Imported Dairy Products Drive Up Premium Ice Cream Costs in São Paulo
The premium ice cream industry in São Paulo is experiencing financial pressure due to increased costs of imported dairy and other commodities. LosLos, a brand that evolved from selling Mexican popsicles to producing ice cream, reports annual price adjustments between 6% and 8% due to heightened expenses on ingredients, fuel, and packaging.
LosLos's founder, José Vicente Mazzarella, highlights the global instability affecting prices and necessitating frequent operational strategy reviews. The company's production structure exposes it to international market tensions, with 62% to 65% of its raw materials sourced from abroad. Key ingredients include Argentine milk, Italian pastes, German sweeteners, and imported fruits, making the brand vulnerable to currency fluctuations.
Argentine powdered milk has emerged as the primary cost driver, with LosLos purchasing average lots of 30 tonnes, incurring an additional cost of R$ 1.50 per kilo compared to domestic products. This price difference translates to approximately R$ 45,000 extra per purchase, potentially exceeding R$ 270,000 annually.
Beyond dairy, the cost of pistachios, another critical ingredient, has surged by 30% in recent weeks, driven by high international demand, particularly from the Middle East. This trend underscores the rapid response of food commodities to global supply and demand shifts.
Logistics costs have also increased, with rising gasoline and diesel prices making refrigerated transportation more expensive. The cost of petroleum-based packaging has risen by 39.4%, from R$ 33 to R$ 46 per kilo, resulting in logistics accounting for 4.5% to 5% of overall company costs.
Despite gradual consumer price adjustments, some inflation is absorbed by narrowing profit margins. Mazzarella states that the current challenge extends beyond cost transfer to maintaining product quality amid persistent inflation and pressure on raw materials.
In response, LosLos is accelerating changes to its formulations, investing in removing petroleum-based colorants and genetically modified elements, aiming for a completely 'clean label' product line. This movement reflects the premium segment's ongoing demand for differentiation, quality, and adaptability, emphasizing the importance of managing procurement, logistics, and formulations to maintain competitiveness and market positioning.
