Industry Analysis on Ice Cream Industry

INDUSTRY ANALYSIS REPORT WITH REFERENCE TO ICE CREAM INDUSTRY

Submitted by:

E. Pramod Kumar (08571E0004)

Submitted to:

SREE VISVESVARAYA VISVESVARAYA INSTITUTE OF TECHNOLOGY & SCIENCE (Affiliated to JNTU & approved by AICTE, New Delhi)

SVITS School of Management Page 1

Ice Cream Industry

Content SNo SN o

Title tl e

Page ag e No

1

Industry Analysis Overview

3-7

2

Ice Cream Industry Profile

8

3

Ice Cream Industry Growth

10

4

Top Ice Cream Companies list

5

Short Profile of Ice Cream Companies

12-15

6

SWOT Analysis of Ice Cream Industry

16

7

Market Share of Ice Cream Industry 17 17

8

Conclusion

9

Reference

11

18 19

Industry Analysis Overview: The main objective of industrial analysis is to assess the prospects of various industrial groupings. At any stage in the economy there are some industries which are Page 2

SVITS School of Management

Ice Cream Industry growing while others are declining, the performance of companies will depend among other things upon the state of the industry as a whole and the economy. If the industry prosperous, the companies within the company may also be prosperous although a few may be in bad shape. The share price of the company is empirically found to depend up to 50% on the performance of the industry and economy.

To analysis the industrial performance one should follow three steps.



Industry life cycle analysis



Study of the structure& characteristics of an industry



SWOT analysis

1. Industry Industry life cycle analysis: analysis:(Prod (Product uct life cycle theory) theory) Many industrial economists believe that the development of almost every industry may be analyzed in terms of life cycle with four well defined stages.

Pioneering stage :( Introduction stage) The stage is characterized by introducing of a new product and uptrend in business cycle which encourages new product introductions. Demand keeps on growing at an increasing rate competition is generated by the entry of new firms to grab the market opportunities weaker firms face premature death while stronger over survive to grow and survive. This stage is mainly suitable for a speculator.

Rapid growth stage: (Expansion stage) Firms which enter in pioneering stage will concentrate on expansion of their sales & profits in this stage. It is suggest to the investor respond quickly & invest more in this stage. The market continues to grow but slowly offering steady and slow growth to sales of industry. It is a phase of consolidation wherein companies establish durable policies relating to dividends and investments.

Maturity stage:

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Ice Cream Industry This stage show sign of slow progress and also prospects of decay. After enjoying an above average rate of growth during the rapid growth, the industry enters the maturity stage. In this stage the growth of the industry is more or less developed, it is growth rate is comparable to that of the economy of a country it is suggested to hold the investment in this period.

Declining stage: The stage is existed due to the changes in the consumer performance competition from new product etc,. In this stage the industry may grow slightly during prosperous periods, stagnate during normal periods and during recessionary periods.

2. Study of the structure and characteristics of an industry: Since each industry is unique; a systematic study of its specific features and characteristics must be an internal part of the investments decision process. Industry analysis should focus on the following:

Structure of industry & nature of competition: (a) The no. of firms in industry & market share of top few firms in the industry. (b) Licensing policy of the government. (c) Entry barriers, if any (d) Pricing policy of the firm. (e) Degree of homogeneity or differentiation among products. (f) Competition from foreign firms. (g) Comparison of the products of the industry with substitutes in terms of quality, price, appeal& functional performance.

Nature & prospects of demand: (a) Major customers and their requirements. (b) Key determinants of demand. (c) Degree of cyclicality in demand. (d) Expected rate of growth in the foreseeable future.

Cost, efficiency, and profitability:

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Ice Cream Industry (a) Proportions of the key cost elements namely raw material, labor, utilities, and fuel. (b) Productivity of labor. (c) Turnover of inventory, receivables, and fixed assets. (d) Control over prices of outputs & inputs. (e) Behavior of prices of inputs & outputs in response to inflationary pressures. (f) Gross profit, operating profit, and net profit margins. (g) Return on assets, earning power, and return on equity.

Technology & research: (a) Degree of technological stability. (b) Important technological changes on the horizon & their implications. (c) Research & Development outlays as a percentage of industry sales. (d) Proportion of sales growth attributable to new products.

3. SWOT analysis:

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Ice Cream Industry SWOT Analysis is a strategic planning method used to evaluate the Strengths, Weaknesses, Opportunities, and Threats involved in a project or in a business venture. It involves specifying the objective of the business venture or project and identifying the intern internal al and extern external al factor factors s that that are favora favorable ble and unfavo unfavorab rable le to achiev achieving ing that that object objective ive.. The techni technique que is credit credited ed to Albert Albert Humphrey Humphrey,, who who led led a conv conven enti tion on at Stanford University in the 1960s and 1970s using data from Fortune 500 companies. A SWOT analysis must first start with defining a desired end state or objective. A SWOT analysis may be incorporated into the strategic planning model. An example of a strategic strategic planning technique technique that incorporates incorporates an objectiveobjective-driven driven SWOT analysis analysis is Strategic Strategic Creative Creative Analysis Analysis (SCAN) (SCAN).. Strat Strategi egic c Planni Planning, ng, includ including ing SWOT SWOT and SCAN SCAN analysis, has been the subject of much research. 

Strengths: attributes of the person or company that, are helpful to

achieving the objective. 

Weaknesses: attributes of the person or company that, are

harmful to achieving the objective. 

Opportunities: external conditions that, are helpful to achieving

the objective. 

Threats: external conditions which could do damage to the

objective. Identification of SWOTs is essential because subsequent steps in the process of planning for achievement of the selected objective may be derived from the SWOTs. First, the decision makers have to determine whether the objective is attainable, given the SWOTs. If the objective is NOT attainable a different objective must be selected and the process repeated. The SWOT analysis is often used in academia to highlight and identify strengths, weaknesses, opportunities and threats. It is particularly helpful in identifying areas for development.

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Ice Cream Industry Evidence on the Use of SWOT SWOT analysis may limit the strategies considered in the evaluation. "In addition, people who use SWOT might conclude that they have done an adequate job of planning and ignore such sensible things as defining the firm's objectives or calculating ROI for alternate strategies." Findings from Menon et al. (1999) (1999) and Hill and Westbrook Westbrook (1997) have shown that SWOT may harm performance. As an alternative to SWOT, J. Scott Armstrong descri describes bes a 5-s 5-step tep approa approach ch altern alternati ative ve that that leads leads to better better corpo corporat rate e performance.

Use of SWOT Analysis: The usefulness of SWOT analysis is not limited to profit-seeking organizations. SWOT analysis may be used in any decision-making situation when a desired end-state (objective) has been defined. Examples include: non-profit organizations, governmental units, units, and indivi individua duals. ls. SWOT SWOT analys analysis is may also also be used used in pre-cr pre-crisi isis s planni planning ng and preventive crisis crisis management management.. SWO SWOT analy nalys sis may may also lso be used used in crea creati ting ng a recommendation during a viability study. study. SWOT-landscape also indicates which underlying strength/weakness factors that have had or likely will have highest influence in the context of value in use (for ex. capital value fluctuations). Using SWOT to analyze the market position of a small management consultancy with specialism in HRM. Strengths Reputation in

Weaknesses Shortage of

Opportunities Well established

Thr e a t s Large consultancies

marketplace

consultants at

position with a well

operating at a minor

operating level

defined market

level

rather than partner

niche.

Expertise at partner

level Unable to deal with

Identified market for

Other small

level in HRM

multi-disciplinary

consultancy in areas

consultancies

consultancy

assignments

other than HRM

looking to invade

because of size or

the marketplace

lack of ability

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Ice Cream Industry

Ice Cream Industry Profile: The The ice ice crea cream m indu indust stry ry in India India is in many many ways ways,, refl reflec ecti tive ve of the the over overal alll population population distribution distribution.. The country’s country’s population population is primarily primarily rural with approximat approximately ely 65% of the population living in villages with a population of less than 5,000; this means there there are well over over 15 150,0 0,000 00 villag villages es with with a combin combined ed popula populatio tion n in excess excess of 65 650 0 million. million. This has contributed contributed to a highly fragmente fragmented d industry that by many estimates estimates has over 70,000 70,000 ice cream entities. entities. Many of these are single family operations operations where the product is made either in the home or in very small factories and sold on the streets. The 350 million remaining people are concentrated in the cities where the industry is reasonably reasonably concentra concentrated ted in the hands of a few international international and domestic domestic firms. It is estimated that only 30% of the entire market is “organized” and the industry meets the classic definition of a fragmented industry, that is, one where there is an absence of market leaders with the power to shape industry events. Ice cream or ice-cream is a frozen dessert usually made from dairy products, products, such such as milk milk and cream cream,, and often often combi combined ned with with fruits fruits or other other ingred ingredien ients ts and flavours. Most varieties contain sugar, although some are made with other sweeteners. sweeteners. In some some cases, cases, artifi artificia ciall flavourings and and colo colori ring ngs s are are used used in addi additi tion on to (or (or in replacement of) the natural ingredients. This mixture is stirred slowly while cooling to prevent large ice crystals from forming; the result is a smoothly textured ice cream. The meaning of the term ice cream varies from one country to another. Terms like frozen custard, frozen frozen yogurt yogurt,, sorbet, gelato and others are used to distinguish different varieties and styles. In some countries, like the USA, the term ice cream applies only to a specific variety, and their governments regulate the commercial use of all these terms based on quantities of ingredients.[2] In others, like Italy and Argentina, one word is used for all the variants. Alternatives made from soy milk, milk, rice milk, milk, and goat milk are Page 8


Ice Cream Industry available for those who are lactose intolerant or have an allergy to dairy protein, protein, or in the case of soy milk for those who want to avoid animal products. Ancient civilizations have served ice for cold foods for thousands of years. The BBC reports that a frozen mixture of milk and rice was invented in China around 200 BC, and in 618-97 AD, King Tang of Shang had 94 men who made a frozen dish of buffalo milk, flour, and camphor. camphor. The Roman Emperor Nero (37–68) had ice brought from the mountains and combined with fruit toppings. These were some early chilled delicacies.In 400 BC, Persians invented a special chilled pudding-like dish, made of rose of rose water and vermicelli which was served to royalty during summers. The ice was mixed with saffron, saffron, fruits fruits,, and various various other other flavou flavours. rs. The treat, treat, widely widely made made in Iran today, today, is called called "faloodeh", faloodeh", and is made from starch (usually wheat), spun in a sieve-like machine which produces threads or drops of the batter, which are boiled in water. The mix is then frozen, and mixed with rose r ose water and lemons, before serving.

Industry Competition: As the industry evaluation evaluation would indicate indicate the competition competition is significant. significant. The 70,000 some participants is a large number but the more serious challenge comes from the top six national firms; Amul, Kwality Walls, Mother Dairy, Vadilal, Dinshaw, and Arun. These top six firms dominate the market and essentially control the organized market. Detail statistics are not available to indicate market share but Ben & Jerry's estimates that these six firms control 40% to 50% of the urban market.

Historicall Historically y MNC’s have not achieved achieved much success success in penetratin penetrating g the Indian market. market. There are a number of possible possible explanations explanations for this; the relative embryonic embryonic and disorganized nature of the market, excessive government regulation that included excessive tariffs and the restriction that imported ice cream could only be sold in hotels, and a highly fragmented and ineffective ineffective media. Most of these market market inefficiencies have been or are in the process of being corrected and Ben & Jerry's believes that conditions have ripened to the extent where MNC’s can now effectively enter the market and compete with the domestic firms.

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Ice Cream Industry

Industry Growth:

The three three factor factorss of growth growth,, popula populatio tion, n, per capita capitall consum consumpti ption, on, and price price are all projected to increase over over the next six years. Population is projected to grow at 1.8%, per capital consumption is projected to grow at 5%, and prices are projected to increase at just over 1% per

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Ice Cream Industry year. (Overall the long-term projection for consumer consumer prices is expected expected to rise at 3.5%, however, given the intense level of competition Ben & Jerry's does not think it likely that ice cream prices will rise that fast.) fast.) Overall Overall the market will grow from $245 million million to $360 million, million, a compound growth growth rate of 8%. Of the $115 $115 millio million n in growth, growth, 60% will come come from from incre increase ased d per capita capita consumption, 24% from increased population, and 16% from increase in price.

Top Ice Cream Industries List:

 Vadilal  Amul

Ice Cream India

Ice Cream

 Kwality

Walls

 Mother

Diary



Ben & Jerry

 MTR

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Ice Cream Industry

Short Profile of Ice Cream Companies:

Vadilal Ice Cream Ltd:

Vadilal ice cream division has always been a hot favorite with the people both inside inside and outside the organization. organization. In India, the name Vadilal is synonymous with Ice Cream. The Cream. The Ice Cream industry in India today has a turnover of Rs. 15 billion [US$ 330 million]. A quarter of this comes from the house of Vadilal alone. But that’s no surprise, considering that we have the largest range of Ice Creams in the country – 120 – plus flavor flavors, s, in a variet variety y of more more than than 250 packs packs and forms. forms. The range range includ includes es cones cones,, candie candies, s, bars, bars, ice-lo ice-lolli llies, es, small small cups, cups, big cups, cups, family family packs packs,, and econom economy y packs. packs. Something for all tastes, preferences and budgets.

To make it convenient for our consumers to relish our complete range under one roof, we have set up a chain of Happiness Parlors – ‘Ice Cream boutiques’ so to say. Hordes Hordes of people people flock flock to these these parlor parlors s daily daily becaus because e they they know know that that our products products contain the purest and creamiest milk, and the freshest and tastiest fruits and nuts.

Among Among our produc products ts are OneUp OneUp Chocob Chocobar ar and King King Cone Cone – all-t all-time ime favor favorite ites s which have today attained the generic status. Another hit is our Kulfi – traditional Indian milk sweet. Some of our products are a combination with confectioneries.

Since our products are highly perishable, quick transport and proper storage are of paramount paramount importance. importance. Hence Hence our refrigeration refrigeration equipment equipment and deep freezes are imported from companies, which are world leaders in their respective fields. To ensure Page 12


Ice Cream Industry suff suffic icie ient nt,, time timely ly and and cons consta tant nt ice ice crea cream m supp supply ly,, we have have a Cold Cold Chai Chain n Netw Networ ork k comprising three manufacturing plants [totaling a production capacity of 1.25 lakh litre per day], about 23 C&FA, more than 500 Distributors and over 40,000 Retailers.

Amul India Ltd: AMUL means "priceless" in Sanskrit. The brand name "Amul," from the Sanskrit "Amoolya," was suggested by a quality control expert in Anand. Variants, all meaning "priceless", are found in several Indian languages. Amul products have been in use in millions of homes since 1946. Amul Butter, Amul Milk Powder, Amul Ghee, Amulspray, Amul Cheese, Amul Chocolates, Amul Shrikhand, Amul Ice cream, Nutramul, Amul Milk and Amulya have made Amul a leading food brand in India. (Turnover: Rs. 67.11 billion in 200820 08-09 09). ). Today Today Amul Amul is a symbol symbol of many many things things.. Of high-q high-qual uality ity produc products ts sold sold at reasonable prices. Of the genesis of a vast co-operative network. Of the triumph of indige indigenou nous s techno technolog logy. y. Of the marke marketin ting g savvy savvy of a farme farmers' rs' organi organisa satio tion. n. And of a proven model for dairy development.

Kwality Walls Ltd:

Kwality Ice Cream is the pioneer in the Indian ice-cream manufacturing industry and in 1956 became the first company in the country to use imported technology for manufacturing ice-cream on a commercial scale. As the ice-cream industry exploded in India, in 1995 Kwality Group joined hands with Hindustan Lever Limited and then there was no looking back.

The Indian consumer market was introduced to “KWALITY WALLS” – the result of a collab collabora oratio tion n betwee between n global global brand brand Walls Walls and the leadin leading g Indian Indian ice-cr ice-cream eam brand brand Kwality. Though the two giants eventually parted ways, the collaboration made Kwality a Page 13


Ice Cream Industry household name and created deep in roads for the brand in the consumer market. Today Today,, Kwalit Kwality y is not just a brand brand – it is the ice-cr ice-cream eam associ associat ated ed with with the Indian Indian summer; it’s the first choice in ice-cream for any child or adult during the scorching Indian summers. Kwality ice-creams are trusted not only for their rich, creamy flavours, but also for their trusted quality and nutritious food value.

Mother Diary Ltd: Mother Mother Dairy Fruit and Vegetable Vegetable Pvt. Ltd. offers the following following products: products: Mother Mother products like Liquid Milk, Ice Creams, Flavoured Milk, Dahi, Lassi, Dairy markets dairy products Mishti Doi, Ghee, White Butter, Table Butter, Cheese, UHT Milk, Dhara range of edible oils and the Safal range of fresh Fruits & Vegetables, Frozen Vegetables and Fruit Juices at a national national level, through its sales and distributi distribution on networks, networks, for marketing marketing food items. items. Mother Dairy milk (Bulk Vended Milk) is fortified with vitamin A @2000 IU per litre of milk as a part of social accountability. This program was started with the Mother Dairy, Delhi, since February 1980and there after Mother Dairy is continuing this program on their own as a social responsibility without having any financial assistance from the Government as well as since it is felt that BVM is generally consumed by the middle / lower middle / poor strata of the society. It is also found that the dietary practices adopted by these classes are deficient in Vitamin A.

Mother Dairy sources significant part of its requirement of liquid milk from dairy cooper cooperati atives ves.. Mothe Motherr Dairy Dairy source sources s fruits fruits and vegeta vegetable bles s from from farmer farmers s / grower growers s associations. Mother Dairy also contributes to the cause of oilseeds grower cooperatives that that manufa manufactu cture/ re/ pack pack the Dhara Dhara range range of edible edible oils oils by undert undertaki aking ng to nation nationall ally y market all Dhara products.The company markets an array of fresh and frozen fruit and vegetable products under the brand name SAFAL through a chain of 400+ own Fruit and Vegetable shops and more than 20,000 retail outlets in various parts of the country. Fresh produce produce from the producers producers is handled handled at the Company’s Company’s modern modern distributio distribution n Page 14


Ice Cream Industry facility in Delhi with an annual capacity of 200,000 MT. An IQF facility with capacity of around 75 MT per day is also operational in Delhi. A state-of-the-art state-of-the-art fruit processing plant of fruit handling capacity of 120 MT per day, a 100 percent EOU, setup in 1996 at Mumbai supplies quality products in the international market. With increasing demand another state-of-the-art fruit processing plant has been set up at Bangalore with fruit handling capacity of around 250 MT per day.

Ben & Jerry Ltd: Since Since 20 2003, 03, Ben & Jerry' Jerry's s have have been been worki working ng on a sus susta taina inable ble Caring Caring Dairy Dairy initiative, which helps level out needs of the farmers and their cows, as well as the planet's needs. The company has, so far, reduced energy use on their 11 farms by 2%, and converted all their farms to green energy. Also, in 2002, Ben & Jerry's in the USA committed to reducing carbon dioxide emissions by 10% by 2007, and by investing in a variet variety y of effici efficienc ency y measur measures, es, this this target target was achieved achieved with with ease ease - the USA now produce 32% less carbon dioxide emissions (per pint of ice cream) today (in 2008) than in 2002. This initiative was brought to the exclusive provider of milk for Ben & Jerry's European ice cream production, Beemster Cheese, in 2007.

In additi addition on to helping helping farmer farmers s and their cows, cows, in 2001 Ben & Jerry' Jerry's s began began sourcing vanilla, cocoa, and coffee, for their smooth ice creams, from cooperatively run farmer associations - these community structures help promote their members' quality of life, life, impr improv ove e work worker er's 's bene benefi fits ts,, and and sust sustai ain n a comm commit itme ment nt to their their land land and and commun communiti ities. es. In 2006, 2006, the world world's 's first first ever ever vanilla vanilla ice cream cream made made with with Fairtr Fairtrade ade ingred ingredien ients ts was launched launched by Ben & Jerry' Jerry's. s. 20 2007 07 saw the releas release e of Vanilla Vanilla Toffee Toffee Crunch, using 100% Fairtrade certified cocoa, sugar, and vanilla, and in 2008, Chunky Monk Monkey ey was was guar guaran ante teed ed to be trad traded ed in acco accord rdan ance ce with with inte intern rnat atio iona nall Fair Fairtr trad ade e standards as well.

MTR Pvt Ltd:

MTR Foods Private Limited is amongst the top five processed food manufacturers in India. We manufacture, manufacture, market and export a wide range of packaged packaged foods to global global markets that include USA, UK, Australia, New Zealand, Malaysia, Singapore, UAE, Japan and Oman. Starting with the legendary MTR restaurant in Bangalore, India’s silicon valley, we now offer ''complete ''complete meal solutions'. solutions'. Our wide range of products include ready-to-eat Page 15


Ice Cream Industry currie curries s and and rice, rice, readyready-to to-co -cook ok gravie gravies, s, frozen frozen foods, foods, ice cream, cream, instan instantt snack snack and dessert mixes, spices and a variety of accompaniments like pickles and papads. Our deep understanding of culinary expectations and needs has resulted in many new and innovative products. Our investments in infrastructure and technology ensure that we can scale rapidly and bring these to market. Today, consumers across the globe coun countt on us to brin bring g them them allall-na natu tura ral, l, whol wholes esom ome e and and deli delici ciou ous s food food that that is also also convenient and no-fuss.

SWOT Analysis of Ice Cream Industry:

Strengths: 1) They are available in reasonable prices.

2) Known Known for produc productt quali quality. ty. 3)

Strong presence of parent company in India.

4) The Brands Brands almos almostt generic generic to their their product product catego category ry 5) Wide variety variety of of unique unique ice cream cream flavors. flavors.

Weakness: 1) The durability of of ice-creams is not really good good

2) it melt melts s ver very y soo soon n 3) The industry has a complex supply chain management and the main issue is

traceability 4) Domestic Domestic business business as well well as many many internationa internationall markets markets are thriving thriving

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Ice Cream Industry Opportunities:

1) They They can can come come up up with with new flavor flavors s 2) They should should focus focus more on their their advertisin advertising g and marketing marketing strategi strategies es 3) They should should come come up up with offers offers for purchas purchase e of ice-cream ice-cream in whole whole market market 4) Efforts Efforts to exploit exploit export export potenti potential al are alread already y on

Threats: 1) Currently, Currently, the the threat threat of of new new viable viable competi competitors tors 2) Foreig Foreign n players players enter entering ing the the market market 3) Consumer Consumer buying buying power power also repres represents ents a key key threat threat in the industry industry 4)

Consumers can easily switch to other substitutes with little cost or consequence

Market Share of Ice Cream Industry:

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Ice Cream Industry

Conclusion:

Following are the concluding points taken into consideration after the conduct of the Industry Analysis:

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Ice Cream Industry  Advertisement acts as a very important role here. So if heavy advertisements are carried out it will definitely increase purchase.

 Due to the changing in climate, life style and preferences, it was not necessary that they will consume same product every time.



The Ice Cream Industry had to further focus on:   

Strengthen communications Multi v/s sole dealer Training to dealers

Reference:

Books:

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Ice Cream Industry 1) Prasanna Chandra Edition

: Investment analysis & portfolio management, 2nd Tata Mc Grill Hill, New Delhi.

Journal:

The Brand Reporter

Web Sites: 1)

www.moneycontrol.com

2)

www.reportbuyer.com

3)

www.indiatodaygroup.com

4) www.m www.mone oneyco ycontr ntrol. ol.com com 5)

www.indiainbusiness.nic.in

6) www. www.go goog ogle le.c .co. o.in in

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Industry Analysis on Ice Cream Industry

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