INDUSTRY ANALYSIS REPORT

WITH REFERENCE
TO
ICE CREAM INDUSTRY

Submitted by:

E. Pramod Kumar

(08571E0004)

Submitted to:

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

SVITS School of Management

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Content

SNo Title Page 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 11

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

8 Conclusion 18

9 Reference 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

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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 life cycle analysis:(Product life cycle 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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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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(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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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
internal and external factors that are favorable and unfavorable to achieving that
objective. The technique is credited to Albert Humphrey, who led a convention 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 planning technique that incorporates an objective-driven SWOT analysis is
Strategic Creative Analysis (SCAN). Strategic Planning, including SWOT and 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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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) and Hill and Westbrook (1997)
have shown that SWOT may harm performance. As an alternative to SWOT, J. Scott
Armstrong describes a 5-step approach alternative that leads to better corporate
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, and individuals. SWOT analysis may also be used in pre-crisis planning and
preventive crisis management. SWOT analysis may also be used in creating a
recommendation during a viability 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 Weaknesses Opportunities Threats

Reputation in Shortage of Well established Large consultancies
marketplace consultants at position with a well operating at a minor
operating level defined market level
rather than partner niche.
level
Expertise at partner 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 Profile:

The ice cream industry in India is in many ways, reflective of the overall
population distribution. The country’s population is primarily rural with approximately
65% of the population living in villages with a population of less than 5,000; this means
there are well over 150,000 villages with a combined population in excess of 650
million. This has contributed to a highly fragmented industry that by many estimates
has over 70,000 ice cream entities. Many of these are single family 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 concentrated in the hands of a few international and 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,
such as milk and cream, and often combined with fruits or other ingredients and
flavours. Most varieties contain sugar, although some are made with other sweeteners.
In some cases, artificial flavourings and colorings are used in addition to (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 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, rice milk, and goat milk are

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available for those who are lactose intolerant or have an allergy to dairy 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. 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 water and
vermicelli which was served to royalty during summers. The ice was mixed with saffron,
fruits, and various other flavours. The treat, widely made in Iran today, is called
"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 water and lemons, before serving.

Industry Competition:

As the industry evaluation would indicate the competition is 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.

Historically MNC’s have not achieved much success in penetrating the Indian

market. There are a number of possible explanations for this; the relative 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 media. Most of these 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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Industry Growth:

The three factors of growth, population, per capital consumption, and price are all

projected to increase 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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year. (Overall the long-term projection for consumer prices is 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.) Overall the market will grow from $245 million to $360 million, a compound

growth rate of 8%. Of the $115 million in growth, 60% will come from increased per capita

consumption, 24% from increased population, and 16% from increase in price.

Top Ice Cream Industries List:

 Vadilal Ice Cream India

 Amul Ice Cream
 Kwality Walls
 Mother Diary
 Ben & Jerry
 MTR

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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 and outside the organization. In India, the name Vadilal is synonymous with Ice
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
flavors, in a variety of more than 250 packs and forms. The range includes cones,
candies, bars, ice-lollies, small cups, big cups, family packs, and economy 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 of people flock to these parlors daily because they know that our products
contain the purest and creamiest milk, and the freshest and tastiest fruits and nuts.

Among our products are OneUp Chocobar and King Cone – all-time favorites
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 importance. Hence our refrigeration equipment and deep freezes are
imported from companies, which are world leaders in their respective fields. To ensure
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sufficient, timely and constant ice cream supply, we have a Cold Chain Network
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
2008-09). Today Amul is a symbol of many things. Of high-quality products sold at
reasonable prices. Of the genesis of a vast co-operative network. Of the triumph of
indigenous technology. Of the marketing savvy of a farmers' organisation. 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 collaboration between global brand Walls and the leading Indian ice-cream brand
Kwality. Though the two giants eventually parted ways, the collaboration made Kwality a

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household name and created deep in roads for the brand in the consumer market.
Today, Kwality is not just a brand – it is the ice-cream associated with the 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 Dairy Fruit and Vegetable Pvt. Ltd. offers the following products: Mother
Dairy markets dairy products like Liquid Milk, Ice Creams, Flavoured Milk, Dahi, Lassi,
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 level, through its sales and distribution networks, for marketing food 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
cooperatives. Mother Dairy sources fruits and vegetables from farmers / growers
associations. Mother Dairy also contributes to the cause of oilseeds grower cooperatives
that manufacture/ pack the Dhara range of edible oils by undertaking to nationally
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 from the producers is handled at the Company’s modern distribution

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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 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 2003, Ben & Jerry's have been working on a sustainable Caring 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
variety of efficiency measures, this target was achieved with 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 addition to helping farmers and their cows, in 2001 Ben & Jerry's 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, improve worker's benefits, and sustain a commitment to their land and
communities. In 2006, the world's first ever vanilla ice cream made with Fairtrade
ingredients was launched by Ben & Jerry's. 2007 saw the release of Vanilla Toffee
Crunch, using 100% Fairtrade certified cocoa, sugar, and vanilla, and in 2008, Chunky
Monkey was guaranteed to be traded in accordance with international Fairtrade
standards as well.

MTR Pvt Ltd:

MTR Foods Private Limited is amongst the top five processed food manufacturers
in India. We manufacture, market and export a wide range of packaged foods to 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 meal solutions'. Our wide range of products include ready-to-eat

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curries and rice, ready-to-cook gravies, frozen foods, ice cream, instant 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
count on us to bring them all-natural, wholesome and delicious food that is also
convenient and no-fuss.

SWOT Analysis of Ice Cream Industry:

Strengths:

1) They are available in reasonable prices.

2) Known for product quality.
3) Strong presence of parent company in India.
4) The Brands almost generic to their product category
5) Wide variety of unique ice cream flavors.

Weakness:

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

2) it melts very soon
3) The industry has a complex supply chain management and the main issue is
traceability
4) Domestic business as well as many international markets are thriving

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Opportunities:

1) They can come up with new flavors

2) They should focus more on their advertising and marketing strategies
3) They should come up with offers for purchase of ice-cream in whole market
4) Efforts to exploit export potential are already on

Threats:

1) Currently, the threat of new viable competitors

2) Foreign players entering the market
3) Consumer buying power also represents a key threat in the industry
4) Consumers can easily switch to other substitutes with little cost or consequence

Market Share of Ice Cream Industry:

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Conclusion:

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

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 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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1) Prasanna Chandra : Investment analysis & portfolio management, 2nd
Edition
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.moneycontrol.com
5) www.indiainbusiness.nic.in
6) www.google.co.in

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