What’s behind the dairy category’s flavour frenzy

From frozen treats to alternative options, novelty, inclusion and health benefits are driving innovation.

courtney-cook-QYsRxRPygwU-unsplashBy Will Novosedlik

Unilever’s batch of newest frozen treat flavours aren’t just delicious, they’re also a mouthful to say: Very Berry Cobbler. Coocoo for Caramel. Caramel Pretzel Blondie Pairings – described as a combination of “best-selling Talenti Sea Salt Caramel gelato made with a signature sweet Dulce de Leche and Salted Pretzel gelato with Blondie brownie pieces for a sweet and salty heavenly treat.”

These are just a few of the 19 new frozen treats introduced by the brand earlier this year across four of its packaged ice cream and frozen novelty brands, including Breyers, Klondike, Magnum ice cream, and Talenti Gelato & Sorbetto. The detailed description of Talenti Caramel Pretzel Blondie Pairings is a perfect example of what Unilever calls “a reimagined twist on classic American flavors” and “unexpected pairings for the perfect flavour combinations.”

According to the Prepared Foods 2022 state of the industry report, ice cream makers in the U.S. produced more than a billion gallons in 2021 – a five-year high. Fortune Business Insights analysis predicted global ice cream sales will near $92 billion in 2027, a 30% jump from $71 billion in 2019.

Unilever isn’t the only one to jump on the bandwagon. In June, Agropur announced a $34 million investment in its Scotsburn ice cream plant in Truro, Nova Scotia. The facility will become one of Agropur’s “Centres of Excellence” for extrusion-type frozen products. According to Philippe Razanakolona, senior director global research and innovation at Agropur, “We are expanding our ice cream mochi line into new flavours and are working on further developing our ice cream novelties portfolio in the upcoming years following the investment in our Truro, NS plant.”

So what’s behind this frenzy of frozen treat flavour extensions? We asked Scott Wegener, director of marketing at Calgary-based Foothills Creamery, which serves the Western Canadian market. Says Wegener, “Adding new flavors is a great way to build brand awareness. Our classic flavours are always going to sell more than our unique, crazy flavours, but it’s a great way to get customers to notice you, try something out and build brand affinity.”

Foothills launched six new flavors this year, including sea salt caramel fudge, raspberry chocolate truffle and some kids’ flavors including cotton candy (pink cotton candy ice cream marbled with a blue marshmallow ribbon), tiger (orange ice cream swirled with black licorice) and cereal bowl (cereal-milk flavoured ice cream with fruity cereal pieces inside).

Foothills Creamery sees similarly sized players like Chapman’s and Breyers as its most evenly matched competitors. We asked Ashley Chapman, chief operations officer and son of the founder of the 50-year-old Canadian ice cream producer what he thought of all this product innovation that is happening in the category.

“The entire dessert category has just been overwhelmed with a lot of weird, crazy, distracting stuff,” he says. “We see this quest for flavour innovation as a race to the bottom. Unlike our competitors, we don’t just release all of these weird and wonderful, innovative flavors to fill up the shelves for a limited period of time. When we find something excellent, something extraordinary, we like to make a big splash, get it into the marketplace and have it stay there.”

He claims a lot of his multinational competitors flood the marketplace for short-term gain. “These new flavours are typically good for that first sale to the customer, but often disappear two years after being introduced. What’s the point of feeding the machine of innovation just to have these products in market for a year?”

But even Chapman is not able to resist the introduction of new flavours. As COO, he listens very carefully to his customers, fielding every single email that comes into the company. When a consumer emailed about a unique frozen yogurt flavour they discovered while on a trip to Florida, Chapman’s product dev team took it to heart, producing something they called BlackJack Cherry. Says Chapman, “We put black cherries in it, cherry ice cream, chocolate ice cream, chocolate chunks and cherry-filled cups. This was five years ago. Today it is number three in the top sellers of our frozen yogurt category. That’s what I mean by meaningful innovation.”

But flavour innovation is driving more than frozen treats. According to Agropur’s Razanakolona, “Flavour innovation is important in all food categories, including dairy. We’re seeing more demands for ethnically diverse flavours and surprising combinations. For example, our Mr. Gustav fine cheese product line has a variety of flavours, including chili sriracha and smoked cheddars, jalapeno and caraway seed gouda, or tex mex and mustard cheese slices for burgers. In ice cream, we see a demand for comforting flavours such as birthday cake and smores. Ice cream is a dynamic category in terms of product innovation, with dozens of new product launches every year.”

Beyond flavour, there are other factors driving not just ice cream consumption but dairy as a whole. Says Razanakolona, “The high nutritious value of dairy products (protein, energy, minerals and vitamins) has, for decades, provided consumers with good value. Another driver is the consumer’s desire to find pleasure in food to satisfy their senses. Consumers want to take part in culinary experiences.”

But increasingly, dairy is under the microscope from a health and wellness perspective. Says Scott Wegener, “There’s a lot more consumer preference for non-dairy alternatives based on diet. Non-dairy alternatives have seen a tremendous amount of growth the past few years. There’s opportunities to get really specific in the type of product you offer, whether it’s high-fat or keto, which is seeing growth on shelves, as well as low-calorie options like Halo Top. There’s lots of space for growth.” While Foothills is working on some non-dairy solutions, they remain mostly focused on what Wegener calls “good, old-fashioned ice cream.”

Chapman sees non-dairy and plant-based products as niche, but inevitable. After substantial experimentation, Chapman’s has decided for now to remain true to their traditional ingredients. “About a year and a half ago we finally had a non-dairy breakthrough. It was a unique formulation, and it’s the closest thing to real ice cream that I have ever tasted,” says Chapman. “But even though we finally perfected the recipe, the marketplace is being flooded with non-dairy options. If we were to release one for Chapman’s at this point, we’d be head-to-head with all these players in a saturated marketplace.” For now, Chapman’s is opting to wait it out and see if a non-dairy SKU would fit into a future line-up.

Canadian producers like Agropur, Chapman’s and Foothills are, at the end of the day, strongly committed to Canadian dairy farmers. As a cooperative owned by 2908 dairy farmers, Agropur’s products are unlikely to be plant-based. “Agropur is committed to providing high-quality dairy beverages that meet the health and nutrition needs of Canadians,” says Razanakolona, citing that their Natrel lactose-free options are available, with a recently launched product, Natrel Plus, that offers the highest protein content in the market at 18 g per serving. For Agropur, any foray into further health advancements is going to focus on enhancing the benefits of its existing portfolio of milk, cheese and frozen products.