanut butter candy.

Candy brands are popular inclusions, and processors often sign licensing deals to use the ingredients. In the case of Mars Ice Cream, it looked inward at its own portfolio. In February, it came out with Starburst strawberry sorbet bars. (Starburst is the No. 3 nonchocolate confections brand, according to IRI.) The stick novelty retails for $1.49 for a 2.6-ounce single serving and $3.99 for a 4-count multipack.

Kemps, which celebrated its 100th anniversary this year, partnered with Pearson’s Candy Co., another Twin Cities firm marking its centennial. Three ice cream flavors (Salted Nut Roll, Nut Goodie and Mint Patties) will be in stores in eight Midwestern states in early March 2015. They will be sold in 1.5-quart scrounds for a suggested retail price of approximately $6.

Unilever’s Klondike looked at popular candies and candy combinations for its new Kandy Bar line of novelties. The flavors are caramel & peanuts (vanilla light ice cream and caramel in a milk chocolate-flavored coating with peanuts), Fudge Krunch (chocolate light ice cream and chocolate fudge in a milk chocolate-flavored coating with rice crispy pieces) and cookies and cream (vanilla light ice cream with chocolate cookie crunch pieces topped with thick chocolate fudge in a white chocolate-flavored coating with chocolate cookie crunch). Four-packs have a suggested retail price of $3.59.

Following the seasons is another time-tested way that ice cream companies generate enthusiasm for a flavor. A seasonal program is also a good way to test-market new ideas, which can lead to year-around availability. Hudsonville Ice Cream tied a seasonal flavor to a vacation destination in naming its Grand Hotel Pecan Ball (vanilla ice cream, fudge swirls and pecans). The flavor is inspired by the famous dessert served at the Grand Hotel on Mackinac Island, Mich.

When Hudsonville expanded its presence in Chicago in September, it launched a flavor inspired by the NFL’s Chicago Bears. Bear Traxx is made with chocolate ice cream, peanut butter ripple and fudge pieces.

High-protein ice cream

Consumers typically do not turn to ice cream for a healthy treat. But one company is trying to change that perception, albeit with a frozen dairy dessert. Nutricopia Inc. of Montpelier, Vt., launched Brio this year in Chicago. Twin brothers and entrepreneurs Ron and Arnie Koss founded Earth’s Best, the first organic baby food in the United States, are behind the venture.

A 4-ounce serving of the frozen dairy dessert contains 24 vitamins and minerals, 6 grams of protein and no artificial sweeteners. Flavors are dark chocolate, vanilla caramel, coffee latte, strawberry and mango. A single-serve package retails for $1.79 to $1.99 and a 14-ounce package is $4.99 to $5.99.

Another low-calorie frozen treat comes from Dreyer’s Edy’s. Its new Outshine Fruit and Veggie bars feature five flavors: blueberry medley, tangerine carrot, apple and greens, peach mango medley and strawberry rhubarb. At 35 to 60 calories each, the bars contain at least 25% vegetables from purees and juices.

“We wanted to add a unique twist to our namesake fruit bars with fruit and vegetable combinations in delicious, complementary flavors,” said Outshine Brand Manager Kerry Hopkins in a statement. “By adding vegetables to our recipes in this new line, we have created distinct flavor profiles that are a tasty way to include vegetables in your diet.”

Local scoop shops continue to test the retail waters. One of the latest is Sanders Chocolate & Ice Cream Shops of Clinton Township, Mich., which said in October it plans a national rollout of its ice cream in 2015. Sold in 1.5-quart cartons, the ice cream was re-formulated in order to meet the super-premium identity. It is manufactured by Guernsey Farms Dairy. Mitchell’s, a popular ice cream store in the south suburbs of Chicago, also began selling its pints in Chicago grocery stores this year.

 While their products might be as cold as ice, processors are being creative with flavors and formats in order to engage consumers and warm up sales. Based on this year’s sales trends, the approach seems to be working.   

Read our review of the Cultured category

Read our review of the Butter category