7 December 2015
Keeping cool: Competition heats up for ice cream manufacturers, driving
premiumisation
In response to the popularity of niche gourmet ice creameries and the growing health
consciousness of the population, major producers have expanded their ranges.
Ice-cream manufacturing is a competitive business. The growth in popularity of premium icecream, 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 (Holdings) Pty Ltd and Norco Co-operative Limited. 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 expects revenue from ice-cream sales to grow at a compound
annual rate of 13.6% 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 takehome 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 $1.1 billion in 2015-16, privately owned
Unilever Australia has also faced fierce competition. The subsidiary of multinational Unilever
PLC, Unilever Australia 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% 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% 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 forecasts that industry revenue growth will slow to 1.7% 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.
Relevant companies:
Unilever Australia (Holdings) Proprietary Limited
Norco Co-operative Limited