A Pennsylvania ice cream chain pulled its chocolate flavor entirely over rising prices. Now AI is making life even worse

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Ice cream makers have seen pressure from a range of different factors recently, which you may have noticed in the price of your favorite tub.

Things got so bad last year that, rather than raise prices, Pennsylvania ice cream chain Millie’s Homemade (1) just decided to stop selling its chocolate flavor altogether as cocoa prices surged.

Now, there’s a new and unexpected cost reducing margins across the industry: AI.

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The rising electricity demand across the grid, including from energy-hungry AI data centers puts a high price tag on the energy needed to run production and keep everything refrigerated.

What’s happening

If you’ve felt like grabbing an ice cream cone has gotten noticeably more expensive, you’re not imagining it. Federal Reserve data (2) show the average price of an ice cream cone has climbed by roughly a third since 2019. In plenty of cities, it’s no longer unusual to pay $6, $7 or even $8 for a single scoop.

The reasons have been piling up for years. Since 2020, wholesale dairy prices (3) have risen about 20%, cocoa prices (4) have more than tripled at their peak, and egg prices (5) have periodically surged during supply shortages. At the same time, restaurants and food manufacturers have had to pay more (6) to attract and keep workers.

That pressure hasn’t just shown up in higher prices. In some cases, it’s already starting to shape what companies choose to make. Millie’s Homemade in Pennsylvania, for example, temporarily pulled its chocolate ice cream last year when cocoa prices made it too expensive to keep producing. It’s a small example, but it shows how quickly rising costs can force decisions that go beyond just raising prices.

Many ice cream makers tried to hold the line on prices for as long as they could. But as one cost increase followed another, there came a point where charging more became hard to avoid.

Cocoa has been especially hard hit. Poor harvests in West Africa (7), supply disruptions and trade uncertainty have all made the key ingredient more expensive and harder to source.

For ice cream makers, it all adds up. Long before electricity bills became the latest headache, they were already paying more for many of the ingredients and labor needed to keep freezers stocked.

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Why your ice cream bill may keep climbing

Even if ingredient costs level off, ice cream makers say they’re still facing pressure from another big expense: electricity.

Ice cream has to stay frozen the entire way through production, storage, transport and retail. That makes refrigeration one of the industry’s biggest ongoing costs.

Electricity prices have been edging higher as demand picks up across the grid, including from power-intensive AI data centers running large-scale computing systems around the clock. In parts of the U.S., power costs are up (8) more than 6% over the past year.

Fuel hasn’t helped either. Higher diesel prices have made it more expensive to move frozen products through the supply chain.

There isn’t much wiggle room in the system. Ice cream can’t just be shipped or stored at warmer temperatures to save money, so energy use stays pretty fixed. That leaves manufacturers with limited ways to respond when costs go up.

The impact isn’t limited to ice cream. Other refrigerated foods, including frozen meals and dairy products, are dealing with the same pressure from higher energy and transportation costs.

Consumers are already starting to adjust. According to Bloomberg, NielsenIQ (1) data show premium ice cream sales are down about 6% over the past two years, while overall category sales have been mostly flat. More shoppers are trading down instead of cutting ice cream out altogether.

For now, ice cream still sells. Summer demand takes care of that. But with ingredient costs still uneven, wages higher than a few years ago, and electricity prices climbing alongside demand from AI data centers, the business is looking a lot less straightforward than it used to. What used to feel like a simple indulgence is now a much tighter balancing act.

And for consumers, that cheaper cone from a few years back probably isn’t coming back.

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