CPG Playbook   //   April 4, 2024

Premium dessert startups are transforming the ice cream aisle

The ice cream aisle is in the midst of a transformation thanks to emerging artisanal brands making their way into major grocery doors.

Major retailers are seeking out frozen dessert startups to sit next to ice cream stalwarts like Edy’s and Ben & Jerry’s. For example, Doughlicious, a U.K.-based frozen dessert brand by The London Dough Co., launched in the U.S. at Whole Foods in late 2023. The brand kicked off with its line of frozen cookie dough and gelato balls, which are low-calorie and preservatives and gluten-free.

Founder Kathryn Bricken told Modern Retail that many of the buyers she’s meeting with are looking to stock better-for-you options to appeal to health-conscious shoppers.

For years, major brands like Häagen-Dazs and Breyers dominated the frozen food section with classic flavors like chocolate and vanilla. But thanks to the success of recent players like Halo Top and Jeni’s, alongside growing demand for more premium and healthier products, startups like Doughlicious and Alec’s Ice Cream say they are seeing heightened interest for major grocers like Whole Foods and Sprouts.

“We saw a gap in the market for premium frozen snacks made with the highest-quality clean label ingredients and innovative indulgent flavors,” Bricken said. As such, Doughlicious is being positioned as a healthier alternative to Americans’ growing snacking habits — while sitting next to large tubs of Friendly’s.

This comes as ice cream consumption begins to shift. While total ice cream sales are still growing in the U.S., much of that is due to inflation rather than units sold. According to NielsenIQ, the ice cream dollar sales figures were up 9.4% in 2023, but volume was down 2%. While classic flavors like vanilla, chocolate and strawberry remain popular, NielsenIQ data shows that healthier alternatives like sorbets and sherbets are helping drive growth.

This change is being felt by major ice cream manufacturers. In March, Unilever announced its decision to divest its ice cream business by the end of 2025, a plan that’s set to cut 7,500 jobs. The newly spun-off company includes brands like Ben & Jerry’s, Cornetto, Magnum, Talenti. According to the announcement, the CPG giant says the separation is to create “a simpler, more focused and higher performing Unilever.”

With these recent shake-ups, new brands say they’re aiming to fill a gap for retailers. Plant-based and vegan ice cream startups have been at the forefront of the wave. For years, brands like Van Leeuwen and NadaMoo were among the buzzy companies ushering in dairy-free options. Then there are subcategories like Japanese rice cake mochi, which are also gaining traction and sitting next to traditional American ice cream pints — with more mochi brands launching every year.

According to data from 84.51°, total ice cream sales are up slightly year-over-year, at a 4% increase, but remain relatively flat by units and household rates. And while many shoppers are spending less on premium brands, the firm said a few artisanal brands are outperforming in this category (though it declined to name which ones).

New brands are also marrying sustainability to their plant-based development of ice cream products. Alec’s Ice Cream, which launched in 2021 and makes regeneratively-farmed ice cream, is making its way to more national retailers. Alec’s uses A2 dairy in its products, a protein that is reported to be more tolerable by those with lactose sensitivity. The brand launched in Whole Foods nationally in 2023, followed by Sprouts, The Fresh Market and Erewhon. It is now in 2,000 doors.

The changing at-home ice cream category is so lucrative that existing brands are getting into ice cream.

Doug Taylor, co-founder and CEO of online bakery Taylor Chip Cookies, said the company is planning the launch of a new grocery ice cream line this year. When the company launched in 2018, it started with cookies as ice cream posed a bigger challenge due to high costs and strict regulations in dairy manufacturing.

“Looking around, I see plenty of unoccupied shelf space in the ice cream section,” Taylor said. Through the research phase, Taylor said he found the at-home ice cream trends are leaning toward healthier sweets with fewer additives and more natural ingredients. “That aligns with our philosophy and upcoming slogan, ‘Feel Good About It.'”

The company is investing nearly $10 million in its own manufacturing, setting up a 20,000-square-foot facility in Lancaster County, Pa. that will include retail space with a drive-through and production viewing area.

“We’ve leveraged resources like Penn State’s HTST and Ice Cream Short Course and brought in experts from the dairy industry to bolster our R&D capabilities,” Taylor said.

Doughlicious’s Bricken is betting on Americans’ growing affinity for more diverse frozen treats options to fuel her company’s trajectory.”

The response from U.S. buyers has been incredibly encouraging,” Bricken said, with the brand set to enter more retail chains this year. “The interest in artisanal and premium frozen desserts, such as Doughlicious, reflects a shift towards indulgence without compromise.”