Ice cream sales may have cooled off in the past few years, but consumers are expected to be melting over the frozen treat once again.
It looks like we’ve reached the turning point where the industry is going to bounce back and some are certainly forecasting a rebound.
Trends toward healthier eating as well as the growing popularity of frozen yogurt trimmed revenue at ice cream store franchises by 4 percent to $3.2 billion from 2008-13.
It’s gone through a period of intense competition with frozen yogurt, which has grown at 20-30 percent per year.
But the rebound is mostly benefiting mom-and-pops and small chains, rather than the big players of ice cream, as consumer tastes are shifting toward more premium products and local ingredients, as well as more customizable and portion-controlled options.
In some markets, such as urban markets like New York, Los Angeles, Chicago, etc., independents are definitely outgrowing the chains because consumers value that unique independent feel now, and it’s a similar reason to why people value local ingredients. They want some transparency to what they’re eating, and you can’t really achieve that with a generic chain brand. So independents and very small chains are doing very well in the urban markets.
ase and are multigeneration. We haven’t seen any contraction because we’ve stayed local and we’ve served multiple generations,” said Amy’s CEO Michael Hartman, who actually worked at Amy’s in its early days while he studied at the University of Texas.
Big three melting
From 2008-13, combined revenue declines of the three major players in ice cream stores, Dairy Queen, Baskin-Robbins and Cold Stone Creamery, were faster than the overall category. Cold Stone revenue, the most dramatic of the three, fell 23.3 percent.
Now, however, they are showing signs of recovery. Specifically citing Baskin Robbins’ revenue growth of 1.9 percent from 2012 to 2013.
We are well-positioned to continue this growth, with investments being made both inside our shops to grow sales and outside our shops to create even stronger brand awareness,” said Bill Mitchell, president of Baskin-Robbins.
According to Mitchell, Baskin-Robbins took a number of steps to improve its business, including redesigning its restaurants and improving relationships with franchisees and offering new flavors and products.
Meanwhile, Dairy Queen is also focused on new flavors and innovation, according to executive vice president of marketing for Dairy Queen. He cited the re-introduction of its popular S’mores Blizzard as an example of the steps it’s taking.
As for the threat of frozen yogurt, At DQ, they’ve found that consumers see the two occasions (yogurt and ice cream) very differently. Ice cream is still the preferred option for a summertime, cool-down treat.
One industry analyst who specializes in consumer eating habits, said he doesn’t expect that the yogurt battle was the source of ice cream’s pain. Instead, consumers are often shifting to healthier choices.
Back in 1989, the average American had 43 eatings over the year of ice cream at home and out away. They had three eatings of frozen yogurt. Today, ice cream amounts to 28 eatings, and frozen yogurt is one.
Source: cnbc.com, 7-18-2014