The northern hemisphere summer may be over, but ice cream still finds itself very much in the sunshine, with both of the two dominant global players amid corporate shake-ups.
Firstly, it is reported that Goldman Sachs will partner with PAI as a new financial investor in Froneri, with Nestle expected to retain its 50% stake. At the same time, market leader, and the newly named The Magnum Ice Cream Company (TMICC), is slated to complete its separation from Unilever with a primary listing on the Amsterdam Stock Exchange in mid-October. More than enough to keep Third Bridge Consumer analysts busy.
What is the appeal of the ice cream category? On top of being seasonal, it is highly volatile with the out-of-home channel in Europe notoriously difficult to forecast due to its weather dependency. It is also capital and energy-intensive, with the need to maintain temperatures below 18 degrees, from production, to transportation, to storage.
However, according to Third Bridge experts, the category is seen as ‘having a very strong future.’ Whilst riding on the coattails of wider favourable snacking tailwinds, ice cream is seen as an outperformer, as it increasingly broadens its appeal and accessibility away from the after-dinner big tub format. This, it is believed, places the category favourably to take share from more traditional dry snacks.
Despite the limitations of cold storage in emerging markets, and in particular in the at-home occasion, Third Bridge experts are optimistic that per capita consumption levels can build from less than 2 litres, well below that of Europe (6-7 litres) and the US (18 litres). In markets such as India, where consumption is suggested at less than 0.5 per litre, experts anticipate the category may grow at 15-17% p.a. until 2030. Meanwhile, in the more mature markets of Europe and North America, category growth potential is expected to be led through premiumisation, with consumers seen as willing to pay more for premium products with interesting, high-quality, and unique ingredients and experiences.
One may question where ice cream fits into the powerful undercurrent of health and wellness that continues to heavily shape the fate of winners and losers in the food and beverage industry. Whilst experts point to the role of ice cream fulfilling the consumer need for an occasional indulgent treat as central to its appeal, they also note the industry's adaptability in combining indulgence with better-for-you alternatives through portion size and sugar content reduction, all helping reduce calories per snack. At the same time, the introduction of vegan and plant-based alternatives are also attracting new consumers.
Turning specifically to TMICC, Third Bridge experts have been positive on the rationale behind the separation from Unilever. Perceived more as a commodity business within the wider Unilever portfolio, it has historically struggled to compete for resources with more profitable categories. As an already more standalone entity, TMICC is believed to be benefiting from improved focus and accountability, resulting in higher quality innovation and in-store execution, all of which is contributing to a higher level of competitiveness.
TMICC has already been operating with a dedicated sales force for ice cream in key markets and this is expected to help minimize disruption during the transition. Third Bridge experts recognise that the separation might impact some synergies in distribution, particularly in markets where Unilever's combined portfolio provided leverage with small store owners. However, experts go on to note that TMICC has been working on developing market-specific distribution models.
Experts highlight operational improvements have already been seen at TMICC in its early stages of operating as more of a standalone entity. However, some experts believe that there are still further opportunities to exploit. Notably, through better international roll-out of premium acquisitions such as Grom and Yasso, and as a big player, replicating the artisanal trends around textures and flavours that independent stores are introducing to consumers.
Similarly, in emerging markets, our experts believe that TMICC could do more in terms of category development to create habits and more occasion based ice cream snacking. Whilst snacking in Asia and Latin America markets is highly prevalent, there is currently little call for ice cream.
Inevitably, with category development potential comes increased competition. Several experts have referenced the more recent entry of chocolate brand owners such as Ferrero, Mars and Mondelez. Introducing strong confectionery brands such as Oreo and Ferrero Rocher as innovative, quality ice cream products, often under licence agreements with the likes of Froneri, are expected to prove a powerful, disruptive, and competitive threat to TMICC.
TMICC has also had to fend off ‘me too’ competition from the likes of Froneri in recent years, with its launch of Nuii, which looked to compete with TMICC’s premium iconic and eponymous Magnum. Expert opinions on Nuii have been mixed, with some considering Nuii's ice cream to be better than Magnum, whilst others believe it lacks the manufacturing capability to create the complex milk-based Magnum stick. Overall, our experts assess Froneri’s strength to lie with its manufacturing and operational efficiency rather than as an innovation leader or driver of new trends.
In emerging markets, TMICC will continue to contend with low-cost local competition. Although experts make the point that such competition helps develop the market at affordable entry-level price points, providing TMICC with the opportunity to trade consumers up from water-based to milk-based products.
A major headwind currently facing TMICC and other ice cream suppliers is elevated cocoa prices, which are not expected to offer relief anytime soon. This may have been a contributor to industry margins coming under pressure, despite efforts to reformulate, resize and raise prices. While industry margins are not expected to recover to pre-pandemic levels quickly, some experts are more optimistic about the longer-term P&L opportunities for TMICC. Including opportunities to improve waste throughout the supply chain, driving mix from premiumizing, and a shift away from tubs to snacking, whilst as an independent company there should be an opportunity to improve trade terms. All this, according to one expert, offers “more tailwinds from a gross margin opportunity than headwinds”.
All insights in this article are based on information shared by Third Bridge experts.
Transcript references
- The Magnum Ice Cream Company (Formerly Unilever Ice Cream Division) – Breaking the Ice Ahead of Planned Q4 2025 Separation - 14 August 2025
- Unilever – Ice Cream Division Separation Update - 2 December 2024
- European Ice Cream Industry Update – In the Dough or Rocky Road? - 26 November 2024
- Indian Ice Cream Market – Hindustan Unilever's Ice Cream Business Spin-off & Competitive Landscape - 23 April 2024
- Unilever – Ice Cream Division Separation Analysis - 12 April 2024
- Froneri – Strategy Review, Competitive Positioning & Mid-term Operational Outlook - 12 June 2025
- Froneri – Strategic Update & Mid-term Operational Outlook - 10 December 2024
- Froneri – Strategy Review, Competitive Positioning & Mid-term Operational Outlook - 15 February 2024
