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Players in Ice-Cream Market in India
Players in Ice-Cream Market in India
December 2008
Executive Summary
Market
Estimated worth USD 209 mn in 2008, expected to grow to USD 240 mn in 2009 North and west account for 70% of total sales High profit margins ranging between 30-50%
Drivers: Opportunity to capitalize on low consumption levels; growing institutional sales Challenges: Competition with the unorganised sector on price and quality, and lack of well-developed cold chain facilities Large investments in advertising Diversification of product portfolio targeting specific consumer segments Partnerships and franchises pursued to boost distribution Falling costs of raw materials offsetting rising milk and sugar prices
Trends
Competition
GCMMFs Amul brand is the market leader Mother Diary and Hindustan Unilevers Kwality brand are other strong players The premium segment is dominated by Baskin Robbins
Market Overview Advertising Trends Competition Factors External & Internal Key Developments
The industry is growing steadily with the northern and western regions accounting for the largest consumption Overview
Size and Growth Worth USD 209 mn in 2008 Growing at 12% p.a. in 2005-2008 Forecast to increase by 15% to reach USD 240 mn in 2009 Characteristics Northern and western regions together account for 70% of total market consumption Profit margins range from 30% to 50% depending on the product segment 60% of ice cream sales occur during the summer months of April-June 80% of sales is through street vendors Vanilla is the highest selling flavour and together with strawberry and chocolate it accounts for 70% of the market
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Geographic Distribution
North 30% West 40% 10% 20% South East
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
Market Overview Advertising Trends Competition Factors External & Internal Key Developments
Key Competitors
Kwality Walls
Key Strengths
Premium Imagery
Popular TV ads Trust and reputation Varieties in chocolate ice creams Attractive packaging
Offerings in Ice Formats Black grape jelly : In black current Twister Zing : Raspberry and Mango Benefit Beat the heat Others in milk base are : Litchi Zap and Mango Zap priced @ 25
Key Competitors
Vadilal
Key Strengths Low pricing Easy availability Offerings in Ice Formats Juice Candies Flavors Kachi kerri, Black Current , Mango, Orange, Kala khatta, Jaljeera and Tiranga ice candy Price @ 10 Benefit Quenches thirst and offers refreshment
Key Competitors
Amul
Key Strengths Popular TV ads Trust and reputation Varieties in milk ice creams Offerings in Ice Formats Stamina Candies Flavors : Orange , Lemon and Mango Priced @ 8 Positioned as Indias first fitness candy
Key Competitors
Creambell
Key Strengths For masses Availability Economical
Offerings in Ice Formats Joosticks Flavors : Nimboo Paani, pineapple and strawberry Priced @ 10 Benefit Real frozen juice on stick
Key Trends
Large scale advertising Product diversification to target specific segments
Trend Benefits derived from falling sFranchises and strategic costs partnerships to enhance distribution
Share of TV advertising
Kwality Walls
(HUL)
78%
Federation
Product diversification to target specific segments Producers have launched flavoured kulfi the traditional Indian dessert ice cream which is the favoured dessert in the non-metros Naturally flavoured ice cream i.e. without any artificial or synthetic flavour has been introduced for the premium segment Players are capitalizing on the market which has become extremely health conscious
Company Hindustan Unilever (HUL) Product Moo Health Benefits High calcium content, low calorie and fat Increases immunity, help in digestion, prevents diarrhoea and growth of colon cancer Low sugar and fat content
GCMMF
Mother Dairy
Source:
Financial Express Ice cream war begins as HUL, Amul oil plans, February 2008
Milkway Express 1000 outlets in southern and central India by 2009, counters at corporate campuses Baskin Robbins Company HUL Outlets in malls and multiplexes Affiliation Indian Oil Corporation (IOC) Oxicash GCMMF Bharat Petroleum Corporation Ltd (BPCL) Purpose Retail stores at petrol stations Marketing via scratch and win contests Mobile kiosks at petrol stations
Partnerships
Baskin Robbins Lifestyle, Coca-Cola, ICICI credit cards and Cox Exclusive retailing & Kings Milkway Express Spencer Retail Ltd and Foodworld Movenpick Rhapsody Foods & Beverages Targeting the southern market Re-launch brand in Mumbai, Delhi, Bangalore, Hyderabad, Kolkata and Chennai
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
Market Overview Advertising Trends Competition Factors External & Internal Key Developments
16%
Market
Major Players
Fiercely competitive due to attractive economics with profit margins ranging between 30-50% Organized sector comprises GCMMFs Amul, HULs Kwality Walls, Mother Diary, Baskin Robbins and a number of regional brands Amul is the market leader and is at the forefront of targeting the rural market For most national players viz. GCMMF, HUL and Mother Diary, revenue from ice cream accounts for a small portion of their total revenues Premium segment: Baskin Robbins is the single largest premium ice cream brand New entrants include Amul, Movenpick, Haagen Dazs and Snowberry
Market share
55%
Unorganized
45%
Organized Vadilal
GCMMF 37%
16% Others
A well established unorganized sector creates a fiercely competitive environment for the larger players
Source: Business Line Bringing in the creamy layer, August 2008; magindia.com Amul to launch new ice cream range, October 2008
Market Overview Advertising Trends Competition Factors External & Internal Key Developments
Challenges Low quality products and competitive pricing from unorganized sector Lack of cold chain facilities
External Factors
ECONOMIC FACTOR - Low consumption ml levels Per capita consumption levels are very low at 200250 ml while penetration rate is estimated at 15% Significant scope for market growth by increasing either consumption levels or market penetration, or both National players are focusing on increasing per capita consumption or penetration to grow the market
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250
100 0
2000
2004
2008
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
External Factors
SOCIETAL FACTOR - Low quality products and competitive pricing in the unorganized sector
The market faces a threat from low-quality products Price difference between large and small players Large players are at a competitive disadvantage compared to the unorganized players due to the low quality and pricing of the unorganized sector
External Factors
TECHNOLOGICAL FACTOR - Lack of cold chain facilities
The lack of good cold chain facilities for transportation and storage is an impediment towards increasing market access and penetration Cold chain also constitutes the most to the total cost 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