Industry revenue for Australian ice cream stores is estimated to increase at an annualised 2.2 per cent in the five years through 2013-14 to $513.3 million, according to IbisWorld.

This includes an estimated 4.3 per cent increase in 2013-14 as more enterprises enter the industry and economic conditions improve.

In the ice cream stores industry a high proportion of stores are operated under franchise agreements, which has contributed to industry growth in the past five years. During this time, steady growth in store numbers, particularly through franchises in regional areas, has helped the industry reach a larger market.

With a wide range of products, quality, and markets to target, ice cream stores have been able to expand steadily. For example, Movenpick has franchises at the premium end of the market, which offer customers a high end instore setting and premium products.

This contrasts to some franchise stores at the lower end of the market, which offer basic or generic ice cream products that are consumed away from the store. As such, the industry caters to a wide range of customers across various price points, with further potential for growth in the next five years.

The market share level for the ice cream stores industry is based on store brands across the major franchises. Therefore, industry concentration is at a moderate level due to several major franchise operations within the industry that have a high aggregated number of franchisees across Australia.

There are four large ice cream franchise companies in Australia: the Australia Retail Franchise Group (Wendy’s), Baskin-Robbins Australia, Franchised Food Company (Cold Rock) and NZN Holdings (New Zealand Natural).

IbisWorld industry analyst, Alen Allday said industry growth in the five years through 2013-14 has been driven by a greater number of ice cream stores providing high end, premium and gourmet ice cream products. Some of these stores manufacture gelato by hand and follow traditional Italian recipes, and are able to attract a large and loyal following. These ice cream and gelato stores are also able to charge higher prices, resulting in higher profit margins.

According to Allday: “Future growth will be driven by increases in franchise outlets, resulting in higher sales to a larger market.”

IbisWorld also expects an increase in the number of small and medium size companies offering franchises. Gelato makers and franchise providers, such as Gelatissimo, and niche premium ice cream stores are expected to be major contributors to this industry expansion.

For more information, visit IBISWorld’s Ice Cream Stores report in Australia industry page.