Halo Top looks sweet as low-calorie ice cream sales soar

Justin Woolverton, the founder of Halo Top ice-cream, has heard the question before.

Asked whether Unilever has tried to acquire the low-sugar, high-protein brand that has enjoyed explosive growth in the US, he sighs: “I think we’ve been approached by every major player and every private equity firm in the [United] States, to be honest with you.”

Unilever considered paying $2bn for the five-year-old company, according a New York Post report this month.

The reason for all the interest is that Halo Top sales grew 2,500 per cent year-on-year in 2016; it has taken a 5 per cent scoop of the US ice-cream market within two years.

That rate of growth is enough to make multinational food producers choke, given annual sales growth was languishing at an average of 2-3 per cent last year.

“I’m not sure a food company has grown faster in recent history,” says Mr Woolverton. “So it’s been a lot of holding on to the bucking mustang or whatever the metaphor is there.”

Halo Top’s big selling point is that a whole tub contains 280-360 calories — roughly a third of an equivalent pint of Ben & Jerry’s or Nestlé’s Häagen-Dazs.

The calorie count is displayed in big numbers at the centre of its gold-rimmed, Instagram-friendly packs, which also highlight its protein content.

This means consumers can scoff a whole tub of caramel macchiato or pancakes and waffles ice-cream for the calorific equivalent of a chicken sandwich.

Share of the US market scooped by the company within two years

Halo Top cuts out sugar and sweetens with stevia, a sweetener from a leafy shrub used increasingly in everything from “sugar” cubes to fizzy drinks. The ice cream also contains erythritol, a no-calorie sugar alcohol which adds texture. Both ingredients can be called “natural”.

There is milk, cream — and air. That might not be to everyone’s liking but when a science journalist for GQ magazine wrote about eating nothing but Halo Top for 10 days — and lost 10lbs in weight — sales started to rocket.

“We didn’t even know that article was coming, we never would recommend anybody do that,” says Mr Woolverton, who got the idea for the business from concoctions made in his Los Angeles kitchen when he was a bored lawyer.

By August, Halo Top’s pint-sized tubs were outselling Ben & Jerry’s and Nestlé’s Häagen-Dazs for the first. In the three months to August 6, it had sales of $86.9m against, respectively, $83m and $79m according to IRI, the market research group.

Last October, Unilever, the world’s biggest ice cream manufacturer with Magnum and Ben & Jerry’s, reported a fall in volumes in its refreshment division. Speaking at the time, Graeme Pitkethly, Unilever’s finance director, highlighted how “very, very quickly” Halo Top had “taken 1.5 share points from us”.

I didn’t necessarily have weight issues. The driving force for me was these were low-sugar products

Justin Woolverton, founder of Halo Top

The Anglo-Dutch company hit back with an almost identical ice cream, Breyers Delights, containing 260-330 calories, with the number in big figures at the centre of the tub and highlighting its protein content.

Mr Woolverton loves ice cream himself but suffers from hypoglycaemia and follows a low-sugar diet. Instead of ice cream, the lean 38-year-old would eat Chobani, the Greek-style yoghurt founded by Kurdish entrepreneur Hamdi Ulukaya.

“It blew me away as to how this small company could come out of nowhere and take on Danone and [General Mills’] Yoplait,” says Mr Woolverton.

But before even thinking of going into business: “I started to freeze Chobani and then, over time, I got sick of the tang of the yoghurt and so substituted other things that had the same kind of nutritionals. I didn’t necessarily have weight issues. The driving force for me was these were low-sugar products.”

An idea then occurred to him. “If people like Chobani, and I like Chobani, and I like this ice cream I’m making, I think other people might like this ice-cream I’m making.”

To see if he was right, he needed capital. “The one good thing that came from my legal career” he says, was being able to find the money to start the business in 2012.

Lawyers have good credit scores, “so I was able to get a whole bunch of credit cards” on which he racked up $150,000 debt. His salary as a litigator was high, which helped too. “I was able to live very frugally in a very run-down apartment and got to sock away my entire pay-cheque into the company.”

Halo Top has recently expanded into non-dairy varieties, which Mr Woolverton says was the top request of his customers. In November, the brand opened its first ice cream parlour in Canoga Park near Los Angeles, called Scoop Shop.

It launched this month in the UK, with the hope of replicating its US success and also exports to Australia, Singapore and Panama.

Alex Kottke, analyst at Euromonitor says: “Consumers choose health as a key factor in their food purchases, for example, by looking for low-calorie options that are more natural, as opposed to having their fat content reduced through processing.

“Halo Top meets these criteria and would be well-positioned in the UK, given that healthy ice-creams are the fastest-growing product type in the ice-cream category.”

Mr Woolverton says he is not tempted to sell out. “We’re having a lot of fun. We don’t have suits telling us ‘don’t do this or do do that’. Never say never — but there are a lot of big companies that manage to stay private and that’s by far preferable.”