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ANALYSIS OF THE ICE

CREAM INDUSTRY

Team B:
Elizabeth Gardner,
Vandy Figueroa,
Emily Garcia,
Bradley Kamdem-Fewo
Jennifer Kim,
Alyssa Franco,
& Korin Koerwitz

RESOURCES &
TECHNOLOGY
Ice cream has been around since the second century B.C. and has
evolved from honey and nectar flavored snow into a smooth blend
of cream, milk, sugar, and various other ingredients (IDFA 2014).
The majority of firms today use guar gum to limit ice crystal
growth in the product and promote a soft and creamy texture.
Alternatives include cellulose gum or tara gum (Gum Technology
2009).

Ice cream firms require state-of-the-art equipment and high-tech


machinery for pasteurization/homogenization, churning and
mixing, freezing and whipping, packaging, hardening, and storage.
These firms have heavy duty batch freezers that are regulated at
10 degrees Fahrenheit or lower.

http://cdn.bluebell.com/the_little_creamery/o
ur_history.html

BREYERS
Breyers began in 1866 Philadelphia as an entrepreneurship.
William A. Breyer hand-cranked homemade ice cream made
from rich cream, pure cane sugar, fruit, nuts, and various other
ingredients.

Breyer opened his first retail ice cream shop in 1882. This is an
example of a SOLE PROPRIETORSHIP, meaning Breyer was the
sole owner who had great decision making power, but limited
ability to raise funds and unlimited liability.

Goes to show
how a thriving
business can
evolve from a
corner ice cream
shop to a
successful
corporation

His son, Henry Breyer incorporated the business in 1908.


By 1926 Breyers Ice Cream Company became a division of the
National Dairy Products Corporation.
As a CORPORATION, Breyers was able to outlive the founder,
William A. Breyer, as a collective mass of stockholders who have
limited liability and ability to raise money.

William A. Breyer

BLUE BELL
Blue Bell Creameries began in Brenham, Texas in 1907
when Washington Country dairy farmers converted a
cotton gin into a creamery.
By 1992 Blue Bell was the number-two ice cream firm,
behind Breyers.
Today, it is still among the largest ice cream firms in
America. It is a LIMITED PARTERSHIP with headquarters in
Brenham, Texas. Easy to organize, it operates on team
production and specialization of labor. Partnerships have
complicated decision making and unlimited liability.

http://i995fm.com

E. F. Kruse,
general manager
in 1919, is
credited with
reversing the
creamery's
declining fortunes
after business
failed to expand.

http://benekeith.com

HAGEN DAZS
It all began in the 1920s when Reuben Mattus peddled ice
cream pops along the New York streets in a horse drawn
carriage to help the family ice cream business.
As he got older Reuben had a new vision for ice cream so
Reuben and his wife Rose began a new brand named
Hagen Dazs.
Hagen Dazs opened its first retail store in Brooklyn, New
York on November 15, 1976.
Reuben remained SOLE PROPRIETOR until 1983 when he
sold the company to the Pillsbury Company, now part of
the General Mills CORPORATION.

Reuben Mattus,
founder of
Hagen Dazs

BEN & JERRYS


Ben & Jerry's began as a PARTNETSHIP in the 1970's.
They had known each other since childhood and moved to
Vermont with the idea to start a business. This brand of
firm organization relies on team production with unlimited
liability and complex decision-making.

They borrowed $4,000 but used $12,000 in investment


and opened an ice cream shop in a renovated gas station.
The first 3 years they did not make profit until they
discovered that if they gave half an ounce less of ice
cream they would make profit.
As of August 3, 200 Ben & Jerry's became a wholly owned
subsidiary of Unilever. Ben and Jerry currently own 42% of
voting stock.

BEN Cohen
& JERRY
Greenfield
met during
7 th grade
gym. They
were the
two slowest,
fattest kids
in class
(theindepen
dent.co.uk).

Hagen Dazs

TECHNOLOGY

-The most used methods of technological advancement by the


company are the online MARKETING and digital MEDIA.(Roviralta 6) Hagen
Dazs is very active in the field of marketing which increases their popularity and
has showed to produce good results. In the SHORT RUN this is positive because
Hagen Dazs has been dominating the marketing market but they also need to
able to look LONG RUN and make sure that their marketing skills are always up
to speed with competitors.

Ben & Jerry


-This company has focused the most of its technological effort on
finding ways to keep the ice cream in good conditions when it is travelling on
trucks or just when it is conserved. Because the company has been accused of
not being so GREEN, especially when they are conserving or transporting ice
cream, they came up with a new technology which is a thermo-acoustic CHILLER.
This chiller will keep the ice cream cool using sound waves (Ken Brown). This
cooler will obviously use a lot less technology and help the image of Ben & Jerry
has a company that is more eco-friendly. This is another method of marketing
that is used by them because they dont want people to find a reason to not buy
their products and be able to get to has many clients as possible.

TECHNOLOGY

C O N T.

Blue Bell
-Blue Bell has also tried to improve the transportation of the products
but not like Ben & Jerry did. Blue Bell has tried to make the transportation more
efficient by updating programs and methods. According to TRM, Blue Bell has
668 delivery routes with 1534 vehicles. With the new programs they have
installed they are able to have maintenance on the vehicles and have data that is
stored for every single trip so they can find areas of improvement. This is
obviously very helpful for them because they are able to find areas that are
maybe making them waste money and they can save that money.

Breyer
-This ice cream company has made improvements in the technological
side of making ice cream. The machines they use have improved a lot and have
become a lot more efficient. They now use machines that work better faster and
that use less energy. Thanks to the machines Breyer is able to use less energy
and produce more ice cream which obviously reduces the cost.

PRODUCTION PROCESS/ RESOURCES


Hagen Dazs
Hagen Dazs has a very special way of producing ice cream and making sure that the customers
enjoy it. This company asks customers for new flavors for packaging options and for new ideas
concerning the ice cream. (Roviralta 11) Each place in the world where the ice cream is sold there are
dif ferent types of ice cream available because of the demand of the clients. This is a smart tactic,
because they are able to maximize the selling of ice cream since they adapt to the customers.
Ben & Jerr y
This company has a very unique way of production. According to the Ben & Jerry of ficial website
They have companies across the country that they get their milk from and they only get the milk from
those farms. The milk is then turned into cream and transported across the country. When it arrives at
the factory it is conserved and then turned into ice cream. This guarantees the customers quality
products because they know where the milk comes from, and all the milk is guaranteed to be top
quality.
Blue Bell
Blue bell has used technology a lot in the production process. They have found sof tware and
programs that make labor a lot easier and a lot more ef ficient. Programs like Maximo 5.2 have saved
around 15000 man hours in a year (TRM). This is an huge number and it allows the production process
to be a lot quicker and to also be a lot cheaper for the company.

Breyers
This company has a reputation of using a small amount of all natural ingredients in the ice cream.
This benefits the company because it allows them to cut a lot of the cost. The only problem is that many
customers have been unhappy about the ice cream because they said it could not even be called ice
cream anymore since there was not enough natural ingredients in it. This has been an issue in
production for Breyers because many customer have stopped buying their products due to that problem.

THE FLAVORS

COMPETITION
Hagen Dazs stresses it is made like no other.
Blue Bell says it is the best ice cream in the country.
In a monopolistic competition market firms need to aggressively
advertise their products to appeal to a mass of ice cream -loving
consumers. They hire actors to endorse their products. They
produce expensive commercials. They also have sales. All these
promote market share enhancing.

www.thecouponhigh.net

GEOGRAPHIC LOCATION

Blue Bell
Anyone in the United States
can order any flavor online and
have it shipped to their house
in the U.S.
It is also available throughout
the states of Texas, Louisiana,
Mississippi, Alabama, Arizona,
Arkansas, Florida, Georgia,
South Carolina, Tennessee
Available in some parts of New
Mexico, Oklahoma, Kansas,
Missouri, Kentucky, Indiana,
North Carolina, Virginia,
Colorado and Wyoming.

Hagen Dazs
H a g en D a z s
In North and South America
Aruba, Brazil, Cayman Islands, Costa Rice,
Dominican, Republic, Jamaica, Mexico,
Panama, Puerto Rico, St. Martin, Trinidad.

In Europe:
Austria Belgium, Canary Islands, Cyprus,
Czech Republic, France, Germany, Greece,
Holland, Hungary, Luxembourg, Monaco,
Poland, Portugal, Republic of Ireland,
Romania, Spain, Turkey, United Kingdom.

In Asia:
China, Guam, Hong Kong, India, Indonesia,
Macau, Malaysia, Philippines, Singapore,
Korea, Taiwan, Thailand.

In Africa:
Morocco, South Africa.

Middle East:
Egypt, Kuwait, Lebanon, Qatar, Saudi
Arabia, United Arab Emirates.

You can order them and have them


shipped to the U.S. and the U.K .

Faloodeh: Persian frozen dessert made with thin


vermicelli noodles frozen with corn starch, rose
water and lime juice. Popular in Iran .

GEOGRAPHIC LOCATION

Ben & Jerrys


You can order Ben & Jerrys
and have it shipped to any
state in the U.S.
You can also go to a shop or
get it at a store in the
following:
Aruba, Australia, Austria,
Canada, Czech Republic,
Denmark, Finland, France,
Germany, Greece, Ireland,
Israel, Italy, Japan, Mexico,
Netherland, Netherlands,
Antilles, Norway, Portugal,
Puerto Rico, Singapore,
Spain, Sweden, and United
Kingdom.
http://www.travelchannel.com

Breyers
Any state in the United
States and Puerto Rico
*Ice cream is popular ALL OVER THE WORLD.
Check out this Japanese Mochi ice cream, made from
sticky rice balls pounded into soft, marshmallow-like
texture and fused with flavors such as green tea or red
bean!

COST MINIMIZING STRATEGIES


BLUE BELL
Some competitors have slimmed
down the size of their ice cream
containers to maintain profit
margins, Blue Bell asserts that its ice
cream will retain its true half-gallon
size. And to keep its customers
coming back for favorite flavors while
trying new ones each year, the
creamery boasts an active product
development group that churns out
new flavors, such as its Rocky
Mountain Road. Blue Bell in 2014
began distributing ice cream in the
Las Vegas area. The Blue Bell
company keeps their cost
minimization by constantly
researching other companies to keep
current and competitive. In the short
run these investments might increase
the cost by a lot, but in the long run
it will reduce the cost and help
increase the sales by a lot.

BREYERS
Due to increasing costs, Breyer s
needed to find a way to cut down.
The company developed a frozen
yogur t and also cut down on a lot
of natural ingredients. This way,
Breyer s saved on money without
sacrificing the great taste.
Most of their customers dont really
realize that they are eating frozen
yogurt rather than ice cream, but
Breyers has lost a lot of other
customers who complained about
the cut back in all natural
ingredients.
This goes to show how maximizing
profit for the short run can hurt a
company in the long run (due to
losing customers).

COST MINIMIZING STRATEGIES


Hagen Dazs
To cover the costs of shipping the products from the US to the UK and the
establishment of the high street shop network, the product was launched
in the UK at a price significantly above the US price
By implementing the value chain described above, Hagen Dazs
ignited the super-premium ice cream sector in the UK, accessed a new
and much higher price
Industry average costs of goods sold typically accounted for 62% of sales,
with some variation expected for different strategies. Unilever, for example,
typically had advertising spend of up to twice the industry average.
Haagen Dazs uses the valued-based price strategy and the new high end
approach for selling ice cream to the general public. (Roviralta 13) To
maximize their profit, the company relies on their relationship with their
customers and strives on building a strong bond with the client to get
better sells. They also try to use promotions and discounts In the short run
this can be a little expensive for Hagen Dazs because of all the
promotions and discounts, but in the long run they should get even more
money back from all the customers appreciation of the product and of the
brand.

COST MINIMIZING STRATEGIES


BEN & JERRYS

In monopolistic
competition the
quantity of output that
achieves the greatest
difference of total
revenue over total cost
is profit maximization

Ben & Jerry did not make any money the first 3 years. After a while, they came to
the realization that they were over-scooping. If you over-scoop by half an ounce,
your profit is gone. They corrected the problem (Greenstreet 20).
Ben & Jerrys is an innovative leader in the super premium ice cream industry.
The company blends a commitment to provide all natural, high quality ice cream
with a commitment towards social activism and environmental responsibility.
This company has put more of their focus on the saving money on production.
Thanks to technological advancements they have been able to reduce the cost of
production and have less ingredients wasted. According to Infinity QS they have
implemented a new program called Infinity QS Proficient which has helped the
company with identifying places that were not running efficiently enough and to
reduce the waste by a lot. This is an investment that will help the company in the
long run and in the short run since it allows them to maximize the usage of all the
ingredients they use to make ice cream.
They are constantly changing and adjusting prices to be competitive with
other premium ice cream corporations.
It requires research and spying
But of course people hire people to do that!
http://www.amosweb.com/images/MsMc40c.gif

REVENUE & PROFIT


Revenue

Profit

# of Employees

Blue Bell
(6/16/14)

$500,000,000
($500 million)

$300,000,000
($300 million)

2,800

Breyers
(2014)

$11,000,000,000
($11 billion)

$8,000,000,000
($8 billion)

15,000
(US and Puerto
Rico)

Hagen Dazs

$700,000,000
($700 million)

$450,000,000
($450 million)

350,000
(worldwide)

Ben & Jerrys


(3/20/2014)

$132,000,000
($132 million)

$100,000,000
($100 million)

446 (according to
statistica.com)

Revenue is the total amount of money a company receives during a


given period. It is calculated by price multiplied by units sold.
Profit is how much money the company actually made. This is
calculated by subtracting total costs from the revenue. (P = R TC)

The total U.S. market size for the Ice Cream & Frozen Dessert
Manufacturing industry

Market Size ($ Billions)

Revenue Per Firm ($ Millions)

*Overview of
the general
frozen
dessert
market

2008 2009 2010 2011 2012 2013

2008 2009 2010 2011 2012 2013

http://www.anythingresearch.com/industry/IceCream-Frozen-DessertManufacturing.htm#currentstate

http://www.bluebell.com/IceCreamFlavor
?fid=12

MARKET STRUCTURE
The Ice Cream Industry is similar to a MONOPOLISTIC
COMPETITIVE market:
There are many firms who compete with each other.
Ice cream products are similar, but not identical.
For example, Hagen Dazs produces indulgent and
decadent blends like white chocolate raspberry truffle,
while Blue Bell Creameries specializes in home -style
flavors such as Peaches & Homemade Vanilla. Even
though all firms produce a vanilla flavor, every recipe is
slightly altered to produce a unique and differentiated
flavor.

http://www.haagendazs.us/P
roducts/Product/2479

ADVANTAGES

Market ENTRY AND EXIT in a monopolistic competitive market


is accessible. This is due to low entry and exit barriers.
Ex: If an ice cream firm is making positive profits in the short run,
other firms are able to enter the monopolistic competitive market
and compete as well.

An Ice cream firm is able to be a PRICE MAKER instead of a


price-taker, since the products are dif ferentiated.
Ice cream firms become INNOVATIVE in order to create
dif ferentiated products which is good for the consumer.
Ex. Ice cream firms are constantly experimenting with new flavors
and techniques to appeal to consumers.

DISADVANTAGES
Ice cream firms face competition from other ice cream firms
in the industry and may need to go to great lengths to
aggressively ADVERTISE their product.
Markets that are monopolistically competitive are
productively INEFFICIENT because price lies on the downward sloping portion of the average cost curve.

http://johnmichaelsgoodeats.com

http://stylefrizz.com

Elasticity of Demand

At $5/quart, the
quantity
demanded is 6
quarts,
represented by
point A on the
chart. If the price
were to increase
to $10/quart, the
quantity
d e m a n d e d b y yo u
would decrease to
1 quart (point B).
If the price
decreases to
$2/quart, the
quantity
d e ma n d e d b y yo u
would be 9 quarts
(point C).

Shift in Demand Graph

Ice cream is considered relatively elastic, since a change in one


variable (such as weather) can dramatically change another
variable (such as quantity demanded). 1 < E <

If it were an
extremely hot
s u m m e r, yo u
would most likely
consume more ice
cream, even if the
price remained at
$5/quart. This
w o u l d c a u s e yo u r
demand curve to
shift out,
represented by
line D.
The increase in
temperature
shifted demand
outward, resulting
in an increase in
quantity demanded
at all price points
relative to the
quantity demanded
d u r i n g a t yp i c a l
s u m m e r.
A t $ 5 / q u a r t , yo u
would consume 8
quarts (point B) as
opposed to 6
(point A), creating
an outward shift
in demand.

CIRCULAR FLOW MODEL

The households
buy the products
from the firms
(ice cream). This
is how the firms
make revenue.
They then pump
it into the factor
markets by
hiring employees
to work at their
factories.
The households
supply the labor,
and the firms (as
employers) pay
them. Then
households use
the money they
earn to buy the
product (ice
cream).

Production Possibilities Frontier


An Ice Cream Firm PPF Model displaying vanilla flavored ice cream
production and chocolate flavored ice cream production

CHOCOLATE
ICE CREAM
inefficient

efficient
impossible

VANILLA ICE
CREAM

Opportunity cost accounts for the next-best


forgone alternative.

The PPF model


line shows the
tradeoffs of
producing
dif ferent
products.
Because the
production of
chocolate and
vanilla are
s i m i l a r, t h e l i n e
is constant
instead of bowed
out. This is
because there is
low opportunity
cost, since
vanilla and
chocolate cost
the same (about
$4.00 for 1.5
quarts).
The blue line
shift implies
firms growth.
For this company
to remain
suf ficient, the
points of
production
should fall along
the line. Beyond
the line is
impossible. Under
the line is
inef ficient.

DEMAND & SUPPLY


New equilibrium
Old equilibrium

Quantity
demanded is
what consumers
want. Quantity
supplied
accounts for the
amount of
product firms
can provide.
Ice cream is a
normal good.

Law of demand: As price increases,


demand decreases
Law of supply: supply increases as price
increases

SUPPLY & DEMAND

C O N T.
Compliments:
Ice cream cones,
whipped cream,
chocolate syrup,
and caramel are
all compliments
to the ice cream
market. When
the price of ice
cream
decreases,
quantity
demanded of
these products
increase.

CPEoD = (% Change in
Quantity Demand for Good
X)/(% Change in Price for
Good Y)

Cross elasticity between ice cream and


caramel would be positive, since they are
compliments.
Cross elasticity between ice cream and pie
would be negative, since they are
substitutes.

http://www.biz-development.com

Substitutes:
Pies and cakes
are alternatives
to ice cream.
The demand for
pie increases
during the
winter months
as the demand
for ice cream
decreases.

In Conclusion
Blue Bell, Breyers, Hagen Dazs, and Ben & Jerrys are successful
franchises that bring unique, differentiated products to the market.
Ben & Jerrys products are bursting with giant chunks of just about
anything you can think of and continues to invent the most
outrageous original concoctions with the cleverest names. Hagen
Dazs promises the richest, most decadent blends of sweet
indulgence. Blue Bell produces good ol homemade ice cream that
appeals to nature of the American spirit. Breyers provides a wide
array of flavors and and is forever reliable.
They have different techniques, different tastes, different styles, and
different stories. That is the beauty of the market. There is room for
new companies to enter, innovate, grow, expand, and cater to the
customer.
Any firm has the chance to rise from anonymity to marketability and
become the cream of the crop.

Resources
Breyers. Breyers Rich History. Unilever Ice Cream (2014). Retrieved from http://www.breyers.com/home/about. Web.
26 June 2014.
Guar Gum Replacements. Gum Technology by Coyote Brand (2009). Retrieved from
http://www.gumtech.com/products/GuarReplace.php . Web. 24 June 2014.
Hagen Dazs. Made Like No Other. Retrieved from http://www.haagendazs.us/Learn/History/.
International Dairy Food Association. The History of Ice Cream. IDFA (2014). Retrieved from http://www.idfa.org/newsviews/media-kits/ice-cream/the-history-of-ice-cream. Web. 25 June 2014.
Taylor, John B. Principles of Microeconomics, Second Edition. (2011).
Greenstreet, Rosanna. How We Met: Ben Cohen and Jerry Greenfield (28 May 1995). The Independent. Retrieved from
http://www.independent.co.uk/arts-entertainment/how-we-met-ben-cohen-and-jerry-greenfield-1621559.html. Web. 25
June 2014.
Statistic Brain. Ben & Jerrys Ice Cream Statistics (20 May 2014). Retrieved from http://www.statisticbrain.com/benand-jerrys-ice-cream-statistics/.
Monopolistic Competition, Profit Maximization. AmosWeb (2000-2014). Retrieved from
http://www.amosweb.com/cgibin/awb_nav.pl?s=wpd&c=dsp&k=monopolistic+competition,+profit+maximization.
Blue Bell Creameries, L. P. Vault (2014). Retrieved from http://www.vault.com/company-profiles/food-beverage/bluebell-creameries,-lp/company-overview.aspx. Web 27 June 2014.
http://www.slideshare.net/JakeRoviralta/hagen-dazs-pdf