Consumer Staples

Can frozen yogurt and ice cream coexist?

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It is a question that has plagued many great thinkers for a number of years: does the rise of "healthy" frozen yogurts signal the death knell for the indulgent ice cream?

Mintel Research's latest report into the U.K.'s ice cream market said, "While sales of ice cream overall flounder, the frozen yogurt market – with its health halo – is booming, with sales having doubled between 2010 and 2013, albeit from a small base of less than one percent of the total market by value."

However, Kevin Havelock, president of refreshments at Unilever, argues that the "froyo craze" is beneficial for the ice cream market.

"People are coming into ice cream that before, were a little concerned, they're coming in via frozen yogurt," Havelock said. "So for us, for example, Ben & Jerry's - which is very big in frozen yogurt across the U.S. - we saw last year (that) 60 percent of the growth came through Greek yogurt, so it's a really great addition to the market."

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Indeed, Mintel's report suggested that ice cream manufacturers in the U.K. should follow the U.S. Ben & Jerry's model: "There is scope for manufacturers to tap into the Greek yogurt trend with frozen Greek yogurts, taking cues from the Ben & Jerry's Greek Frozen Yogurt range in the U.S."

Mintel reports that the ice cream market grew 20 percent between 2007 and 2013 and is now worth £1.1 billion ($1.7 billion). However, this was fueled by inflation and there has been an 11 percent decline in volume sales over the period. The market saw the biggest annual decline in 2012, with volume sales down five percent year on year.

However, while the frozen yogurt market is relatively small compared to the ice cream sector, its popularity is on the rise, especially among a younger demographic.

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Ice cream and frozen yogurt: can they coexist?

Rebecca McGuire, the founder of frozen yogurt chain Yog, which now has 12 stores in the U.K. and has a partnership with Odeon cinemas, sees a booming market, and has plans to expand into Spain and even the U.A.E.

"Key to our success is the provenance, originality and quality of the product," she told CNBC. "It's fat free or low in fat. It's very low in sugar. We have no artificial ingredients in the product."

When comparing one cup of vanilla ice cream with one cup of vanilla frozen yogurt, the former has 275 calories and 15 grams of fat, while the froyo contains 221 calories and 6 grams of fat.

Havelock agrees that health is key to the frozen yogurt craze, but adds that luxury plays a part in this market.

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"People will pay for health," Havelock said, adding, "We're also seeing in all markets people are actually upgrading to the best that they can possibly get. For us, the fastest growth has actually been in the Magnum brand. Magnum is very much about indulgence."

With Yog looking to expand internationally, and Havelock aware of the potentials of the frozen yogurt arena, it does look like ice cream brands can maintain a dominance while also making steps to innovate in the frozen yogurt space, like Ben & Jerry's in the U.S.

The key, as always, is taste and the indulgence factor.

"They're not buying ice cream every day and when you want an occasional treat you want to really, really enjoy it, that's so important, whether its Wall's, Magnum or any of the frozen yogurt brands," Havelock said.