How American ice cream brand Halo Top became a US$2 billion dessert company

A Halo Top store located in Los Angeles - a glimpse of what could be rolled out in New Zealand. Photo / Supplied

New Zealand has one of the highest ice cream consumption rates in the world, this is why Halo Top, Ben & Jerry's, Häagen-Dazs and a handful of other such brands have entered the market in the last few years.

Halo Top, the newest market entrant, launched in New Zealand through supermarkets in September and in the past six months has surpassed $1.3 million of revenue from sales.

Founded in America in late 2011 by former lawyer Justin Woolverton who wanted to find an ice cream that he could "enjoy without the guilt", the brand is now America's best-selling ice cream after reportedly selling around 28.8 million tubes in 2016, generating $191m in revenue, surpassing industry leaders Ben & Jerry's and Häagen-Dazs. It is sold in 12 countries across the globe.

The company is targeting operations in 20 markets by the end of the year.

The ice cream brand, which positions itself as low-calorie, has three retail stores in Los Angeles, which Halo Top co-founder and chief operating officer Doug Bouton says could be a contender for New Zealand.

"We're exploring whether there is a market for that in New Zealand but right now the path of least resistance to introduce our brand is through wholesale business," says Bouton.

"Sales since launch, we've already done north of $1m. We really think New Zealand can become a sizeable country for us."

Compared to other more established markets, revenue from New Zealand is minute.

Total revenue sales in Australia exceeded $18.5m in the year ended January 27, $19m in Canada and $39m in Britain, according to data recorded by Nielsen.

In the United States, Halo Top made $475m in sales in the last financial year.

Halo Top opted for a wholesale launch in New Zealand opposed to a store roll-out, as this is the business model it operates on in the US, with retail stores used to compliment the brand, says Bouton.

The brand launched in Australia in February 2017 and had been well received, which is why it decided to expand further into this part of the world.

Per capita New Zealand eats the third most ice cream in the world, behind the US and Australia. Figures show New Zealanders consume approximately 23 litres each year.

Expenditure on ice cream and other edible ices totalled $381 million in the year to September 2017, up from $358m in 2016, with $2.10 of every $100 spent on food in New Zealand going on chilled treats, according to Stats NZ.

With a population of approximately 4.8 million people, this means every person spends $79 per year, or $1.50 a week on average, on ice-cream.

Bouton says revenue from New Zealand in the past six months had exceeded its forecast of $500,000, and it had spent the majority of that time trying to keep up with demand.

Doug Bouton, chief operating officer and co-founder of Halo Top. Photo / Supplied

A retail store in New Zealand will likely be a stand alone hut-like operation, though it could be a kiosk within a shopping centre, says Bouton.

"We're still learning the retail business and constantly trying to tweak the concept.

"[A store] is fun, it brings the brand to life a little bit, it's a little bit more tangible than just buying a tub at the grocery store," he says.

"First we want to make sure we establish the brand properly, that the brand resonates. Early indications show everything is going great but we really want to fortify our position and localise the brand."

It will seriously look into the possibility of a New Zealand store at the end of the year, as one of its options for expansion.

Bouton says the brand does not have direct competitors in the market, at least not yet. "Internationally, our sales put us in the conversation with Ben & Jerry's and Häagen-Dazs but for the most part those are whole-calorie ice creams, they are not exactly directly competing with us."

It's kind of like what Greek yoghurt did to yoghurt - that's how we positioned it in the ice cream space.

The brand will this week launch its range of dairy-free and vegan ice cream, which it hopes will further position it for less competition in an already crowded market.

Despite it having little direct competition in its own low-calorie category, Bouton says the brand is disrupting sales in the traditional format.

"It's kind of like what Greek yoghurt did to yoghurt - that's how we positioned it in the ice cream space."

Growth for the business has skyrocketed in recent years and it is now estimated to be worth US$2 billion ($2.9b) but the past seven or so years of operating has not all been smooth sailing.

Bouton and Woolverton spent the first two years in business refining the product and setting up a supply chain network. 2013, was its first full operational year where it began selling into a few hundred stores.

Supermarket brand Halo Top has been in the market since September. Photo / Supplied

Bouton says 2013, 2014 and 2015 were tough years and the business had to go through a rebrand and reformulate the product before it took off. It was in early 2016 that it began to experience what Bouton describes as "rocket ship growth".

"I think a lot of it was right product, right time ... it almost went viral for lack of a better term, and everybody started telling everybody about it and we've been trying to catch up ever since."

Halo Top's ice cream is made in factories in US but it is looking to source-manufacture in Australia. It is currently on the hunt for a factory located just outside of Sydney to manufacture local product.

A big focus for Halo Top this year is expanding into Asia, among other markets. It recently launched into Germany and the Netherlands but hopes to be in around 20 countries by the end of the year.

It will launch into its first Asian market in May, though Bouton would not say which country that would be.

Retail analyst Chris Wilkinson said New Zealand's ice cream market was crowded and that growth had primarily been through boutique brands such as the likes of Killinchy Gold, Rush-Munro's, Deep South and Kapiti.

He said "once 'Artisan'" and newly emerging smaller producers now make up a larger proportion of the frozen confection market, and that mainstream producers were now responding to consumer trends, such as Magnum which had recently released a vegan and dairy-free alternative.