As summer temperatures climb, ice cream lovers are facing another heatwave—rising prices. Recent data from British consultancy Rift reveals that ice lolly and cone prices in UK supermarkets jumped 7.6% in May 2025. With the global ice cream market valued at $81 billion in 2024, understanding the reasons behind these price hikes is crucial for consumers and industry insiders alike.
The Coconut Oil Factor
A key ingredient driving the surge in ice cream prices is coconut oil. Widely used in ice cream production—especially in gelatos and hard-shell varieties—coconut oil helps maintain texture and stability without affecting flavor. However, its cost has nearly doubled in the past year. Wholesale prices for coconut oil from the Philippines reached over $2,700 per metric ton in Rotterdam last week, up from $1,300 at this time last year and significantly above the 2000–2020 average.
Weather and Biofuel Demand Impact Supply
Coconut palms thrive in tropical climates with consistent rainfall, but the El Niño weather pattern caused drier conditions across Southeast Asia in 2024. This disrupted production in Indonesia and the Philippines, which together supply around 75% of the world’s coconut oil. Since coconut trees take about a year to bear fruit, the effects on yields are just now hitting the market, resulting in lower supply.
Compounding the problem, the Philippine government’s biodiesel policies have increased coconut oil demand for biofuel production. Diesel in the Philippines must now be blended with up to 3% coco methyl ester—a coconut oil derivative—with plans to raise this to 5% by the end of 2026. This shift will divert billions of coconuts from food to fuel production, pushing global coconut oil availability even lower.
Global Ripple Effects
The Philippines leads coconut oil production at 45% of the market, followed by Indonesia (28%) and India (13%). Other producers include Vietnam, Bangladesh, Sri Lanka, Mexico, and Ivory Coast. Due to poor weather and rising biofuel demand, global coconut oil output is expected to drop nearly 10% to 3.6 million metric tons in 2024–25, with low production forecasted to continue into 2025–26.
As coconut oil becomes scarcer, ice cream producers in the US, Europe, and beyond face higher ingredient costs, which will likely translate to more expensive cones, lollies, and other frozen treats this summer.
Chocolate Industry’s Role
Adding to the strain, many chocolate manufacturers are substituting cocoa butter with coconut oil to cut costs, especially in vegan and dairy-free products. Despite its rising price, coconut oil remains cheaper than cocoa, driving increased demand and further squeezing supply.
This summer’s “cone crisis” underscores the complex factors behind rising ice cream franchise costs and highlights the interconnected nature of global food markets. For businesses and consumers, keeping an eye on ingredient trends like coconut oil is key to navigating the latest ice cream market challenges.
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