Tuesday, 25 April 2017

Ice Cream Industry

       Global ice cream market is worth USD 54.6 Billion. Market grew at CAGR of 3.49% since 2011 and reached USD 54.6 billion by 2016. Expected to grow further to reach USD 89 billion by 2022. It reached volume of 19.7 Million Metric Tons in 2016. Uniliver dominates the global market with 8 of the 15 top selling brands and a 22% share followed by Nestle with 18% market share. Nestle is the closest corporate rival of Unilever with 4 brands in the top 15. The sales of low-quality ice cream have been declining due to the increased preference for premium ice cream. Population growth, increasing disposable incomes, innovative flavors with added nutrients, increasing popularity as an addition to other foods and beverages such as milk shakes, smoothies, brownies, etc., are some of the key factors that are currently driving the growth of the global ice cream market.
       Europe dominated the market with more than 40% share. China and Brazil together accounts 2/5th of the global ice cream sales.Major trend is the growth of organic ice cream and Low Fat. It is supported by various technological advancements in the field of cold chain infrastructure, refrigerated transport systems, storage facilities and equipment. Magnum is the most popular brand worldwide followed by Haagen-Dazs, Cornetto and Ben & Jerry’s. 
        Europe dominates the market with more than 40% share.New Zealand has highest per capita ice cream consumption of 28.4 liters. China and Brazil together accounts 2/5th of the global ice cream sales. Growth of organic ice cream and Low Fat supported by various technological advancements in the field of cold chain infrastructure, refrigerated transport systems, storage facilities and equipment. Emergence of private label brands has reduced the price of Ice cream( e.g- Kroger ).The market can be segmented into impulsive, take-home, and artisanal ice cream. The impulse segment dominated with market share of 39%.
        Indian ice cream industry was valued USD 0.9 Billion in 2014 expected to reach $1.7bln by 2018. It is a promising category projected to grow at a CAGR of 17% or even more. It is a promising category projected to grow at a CAGR of 17% or even more. Ice cream segment accounts for just 1% of the total dairy products market in India. Market in India grew at a moderate pace over the past few years, on account of increasing number of international ice cream brands entering the Indian market, improving cold storage facilities, coupled with changing consumer taste. Moreover, India is the largest producer of milk, as the country accounts for over 1/5th of global milk production, thereby offering ice cream market in the country with large volume of raw material for manufacturing of ice creams. Ice cream in India is mostly consumed in cups, bars, bricks and tubs. Bricks and tubs are popular for occasions like marriages and gathering while sticks and cones are popular otherwise ,as these products offer portioned packaging and have wide variety of flavors.
         Amul is the market leader in organized category having 18% share followed by HUL. Including HUL it covers almost 1/3rd of the organised market. Domestic market is dominated by impulse category of ice creams owing to growing demand for premium ice creams and changing consumer taste. Vadilal has the largest range of ice creams in the country with 150 plus flavors, sold in a variety of more than 300 packs and forms. Chocolate, Vanilla, Strawberry ,Mango are most popular flavors i n India. Major companies offer same flavor throughout the countries. However recently companies are developing flavors to target specific regions ( e.g-Mother Dairy’s Nolen Gur Flavor for Bengali community) Gourmet flavors are gaining in popularity and are the triggers for brands seeking premium positioning..
        Western region has highest 35% share in domestic market ;Gujurat alone contributes 12% of countries ‘sales. Gujarat stands number one consumer accounts for more than 12% of countries ‘ sales. Gujurat and Delhi together contribute approx. 30% of sales in this category. Northern and western India are the highest consumption centres accounting for close to 70 % of the market. UP, Delhi (NCR), Uttarakhand, Punjab and Haryana are some of the best markets for ice cream. North India due to hot climate during summers leads the turnovers during this period. Increasing number of metropolitan cities in South India, increasing young crowd in cities like Chennai, Hyderabad and Bangalore, is adding to its growth. Increasing presence of international brands driving consumption in metros and mini-metros.
        Per capita consumption of Indian consumers has double in the last 4 years from 200ML to 400ML.and is expected to reach 1L in the next 5 years. This growth will bring huge opportunities to the entire allied sectors which include processing and packaging machinery manufacturers, packaging materials, ingredients and raw material suppliers and cold chain solution providers. GDP per capita of India is increased from USD1390 in 2010 to 1580 in 2015, which is positively impacting the ice cream market in India. Increasing incomes, a burgeoning middle class, contributes in making ice-cream more affordable and acceptable among Indian masses. Monthly spending on ice cream by household is below potential. Rural consumer spend 0.12% on ice cream out of spending on total milk and milk products while urban household spend just 0.85% on ice cream out of spending on total milk and milk products
          Overall world Export of ice cream in 2016 was 3.3bln USD, India accounted 0.08% of the total exports(2.9 Million USD ). USA has been the key destination for ice cream exports. Apart from the huge Indian population in the US, it is the popular destination to acquire a large number of customers from other countries. Total Indian import of ice cream was 4 Million USD which is only 0.12% of the world import in this category. Thailand is the key sourcing destination for India . It is mainly due to reduced tariff rates that applies because of educed as ASEAN-India (AIFTA) free trade agreement.
          Ice cream industry is the biggest victim of bad infrastructure of road and power supply. Due to this, rural India where power comes just for few hours in a day and where more than 50% of the country’s population resides is not able to store ice cream .This industry is short of cold chain by about 50%. Also, No. of household possessing refrigerator per 1000 household is very low;658 for urban and 252 for rural. This is another hurdle. Increasing dairy costs are ramping up transaction costs for traditional ice-cream players which are in turn pushing up prices at the consumer end. Due to rising prices of raw material many companies are switching to cheaper substitute which can be an issue as government has imposed strict restrictions on composition of the raw material of the ice cream. Lastly, Unorganized sector is much bigger than organized sector. Therefore ,Companies entering this market have to deal with unorganized sector which is hard to track

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