ARTISANAL ICE CREAM MARKET ANALYSIS

Market Challenges And Opportunities

Market Drivers:

• Increasing demand for premium and superior quality products: The demand for artisanal ice cream has seen significant growth globally over the past few years. More consumers now appreciate the superior quality and freshness of artisanal ice creams made with high-quality, natural, and locally sourced ingredients as compared to commercial ice creams. There is a growing preference for foods perceived as natural, organic, locally produced and handcrafted. Customers are willing to pay a premium for ice creams that are premium in quality and taste and offer an authentic dining experience. This trend can be attributed to the rising health consciousness among people and their desire to choose foods that are fresh and minimally processed. With increasing awareness about artificial ingredients and preservatives used in commercial ice creams, customers prefer artisanal ice creams that are made with fewer and cleaner ingredients sourced directly from local farms. The availability of product information and the origins of ingredients used appeal to a conscientious customer base. Data from the United Nations Food and Agriculture Organization shows that the demand for organic foods increased by over 150% globally between 2008 and 2020, reflecting the growing popularity of premium and high-quality food products.
• Growing popularity of new flavors: This market is experiencing significant growth driven largely by the popularity of new and unique flavors. Consumers today want variety and are more willing to experiment with bold, unusual flavors made with high-quality, seasonal ingredients. Artisanal ice cream makers are catering to this demand by continually innovating and launching exciting new flavor profiles. Looking ahead, the demand for custom and customizable flavors is expected to shape the future of the artisanal ice cream industry. Some shops now allow customers to build their own flavor "recipe" by choosing multiple fresh ingredients. This personalization meets people's desire for uniqueness. Hybrid dessert/ice cream mixes are another emerging trend, with flavors blending elements of gelato, sorbet, frozen yogurt and more. This growth in new flavors and artisanal experimentation supports the industry expansion. According to data from the Food and Agriculture Organization, over the period from 2015 to 2020, fruit production increased the most among tropical and subtropical fruits globally. Specifically, mango and pineapple production growth outpaced other fruits, reflecting growing worldwide demand for these ingredients. As artisanal shops seek to source high-quality seasonal fruits for their inventive flavors, this increase in tropical and unusual fruit availability supports continued menu innovation. The rising popularity of unique new flavors is a key driver propelling this market forward in terms of higher revenues and increased visibility for artisanal brands.

Market Opportunities:

• Geographic expansion into untapped markets: Geographic expansion into new and untapped markets provides huge potential for growth in this market. As consumer preferences are shifting towards premium and handcrafted products, many developing nations are witnessing rising disposable incomes and growing middle class populations. These socio-economic changes are increasing the demand for high-quality ice cream experiences. While the market remains heavily concentrated in developed regions currently, opening new retail locations in emerging economies could allow brands to tap into these fast-developing consumer bases. Many Latin American, Asia Pacific and African countries represent sizable untapped opportunities. Environmental changes are also benefiting the industry; according to the International Panel on Climate Change, warmer temperatures and climates are expanding across many developing regions, making them more conducive to ice cream consumption throughout the year rather than just summer seasons.

Market Restraints:

• High price points compared to mass-produced ice creams: The high price points of artisanal ice creams compared to mass produced ice creams are significantly restraining the growth of the global artisanal ice cream market. The average price of a pint of artisanal ice cream can be 2-3 times higher than that of mass-produced premium ice cream brands. This premium pricing makes artisanal ice creams an occasional purchase for most people rather than a regular or frequent dessert. Moreover, the higher costs of artisanal production techniques, including smaller batch sizes, no mass production, and longer production cycles, prevent artisanal brands to achieve mass scale economies. This translates into higher retail prices, further restricting their target audience. As mentioned in a 2021 report by the United Nations International Children's Emergency Fund, more than two billion people living on less than US$ 3.20 per day cannot afford expensive artisanal products on a regular purchase. Unless price points are brought closer to mass brands, the market for artisanal ice creams will likely remain a niche. Some brands are trying to overcome this by reducing wages, lowering margins, and adopting limited mechanization to reach lower price points, but full-scale growth will still be challenging without wider adoption.
• Short shelf life and vulnerability to temperature changes: The short shelf life and vulnerability to temperature changes have been one of the major restraints for the growth of the artisanal ice cream market. Artisanal ice creams are made in small batches using traditional methods without much preservative. This makes them highly perishable in nature compared to commercial ice creams. They have a very short shelf life of just a few weeks under correct frozen storage conditions of -18°C to -20°C. Any temperature fluctuation above this range can severely impact the quality, texture, and taste of the ice cream. This poses significant challenges for artisanal ice cream makers as well as retailers. For producers, it increases operational challenges to produce ice creams only in batches that can be sold before expiration. It also restricts their ability to scale up production. For retailers, it poses constant risks of expired products if freezers malfunction or power outages occur. Maintaining an uninterrupted cold chain from producers to stores is equally important yet difficult to achieve consistently. Both parties therefore have to invest substantially in temperature-controlled logistics and storage facilities to ensure safe transportation and storage of these perishable products. The vulnerability of artisanal ice creams to temperature changes was seen during the recent global outbreak of COVID-19. According to the United Nations Conference on Trade and Development trade statistics, global trade disruptions due to lockdowns and suspended logistical activities impacted refrigerated reefer containers the most between 2019 and 2021. This affected the transportation of perishables like artisanal ice creams from production units to international markets. Many small artisanal brands had to refuse export orders or face significant product losses due to broken cold chains during the period. While global trade is recovering, the inherent short shelf life and temperature sensitivity continues to challenge wider market reach and success of artisanal ice cream producers.