Ice Cream Market


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Ice Cream Market

  1. 1. ICE-CREAM MARKET INDIA December 2008
  2. 2. Executive Summary <ul><ul><li>Drivers: Opportunity to capitalize on low consumption levels; growing institutional sales </li></ul></ul><ul><ul><li>Challenges: Competition with the unorganised sector on price and quality, and lack of well-developed cold chain facilities </li></ul></ul>Market Drivers & Challenges Trends Competition <ul><ul><li>Large investments in advertising </li></ul></ul><ul><ul><li>Diversification of product portfolio targeting specific consumer segments </li></ul></ul><ul><ul><li>Partnerships and franchises pursued to boost distribution </li></ul></ul><ul><ul><li>Falling costs of raw materials offsetting rising milk and sugar prices </li></ul></ul><ul><ul><li>GCMMF’s Amul brand is the market leader </li></ul></ul><ul><ul><li>Mother Diary and Hindustan Unilever’s Kwality brand are other strong players </li></ul></ul><ul><ul><li>The premium segment is dominated by Baskin Robbins </li></ul></ul><ul><ul><li>Estimated worth USD 209 mn in 2008, expected to grow to USD 240 mn in 2009 </li></ul></ul><ul><ul><li>North and west account for 70% of total sales </li></ul></ul><ul><ul><li>High profit margins ranging between 30-50% </li></ul></ul>
  3. 3. <ul><li>Market Overview </li></ul><ul><li>Advertising Trends </li></ul><ul><li>Competition </li></ul><ul><li>Factors – External & Internal </li></ul><ul><li>Key Developments </li></ul>
  4. 4. The industry is growing steadily with the northern and western regions accounting for the largest consumption <ul><li>Size and Growth </li></ul><ul><ul><li>Worth USD 209 mn in 2008 </li></ul></ul><ul><ul><li>Growing at 12% p.a. in 2005-2008 </li></ul></ul><ul><ul><li>Forecast to increase by 15% to reach USD 240 mn in 2009 </li></ul></ul><ul><li>Characteristics </li></ul><ul><ul><li>Northern and western regions together account for 70% of total market consumption </li></ul></ul><ul><ul><li>Profit margins range from 30% to 50% depending on the product segment </li></ul></ul><ul><ul><li>60% of ice cream sales occur during the summer months of April-June </li></ul></ul><ul><ul><li>80% of sales is through street vendors </li></ul></ul><ul><ul><li>Vanilla is the highest selling flavour and together with strawberry and chocolate it accounts for 70% of the market </li></ul></ul>Overview Size and Growth 2005 USD mn 2006 2007 2008 e 2009 f +12% 40% West 30% North 10% East 20% South Source: The Economic Times “Showers upset regional sales targets of marketers”, May 2007; IBEF “FMCG companies target consumers in summer”, March 2008; India Environment Portal “Is our ice cream natural or synthetic?, August 2007; The Financial Express “Fire & Ice”, June 2008; 51Rainbow company website Geographic Distribution
  5. 5. <ul><li>Market Overview </li></ul><ul><li>Advertising Trends </li></ul><ul><li>Competition </li></ul><ul><li>Factors – External & Internal </li></ul><ul><li>Key Developments </li></ul>
  6. 6. Key Trends Trends Franchises and strategic partnerships to enhance distribution Benefits derived from falling costs Product diversification to target specific segments Large scale advertising
  7. 7. Large-scale advertising geared towards brand building and sales promotion <ul><li>Grew by 15% rise in 2008 compared to 2007 </li></ul><ul><li>Average number of ads per day increased by 45% </li></ul><ul><li>The top 3 ice cream brands advertised </li></ul><ul><ul><li>Kwality Walls Almond Praline </li></ul></ul><ul><ul><li>Kwality Walls Paddle Pop </li></ul></ul><ul><ul><li>Arun Ice Cream </li></ul></ul><ul><li>Grew by 58% rise since 2005 </li></ul><ul><li>Gujarat accounted for 25% of the total advertising </li></ul><ul><li>Maximum advertising in non-metros in the newspaper medium indicates organized sector’s targeting of rural areas and unorganized sector </li></ul><ul><ul><li>Non-metros: 57% </li></ul></ul><ul><ul><li>Metros: 26% </li></ul></ul><ul><ul><li>Mini –metros: 16% </li></ul></ul>Advertising on Television: Jan-Apr 2008 Share of TV advertising Advertising in Print: Jan-Apr 2008 Share of Print advertising 78% Kwality Walls (HUL) 2% Karnataka Milk Federation Others Hatsun Agro 4% Metro Daily Ltd 14% 9% Havmor 3% 22% GCMMF Others 52% Dinshaws Vadilal Source: “Snapshot of advertising by Ice Cream category in Print during Jan-Apr’ 08”; “Snapshot of advertising by Ice Cream category in January-April 2008”, June 2008 Advertising is the primary method to increase consumption and penetration levels
  8. 8. Source: Financial Express “Ice cream war begins as HUL, Amul oil plans”, February 2008 <ul><li>Producers have launched flavoured “kulfi” – the traditional Indian dessert – ice cream which is the favoured dessert in the non-metros </li></ul><ul><li>Naturally flavoured ice cream i.e. without any artificial or synthetic flavour has been introduced for the premium segment </li></ul><ul><li>Players are capitalizing on the market which has become extremely health conscious </li></ul>Product diversification to target specific segments Capitalizing on demand from a niche markets Low sugar and fat content Diet Mother Dairy Increases immunity, help in digestion, prevents diarrhoea and growth of colon cancer Probiotic range – Amul Prolife GCMMF High calcium content, low calorie and fat Moo Hindustan Unilever (HUL) Health Benefits Product Company
  9. 9. Enhancing network through franchises and strategic partnerships Partnerships Franchising Strengthens marketing, sales and distribution. Source: FnBnews “Coops, the mainstay of India's dairy model”, October 2008; Business Standard “Ice-cream makers add healthy flavours”, April 2008; FoodIndustryIndia “Gelato ice creams is a hit at AAHAR”, March 2008 1000 outlets in southern and central India by 2009, counters at corporate campuses Milkway Express Outlets in malls and multiplexes Baskin Robbins Premium ice cream outlet – Arun Ice Cream Unlimited Hatsun Agro Increase Amul Parlours from 1,800 to 3,000 in 2008 and 10,000 by 2009, Cyber stores in 100 cities, Cyber clubs in 125 cities GCMMF Kiosks - Swirls HUL Projects Company Retail stores at petrol stations Indian Oil Corporation (IOC) HUL Re-launch brand in Mumbai, Delhi, Bangalore, Hyderabad, Kolkata and Chennai Rhapsody Foods & Beverages Movenpick Targeting the southern market Spencer Retail Ltd and Foodworld Milkway Express Exclusive retailing Lifestyle, Coca-Cola, ICICI credit cards and Cox & Kings Baskin Robbins Mobile kiosks at petrol stations Bharat Petroleum Corporation Ltd (BPCL) GCMMF Marketing via scratch and win contests Oxicash Purpose Affiliation Company
  10. 10. <ul><li>Market Overview </li></ul><ul><li>Advertising Trends </li></ul><ul><li>Competition </li></ul><ul><li>Factors – External & Internal </li></ul><ul><li>Key Developments </li></ul>
  11. 11. Market <ul><li>Fiercely competitive due to attractive economics with profit margins ranging between 30-50% </li></ul><ul><li>Organized sector comprises GCMMF’s Amul, HUL’s Kwality Walls, Mother Diary, Baskin Robbins and a number of regional brands </li></ul><ul><li>Amul is the market leader and is at the forefront of targeting the rural market </li></ul><ul><li>For most national players viz. GCMMF, HUL and Mother Diary, revenue from ice cream accounts for a small portion of their total revenues </li></ul><ul><li>Premium segment: </li></ul><ul><ul><li>Baskin Robbins is the single largest premium ice cream brand </li></ul></ul><ul><ul><li>New entrants include Amul, Movenpick, Haagen Dazs and Snowberry </li></ul></ul>Major Players Market share Source: Business Line “Bringing in the creamy layer”, August 2008; “Amul to launch new ice cream range”, October 2008 A well established unorganized sector creates a fiercely competitive environment for the larger players 16% GCMMF 37% Vadilal 15% Mother Diary 14% HUL 13% Baskin Robbins 5% Others 16% 55% Unorganized 45% Organized
  12. 12. <ul><li>Market Overview </li></ul><ul><li>Advertising Trends </li></ul><ul><li>Competition </li></ul><ul><li>Factors – External & Internal </li></ul><ul><li>Key Developments </li></ul>
  13. 13. Drivers & Challenges Developing institutional channel Low consumption levels Drivers Lack of cold chain facilities Low quality products and competitive pricing from unorganized sector Challenges
  14. 14. External Factors ECONOMIC FACTOR - Low consumption levels <ul><li>Per capita consumption levels are very low at 200-250 ml while penetration rate is estimated at 15% </li></ul><ul><li>Significant scope for market growth by increasing either consumption levels or market penetration, or both </li></ul><ul><li>National players are focusing on increasing per capita consumption or penetration to grow the market </li></ul>2000 2004 2008 ml Source: Economic Times “Vanilla prices shoot up on short supply”, October 2008; Business Today “The Branded Ice-Cream Tango Begins”, July 2000; Rediff “The ice-cream war hots up”, March 2004; Vadilal Annual Reports; Hindu “The Ice-cream Punch”, June 2004
  15. 15. External Factors SOCIETAL FACTOR - Low quality products and competitive pricing in the unorganized sector <ul><li>The market faces a threat from low-quality products </li></ul><ul><li>Price difference between large and small players </li></ul><ul><li>Large players are at a competitive disadvantage compared to the unorganized players due to the low quality and pricing of the unorganized sector </li></ul>
  16. 16. External Factors TECHNOLOGICAL FACTOR - Lack of cold chain facilities <ul><li>The lack of good cold chain facilities for transportation and storage is an impediment towards increasing market access and penetration </li></ul><ul><li>Cold chain also constitutes the most to the total cost </li></ul><ul><li>Developing cold chain infrastructure is extremely crucial to increase market penetration and the challenge is shared by many other industries in the food & beverage sector </li></ul>
  17. 17. Internal Factors - SWOT