Is vegan ice cream profitable? In this post, I want to talk specifically about whether vegan ice cream is profitable. Whether you are a dedicated vegan ice cream business or one that offers vegan alternatives – you need to know if vegan options are profitable or not. Whatever you decide to offer in your ice cream business, in today’s world you cannot ignore vegan, dairy-free, and plant-based options. As many as 6% of Americans are now vegan.
Now, this may not seem like much to you, but consider the growth in this area. In 2014, only 1% of Americans were vegan. That is a big jump, and it is growing. Also, these figures don’t consider people who are not vegan, but just want to eat dairy-free/vegan ice cream options. Take a look at the dairy-free ice cream market which is forecasted to grow to over $1 billion by 2024 (Global Market Insights). If that is not enough to convince you then just go to your local grocery store and see the number of vegan and dairy-free options available. If Ben & Jerry’s and Häagen-Dazs are doing it, then you need to take it seriously. So, let’s get to it and find out if making vegan ice cream will be profitable for your ice cream business?
Is Vegan Ice Cream Profitable To Make?
As a general rule, the raw cost of ingredients to make vegan ice cream tends to be higher than the ingredients required to make dairy ice cream. However, vegan ice cream is still profitable as there is such a huge demand for it. This is combined with the fact consumers are willing to pay more for vegan ice cream.
What Is Vegan Ice Cream?
Vegan ice cream is ice cream made from ingredients that have not been derived from animals. Vegan ice cream is usually made with a vegan milk alternative. The popular varieties include:
- Coconut Milk or Cream
- Soy
- Almond Milk
- Oat Milk.
Less commonly used varieties include milk such as:
- Hemp Milk
- Cashew Milk
- Flaxseed Milk
- Barley Milk
- Pea Protein Milk
- Sesame Seed Milk
- Macadamia Nut Milk
Vegan Ice Cream Is Not Just Dairy-Free
Vegan ice cream also will have been made without eggs. On a side note, ice cream can be dairy-free (e.g., it uses vegan milk instead of dairy milk) but is still not vegan if it contains eggs.
Another ingredient that can make ice cream technically not vegan is sugar. Non-raw or organic cane sugar can be processed with bone char to give it a white appearance. Bone char is exactly as it sounds – charred animal bones.
What Is Vegan Ice Cream Summary
In summary, vegan ice cream:
– doesn’t contain dairy milk or any other kind of dairy
– is egg-free
– is sweetened with non-bone char sugar (e.g. organic or raw cane sugar) or a more natural sweetener such as maple or date syrup; and
– does not contain any other animal-derived ingredients.
Is Vegan Ice Cream Harder To Make?
In my post on Different Types of Frozen Desserts, I explained the main difference between ice cream and other frozen desserts (including vegan ice cream). You can read that post here: What are the Different Types of Frozen Dessert.
As a quick recap, for something to be called “ice cream”, it must legally contain at least 10% dairy milkfat. That is why vegan and dairy-free “ice creams” are called “Frozen Desserts”. Anyway, what makes ice cream so thick and creamy is the presence of “fats”. These fats get in-between water molecules during the freezing process and help create small ice crystals and that smooth creamy ice cream finish.
The challenges with vegan ice cream are that a lot of the dairy milk alternatives are not naturally high in similar fats. This, combined with the higher price point of dairy milk alternatives (dairy is cheap) means a lot of producers add water to their base. The result is often icy, and less creamy ice creams. To combat this some producers will add thickeners (Guar Gum, Xanthan Gum, Locust Bean Gum, etc.) and stabilizers to their mixtures.
In my opinion, this can affect quality.
All the above can make producing vegan ice cream particularly challenging, but not impossible. The key to success is to use naturally fatty alternatives such as high-fat coconut creams. Also, there are a lot of bad vegan ice cream recipes out there. I always recommend putting the R&D time into developing your vegan ice cream recipes. Experiment, experiment, experiment – until you get it right. That is what I did when developing my vegan ice cream recipes.
Size of Vegan Ice Cream Market
The global ice cream market is growing at an exponential rate. The global vegan ice cream market is predicted to reach $1,015.15 million by 2029.
Why is the vegan ice cream market growing so rapidly? Well, obviously veganism is growing at an accelerated rate – just go and type ‘vegan‘ into Google trends and look at the growth since 2004 – veganism has been growing at an accelerated rate in recent years.
Also, just healthier eating and incorporating more plant-based and vegan options into diets have also been increasing in recent years. I have friends who are not vegan but will only drink non-dairy milk.
Finally, one of my ice cream businesses is vegan plant-based ice cream. Everything we make and offer is vegan. Whilst vegans do form a core part of our customer base, most of our customers are non-vegans. Non-vegans who are just looking for simpler, dairy-free ice cream which they can feel great about eating.
Opportunities for Vegan Ice Cream
Vegan ice cream of course caters to vegans, but vegan ice cream is also appealing to the following groups of customers:
- who want to satiate their sweet tooth with a healthier ice cream option (vegan milk tends to be lower in calories and fat than dairy milk as well as being high in nutrients).
- who want to reduce their environmental impact but make more non-dairy choices.
- with dairy allergies and intolerances (full-fat dairy can give a lot of people a tummy ache even if they are not lactose intolerant).
- many customers prefer the taste and texture of vegan ice cream.
Cost of Making Vegan Ice Cream
Ok, so the vegan ice cream market, demand for vegan ice cream, and veganism generally are growing at an exponential rate. Great.
However, here is the bad news. On average it is much more expensive to make vegan ice cream than dairy ice cream. This is due to the higher cost of ingredients.
Examples of the price differences
The coconut milk and cream we use to make vegan ice cream in our ice cream shop cost about THREE times what dairy milk would cost us.
On top of this, we use natural sweeteners such as date syrup rather than cane sugar. This makes our ice cream appeal even more to health-conscious customers and not just vegans. However, the date syrup we use costs 29 cents per ounce. Cane sugar bought in bulk can in comparison be as cheap as a few cents (often less than 5 cents) per ounce.
This means in our ice cream shop it costs us:
- around $2 to make a scoop of vegan ice cream (our ice cream scoops are generous and served in an 8-ounce cup).
- This averages out to the best part of $4 to make a pint of our ice cream.
Both figures are based just on raw ingredients and packaging – this cost is before the cost of staff to make and sell it as well as rent, electricity for the ice cream machine, etc.
Okay, so what have we learned so far. First, there is demand for ice cream. Secondly, it is more expensive to make vegan ice cream than dairy ice cream. But hold on a minute – despite these two things is vegan ice cream profitable?
What Price Can I Charge for Vegan Ice Cream?
As a general rule, higher prices can be charged for vegan ice cream than dairy ice cream. In our ice cream shop, we charge $5.95 for a single scoop of our vegan ice cream and $12.95 for a pint of our vegan ice cream. We operate off a gross margin of around 70%. Which is enough to generate profits after paying for our high rent, staff wages, and other operating costs of our ice cream shop.
There is a soft-serve shop I know and their prices for their dairy soft serve are very cheap (e.g., just $2.50 for a kids serving). However, they have two vegan flavors on the menu and if you choose the vegan flavor there is a surcharge of $2. So, if you order a vegan kid serving it will cost you almost double ($4.50). When the dairy equivalent would cost $2.50.
It is common to see a surcharge for the vegan option (I mean we still get charged more for non-dairy milk in most coffee chains, so people are used to it).
What does this mean for you? If you choose to serve vegan ice cream be prepared to charge more for it. In my experience, most people understand the reasoning for the difference in prices between vegan and traditional dairy ice cream.
So, Is Vegan Ice Cream Profitable?
Vegan ice cream can be very profitable.
Yes, it is more expensive to make due to higher ingredient costs BUT there is also a huge demand for it – from vegans as well as non-vegans. Plus, higher prices can be charged for vegan ice cream than dairy ice cream.
A personal recommendation would be to also sweeten your vegan ice with a healthier sweetener – your ice cream will then also really appeal to consumers who aren’t vegan but simply want a healthier ice cream option.
However, it will only be profitable if you mark up your prices in accordance with your cost. You want to make a minimum of a 70% Gross Profit per scoop. If you want to learn more about prices and ice cream business finances, I covered everything you need to know in my posts:
- Ice Cream Shop Accounting – Everything You Need To Know
- Ice Cream Shop Profits – How To Run A Profitable Ice Cream Shop
Is Vegan Ice Cream Profitable – The Final Lick
Is vegan ice cream profitable? Let’s recap what we have learned. First, vegan ice cream is in high demand and growing. Secondly, it is harder to make (and get right). Thirdly, it costs more to make. And, finally, despite all these things – YES – vegan ice cream can be profitable. Why? Because in my experience customers understand that there are higher costs involved in making vegan ice cream and are willing to pay a premium for it. This can be a high premium when you make especially great vegan ice cream. On a personal note, I notice that charging above $6 for a scoop of ice cream is the point people will start to grumble about pricing.
The key when making any ice cream, including vegan ice cream, is to make sure that you set your price according to your costs. You need to have a price point that can cover the cost of your ice cream and all your other costs. The only way to do this is to make sure you have a minimum of a 70% gross profit margin baked into your pricing. If it starts to go below – you will need to increase your pricing. It is that simple.
Time To Learn Some More
Want to learn more on your path to ice cream entrepreneur success. Then check out some of my other articles.
- What Are the Challenges In An Ice Cream Business
- How Do I Start My Own Ice Cream Business
- Ice Cream Shop Profits – How To Run A Profitable Ice Cream Shop
- How Much Does It Cost To Start An Ice Cream Truck
- How Much Does It Cost To Start An Ice Cream Shop
- Ice Cream Shop Accounting – Everything You Need To Know
- Can I Make Ice Cream At Home And Sell It
- What Are the Different Types of Frozen Desserts?
- What Equipment Do I Need For My Ice Cream Truck
- How To Pick A Generator For Your Ice Cream Truck
- How Profitable Is An Ice Cream Truck?
- Everything You Need To Know About Working In An Ice Cream Shop
- Everything You Need to Know About Writing an Ice Cream Business Plan
- Everything You Need To Know About Rolled Ice Cream
- Everything You Need To Know About Soft Serve Ice Cream
- Vegan “Ice Cream”
- Everything You Need To Know About Batch Freezers
- What Equipment Do You Need For An Ice Cream Shop
- What Supplies Do You Need For An Ice Cream Shop
- What Is The Best Location For An Ice Cream Shop
- How To Open An Ice Cream Shop
- How To Start An Ice Cream Truck
- Do Ice Cream Shops Make Money in the Winter
- How To Make An Ice Cream Shop Stand Out
- How Do You Become An Ice Cream Distributor
- Everything You Need To Know About Ice Cream Delivery Apps
- Everything You Need To Know About Gluten-Free Ice Cream and Toppings
- What is the Mark-Up on Ice Cream?
- What Scoopers Do Ice Cream Shops Use?
- What Are the Best Toppings and Sauces for Ice Cream?