Is Gelato the Next Fro-Yo Craze?

NEW YORK (MainStreet) -- Amaretto pumpkin pie, cheesecake chocolate chip, limoncello and sweet potato organic maple syrup are just a few of the flavors you'll see on the gelato menu at Paciugo Gelato & Caffe.

Gelato represents just 1% of the frozen dessert market, according to the National Ice Cream Retailers Association, which makes the potential to expand essentially limitless. Given the popularity of frozen yogurt stores, especially with new-age giants such as Red Mango and Pinkberry dominating the scene, consumers have developed an appetite for food that is more natural and perceived as better for you, experts say.

Some expect gelato to become as big as frozen yogurt, but there are some hurdles the frozen dessert must overcome first.

Gelato is denser than ice cream, which lacks the air sometimes pumped into ice creams, and despite having less butterfat tends to have an equally (or, some would say, more) rich, creamy taste. Gelato is served at lower temperatures than ice cream, which -- along with the lower levels of butterfat -- means it melts in the mouth faster.

Howard Waxman, editor and publisher of the monthly newsletter Ice Cream Reporter, says he's predicting gelato will be the next big thing -- as he has been for the past five years.

"There has been definite growth over at least a half a decade in some key locations like New York and Florida," Waxman says. "Gelato is a great product if they can get some traction. The fro-yo [market] will beat itself up eventually" because there are too many names in the market.

Torrance Kopfer is owner of Cold Fusion Gelato in Newport, R.I., a retail store that opened in 2004 and does wholesale distribution in New England.

"The primary reason that fro-yo has taken off is that some major players from overseas came into the U.S. market with a lot of money," Kopfer says. "I think gelato could do that, but there is an education hurdle to overcome with a lot of customers. Everybody knows what yogurt is. Not everybody knows what gelato is. Once they realize how the Italian style is different, they get very excited about it."

Education aside, the running of a gelato business is more complex than an ice cream store, mainly because the product does not have as long a shelf life as ice cream.

"If you don't have a high-turnover store, you have to get rid of your product every other day. That can be costly," says Lynda Utterback, executive director of the National Ice Cream Retailers Association. She notes there have been gelato stores that have been forced to close because they didn't have the volume to support a profit.