Higher expenses weigh down U.S. ice cream makers

Rising costs and lower retail prices have cooled profits for U.S. ice cream makers this summer. Costs for cream, whipped to make ice cream and other confections, rose 78 percent this year through Aug. 22 in the steepest increase since 2010, according to U.S. Department of Agriculture data. That’s squeezing makers of the frozen dessert after retail prices fell in June to a three-year low. Most stores set prices at the start of the season and don’t change them, said Lynda Utterback, executive director of the Elk Grove Village, Ill.-based National Ice Cream Retailers Association.

Cream expenses have surged as milk production trails analysts’ forecasts amid a drought in California, the nation’s top producer, and as demand rises for butter, which also uses milk fat. Sales of branded ice cream in the year ended July 5 reached $3.8 billion, a 1.9 percent increase from a year earlier, according to data from New York-based market researcher Nielsen NV.

Bloomberg News