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New labeling rules could reshape market for ice cream and other frozen desserts.

New Labeling Rules Could Reshape Market For Ice Cream and Other Frozen Desserts

How many kinds of ice creams and other frozen desserts can fit under the low-fat banner? Are yesterday's legal distinctions and labeling standards relevant in light of today's market realities? The rapidly growing number of difficult-to-define ice dessert products is spurring a widespread re-examination of these cold facts.

The decisions to emerge from the FDA concerning these standards and others such as defining "frozen yogurt," are likely to set off broad-based restructuring of the $9.4 billion market for ice cream and related desserts in the 1990s - both in terms of what is manufactured and how it is marketed. That's what New York-based business research firm Finds/SVP has concluded.

"The most pressing case is that of premium quality ice milks," said Peter Allen, vice president of Market Research Reports. "These products are designed to offer at a premium price, a much soughtafter combination of features to today's consumers: high quality and lower fat. But under current standards of identity, the product must be labeled |ice milk,' a term often associated with thrift. Marketers would prefer labels like |reduced-fat ice cream' or |low fat ice cream.'"

According to the report, the central trend in the frozen desserts market during the last five years was waning consumer interest in the industry's core product: average-to-premium-quality ice cream. During this period, interest shifted to lower fat items, especially ice milk and frozen yogurt - although interest in super-premiums remains strong.

Confirming this overall shift, frozen yogurt emerged as the fastest growing category in the market for ice cream and other frozen desserts in the period between 1986 and 1990, expanding at a dramatic compound annual rate of 26%. Ice milk also showed healthy growth, while sales of ice cream were marginally lower.

Together, ice cream, frozen yogurt and ice milk accounted for 90% of 1990's $9.4 billion in volume, with sales of $5.2 billion (55% of the total), $2.2 billion (23%) and $1.1 billion (12%), respectively, according to Find/SVP.

The overall market was pegged up 3.5% over 1989's $9.1 billion. As compared with sales of $8 billion in 1986, this represents a compound annual growth rate of 4.2%.

The report defines the market's segments as: ice cream, ice milk, sherbet, water and juice ices, non-dairy frozen desserts, "other" frozen desserts, and frozen yogurt. It reveals that a category's performance in dollar volume is not necessarily identical to its rank in the amount of product gallonage introduced into the market.

For example, ice cream and ice milk account for 84% of total frozen dessert production. Ice cream output is put at an estimated 775 million gallons in 1990, or 55% of the total of 1.4 billion gallons, while production of ice milk is 415 million gallons, or 29% of the total. And while frozen yogurt remains the third largest category, production totals only an estimated 95 gallons, or 7%.

The report also found that dollar sales of frozen desserts are about equally divided between grocery-type outlets - including convenience stores - and foodservice operations. However, per ounce prices are far higher in foodservice-type retail outlets such as ice cream parlors than in supermarkets.

"The fact that ice milk production is over six times that of frozen yogurt, but dollar sales of ice milk are only half those of yogurt, is largely attributable to the fact that most ice milk moves through the supermarket while most frozen yogurt moves through outlets such as ice cream parlors and frozen yogurt shops," said Allen.

Find/SVP anticipates that production of frozen desserts in the USA will rise from 1.4 billion gallons in 1990 to 1.9 billion gallons in 1994. In addition, it estimates that retail sales will grow from $9.4 billion to $11.5 billion, in the same period.
COPYRIGHT 1991 E.W. Williams Publications, Inc.
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1991 Gale, Cengage Learning. All rights reserved.

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Publication:Quick Frozen Foods International
Date:Jul 1, 1991
Words:644
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