Ice Cream Industry - Case Study Example

Running head: Ice cream industry in U.S. Analysis of the U.S. ice cream industry Ice cream industry is one of the prominent industries in U.S. because of the immense popularity ice creams have in US society. Apart from children, even old generation also very much interested in tasting ice creams. This paper briefly explains the ice cream industry in US in general and external environment, market segment and competition in ice cream industry, in particular. Introduction Ice cream is one of the most favourite food items for the American people. Ice creams are favourite dishes on celebrations like birth day parties, wedding parties and even as a leisure time food. Lovers often make use of ice creams to convey their love towards opposite sex. Ice creams are one of the oldest traditional well-known frozen dairy desserts. “Nearly nine in 10 adults (89%) report eating ice cream, followed by 59% of adults who say they eat frozen novelties. Among children, the preference for ice cream is even stronger, around 98%. (Sweet Success, p.56) U.S. organic ice cream launches nearly doubled from 2005 to 2007. (Phillips) American people cannot imagine of a world without ice creams and hence ice cream industry is one of the ever growing industries in America. Even though the current economic crisis has forced the American public to cut down their expenses on unnecessary spending, their spending on ice creams has not been affected much. Ice cream industry and product sectors 589 new ice cream and frozen dessert products were launched between January and September of this year. Thats just 10 more than were introduced in 2003 but about half as many as in 2006. (Sweet Success, p.60)..Lots of products are labeled under ice cream industry though in true sense they may be something else. “Some have their own separate product categories like frozen yogurt or sorbet, or ice cream novelties. Other newer products are marketed like ice cream, and basically are made with ice cream, but are so filled with inclusions that they fall out of the standards. Then there are things like ice cream cakes and other desserts that combine ice cream and baked treats.” (Frozen Desserts A Growing Sub-segment, p.42) Ice cream industry has a reasonable size in American market. The frozen dessert has reported around $158 million in sales for the 52 weeks ended July 13,( $3.6% over the prior year) Around 12.5 million units of ice creams were sold during the above period. Annual sales of the overall ice cream and sherbet category, reached about $4.5 billion for the 52 weeks ended July 13, while about 1.3 billion units were sold during that same period. (Frozen Desserts A Growing Sub-segment, p.42) Reporting Period 13 weeks ended Dollar sales (millions) % change vs yago Unit sales (Millions) % change vs yago 6/29/08 44.9 1.81 3.4 -2.95 3/30/08 36.7 5.64 2.9 3.63 12/30/07 34.5 1.78 2.9 0.96 9/30/07 41.9 5.41 3.3 8.25 7/01/07 44.2 7.37 3.5 11.69 4/01/07 34.7 7.57 2.9 13.58 Source: Information Resources Inc. (Frozen Desserts A Growing Sub-segment, p.42) External Environment Economical environment always affect ice cream industry. The current recession has adversely affected the ice cream industry. People will cut their unnecessary spending in order to overcome the financial crisis. Social and cultural factors also can affect ice cream industry. Some communities may be interested more in sweetly food items while some others may not have that much interest in sweets or ice creams. “One way many frozen dessert manufacturers are dealing with their own economic challenges is to downsize packaging without lowering product costs” (Berry, p.30) Competition “The US ice cream market is fragmented, dominated by three large and well known companies, namely Unilever, Nestle and Blue Bell Creameries” (Datamonitor, p.17) Blue Bell Creameries (Blue Bell) mostly engaged in the manufacture of normal ice creams, frozen yogurt, frozen treats and sherbet. Their ice cream is branded as Blue Bell itself. It is controlled by Kruse family with 20 branches across America. They mainly concentrate on southwestern states such as Alabama, Arizona, Arkansas, Florida, Georgia, Indiana, Kansas, Kentucky, Louisiana, Mississippi, Missouri, New Mexico, North Carolina, Oklahoma, South Carolina, Tennessee and Texas. (Datamonitor, p.18) Nestle is another company which is engaged in ice cream industry in America. Nestle is an international business giant which have business interest in other areas such as coffee, branded food beverages etc apart from ice cream. Slow Churned Dreyers Grand Light, Sveltesse stick, Haagen Dazs, and Legend Real Dairy are some of the ice creams branded under Nestle. Unilever is the third market leader in ice cream industry in America. They are the global leaders in consumer goods in the food, personal and homecare segments. Their ice cream and beverages segment markets ice cream under the international Heart brand including: Cornetto, Magnum, Carte dOr and Solero; and also Ben & Jerrys, Breyers, Klondike and Popsicle. The groups frozen foods brands include Iglo, Birds Eye and Findus. (Datamonitor, p.23) Market Segments The take-home ice cream segment was the markets most lucrative in 2008, generating total revenues of $6.6 billion, equivalent to 67.2% of the markets overall value. (Datamonitor, p.8) Most of the ice cream consumers like to have some ice creams in their house always and hence most of the American people were interested in take –home ice creams especially in the hot season. Consumers of ice creams in America can be classified into three different groups based on the purpose for which they use ice creams. Most of the children of course use ice creams because of its attractive flavour and taste. But some other people use ice creams in order to maintain their health requirements. “For the past several years, lower-calorie “churned” formulations and 100-calorie packs have been the biggest stories in better-for-you ice cream.” (Faron &Berry, p.34) On the other hand some other people may be interested in alcoholic ice creams rather than the normal ones. Potential consumer markets of ice cream in US Segment name Profile Children Not much concerned with the side effects or the calories involved, giving priority only to the taste and decorations, different flavors always welcomed People who are looking for health and wellness Giving priority to the ingredients or calories involved. Not much concerned about the flavors or decorations. Concerned with controlled calories/fat/sugar and convenience. People who are looking for alcoholic ice cream Giving priority to the alcoholic influence rather than the taste. Not much concerned about the flavors or decorations. They use it as a substitute for alcohol. Conclusions Ice cream industry in America has a bright future since there is no reason to believe that the food habits of American people may change drastically in near future. The introduction of new varieties like alcoholic ice creams and calorie controlled ice creams has helped the manufacturers to sustain their customers. American ice cream industry is mainly controlled by Unilever, Nestle and Blue Bell. References 1. Frozen Desserts A Growing Sub-segment, Dairy Foods, September, 2008, 2. Sweet Success, Dairy Foods, November, 2008, 3. Datamonitor, Ice Cream in the United States, November 2008 4. Phillips David, Ice Cream Outlook, March 1, 2008 5. Faron Krista & Berry Donna, A Look Back at Last Year . . . and a Glimpse into 2009, Dairy Foods, March 2009 6. Berry Donna, ICE CREAM OUTLOOK, A recession proof treat, Dairy Foods, March 2009 Read More