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Competition Heating Up in UK Ice Cream Sector

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Competition Heating Up in UK Ice Cream Sector

Competition Heating Up in UK Ice Cream Sector
May 18
10:25 2015

High levels of competition within the UK ice cream sector are at risk of escalating further, according to Key Note’s new Market Report Ice Creams & Frozen Desserts. While the hot summer weather drove value sales growth of 4.3% in 2014, emerging market trends are nevertheless making it challenging for manufacturers to remain competitive.

Health is one such trend. Key Note’s Ice creams & Frozen Desserts Market Report suggests that the UK consumer base is becoming increasingly health-conscious in light of penetrative public health campaigns, media-driven health fads and a widespread obesity crisis. Key consumer concerns in this regard are fat and sugar — both of which typically feature heavily in ice cream products. Even healthier products, such as frozen yoghurt and sorbet, still contain relatively large quantities of sugar. While this is unlikely to affect the demand for single-serve impulse products, it does represent a threat to take-home sales, exacerbating competition.

KeyNoteLogoManufacturers are investing in new product developments (NPDs) as a means of retaining brand loyalty in this climate, while also appealing to an increasingly adventurous consumer base. Yet, innovations often require corresponding marketing initiatives to be popular and, even then, success is not guaranteed. Main media advertising expenditure is an important means of brand consolidation for ice cream manufacturers, while companies are also investing in enhancing their presence on social media platforms. However, despite all these exposure initiatives, private-label ice cream products continue to eat into the banded manufacturers’ market share. As the economic recovery develops, private labels are focusing on penetrating the premium and super premium categories, thereby building upon their existing influence in the standard quality category.

The outlook for the UK ice cream sector is consequently one of extreme competition. While this is perhaps manageable in years when the summer weather is good, trade will be extremely challenging when this is not the case. While Key Note forecasts ongoing value growth over the next few years, branded manufacturers will need to invest more to retain their share, consequently restricting profitability.

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