Like Nation, Local Ice Cream Shops Face High Ingredient Costs

The is famously delicious. But with milk going sky-high and food prices continuing to oscillate, some local shops have had to absorb rising ingredient prices.

"Our cream prices just went up 28% a couple of weeks ago," said Carrie Gustafson, co-owner of Crema.

By cream she means the mix of cream, milk, sugar and a small amount of egg yolk that's at the heart of all their ice cream flavors. Crema sources theirs from the Pride of Mainstreet Dairy, a Minnesota company.

Gustafson and Ron Siron, the cafe's co-owner, raised prices in their Lyndale Avenue shop by 7%, or $.25, at the beginning of the season, but are now holding steady despite the recent increase in costs.

None of this is surprising, as prices for dairy products have been quite high this season. According to Jim Salfer, Regional Extension Educator for the University of Minnesota Extension Service, milk and other food prices have increased for a variety of reasons including the growing appetites of other countries, like China.

"Exports have been very good this year, because the value of the dollar has been kind of low," Salfer explained. He told Patch that people worldwide, especially in Asia, are becoming middle-class and demanding better food.

Rising feed costs and low sugar yields have made other ice cream ingredients fetch a pretty penny in the wholesale market, he said.

Bob Lefebvre, executive director of the Minnesota Milk Producers Association, maintained that present dairy prices are keeping farmers afloat. In the past few years, the farmers he represents have been feeling the pinch, just like ice cream producers.

"The cost of feed, fuel and other inputs have risen over 70% since 2009," he said.

Both Lefebvre and Salfer shared their concern that dairy farmers are seeing a decline in the percentage they see of each dollar that consumers spend on dairy products. For example, from 2004 through 2009, the farm share of a half gallon of ice cream went from 20% to 14% (see the table at right).

For , with its Linden Hills location and Kingfield-based operations, it's more than just the cream mix that's become more expensive.

"We've been battling price increases year-round. We're even more aware of it during the offseason," said Greg Hefferan, who runs the production facility for the company.

The cost of nuts, cocoa and other add-ins have kept them shopping around and locking into contracts when they want to hold onto a particular price. They have just enough volume between their two retail stores and their wholesale business serving restaurants to be able to negotiate.

Heffernan said the Chinese have driven up the cost of pecans and conflict in Sierra Leone has made cocoa rates flucuate. Things have settled down in West Africa, but even purchases of items like plastic tubs have had an affect on their bottom line.

Sebastian Joe's increases their retail prices once a year, generally—and just a small amount—much like Crema. Both local companies have tried to streamline their opperations to help them to avoid passing cost increases onto their customers.

For now it seems that the ice cream-buying public will not feel the full impact of rising ingredient costs at either of these local favorites. But Crema and Sebastian Joe's may need to be careful.

"Fluid milk consumption varies some based on price, but one of the concerns with ice cream is I think that a lot of people would view it as sort of a luxury product - so something you can reasonably give up in your diet," said the U of M's Salfer.

At the moment sales are good at both places for the summer so it's business as usual for ice cream in Southwest Minneapolis. If ingredient prices go haywire, they'll cross that bridge when they come to it.

"Bottom line is that real food costs real money," said Gustafson. "When I see cheap ice cream, I ask myself what they could be putting in the ice cream to make it that cheap."

That means prices at Crema and Sebastian Joe's are staying put for now, as long as they can continue to keep the quality and taste at the high level that we expect.