The ice cream industry is divided into four segments that categorise the reasons why consumers purchase ice cream – snacking, indulgence, fun and value, and refreshment.
The snacking and indulgence segment were almost equal about three to four years ago, however because Australians are increasingly snacking more, it increased from 37% in 2002-03 to 40.3% in 2006-07, and is expected to continue to rise.
The indulgent segment has declined slightly over the past few years as a result of increased snacking, accounting for 32.3% of the market. Brands such as Connoisseur and Magnum have proved to be successful in continuously introducing new flavours, with Magnum holding 66.3% of the segment in 2006-07.
The fun and value segment is targeted at children and teenagers, and despite continued product innovations, the market share has declined in the past few years, down to 9.6%, from 12% in 2002-03. Paddle Pop dominates this segment, accounting for 60.8% in 2006-07, an increase of 16.8% from the previous year.
Refreshment has increased by 1.8% over the past two years to account for 17.8% of the market in 2006-07, with a large proportion of growth coming from Streets Calippo. Although seasonality affects the whole industry, the refreshment and fun and value segments appear to be more significantly affected.
The domestic consumption of ice cream has declined marginally over the current performance period. In the last few years industry turnover has been driven by value added products such as snack-sized ice cream and premium ice cream, rather than growth in ice cream volumes. The producer price index for the industry has grown moderately in nominal terms, but fallen slightly in real terms.
IBISWorld estimates that industry revenue will increase from $619.9 million in 2008-09 to $649.2 million in 2012-13, representing an average annualised increase of 1.7% over five years.
Many consumers have shifted away from ice cream toward healthier dessert alternatives such as yoghurt. Ice cream manufacturers have tried to retain consumers by expanding into low fat, fat free, low carb, organic and soy ice cream varieties, along with blending yoghurt with low fat ice cream.
The major players in this industry have global food production and distribution operations and therefore rationalisation of their global operations may have an adverse impact on the ice cream manufacturing in Australia. Unilever has scaled down operations at their ice cream manufacturing plant in Sydney and further relocations may eventuate over the next few years.
Lena Zak is the editor of FOOD Magazine.