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HISTORICAL BACKGROUND

The Evolution of  Ice Cream 

 
Ice cream's origins are not known to reach back as far as the second century B.C., although
no specific date of origin nor has inventor been undisputable credited with its discovery. We
know that Alexander the Great enjoyed snow and ice flavored with honey and nectar.
Biblical  references also show that King Solomon was fond of iced drinks during harvesting.
During the Roman Empire, Nero Claudius Caesar (A.D. 54-86) frequently sent runners into the
mountains  for snow, which was then flavored with fruits and juices.Over a thousand years later,
Marco Polo returned to I taly from the Far East with a recipe that closely resembled what is now
called sherbet. Historians estimate that this recipe evolved into ice cream sometime in the 16 
th century. England seems to have discovered ice cream at the same time, or perhaps even earlier
than the I talians. "Cream I ce," as it was called, appeared regularly at the table of Charles 
I during the 17 th century. France was introduced to similar frozen desserts in 1553 by the I 
talian Catherine de Medici when she became the wife of Henry II of  France.I t wasn't until 1660
that ice cream was made available to the general public. The Sicilian Procope introduced a recipe
blending milk, cream, butter and eggs at Caf Procope, the  first caf in Paris.I ce Cream for
America 
 
The first official account of ice cream in the New World comes from a letter written in 1744 by a
guest of Maryland Governor William Bladen. The first advertisement for ice cream in
this country appeared in the New York Gazette on May 12, 1777, when confectioner Philip
Lenzi announced that ice cream was available "almost every day." Records kept by a Chatham
Street,New York, merchant show that President George Washington spent approximately $200
for ice cream during the summer of 1790.I nventory records of Mount Vernon taken
after Washington's death revealed "two pewter ice cream pots." President Thomas Jefferson was
said  to have a favorite 18-step recipe for an ice cream delicacy that resembled a modern-day
Baked   Alaska.I n 1812, Dolley Madison served a magnificent strawberry ice cream creation
at President Madison's second inaugural banquet at the White House.Until 1800, ice cream
remained a rare and exotic dessert enjoyed mostly by the elite. Around  1800, insulated ice
houses were invented. Manufacturing ice cream soon 
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became an industry  in America, pioneered in 1851 by a Baltimore milk dealer named Jacob
Fussell. Like other American industries, ice cream production increased because of technological
innovations,including steam power, mechanical refrigeration, the homogenizer, electric power
and motors, packing machines, and new freezing  processes and equipment.I n addition,
motorized delivery vehicles dramatically changed the industry. Due to ongoing technological
advances, today's total frozen dairy annual production in the United States is more than 1.6
billion gallons.Wide availability of ice cream in the late 19 th century led to new creations.In
1874, the  American soda fountain shop and the profession of the "soda jerk" emerged with the
invention of the ice cream soda.I n response to religious criticism for eating "sinfully" rich ice
cream sodas on Sundays, ice cream merchants left out the carbonated water and invented the ice
cream "Sunday" in the late 1890's. The name was eventually changed to "sundae" to remove
any connection with the Sabbath.I ce cream became an edible morale symbol during World
War II  Each branch of the military tried to outdo the others in serving ice cream to its troops.
I n 1945, the first "floating ice cream  parlor" was built for sailors in the western Pacific. When
the war ended, and dairy product rationing was lifted, America celebrated its victory with ice
cream. Americans consumed over 20 quarts of ice cream per person in 1946.
I n the 1940's through the 70s, ice cream production was relatively constant in the United  States.
As more prepackaged ice cream was sold through supermarkets, traditional ice cream  parlors
and soda fountains started to disappear. Now, specialty ice cream stores and unique restaurants
that feature ice cream dishes have surged in popularity. These stores and  restaurants are popular
with those who remember the ice cream shops and soda fountains of  days past, as well as with
new generations of ice cream fans. According to legend, Marco Polo brought the secrets of ice
cream with him from the Orient,together with other sundry savories. There is, however, no proof
of that, although there is some evidence that the Chinese indulged in iced drinks and desserts,
which gives some weight to the Marco Polo theory.The Chinese did, however, teach Arab traders
how to combine syrups and snow, to make an early version of the sherbet. Arab traders
proceeded to show Venetians, then Romans, how to make this frozen delight. The Emperor Nero
was quite fond of pureed fruit, sweetened with honey, and then mixed with snow--so much so
that he had special cold rooms built underneath the imperial residence in order to store snow.
I n the 1500s, Catherine de Medici brought the concept of the sorbet to the French, who were
soon to make a great improvement on it. As you will have noted, the above are frozen desserts,
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not ice cream. That invention awaited  the development of the custard, then the discovery that
freezing it would create a delectable dessert. This notable event occurred in 1775 in France, and
was shortly followed by the invention of an ice cream machine, which did a much better job of
creating a light and fluffy  frozen custard than beating by hand could do.Thomas Jefferson, who
imitated Nero in having a special cold room for storing snow, provides us with the first recipe for
ice cream found in the United States. Not to be outdone, George Washington invested in one of
the ice cream machines.Until 1851, ice cream (or, more frequently, cream ice) was solely made
at home. But an intrepid  man from Baltimore, named Jacob Fussell changed all that by opening
the first ice cream  factory.Near the turn of the century, the ice cream soda was created, although
by who seems to be in question--either James W. Tuff or Robert Green.
I t does seem to have been done by accident,however--a scoop of ice cream falling in a glass of
flavored soda water. At any rate, the drink became a national craze, and many a girl and boy
went courting over an ice cream soda. So many, in fact, that many municipalities passes laws
forbidding the sale of soda water on Sunday. Quickly afterwards, the 'sundae' was invented--it
contained the ice cream, syrup, and  whipped cream of the soda, but without the evil influence of
soda water. Numerous variations existed.The next ice cream craze with the 1904 Louisiana
Purchase Exposition in Saint Louis. Charles Menches was doing a lively business selling scoops
of ice cream in dishes, all the way up to the  point that he ran out of dishes. Frustrated, but
determined to still find a way to make a profit,he lighted upon his friend Ernest Hamwi, who was
selling a wafer-like cookie called zalabia (a Syrian treat). The combination proved irrestible.

Making its Appearance The first ice cream cone was produced in 1896 by I talo Marchiony.
Marchiony, who emigrated   from I taly in the late 1800s, invented his ice cream cone in New
York City. He was granted a  patent in December 1903. Although Marchiony is credited with the
invention of the cone, a similar creation was independently introduced at the 1904 St. Louis
World's Fair by Ernest A. Hamwi, a Syrian concessionaire. Hamwi was selling a crisp, waffle-
like pastry -- zalabis -- in a booth right next to an ice cream vendor. Because of ice cream's
popularity, the vendor ran out of dishes. Hamwi saw an easy solution to the ice cream vendor's
problem: he quickly rolled one of his wafer-like waffles in the shape of a cone, or cornucopia,
and gave it to the ice cream vendor. The cone cooled in a few seconds, the vendor put some ice
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cream in it, the customers were happy and the cone was on its way to becoming the great
American institution that it is today.
 A Business Is Born St. Louis, a foundry town, quickly capitalized on the cone's success.
Enterprising people invented special baking equipment for making the World's Fair cornucopia
cones.Stephen Sullivan of Sullivan, Missouri, was one of the first known independent operators
in the ice cream cone business.In 1906, Sullivan served ice cream cones (or cornucopias, as
they were still called) at the Modern Woodmen of America Frisco Log Rolling in
Sullivan,Missouri. At the same time, Hamwi was busy with the Cornucopia Waffle Company.I n
1910, he  founded the Missouri Cone Company, later known as the Western Cone
Company. As the modern ice cream cone developed, two distinct types of cones emerged. The
rolled cone was a waffle, baked in a round shape and rolled (first by hand, later mechanically) as
soon as it came off the griddle.I n a few seconds, it hardened in the form of a crisp cone. The
second type of cone was molded either by pouring batter into a shell, inserting a core on which
the cone was baked, and then removing the core; or pouring the batter into a mold, baking it and
then splitting the mold so the cone could be removed with little difficulty.
In the 1920s, the cone business expanded. Cone production in 1924 reached a record 245 million.
Slight changes in automatic machinery have led to the ice cream cone we know today.Now,
millions of rolled cones are turned out on machines that are capable of producing
about 150,000cones every 24 hour sitting the mold so the cone could be removed with little
difficulty.I n the 1920s, the cone business expanded. Cone production in 1924 reached a record
245 million. Slight changes in automatic machinery have led to the ice cream cone we know
today.Now, millions of rolled cones are turned out on machines that are capable of producing
about 150,000 cones every 24 hours.
 
CONCEPTUAL BACKGROUND
WORKING TERMINOLOGY USED IN ICE CREAM PRODUCTION AND
MARKETING
Before proceeding further into the discussion ofthe distribution management issues of ice cream,
it would be worth while to define the working terminology of its business here in this section to
make it more comprehensive for the readers. Ice Cream Business is a specialized business and
has its formal terminology which has specific meaning and implication for its trade. In fact the
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terminology is not known to most of the traders or the consumers. The important terminology
used for this product are defined hereunder:
 Air:
 A term used in conjunction with overrun. Air is incorporated into ice cream by whipping
action of the dasher inside the barrel of the batch freezer. Overrun is the quantum of air
whipped into the ice cream mix during the freezing process.
 Bisque:
 It is the ice creaw that contains either macaroons or some other bakery product. Bulk Ice
Cream:
 Ice Cream usually packed in a two and half or three gallon paper or plastic tub that is
purchased by retailers for resale to the consumer as individual servings.
 Butter fat:
 An ingredient made from rich sweet cream ( milk cream). Egg Yolk solids and cocoa are
sometimes included in calculating the percentage of butterfat in a product, but those
ingredients should not be confused with the fat from the cream. The specific percentage
of the butterfat is a unique characteristic of various frozen desserts. The most frequently
asked question in the industry is about the percentage of butterfat in the ice cream you are
producing.
 Confectioner's Sugar:
 A very fme sugar, also known as 1 OX, sometimes used in producing ices or sorbets. It
will produce, a smoother scooping product, but it will not make a sugar syrup solution.
 There are many choices in today's ice cream case to suit a wide variety of consumer
tastes. There is plenty of information on food labels. Here, the International  Ice Cream
Association sheds some light on how ice cream and related products are labeled.

LABELLING DEFINITIONS
The U.S. Food and Drug Administration (FDA) sets standards of identity for many foods so that
consumers will get a consistent product, no matter what brand or type they buy. For ice cream,
FDA permits the use of nutrient descriptors such as "light," "reduced fat" and "low fat" so that
consumers know exactly what they're selecting in terms of nutritional content.
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These FDA standards follow the federal Nutrition Labeling and Education Act (NLEA),
which  governs all food labeling.Here are some of the terms consumers are seeing in the
supermarket, and exactly what those terms mean:I ce cream is a frozen food made from a
mixture of dairy products, containing at least 10% milk  fat."Reduced fat" ice cream contains at
least 25% less total fat than the referenced product (either an average of leading brands, or the
company's own brand.) 
"Light" ice cream contains at least 50% less total fat or 33% fewer calories than the
referenced   product (the average of leading regional or national brands.) "Low fat" ice cream
contains a maximum of 3 grams of total fat per serving "Nonfat" ice cream contains less than 0.5
grams of total fat per serving.
How Ice Cream  Is Made Everybody has a favorite flavor or brand of ice cream, and the debate
over whose ice cream is the best rages on each year. While each manufacturer develops its own
special recipes, ice cream  production basics are basically the same everywhere.The most
important ice cream ingredients come from milk.
The dairy ingredients are crucial in determining the characteristics of the final frozen product.
Federal regulations state that ice cream must have at least 10% milk fat, the single most critical
ingredient. The use of varying  percentages of milk fat affects the palatability, smoothness, color,
texture and food value of the  finished product. Gourmet or super premium ice creams contain at
least 12% milk fat, usually more.Ice cream contains nonfat solids (the non-fat, protein part of the
milk), which contribute nutritional value (protein, calcium, minerals and vitamins). Nonfat dry
milk, skim milk and  whole milk are the usual sources of nonfat solids.
The sweeteners used in ice cream vary from cane or beet sugar to corn sweeteners or
honey.Stabilizers, such as plant derivatives, are commonly used in small amounts to prevent
the  formation of large ice crystals and to make a smoother ice cream. Emulsifiers, such as
lecithin and mono- and diglycerides, are also used in small amounts.
They provide uniform whipping qualities to the ice cream during freezing, as well as a smoother
and drier body and texture in the frozen form.These basic ingredients are agitated and blended in
a mixing tank. The mixture is then pumped  into a pasteurizer, where it is heated and held at a
predetermined temperature.
The hot mixture is then "shot" through a homogenizer, where pressure of 2,000 to 2,500 pounds
per square inch breaks the milk fat down into smaller particles, allowing the mixture to stay
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smooth and  creamy. The mix is then quick-cooled to about 40°F and frozen via the "continuous
freezer" method (the "batch freezer" method) that uses a steady flow of mix that freezes a set
quantity of ice cream one batch at a time.During freezing, the mix is aerated by "dashers,"
revolving blades in the freezer. The small air cells that are incorporated by this whipping action
prevent ice cream from becoming a solid  mass of frozen ingredients. The amount of aeration is
called "overrun," and is limited by the  federal standard that requires the finished product must
not weigh less than 4.5 pounds per  gallon.

 The next step is the addition of bulky flavorings, such as fruits, nuts and chocolate chips.
The ingredients are either "dropped" or "shot" into the semi-solid ice cream after it leaves the
freezer. After the flavoring additions are completed, the ice cream can be packaged in a variety
of  containers, cups or molds.It is moved quickly to a "hardening room," where sub-
zero temperatures freeze the product to its final state for storage and distribution.

QUALITY SEGMENTS 
In addition, there are commonly used marketing phrases that describe ice cream products
in terms of quality segments, such as "super premium," "premium" and "economy." Several
factors can contribute to a product's quality segment, such as price, brand positioning,
product  packaging, quality of ingredients and the amount of overrun (air) in the product.
Overrun refers to the amount of aeration the ice cream undergoes during its manufacture that
keeps the mixture from becoming an inedible frozen mass. Overrun is governed by federal
standards in that the finished product must not weigh less than 4.5 pounds per gallon."Super-
premium ice cream tends to have very low overrun and high fat content, and the manufacturer
uses the best quality ingredients."Premium" ice cream tends to have low overrun and higher fat
content than regular ice cream,and the manufacturer uses higher quality ingredients."Regular" ice
cream meets the overrun required for the federal ice cream standard."Economy" ice cream meets
required overrun and generally sells for a lower price than regular ice cream.
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MICRO ANALYSIS

INTERNAL ANALYSIS (PRODUCER)

According to the recent studies, most of the newly launched product or services fail due to
improper analysis of their internal and external needs. A company should most effectively and
efficiently take care of all the internal matters and needs.Since internal analysis is so use full and
the life cycle as well as pricing is totally depended  upon this analysis, Ice cream industries have
taken proper and fully effective steps in analyzing all the need and requirements of the
companies .During internal analysis the promoter should take care of the following things:Raw
material requirement Power supply Labour requirement Working force Capital  Working
capital  Internal rules and regulations Proper management Proper material handling

EXTERNAL ANALYSIS (CONSUMER)

The Indian market with its vast size and demand base offers great opportunities to
marketers.Two-thirds of countries consumers live in rural areas and almost half of the national
income is  generated here.It is only natural that rural markets form an important part of the total
market of  India though the urban market is increasing drastically. Our nation is classified in
around  450 districts, and approximately 630000 villages, which can be sorted in different
parameters such as literacy levels, accessibility, income levels, penetration, distances from
nearest towns,etc.The rural bazaar is booming beyond everyone's expectation. This has been
primarily attributed  to a spurt in the purchasing capacity of farmers now enjoying an increasing
marketable surplus of farm produce. In addition, an estimated induction of Rs 140 billion in the
rural sector through the government's rural development schemes in the Seventh Plan and about
Rs 300 billion in the Eighth Plan is also believed to have significantly contributed to the rapid
growth in demand. The high incomes combined with low cost of living in the villages have
meant more money to spend. And with the market providing those options, trends and tastes are
also changing. The major ice cream companies have decided to enter this market with the basic
idea of tapping the upper middle class which had established itself as a huge tapped market in the
perception of a lot of  national and multinational players who were then trying forages into the 
I ndian market.
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MARKET ANALYSIS
COMPETITORS ANALYSIS

 Consumer Mindset 
The consumers always have a different loyalty status for different brands. Sometimes they buy
some brand due to the price or sometimes due to the features. Studying the consumer·s mindset
is of vital importance as perception of individuals at the buying stage of various brands is
unpredictable and ever changing.
ƒ
 Market Share 
The market share of the players in the two wheeler auto market needs to be studied to know
which company is in the booming stage and which company is in its closure stage. Also the
advertisement and promotional share needs to be studied. Thus, market share helps us know the
current market leader and market follower so that our company can develop an efficient
marketing strategy for its product range after analyzing the current market player·s position.
ƒ
 SWOT Analysis
 The SWOT Analysis i.e. the Analysis of the Strengths, Weaknesses, Opportunities and  Threats
of the company products and its competitors at a glance.I t needs to be compared to get an
overall analysis of all the major companies and to know the company having better strengths,
more opportunities and on the other hand the company having more of weaknesses and threats.
 
 High initial launch cost 
There is a large front-ended investment made in new products including cost of
product development, market research, test marketing and most importantly its launch. To
create awareness and develop franchise for a new brand requires enormous initial expenditure
is required on launch advertisements, free samples and product promotions. Launch costs are
as high as 50-100% of revenue in the first year and these costs progressively reduce as the
brand  matures, gains consumer acceptance and turnover rises. For established brands,
advertisement expenditure varies from 5 - 12% depending on the categories.I t is common to
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give occasional   push by re-launches, which involves repositioning of brands with sizable

marketing support.
 Market research 
Customers purchase decisions are based on perceptions about brands. They also keep
on changing with fashion, income and changes in lifestyle. Unlike industrial products, it
is difficult to differentiate products on technical or functional grounds. With
increasing competition, companies spend enormous sums on product launches. Market research
and test marketing become inevitable. The business rests on the two aspects that are brand equity
and  distribution network.

 Marketing driven 
In relative terms, marketing function has greater importance in the I ce Cream industry.
The  players have to reach out to mass population and compete with several other brands.
The  perceived differences are greater than the real differences in the product.

 Brand equity 

Brand equity refers to the intangible asset in the form of brand names. The consumer's
loyalty  for a particular brand is due to the perception that the product has distinctively superior
and  consistent quality, satisfies his/ her specific needs and provides better value for money
than other competing brands. A successful brand generates strong cash flow which enables
the owner of the brand to reinvest a part of it in the form of aggressive advertisement/
promotion to reinforce the perceived superiority of the brand. The worth of a brand is manifested
in the consumer's insistence on a particular brand or willingness to pay a price premium for
the  preferred brand.

 Distribution network 
In this sector, one of the most critical success factors is the ability to build, develop,
and  maintain a robust distribution network. Availability near the customer is vital for
wider  penetration as most products are high value products .I t takes enormous time and effort
to build a chain of stockiest, retailers; dealers etc and establish their loyalties. There are
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entry barriers for a new entrant as a new product is typically slow moving and has lesser
consumer demand. Therefore dealers/ retailers are reluctant to allocate resources and time.
Established   players use their clout to inhibit new entrants. However, when a product offers a
strong breakthrough, equity build up rapidly and so does the distribution network.

The major problems faced while marketing in the Indian market:

a.Underdeveloped People and Underdeveloped Markets:

The number of people below poverty line has not decreased in any appreciable manner.
Thus underdeveloped people and consequently underdeveloped market by and large
characterize the I ndian markets.
 
b.Many Languages and Dialects:
The number of languages and dialects vary widely from state to state, region to region
and   probably from district to district. The messages have to be delivered in the local
languages and dialects. Even though the numbers of recognized languages are only 16, the
dialects are estimated to be around 850.

c.Prevalence of spurious brands and seasonal demand: - 

For any branded product there are a multitude of ¶local variants·, which are cheaper,
and,therefore, more desirable to mass.

d.Different way of thinking: - 

There is a vast difference in the lifestyles of the people. The kind of choices of brands that an
urban customer enjoys is different from the choices available to the rural customer. The rural
customer usually has 2 or 3 brands to choose from whereas the urban one has multiple  choices.
The difference is also in the way of thinking. The rural customer has a fairly simple thinking as
compared to the urban counterpart.

MARKETING STRATEGIES
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The  differentiation concept is to make the product different from those of its competitor. When
we look at the Indian Ice Cream market we see that the leader·s naturals have constantly
maintained its market leadership by constantly differentiating on the basis of new flavors. And
coming up with line extensions with regular frequency. The only alternative for 
Ice cream companies to survive in this industry will be to differentiate itself. This differentiation
could be on the basis of the marketing mix. (Product, Price, Promotion, Place) Thus, as per the
different  factors of marketing mix 4 Different strategies are made to market in the developing
cities in India.
SEGMENTATION VARIABLES

Several variables differentiate consumers who prefer different kinds of  Desserts, such as
frequency of consumption, price sensitivity, relative importance of calories vs.taste, consumption
occasion (at home, at work, at a social event, during recreation or at a restaurant), and desired
serving size. The two most important variables are probably price sensitivity and the taste-calorie
tradeoff.The reason that price sensitivity is especially important is that some consumers will pay
high  prices for a product of high quality. Therefore, one might be able to make large margins
selling to that market. On the other hand, there is a large market that will not buy desserts that
are  priced too high; therefore, some of the manufacturers will want to provide value-priced
frozen desserts that may sacrifice quality somewhat. Consumers today tend to be increasingly
health conscious, and many will therefore want to limit the amount of calories in the desserts
they consume. On the other hand, desserts are consumed for pleasure, and other consumers
are unwilling to sacrifice the taste provided by calorie-rich desserts. There are also certain
people who have high metabolisms or engage in strenuous activity, leaving them with less worry
about weight gain. Frequent or ´heavy users of frozen desserts would a great target, but this
group is not readily identifiable and reachable³these consumers are not likely to have distinct
media habits or to frequent particular stores, for example. Serving size preference is an
important issue, but is addressed already to some extent by price sensitivity.

SEGMENTS BASED ON COMBINATION OF VARIABLES

Price sensitivity is clearly a matter of a degree, with each consumer being somewhere on
the continuum from extremely price insensitive to extremely sensitive. However, it seems
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reasonable to divide consumers into insensitive, value-conscious, price sensitive, and highly
price sensitive  groups.In terms of the taste-quality dimension, reasonable categories might be
taste dominated,balance seekers, and calorie ´misers.
With four levels of price sensitivity and three levels of  taste-calorie tradeoffs, twelve
combinations emerge. The more important segments will be discussed.
´Price Insensitive Indulgers are consumers who take their dessert experiences seriously and will
let neither price nor calories get in the way of their desserts. These consumers want high quality
ingredients and tend to be very brand conscious. Because their high level of  involvement, these
connoisseurs will often exchange tips with each other on what to try. They can be quite
unforgiving to the brand if they have a bad experience. Often, they buy from specialty stores,
such as bakeries, but may also indulge in super-premium ice cream. The ´Dessert Pragmatists 
represent a large group of consumers who enjoy good desserts but are concerned about both
price and quality. They are willing to pay more money for a good dessert,but will tend to switch
brands if their favorite dessert is not on sale. They care about taste and  will not buy a low fat
concoctions without taste. On the other hand, they tend to avoid high  fat ice-creams. They tend
to buy branded products and pay attention to calorie contents on the containers.´Value Gluttons 
 are concerned about price but are less concerned about calories. A dessert has to be relatively
inexpensive for them to buy it. They therefore often buy regional and store brands. They buy ice
cream and other sweets frequently and eat large portions.´Sophisticated Waist liners 
 are greatly concerned about their figures and dread calories. This  group predominantly consists
mostly of women. Some are affluent while others are willing to make financial sacrifices to stay
healthy. This group enjoys sophistication in selecting high quality products and is very status
conscious. Often, this group will prefer small serving sizes of rich desserts, and desserts are often
consumed in a social setting. This group tends to shop in upscale supermarkets and in
convenience stores.´Budget Conscious Realists consist of consumers who are very price sensitive
and are moderately concerned about calories. Typically, this group includes modest income
families,large families, or families headed by a single parent. Parents are concerned about the
amount of  calories that they and their children consume, but money is limited, so they tend end
up buying what is less expensive. This group tends to buy what is on sale, generics, or store
brands.
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MACRO ANALYSIS
CURRENT SENARIO IN INDIA:

a) Import of Machinery and Equipment: Ice cream manufacturing is an exclusive type of

business, as this product is highly perishable; and accordingly, right from the stage of production
to the ultimate delivery to the consumer it has to be kept, stored and transported in frozen
condition. The primary 34 requirement is a large investment for coru::tructing a modem factory,
installation of machinery and equipment by imports from Europe, UK and USA, construction of
cold store rooms which would maintain the required refrigeration temperature for stored product,
and for undertaking all other arrangements for distribution and sales. A large staff, fully
experienced and trained in this line of refrigerated product for production, and operation and
maintenance of all the machinery and equipment is an important aspect.

b) Industry Classification: Small scale industry Ice Cream manufacture has been piaced under
'Small Scale Industries' by the Government .Jflndia from the beginning of its commercialization
and r_resently also it is covered under the Small Scale Industries. This classification of the
industry has restricted growth of the Ice Cream industry at a national scale and precisely because
of this reason the industry remained at a highly fragmented state. The supporting industries for
manufacturing the equipment for production and marketing oflce Cream could not develop in the
country and if anything was done it was localized and at a very rudimentary scale. Therefore, all
the modem equipment have to be imported from other developed countries of Europe or USA
where due to high cost of labour, the costs keep on rising. The levy of customs duty in India is a
large burden and then there are excise duties claimed on certain equipment and composite
machinery. Thus the installation cost of a single unit is high in Indian condition.

c) Legal Standard : 10% Milk fat mandatory The legal standard prescribed for ice cream
production in India constitutes 10% milk fat. This is also the federal standard ofUnited States of
America, United Kingdom and other European countries. According to their commercial and
economic interests, these countries restrict production of'Dairy Ice Cream and Milk Ice' to milk
fat only and all other categories of ice cream are permitted to be produced with vegetable fats.
This legal facility permits ice cream being manufactured, both, for catering to the requirements
of affluent society and of the average citizen at reasonable prices. In Indian situation, the
 15

restriction oflce Cream to miik fat has proved ice cream to be a high priced product and a
luxurious ~.table for all these y~ars since the price of milk fat remained always at a higher level.

d) Low Per Capita Consumption: 35 The per capita consumption oflce Cream in India bas
remained way behind the level of the developed countries and even behind the other Asian
Countries. In North America, the per capita consumption oflce Cream is estimated to be 30 litres
per annum. The Indian per capita consumption oflce Cream is about 125 m1 ( one scoop) per
year where as the per capita figure of ixs neighboring Asian countries like Pakistan is 3 times
higher and frat of Thailand is 10 times higher. The western region oflndia has a much higher
consumption than the all-India average. In the western region, primarily in Gujarat, a retailer, on
an average, sells three litres of ice cream per day. The Western and Northern regions put
together, account for about 70 percent of the total sales. According to industry estimates, eight
cities account for 60 percentofthe national consumption.

e) Largely Local Marketing: Few Regional/National Brands: Historically, in India ,since its
commercial inception, the ice cream business remained largely as a localized product confined to
a city or township or a small region where the manufacturer was located. Very few brands even
operated across the states . The handful of Brands which were relatively well known across the
states and regions are: Kwality- in Delhi, Bombay, Calcutta and eastern region. Vadilal - Mainly
in Gujarat, to some extent in Bombay. Milk Food- in Delhi and Northern Region Dollops - in
South . g) Dominance ofNon-Organized Sector in the Past: Changing now : The business
remained in the non-organized sector to a large extent until the nineteen hundred eighties. The
ice cream was regarded as a high priced product of luxury. Around nineties, this industry has
undergone changes in its orientation. From occasional outdoor celebrations to an all-family
delight is a big leap in ice cream consumptiop. in the country. There has been a shift from
impulsive buying to a coveted brick of ice cream in the 36 household fridge. The COIT'Jrate
sector has also recognized ice cream industry as an avenue for expansion, growth and profitable
business. After liberalization oflndian Economy in 1991, the multinational corporations have
entered this field which itself is a recognition of the potential of this industry. There is a highly
competitive market with the following player composition: !.Organized Sector: 150 players
having ..... 60% market share 2. Non-organized Set;;tor: 2000 players having ... .40 %market
share. h) Size of the India,,_ Ice Cream Market: India's ice cream market, over a period of time
 16

has grown to a remarkable size. In 1996, the Indian Ice cream market was of the size of 216
million litres which could be valued at Rs 1 OOOcrores plus.

INTERNATIONAL TRADE AND MARKET

 The global retail ice cream industry revenue is estimated to reach $74 billion by 2018. Favorable
demographic factors, rising consumer disposable income, and consumer’s awareness toward
frozen dessert mainly drive the demand.
The retail ice cream industry includes retail sales of classic ice creams and frozen novelties.
Classic ice cream includes special ice cream such as low-fat and non-fat, take home, and bulk ice
creams. Frozen novelties include flavored ice, sorbet, and frozen yogurt.
 A total of 52 figures / charts and 12 tables are provided in this report to help in your business
decisions. Sample figures with some insights are shown below. To learn the scope of, benefits,
companies researched and other details of the retail ice cream industry report.

This study provides an overview of the global retail ice cream industry, tracking two market
segments of that industry in four geographic regions. The report studies manufacturing of classic
ice creams and frozen novelties. The report provides a five-year (2007-2012) annual trend
analysis, as well as a forecast, which addresses market opportunities for the next five years
(2013-2018)for each of these regions.

The industry is moderately capital-intensive as large numbers of players are competing with each
other to maintain their place in the market. The classic ice cream segment contributed
approximately 80% in global retail ice cream industry in 2012, whereas Nestle and Unilever, the
two largest players captured one-third of the total market. New product development and
innovation plays an important role as a growth driver for industry. Maintaining price and quality,
brand loyalty, and consumer group retention are the biggest challenges for industry due to the
large number of competitors in the market.
Lucintel research indicates that in the future, innovative flavors in ice cream products with focus
on health improvement will increase the per-household consumption, thus reflecting an increase
in demand. Frozen novelties are forecast to witness strong growth during the next five years.

This comprehensive guide from Lucintel provides readers with valuable information and the
 17

tools needed to successfully drive critical business decisions with a thorough understanding of
the market’s potential. This report will save Lucintel clients hundreds of hours in personal
research time on a global market and it offers significant benefits in expanding business
opportunities throughout the global retail ice cream industry analysis. In a fast-paced ever-
changing world, business leaders need every advantage available to them in a timely manner to
drive change in the market and to stay ahead of their competition. This report provides business
leaders with a keen advantage in this regard by making them aware of emerging trends and
demand requirements on an annual basis.
Some of the features of Growth Opportunities in the Global Retail Ice Cream
Industry report are:
 Retail ice cream industry size estimates in terms of (US $) by regions and by segment
 Global retail ice cream  industry annual  trend (2007-2012) and forecast (2013-2018)
analysis
 Porter’s Five Force analysis
 New product launch and merger and acquisition activity in global retail ice cream 
industry
 Quarterly demand trend (Q1 2011-Q4 2012) and forecast analysis (Q1 2013-Q4 2014) for
global retail ice cream  industry
 Gross and net profit trends in the global retail ice cream  industry analysis
 Cost structure trend in the global as well as regional retail ice cream  analysis
 More than 52 valuable figures/charts and 12 tables are provided in this report

THE CHANGE IN SCENARIO – GROWTH AND DEVELOPMENT

The most significant development in the rapidly changing scenario of ice cream industry has
been the entry of the giant multinational Brooke Bond Lipton India Ltd. ( presently known as
Hindustan Lever Limited after their merger) of the Unilever Group of UK in mid-1993 with their
international brand oflce Cream 'Walls'. The multinational had got first into strategic alliances
with Cadbury's (the muhinational famous for its chocolates and Dollop brand oflce Cream),
Kwality (the first and the largest ice cream company in India then - brand : 'K wality' ) and
Milkfood ( a strong brand of ice cream of Delhi. and North India) between July 1993 and April,
1995. Subsequently Hindustan Lever ha£ gone for acquisition of all these units to make its
 18

umbrella brand 'Kwality-Walls'. Around 1997, Hindustan lever had emerged as the market leader
with 53% of market share. The sales turnover ofLiptons was Rs.120 Crores in 1995 which grew
to the level ofRs200 crores in 1996 and it is expected to touch or surpass the figure of Rs.l 000
crores by the year 2000. Hindustan Lever bas also planned for an investment ofRs.300 crores
during this period. The other noticeable multinational intervention in the ice cream market is of
the megabrand ofU.S.A., i.e. 'Baskin Robbins'. They have also established their exclusive outlets
in Bombay and Ahmedabad and are rolling out to other major cities to fetch the pockets of the
higher income group of ice cream consumers. 'Baskin Robbins' is a very high priced brand and is
looking at the 'Up Market'segment. At the time of their launch of ice cream in Bombay in 194-
95, it was seen that the consumers were queuing to buy a cup of Baskin Robbins ice cream. The
Co-operative sector of Dairy Industry, led by National Dairy Development Board and the strong
and famous Brand of Dairy products 'Amul' has also woken up to encash the potential of the ice
cream market in its favour. The National Dairy Development Board( NDDB) had already
established an ice cream plant at Mother Dairy, Delhi around 1994 and the Mother Dairy has
been marketing their 'Mother Dairy' brand of ice cream very successfully in the metro-city of
Delhi. The Gujarat Co-operative Milk Marketing Federation, through one of its constituents ,
Boroda District Co-operative Milk Producers Union, Boroda had initially established an Ice
Cream Plant at Sugam Dairy, Boroda and has been marketing a successful brand oflce Cream
'Sugam Ice Cream' since the year 1994-95. After entry ofthe multinationals into the Indian ice
cream market which is nothing but an entry into the Dairy industry; which was dominated by the
Co-operative Sector led by National Dairy Development Board for almost three decades with
strong entry barriers of regulatory and legislative nature, the ~peratives have come up with their
brands of ice cream to create further entry barrier and strong competition for the multinationals
who would tend to expand and entrench rapidly since the ice cream business has proved to be
rewarding and profitable. The most significant move of the National Dairy Development Board
and the co-operatives in this direction has been the kunch of' Amul' brand of ice cream in March,
1996 by Gujarat Co-operative Milk Marketing Federation Limited, the apex co-operative dairy
federation ofGujarat having annual sales turnover of around Rs2000 crores from their business of
dairy products and edible oils. The 'Amul' ice cream was first launched in Gujarat in March,
1996 by production of the ice cream at Sugam Dairy, Baroda. Then the product was extended to
Bombay market towards end of 1996 . In 1997, the Amulice Cream has been launched in
 19

Bangalore (the up coming south Indian silicon city ) and the marketing has been further extended
to other parts ofMaharastra, Madhya Pradesh, Rajasthan and Uttar Pradesh. The Gujarat Co-
operative Milk Marketing Federation has also added one new state-ofthe-art imported ice cream
plant at their most modem dairy at Mother Dairy, Gandhinagar to cater to the requirement of the
different expanding markets. They also get some of their requirements manufactured at the ice
cream plant of Mother Dairy, Delhi under the brand name 'Amul'. Because of the existence of
Mother Dairy Ice Cream in Delhi, and as Gujarat Co-operative Milk Marketing Federation and
the Mother Dairy are two associated organizations patronized by National Dairy Development
Board, the 'Amul' brand has not been launched there in order to avoid internal competition
among these two brands. The other State level co-operative milk federations who are associated
with NDDB, are also selling ice cream under their local brand names. Under the changing
scenario, in order to give a strong competition to the big private players like Hindustan Lever
Limited, there is a move to make a strategic alliance of the co-operatives and unify all such
brands under the popular brand nap1e 'Amul'.
CONCLUSION
 All these years, the ice cream was an up-market product and the consumption was more or less
restricted to larger cities and higher income group because of the higher prices of this product.
The entry ofthe Co-operative sector, especially Amul and Mother Dairy Ice Cream, has added a
new dimension to ice cream marketing by expanding the consumer base. They envisage to
transform ice cream into a mass selling product through competitive and lower pricing. In 1996,
when Amul Ice Cream was launched, the other brands like 'Kwality Walls' and 'Vadilal' were
selling a lOOml cup of Ice Cream with Vanilla flavour (the most common and cheapest flavour)
at a consumer price ofRs.9/- to Rs.l2/-. At the same time, 'Amul' launched its ice cream at a
much lower pri\e ie. a lOOml Vanilla Cup. was priced at Rs.6/- to the consumer. Through low
pricin6 the target was not only to win away the existing consumers but also to retch the big
peripheral markets of urban areas which were restrained in ice cream consumption for the high
prices. Thus there has been an attempt by these cooperatives to expand the market and enhance
the consumer base and it has been successful. There is a large potential available in the middle
class segment of the population, which is yet to be fully tapped. The vast population of rural
areas still remain unexplored and untapped. Since the ice cream industry was restricted to the
small scale sector, the investments in the past have not been sizable in terms of total investment
 20

or in terms of individual units. Thus, not much of technical improvement has taken place in
terms of supporting infrastructure such as refrigerated transportation, storage and supply chain.
The technology which has been used is old and in the changing scenario it would require
upgradation. Going by the gap of per capita consumption oflce Cream in India compared to the
other countries, which has been mentioned in the foregoing paragraphs here, the ice cream
industry is poised for an unprecedented growth. The role of Distribution Management for
achieving and sustaining the growth is going to be very critical.