Raw material price increases driving up ice cream prices too
Summer is peak season for ice cream, but thus far this summer, ice cream sales have dipped somewhat. Ice cream prices, meanwhile, have gone up, and as the cost of raw materials involved in its production continues to increase, consumers can expect those prices to go up even further.
A Balbiino ice cream truck comes around the TV Tower in Tallinn every Sunday, announcing its presence with music just like they do in North America. Customers are hard to come by in rainy weather, however, at which point the truck is acting as more of an advertisement on wheels.
"It's a seasonal thing, that toward the beginning of summer you get more people and clients, and toward the end, they start to dwindle," said Rasmus, who sells ice cream from the truck.
Compared with last summer, ice cream prices have gone up an average of 11 percent.
"In the case of ice cream, the primary raw material is milk, cream and all milk-based raw materials, and their prices have gone up a lot," said Anne Tääkre, marketing director for Estonian ice cream producer Balbiino. "In other words, if we actually look at since the beginning of the year, such commodities' prices have increased nearly 40 percent in Estonia, and we're definitely forced to pass that price increase on to consumers."
Most small ice cream bars and cones still cost under €1 apiece in grocery stores, but should raw materials prices remain high, ice cream prices will continue to rise as well.
"Our market share has increased somewhat in June, but the market has nonetheless declined somewhat," Tääkre said. "And perhaps declined in terms of such cheaper products."
Meanwhile, the market share of small Estonian popsicle producer Jäämari continues to increase each year, according to board member Virgo Tuul.
"Our sales have increased — as in previous years — by 20 percent this year as well," Tuul said. "Sales in Estonia are going up. In that sense, we're not outright feeling that things are going badly for us or for the company. On average, I'd say we're doing pretty well, actually."
Nonetheless, Jäämari popsicle prices have gone up 15 percent. Production costs, however, have actually gone up even more than that — more than 30 percent — due primarily to increased electricity and fuel prices.
"Internally we've identified several places where we can actually significantly scale back the share of energy costs so that they wouldn't affect us as much," the board member noted. "For example, we're trying to use the heating energy from our ice cream machines to produce warm water, or solar panels to produce ice cream."
Should the cost of raw materials, which in Jäämari's case primarily include coconut milk and fruits, continue to go up, however, another price increase will be inevitable for them as well.
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Editor: Aili Vahtla