Ice cream prices melt: Falling butterfat prices bring relief to the freezer aisle

By Isabelle LaBianco

(CNN) — Ice cream prices are cooling off at the cash register ahead of National Ice Cream Day.

Even as summer heat drives up the demand for frozen treats, the average price of a half-gallon ice cream container in the US was below $6 last month, according to data released Tuesday by the Bureau of Labor Statistics. For the past two years, these frozen desserts averaged around $6.26 per container. The primary driver behind the dip is the price of butter.

Butter prices came down significantly, nearly 9% year-over-year, according to last week’s Consumer Price Index. Meanwhile, ice cream ingredients like milk and sugar had slight price increases, according to CPI data.

In 2023, butter, which is traded on commodity exchanges, was priced at $3.50 per pound — its highest level since 1965. Butter has since dropped to $1.65 per pound, or 31% below the five-year average.

Fresh cream, valued for its rich butterfat content, is the most expensive ingredient in ice cream. Butterfat is not butter, though they are both made from the natural fat found in milk. However, all American butters are at least 80% butterfat under federal regulations.

Selective breeding and high-tech dairy production have increased the supply of butterfat, driving wholesale prices down. Over $11 billion has been invested in new manufacturing processes in America’s dairy industry, according to the International Dairy Foods Association (IDFA). These investments have reshaped the way farmers use advanced technology and genetics to produce milk more efficiently.

“(What) we are seeing over the past five to seven years is dairy farmers using genetics and feeding for breeding for fat, and so the average percentage of fat in 100 pounds of milk has gone up substantially,” Phil Plourd, the executive director at the Wisconsin Dairy Products Association and an insights advisor at agricultural data company Ever.Ag, told CNN.

It is a welcome relief to manufacturers, since the FDA requires products to contain at least 10% milkfat by weight to legally carry the label of “ice cream.”

“Higher levels of butterfat in ice cream appeal to those who are looking for a very satisfying indulgence as a treat, and other innovations we’re seeing (in the dairy industry), is increased levels of butterfat in ice cream to enhance the flavor,” said Michael Dykes, IDFA’s president and CEO.

A recent poll by IDFA and Morning Consult found that 89% of respondents said flavor is the most important consideration when purchasing ice cream, outpacing price and container size.

Shoppers are likely not thinking about the genetic advancements made in the dairy industry. But they might want to grab an extra scoop while they can.

Retailers like Whole Foods and Target have promotional pricing on ice cream products throughout the summer. And data from CartHappy, which tracks grocery prices via Chrome extension, shows Walmart changed prices more than 1,000 times on its Great Value half-gallon ice creams over the past two weeks despite only selling seven flavors.

While prices have cooled on National Ice Cream Day, Ever.Ag expects wholesale butter prices to be a little higher for the rest of the year — around $1.70 per pound — due to increased baking around the holidays and strong demand from foreign buyers.

Whether shoppers are grabbing a traditional half-gallon or splurging on a unique pint, the current relief might be a little bit sweeter on their wallets this weekend.

The-CNN-Wire
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