Competition is driving ice cream premiumisation

The growth in popularity of premium ice-cream, combined with the growing number of health conscious consumers has contributed to a surge in the number of ice cream manufacturers keen to play in this market, including Unilever Australia and Norco Co-operative. 

Premium ice cream and gourmet gelato products continue to gain popularity, boosting industry growth as customers that seek these products are typically less sensitive to mild price fluctuations and are willing to pay more for quality ice-cream. IBISWorld said that it expects revenue from ice cream sales to grow at a compound annual rate of 13.6 per cent over the five years through 2015-16.

Norco Co-operative, a company wholly owned by Australian dairy farmers, produces two-litre tub ice cream products under the Coles private-label brand, which are targeted towards the premium ice-cream consumer. 

This range includes gourmet flavours such as Lamington Style, Caramel and Macadamia, Lemon Meringue and Pavlova Passion.  The release of these flavours has come in response to increasing competition from niche ice-creameries such as Movenpick and Gelatissimo, which offer their own premium take-home tub products in a range of innovative and gourmet flavours. 

Norco has responded to consumer demand for premium take-home multi-pack ice creams by manufacturing products for the Coles Classics range, which bear strong resemblance to popular premium ice cream brands Heaven and Magnum. 

Norco has also catered for the growing health-conscious consumer segment by promoting its Light Prestige range, which includes ice-cream products with a lower fat content. The company’s contract arrangements with major supermarkets Coles, Woolworths and Aldi have ensured steady demand for its premium ice-cream products.

In an industry where revenue is expected to reach $AUD1.1 billion in 2015-16, privately owned Unilever Australia has also faced fierce competition. The company first ventured into ice-cream manufacturing after it acquired McNivens ice cream in 1959. The company also owns ice cream brand Streets, which has allowed it to capture a greater share of the market. Unilever Australia currently holds an estimated 27.6 per cent of industry revenue, primarily through strong marketing for the Streets brand, which has amassed a loyal consumer following for its Magnum, Cornetto, Paddle Pop and Golden Gaytime varieties.

Unilever has also pursued growth through premiumisation, altering its marketing strategy in line with shifts in consumer tastes towards premium products. 

As a result, the company’s ice cream revenue is expected to grow by 14.2 per cent over the five years through 2015-16. Unilever’s recent expansion of its premium brand, Magnum, offers new gourmet flavours and take-home tub options, which have proved successful with its loyal consumer base.

Whilst premium ice-cream products have experienced great success over the past five years, IBISWorld has forecast that industry revenue growth will slow to 1.7 per cent annualised over the five years through 2020-21. 

Despite expected growth in discretionary income levels, the growing number of health-conscious consumers may negatively influence consumer ice-cream purchases, as individuals seek healthier snack options and desserts with lower fat and sugar content.

 

286 thoughts on “Competition is driving ice cream premiumisation

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