A Rocky Road for Ice Cream: The Inside Scoop on Private Equity’s Newest Bet

Author: Thea Louise Dai
Graphics: Yarden Pri-Noy

The multibillion-dollar ice cream market is turning, well, ice-cold: as big brands face low margins, private equity pushes for an industry upset fueled by artisanal growth.

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Introduction

Everyone loves ice cream — except, apparently, the companies that sell it. In the United States, the multibillion-dollar frozen dessert market has traditionally been led by household names such as Ben & Jerry’s, Häagen-Dazs, Blue Bell, and Breyers. But for consumers, brand loyalty melts fast. Switching costs in the industry are virtually nonexistent, as it only takes seconds to reach for a new pint in the freezer aisle. As American consumers have begun to seek novelty beyond the legacy labels of their childhood, both entrepreneurs and investors have followed. Boutique brands backed by private equity have emerged with premium flavors and inventive marketing strategies, while the traditional conglomerates are retreating altogether. But despite ice cream’s universal appeal, its economics remain stubbornly challenging.

Legacy Giants Lose Their Taste

By the early 2000s, multinational conglomerates had consolidated much of the world’s ice cream industry. Unilever — the biggest player commanding 21% of total industry sales — owns an empire of frozen brands including Ben & Jerry’s, Breyers, Magnum, and Talenti. At the same time, Nestlé has assembled a portfolio including Häagen-Dazs, Dreyer’s, Drumstick, and Outshine, comprising  around 13% of the market. Despite having the leading brands, massive economies of scale, and unrivaled synergies, both companies have independently concluded that the ice cream business is just not worth it.

Unilever’s ice cream division is now the company’s weakest link in sales. While Unilever posted an  overall sales growth of 7% in 2024, its ice cream division lagged at just 2.3% with a 6% drop in volume. The segment faces high capital intensity, greater seasonality, and requires a fussy supply chain compared to Unilever’s higher-margin businesses in home care, personal care, and beauty. For the first time in 2025, Unilever reported the ice cream division by itself to show investors why they’re committed to divesting in it. The company announced plans to spin off the business into a new, standalone company by November 2025.

Nestlé followed a similar trajectory, with ice cream revenue declining year-over-year since 2007. The only way Nestlé was able to salvage margins in 2009 was thanks to “shrinkflation,” when the company downsized the size of every Häagen-Dazs pint from 16 ounces to 14 ounces. In 2019, the company finally cashed out by selling their ice cream division to Parisian private equity firm Froneri for $4 billion. While Froneri has expanded revenue modestly, its operating margins hover near 10% with management consistently blaming the weather, weak summers, and sugar, cocoa, and dairy costs. The firm is also exploring exit options, including raising funds for a potential initial public offering.

The Economics of Premium

The ice cream industry has now become a target for private equity firms, who have started to supercharge mom-and-pop scoop shops into premium brands with massive capital infusions — all with the goal of creating the Häagen-Dazs of the Instagram generation. Because shoppers can switch to similar products by other brands in seconds, the industry leaves little room for long-term loyalty. Private equity investors have thus pivoted, focusing on brand storytelling by backing artisanal producers such as Salt & Straw, Jeni’s Splendid Ice Creams, and Van Leeuwen. The bet is that distinct identities, local sourcing, imaginative flavors, and social media engagement can differentiate them from the supermarket mainstays and command higher margins. 

The U.S. artisanal ice cream segment, valued at roughly $2.2 billion in 2023, is projected to grow about 6% annually through 2030, according to Grand View Research. Global market forecasts suggest an expansion from $93.6 billion in 2024 to $144 billion by 2034. While the numbers appear promising, analysts caution that the majority of growth will likely come from premiumization (greater profit per unit) than an actual increase in sales volume.

The average 16-ounce pint of Ben & Jerry’s at the grocery store retails for around $6.99, while a pint of Jeni’s costs $12. A Salt & Straw pint will set you back $15. These higher price points mean artisanal brands command significantly better gross margins than their grocery-store counterparts. While Froneri struggles with margins around 5-10% in their ice cream division, boutique brands can achieve gross margins well over 50% per pint.

The ultimate payoff for private equity’s bet would be a move into scalable retail distribution. This entails a transition from small-batch, high-cost storefronts to the high-volume environment of the supermarket freezer. Brands like Jeni’s and Van Leeuwen have already begun this process. Jeni’s, for instance, has leveraged its cult following to secure shelf space in thousands of grocery stores, including Whole Foods and Target. Similarly, Van Leeuwen, backed by investments from NextWorld Evergreen, has aggressively expanded its sales in major retailers like Kroger. This hybrid model — using scoop shops to build brand equity and grocery stores for scale — likely illustrates the future of the ice cream industry: a differentiated market where the artisanal innovators fill the void left by the giants.

The Salt & Straw Story

The case of Salt & Straw, founded in 2011 by cousins Kim and Tyler Malek, also exemplifies this movement. From what began as a single ice cream pushcart in Portland. Tyler, recently out of culinary school, crafted imaginative, small-batch flavors that quickly won local fans. This era laid the foundation for the brand’s distinct, off-beat identity. Salt & Straw’s current staples include flavors like Arbequina Olive Oil, Pear and Blue Cheese, and Strawberry Honey Balsamic with Black Pepper — with even more adventurous flavors introduced on a rotating basis.

Within months, Salt & Straw opened its first brick-and-mortar store. Over the next decade, the company steadily expanded across the West Coast, growing from one location to dozens of shops nationwide. Their reach now includes major markets like Los Angeles, San Francisco, Seattle, and New York, alongside a strong direct-to-consumer e-commerce platform that allows fans to enjoy their ice cream anywhere in the United States. Salt & Straw’s new delivery system can ship any of their currently offered flavors in under 6 business days, and uses dry ice for a “melt-free guarantee.”

Key to enabling this rapid growth has been their successful capital raising efforts. Over the years, Salt & Straw has raised roughly $7.7 million in private equity funding, including $4.2 million in a 2025 round supported by Gladstone Capital and the Oregon Venture Fund. High-profile investors such as Danny Meyer’s Union Square Hospitality Group and celebrity backers Dwayne “The Rock” Johnson and Dany Garcia have also invested through private ventures.

Conclusion

While the ascent of brands like Salt & Straw has been impressive, the success of the business model is far from guaranteed. The question now is if artisanal brands can successfully scale without losing the small-batch authenticity responsible for their initial rise. Toeing the line between novelty and volume is a delicate balance for these new entrants to sustain. However, the global distribution networks of Unilever and Nestlé have proven that scale alone isn’t enough to sweeten profits. Both models face the same underlying truth: whether sold from a supermarket freezer or a hand-scooped boutique, even the world’s most comforting product can be a cold business.

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Take-Home Points

• While ice cream is a global favorite, the industry has historically been a low-margin business at scale.

• Conglomerates like Unilever and Nestlé have begun leaving the space after decades due to profit stagnation and weak returns.

• Private equity firms have filled the gap by funding artisanal, brand-driven players with the hope that differentiation can sustain premium pricing.

• The market’s future growth will increasingly depend on successful storytelling and efficient operations.