An analysis of at-home demand for ice cream in the United States1

Ice cream has been manufactured commercially in the United States since the middle of the 19th century. Ice cream and frozen dessert products comprise an important and relatively stable component of the United States dairy industry. As with many other dairy products, ice cream is differentiated in several dimensions. A censored translog demand system model was employed to analyze purchases of 3 ice cream product categories. The objective of this study was to determine the effect that changes in retail prices and consumer income have on at-home ice cream consumption. The analysis was based on Nielsen 2005 home scan retail data and used marital status, age, race, education, female employment status, and location in the estimations of aggregate demand elasticities. Results revealed that price and consumer income were the main determinants of demand for ice cream products. Calculated own-price elasticities indicated relatively elastic responses by consumers for all categories except for compensated bulk ice cream. All expenditure elasticities were inelastic except for bulk ice cream, and most of the ice cream categories were substitutes. Ongoing efforts to examine consumer demand for these products will assist milk producers, dairy processors and manufacturers, and dairy marketers as they face changing consumer responses to food and diet issues.