square ice cream

96
MarkeTing plan Company profile and overview: QUARE today symbolizes a name – a state of mind. But its journey to the growth and prosperity has been no bed of roses. From the inception in 1958, it has today burgeoned into one of the top line conglomerates in Bangladesh. Square Pharmaceuticals Ltd., the flagship company, is holding the strong leadership position in the pharmaceutical industry of Bangladesh since 1985 and is now on its way to becoming a high performance global player. SQUARE today is more than just an organization, it is an institute. In a career spanning across four and half decades it has pioneered the development of the local business in fields as diverse as Pharmaceuticals, Toiletries, Garments, Textile, Information Technology, Health Products, Food Products, Hospital, etc. With an average Annual turnover of over US$ 200 million and a workforce of about 3500 the SQUARE Group is a true icon of the Bangladesh business sector. SQUARE today symbolizes a name- a state of mind. 1958 : Debut of Square Pharma as a Partnership Firm. 1964 : Converted into a Private Limited Company. 2001: SQUARE Consumer Products Ltd. Started its operation. Brands under Square consumer products 1. Radhuni

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QUARE today symbolizes a name – a state of mind. But its journey to the growth and prosperity has been no bed of roses. From the inception in 1958, it has today burgeoned into one of the top line conglomerates in Bangladesh. Square Pharmaceuticals Ltd., the flagship company, is holding the strong leadership position in the pharmaceutical industry of Bangladesh since 1985 and is now on its way to becoming a high performance global player.

TRANSCRIPT

Page 1: Square Ice cream

MarkeTing plan

Company profile and overview

QUARE today symbolizes a name ndash a state of mind But its journey to the growth and prosperity

has been no bed of roses From the inception in 1958 it has today burgeoned into one of the top

line conglomerates in Bangladesh Square Pharmaceuticals Ltd the flagship company is

holding the strong leadership position in the pharmaceutical industry of Bangladesh since 1985

and is now on its way to becoming a high performance global player

SQUARE today is more than just an organization it is an institute In a career spanning across

four and half decades it has pioneered the development of the local business in fields as diverse

as Pharmaceuticals Toiletries Garments Textile Information Technology Health Products

Food Products Hospital etc With an average Annual turnover of over US$ 200 million and a

workforce of about 3500 the SQUARE Group is a true icon of the Bangladesh business sector

SQUARE today symbolizes a name- a state of mind

1958 Debut of Square Pharma as a Partnership Firm

1964 Converted into a Private Limited Company

2001 SQUARE Consumer Products Ltd Started its operation

Brands under Square consumer products

1 Radhuni

2 Ruchi

3 Chashi

Executive Summary

ldquoSquare consumer productsrdquo is preparing to launch Ruchi Ice cream in a mature market We will

offer new to our market flavours of ice cream Our target customers will

Competitive analysis

40 BANGLADESH ICE CREAM INDUSTRY

41 Industry Construct

The ice cream industry of Bangladesh is a growing one With an estimated market size of BDT

220 Cr in 2009 the market can be subdivided broadly into branded and unbranded categories

Total Market [BDT 220 Cr]Branded [BDT 131 Cr] Unbranded [BDT 79 Cr] Common [BDT 121

Cr] Boutique [BDT 98 Cr]Around 20000 local manufacturers

Figure 6 Market Construct of Bangladesh Ice cream Industry

411 Branded Market

The branded market segment is around BDT 131 Cr with players in both common conventional

ice cream format (BDT 121 Cr) and boutique format which is still very small in size (BDT 98

Cr)

Common Format

Common format ice creams are generally produced and packed in factory These are distributed

and sold through retail channels carts to the shoppers Products can be single serving like stick

and cones or multiple serving like containers Moreover single serving can either be water based

where only water and flavours are mixed or cream based where milk cream and flavours are

mixed

Branded common format ice cream industry has only five players in the market They are Igloo

Polar Kwality Savoy and Milk Vita Igloo is currently the market leader Polar stayed market

leader for 10 years (rsquo86-lsquo96) in their initial days and Kwality challenged and took Polarrsquos second

position in recent times However Igloo bounced back every time they faced challenge Milk

Vita came in the market with proper dairy ice cream but failed to create an impact as their core

business is not ice cream

Boutique Format

Boutique format ice creams are sold through dedicated outlets where there is seating facility for

consumers They can see the products flavours open in freezers and can choose directly Also

consumers can decide what type of packing to use eg cup cones or containers and based on the

consumers decision product is either served for consumption at the premises or take away

Evaluation of Entry into Ice cream Business for Bangladesh Limited 17

Boutique format has seen an upsurge from year 2000 with introduction of premium franchise

and imported ice creams This segment is driven by Dhaka and Chittagong based players Club

Gelato MoumlvenPick Andersenrsquos Gelateria Igloo Baskin31Robbins and Sub Zero are the major

players in the segment Among these Gelateria Igloo and Sub Zero are run by common format

players Igloo and Kwality respectively

412 Unbranded Market

The unbranded market basically is constituted with around 20000 local small producers that do

not use any brand leverage and compete in the market based on significant lower price in the

range of BDT 1-5

Market size of this segment is significantly high with BDT 79 Cr These producers are mainly

rural and suburb based where concentration of SEC C and lower SECs are high They mainly

produce water ice cream sticks or in colloquial terms ldquoBaarfirdquo These are made with saccharine

and colours They also produce small amount of milk based kulfi These ice creams are very

unhygienic and of low quality

42 Historical Progress of the Industry

1048766 Before 1964 Ice cream market dominated by unorganized unbranded approach

1048766 1964 Igloo started large scale organized approach under K Rahman amp Co Ltd

1048766 1965 Igloo opened up the first ice-cream parlour in Dhaka

1048766 1971 Igloo was nationalized by the government of Bangladesh after liberation

1048766 1972 In June Igloo was handed over to Bangladesh Sugar amp Food Industries Corporation

1048766 1983 Abdul Monem Ltd acquired Igloo under privatization policy

1048766 1986 Polar started operation introduced food grade plastic based packaging They

immediately became market leader with extensive campaign

1048766 1988 Dolce Vita Gelato one of the dedicated boutique operator brought premium ice cream

1048766 Early 1990s Rainbow and Snow White started extensive operation in the boutique segment

1048766 Late 1990s American Soft Ice cream started promoting the soft ice cream format

1048766 1995 Savoy was introduced but failed due to product quality though in suburban areas they

grabbed share with low price

1048766 1996 In September Igloo organized a massive marketing campaign

1048766 Introduced the first straight line extrusion ice-cream in the market

1048766 They initiated a massive campaign and became market leader after 10 years

1048766 1997 In February Igloo took a devastating decision to increase price for the cup line

1048766 Igloo not only incurred substantial financial loss but also lost the hard earned market share

The question of sustaining became a central issue

1048766 In summer Price of 11 items were revised and communicated as special discount

1048766 This instantly pushed them to the number one position

Evaluation of Entry into Ice cream Business for Bangladesh Limited 18

1048766 1999 Kwality ice-cream entered the market

1048766 2000 Entry of the premium boutique operators like Club Gelato MoumlvenPick and

Baskin31Robbins

1048766 2002 Kwality launched an extensive campaign and started to capture the ice-cream outlets of

the city by providing freezers

1048766 2004 Kwalityrsquos number of freezers exceeded Polarrsquos and moved to second position

1048766 2005 onwards Igloo leads the market and there is immense competition among Polar and

Kwality for the coveted 2nd spot

Historical progress of this industry is of great importance Bangladesh ice cream industry has

traditionally been exposed to high quality products for a long time Igloo initiated the progress of

boutique segment (1965) but it lost its way over time The segment picked up once again in the

recent years Also high quality products and innovations in the common format segment have

created an appreciation for continuous innovation and better products in the minds of the

consumers Consumers in Bangladesh see ice cream as a fun product which requires novelty and

quality coupled with continuous hype around the brand This is why we see Kwality and Polar

could create early impacts with their entry into the industry as they came up with innovations in

product or packaging and arranged massive marketing campaigns during their launches Igloo

had to minimize their effects with similar campaigns to hold on to their position

Evaluation of Entry into Ice cream Business for Bangladesh Limited 19

50 MARKET amp COMPETITION ANALYSIS

51 Market Description

Bangladesh ice-cream industry is growing With increasing market demand size of the industry

is growing but due to entry barriers of lengthy and complex production process and high

investment few companies enter this business Although local companies in the branded segment

have captured most of the market share small unbranded local companies own a huge market to

themselves Where branded ice cream consumers look for innovation and quality unbranded

users outside metro cities are currently inclined towards low price low quality products This

creates an opportunity for further market development on the hygiene and health platform On

the other hand the boutique industry is doing quite well with their approach towards ice cream

as a dessert item along with service of other snacks like cakes and coffee at their premises which

help them reduce seasonality effects of ice cream

With a complicated scenario in the market to analyze the industry condition and understand the

competitive realities details of market characteristics and players of both common and boutique

segments are explained in following sections However unbranded segment is excluded from

discussion as Unileverrsquos portfolio does not match the characteristics and price level of this

category

511 Market Characteristics of the Common Format Segment

A Market size

Due to promotion innovation and exposure to different cultures the consumption of ice cream

has increased As a result the total market size is expanding At present the local companies in

the common format segment have a huge market of about BDT 121 Cr This market is 16 times

larger than the boutique segment and nearly doubles the unbranded segment Over the years the

size increase of the industry shows the prospect of converting unbranded unhygienic ice cream

consumers into branded ice cream consumers However price level still remains a big problem

for the branded category as petty unbranded ice cream companies with a price range of Tk1 to

Tk5 have a total market size of BDT 79 Cr which shows a hint of high price sensitivity in lower

SEC consumers Overall market size of 220 Cr indicates that most of the people in the country

are exposed to ice cream or some kinds of derivatives of ice cream like ldquoBaarfirdquo however they

probably cannot afford higher priced icy fruit sticks (BDT 6-10) available in the branded

segment

B Competitive rivalry in the Market

Competition is not very intense among the existing five companies because the number of

operators is very small considering the total population Also complexities of production and

distribution process and other entry barriers are stopping new companies from entering the

industry Evaluation of Entry into Ice cream Business for Bangladesh Limited 20

Igloo is confident about its unbeatable first position but there is competition among other

companies such as Polar and Kwality for the 2nd position However in current market no

operator is showing much aggressive and visible activity towards growth It is expected that

recent announcement regarding introduction of ISIS diabetic ice cream by Polar in partnership

with DANONE would again create some hype in the market

Reasons behind existing level of rivalry among competitors can be attributed to following

reasons

1048766 The ice cream industry has few sellers because there is economy of scale through large-scale

production The larger firms have a cost advantage over smaller firms they can produce more

cheaply- making it hard for small firms to survive

1048766 Market is bigger than capability of current players and can accommodate them without much

trouble This is because PCC of ice cream in the country is still pretty low

1048766 This market has substantial amount of ldquobarriers to entryrdquo making it difficult for a large

number of competitors to enter the market The cost of setting up a new plant in this industry is

quite high The cost of entry works as an entry barrier

1048766 To get people to try new product the potential entrant will have to run a big competitive

advertising or massive promotional campaign which is expensive The prevailing companies

created barriers in entry for potential rivals by using extensive advertising and product

differentiation earlier which has its effects till now Another fact is that product awareness and

brand loyalty to the existing firms make it expensive for potential rivals to enter

1048766 To further elaborate present competitive reality of the industry the five competitive forces are

discussed below

1048766 The rivalry among the competing sellers is weak as market is yet to develop more

1048766 With various entry barriers not many new companies are attempting to enter this industry

1048766 As there are no direct substitute products to ice-cream the companies donrsquot face any

competition from other industries

1048766 As the number of suppliers is very low and the companies especially Igloo as the best product

enjoys high bargaining power or leverage over rivals But some of the companies such as Savoy

are concentrating on increasing profit margin of the retailers for securing a more prominent

position in the market

1048766 Mainly consumers or buyers decide the pricing Keeping in mind the various buying power of

people the companies decide the price of each items Price of the Items that have the most

market demand is kept low so that they are in the reach of the general customers By lowering

the price some companies such as Savoy are trying to maintain a competitive edge

Evaluation of Entry into Ice cream Business for Bangladesh Limited 21

C Market Sales and Growth Rate

Sales information of the five existing companies for the current years shows the following trend

Company Name

2007

2008

2009

Total Market

11307

12120

13122

Igloo

5785

6086

6425

Polar

168

1835

2019

Kwality

306

335

374

Savoy

388

415

458

Milk Vita

394

434

488

Table 9 Market Sales and Growth Rate of Branded Common Format Market

Volume based market size shows the following scenario prevailing in the Bangladesh market in

2009

Company Name

Single Vol (000 Ltrs)

Multi Vol (000 Ltrs)

Total Vol (000 Ltrs)

Total Market

32759

42967

7573

Igloo

16760

21983

3874

Polar

4867

6384

1125

Kwality

8865

11628

2049

Savoy

1124

1474

260

Milk Vita

1141

1497

264

Table 10 Volume Based Market Size

The total volume of the branded common format ice cream industry is 7500 Tons of which more

than 50 belongs to Igloo followed by Kwality with 27

D Market Share and Size of the rivals

Market share data for all the local companies show a trend where Igloo is the biggest ice-cream

company dominating with a huge market share Although even 1-2 years ago there was intense

competition between Kwality and Polar but now it seems that Kwality is 2nd largest ice-cream

manufacturing company in Bangladesh Polar is in the 3rd position with Savoy and Milk Vita

trailing in the market Market share percentage over the years is presented in the following table

Company Name

2007

2008

2009

Igloo

50

5031

5116

Kwality

256

2666

2706

Polar

17

161

1485

Milk Vita

34

332

348

Evaluation of Entry into Ice cream Business for Bangladesh Limited 22

Savoy

39

365

343

Table 11 Market Share of Competitors

E Geographic Sales Orientation

Ice cream still continues to be a city-oriented product and its demand is comparatively low in the

rural areas Reasons behind this are electricity problem outside urban areas and purchasing

power of people Geographic sales orientation of the common format ice cream industry is

provided below

611890690480590250DhakaChittagongKhulnaComillaBarisalOthers

Figure 7 Geographic Sales Orientation

Dhaka still is the largest contributor in the ice cream segment Nevertheless over the years this

trend is shifting Areas outside Dhaka are also growing making Dhakarsquos share lower by small

percentage As urban markets are the major contributors companies design their products

keeping in mind the tastes and styles of the urban consumers Compared to the other companies

Igloo is the most expensive in the common format segment so they target only city based

customers who have the purchasing power Although other companies such as Savoy are offering

low priced product even their main target is urban people due to nation wide electricity problem

F Seasonality of Sales

Ice cream industries in warmer part of the world are highly seasonal Same is true with

Bangladesh According to secondary data sources sales seasonality looks as follows

Period Name

Months

Contribution

Super-Peak

April May June

46

Peak

March July August

36

Off-Peak

February September October November

15

Super Off-Peak

December January

3

Table 12 Seasonality of Ice cream Sales

This data was validated through interviews with retailers during market visit According to them

more than 75 sales of ice cream came in the hot months Another insight that could be

identified was

Evaluation of Entry into Ice cream Business for Bangladesh Limited 23

various festivals and programmes provide scope for higher volume of ice cream sales According

to companies where only 10-15 sales occurs in the winter season same amount of sales occurs

during festivals like the two Eids and Nobobarsha

G Distribution Servicing System

Mainly common format ice-cream is distributed in two methods that are directly to retail shops

and through hawkers with ice cream carts trolleys

The various channels of retail shops other than cart that serve as distribution outlets for Ice cream

are

7 Urban General Stores (UGS)

8 Urban Neighbourhood Grocer (UNG)

9 Premium General Store (PGS) SMMT

10 Confectionary Bakery

11 Modern Trade (MT)

12 Fast Food shops (Recently some fast food shops keep branded ice cream cabinets)

Distribution details of all the companies are provided below However detail of Milk Vita is not

available as they are mainly milk producer and they have no dedicated ice cream cabinet for

retail stores and currently they are not distributing ice cream in Dhaka city

Company

Distribution Method

Frequency

No of Cabinets

No of Carts

Igloo

Distributor Cart

2 to 3 times a week

4000

100

Kwality

Distributor Cart

1 to 2 times a week

1050

20

Polar

Distributor Cart

1 to 2 times a week

800

50

Savoy

Company

1 to 2 times a fortnight

176

-

Milk-Vita

-

-

-

-

Table 13 Distribution Method of Market Players

Distribution Process Distribution process through both methods is described below

Retail Distribution The general distribution that is followed by companies is that distributor

sends large refrigerated trucks dedicated to specific territories These trucks are accompanied by

small refrigerated vans Main road side shops are served directly from the large truck and shops

that are inside small streets are served by the small vans

Order and delivery are done on the same day The strategy followed is that of replenishment If

the branded freezer of the company is empty they simply fill it up according to requirement of

different SKUs as the delivery people see fit However shopkeepers have to buy full cartons

(usually 24 pieces in a carton) of single serve ice cream they cannot buy in pieces

Evaluation of Entry into Ice cream Business for Bangladesh Limited 24

Among the retail shops there are about equal numbers of branded and unbranded freezers This

is a normal scene in Dhaka where all shopkeepers require freezer to keep other cold products

However basic distribution policy is that if a shop has branded cabinet of a company they

cannot keep competitor ice cream in that cabinet Thus penetration can be made possible in

shops where unbranded freezers are available

General branded freezer contract policy with Igloo and Polar is that traders have to pay BDT

5000 to take a freezer Maintenance of branded freezers is responsibility of the company but

electricity bill is paid by shopkeeper However Polar is not currently giving any new freezer

Kwality gave away their freezers for free however they ensured safety of their freezers by

checking background of the shopkeepers

Cart sellers Cart sellers collect required amount of ice cream from nearby distribution house or

company showroom (Igloo has one showroom in Panthapath) on a daily basis They also have to

buy cartons of products not pieces Kwality carts collect their ice cream from factory (Tejgaon)

or nearby distribution house Cart sellers contribute around BDT 3000 sales in a day and

generally sell at BDT 1-2 higher than set price of each product

The cart sellers generally keep at least a two-day stock so that they can meet sudden upsurge in

daily demand of ice cream or if they get the opportunity to sell at parties programs or any open

air event (Wedding at community centres or outside cultural programs at auditoriums) If cart

sellers need replenishment of stock they even take service more than once in a day either

revisiting showroom house or they call up company delivery people to serve them at their

location if there is opportunity for selling more ice cream

Policy regarding Damaged Ice cream All the ice cream producers have very good relationship

with the shopkeepers If the retailers have refrigeration problem company takes ice cream back

until the problem is fixed whether it is stored in branded freezer or not Also if any ice cream

gets damaged or there is bacterial formation company takes them back Usual return time varies

from 15-30 days For large sellers however they take less time

Payment Method for Ice cream Purchase All the companies give credit of around one month to

large volume contributing retail sellers and try to maintain good relationship with them This

trend is seen in all channels Also all the SMMTs and MTs are given credit of one month and

payment is made by cheque Other small shopkeepers have to purchase with cash However

according to shopkeepers Igloo is currently trying to cut down on credit sales as they believe

there is a consumer pull for their brand Companies like Polar and Kwality also give special

commission to large sellers Polar gives 5 commission on every bill

Evaluation of Entry into Ice cream Business for Bangladesh Limited 25

H Technology and Innovation

Technological advancement in the ice cream industry has been very rapid Starting with stick

mould and filler ice cream production the companies have come a long way Assessing the

consumer choice and demand the companies are introducing new products very often Improved

and new technology is used for faster production and better quality Igloo is trying to meet the

international standards and launching products such as Sundae Cornelli and Nuggets Other

companies are also introducing new flavours suitable for their target segments Igloo has both the

ISO and the HACCP certifications These were awarded in the year 2003 due to their relentless

pursuit of quality and innovation In September 1996 Igloo introduced the 3D Mould line and

straight line extrusion technology for the first time in the subcontinent Basically with Igloorsquos

pursuit all the modern technologies and quality innovations are available in the market

I Production Capacity

Current production capacity of the major players in the common format ice cream segment is

estimated to be as follows

Name

Capacity (Ltrs day)

Total Production (000 Ltrs)

Required Capacity (at 300 production days )

Estimated unutilized capacity (Ltrs day)

Igloo

22000

387433

12914

9086

Polar

6500

112513

3750

2750

Kwality

12100

204934

6831

5269

Savoy

1560

25985

866

694

Milk Vita

1330

26387

880

450

Table 14 Production Capacity of Current Market Players

From the table we can see that all the ice cream manufacturers are operating with unutilized

capacity However one point to be noted is that different ice cream SKUs require different

amount of item to be produced Exact machine production capacity at litre per day does not

represent the accurate scenario Nevertheless it can be safely assumed that all the manufacturers

have unused machine capacity at their premises Moreover the larger players like Polar and

Kwality have new technology available at their premises Kwality bought second hand machines

from Thailand but both Igloo and Polar bought theirrsquos from Italy and Denmark

J Products and Pricing

Products The products in the ice-cream market are differentiated A few firms dominate the

market but an endless variety of ice creams are offered to the consumers Igloo pioneers all

major innovations in the market The products that are available in the market can be classified

into single serving and multiple serving groups Which are then categorized based on functional

attributes designs These are

Single

Stick

Normal mould 3D mould extrusion

Evaluation of Entry into Ice cream Business for Bangladesh Limited 26

Cup and Sundae

Flat cup long cup

Cone

Normal cone (vanilla strawberry etc) premium cone (Ripple)

serving

Innovative Fillers

Snowball Animal shaped containers sandwich nuggets etc

Container

05 ltr 1 ltr and 2 ltr containers

Multiple serving

Family Pack

Assorted packs cakes shahi kulfi etc

Table 15 Ice cream Serve types

Among all the products available in the market most selling SKU for all the companies is Choc-

bar stick and highest selling flavour is Vanilla Following are the ranks of most selling SKUs and

flavours

SKU Name

Rank

Choc-bar (70 ml)

1

Vanilla Cup (100 ml)

2

Vanilla Box (05 and 1 Ltr)

3

Lemon Lolly (70 ml)

4

Normal Cone

5

Flavour

Rank

Vanilla

1

Chocolate

2

Strawberry

3

Ripple

4

Mango

5

Table 16 Rank of SKUs Table 17 Rank of Flavours

Choc-bar is one of the earliest vanilla based chocolate coated SKU that has dominated the

market strongly over the years Shopkeepers could not provide an exact percentage on SKU

based sales contribution Most of them ranked the SKUs and flavours according to sequence

shown in the above table Also according to newspapers and secondary sources Vanilla is the

most selling flavour with 60 sales contribution According to secondary sources percentage

sales contribution of various types of SKUs in the common format segment are as follows

Type of Ice cream

Value Share

Volume Share

Impulse dairy ice cream

514

443

Impulse water ice cream

112

138

Take-home dairy ice cream

374

419

Table 18 Volume Share of Different Serve Types

Impulse dairy ice cream provides more value share as price per litre is higher than take home

multiple serving ice creams Impulse water ice cream shows a similar trend as of take home ice

cream

Pricing Product pictures and price ranges of each category are provided below Evaluation of

Entry into Ice cream Business for Bangladesh Limited 27

Normal Premium Price Tk12 Tk20 Tk25 Cup amp Sundae Normal Cup Sundae Premium Cup

Price Tk20 Tk25 Cone Normal Premium PriceTk20 Tk25Innovative Fillers PriceLtr Tk100

Tk175 Container Normal Premium PriceLtrTk150 Tk 175 Tk 190 Family Packs Kulfi Mixed

Pack Cake Single ServingMultipleServingNormal Ice Fruit 3D Mould Premium Extrusion Price

Tk10 Tk15 Tk15 Tk20Stick Normal Cream

Figure 8 Serve Types and Pricing

As it can be seen from the above chart all impulse ice creams are priced within the range of

BDT 10 to 25 Other take home multiple servings are priced within the range of BDT 50 (05

Litres) to BDT 220 (2 Litres) Another noticeable factor in price is that there are both normal and

premium flavours in all types of ice creams

K Firms as Price Setters

The firms have capability to affect the market price to be low as profit margin is very high If

Igloo reduces the price of an item below the prevailing price level in order to increase its sales

its competitors will fear that their customers will go away from them to buy Igloo products To

retain their customers they will be forced to match the price cut of Igloo Historically this has

been proven to be true However due to price sensitivity companies cannot drastically increase

price even if they provide higher quality of product It was seen in 1997 when Igloo increased

price of 11 SKUs and faced drastic sales fall during that time It shows that the industry might

welcome overall industry price increase but not individual company price increase

L Promotion

The promotion scenario in the industry is not quite organized as of now Even proper data

regarding promotional expenditure is not available from research sources The reason being

there is not much consumer related activity seen in the market After Kwalityrsquos introduction in

the market in 1999 Igloo went on with massive Television promotion of their new products that

were available at that time

Evaluation of Entry into Ice cream Business for Bangladesh Limited 28

However in current times there is no TVC running from any company Companies promote their

launches mainly through billboards and newspaper promotions which is currently the most used

source of consumer promotion Some promotional activities that were done by the companies

over the years are listed below

Consumer Promotions

1 Larger players like Igloo and Kwality goes on with campaigns like ldquoGift on stickrdquo where

various prizesrsquo names are written on the sticks and consumers can get them

a Igloo ran a program on their launch of Macho variant where gift varied from cricket bat to

personal computer

b Igloo had a program in 2006 where gifts on sticks varied from Bangkok visit to sunglass

c Igloo ran one campaign in 2007 where gold bars were given on purchasing Choc-bar

d Kwality ran a similar program in 2008 where gifts varied from wrist watches to motorcycle

2 Some companies ran consumer TTS and gift programs where company products were given

free

a Igloo had a program in 2006 where Igloo butter was given free on purchasing Igloo ice cream

cake

b Kwality ran a program in 2008 where one SKU was given as gift with another SKU randomly

c ldquoCone Ice cream at your Homerdquo program was run by Igloo in 2002 where six cone biscuits

were given free with purchase of one litre ice cream

3 Media placement is another form of placement done by larger companies

a Igloo purchased ldquoGlimpse into World Cup Resultrdquo space in daily newspapers during World

Cup Football 2002

4 One interesting program is done by only Igloo in Bangladesh They did it in June 2006 The

program was ldquoIgloo Ice cream Festivalrdquo with main attractions of ldquoGet as much ice cream as you

want for BDT 200rdquo ldquoGet a Fantasy Kingdom Entry ticket with each Entry Couponrdquo ldquoLucky

Drawrdquo and ldquoCelebrity Addardquo

Trade Promotions

5 Trade promotions are mainly given to ldquoHighest retail purchasersrdquo and also based on time

bound trade schemes where various slabs of purchase amount are mentioned for different prizes

a Igloo takes their highest purchasers to visit countries like Singapore and Thailand

b Savoy has a purchase slab scheme where first prize is table fan

c Polar gives special sales commission to their highest purchasers (around 5)

Evaluation of Entry into Ice cream Business for Bangladesh Limited 29

M Players in the Common Format Segment

Branded common format ice cream segment is constituted of five players only Among them

Igloo is the largest player and Milk Vita is the smallest The following sections detail the basic

company detail of all the companies with special emphasis on Igloo the market leader

Igloo

The pioneering ice-cream company in Bangladesh started its operation in 1964 in Chittagong

under K Rahman amp Co Limited (KRC) with a small factory inside Coca Cola bottling factory of

KRC After the independence of Bangladesh in 1971 Igloo was taken over by the government of

Bangladesh Later in 1983 Abdul Monem Limited purchased the entire production setup of KRC

Limited including Coca-Cola bottling plant and Igloo ice-cream factory After taking full charge

of Igloo ice-cream by Abdul Monem Limited the manufacturing operations continued in

Chittagong till 1990 Although Dhaka fetched the maximum share of the total revenue the

distribution cost increased tremendously in the process of meeting the demand of Dhaka city To

cope with the distribution problem and handle Polar threat Abdul Monem Limited transferred

the factory to Dhaka changed the ice-cream packaging from the conventional paper to plastic

and expanded their market and distribution operation The new factory of Igloo was setup at

Shyampur Narayanganj and was nine kilometres away from the Motijheel office The company

apart from catering the capital city started to expand its operations in Comilla (1991) Khulna

(1992) and North Bengal (1993) These markets were served directly from Dhaka since the

storage facilities were not developed till then The company is now the market leader since 1997

with clear market share victory over others with sweeping 51 share It is to be noted that Igloo

is also a player in the boutique segment with three parlours (2 in Dhaka and 1 in Chittagong)

Product Range Igloo offers the widest choice of ice cream more than any other competitor in

the market Igloo is offering a total of fifty items including normal premium and novelty cup

stick and family pack items Igloo has thirty flavours more than anyone else in the industry and

is continuously launching new and innovative delicacies

Igloo ice-cream can be classified in six groups They are

Stick

Macho Choc-bar Mini Choc Clown Mega Shell n core Lolly

Cone

Cornelli 2 in one Cornelli classic

Cup

Shahi kulfi Vanilla Strawberry Mango Snow ball

Container

Vanilla Strawberry Mango Chocolate Coffee Diet Vanilla Tutti Frutti Ripple Pralin

Pistachio

Innovative

Nuggets Sandwich

Family

Ripple cake Party time Shahi Kulfi

Table 19 Products of Igloo

Single serve stick cups and cone items are easy to carry around and convenient to eat which

makes it most sold The core target segment of ice-cream is 6-24 years and this generation is

always on the Evaluation of Entry into Ice cream Business for Bangladesh Limited 30

move and thus prefers independent cone stick or cup items As Igloo initiated the concept of ice-

cream as a family product they offer some items to be enjoyed with the whole family

Quality and Innovation Igloo is committed to maintaining the highest quality standard through

its continuous RampD activities The major ingredients raw materials and packing materials are

procured from the best European sources Strict quality control is done at every stage of the

manufacturing process from procurement of material mixing material flow ice cream making

packaging storing (at main warehouse) distributing and market shelving by the Quality Control

Department Current supply chain for various materials of Igloo is as follows Australia (Milk

Powder) Denmark (Ingredients emulsifiers amp stabilizers) China amp UAE (Food grade sticks)

China Denmark Singapore amp Thailand (Food grade packing materials)

Figure 9 Igloo Supply Chain

Distribution Network Their distribution network is stretched all over the country with a long

fleet of refrigerated vans Firstly the ice cream products are stored at the central warehouse of

the factory and from there they are distributed through the haulage vehicle to the operational

centres located in Dhaka Chittagong Comilla Rajshahi Barisal Bogra Rangpur and Khulna

Strictest cold chain maintenance during the distribution and selling of the ice creams is ensured

Their distribution process is as follows Manufacture Stored at -24c Transported by Refrigerated

trucks at -Reaches amp Preserved in Eight regional stores Refrigerated vehicles (Distributors)Retail

outlets (Deep freezers)

Figure 10 Distribution Process of Igloo

Evaluation of Entry into Ice cream Business for Bangladesh Limited 31

Trolley Operation Igloo also operates through trolleys for extending its reach to consumers at

the furthest points The trolleys are operated near schools alleys streets parks etc and play

rhythmic music to attract the consumers These are very colourfully decorated with Igloo

umbrella and the puller wears specific uniforms Igloo was the first in introducing and operating

these trolleys in Bangladesh for any Fast Moving Consumer Goods (FMCG) Igloo has around

125 trolleys operating throughout the country Individual trolleys are provided with a regular

supply of igloo ice creams

Marketing The marketing commitment of Igloo is based on the relationship with its customers

and consumer by not only manufacturing the highest quality product but also delivering the

product by maintaining this quality To satisfy the ever-changing needs of the customer Igloo

has regularly launched new ice creams and introduced new flavours And this commitment has

positioned Igloo as the market-leading brand by gaining the consumers trust with the positioning

as ldquoA WORLD OF GREAT TASTErdquo

Facilities and Logistics at a glance As of 2009 following are the facilities and logistics enjoyed

by the company

Factory location

Dhaka

Production Lines

4

Packages

Stick Cup Family pack Others (Nuggets and sandwich)

Machine suppliers

1048766 Mark-Italy

1048766 Tetra Pak(Hoyer)-Denmark

1048766 Sabore Denmark

1048766 Hass- Austria

Machine models

1048766 Freemark 1100 Italy

1048766 FM 3000 FM 6000 Italy

1048766 SL600 Denmark

Cone baking

Hass- Austria

Chocolate making

Macentyre-UK

Coverage

Nationwide

Operational centre

10

Total market vehicles

30

Distribution channel

Directthrough appointed distributors

Outlet service

7500

Injected deep freezers

4000

Trolley operations

125

Warehouse no

8

Table 20 Igloo Facilities and Logistics

Kwality

Kwality is currently the second largest ice cream manufacturer of the country The mother

company for the Kwality brand is Sanowara Drinks amp Beverages Ltd a sister concern of

Sanowara Group The company is famous for powdered milk brands Red Cow and Diploma in

Bangladesh The drinks and beverage concern of Sanowara made an entry into the market in

1997 with ldquoYesrdquo brand drinking water and launched the ice cream brand in 1999 With heavy

communication and novelty products it Evaluation of Entry into Ice cream Business for

Bangladesh Limited 32

successfully removed Polar from the second place with a current market share of 27 The

company also operates in the boutique segment with two parlours in Dhaka and Chittagong

Kwality ice cream factory is situated in Chittagong with a floor space of 35000 sft and fully

automated machinery wrapping mix machinery equipments from Italy having capacity of

around 20000 litres of ice cream per shift The ice cream factory employs 140 people The

company is ISO 9001-2000 certified

Kwality was the first true competitor for Igloo products with some major innovation in product

design and communication but their quality is perceived to be lower in the minds of the

consumers and they do not have extrusion ice cream The product prices are also similar to that

of Igloo but they charge a bit lower than Igloo in premium multiple servings However during

market visits it was seen that shops that keep only Kwality or Igloo and Kwality both they can

sell Kwality too although the sales amount is lower than that of Igloo People who look for Igloo

shopkeepers give them that directly but if they get a chance and Kwality ice cream stock is high

they also push Kwality to dry the stock out This gives an indication that market is larger than

what the current players are capable of serving even in Dhaka

Kwality follows a similar distribution model like Igloo but distribution frequency is lower and

amount of cart sellers is limited to 25 and they operate only in Dhaka

Polar

Once a giant in the industry Dhaka Ice Cream Industries Ltd introduced the first hygienically

packed ice cream in Bangladesh in 1987 and the brand name Polar was thus born In the early

days the company started ice cream business with a wide range of products and a variety of

flavours in Dhaka city In 1988 the company started its distribution in the city of Chittagong

then Bogra and continued to cover more cities Presently Polar ice cream is available

throughout Bangladesh The company today trails in the market with 15 market share in the

common format segment Recently Polar has announced launch of ISIS diabetic ice cream with

support from DANONE to turn around in the market

The company has its head office as well as a modern large-scale industrial plant in Dhaka Polar

ice cream is made with Danish expertise using Danish equipment and technology The

production activities and quality control measures are supervised and managed by Danish

experts Polar offers a wide range of delicious flavours and tastes made by ingredients imported

from Europe

Dhaka Ice Cream at present has 3 cold stores in Dhaka Chittagong and Bogra in Bangladesh

From Dhaka cold store they distribute ice creams in Mymensingh Tangail Jamalpur Sherpur

Kishoreganj Netrakona Comilla Narsingdi Barisal Madaripur Agaeljhara Faridpur Magura

Chuadanga Jessore Satkhira Khulna Pirojpur and Sylhet through their distributors In case of

long distance delivery points the company uses auto cooling freezer van

Evaluation of Entry into Ice cream Business for Bangladesh Limited 33

In Dhaka city they distribute ice creams directly to retail stores in freezer vans Besides that

they have several distributors at different points of the city Distributors cover their individual

areas where company is not able to supply directly in their freezer vans Similar model is

followed by the company to distribute ice cream from their other cold storages through out the

country For storing and selling ice creams in retail stores the company like the other players

arranges a deep freezer with the Polar logo and canopy light box

In addition to this distribution the company also undertakes home delivery of ice creams for

special occasions

Savoy

Savoy Ice-cream brand is owned by Sena Kalyan Sangstha (SKS) Group of industries It started

its journey in March 1995 with a factory in Tejgaon Dhaka Yearly turnover is estimated at BDT

388 crores with a market share of roughly 35

The factory has been established with Sonali Bank finance at 6040 equity ratio The total

production capacity of the factory has been estimated at 2400 litres of Ice-cream per day Total

land area of the factory premise is 116 Bigha with 8000 sft area covered with a total project cost

of BDT 144 The factory employs 73 people

Product ranges of the company include all the basic designs and flavours of the industry

However the company has not been much of an innovator in the industry Their product quality

is substantially low than that of other players and they price their products at 10-15 lower than

the other competitors The company imports raw materials mainly from Europe The general raw

materials are Euro cream Skimmed Milk Powder Cocoa Powder and Flavour (Vanilla Mango

and Strawberry) Colour (Yellow Red Chocolate and Green) Ripple Sauce Cheney Fruit Palm

Kernel Oil Anhydrous Butter Oil (Ghee) and Sugar etc

Milk Vita

Milk Vita is one of the most famous brand names in Bangladesh for its liquid dairy milk Owned

by Bangladesh Milk Producersrsquo Co-operative Union Limited (BMPCUL) the company came in

the market with proper dairy milk ice cream in form of cups and choc-bar With a production

capacity of around 1600 litres per day the company is trailing in the market place with 3

market share

Although the Milk Vita Choc-bar was perceived to be extremely tasty by consumers they

probably could not do well due price competition Currently they do not even distribute ice

cream in Dhaka However their presence is seen in outskirts of Dhaka and other nearby towns

If the current market situation prevails Milk Vita would lose their remaining market share and

other companies would benefit especially Igloo However one of the advantages of Milk Vita

remains to be

Evaluation of Entry into Ice cream Business for Bangladesh Limited 34

their nation wide milk supply network They have skimmed milk powder production plant that

Igloo does not have Thus they can combat the seasonality of milk supply that Igloo with its

huge requirement of milk cannot

Strengths and Weaknesses of Competitors

Company

Strengths

Weaknesses

Igloo

1048766 Strong brand image

1048766 High product quality

1048766 Highest no of variety

1048766 Strong distribution network

1048766 Highest visibility

1048766 Strong promotion

1048766 High production capacity

1048766 Presence of extrusion ice cream

1048766 Items are generally a bit pricy

1048766 Igloo does not give free freezers like other companies

1048766 Reluctant in recent times regarding innovation

1048766 Local sourcing of liquid milk does not meet demand

1048766 Failure to use ERP technology slowing decision making

Kwality

1048766 Product variety

1048766 Strong promotion

1048766 Free freezer distributed

1048766 Presence in all price segments

1048766 High production capacity

1048766 Weak distribution

1048766 Lower exposure

1048766 low amount of carts in operation

Polar

1048766 Free freezer

1048766 Quality perceived to be high compared to Kwality

1048766 Discoloured freezers

1048766 Lower exposure

1048766 Low product variety

1048766 Unused capacity

Savoy

1048766 Price is lower

1048766 Discoloured freezers

1048766 Low product variety

1048766 Weak distribution

1048766 Small amount of freezers

1048766 Low production capacity

Milk Vita

1048766 Quality is good due to dairy cream

1048766 Brand leverage from Milk Vita milk

1048766 Low exposure

1048766 Low variety

Table 21 Strengths and Weaknesses of Competition

512 Market Characteristics of the Boutique Segment

With a small market of BDT 98 Cr and 567 share in the branded ice cream market the

boutique segment is currently an increasing segment in the ice cream industry Boutique

segmentrsquos history dates back to 1960s when Igloo launched boutiques in Dhaka to save

distribution cost and promote a culture of ldquoice cream eating outrdquo In later years boutiques lost

their glamour and retail common format segment picked up growth However with Dolce Vita in

the late lsquo80s craze for Italian Artisan ice cream was recreated in the market Although Dolce

Vita is failing in recent times emergence of MoumlvenPick and Club Gelato in 2000 has uplifted the

segment once again Current growth rate of the

Evaluation of Entry into Ice cream Business for Bangladesh Limited 35

segment can be estimated to be approx 20-22 (higher than the common format segment)

Following are the basic detail of all the major players in the segment with their estimated sales3

Players

Outlet

Sales (Cr Taka)

Share

Club Gelato

1

136

199

MoumlvenPick

1

119

174

Andersenrsquos

3

119

174

Gelateria Igloo

3

119

174

Sub Zero (Kwality)

2

051

75

Baskin Robbins

1

015

22

Dolce Vita

1

017

25

American Soft

1

009

12

Rainbow

1

009

12

Others (off site)

089

130

Total Market

682

Table 22 Players and Shares in Boutique Segment

A Detail of Operation

General operational procedure followed by all the operators is as follows

1048766 Operating method There is a variation in operational method among the large operators

1048766 Club Gelato uses kitchen at own premise where imported ingredients and local milk (daily

special service from Milk Vita) are used to make ice cream

1048766 MoumlvenPick directly imports ice cream from Switzerland

1048766 Andersenrsquos Gelateria Igloo and Sub Zero produce ice cream at their factory with a mix of

imported and local ingredients

1048766 Products Around 30-35 flavours of artisan dairy ice cream are served at the premises

1048766 Most sold flavours are Vanilla Ferrero Rocher Butterscotch Chocolate Caramel etc

1048766 Other Products Larger players also serve ice cream desserts (milk shakes ice cappuccino etc)

pastries and other desserts with normal coffee and tea facility at their premises

1048766 Boutiques fight ice cream seasonality with the other products sales during off-peak ice cream

seasons Usually ice cream and other products contribute at 6040 ratio in summer and during

winter and off-peak seasons the ratio reverses

1048766 Pricing Usually the prices of products in this segment are 3-4 times higher than that of the

common format segment

1048766 Prices do not vary with flavours Variation depends on serve style (Cone tub) and use of

toppings and other ingredients (Chocolate sauce nut fruits) etc

1048766 Usual margin charged is around 50-60 over production cost Similar margin is charged for

other products like coffee ice cappuccino etc

3 Yearly sales is estimated based on companyrsquos approximate daily sales collected during

interview

Evaluation of Entry into Ice cream Business for Bangladesh Limited 36

1048766 Target Group Most of the consumers belong to SEC A and higher SEC A with DMFI of at

least BDT 20000

1048766 Foreign delegates and resident foreigners also visit these boutiques

1048766 Main purposes of visits in the boutiques are

bull Youth hangout with friends and having ice cream and ice cream derivatives

bull Family Family night out or eat out at a restaurant and then having dessert

bull Foreigners Having dessert after dinner

1048766 Rush time at boutiques are Afternoon 2-4 pm and at night 9-11 pm

1048766 Offsite sales Most of the large operators also sell offsite They have small freezers for off-site

1048766 Club Gelato and MoumlvenPick serves ice cream at high society parties and programmes

1048766 MoumlvenPick also has kiosks in known hotels like Sheraton

1048766 Promotion No mass promotion is done by any of the companies Word of mouth is the most

important source of promotion Posters and banners outside the premise and occasional

newspaper advertisements are used to communicate special offers

1048766 Growth Drivers Market growth is driven by image innovation quality decoration of facility

environment and special offers

1048766 Club Gelato has the image of selling true Italian dairy ice cream with an excellent hangout

environment

1048766 MoumlvenPick imports ice cream directly from Switzerland and is perceived to be of high quality

1048766 Andersenrsquos operates with the image of ice cream from Denmark

1048766 Gelateria Igloo (from Igloo) and Sub Zero (from Kwality) could not establish the premium

artisan ice cream image

B Players in the Boutique Segment

There are very few players who have significant impact in the boutique segment Detailed

information of all the major boutique segment players is provided below

Evaluation of Entry into Ice cream Business for Bangladesh Limited 37

Club Gelato

Basic Company Information

1048766 Location Banani Road 11 (Planning for a second one in Dhanmondi)

1048766 Established in 2001

1048766 Seating Capacity 48

1048766 Area 1250 sft (including kitchen)

1048766 Owner Mr Jahangir Alam (Bangladesh)

1048766 Business Type Joint business partnership with Singapore

1048766 Staff 15 people (6 in the kitchen)

1048766 Production capacity 150 litres per day

Product Related Information

1048766 Product Italian style parlour scoop ice cream fruit juice coffee and pastries

1048766 Flavours Around 32 flavours available

1048766 Most selling Ferraro Rocher Vanilla Pistachio

1048766 Innovations New variants and ingredients are communicated by their Italian supplier and

Club Gelato decides what to take from them

1048766 Serve type Cup Cone Glasses Box for take away

Consumer Profile

1048766 Primary Teenagers and Young Adults (18-30) amp Diplomats

1048766 Secondary Family consumers for eat out

1048766 Income Group High income customers tentatively from SEC A and higher SEC A

1048766 Geographic Area Diversified

1048766 Rush time 8-10 pm

Sales and Price Information

1048766 Sales BDT 50000 (60 Ice cream 40 other desserts) daily in summer In winter however

other products sell more and thus they keep total sales at the same level

1048766 Price 750 per litre for any flavour

1048766 Sales Volume 50-60 litres per day

Supply Chain Placement Information

1048766 Milk Local sourcing from Milk Vita (4050 litres per day)

1048766 Chocolates amp Flavours Belgium France Germany

1048766 Transportation Mainly air (They can afford it due to high margin)

1048766 Contribution of various materials Flavours (30) Milk (20) other parts are water and air

Promotional Materials

1048766 Materials used are near premises POS materials for promoting the parlour only

Table 23 Detail of Club Gelato

Evaluation of Entry into Ice cream Business for Bangladesh Limited 38

MoumlvenPick of Switzerland

Basic Company Information

1048766 Location Gulshan

1048766 Established in 2000

1048766 Seating Capacity 55

1048766 Owner Mr Arif Mahmud

1048766 Business Type Franchise of International MoumlvenPick

1048766 Storage Capacity in Shop 150 litres

Product Related Information

1048766 Product Imported MoumlvenPick ice creams coffee chicken sandwich and Frappe

1048766 Flavours Around 30 to 35 flavours available

1048766 Most selling Swiss Chocolate caramel Vanilla Dream Espresso Strawberry

1048766 Innovations New variants are communicated by their franchiser and they decide on flavours

that they want

1048766 Serve type Cup Cone Glasses Box for take away

Consumer Profile

1048766 Primary Teenagers and Young Adults (18-30) (70) amp Diplomats

1048766 Secondary Family consumers for eat out

1048766 Income Group High income customers tentatively from SEC A

1048766 Geographic Area Concentrated in Gulshan and nearby areas

1048766 Rush time Afternoon- Young Adult 10 to 11 pm Foreigners

1048766 the company also serves at parties and has freezers in known hotels where their ice creams

are served

Sales and Price Information

1048766 Sales BDT 35-40000 daily in summer

1048766 Price 640 per litre for any flavour

1048766 Sales Volume 55-60 litres per day

Supply Chain Placement Information

1048766 Transportation Imported finished goods by ship

1048766 Ship travel time 19 days

1048766 Port clearance 10 days

1048766 Safety Cushion Extra 10 days

Promotional Materials

1048766 Materials used are near premises POS materials for promoting the parlour only

Table 24 Detail of MoumlvenPick of Switzerland

Evaluation of Entry into Ice cream Business for Bangladesh Limited 39

Andersenrsquos of Denmark

Basic Company Information

1048766 Location Gulshan (2 others in Uttara Dhanmondi)

1048766 Established in 2001

1048766 Seating Capacity 48

1048766 Owner United Group

1048766 Business Type Franchise of Australian company Andersenrsquos of Denmark

1048766 Production Tongi Factory of United Group

1048766 Production capacity 2000 litres per day in factory

1048766 Storage Capacity in Shop 150 litres

Product Related Information

1048766 Product Danish parlour scoop ice cream and coffee

1048766 Flavours Around 30 to 35 flavours available

1048766 Most selling Strawberry Butter Scotch Green

1048766 Innovations New variants and ingredients are communicated by their franchiser and they

decide on flavours that they want

1048766 Serve type Cup Cone Glasses Box for take away

Consumer Profile

1048766 Primary Teenagers and Young Adults (18-30) (70) amp Diplomats

1048766 Secondary Family consumers for eat out

1048766 Income Group High income customers tentatively from SEC A

1048766 Geographic Area Concentrated in Gulshan and nearby areas

1048766 Rush time 8 to 10 pm

Sales and Price Information

1048766 Sales BDT 10-12000 daily in summer

1048766 Price 460 per litre for any flavour

1048766 Sales Volume 40-50 litres per day

Supply Chain Placement Information

1048766 Milk 2025 kg packs are imported

1048766 Chocolates amp Flavours Imported

1048766 Butte paper Local sourcing

1048766 Transportation Ship

Promotional Materials

1048766 Materials used are near premises POS materials for promoting the parlour only

Table 25 Detail of Andersenrsquos of Denmark

Evaluation of Entry into Ice cream Business for Bangladesh Limited 40

Gelateria Igloo

Basic Company Information

1048766 Location Banani Kemal Ataturk Avenue (Two others in GEC Mor Chittagong and Naya

Paltan)

1048766 Established in 2000

1048766 Seating Capacity 20

1048766 Production From Igloo factory in Shyampur Narayanganj

Product Related Information

1048766 Product Parlour scoop ice cream and coffee only

1048766 Flavours Around 30 flavours available

1048766 Most selling Vanilla Strawberry Chocolate Pistachio Butter Scotch Tutti Fruity

1048766 Serve type Cup Cone Glasses Box for take away

Consumer Profile

1048766 Primary Teenagers and Young Adults (18-30)

1048766 Secondary Family consumers for eat out

1048766 Income Group High income customers tentatively from SEC A and B

1048766 Geographic Area Diversified

1048766 Rush Time afternoon and evening

Sales and Price Information

1048766 Sales BDT 8000 to 10000 daily in summer Nearly one fourth in winter

1048766 Price Varies but 350 per litre of vanilla

Promotional Materials

1048766 POS materials at the premises

Table 26 Detail of Gelateria Igloo

52 Price Comparison of Common and Boutique Segments

Price ranges of both common format and boutique segment cannot exactly be pin pointed as

products do not follow common structure and variations occur with use of toppings mixing of

flavours and use of coatings However a price comparison has been made among the brands

based on their price of per litre of vanilla flavoured ice cream in the market It appears to be as

following

Company

Price Litre Vanilla

Club Gelato

750

MoumlvenPick

640

Andersenrsquos

460

Dolce Vita

440

Igloo

100

Kwality

100

Polar

100

Milk-Vita

90

Savoy

85

Table 27 Comparative Price Analysis

As it can be seen there is price gap within the range of BDT 100-400 Ice cream kiosks and

small scooping boutiques can operate within that range

Evaluation of Entry into Ice cream Business for Bangladesh Limited 41

60 CONSUMER ANALYSIS

61 Target Group of Ice cream

Who are the consumers of ice cream This question does not have a clear answer Ice cream is a

food for all It is the only food consumed by a human being at less than 0 degree centigrade

temperature and people of all ages feel indulged to have it However we can determine focus

target groups for both branded common format and artisan boutique ice cream Group

discussions and market visits were done to get insight into the consumers along side resources

form secondary sources Age based target group is common for both segments but variation

among the groups occur mainly based on SEC and DMFI classification

611 Geographic Group

Branded ice cream remains an urban product till date Geographically branded ice cream has

reached urban and semi urban areas up to Thana Head Quarter levels Ice cream has reached

areas where electricity is available Small artisan players are available in places where large

branded players have no distribution

612 Target Age Group

Age wise grouping of target consumers is as follows

1048766 Urban kids in the age group of 5-14

1048766 They mainly consume normal sticks cups cones innovative fillers and water ice creams

1048766 Urban youth in the age group of 15-24

1048766 They consume premium and extrusion sticks and cones

1048766 Urban mothers in the age group of 25-35

1048766 They determine the family purchases Even when the father purchases ice cream decision is

taken by them

Consumption pattern of various age groups are depicted in the following chart Ice cream

consumption pattern50203005 to 14 yrs15 to 24 yrs25 to 35 yrs

Figure 11 Target Group wise Consumption Pattern Evaluation of Entry into Ice cream Business

for Bangladesh Limited 42

613 Target SEC and DMFI Group

Common Format

SEC A and B is the target group for common format ice cream However with rapid increase in

price level over the years has made it a ldquohard to consumerdquo product for SEC B consumers who

belong to lower DMFI group

Boutique Format

Boutique formatrsquos higher margin and high price range makes it an exclusively SEC A ice cream

People belonging to upper and upper middle class have access to the mediocre boutiques and

only higher upper class can have premium ice creams like Club Gelato and MoumlvenPick

Another unique target group for boutique format are the foreigners who live in Bangladesh

These people tend to visit the parlours to have ice cream as dessert especially after dinner

62 Ice cream in Consumer Lifestyle

Figure 12 Ice cream in Consumer Life style

This simple overview of ice cream in consumer lifestyle was determined based on in-depth

research analysis of UBL and validated through qualitative group discussions by the author

However detail of in-depth research is provided in a later section of this chapter

Evaluation of Entry into Ice cream Business for Bangladesh Limited 43

63 Highlights of Purchase Habit of Ice cream

631 Common Habits across Target Groups

There are some common habits that were identified in earlier researches and group discussions

with consumers Common habits mean the consumer approach towards ice cream that is seen

across all target groups eg kids youth and adult purchasers These are outlined below

1048766 Ice cream is mainly seen as a dessert or a snack Impulse ice cream is seen as a quick snack

that is consumed when it is in sight Visibility plays a big role here Regarding family packs

people see it as a post-food dessert

1048766 Ice cream purchase is commonly a planned event When the contexts arise people generally

take a bit of time to decide whether or not to have ice cream or when they want to go to a

boutique they make due considerations regarding which boutique to visit

1048766 Ice cream purchase decision is taken based on favourite flavour People tend to try out new

variants and flavours when they first see it They compare the taste with earlier experience and

when they purchase later they choose the flavour they have liked most

1048766 For In-Home segment decision is mostly taken on the flavour Generally people come up with

different flavours of choice and most voted flavour is chosen

1048766 People become aware of new variants or flavours mainly through word-of-mouth

Advertisement (new launches special offers and festivals) in newspaper is another source of

awareness

1048766 People are currently indifferent towards the price level of premium flavours However some

feel that price of Choc-bar or water ice creams (lolly) is a bit much If less they would have

consumed more Some also feel that companies should come up with branded ice cream in the

price range of BDT 5-8

1048766 Ice cream is purchased from nearby shops If required brand and flavour is not available 2-3

shops will be visited and then available flavour will be selected even if the required one is not

found This is done mainly not to ruin the mood for ice cream

1048766 People are very open to try new brands and flavours especially if it comes from a credible

source They would try new flavours and if they are satisfied with the taste they would repeat

purchase

1048766 Regarding boutique visits people feel that boutiques need to have a proper environment

enough flavours and other snacks

1048766 While visiting boutique with family or companion they want variation in flavours so that

they would order different flavours and taste each otherrsquos ice cream It is seen as a sign of

togetherness

1048766 Frequency of ice cream purchase varies among people It depends on peer pressure collective

family decision summer heat and attitude towards ldquoice creamrdquo itself as a product Evaluation of

Entry into Ice cream Business for Bangladesh Limited 44

632 Habits of Kids

1048766 Kids choose ice cream flavours by the look of the product (generally pictures shown in POS

materials and carts) They love colour and designs of the products let it be a common format or a

boutique ice cream

1048766 Kids (when in house) would go with the housemaid to the nearby shop choose the flavour

they want (within range of the amount given to the maid) and buy it

1048766 When with parents they would take the product they like even if the price is lower than some

other product However mothers play a role in this decision They would want their children not

to choose too high priced a product or coloured products

633 Habits of Youth

1048766 Young people are the main consumer of impulse ice cream They also are one of the major

consumers in the boutique segment

1048766 Young people love to try out new products that come into the market Another side of the coin

is that they are not very loyal to a brand or a flavour and tend to switch a lot

1048766 Regarding boutique visits young people go to boutiques to have an ldquoice cream hang outrdquo with

peer groups They would stay there for a longer period of time while they have their ice cream

1048766 Some times young people make milk shakes and other ice cream based desserts

634 Habits of Mothers

1048766 Mothers worry about their childrenrsquos health and they prefer ldquovanillardquo type of brands

However when price constraint occurs they go for water ice creams for their children They try

to convince their kidrsquos purchase decision

1048766 Regarding family purchase motherrsquos decision is sometimes prioritized by the whole family

64 Barriers to Ice cream Consumption

641 Emotional Barriers

1048766 Overindulge (close to sinful)

1048766 Undisciplined (no control)

1048766 Childish (licking)

1048766 Artificial Image

642 Functional Barriers

1048766 People of SEC B feel that ice cream is an expensive dessert (If less expensive would consume

more often)

1048766 It leads to cold cough - especially in winter rainy season

1048766 It contains artificial additives preservatives

1048766 It is very high in calories that lead to fattening

Evaluation of Entry into Ice cream Business for Bangladesh Limited 45

1048766 It does not quench ldquothirstrdquo

1048766 Less convenient (portable immediate eat)

1048766 Messy Dripping

65 Research Findings

The highlights regarding purchase habits triggers and barriers of ice cream consumption provide

a glimpse into the consumer world of ice cream industry However UBL CMI conducted a

formal research exclusively on ice cream consumers to identify

1048766 Occasions of ice cream

1048766 Frequency of ice cream consumption

1048766 Expectations from ice cream occasions

1048766 Personalities that they desire from ice cream

651 Relevant Occasions in Daily Lives of Consumers

Research question regarding ldquousual occasions of life that occurred most frequently in day-to-day

lives of the respondentsrdquo generated the following replies

Occasion

of Respondents saying Yes

Watching TV

93

Normal Dinner At Home

91

Normal Lunch At Home

89

At Home While ReadingMusicSurfing

86

Informal Family Get Together

85

Out Of Home Hanging Out With Friends

84

Out Shopping

84

Mid-Afternoon Break At Home

83

At Home By Myself During The Day

82

Special Dinner At Home

82

Informal Dinner Out Of Home

82

Normal Lunch Out Of Home

82

Leisure Walk

79

Coming Home From WorkSchool

78

Special Dinner Out Of Home

78

Celebration

78

A Night In With Friends

77

At Home By Myself In The Evening

77

Special Lunch Out Of Home

76

Mid-Afternoon Break Out Of Home

75

Special Lunch At Home

73

Day out with Partner

72

Midmorning Break

70

At Breakfast

68

Family Day Out

68

During Work Or At School

65

Evaluation of Entry into Ice cream Business for Bangladesh Limited 46

Travelling ToFrom WorkSchool

65

At The Cinema

61

Special Event

56

Clubbing At A Party

50

Post GymSports

48

Table 28 Relevant Occasions in Consumersrsquo Lives

Respondents were then asked to mention ldquofrequency of occurrence of the identified occasionsrdquo

The identified replies are as follows Normal dinner at homenormal lunch at homeComing home

from workschoolTraveling tofrom workschoolDay out with Partner SpouseMid-afternoon

break at homeOut of home hanging out with friendsLeisure walkMid-afternoon break out of

homeA night in with friendsSpecial dinner at homeSpecial lunch out of homeFamily day

outSpecial eventPost gymsportsDaily2-3 Times A WeekWeekly2-3 Times A MonthOnce A

MonthEvery 2-3 MonthsLess OftenNever Figure 13 Frequency of Occurrence of Occasions

This shows that ldquoNormal dinner at home Watching TV Normal Lunch At Home At Home

While ReadingMusicSurfing Coming Home From WorkSchool During Work Or At School

Travelling ToFrom WorkSchool Midmorning Break Day Out With Partner Spouse At Home

By Myself During The Dayrdquo are the most frequent daily rituals of busy lives of consumers

652 Frequency of Ice cream Consumption

Respondents were asked to mention ldquoconsumption pattern of ice cream during the identified

occasionrdquo on a scale of 1-5 depicting frequencies like ldquo(5) always (4) most of the times (3)

about half of the times (2) sometimes (1) never do not knowrdquo The responses are depicted in

the following table

Evaluation of Entry into Ice cream Business for Bangladesh Limited 47

444474544655555566756665775967779991011101111101210111110101113111412131314161

011121411131216181519181518211817171719181718201721222130303434253437403741394

046383944464746453745414641374638504843414839373030292726232725222020201926202

21722221317Midmorning

breakWhile clubbing at aAt the cinemaSpecial eventNormal lunch out ofA night in with

friendsNormal dinner atInformal dinner out ofAt home by myselfAt home by myself inOut

shoppingSpecial lunch atDay out with SpouseWatching TVAlwaysmost of the timesAbout half

of the timesSometimesneverdo not know

Figure 14 Frequency of Ice cream Consumption

As it can be seen ldquoDay out with Spouse Special lunch at home Special dinner at home

Watching TV Family day out Celebrationrdquo are the occasions where most frequently ice cream is

consumed

653 Market Character Mapping Relevant Occasions vs Frequency of Consumption

If we plot frequency of consumption on the X-axis of a chart and relevance of occasion

occurrence on the Y-axis taking the above mentioned values as cut-off values we get four

quadrants in the chart depicting four market scenarios that any ice cream manufacturer in

Bangladesh market might encounter given the current market situation This market

segmentation is based on frequency of ice cream consumption in daily occasions of consumer

lives

The segments are

1048766 OPPORTUNITY MARKET High Relevant Occasions-Low Ice cream Frequency

1048766 QUESTION MARKET Less Relevant Occasions-Low Ice cream Frequency

1048766 HIGH FREQUENCY MARKET Relevant Occasions-High Ice cream Frequency

1048766 CAPTIVE MARKET Less Relevant Occasions-High Ice cream Frequency

The chart looks as follows Evaluation of Entry into Ice cream Business for Bangladesh Limited

48

Figure 15 Relevance of Occasion-Frequency of Consumption Mapping

As it can be seen from the above chart Bangladesh Market still lies in the Opportunity and

Question market zone with a pull towards High frequency and Captive Market zones This is

evident from market data as penetration of ice cream still remains at Thana headquarters levels

Also this explains the high market growth rate of 17 as market is yet under developed and

branded quality ice cream has yet not reached all levels of consumers especially rural level that

constitutes around 75 of Bangladeshi market

From the above analysis we can establish that target of ice cream manufacturers should be to

penetrate more into the Bangladeshi market to create higher frequency of ice cream

consumption The following chart shows the strategies to follow for ice cream manufacturers

Figure 16 Required Market Strategy for Bangladesh

Evaluation of Entry into Ice cream Business for Bangladesh Limited 49

As relevance of ice cream consumption occasions can hardly be controlled by marketers their

endeavour should be to create more ldquoemotional and functionalrdquo attachment to ice cream in less

frequent occasions through ldquomarket developmentrdquo strategy to earn share from overall food

expenditure of consumers and at the same time make them consume more ice cream in highly

relevant occasions through ldquopenetrationrdquo strategy

654 Consumersrsquo Emotional Requirements and Product Attributes

All consumers under these clusters also identify the emotional requirements and the significant

product attributes they seek from their current preferred and future desired ice creams These are

provided below

Cluster

Emotional Functional Requirement

Product Attributes

Enjoyment

Flavour Variety

1048766 Combination of different flavours

1048766 Combination of different textures

1048766 Very sweet

1048766 With wafer or biscuit

1048766 With chocolate

1048766 Of a well known brand

Socially Involved

Spoonable Rich

1048766 Very creamy

1048766 Only natural ingredients

1048766 No mess

Care

Size Creaminess

1048766 Big

1048766 Rich full taste

1048766 Smooth

1048766 Value for money

1048766 No mess

Unwind amp Escape

Economy

1048766 Crunchy

1048766 Economic

1048766 Of a well known brand

1048766 Nutritious

Balanced Convenience

Health Conscious

1048766 Of a well known brand

1048766 Nutritious

1048766 Milk based

1048766 Low sugar

1048766 Low carbohydrates

1048766 Filling

Active Self-Grooming

Fruit Vitamins

1048766 Healthy

1048766 Fruit based

1048766 Low fat

1048766 Liquid or drinkable

1048766 Nutritious

1048766 Of a well known brand

Confidence

Drinkable Light

1048766 Low calories

1048766 Light on the stomach

1048766 Chewy or gooey

1048766 Not so sweet

1048766 Natural appearance

Sensual

Appeal or image

1048766 No artificial additives

Evaluation of Entry into Ice cream Business for Bangladesh Limited 50

1048766 Natural appearance

1048766 Melting slowly

1048766 Attractive packaging

1048766 High quality ingredients

1048766 Of a well known brand

Table 29 Requirements amp Product Attributes Desired by Consumer Clusters

Of these findings we see that the identified highlighted barriers to ice cream consumption are

pretty evident among the consumers Mostly people want products of a reliable source or a well

known brand low calories quality ingredients value for money economic type

Evaluation of Entry into Ice cream Business for Bangladesh Limited 51

70 INDUSTRY ATTRACTIVENESS AND ENTRY PROSPECTS

71 Driving Forces of Growth

As identified in the earlier sections there are several driving forces behind the growth of ice-

cream industry in Bangladesh

712 Trade and Infrastructural Level

1048766 As a result of globalization newer varieties have been introduced to the local products Many

foreign companies are also coming as franchise so there has been increased competition and

these boutiques are setting higher standards for the local producers

1048766 The present market growth rate is 18-19 which is being influenced by larger players like

Igloo who are expanding their distribution nation wide with expansion of national electricity

grid

1048766 With entry of Modern Trade and recent organized business approach of retailers has made it

possible for ice cream manufacturers to penetrate into shops even without providing them with

branded freezers

1048766 Weather change has increased ldquosummerrdquo season in our country which has reduced negative

seasonal impact on ice cream

1048766 Large companies like Igloo have taken global learning of using carts as an effective tool of

availability and visibility for ice cream

1048766 New and improved technologies are being used in the production process This technological

advancement has improved quality increased speed of production and made the process more

cost effective

713 Consumer Level

1048766 Only a few years back rich people could afford the luxury of having ice-cream but now it has

become a common product for everybody Ice-cream companies are producing different products

with a wide price range for consumers of every class and status

1048766 Nowadays companies are doing promotional campaigns more frequently the customers get to

know about the product which makes it easier for them to buy the best one

1048766 The improved standard of life and more modernized lifestyle of people is an important reason

for the increased consumption thus growth of the ice-cream industry

Evaluation of Entry into Ice cream Business for Bangladesh Limited 52

72 Prospects of Entry

The ice-cream industry of Bangladesh is an attractive one for the investors because there is a

huge market but number of producers is very small The major reasons behind industry

attractiveness are as follows

1048766 The industryrsquos current growth potential is very high with opportunity for market development

1048766 The competition currently permits adequate profitability and the competitive forces are

becoming stronger with time

1048766 Boutique segment is at a very high growth stage but no operator is currently operating with a

mid price range of BDT 100-400 Ice cream kiosks and small scooping boutiques can operate

within that range

1048766 Current industry driving forces are favourable for the future industry profitability

1048766 Globally oriented consumers look for variety in ice cream that is currently not available

Latest innovations came in the market in 2002 People would welcome new variety and flavours

1048766 There is a gap in the market for balanced convenience through ice cream where consumers can

get nutritional benefits for ice cream Also emotional attachment to ice cream could further be

improvised in promotional campaigns

1048766 There is high scope for market penetration and development to increase frequency of ice

cream consumption

1048766 Level of risk or uncertainty is very low in ice-cream industry because the consumer market is

so huge any product with a standard quality and careful pricing will be able to make significant

profit

1048766 As for geographic reach of the industry 60 market is still in Dhaka There is scope of

expansion and a new entrant can easily capture market share within Dhaka using carts even if

they do not want nation wide cold chain distribution

1048766 The production process is very complex and capital requirements are also high So before

going into production any company should know about their capabilities and weaknesses and

then start the business or else they might suffer huge loss at a certain level

1048766 Unilever can acquire the required resource and use existing multi-national multi-cultural

expertise to enter the market in a grand way

1048766 With high probability of entry from DANONE with more products like the ISIS diabetic ice

cream Unilever should consider entering in this industry as soon as possible

Evaluation of Entry into Ice cream Business for Bangladesh Limited 53

80 ENTRY STRATEGY FOR UNILEVER

While describing the suggested entry strategy for UBL certain issues have been kept

confidential and some issues have been touched but not explained to keep consistency with UBL

confidentiality policy

81 Suggested Entry Areas for UBL

1048766 Boutique segment of the Bangladesh ice cream is only 5 of the branded market UBL needs

to pursue a larger scope to make the entry viable

1048766 UBL cannot fight with unbranded segment as global product quality mandate of Unilever does

not allow UBL to fight in low price-low quality segment

1048766 Recommend entry should be in the common format segment with both single and multiple

servings and in the boutique segment with a different brand name (if possible BEN amp JERRYrsquoS)

1048766 UBL should build up state-of-art modern factory for manufacturing and establish cold chain

facilities initially focusing on metro cities

1048766 Investment issues are required to be addressed for building factory and cold chain and capital

requirement needs to be identified for that purpose4

1048766 UBL may have boutiques for driving image selective top-end offering

1048766 Kiosks can be setup near universities and shopping malls

1048766 Boutiques should be concentrated in Dhaka and Chittagong

1048766 Ice cream for boutiques and kiosks would be produced in factory as institutional packs of 9-10

litres

82 Products

1048766 As a Brand Building country in global Unilever operating framework UBL is entitled only to

bring products developed by the Brand Development countries

1048766 Unilever should focus on serving products that have nutritional benefits (already available

globally) along with usual satisfactions of sensual pleasure functional attributes etc

1048766 Current existent players especially Igloo and Kwality have extensively copied global and

regionally available Unilever products eg Cornelli is same as Wallrsquos Cornetto Vinetta is similar

to Vienetta Mega is similar to Magnum etc UBL needs to differentiate these to consumers on

the ldquotaste the originalrdquo platform where global quality is focused regarding the products

1048766 UBL should also bring regionally famous brands like Moo or Max to create image

differentiation

1048766 Magnum or Moo should be used as premium end ice cream to generate more profit margin

Evaluation of Entry into Ice cream Business for Bangladesh Limited 54

83 Placement

1048766 Distribution focus should be in Dhaka for entry as Dhaka contributes more than 60 of total

ice cream sales in the country

1048766 Company may use carts as distribution method They serve as good source of visibility and

availability It would help in increasing impulse purchase

1048766 At least 1500 outlets in Dhaka and Chittagong needs to be actively served using dedicated

branded refrigerators to generate sales

1048766 50 carts should operate in Dhaka and Chittagong

84 Price

1048766 UBL products should be priced at par with Igloo pricing for the common format ice creams

1048766 UBL can bring in premium single-serve SKUS for the higher economic classes in the price

range of BDT 60-80

1048766 Smaller SKUs (small lolly stick) can be introduced in the price range of BDT 10-15

1048766 In the boutique segment UBL should price products above the semi-premium segment

(Gelateria Igloo Sub Zero or Andersenrsquos) but lower than that of Club Gelato or MoumlvenPick

85 Promotion

1048766 UBL would require strong marketing campaign (As high as 50 of sales) to have a grand

entry in the market

1048766 Presence in the television media would be of utmost importance More than 50 of

promotional expense should be made here initially Gradually it can be reduced

1048766 Newspaper would serve as the second most important option

1048766 Billboards should also be used

1048766 Activations (similar to Lux Channel i Super Star or Igloo Festival) should be done to generate

trial

86 Scope of Opportunity

Table 30 Value and Volume Based Scope of Opportunity for UBL

Value (BDT Cr)

Volume (Tons)

Market

131

7835

Common

121

7600

Boutique

98

235

Evaluation of Entry into Ice cream Business for Bangladesh Limited 55

861 Geographic Contribution

1048766 Dhaka (61)

1048766 Chittagong (19)

1048766 Sylhet (10)

862 UBL objectives

Common Format Ice Creams

1048766 Target 10 Market share in 1st year operation

1048766 Value BDT 11 Cr

1048766 Production capacity required 21 Tons day

1048766 Freezer Placement 1500 freezers

1048766 Cart operation At least 50 carts

Boutiques

1048766 Target Further develop the market

1048766 Focus Dhaka Chittagong and Sylhet Metro

1048766 Franchise At least 20 franchisee operations nation wide in divisional towns

1048766 Pricing Below imported parlours above common formats with around BDT 400 per Litre

87 Critical Success Factors

1048766 UBL is considered as a high profile company in Bangladesh and thus they cannot operate in

the market only with common products like choc-bars and cups They must have premium

products (these require extrusion line) also to carry their brand image Otherwise UBL would not

be able to charge usual premium over competition products

1048766 Launch of ice cream would require huge promotional and activation support in order to gain

customers from Igloo People want novelty regarding ice cream and UBL have to let them know

about their products and create hype

1048766 Cart should be used as a source of distribution Recent successes of Unilever companies like

Indonesia shows that carts can generate more sales and can be used as source of visibility in the

minds of both retail traders and consumers Carts can also provide incremental sales to the

company

1048766 UBL have to create a strong cold chain for ice cream (initially in Dhaka and Chittagong) to

ensure quality products for consumers

1048766 UBL have to build capacity very rapidly to meet consumer demand if the launch is successful

Evaluation of Entry into Ice cream Business for Bangladesh Limited 56

90 BUSINESS PROJECTION

91 Basic Assumptions

Business projection for ice cream business was made based on a conservative approach UBL

would require spending significantly on production capacity and factory dedicated to ice cream

Thus to analyse business possibilities of ice cream certain assumptions were made and collected

data were used These are

1048766 Production equipments and cabinets would cost approximately BDT 55 crores

1048766 Production equipments 45

1048766 Packaging Equipments 15

1048766 Storage Facility 20

1048766 Branded Freezers 10

1048766 Distribution Investment 10 (Distributors would also invest themselves)

1048766 Ice cream factory with a floor size of 20000 sqft would cost BDT 25 crores

1048766 Objective is to capture 10 market share in Dhaka and Chittagong in the first year

1048766 Business would grow by 50 in year 2 and 3 30 in year 4 and 25 in year 5

1048766 Weighted price per litre is BDT 170 according to volume share of single serve ice cream

multiple serve ice cream and boutique ice cream

1048766 Other financial assumptions were also made List of them are provided below but amount has

been removed for confidentiality issues

Assumptions

Trade Margin

Distributors Margin

DutyVAT Rate

Trade Terms Expense of NPS

Trade Terms Expense of NSV

Advertising ampPromotion of NPS

Indirects (Salaries Wages etc)

Trading Tax

Table 31 Assumptions for Business Projection

Evaluation of Entry into Ice cream Business for Bangladesh Limited 57

100 CONCLUSION

Ice cream has good prospect in Bangladesh It is still a growing market with opportunities for big

new entrants With the barriers of entry UBL needs to consider its priorities UBL being an HPC

company traditionally needs to acquire expertise in cold chain distribution and has to invest a lot

of money to rip the benefits of the industry However to initiate company can take regional

support and acquire resource expertise The company should enter the business as soon as

possible since there is potential threat from DANONE to introduce more ice creams after ISIS

diabetic ice cream and also with potential of the industry arch rival Nestlersquo might consider

entering into the industry too

Evaluation of Entry into Ice cream Business for Bangladesh Limited 58

References

Web References

1 wwwunilevercom

2 wwwunilevercombd

3 wwwhllcom

4 wwwunilevercompk

5 wwwthedailystarcom - Life Style Magazine

6 wwwreuterscouk

Evaluation of Entry into Ice cream Business for Bangladesh Limited 59

Page 2: Square Ice cream

Executive Summary

ldquoSquare consumer productsrdquo is preparing to launch Ruchi Ice cream in a mature market We will

offer new to our market flavours of ice cream Our target customers will

Competitive analysis

40 BANGLADESH ICE CREAM INDUSTRY

41 Industry Construct

The ice cream industry of Bangladesh is a growing one With an estimated market size of BDT

220 Cr in 2009 the market can be subdivided broadly into branded and unbranded categories

Total Market [BDT 220 Cr]Branded [BDT 131 Cr] Unbranded [BDT 79 Cr] Common [BDT 121

Cr] Boutique [BDT 98 Cr]Around 20000 local manufacturers

Figure 6 Market Construct of Bangladesh Ice cream Industry

411 Branded Market

The branded market segment is around BDT 131 Cr with players in both common conventional

ice cream format (BDT 121 Cr) and boutique format which is still very small in size (BDT 98

Cr)

Common Format

Common format ice creams are generally produced and packed in factory These are distributed

and sold through retail channels carts to the shoppers Products can be single serving like stick

and cones or multiple serving like containers Moreover single serving can either be water based

where only water and flavours are mixed or cream based where milk cream and flavours are

mixed

Branded common format ice cream industry has only five players in the market They are Igloo

Polar Kwality Savoy and Milk Vita Igloo is currently the market leader Polar stayed market

leader for 10 years (rsquo86-lsquo96) in their initial days and Kwality challenged and took Polarrsquos second

position in recent times However Igloo bounced back every time they faced challenge Milk

Vita came in the market with proper dairy ice cream but failed to create an impact as their core

business is not ice cream

Boutique Format

Boutique format ice creams are sold through dedicated outlets where there is seating facility for

consumers They can see the products flavours open in freezers and can choose directly Also

consumers can decide what type of packing to use eg cup cones or containers and based on the

consumers decision product is either served for consumption at the premises or take away

Evaluation of Entry into Ice cream Business for Bangladesh Limited 17

Boutique format has seen an upsurge from year 2000 with introduction of premium franchise

and imported ice creams This segment is driven by Dhaka and Chittagong based players Club

Gelato MoumlvenPick Andersenrsquos Gelateria Igloo Baskin31Robbins and Sub Zero are the major

players in the segment Among these Gelateria Igloo and Sub Zero are run by common format

players Igloo and Kwality respectively

412 Unbranded Market

The unbranded market basically is constituted with around 20000 local small producers that do

not use any brand leverage and compete in the market based on significant lower price in the

range of BDT 1-5

Market size of this segment is significantly high with BDT 79 Cr These producers are mainly

rural and suburb based where concentration of SEC C and lower SECs are high They mainly

produce water ice cream sticks or in colloquial terms ldquoBaarfirdquo These are made with saccharine

and colours They also produce small amount of milk based kulfi These ice creams are very

unhygienic and of low quality

42 Historical Progress of the Industry

1048766 Before 1964 Ice cream market dominated by unorganized unbranded approach

1048766 1964 Igloo started large scale organized approach under K Rahman amp Co Ltd

1048766 1965 Igloo opened up the first ice-cream parlour in Dhaka

1048766 1971 Igloo was nationalized by the government of Bangladesh after liberation

1048766 1972 In June Igloo was handed over to Bangladesh Sugar amp Food Industries Corporation

1048766 1983 Abdul Monem Ltd acquired Igloo under privatization policy

1048766 1986 Polar started operation introduced food grade plastic based packaging They

immediately became market leader with extensive campaign

1048766 1988 Dolce Vita Gelato one of the dedicated boutique operator brought premium ice cream

1048766 Early 1990s Rainbow and Snow White started extensive operation in the boutique segment

1048766 Late 1990s American Soft Ice cream started promoting the soft ice cream format

1048766 1995 Savoy was introduced but failed due to product quality though in suburban areas they

grabbed share with low price

1048766 1996 In September Igloo organized a massive marketing campaign

1048766 Introduced the first straight line extrusion ice-cream in the market

1048766 They initiated a massive campaign and became market leader after 10 years

1048766 1997 In February Igloo took a devastating decision to increase price for the cup line

1048766 Igloo not only incurred substantial financial loss but also lost the hard earned market share

The question of sustaining became a central issue

1048766 In summer Price of 11 items were revised and communicated as special discount

1048766 This instantly pushed them to the number one position

Evaluation of Entry into Ice cream Business for Bangladesh Limited 18

1048766 1999 Kwality ice-cream entered the market

1048766 2000 Entry of the premium boutique operators like Club Gelato MoumlvenPick and

Baskin31Robbins

1048766 2002 Kwality launched an extensive campaign and started to capture the ice-cream outlets of

the city by providing freezers

1048766 2004 Kwalityrsquos number of freezers exceeded Polarrsquos and moved to second position

1048766 2005 onwards Igloo leads the market and there is immense competition among Polar and

Kwality for the coveted 2nd spot

Historical progress of this industry is of great importance Bangladesh ice cream industry has

traditionally been exposed to high quality products for a long time Igloo initiated the progress of

boutique segment (1965) but it lost its way over time The segment picked up once again in the

recent years Also high quality products and innovations in the common format segment have

created an appreciation for continuous innovation and better products in the minds of the

consumers Consumers in Bangladesh see ice cream as a fun product which requires novelty and

quality coupled with continuous hype around the brand This is why we see Kwality and Polar

could create early impacts with their entry into the industry as they came up with innovations in

product or packaging and arranged massive marketing campaigns during their launches Igloo

had to minimize their effects with similar campaigns to hold on to their position

Evaluation of Entry into Ice cream Business for Bangladesh Limited 19

50 MARKET amp COMPETITION ANALYSIS

51 Market Description

Bangladesh ice-cream industry is growing With increasing market demand size of the industry

is growing but due to entry barriers of lengthy and complex production process and high

investment few companies enter this business Although local companies in the branded segment

have captured most of the market share small unbranded local companies own a huge market to

themselves Where branded ice cream consumers look for innovation and quality unbranded

users outside metro cities are currently inclined towards low price low quality products This

creates an opportunity for further market development on the hygiene and health platform On

the other hand the boutique industry is doing quite well with their approach towards ice cream

as a dessert item along with service of other snacks like cakes and coffee at their premises which

help them reduce seasonality effects of ice cream

With a complicated scenario in the market to analyze the industry condition and understand the

competitive realities details of market characteristics and players of both common and boutique

segments are explained in following sections However unbranded segment is excluded from

discussion as Unileverrsquos portfolio does not match the characteristics and price level of this

category

511 Market Characteristics of the Common Format Segment

A Market size

Due to promotion innovation and exposure to different cultures the consumption of ice cream

has increased As a result the total market size is expanding At present the local companies in

the common format segment have a huge market of about BDT 121 Cr This market is 16 times

larger than the boutique segment and nearly doubles the unbranded segment Over the years the

size increase of the industry shows the prospect of converting unbranded unhygienic ice cream

consumers into branded ice cream consumers However price level still remains a big problem

for the branded category as petty unbranded ice cream companies with a price range of Tk1 to

Tk5 have a total market size of BDT 79 Cr which shows a hint of high price sensitivity in lower

SEC consumers Overall market size of 220 Cr indicates that most of the people in the country

are exposed to ice cream or some kinds of derivatives of ice cream like ldquoBaarfirdquo however they

probably cannot afford higher priced icy fruit sticks (BDT 6-10) available in the branded

segment

B Competitive rivalry in the Market

Competition is not very intense among the existing five companies because the number of

operators is very small considering the total population Also complexities of production and

distribution process and other entry barriers are stopping new companies from entering the

industry Evaluation of Entry into Ice cream Business for Bangladesh Limited 20

Igloo is confident about its unbeatable first position but there is competition among other

companies such as Polar and Kwality for the 2nd position However in current market no

operator is showing much aggressive and visible activity towards growth It is expected that

recent announcement regarding introduction of ISIS diabetic ice cream by Polar in partnership

with DANONE would again create some hype in the market

Reasons behind existing level of rivalry among competitors can be attributed to following

reasons

1048766 The ice cream industry has few sellers because there is economy of scale through large-scale

production The larger firms have a cost advantage over smaller firms they can produce more

cheaply- making it hard for small firms to survive

1048766 Market is bigger than capability of current players and can accommodate them without much

trouble This is because PCC of ice cream in the country is still pretty low

1048766 This market has substantial amount of ldquobarriers to entryrdquo making it difficult for a large

number of competitors to enter the market The cost of setting up a new plant in this industry is

quite high The cost of entry works as an entry barrier

1048766 To get people to try new product the potential entrant will have to run a big competitive

advertising or massive promotional campaign which is expensive The prevailing companies

created barriers in entry for potential rivals by using extensive advertising and product

differentiation earlier which has its effects till now Another fact is that product awareness and

brand loyalty to the existing firms make it expensive for potential rivals to enter

1048766 To further elaborate present competitive reality of the industry the five competitive forces are

discussed below

1048766 The rivalry among the competing sellers is weak as market is yet to develop more

1048766 With various entry barriers not many new companies are attempting to enter this industry

1048766 As there are no direct substitute products to ice-cream the companies donrsquot face any

competition from other industries

1048766 As the number of suppliers is very low and the companies especially Igloo as the best product

enjoys high bargaining power or leverage over rivals But some of the companies such as Savoy

are concentrating on increasing profit margin of the retailers for securing a more prominent

position in the market

1048766 Mainly consumers or buyers decide the pricing Keeping in mind the various buying power of

people the companies decide the price of each items Price of the Items that have the most

market demand is kept low so that they are in the reach of the general customers By lowering

the price some companies such as Savoy are trying to maintain a competitive edge

Evaluation of Entry into Ice cream Business for Bangladesh Limited 21

C Market Sales and Growth Rate

Sales information of the five existing companies for the current years shows the following trend

Company Name

2007

2008

2009

Total Market

11307

12120

13122

Igloo

5785

6086

6425

Polar

168

1835

2019

Kwality

306

335

374

Savoy

388

415

458

Milk Vita

394

434

488

Table 9 Market Sales and Growth Rate of Branded Common Format Market

Volume based market size shows the following scenario prevailing in the Bangladesh market in

2009

Company Name

Single Vol (000 Ltrs)

Multi Vol (000 Ltrs)

Total Vol (000 Ltrs)

Total Market

32759

42967

7573

Igloo

16760

21983

3874

Polar

4867

6384

1125

Kwality

8865

11628

2049

Savoy

1124

1474

260

Milk Vita

1141

1497

264

Table 10 Volume Based Market Size

The total volume of the branded common format ice cream industry is 7500 Tons of which more

than 50 belongs to Igloo followed by Kwality with 27

D Market Share and Size of the rivals

Market share data for all the local companies show a trend where Igloo is the biggest ice-cream

company dominating with a huge market share Although even 1-2 years ago there was intense

competition between Kwality and Polar but now it seems that Kwality is 2nd largest ice-cream

manufacturing company in Bangladesh Polar is in the 3rd position with Savoy and Milk Vita

trailing in the market Market share percentage over the years is presented in the following table

Company Name

2007

2008

2009

Igloo

50

5031

5116

Kwality

256

2666

2706

Polar

17

161

1485

Milk Vita

34

332

348

Evaluation of Entry into Ice cream Business for Bangladesh Limited 22

Savoy

39

365

343

Table 11 Market Share of Competitors

E Geographic Sales Orientation

Ice cream still continues to be a city-oriented product and its demand is comparatively low in the

rural areas Reasons behind this are electricity problem outside urban areas and purchasing

power of people Geographic sales orientation of the common format ice cream industry is

provided below

611890690480590250DhakaChittagongKhulnaComillaBarisalOthers

Figure 7 Geographic Sales Orientation

Dhaka still is the largest contributor in the ice cream segment Nevertheless over the years this

trend is shifting Areas outside Dhaka are also growing making Dhakarsquos share lower by small

percentage As urban markets are the major contributors companies design their products

keeping in mind the tastes and styles of the urban consumers Compared to the other companies

Igloo is the most expensive in the common format segment so they target only city based

customers who have the purchasing power Although other companies such as Savoy are offering

low priced product even their main target is urban people due to nation wide electricity problem

F Seasonality of Sales

Ice cream industries in warmer part of the world are highly seasonal Same is true with

Bangladesh According to secondary data sources sales seasonality looks as follows

Period Name

Months

Contribution

Super-Peak

April May June

46

Peak

March July August

36

Off-Peak

February September October November

15

Super Off-Peak

December January

3

Table 12 Seasonality of Ice cream Sales

This data was validated through interviews with retailers during market visit According to them

more than 75 sales of ice cream came in the hot months Another insight that could be

identified was

Evaluation of Entry into Ice cream Business for Bangladesh Limited 23

various festivals and programmes provide scope for higher volume of ice cream sales According

to companies where only 10-15 sales occurs in the winter season same amount of sales occurs

during festivals like the two Eids and Nobobarsha

G Distribution Servicing System

Mainly common format ice-cream is distributed in two methods that are directly to retail shops

and through hawkers with ice cream carts trolleys

The various channels of retail shops other than cart that serve as distribution outlets for Ice cream

are

7 Urban General Stores (UGS)

8 Urban Neighbourhood Grocer (UNG)

9 Premium General Store (PGS) SMMT

10 Confectionary Bakery

11 Modern Trade (MT)

12 Fast Food shops (Recently some fast food shops keep branded ice cream cabinets)

Distribution details of all the companies are provided below However detail of Milk Vita is not

available as they are mainly milk producer and they have no dedicated ice cream cabinet for

retail stores and currently they are not distributing ice cream in Dhaka city

Company

Distribution Method

Frequency

No of Cabinets

No of Carts

Igloo

Distributor Cart

2 to 3 times a week

4000

100

Kwality

Distributor Cart

1 to 2 times a week

1050

20

Polar

Distributor Cart

1 to 2 times a week

800

50

Savoy

Company

1 to 2 times a fortnight

176

-

Milk-Vita

-

-

-

-

Table 13 Distribution Method of Market Players

Distribution Process Distribution process through both methods is described below

Retail Distribution The general distribution that is followed by companies is that distributor

sends large refrigerated trucks dedicated to specific territories These trucks are accompanied by

small refrigerated vans Main road side shops are served directly from the large truck and shops

that are inside small streets are served by the small vans

Order and delivery are done on the same day The strategy followed is that of replenishment If

the branded freezer of the company is empty they simply fill it up according to requirement of

different SKUs as the delivery people see fit However shopkeepers have to buy full cartons

(usually 24 pieces in a carton) of single serve ice cream they cannot buy in pieces

Evaluation of Entry into Ice cream Business for Bangladesh Limited 24

Among the retail shops there are about equal numbers of branded and unbranded freezers This

is a normal scene in Dhaka where all shopkeepers require freezer to keep other cold products

However basic distribution policy is that if a shop has branded cabinet of a company they

cannot keep competitor ice cream in that cabinet Thus penetration can be made possible in

shops where unbranded freezers are available

General branded freezer contract policy with Igloo and Polar is that traders have to pay BDT

5000 to take a freezer Maintenance of branded freezers is responsibility of the company but

electricity bill is paid by shopkeeper However Polar is not currently giving any new freezer

Kwality gave away their freezers for free however they ensured safety of their freezers by

checking background of the shopkeepers

Cart sellers Cart sellers collect required amount of ice cream from nearby distribution house or

company showroom (Igloo has one showroom in Panthapath) on a daily basis They also have to

buy cartons of products not pieces Kwality carts collect their ice cream from factory (Tejgaon)

or nearby distribution house Cart sellers contribute around BDT 3000 sales in a day and

generally sell at BDT 1-2 higher than set price of each product

The cart sellers generally keep at least a two-day stock so that they can meet sudden upsurge in

daily demand of ice cream or if they get the opportunity to sell at parties programs or any open

air event (Wedding at community centres or outside cultural programs at auditoriums) If cart

sellers need replenishment of stock they even take service more than once in a day either

revisiting showroom house or they call up company delivery people to serve them at their

location if there is opportunity for selling more ice cream

Policy regarding Damaged Ice cream All the ice cream producers have very good relationship

with the shopkeepers If the retailers have refrigeration problem company takes ice cream back

until the problem is fixed whether it is stored in branded freezer or not Also if any ice cream

gets damaged or there is bacterial formation company takes them back Usual return time varies

from 15-30 days For large sellers however they take less time

Payment Method for Ice cream Purchase All the companies give credit of around one month to

large volume contributing retail sellers and try to maintain good relationship with them This

trend is seen in all channels Also all the SMMTs and MTs are given credit of one month and

payment is made by cheque Other small shopkeepers have to purchase with cash However

according to shopkeepers Igloo is currently trying to cut down on credit sales as they believe

there is a consumer pull for their brand Companies like Polar and Kwality also give special

commission to large sellers Polar gives 5 commission on every bill

Evaluation of Entry into Ice cream Business for Bangladesh Limited 25

H Technology and Innovation

Technological advancement in the ice cream industry has been very rapid Starting with stick

mould and filler ice cream production the companies have come a long way Assessing the

consumer choice and demand the companies are introducing new products very often Improved

and new technology is used for faster production and better quality Igloo is trying to meet the

international standards and launching products such as Sundae Cornelli and Nuggets Other

companies are also introducing new flavours suitable for their target segments Igloo has both the

ISO and the HACCP certifications These were awarded in the year 2003 due to their relentless

pursuit of quality and innovation In September 1996 Igloo introduced the 3D Mould line and

straight line extrusion technology for the first time in the subcontinent Basically with Igloorsquos

pursuit all the modern technologies and quality innovations are available in the market

I Production Capacity

Current production capacity of the major players in the common format ice cream segment is

estimated to be as follows

Name

Capacity (Ltrs day)

Total Production (000 Ltrs)

Required Capacity (at 300 production days )

Estimated unutilized capacity (Ltrs day)

Igloo

22000

387433

12914

9086

Polar

6500

112513

3750

2750

Kwality

12100

204934

6831

5269

Savoy

1560

25985

866

694

Milk Vita

1330

26387

880

450

Table 14 Production Capacity of Current Market Players

From the table we can see that all the ice cream manufacturers are operating with unutilized

capacity However one point to be noted is that different ice cream SKUs require different

amount of item to be produced Exact machine production capacity at litre per day does not

represent the accurate scenario Nevertheless it can be safely assumed that all the manufacturers

have unused machine capacity at their premises Moreover the larger players like Polar and

Kwality have new technology available at their premises Kwality bought second hand machines

from Thailand but both Igloo and Polar bought theirrsquos from Italy and Denmark

J Products and Pricing

Products The products in the ice-cream market are differentiated A few firms dominate the

market but an endless variety of ice creams are offered to the consumers Igloo pioneers all

major innovations in the market The products that are available in the market can be classified

into single serving and multiple serving groups Which are then categorized based on functional

attributes designs These are

Single

Stick

Normal mould 3D mould extrusion

Evaluation of Entry into Ice cream Business for Bangladesh Limited 26

Cup and Sundae

Flat cup long cup

Cone

Normal cone (vanilla strawberry etc) premium cone (Ripple)

serving

Innovative Fillers

Snowball Animal shaped containers sandwich nuggets etc

Container

05 ltr 1 ltr and 2 ltr containers

Multiple serving

Family Pack

Assorted packs cakes shahi kulfi etc

Table 15 Ice cream Serve types

Among all the products available in the market most selling SKU for all the companies is Choc-

bar stick and highest selling flavour is Vanilla Following are the ranks of most selling SKUs and

flavours

SKU Name

Rank

Choc-bar (70 ml)

1

Vanilla Cup (100 ml)

2

Vanilla Box (05 and 1 Ltr)

3

Lemon Lolly (70 ml)

4

Normal Cone

5

Flavour

Rank

Vanilla

1

Chocolate

2

Strawberry

3

Ripple

4

Mango

5

Table 16 Rank of SKUs Table 17 Rank of Flavours

Choc-bar is one of the earliest vanilla based chocolate coated SKU that has dominated the

market strongly over the years Shopkeepers could not provide an exact percentage on SKU

based sales contribution Most of them ranked the SKUs and flavours according to sequence

shown in the above table Also according to newspapers and secondary sources Vanilla is the

most selling flavour with 60 sales contribution According to secondary sources percentage

sales contribution of various types of SKUs in the common format segment are as follows

Type of Ice cream

Value Share

Volume Share

Impulse dairy ice cream

514

443

Impulse water ice cream

112

138

Take-home dairy ice cream

374

419

Table 18 Volume Share of Different Serve Types

Impulse dairy ice cream provides more value share as price per litre is higher than take home

multiple serving ice creams Impulse water ice cream shows a similar trend as of take home ice

cream

Pricing Product pictures and price ranges of each category are provided below Evaluation of

Entry into Ice cream Business for Bangladesh Limited 27

Normal Premium Price Tk12 Tk20 Tk25 Cup amp Sundae Normal Cup Sundae Premium Cup

Price Tk20 Tk25 Cone Normal Premium PriceTk20 Tk25Innovative Fillers PriceLtr Tk100

Tk175 Container Normal Premium PriceLtrTk150 Tk 175 Tk 190 Family Packs Kulfi Mixed

Pack Cake Single ServingMultipleServingNormal Ice Fruit 3D Mould Premium Extrusion Price

Tk10 Tk15 Tk15 Tk20Stick Normal Cream

Figure 8 Serve Types and Pricing

As it can be seen from the above chart all impulse ice creams are priced within the range of

BDT 10 to 25 Other take home multiple servings are priced within the range of BDT 50 (05

Litres) to BDT 220 (2 Litres) Another noticeable factor in price is that there are both normal and

premium flavours in all types of ice creams

K Firms as Price Setters

The firms have capability to affect the market price to be low as profit margin is very high If

Igloo reduces the price of an item below the prevailing price level in order to increase its sales

its competitors will fear that their customers will go away from them to buy Igloo products To

retain their customers they will be forced to match the price cut of Igloo Historically this has

been proven to be true However due to price sensitivity companies cannot drastically increase

price even if they provide higher quality of product It was seen in 1997 when Igloo increased

price of 11 SKUs and faced drastic sales fall during that time It shows that the industry might

welcome overall industry price increase but not individual company price increase

L Promotion

The promotion scenario in the industry is not quite organized as of now Even proper data

regarding promotional expenditure is not available from research sources The reason being

there is not much consumer related activity seen in the market After Kwalityrsquos introduction in

the market in 1999 Igloo went on with massive Television promotion of their new products that

were available at that time

Evaluation of Entry into Ice cream Business for Bangladesh Limited 28

However in current times there is no TVC running from any company Companies promote their

launches mainly through billboards and newspaper promotions which is currently the most used

source of consumer promotion Some promotional activities that were done by the companies

over the years are listed below

Consumer Promotions

1 Larger players like Igloo and Kwality goes on with campaigns like ldquoGift on stickrdquo where

various prizesrsquo names are written on the sticks and consumers can get them

a Igloo ran a program on their launch of Macho variant where gift varied from cricket bat to

personal computer

b Igloo had a program in 2006 where gifts on sticks varied from Bangkok visit to sunglass

c Igloo ran one campaign in 2007 where gold bars were given on purchasing Choc-bar

d Kwality ran a similar program in 2008 where gifts varied from wrist watches to motorcycle

2 Some companies ran consumer TTS and gift programs where company products were given

free

a Igloo had a program in 2006 where Igloo butter was given free on purchasing Igloo ice cream

cake

b Kwality ran a program in 2008 where one SKU was given as gift with another SKU randomly

c ldquoCone Ice cream at your Homerdquo program was run by Igloo in 2002 where six cone biscuits

were given free with purchase of one litre ice cream

3 Media placement is another form of placement done by larger companies

a Igloo purchased ldquoGlimpse into World Cup Resultrdquo space in daily newspapers during World

Cup Football 2002

4 One interesting program is done by only Igloo in Bangladesh They did it in June 2006 The

program was ldquoIgloo Ice cream Festivalrdquo with main attractions of ldquoGet as much ice cream as you

want for BDT 200rdquo ldquoGet a Fantasy Kingdom Entry ticket with each Entry Couponrdquo ldquoLucky

Drawrdquo and ldquoCelebrity Addardquo

Trade Promotions

5 Trade promotions are mainly given to ldquoHighest retail purchasersrdquo and also based on time

bound trade schemes where various slabs of purchase amount are mentioned for different prizes

a Igloo takes their highest purchasers to visit countries like Singapore and Thailand

b Savoy has a purchase slab scheme where first prize is table fan

c Polar gives special sales commission to their highest purchasers (around 5)

Evaluation of Entry into Ice cream Business for Bangladesh Limited 29

M Players in the Common Format Segment

Branded common format ice cream segment is constituted of five players only Among them

Igloo is the largest player and Milk Vita is the smallest The following sections detail the basic

company detail of all the companies with special emphasis on Igloo the market leader

Igloo

The pioneering ice-cream company in Bangladesh started its operation in 1964 in Chittagong

under K Rahman amp Co Limited (KRC) with a small factory inside Coca Cola bottling factory of

KRC After the independence of Bangladesh in 1971 Igloo was taken over by the government of

Bangladesh Later in 1983 Abdul Monem Limited purchased the entire production setup of KRC

Limited including Coca-Cola bottling plant and Igloo ice-cream factory After taking full charge

of Igloo ice-cream by Abdul Monem Limited the manufacturing operations continued in

Chittagong till 1990 Although Dhaka fetched the maximum share of the total revenue the

distribution cost increased tremendously in the process of meeting the demand of Dhaka city To

cope with the distribution problem and handle Polar threat Abdul Monem Limited transferred

the factory to Dhaka changed the ice-cream packaging from the conventional paper to plastic

and expanded their market and distribution operation The new factory of Igloo was setup at

Shyampur Narayanganj and was nine kilometres away from the Motijheel office The company

apart from catering the capital city started to expand its operations in Comilla (1991) Khulna

(1992) and North Bengal (1993) These markets were served directly from Dhaka since the

storage facilities were not developed till then The company is now the market leader since 1997

with clear market share victory over others with sweeping 51 share It is to be noted that Igloo

is also a player in the boutique segment with three parlours (2 in Dhaka and 1 in Chittagong)

Product Range Igloo offers the widest choice of ice cream more than any other competitor in

the market Igloo is offering a total of fifty items including normal premium and novelty cup

stick and family pack items Igloo has thirty flavours more than anyone else in the industry and

is continuously launching new and innovative delicacies

Igloo ice-cream can be classified in six groups They are

Stick

Macho Choc-bar Mini Choc Clown Mega Shell n core Lolly

Cone

Cornelli 2 in one Cornelli classic

Cup

Shahi kulfi Vanilla Strawberry Mango Snow ball

Container

Vanilla Strawberry Mango Chocolate Coffee Diet Vanilla Tutti Frutti Ripple Pralin

Pistachio

Innovative

Nuggets Sandwich

Family

Ripple cake Party time Shahi Kulfi

Table 19 Products of Igloo

Single serve stick cups and cone items are easy to carry around and convenient to eat which

makes it most sold The core target segment of ice-cream is 6-24 years and this generation is

always on the Evaluation of Entry into Ice cream Business for Bangladesh Limited 30

move and thus prefers independent cone stick or cup items As Igloo initiated the concept of ice-

cream as a family product they offer some items to be enjoyed with the whole family

Quality and Innovation Igloo is committed to maintaining the highest quality standard through

its continuous RampD activities The major ingredients raw materials and packing materials are

procured from the best European sources Strict quality control is done at every stage of the

manufacturing process from procurement of material mixing material flow ice cream making

packaging storing (at main warehouse) distributing and market shelving by the Quality Control

Department Current supply chain for various materials of Igloo is as follows Australia (Milk

Powder) Denmark (Ingredients emulsifiers amp stabilizers) China amp UAE (Food grade sticks)

China Denmark Singapore amp Thailand (Food grade packing materials)

Figure 9 Igloo Supply Chain

Distribution Network Their distribution network is stretched all over the country with a long

fleet of refrigerated vans Firstly the ice cream products are stored at the central warehouse of

the factory and from there they are distributed through the haulage vehicle to the operational

centres located in Dhaka Chittagong Comilla Rajshahi Barisal Bogra Rangpur and Khulna

Strictest cold chain maintenance during the distribution and selling of the ice creams is ensured

Their distribution process is as follows Manufacture Stored at -24c Transported by Refrigerated

trucks at -Reaches amp Preserved in Eight regional stores Refrigerated vehicles (Distributors)Retail

outlets (Deep freezers)

Figure 10 Distribution Process of Igloo

Evaluation of Entry into Ice cream Business for Bangladesh Limited 31

Trolley Operation Igloo also operates through trolleys for extending its reach to consumers at

the furthest points The trolleys are operated near schools alleys streets parks etc and play

rhythmic music to attract the consumers These are very colourfully decorated with Igloo

umbrella and the puller wears specific uniforms Igloo was the first in introducing and operating

these trolleys in Bangladesh for any Fast Moving Consumer Goods (FMCG) Igloo has around

125 trolleys operating throughout the country Individual trolleys are provided with a regular

supply of igloo ice creams

Marketing The marketing commitment of Igloo is based on the relationship with its customers

and consumer by not only manufacturing the highest quality product but also delivering the

product by maintaining this quality To satisfy the ever-changing needs of the customer Igloo

has regularly launched new ice creams and introduced new flavours And this commitment has

positioned Igloo as the market-leading brand by gaining the consumers trust with the positioning

as ldquoA WORLD OF GREAT TASTErdquo

Facilities and Logistics at a glance As of 2009 following are the facilities and logistics enjoyed

by the company

Factory location

Dhaka

Production Lines

4

Packages

Stick Cup Family pack Others (Nuggets and sandwich)

Machine suppliers

1048766 Mark-Italy

1048766 Tetra Pak(Hoyer)-Denmark

1048766 Sabore Denmark

1048766 Hass- Austria

Machine models

1048766 Freemark 1100 Italy

1048766 FM 3000 FM 6000 Italy

1048766 SL600 Denmark

Cone baking

Hass- Austria

Chocolate making

Macentyre-UK

Coverage

Nationwide

Operational centre

10

Total market vehicles

30

Distribution channel

Directthrough appointed distributors

Outlet service

7500

Injected deep freezers

4000

Trolley operations

125

Warehouse no

8

Table 20 Igloo Facilities and Logistics

Kwality

Kwality is currently the second largest ice cream manufacturer of the country The mother

company for the Kwality brand is Sanowara Drinks amp Beverages Ltd a sister concern of

Sanowara Group The company is famous for powdered milk brands Red Cow and Diploma in

Bangladesh The drinks and beverage concern of Sanowara made an entry into the market in

1997 with ldquoYesrdquo brand drinking water and launched the ice cream brand in 1999 With heavy

communication and novelty products it Evaluation of Entry into Ice cream Business for

Bangladesh Limited 32

successfully removed Polar from the second place with a current market share of 27 The

company also operates in the boutique segment with two parlours in Dhaka and Chittagong

Kwality ice cream factory is situated in Chittagong with a floor space of 35000 sft and fully

automated machinery wrapping mix machinery equipments from Italy having capacity of

around 20000 litres of ice cream per shift The ice cream factory employs 140 people The

company is ISO 9001-2000 certified

Kwality was the first true competitor for Igloo products with some major innovation in product

design and communication but their quality is perceived to be lower in the minds of the

consumers and they do not have extrusion ice cream The product prices are also similar to that

of Igloo but they charge a bit lower than Igloo in premium multiple servings However during

market visits it was seen that shops that keep only Kwality or Igloo and Kwality both they can

sell Kwality too although the sales amount is lower than that of Igloo People who look for Igloo

shopkeepers give them that directly but if they get a chance and Kwality ice cream stock is high

they also push Kwality to dry the stock out This gives an indication that market is larger than

what the current players are capable of serving even in Dhaka

Kwality follows a similar distribution model like Igloo but distribution frequency is lower and

amount of cart sellers is limited to 25 and they operate only in Dhaka

Polar

Once a giant in the industry Dhaka Ice Cream Industries Ltd introduced the first hygienically

packed ice cream in Bangladesh in 1987 and the brand name Polar was thus born In the early

days the company started ice cream business with a wide range of products and a variety of

flavours in Dhaka city In 1988 the company started its distribution in the city of Chittagong

then Bogra and continued to cover more cities Presently Polar ice cream is available

throughout Bangladesh The company today trails in the market with 15 market share in the

common format segment Recently Polar has announced launch of ISIS diabetic ice cream with

support from DANONE to turn around in the market

The company has its head office as well as a modern large-scale industrial plant in Dhaka Polar

ice cream is made with Danish expertise using Danish equipment and technology The

production activities and quality control measures are supervised and managed by Danish

experts Polar offers a wide range of delicious flavours and tastes made by ingredients imported

from Europe

Dhaka Ice Cream at present has 3 cold stores in Dhaka Chittagong and Bogra in Bangladesh

From Dhaka cold store they distribute ice creams in Mymensingh Tangail Jamalpur Sherpur

Kishoreganj Netrakona Comilla Narsingdi Barisal Madaripur Agaeljhara Faridpur Magura

Chuadanga Jessore Satkhira Khulna Pirojpur and Sylhet through their distributors In case of

long distance delivery points the company uses auto cooling freezer van

Evaluation of Entry into Ice cream Business for Bangladesh Limited 33

In Dhaka city they distribute ice creams directly to retail stores in freezer vans Besides that

they have several distributors at different points of the city Distributors cover their individual

areas where company is not able to supply directly in their freezer vans Similar model is

followed by the company to distribute ice cream from their other cold storages through out the

country For storing and selling ice creams in retail stores the company like the other players

arranges a deep freezer with the Polar logo and canopy light box

In addition to this distribution the company also undertakes home delivery of ice creams for

special occasions

Savoy

Savoy Ice-cream brand is owned by Sena Kalyan Sangstha (SKS) Group of industries It started

its journey in March 1995 with a factory in Tejgaon Dhaka Yearly turnover is estimated at BDT

388 crores with a market share of roughly 35

The factory has been established with Sonali Bank finance at 6040 equity ratio The total

production capacity of the factory has been estimated at 2400 litres of Ice-cream per day Total

land area of the factory premise is 116 Bigha with 8000 sft area covered with a total project cost

of BDT 144 The factory employs 73 people

Product ranges of the company include all the basic designs and flavours of the industry

However the company has not been much of an innovator in the industry Their product quality

is substantially low than that of other players and they price their products at 10-15 lower than

the other competitors The company imports raw materials mainly from Europe The general raw

materials are Euro cream Skimmed Milk Powder Cocoa Powder and Flavour (Vanilla Mango

and Strawberry) Colour (Yellow Red Chocolate and Green) Ripple Sauce Cheney Fruit Palm

Kernel Oil Anhydrous Butter Oil (Ghee) and Sugar etc

Milk Vita

Milk Vita is one of the most famous brand names in Bangladesh for its liquid dairy milk Owned

by Bangladesh Milk Producersrsquo Co-operative Union Limited (BMPCUL) the company came in

the market with proper dairy milk ice cream in form of cups and choc-bar With a production

capacity of around 1600 litres per day the company is trailing in the market place with 3

market share

Although the Milk Vita Choc-bar was perceived to be extremely tasty by consumers they

probably could not do well due price competition Currently they do not even distribute ice

cream in Dhaka However their presence is seen in outskirts of Dhaka and other nearby towns

If the current market situation prevails Milk Vita would lose their remaining market share and

other companies would benefit especially Igloo However one of the advantages of Milk Vita

remains to be

Evaluation of Entry into Ice cream Business for Bangladesh Limited 34

their nation wide milk supply network They have skimmed milk powder production plant that

Igloo does not have Thus they can combat the seasonality of milk supply that Igloo with its

huge requirement of milk cannot

Strengths and Weaknesses of Competitors

Company

Strengths

Weaknesses

Igloo

1048766 Strong brand image

1048766 High product quality

1048766 Highest no of variety

1048766 Strong distribution network

1048766 Highest visibility

1048766 Strong promotion

1048766 High production capacity

1048766 Presence of extrusion ice cream

1048766 Items are generally a bit pricy

1048766 Igloo does not give free freezers like other companies

1048766 Reluctant in recent times regarding innovation

1048766 Local sourcing of liquid milk does not meet demand

1048766 Failure to use ERP technology slowing decision making

Kwality

1048766 Product variety

1048766 Strong promotion

1048766 Free freezer distributed

1048766 Presence in all price segments

1048766 High production capacity

1048766 Weak distribution

1048766 Lower exposure

1048766 low amount of carts in operation

Polar

1048766 Free freezer

1048766 Quality perceived to be high compared to Kwality

1048766 Discoloured freezers

1048766 Lower exposure

1048766 Low product variety

1048766 Unused capacity

Savoy

1048766 Price is lower

1048766 Discoloured freezers

1048766 Low product variety

1048766 Weak distribution

1048766 Small amount of freezers

1048766 Low production capacity

Milk Vita

1048766 Quality is good due to dairy cream

1048766 Brand leverage from Milk Vita milk

1048766 Low exposure

1048766 Low variety

Table 21 Strengths and Weaknesses of Competition

512 Market Characteristics of the Boutique Segment

With a small market of BDT 98 Cr and 567 share in the branded ice cream market the

boutique segment is currently an increasing segment in the ice cream industry Boutique

segmentrsquos history dates back to 1960s when Igloo launched boutiques in Dhaka to save

distribution cost and promote a culture of ldquoice cream eating outrdquo In later years boutiques lost

their glamour and retail common format segment picked up growth However with Dolce Vita in

the late lsquo80s craze for Italian Artisan ice cream was recreated in the market Although Dolce

Vita is failing in recent times emergence of MoumlvenPick and Club Gelato in 2000 has uplifted the

segment once again Current growth rate of the

Evaluation of Entry into Ice cream Business for Bangladesh Limited 35

segment can be estimated to be approx 20-22 (higher than the common format segment)

Following are the basic detail of all the major players in the segment with their estimated sales3

Players

Outlet

Sales (Cr Taka)

Share

Club Gelato

1

136

199

MoumlvenPick

1

119

174

Andersenrsquos

3

119

174

Gelateria Igloo

3

119

174

Sub Zero (Kwality)

2

051

75

Baskin Robbins

1

015

22

Dolce Vita

1

017

25

American Soft

1

009

12

Rainbow

1

009

12

Others (off site)

089

130

Total Market

682

Table 22 Players and Shares in Boutique Segment

A Detail of Operation

General operational procedure followed by all the operators is as follows

1048766 Operating method There is a variation in operational method among the large operators

1048766 Club Gelato uses kitchen at own premise where imported ingredients and local milk (daily

special service from Milk Vita) are used to make ice cream

1048766 MoumlvenPick directly imports ice cream from Switzerland

1048766 Andersenrsquos Gelateria Igloo and Sub Zero produce ice cream at their factory with a mix of

imported and local ingredients

1048766 Products Around 30-35 flavours of artisan dairy ice cream are served at the premises

1048766 Most sold flavours are Vanilla Ferrero Rocher Butterscotch Chocolate Caramel etc

1048766 Other Products Larger players also serve ice cream desserts (milk shakes ice cappuccino etc)

pastries and other desserts with normal coffee and tea facility at their premises

1048766 Boutiques fight ice cream seasonality with the other products sales during off-peak ice cream

seasons Usually ice cream and other products contribute at 6040 ratio in summer and during

winter and off-peak seasons the ratio reverses

1048766 Pricing Usually the prices of products in this segment are 3-4 times higher than that of the

common format segment

1048766 Prices do not vary with flavours Variation depends on serve style (Cone tub) and use of

toppings and other ingredients (Chocolate sauce nut fruits) etc

1048766 Usual margin charged is around 50-60 over production cost Similar margin is charged for

other products like coffee ice cappuccino etc

3 Yearly sales is estimated based on companyrsquos approximate daily sales collected during

interview

Evaluation of Entry into Ice cream Business for Bangladesh Limited 36

1048766 Target Group Most of the consumers belong to SEC A and higher SEC A with DMFI of at

least BDT 20000

1048766 Foreign delegates and resident foreigners also visit these boutiques

1048766 Main purposes of visits in the boutiques are

bull Youth hangout with friends and having ice cream and ice cream derivatives

bull Family Family night out or eat out at a restaurant and then having dessert

bull Foreigners Having dessert after dinner

1048766 Rush time at boutiques are Afternoon 2-4 pm and at night 9-11 pm

1048766 Offsite sales Most of the large operators also sell offsite They have small freezers for off-site

1048766 Club Gelato and MoumlvenPick serves ice cream at high society parties and programmes

1048766 MoumlvenPick also has kiosks in known hotels like Sheraton

1048766 Promotion No mass promotion is done by any of the companies Word of mouth is the most

important source of promotion Posters and banners outside the premise and occasional

newspaper advertisements are used to communicate special offers

1048766 Growth Drivers Market growth is driven by image innovation quality decoration of facility

environment and special offers

1048766 Club Gelato has the image of selling true Italian dairy ice cream with an excellent hangout

environment

1048766 MoumlvenPick imports ice cream directly from Switzerland and is perceived to be of high quality

1048766 Andersenrsquos operates with the image of ice cream from Denmark

1048766 Gelateria Igloo (from Igloo) and Sub Zero (from Kwality) could not establish the premium

artisan ice cream image

B Players in the Boutique Segment

There are very few players who have significant impact in the boutique segment Detailed

information of all the major boutique segment players is provided below

Evaluation of Entry into Ice cream Business for Bangladesh Limited 37

Club Gelato

Basic Company Information

1048766 Location Banani Road 11 (Planning for a second one in Dhanmondi)

1048766 Established in 2001

1048766 Seating Capacity 48

1048766 Area 1250 sft (including kitchen)

1048766 Owner Mr Jahangir Alam (Bangladesh)

1048766 Business Type Joint business partnership with Singapore

1048766 Staff 15 people (6 in the kitchen)

1048766 Production capacity 150 litres per day

Product Related Information

1048766 Product Italian style parlour scoop ice cream fruit juice coffee and pastries

1048766 Flavours Around 32 flavours available

1048766 Most selling Ferraro Rocher Vanilla Pistachio

1048766 Innovations New variants and ingredients are communicated by their Italian supplier and

Club Gelato decides what to take from them

1048766 Serve type Cup Cone Glasses Box for take away

Consumer Profile

1048766 Primary Teenagers and Young Adults (18-30) amp Diplomats

1048766 Secondary Family consumers for eat out

1048766 Income Group High income customers tentatively from SEC A and higher SEC A

1048766 Geographic Area Diversified

1048766 Rush time 8-10 pm

Sales and Price Information

1048766 Sales BDT 50000 (60 Ice cream 40 other desserts) daily in summer In winter however

other products sell more and thus they keep total sales at the same level

1048766 Price 750 per litre for any flavour

1048766 Sales Volume 50-60 litres per day

Supply Chain Placement Information

1048766 Milk Local sourcing from Milk Vita (4050 litres per day)

1048766 Chocolates amp Flavours Belgium France Germany

1048766 Transportation Mainly air (They can afford it due to high margin)

1048766 Contribution of various materials Flavours (30) Milk (20) other parts are water and air

Promotional Materials

1048766 Materials used are near premises POS materials for promoting the parlour only

Table 23 Detail of Club Gelato

Evaluation of Entry into Ice cream Business for Bangladesh Limited 38

MoumlvenPick of Switzerland

Basic Company Information

1048766 Location Gulshan

1048766 Established in 2000

1048766 Seating Capacity 55

1048766 Owner Mr Arif Mahmud

1048766 Business Type Franchise of International MoumlvenPick

1048766 Storage Capacity in Shop 150 litres

Product Related Information

1048766 Product Imported MoumlvenPick ice creams coffee chicken sandwich and Frappe

1048766 Flavours Around 30 to 35 flavours available

1048766 Most selling Swiss Chocolate caramel Vanilla Dream Espresso Strawberry

1048766 Innovations New variants are communicated by their franchiser and they decide on flavours

that they want

1048766 Serve type Cup Cone Glasses Box for take away

Consumer Profile

1048766 Primary Teenagers and Young Adults (18-30) (70) amp Diplomats

1048766 Secondary Family consumers for eat out

1048766 Income Group High income customers tentatively from SEC A

1048766 Geographic Area Concentrated in Gulshan and nearby areas

1048766 Rush time Afternoon- Young Adult 10 to 11 pm Foreigners

1048766 the company also serves at parties and has freezers in known hotels where their ice creams

are served

Sales and Price Information

1048766 Sales BDT 35-40000 daily in summer

1048766 Price 640 per litre for any flavour

1048766 Sales Volume 55-60 litres per day

Supply Chain Placement Information

1048766 Transportation Imported finished goods by ship

1048766 Ship travel time 19 days

1048766 Port clearance 10 days

1048766 Safety Cushion Extra 10 days

Promotional Materials

1048766 Materials used are near premises POS materials for promoting the parlour only

Table 24 Detail of MoumlvenPick of Switzerland

Evaluation of Entry into Ice cream Business for Bangladesh Limited 39

Andersenrsquos of Denmark

Basic Company Information

1048766 Location Gulshan (2 others in Uttara Dhanmondi)

1048766 Established in 2001

1048766 Seating Capacity 48

1048766 Owner United Group

1048766 Business Type Franchise of Australian company Andersenrsquos of Denmark

1048766 Production Tongi Factory of United Group

1048766 Production capacity 2000 litres per day in factory

1048766 Storage Capacity in Shop 150 litres

Product Related Information

1048766 Product Danish parlour scoop ice cream and coffee

1048766 Flavours Around 30 to 35 flavours available

1048766 Most selling Strawberry Butter Scotch Green

1048766 Innovations New variants and ingredients are communicated by their franchiser and they

decide on flavours that they want

1048766 Serve type Cup Cone Glasses Box for take away

Consumer Profile

1048766 Primary Teenagers and Young Adults (18-30) (70) amp Diplomats

1048766 Secondary Family consumers for eat out

1048766 Income Group High income customers tentatively from SEC A

1048766 Geographic Area Concentrated in Gulshan and nearby areas

1048766 Rush time 8 to 10 pm

Sales and Price Information

1048766 Sales BDT 10-12000 daily in summer

1048766 Price 460 per litre for any flavour

1048766 Sales Volume 40-50 litres per day

Supply Chain Placement Information

1048766 Milk 2025 kg packs are imported

1048766 Chocolates amp Flavours Imported

1048766 Butte paper Local sourcing

1048766 Transportation Ship

Promotional Materials

1048766 Materials used are near premises POS materials for promoting the parlour only

Table 25 Detail of Andersenrsquos of Denmark

Evaluation of Entry into Ice cream Business for Bangladesh Limited 40

Gelateria Igloo

Basic Company Information

1048766 Location Banani Kemal Ataturk Avenue (Two others in GEC Mor Chittagong and Naya

Paltan)

1048766 Established in 2000

1048766 Seating Capacity 20

1048766 Production From Igloo factory in Shyampur Narayanganj

Product Related Information

1048766 Product Parlour scoop ice cream and coffee only

1048766 Flavours Around 30 flavours available

1048766 Most selling Vanilla Strawberry Chocolate Pistachio Butter Scotch Tutti Fruity

1048766 Serve type Cup Cone Glasses Box for take away

Consumer Profile

1048766 Primary Teenagers and Young Adults (18-30)

1048766 Secondary Family consumers for eat out

1048766 Income Group High income customers tentatively from SEC A and B

1048766 Geographic Area Diversified

1048766 Rush Time afternoon and evening

Sales and Price Information

1048766 Sales BDT 8000 to 10000 daily in summer Nearly one fourth in winter

1048766 Price Varies but 350 per litre of vanilla

Promotional Materials

1048766 POS materials at the premises

Table 26 Detail of Gelateria Igloo

52 Price Comparison of Common and Boutique Segments

Price ranges of both common format and boutique segment cannot exactly be pin pointed as

products do not follow common structure and variations occur with use of toppings mixing of

flavours and use of coatings However a price comparison has been made among the brands

based on their price of per litre of vanilla flavoured ice cream in the market It appears to be as

following

Company

Price Litre Vanilla

Club Gelato

750

MoumlvenPick

640

Andersenrsquos

460

Dolce Vita

440

Igloo

100

Kwality

100

Polar

100

Milk-Vita

90

Savoy

85

Table 27 Comparative Price Analysis

As it can be seen there is price gap within the range of BDT 100-400 Ice cream kiosks and

small scooping boutiques can operate within that range

Evaluation of Entry into Ice cream Business for Bangladesh Limited 41

60 CONSUMER ANALYSIS

61 Target Group of Ice cream

Who are the consumers of ice cream This question does not have a clear answer Ice cream is a

food for all It is the only food consumed by a human being at less than 0 degree centigrade

temperature and people of all ages feel indulged to have it However we can determine focus

target groups for both branded common format and artisan boutique ice cream Group

discussions and market visits were done to get insight into the consumers along side resources

form secondary sources Age based target group is common for both segments but variation

among the groups occur mainly based on SEC and DMFI classification

611 Geographic Group

Branded ice cream remains an urban product till date Geographically branded ice cream has

reached urban and semi urban areas up to Thana Head Quarter levels Ice cream has reached

areas where electricity is available Small artisan players are available in places where large

branded players have no distribution

612 Target Age Group

Age wise grouping of target consumers is as follows

1048766 Urban kids in the age group of 5-14

1048766 They mainly consume normal sticks cups cones innovative fillers and water ice creams

1048766 Urban youth in the age group of 15-24

1048766 They consume premium and extrusion sticks and cones

1048766 Urban mothers in the age group of 25-35

1048766 They determine the family purchases Even when the father purchases ice cream decision is

taken by them

Consumption pattern of various age groups are depicted in the following chart Ice cream

consumption pattern50203005 to 14 yrs15 to 24 yrs25 to 35 yrs

Figure 11 Target Group wise Consumption Pattern Evaluation of Entry into Ice cream Business

for Bangladesh Limited 42

613 Target SEC and DMFI Group

Common Format

SEC A and B is the target group for common format ice cream However with rapid increase in

price level over the years has made it a ldquohard to consumerdquo product for SEC B consumers who

belong to lower DMFI group

Boutique Format

Boutique formatrsquos higher margin and high price range makes it an exclusively SEC A ice cream

People belonging to upper and upper middle class have access to the mediocre boutiques and

only higher upper class can have premium ice creams like Club Gelato and MoumlvenPick

Another unique target group for boutique format are the foreigners who live in Bangladesh

These people tend to visit the parlours to have ice cream as dessert especially after dinner

62 Ice cream in Consumer Lifestyle

Figure 12 Ice cream in Consumer Life style

This simple overview of ice cream in consumer lifestyle was determined based on in-depth

research analysis of UBL and validated through qualitative group discussions by the author

However detail of in-depth research is provided in a later section of this chapter

Evaluation of Entry into Ice cream Business for Bangladesh Limited 43

63 Highlights of Purchase Habit of Ice cream

631 Common Habits across Target Groups

There are some common habits that were identified in earlier researches and group discussions

with consumers Common habits mean the consumer approach towards ice cream that is seen

across all target groups eg kids youth and adult purchasers These are outlined below

1048766 Ice cream is mainly seen as a dessert or a snack Impulse ice cream is seen as a quick snack

that is consumed when it is in sight Visibility plays a big role here Regarding family packs

people see it as a post-food dessert

1048766 Ice cream purchase is commonly a planned event When the contexts arise people generally

take a bit of time to decide whether or not to have ice cream or when they want to go to a

boutique they make due considerations regarding which boutique to visit

1048766 Ice cream purchase decision is taken based on favourite flavour People tend to try out new

variants and flavours when they first see it They compare the taste with earlier experience and

when they purchase later they choose the flavour they have liked most

1048766 For In-Home segment decision is mostly taken on the flavour Generally people come up with

different flavours of choice and most voted flavour is chosen

1048766 People become aware of new variants or flavours mainly through word-of-mouth

Advertisement (new launches special offers and festivals) in newspaper is another source of

awareness

1048766 People are currently indifferent towards the price level of premium flavours However some

feel that price of Choc-bar or water ice creams (lolly) is a bit much If less they would have

consumed more Some also feel that companies should come up with branded ice cream in the

price range of BDT 5-8

1048766 Ice cream is purchased from nearby shops If required brand and flavour is not available 2-3

shops will be visited and then available flavour will be selected even if the required one is not

found This is done mainly not to ruin the mood for ice cream

1048766 People are very open to try new brands and flavours especially if it comes from a credible

source They would try new flavours and if they are satisfied with the taste they would repeat

purchase

1048766 Regarding boutique visits people feel that boutiques need to have a proper environment

enough flavours and other snacks

1048766 While visiting boutique with family or companion they want variation in flavours so that

they would order different flavours and taste each otherrsquos ice cream It is seen as a sign of

togetherness

1048766 Frequency of ice cream purchase varies among people It depends on peer pressure collective

family decision summer heat and attitude towards ldquoice creamrdquo itself as a product Evaluation of

Entry into Ice cream Business for Bangladesh Limited 44

632 Habits of Kids

1048766 Kids choose ice cream flavours by the look of the product (generally pictures shown in POS

materials and carts) They love colour and designs of the products let it be a common format or a

boutique ice cream

1048766 Kids (when in house) would go with the housemaid to the nearby shop choose the flavour

they want (within range of the amount given to the maid) and buy it

1048766 When with parents they would take the product they like even if the price is lower than some

other product However mothers play a role in this decision They would want their children not

to choose too high priced a product or coloured products

633 Habits of Youth

1048766 Young people are the main consumer of impulse ice cream They also are one of the major

consumers in the boutique segment

1048766 Young people love to try out new products that come into the market Another side of the coin

is that they are not very loyal to a brand or a flavour and tend to switch a lot

1048766 Regarding boutique visits young people go to boutiques to have an ldquoice cream hang outrdquo with

peer groups They would stay there for a longer period of time while they have their ice cream

1048766 Some times young people make milk shakes and other ice cream based desserts

634 Habits of Mothers

1048766 Mothers worry about their childrenrsquos health and they prefer ldquovanillardquo type of brands

However when price constraint occurs they go for water ice creams for their children They try

to convince their kidrsquos purchase decision

1048766 Regarding family purchase motherrsquos decision is sometimes prioritized by the whole family

64 Barriers to Ice cream Consumption

641 Emotional Barriers

1048766 Overindulge (close to sinful)

1048766 Undisciplined (no control)

1048766 Childish (licking)

1048766 Artificial Image

642 Functional Barriers

1048766 People of SEC B feel that ice cream is an expensive dessert (If less expensive would consume

more often)

1048766 It leads to cold cough - especially in winter rainy season

1048766 It contains artificial additives preservatives

1048766 It is very high in calories that lead to fattening

Evaluation of Entry into Ice cream Business for Bangladesh Limited 45

1048766 It does not quench ldquothirstrdquo

1048766 Less convenient (portable immediate eat)

1048766 Messy Dripping

65 Research Findings

The highlights regarding purchase habits triggers and barriers of ice cream consumption provide

a glimpse into the consumer world of ice cream industry However UBL CMI conducted a

formal research exclusively on ice cream consumers to identify

1048766 Occasions of ice cream

1048766 Frequency of ice cream consumption

1048766 Expectations from ice cream occasions

1048766 Personalities that they desire from ice cream

651 Relevant Occasions in Daily Lives of Consumers

Research question regarding ldquousual occasions of life that occurred most frequently in day-to-day

lives of the respondentsrdquo generated the following replies

Occasion

of Respondents saying Yes

Watching TV

93

Normal Dinner At Home

91

Normal Lunch At Home

89

At Home While ReadingMusicSurfing

86

Informal Family Get Together

85

Out Of Home Hanging Out With Friends

84

Out Shopping

84

Mid-Afternoon Break At Home

83

At Home By Myself During The Day

82

Special Dinner At Home

82

Informal Dinner Out Of Home

82

Normal Lunch Out Of Home

82

Leisure Walk

79

Coming Home From WorkSchool

78

Special Dinner Out Of Home

78

Celebration

78

A Night In With Friends

77

At Home By Myself In The Evening

77

Special Lunch Out Of Home

76

Mid-Afternoon Break Out Of Home

75

Special Lunch At Home

73

Day out with Partner

72

Midmorning Break

70

At Breakfast

68

Family Day Out

68

During Work Or At School

65

Evaluation of Entry into Ice cream Business for Bangladesh Limited 46

Travelling ToFrom WorkSchool

65

At The Cinema

61

Special Event

56

Clubbing At A Party

50

Post GymSports

48

Table 28 Relevant Occasions in Consumersrsquo Lives

Respondents were then asked to mention ldquofrequency of occurrence of the identified occasionsrdquo

The identified replies are as follows Normal dinner at homenormal lunch at homeComing home

from workschoolTraveling tofrom workschoolDay out with Partner SpouseMid-afternoon

break at homeOut of home hanging out with friendsLeisure walkMid-afternoon break out of

homeA night in with friendsSpecial dinner at homeSpecial lunch out of homeFamily day

outSpecial eventPost gymsportsDaily2-3 Times A WeekWeekly2-3 Times A MonthOnce A

MonthEvery 2-3 MonthsLess OftenNever Figure 13 Frequency of Occurrence of Occasions

This shows that ldquoNormal dinner at home Watching TV Normal Lunch At Home At Home

While ReadingMusicSurfing Coming Home From WorkSchool During Work Or At School

Travelling ToFrom WorkSchool Midmorning Break Day Out With Partner Spouse At Home

By Myself During The Dayrdquo are the most frequent daily rituals of busy lives of consumers

652 Frequency of Ice cream Consumption

Respondents were asked to mention ldquoconsumption pattern of ice cream during the identified

occasionrdquo on a scale of 1-5 depicting frequencies like ldquo(5) always (4) most of the times (3)

about half of the times (2) sometimes (1) never do not knowrdquo The responses are depicted in

the following table

Evaluation of Entry into Ice cream Business for Bangladesh Limited 47

444474544655555566756665775967779991011101111101210111110101113111412131314161

011121411131216181519181518211817171719181718201721222130303434253437403741394

046383944464746453745414641374638504843414839373030292726232725222020201926202

21722221317Midmorning

breakWhile clubbing at aAt the cinemaSpecial eventNormal lunch out ofA night in with

friendsNormal dinner atInformal dinner out ofAt home by myselfAt home by myself inOut

shoppingSpecial lunch atDay out with SpouseWatching TVAlwaysmost of the timesAbout half

of the timesSometimesneverdo not know

Figure 14 Frequency of Ice cream Consumption

As it can be seen ldquoDay out with Spouse Special lunch at home Special dinner at home

Watching TV Family day out Celebrationrdquo are the occasions where most frequently ice cream is

consumed

653 Market Character Mapping Relevant Occasions vs Frequency of Consumption

If we plot frequency of consumption on the X-axis of a chart and relevance of occasion

occurrence on the Y-axis taking the above mentioned values as cut-off values we get four

quadrants in the chart depicting four market scenarios that any ice cream manufacturer in

Bangladesh market might encounter given the current market situation This market

segmentation is based on frequency of ice cream consumption in daily occasions of consumer

lives

The segments are

1048766 OPPORTUNITY MARKET High Relevant Occasions-Low Ice cream Frequency

1048766 QUESTION MARKET Less Relevant Occasions-Low Ice cream Frequency

1048766 HIGH FREQUENCY MARKET Relevant Occasions-High Ice cream Frequency

1048766 CAPTIVE MARKET Less Relevant Occasions-High Ice cream Frequency

The chart looks as follows Evaluation of Entry into Ice cream Business for Bangladesh Limited

48

Figure 15 Relevance of Occasion-Frequency of Consumption Mapping

As it can be seen from the above chart Bangladesh Market still lies in the Opportunity and

Question market zone with a pull towards High frequency and Captive Market zones This is

evident from market data as penetration of ice cream still remains at Thana headquarters levels

Also this explains the high market growth rate of 17 as market is yet under developed and

branded quality ice cream has yet not reached all levels of consumers especially rural level that

constitutes around 75 of Bangladeshi market

From the above analysis we can establish that target of ice cream manufacturers should be to

penetrate more into the Bangladeshi market to create higher frequency of ice cream

consumption The following chart shows the strategies to follow for ice cream manufacturers

Figure 16 Required Market Strategy for Bangladesh

Evaluation of Entry into Ice cream Business for Bangladesh Limited 49

As relevance of ice cream consumption occasions can hardly be controlled by marketers their

endeavour should be to create more ldquoemotional and functionalrdquo attachment to ice cream in less

frequent occasions through ldquomarket developmentrdquo strategy to earn share from overall food

expenditure of consumers and at the same time make them consume more ice cream in highly

relevant occasions through ldquopenetrationrdquo strategy

654 Consumersrsquo Emotional Requirements and Product Attributes

All consumers under these clusters also identify the emotional requirements and the significant

product attributes they seek from their current preferred and future desired ice creams These are

provided below

Cluster

Emotional Functional Requirement

Product Attributes

Enjoyment

Flavour Variety

1048766 Combination of different flavours

1048766 Combination of different textures

1048766 Very sweet

1048766 With wafer or biscuit

1048766 With chocolate

1048766 Of a well known brand

Socially Involved

Spoonable Rich

1048766 Very creamy

1048766 Only natural ingredients

1048766 No mess

Care

Size Creaminess

1048766 Big

1048766 Rich full taste

1048766 Smooth

1048766 Value for money

1048766 No mess

Unwind amp Escape

Economy

1048766 Crunchy

1048766 Economic

1048766 Of a well known brand

1048766 Nutritious

Balanced Convenience

Health Conscious

1048766 Of a well known brand

1048766 Nutritious

1048766 Milk based

1048766 Low sugar

1048766 Low carbohydrates

1048766 Filling

Active Self-Grooming

Fruit Vitamins

1048766 Healthy

1048766 Fruit based

1048766 Low fat

1048766 Liquid or drinkable

1048766 Nutritious

1048766 Of a well known brand

Confidence

Drinkable Light

1048766 Low calories

1048766 Light on the stomach

1048766 Chewy or gooey

1048766 Not so sweet

1048766 Natural appearance

Sensual

Appeal or image

1048766 No artificial additives

Evaluation of Entry into Ice cream Business for Bangladesh Limited 50

1048766 Natural appearance

1048766 Melting slowly

1048766 Attractive packaging

1048766 High quality ingredients

1048766 Of a well known brand

Table 29 Requirements amp Product Attributes Desired by Consumer Clusters

Of these findings we see that the identified highlighted barriers to ice cream consumption are

pretty evident among the consumers Mostly people want products of a reliable source or a well

known brand low calories quality ingredients value for money economic type

Evaluation of Entry into Ice cream Business for Bangladesh Limited 51

70 INDUSTRY ATTRACTIVENESS AND ENTRY PROSPECTS

71 Driving Forces of Growth

As identified in the earlier sections there are several driving forces behind the growth of ice-

cream industry in Bangladesh

712 Trade and Infrastructural Level

1048766 As a result of globalization newer varieties have been introduced to the local products Many

foreign companies are also coming as franchise so there has been increased competition and

these boutiques are setting higher standards for the local producers

1048766 The present market growth rate is 18-19 which is being influenced by larger players like

Igloo who are expanding their distribution nation wide with expansion of national electricity

grid

1048766 With entry of Modern Trade and recent organized business approach of retailers has made it

possible for ice cream manufacturers to penetrate into shops even without providing them with

branded freezers

1048766 Weather change has increased ldquosummerrdquo season in our country which has reduced negative

seasonal impact on ice cream

1048766 Large companies like Igloo have taken global learning of using carts as an effective tool of

availability and visibility for ice cream

1048766 New and improved technologies are being used in the production process This technological

advancement has improved quality increased speed of production and made the process more

cost effective

713 Consumer Level

1048766 Only a few years back rich people could afford the luxury of having ice-cream but now it has

become a common product for everybody Ice-cream companies are producing different products

with a wide price range for consumers of every class and status

1048766 Nowadays companies are doing promotional campaigns more frequently the customers get to

know about the product which makes it easier for them to buy the best one

1048766 The improved standard of life and more modernized lifestyle of people is an important reason

for the increased consumption thus growth of the ice-cream industry

Evaluation of Entry into Ice cream Business for Bangladesh Limited 52

72 Prospects of Entry

The ice-cream industry of Bangladesh is an attractive one for the investors because there is a

huge market but number of producers is very small The major reasons behind industry

attractiveness are as follows

1048766 The industryrsquos current growth potential is very high with opportunity for market development

1048766 The competition currently permits adequate profitability and the competitive forces are

becoming stronger with time

1048766 Boutique segment is at a very high growth stage but no operator is currently operating with a

mid price range of BDT 100-400 Ice cream kiosks and small scooping boutiques can operate

within that range

1048766 Current industry driving forces are favourable for the future industry profitability

1048766 Globally oriented consumers look for variety in ice cream that is currently not available

Latest innovations came in the market in 2002 People would welcome new variety and flavours

1048766 There is a gap in the market for balanced convenience through ice cream where consumers can

get nutritional benefits for ice cream Also emotional attachment to ice cream could further be

improvised in promotional campaigns

1048766 There is high scope for market penetration and development to increase frequency of ice

cream consumption

1048766 Level of risk or uncertainty is very low in ice-cream industry because the consumer market is

so huge any product with a standard quality and careful pricing will be able to make significant

profit

1048766 As for geographic reach of the industry 60 market is still in Dhaka There is scope of

expansion and a new entrant can easily capture market share within Dhaka using carts even if

they do not want nation wide cold chain distribution

1048766 The production process is very complex and capital requirements are also high So before

going into production any company should know about their capabilities and weaknesses and

then start the business or else they might suffer huge loss at a certain level

1048766 Unilever can acquire the required resource and use existing multi-national multi-cultural

expertise to enter the market in a grand way

1048766 With high probability of entry from DANONE with more products like the ISIS diabetic ice

cream Unilever should consider entering in this industry as soon as possible

Evaluation of Entry into Ice cream Business for Bangladesh Limited 53

80 ENTRY STRATEGY FOR UNILEVER

While describing the suggested entry strategy for UBL certain issues have been kept

confidential and some issues have been touched but not explained to keep consistency with UBL

confidentiality policy

81 Suggested Entry Areas for UBL

1048766 Boutique segment of the Bangladesh ice cream is only 5 of the branded market UBL needs

to pursue a larger scope to make the entry viable

1048766 UBL cannot fight with unbranded segment as global product quality mandate of Unilever does

not allow UBL to fight in low price-low quality segment

1048766 Recommend entry should be in the common format segment with both single and multiple

servings and in the boutique segment with a different brand name (if possible BEN amp JERRYrsquoS)

1048766 UBL should build up state-of-art modern factory for manufacturing and establish cold chain

facilities initially focusing on metro cities

1048766 Investment issues are required to be addressed for building factory and cold chain and capital

requirement needs to be identified for that purpose4

1048766 UBL may have boutiques for driving image selective top-end offering

1048766 Kiosks can be setup near universities and shopping malls

1048766 Boutiques should be concentrated in Dhaka and Chittagong

1048766 Ice cream for boutiques and kiosks would be produced in factory as institutional packs of 9-10

litres

82 Products

1048766 As a Brand Building country in global Unilever operating framework UBL is entitled only to

bring products developed by the Brand Development countries

1048766 Unilever should focus on serving products that have nutritional benefits (already available

globally) along with usual satisfactions of sensual pleasure functional attributes etc

1048766 Current existent players especially Igloo and Kwality have extensively copied global and

regionally available Unilever products eg Cornelli is same as Wallrsquos Cornetto Vinetta is similar

to Vienetta Mega is similar to Magnum etc UBL needs to differentiate these to consumers on

the ldquotaste the originalrdquo platform where global quality is focused regarding the products

1048766 UBL should also bring regionally famous brands like Moo or Max to create image

differentiation

1048766 Magnum or Moo should be used as premium end ice cream to generate more profit margin

Evaluation of Entry into Ice cream Business for Bangladesh Limited 54

83 Placement

1048766 Distribution focus should be in Dhaka for entry as Dhaka contributes more than 60 of total

ice cream sales in the country

1048766 Company may use carts as distribution method They serve as good source of visibility and

availability It would help in increasing impulse purchase

1048766 At least 1500 outlets in Dhaka and Chittagong needs to be actively served using dedicated

branded refrigerators to generate sales

1048766 50 carts should operate in Dhaka and Chittagong

84 Price

1048766 UBL products should be priced at par with Igloo pricing for the common format ice creams

1048766 UBL can bring in premium single-serve SKUS for the higher economic classes in the price

range of BDT 60-80

1048766 Smaller SKUs (small lolly stick) can be introduced in the price range of BDT 10-15

1048766 In the boutique segment UBL should price products above the semi-premium segment

(Gelateria Igloo Sub Zero or Andersenrsquos) but lower than that of Club Gelato or MoumlvenPick

85 Promotion

1048766 UBL would require strong marketing campaign (As high as 50 of sales) to have a grand

entry in the market

1048766 Presence in the television media would be of utmost importance More than 50 of

promotional expense should be made here initially Gradually it can be reduced

1048766 Newspaper would serve as the second most important option

1048766 Billboards should also be used

1048766 Activations (similar to Lux Channel i Super Star or Igloo Festival) should be done to generate

trial

86 Scope of Opportunity

Table 30 Value and Volume Based Scope of Opportunity for UBL

Value (BDT Cr)

Volume (Tons)

Market

131

7835

Common

121

7600

Boutique

98

235

Evaluation of Entry into Ice cream Business for Bangladesh Limited 55

861 Geographic Contribution

1048766 Dhaka (61)

1048766 Chittagong (19)

1048766 Sylhet (10)

862 UBL objectives

Common Format Ice Creams

1048766 Target 10 Market share in 1st year operation

1048766 Value BDT 11 Cr

1048766 Production capacity required 21 Tons day

1048766 Freezer Placement 1500 freezers

1048766 Cart operation At least 50 carts

Boutiques

1048766 Target Further develop the market

1048766 Focus Dhaka Chittagong and Sylhet Metro

1048766 Franchise At least 20 franchisee operations nation wide in divisional towns

1048766 Pricing Below imported parlours above common formats with around BDT 400 per Litre

87 Critical Success Factors

1048766 UBL is considered as a high profile company in Bangladesh and thus they cannot operate in

the market only with common products like choc-bars and cups They must have premium

products (these require extrusion line) also to carry their brand image Otherwise UBL would not

be able to charge usual premium over competition products

1048766 Launch of ice cream would require huge promotional and activation support in order to gain

customers from Igloo People want novelty regarding ice cream and UBL have to let them know

about their products and create hype

1048766 Cart should be used as a source of distribution Recent successes of Unilever companies like

Indonesia shows that carts can generate more sales and can be used as source of visibility in the

minds of both retail traders and consumers Carts can also provide incremental sales to the

company

1048766 UBL have to create a strong cold chain for ice cream (initially in Dhaka and Chittagong) to

ensure quality products for consumers

1048766 UBL have to build capacity very rapidly to meet consumer demand if the launch is successful

Evaluation of Entry into Ice cream Business for Bangladesh Limited 56

90 BUSINESS PROJECTION

91 Basic Assumptions

Business projection for ice cream business was made based on a conservative approach UBL

would require spending significantly on production capacity and factory dedicated to ice cream

Thus to analyse business possibilities of ice cream certain assumptions were made and collected

data were used These are

1048766 Production equipments and cabinets would cost approximately BDT 55 crores

1048766 Production equipments 45

1048766 Packaging Equipments 15

1048766 Storage Facility 20

1048766 Branded Freezers 10

1048766 Distribution Investment 10 (Distributors would also invest themselves)

1048766 Ice cream factory with a floor size of 20000 sqft would cost BDT 25 crores

1048766 Objective is to capture 10 market share in Dhaka and Chittagong in the first year

1048766 Business would grow by 50 in year 2 and 3 30 in year 4 and 25 in year 5

1048766 Weighted price per litre is BDT 170 according to volume share of single serve ice cream

multiple serve ice cream and boutique ice cream

1048766 Other financial assumptions were also made List of them are provided below but amount has

been removed for confidentiality issues

Assumptions

Trade Margin

Distributors Margin

DutyVAT Rate

Trade Terms Expense of NPS

Trade Terms Expense of NSV

Advertising ampPromotion of NPS

Indirects (Salaries Wages etc)

Trading Tax

Table 31 Assumptions for Business Projection

Evaluation of Entry into Ice cream Business for Bangladesh Limited 57

100 CONCLUSION

Ice cream has good prospect in Bangladesh It is still a growing market with opportunities for big

new entrants With the barriers of entry UBL needs to consider its priorities UBL being an HPC

company traditionally needs to acquire expertise in cold chain distribution and has to invest a lot

of money to rip the benefits of the industry However to initiate company can take regional

support and acquire resource expertise The company should enter the business as soon as

possible since there is potential threat from DANONE to introduce more ice creams after ISIS

diabetic ice cream and also with potential of the industry arch rival Nestlersquo might consider

entering into the industry too

Evaluation of Entry into Ice cream Business for Bangladesh Limited 58

References

Web References

1 wwwunilevercom

2 wwwunilevercombd

3 wwwhllcom

4 wwwunilevercompk

5 wwwthedailystarcom - Life Style Magazine

6 wwwreuterscouk

Evaluation of Entry into Ice cream Business for Bangladesh Limited 59

Page 3: Square Ice cream

position in recent times However Igloo bounced back every time they faced challenge Milk

Vita came in the market with proper dairy ice cream but failed to create an impact as their core

business is not ice cream

Boutique Format

Boutique format ice creams are sold through dedicated outlets where there is seating facility for

consumers They can see the products flavours open in freezers and can choose directly Also

consumers can decide what type of packing to use eg cup cones or containers and based on the

consumers decision product is either served for consumption at the premises or take away

Evaluation of Entry into Ice cream Business for Bangladesh Limited 17

Boutique format has seen an upsurge from year 2000 with introduction of premium franchise

and imported ice creams This segment is driven by Dhaka and Chittagong based players Club

Gelato MoumlvenPick Andersenrsquos Gelateria Igloo Baskin31Robbins and Sub Zero are the major

players in the segment Among these Gelateria Igloo and Sub Zero are run by common format

players Igloo and Kwality respectively

412 Unbranded Market

The unbranded market basically is constituted with around 20000 local small producers that do

not use any brand leverage and compete in the market based on significant lower price in the

range of BDT 1-5

Market size of this segment is significantly high with BDT 79 Cr These producers are mainly

rural and suburb based where concentration of SEC C and lower SECs are high They mainly

produce water ice cream sticks or in colloquial terms ldquoBaarfirdquo These are made with saccharine

and colours They also produce small amount of milk based kulfi These ice creams are very

unhygienic and of low quality

42 Historical Progress of the Industry

1048766 Before 1964 Ice cream market dominated by unorganized unbranded approach

1048766 1964 Igloo started large scale organized approach under K Rahman amp Co Ltd

1048766 1965 Igloo opened up the first ice-cream parlour in Dhaka

1048766 1971 Igloo was nationalized by the government of Bangladesh after liberation

1048766 1972 In June Igloo was handed over to Bangladesh Sugar amp Food Industries Corporation

1048766 1983 Abdul Monem Ltd acquired Igloo under privatization policy

1048766 1986 Polar started operation introduced food grade plastic based packaging They

immediately became market leader with extensive campaign

1048766 1988 Dolce Vita Gelato one of the dedicated boutique operator brought premium ice cream

1048766 Early 1990s Rainbow and Snow White started extensive operation in the boutique segment

1048766 Late 1990s American Soft Ice cream started promoting the soft ice cream format

1048766 1995 Savoy was introduced but failed due to product quality though in suburban areas they

grabbed share with low price

1048766 1996 In September Igloo organized a massive marketing campaign

1048766 Introduced the first straight line extrusion ice-cream in the market

1048766 They initiated a massive campaign and became market leader after 10 years

1048766 1997 In February Igloo took a devastating decision to increase price for the cup line

1048766 Igloo not only incurred substantial financial loss but also lost the hard earned market share

The question of sustaining became a central issue

1048766 In summer Price of 11 items were revised and communicated as special discount

1048766 This instantly pushed them to the number one position

Evaluation of Entry into Ice cream Business for Bangladesh Limited 18

1048766 1999 Kwality ice-cream entered the market

1048766 2000 Entry of the premium boutique operators like Club Gelato MoumlvenPick and

Baskin31Robbins

1048766 2002 Kwality launched an extensive campaign and started to capture the ice-cream outlets of

the city by providing freezers

1048766 2004 Kwalityrsquos number of freezers exceeded Polarrsquos and moved to second position

1048766 2005 onwards Igloo leads the market and there is immense competition among Polar and

Kwality for the coveted 2nd spot

Historical progress of this industry is of great importance Bangladesh ice cream industry has

traditionally been exposed to high quality products for a long time Igloo initiated the progress of

boutique segment (1965) but it lost its way over time The segment picked up once again in the

recent years Also high quality products and innovations in the common format segment have

created an appreciation for continuous innovation and better products in the minds of the

consumers Consumers in Bangladesh see ice cream as a fun product which requires novelty and

quality coupled with continuous hype around the brand This is why we see Kwality and Polar

could create early impacts with their entry into the industry as they came up with innovations in

product or packaging and arranged massive marketing campaigns during their launches Igloo

had to minimize their effects with similar campaigns to hold on to their position

Evaluation of Entry into Ice cream Business for Bangladesh Limited 19

50 MARKET amp COMPETITION ANALYSIS

51 Market Description

Bangladesh ice-cream industry is growing With increasing market demand size of the industry

is growing but due to entry barriers of lengthy and complex production process and high

investment few companies enter this business Although local companies in the branded segment

have captured most of the market share small unbranded local companies own a huge market to

themselves Where branded ice cream consumers look for innovation and quality unbranded

users outside metro cities are currently inclined towards low price low quality products This

creates an opportunity for further market development on the hygiene and health platform On

the other hand the boutique industry is doing quite well with their approach towards ice cream

as a dessert item along with service of other snacks like cakes and coffee at their premises which

help them reduce seasonality effects of ice cream

With a complicated scenario in the market to analyze the industry condition and understand the

competitive realities details of market characteristics and players of both common and boutique

segments are explained in following sections However unbranded segment is excluded from

discussion as Unileverrsquos portfolio does not match the characteristics and price level of this

category

511 Market Characteristics of the Common Format Segment

A Market size

Due to promotion innovation and exposure to different cultures the consumption of ice cream

has increased As a result the total market size is expanding At present the local companies in

the common format segment have a huge market of about BDT 121 Cr This market is 16 times

larger than the boutique segment and nearly doubles the unbranded segment Over the years the

size increase of the industry shows the prospect of converting unbranded unhygienic ice cream

consumers into branded ice cream consumers However price level still remains a big problem

for the branded category as petty unbranded ice cream companies with a price range of Tk1 to

Tk5 have a total market size of BDT 79 Cr which shows a hint of high price sensitivity in lower

SEC consumers Overall market size of 220 Cr indicates that most of the people in the country

are exposed to ice cream or some kinds of derivatives of ice cream like ldquoBaarfirdquo however they

probably cannot afford higher priced icy fruit sticks (BDT 6-10) available in the branded

segment

B Competitive rivalry in the Market

Competition is not very intense among the existing five companies because the number of

operators is very small considering the total population Also complexities of production and

distribution process and other entry barriers are stopping new companies from entering the

industry Evaluation of Entry into Ice cream Business for Bangladesh Limited 20

Igloo is confident about its unbeatable first position but there is competition among other

companies such as Polar and Kwality for the 2nd position However in current market no

operator is showing much aggressive and visible activity towards growth It is expected that

recent announcement regarding introduction of ISIS diabetic ice cream by Polar in partnership

with DANONE would again create some hype in the market

Reasons behind existing level of rivalry among competitors can be attributed to following

reasons

1048766 The ice cream industry has few sellers because there is economy of scale through large-scale

production The larger firms have a cost advantage over smaller firms they can produce more

cheaply- making it hard for small firms to survive

1048766 Market is bigger than capability of current players and can accommodate them without much

trouble This is because PCC of ice cream in the country is still pretty low

1048766 This market has substantial amount of ldquobarriers to entryrdquo making it difficult for a large

number of competitors to enter the market The cost of setting up a new plant in this industry is

quite high The cost of entry works as an entry barrier

1048766 To get people to try new product the potential entrant will have to run a big competitive

advertising or massive promotional campaign which is expensive The prevailing companies

created barriers in entry for potential rivals by using extensive advertising and product

differentiation earlier which has its effects till now Another fact is that product awareness and

brand loyalty to the existing firms make it expensive for potential rivals to enter

1048766 To further elaborate present competitive reality of the industry the five competitive forces are

discussed below

1048766 The rivalry among the competing sellers is weak as market is yet to develop more

1048766 With various entry barriers not many new companies are attempting to enter this industry

1048766 As there are no direct substitute products to ice-cream the companies donrsquot face any

competition from other industries

1048766 As the number of suppliers is very low and the companies especially Igloo as the best product

enjoys high bargaining power or leverage over rivals But some of the companies such as Savoy

are concentrating on increasing profit margin of the retailers for securing a more prominent

position in the market

1048766 Mainly consumers or buyers decide the pricing Keeping in mind the various buying power of

people the companies decide the price of each items Price of the Items that have the most

market demand is kept low so that they are in the reach of the general customers By lowering

the price some companies such as Savoy are trying to maintain a competitive edge

Evaluation of Entry into Ice cream Business for Bangladesh Limited 21

C Market Sales and Growth Rate

Sales information of the five existing companies for the current years shows the following trend

Company Name

2007

2008

2009

Total Market

11307

12120

13122

Igloo

5785

6086

6425

Polar

168

1835

2019

Kwality

306

335

374

Savoy

388

415

458

Milk Vita

394

434

488

Table 9 Market Sales and Growth Rate of Branded Common Format Market

Volume based market size shows the following scenario prevailing in the Bangladesh market in

2009

Company Name

Single Vol (000 Ltrs)

Multi Vol (000 Ltrs)

Total Vol (000 Ltrs)

Total Market

32759

42967

7573

Igloo

16760

21983

3874

Polar

4867

6384

1125

Kwality

8865

11628

2049

Savoy

1124

1474

260

Milk Vita

1141

1497

264

Table 10 Volume Based Market Size

The total volume of the branded common format ice cream industry is 7500 Tons of which more

than 50 belongs to Igloo followed by Kwality with 27

D Market Share and Size of the rivals

Market share data for all the local companies show a trend where Igloo is the biggest ice-cream

company dominating with a huge market share Although even 1-2 years ago there was intense

competition between Kwality and Polar but now it seems that Kwality is 2nd largest ice-cream

manufacturing company in Bangladesh Polar is in the 3rd position with Savoy and Milk Vita

trailing in the market Market share percentage over the years is presented in the following table

Company Name

2007

2008

2009

Igloo

50

5031

5116

Kwality

256

2666

2706

Polar

17

161

1485

Milk Vita

34

332

348

Evaluation of Entry into Ice cream Business for Bangladesh Limited 22

Savoy

39

365

343

Table 11 Market Share of Competitors

E Geographic Sales Orientation

Ice cream still continues to be a city-oriented product and its demand is comparatively low in the

rural areas Reasons behind this are electricity problem outside urban areas and purchasing

power of people Geographic sales orientation of the common format ice cream industry is

provided below

611890690480590250DhakaChittagongKhulnaComillaBarisalOthers

Figure 7 Geographic Sales Orientation

Dhaka still is the largest contributor in the ice cream segment Nevertheless over the years this

trend is shifting Areas outside Dhaka are also growing making Dhakarsquos share lower by small

percentage As urban markets are the major contributors companies design their products

keeping in mind the tastes and styles of the urban consumers Compared to the other companies

Igloo is the most expensive in the common format segment so they target only city based

customers who have the purchasing power Although other companies such as Savoy are offering

low priced product even their main target is urban people due to nation wide electricity problem

F Seasonality of Sales

Ice cream industries in warmer part of the world are highly seasonal Same is true with

Bangladesh According to secondary data sources sales seasonality looks as follows

Period Name

Months

Contribution

Super-Peak

April May June

46

Peak

March July August

36

Off-Peak

February September October November

15

Super Off-Peak

December January

3

Table 12 Seasonality of Ice cream Sales

This data was validated through interviews with retailers during market visit According to them

more than 75 sales of ice cream came in the hot months Another insight that could be

identified was

Evaluation of Entry into Ice cream Business for Bangladesh Limited 23

various festivals and programmes provide scope for higher volume of ice cream sales According

to companies where only 10-15 sales occurs in the winter season same amount of sales occurs

during festivals like the two Eids and Nobobarsha

G Distribution Servicing System

Mainly common format ice-cream is distributed in two methods that are directly to retail shops

and through hawkers with ice cream carts trolleys

The various channels of retail shops other than cart that serve as distribution outlets for Ice cream

are

7 Urban General Stores (UGS)

8 Urban Neighbourhood Grocer (UNG)

9 Premium General Store (PGS) SMMT

10 Confectionary Bakery

11 Modern Trade (MT)

12 Fast Food shops (Recently some fast food shops keep branded ice cream cabinets)

Distribution details of all the companies are provided below However detail of Milk Vita is not

available as they are mainly milk producer and they have no dedicated ice cream cabinet for

retail stores and currently they are not distributing ice cream in Dhaka city

Company

Distribution Method

Frequency

No of Cabinets

No of Carts

Igloo

Distributor Cart

2 to 3 times a week

4000

100

Kwality

Distributor Cart

1 to 2 times a week

1050

20

Polar

Distributor Cart

1 to 2 times a week

800

50

Savoy

Company

1 to 2 times a fortnight

176

-

Milk-Vita

-

-

-

-

Table 13 Distribution Method of Market Players

Distribution Process Distribution process through both methods is described below

Retail Distribution The general distribution that is followed by companies is that distributor

sends large refrigerated trucks dedicated to specific territories These trucks are accompanied by

small refrigerated vans Main road side shops are served directly from the large truck and shops

that are inside small streets are served by the small vans

Order and delivery are done on the same day The strategy followed is that of replenishment If

the branded freezer of the company is empty they simply fill it up according to requirement of

different SKUs as the delivery people see fit However shopkeepers have to buy full cartons

(usually 24 pieces in a carton) of single serve ice cream they cannot buy in pieces

Evaluation of Entry into Ice cream Business for Bangladesh Limited 24

Among the retail shops there are about equal numbers of branded and unbranded freezers This

is a normal scene in Dhaka where all shopkeepers require freezer to keep other cold products

However basic distribution policy is that if a shop has branded cabinet of a company they

cannot keep competitor ice cream in that cabinet Thus penetration can be made possible in

shops where unbranded freezers are available

General branded freezer contract policy with Igloo and Polar is that traders have to pay BDT

5000 to take a freezer Maintenance of branded freezers is responsibility of the company but

electricity bill is paid by shopkeeper However Polar is not currently giving any new freezer

Kwality gave away their freezers for free however they ensured safety of their freezers by

checking background of the shopkeepers

Cart sellers Cart sellers collect required amount of ice cream from nearby distribution house or

company showroom (Igloo has one showroom in Panthapath) on a daily basis They also have to

buy cartons of products not pieces Kwality carts collect their ice cream from factory (Tejgaon)

or nearby distribution house Cart sellers contribute around BDT 3000 sales in a day and

generally sell at BDT 1-2 higher than set price of each product

The cart sellers generally keep at least a two-day stock so that they can meet sudden upsurge in

daily demand of ice cream or if they get the opportunity to sell at parties programs or any open

air event (Wedding at community centres or outside cultural programs at auditoriums) If cart

sellers need replenishment of stock they even take service more than once in a day either

revisiting showroom house or they call up company delivery people to serve them at their

location if there is opportunity for selling more ice cream

Policy regarding Damaged Ice cream All the ice cream producers have very good relationship

with the shopkeepers If the retailers have refrigeration problem company takes ice cream back

until the problem is fixed whether it is stored in branded freezer or not Also if any ice cream

gets damaged or there is bacterial formation company takes them back Usual return time varies

from 15-30 days For large sellers however they take less time

Payment Method for Ice cream Purchase All the companies give credit of around one month to

large volume contributing retail sellers and try to maintain good relationship with them This

trend is seen in all channels Also all the SMMTs and MTs are given credit of one month and

payment is made by cheque Other small shopkeepers have to purchase with cash However

according to shopkeepers Igloo is currently trying to cut down on credit sales as they believe

there is a consumer pull for their brand Companies like Polar and Kwality also give special

commission to large sellers Polar gives 5 commission on every bill

Evaluation of Entry into Ice cream Business for Bangladesh Limited 25

H Technology and Innovation

Technological advancement in the ice cream industry has been very rapid Starting with stick

mould and filler ice cream production the companies have come a long way Assessing the

consumer choice and demand the companies are introducing new products very often Improved

and new technology is used for faster production and better quality Igloo is trying to meet the

international standards and launching products such as Sundae Cornelli and Nuggets Other

companies are also introducing new flavours suitable for their target segments Igloo has both the

ISO and the HACCP certifications These were awarded in the year 2003 due to their relentless

pursuit of quality and innovation In September 1996 Igloo introduced the 3D Mould line and

straight line extrusion technology for the first time in the subcontinent Basically with Igloorsquos

pursuit all the modern technologies and quality innovations are available in the market

I Production Capacity

Current production capacity of the major players in the common format ice cream segment is

estimated to be as follows

Name

Capacity (Ltrs day)

Total Production (000 Ltrs)

Required Capacity (at 300 production days )

Estimated unutilized capacity (Ltrs day)

Igloo

22000

387433

12914

9086

Polar

6500

112513

3750

2750

Kwality

12100

204934

6831

5269

Savoy

1560

25985

866

694

Milk Vita

1330

26387

880

450

Table 14 Production Capacity of Current Market Players

From the table we can see that all the ice cream manufacturers are operating with unutilized

capacity However one point to be noted is that different ice cream SKUs require different

amount of item to be produced Exact machine production capacity at litre per day does not

represent the accurate scenario Nevertheless it can be safely assumed that all the manufacturers

have unused machine capacity at their premises Moreover the larger players like Polar and

Kwality have new technology available at their premises Kwality bought second hand machines

from Thailand but both Igloo and Polar bought theirrsquos from Italy and Denmark

J Products and Pricing

Products The products in the ice-cream market are differentiated A few firms dominate the

market but an endless variety of ice creams are offered to the consumers Igloo pioneers all

major innovations in the market The products that are available in the market can be classified

into single serving and multiple serving groups Which are then categorized based on functional

attributes designs These are

Single

Stick

Normal mould 3D mould extrusion

Evaluation of Entry into Ice cream Business for Bangladesh Limited 26

Cup and Sundae

Flat cup long cup

Cone

Normal cone (vanilla strawberry etc) premium cone (Ripple)

serving

Innovative Fillers

Snowball Animal shaped containers sandwich nuggets etc

Container

05 ltr 1 ltr and 2 ltr containers

Multiple serving

Family Pack

Assorted packs cakes shahi kulfi etc

Table 15 Ice cream Serve types

Among all the products available in the market most selling SKU for all the companies is Choc-

bar stick and highest selling flavour is Vanilla Following are the ranks of most selling SKUs and

flavours

SKU Name

Rank

Choc-bar (70 ml)

1

Vanilla Cup (100 ml)

2

Vanilla Box (05 and 1 Ltr)

3

Lemon Lolly (70 ml)

4

Normal Cone

5

Flavour

Rank

Vanilla

1

Chocolate

2

Strawberry

3

Ripple

4

Mango

5

Table 16 Rank of SKUs Table 17 Rank of Flavours

Choc-bar is one of the earliest vanilla based chocolate coated SKU that has dominated the

market strongly over the years Shopkeepers could not provide an exact percentage on SKU

based sales contribution Most of them ranked the SKUs and flavours according to sequence

shown in the above table Also according to newspapers and secondary sources Vanilla is the

most selling flavour with 60 sales contribution According to secondary sources percentage

sales contribution of various types of SKUs in the common format segment are as follows

Type of Ice cream

Value Share

Volume Share

Impulse dairy ice cream

514

443

Impulse water ice cream

112

138

Take-home dairy ice cream

374

419

Table 18 Volume Share of Different Serve Types

Impulse dairy ice cream provides more value share as price per litre is higher than take home

multiple serving ice creams Impulse water ice cream shows a similar trend as of take home ice

cream

Pricing Product pictures and price ranges of each category are provided below Evaluation of

Entry into Ice cream Business for Bangladesh Limited 27

Normal Premium Price Tk12 Tk20 Tk25 Cup amp Sundae Normal Cup Sundae Premium Cup

Price Tk20 Tk25 Cone Normal Premium PriceTk20 Tk25Innovative Fillers PriceLtr Tk100

Tk175 Container Normal Premium PriceLtrTk150 Tk 175 Tk 190 Family Packs Kulfi Mixed

Pack Cake Single ServingMultipleServingNormal Ice Fruit 3D Mould Premium Extrusion Price

Tk10 Tk15 Tk15 Tk20Stick Normal Cream

Figure 8 Serve Types and Pricing

As it can be seen from the above chart all impulse ice creams are priced within the range of

BDT 10 to 25 Other take home multiple servings are priced within the range of BDT 50 (05

Litres) to BDT 220 (2 Litres) Another noticeable factor in price is that there are both normal and

premium flavours in all types of ice creams

K Firms as Price Setters

The firms have capability to affect the market price to be low as profit margin is very high If

Igloo reduces the price of an item below the prevailing price level in order to increase its sales

its competitors will fear that their customers will go away from them to buy Igloo products To

retain their customers they will be forced to match the price cut of Igloo Historically this has

been proven to be true However due to price sensitivity companies cannot drastically increase

price even if they provide higher quality of product It was seen in 1997 when Igloo increased

price of 11 SKUs and faced drastic sales fall during that time It shows that the industry might

welcome overall industry price increase but not individual company price increase

L Promotion

The promotion scenario in the industry is not quite organized as of now Even proper data

regarding promotional expenditure is not available from research sources The reason being

there is not much consumer related activity seen in the market After Kwalityrsquos introduction in

the market in 1999 Igloo went on with massive Television promotion of their new products that

were available at that time

Evaluation of Entry into Ice cream Business for Bangladesh Limited 28

However in current times there is no TVC running from any company Companies promote their

launches mainly through billboards and newspaper promotions which is currently the most used

source of consumer promotion Some promotional activities that were done by the companies

over the years are listed below

Consumer Promotions

1 Larger players like Igloo and Kwality goes on with campaigns like ldquoGift on stickrdquo where

various prizesrsquo names are written on the sticks and consumers can get them

a Igloo ran a program on their launch of Macho variant where gift varied from cricket bat to

personal computer

b Igloo had a program in 2006 where gifts on sticks varied from Bangkok visit to sunglass

c Igloo ran one campaign in 2007 where gold bars were given on purchasing Choc-bar

d Kwality ran a similar program in 2008 where gifts varied from wrist watches to motorcycle

2 Some companies ran consumer TTS and gift programs where company products were given

free

a Igloo had a program in 2006 where Igloo butter was given free on purchasing Igloo ice cream

cake

b Kwality ran a program in 2008 where one SKU was given as gift with another SKU randomly

c ldquoCone Ice cream at your Homerdquo program was run by Igloo in 2002 where six cone biscuits

were given free with purchase of one litre ice cream

3 Media placement is another form of placement done by larger companies

a Igloo purchased ldquoGlimpse into World Cup Resultrdquo space in daily newspapers during World

Cup Football 2002

4 One interesting program is done by only Igloo in Bangladesh They did it in June 2006 The

program was ldquoIgloo Ice cream Festivalrdquo with main attractions of ldquoGet as much ice cream as you

want for BDT 200rdquo ldquoGet a Fantasy Kingdom Entry ticket with each Entry Couponrdquo ldquoLucky

Drawrdquo and ldquoCelebrity Addardquo

Trade Promotions

5 Trade promotions are mainly given to ldquoHighest retail purchasersrdquo and also based on time

bound trade schemes where various slabs of purchase amount are mentioned for different prizes

a Igloo takes their highest purchasers to visit countries like Singapore and Thailand

b Savoy has a purchase slab scheme where first prize is table fan

c Polar gives special sales commission to their highest purchasers (around 5)

Evaluation of Entry into Ice cream Business for Bangladesh Limited 29

M Players in the Common Format Segment

Branded common format ice cream segment is constituted of five players only Among them

Igloo is the largest player and Milk Vita is the smallest The following sections detail the basic

company detail of all the companies with special emphasis on Igloo the market leader

Igloo

The pioneering ice-cream company in Bangladesh started its operation in 1964 in Chittagong

under K Rahman amp Co Limited (KRC) with a small factory inside Coca Cola bottling factory of

KRC After the independence of Bangladesh in 1971 Igloo was taken over by the government of

Bangladesh Later in 1983 Abdul Monem Limited purchased the entire production setup of KRC

Limited including Coca-Cola bottling plant and Igloo ice-cream factory After taking full charge

of Igloo ice-cream by Abdul Monem Limited the manufacturing operations continued in

Chittagong till 1990 Although Dhaka fetched the maximum share of the total revenue the

distribution cost increased tremendously in the process of meeting the demand of Dhaka city To

cope with the distribution problem and handle Polar threat Abdul Monem Limited transferred

the factory to Dhaka changed the ice-cream packaging from the conventional paper to plastic

and expanded their market and distribution operation The new factory of Igloo was setup at

Shyampur Narayanganj and was nine kilometres away from the Motijheel office The company

apart from catering the capital city started to expand its operations in Comilla (1991) Khulna

(1992) and North Bengal (1993) These markets were served directly from Dhaka since the

storage facilities were not developed till then The company is now the market leader since 1997

with clear market share victory over others with sweeping 51 share It is to be noted that Igloo

is also a player in the boutique segment with three parlours (2 in Dhaka and 1 in Chittagong)

Product Range Igloo offers the widest choice of ice cream more than any other competitor in

the market Igloo is offering a total of fifty items including normal premium and novelty cup

stick and family pack items Igloo has thirty flavours more than anyone else in the industry and

is continuously launching new and innovative delicacies

Igloo ice-cream can be classified in six groups They are

Stick

Macho Choc-bar Mini Choc Clown Mega Shell n core Lolly

Cone

Cornelli 2 in one Cornelli classic

Cup

Shahi kulfi Vanilla Strawberry Mango Snow ball

Container

Vanilla Strawberry Mango Chocolate Coffee Diet Vanilla Tutti Frutti Ripple Pralin

Pistachio

Innovative

Nuggets Sandwich

Family

Ripple cake Party time Shahi Kulfi

Table 19 Products of Igloo

Single serve stick cups and cone items are easy to carry around and convenient to eat which

makes it most sold The core target segment of ice-cream is 6-24 years and this generation is

always on the Evaluation of Entry into Ice cream Business for Bangladesh Limited 30

move and thus prefers independent cone stick or cup items As Igloo initiated the concept of ice-

cream as a family product they offer some items to be enjoyed with the whole family

Quality and Innovation Igloo is committed to maintaining the highest quality standard through

its continuous RampD activities The major ingredients raw materials and packing materials are

procured from the best European sources Strict quality control is done at every stage of the

manufacturing process from procurement of material mixing material flow ice cream making

packaging storing (at main warehouse) distributing and market shelving by the Quality Control

Department Current supply chain for various materials of Igloo is as follows Australia (Milk

Powder) Denmark (Ingredients emulsifiers amp stabilizers) China amp UAE (Food grade sticks)

China Denmark Singapore amp Thailand (Food grade packing materials)

Figure 9 Igloo Supply Chain

Distribution Network Their distribution network is stretched all over the country with a long

fleet of refrigerated vans Firstly the ice cream products are stored at the central warehouse of

the factory and from there they are distributed through the haulage vehicle to the operational

centres located in Dhaka Chittagong Comilla Rajshahi Barisal Bogra Rangpur and Khulna

Strictest cold chain maintenance during the distribution and selling of the ice creams is ensured

Their distribution process is as follows Manufacture Stored at -24c Transported by Refrigerated

trucks at -Reaches amp Preserved in Eight regional stores Refrigerated vehicles (Distributors)Retail

outlets (Deep freezers)

Figure 10 Distribution Process of Igloo

Evaluation of Entry into Ice cream Business for Bangladesh Limited 31

Trolley Operation Igloo also operates through trolleys for extending its reach to consumers at

the furthest points The trolleys are operated near schools alleys streets parks etc and play

rhythmic music to attract the consumers These are very colourfully decorated with Igloo

umbrella and the puller wears specific uniforms Igloo was the first in introducing and operating

these trolleys in Bangladesh for any Fast Moving Consumer Goods (FMCG) Igloo has around

125 trolleys operating throughout the country Individual trolleys are provided with a regular

supply of igloo ice creams

Marketing The marketing commitment of Igloo is based on the relationship with its customers

and consumer by not only manufacturing the highest quality product but also delivering the

product by maintaining this quality To satisfy the ever-changing needs of the customer Igloo

has regularly launched new ice creams and introduced new flavours And this commitment has

positioned Igloo as the market-leading brand by gaining the consumers trust with the positioning

as ldquoA WORLD OF GREAT TASTErdquo

Facilities and Logistics at a glance As of 2009 following are the facilities and logistics enjoyed

by the company

Factory location

Dhaka

Production Lines

4

Packages

Stick Cup Family pack Others (Nuggets and sandwich)

Machine suppliers

1048766 Mark-Italy

1048766 Tetra Pak(Hoyer)-Denmark

1048766 Sabore Denmark

1048766 Hass- Austria

Machine models

1048766 Freemark 1100 Italy

1048766 FM 3000 FM 6000 Italy

1048766 SL600 Denmark

Cone baking

Hass- Austria

Chocolate making

Macentyre-UK

Coverage

Nationwide

Operational centre

10

Total market vehicles

30

Distribution channel

Directthrough appointed distributors

Outlet service

7500

Injected deep freezers

4000

Trolley operations

125

Warehouse no

8

Table 20 Igloo Facilities and Logistics

Kwality

Kwality is currently the second largest ice cream manufacturer of the country The mother

company for the Kwality brand is Sanowara Drinks amp Beverages Ltd a sister concern of

Sanowara Group The company is famous for powdered milk brands Red Cow and Diploma in

Bangladesh The drinks and beverage concern of Sanowara made an entry into the market in

1997 with ldquoYesrdquo brand drinking water and launched the ice cream brand in 1999 With heavy

communication and novelty products it Evaluation of Entry into Ice cream Business for

Bangladesh Limited 32

successfully removed Polar from the second place with a current market share of 27 The

company also operates in the boutique segment with two parlours in Dhaka and Chittagong

Kwality ice cream factory is situated in Chittagong with a floor space of 35000 sft and fully

automated machinery wrapping mix machinery equipments from Italy having capacity of

around 20000 litres of ice cream per shift The ice cream factory employs 140 people The

company is ISO 9001-2000 certified

Kwality was the first true competitor for Igloo products with some major innovation in product

design and communication but their quality is perceived to be lower in the minds of the

consumers and they do not have extrusion ice cream The product prices are also similar to that

of Igloo but they charge a bit lower than Igloo in premium multiple servings However during

market visits it was seen that shops that keep only Kwality or Igloo and Kwality both they can

sell Kwality too although the sales amount is lower than that of Igloo People who look for Igloo

shopkeepers give them that directly but if they get a chance and Kwality ice cream stock is high

they also push Kwality to dry the stock out This gives an indication that market is larger than

what the current players are capable of serving even in Dhaka

Kwality follows a similar distribution model like Igloo but distribution frequency is lower and

amount of cart sellers is limited to 25 and they operate only in Dhaka

Polar

Once a giant in the industry Dhaka Ice Cream Industries Ltd introduced the first hygienically

packed ice cream in Bangladesh in 1987 and the brand name Polar was thus born In the early

days the company started ice cream business with a wide range of products and a variety of

flavours in Dhaka city In 1988 the company started its distribution in the city of Chittagong

then Bogra and continued to cover more cities Presently Polar ice cream is available

throughout Bangladesh The company today trails in the market with 15 market share in the

common format segment Recently Polar has announced launch of ISIS diabetic ice cream with

support from DANONE to turn around in the market

The company has its head office as well as a modern large-scale industrial plant in Dhaka Polar

ice cream is made with Danish expertise using Danish equipment and technology The

production activities and quality control measures are supervised and managed by Danish

experts Polar offers a wide range of delicious flavours and tastes made by ingredients imported

from Europe

Dhaka Ice Cream at present has 3 cold stores in Dhaka Chittagong and Bogra in Bangladesh

From Dhaka cold store they distribute ice creams in Mymensingh Tangail Jamalpur Sherpur

Kishoreganj Netrakona Comilla Narsingdi Barisal Madaripur Agaeljhara Faridpur Magura

Chuadanga Jessore Satkhira Khulna Pirojpur and Sylhet through their distributors In case of

long distance delivery points the company uses auto cooling freezer van

Evaluation of Entry into Ice cream Business for Bangladesh Limited 33

In Dhaka city they distribute ice creams directly to retail stores in freezer vans Besides that

they have several distributors at different points of the city Distributors cover their individual

areas where company is not able to supply directly in their freezer vans Similar model is

followed by the company to distribute ice cream from their other cold storages through out the

country For storing and selling ice creams in retail stores the company like the other players

arranges a deep freezer with the Polar logo and canopy light box

In addition to this distribution the company also undertakes home delivery of ice creams for

special occasions

Savoy

Savoy Ice-cream brand is owned by Sena Kalyan Sangstha (SKS) Group of industries It started

its journey in March 1995 with a factory in Tejgaon Dhaka Yearly turnover is estimated at BDT

388 crores with a market share of roughly 35

The factory has been established with Sonali Bank finance at 6040 equity ratio The total

production capacity of the factory has been estimated at 2400 litres of Ice-cream per day Total

land area of the factory premise is 116 Bigha with 8000 sft area covered with a total project cost

of BDT 144 The factory employs 73 people

Product ranges of the company include all the basic designs and flavours of the industry

However the company has not been much of an innovator in the industry Their product quality

is substantially low than that of other players and they price their products at 10-15 lower than

the other competitors The company imports raw materials mainly from Europe The general raw

materials are Euro cream Skimmed Milk Powder Cocoa Powder and Flavour (Vanilla Mango

and Strawberry) Colour (Yellow Red Chocolate and Green) Ripple Sauce Cheney Fruit Palm

Kernel Oil Anhydrous Butter Oil (Ghee) and Sugar etc

Milk Vita

Milk Vita is one of the most famous brand names in Bangladesh for its liquid dairy milk Owned

by Bangladesh Milk Producersrsquo Co-operative Union Limited (BMPCUL) the company came in

the market with proper dairy milk ice cream in form of cups and choc-bar With a production

capacity of around 1600 litres per day the company is trailing in the market place with 3

market share

Although the Milk Vita Choc-bar was perceived to be extremely tasty by consumers they

probably could not do well due price competition Currently they do not even distribute ice

cream in Dhaka However their presence is seen in outskirts of Dhaka and other nearby towns

If the current market situation prevails Milk Vita would lose their remaining market share and

other companies would benefit especially Igloo However one of the advantages of Milk Vita

remains to be

Evaluation of Entry into Ice cream Business for Bangladesh Limited 34

their nation wide milk supply network They have skimmed milk powder production plant that

Igloo does not have Thus they can combat the seasonality of milk supply that Igloo with its

huge requirement of milk cannot

Strengths and Weaknesses of Competitors

Company

Strengths

Weaknesses

Igloo

1048766 Strong brand image

1048766 High product quality

1048766 Highest no of variety

1048766 Strong distribution network

1048766 Highest visibility

1048766 Strong promotion

1048766 High production capacity

1048766 Presence of extrusion ice cream

1048766 Items are generally a bit pricy

1048766 Igloo does not give free freezers like other companies

1048766 Reluctant in recent times regarding innovation

1048766 Local sourcing of liquid milk does not meet demand

1048766 Failure to use ERP technology slowing decision making

Kwality

1048766 Product variety

1048766 Strong promotion

1048766 Free freezer distributed

1048766 Presence in all price segments

1048766 High production capacity

1048766 Weak distribution

1048766 Lower exposure

1048766 low amount of carts in operation

Polar

1048766 Free freezer

1048766 Quality perceived to be high compared to Kwality

1048766 Discoloured freezers

1048766 Lower exposure

1048766 Low product variety

1048766 Unused capacity

Savoy

1048766 Price is lower

1048766 Discoloured freezers

1048766 Low product variety

1048766 Weak distribution

1048766 Small amount of freezers

1048766 Low production capacity

Milk Vita

1048766 Quality is good due to dairy cream

1048766 Brand leverage from Milk Vita milk

1048766 Low exposure

1048766 Low variety

Table 21 Strengths and Weaknesses of Competition

512 Market Characteristics of the Boutique Segment

With a small market of BDT 98 Cr and 567 share in the branded ice cream market the

boutique segment is currently an increasing segment in the ice cream industry Boutique

segmentrsquos history dates back to 1960s when Igloo launched boutiques in Dhaka to save

distribution cost and promote a culture of ldquoice cream eating outrdquo In later years boutiques lost

their glamour and retail common format segment picked up growth However with Dolce Vita in

the late lsquo80s craze for Italian Artisan ice cream was recreated in the market Although Dolce

Vita is failing in recent times emergence of MoumlvenPick and Club Gelato in 2000 has uplifted the

segment once again Current growth rate of the

Evaluation of Entry into Ice cream Business for Bangladesh Limited 35

segment can be estimated to be approx 20-22 (higher than the common format segment)

Following are the basic detail of all the major players in the segment with their estimated sales3

Players

Outlet

Sales (Cr Taka)

Share

Club Gelato

1

136

199

MoumlvenPick

1

119

174

Andersenrsquos

3

119

174

Gelateria Igloo

3

119

174

Sub Zero (Kwality)

2

051

75

Baskin Robbins

1

015

22

Dolce Vita

1

017

25

American Soft

1

009

12

Rainbow

1

009

12

Others (off site)

089

130

Total Market

682

Table 22 Players and Shares in Boutique Segment

A Detail of Operation

General operational procedure followed by all the operators is as follows

1048766 Operating method There is a variation in operational method among the large operators

1048766 Club Gelato uses kitchen at own premise where imported ingredients and local milk (daily

special service from Milk Vita) are used to make ice cream

1048766 MoumlvenPick directly imports ice cream from Switzerland

1048766 Andersenrsquos Gelateria Igloo and Sub Zero produce ice cream at their factory with a mix of

imported and local ingredients

1048766 Products Around 30-35 flavours of artisan dairy ice cream are served at the premises

1048766 Most sold flavours are Vanilla Ferrero Rocher Butterscotch Chocolate Caramel etc

1048766 Other Products Larger players also serve ice cream desserts (milk shakes ice cappuccino etc)

pastries and other desserts with normal coffee and tea facility at their premises

1048766 Boutiques fight ice cream seasonality with the other products sales during off-peak ice cream

seasons Usually ice cream and other products contribute at 6040 ratio in summer and during

winter and off-peak seasons the ratio reverses

1048766 Pricing Usually the prices of products in this segment are 3-4 times higher than that of the

common format segment

1048766 Prices do not vary with flavours Variation depends on serve style (Cone tub) and use of

toppings and other ingredients (Chocolate sauce nut fruits) etc

1048766 Usual margin charged is around 50-60 over production cost Similar margin is charged for

other products like coffee ice cappuccino etc

3 Yearly sales is estimated based on companyrsquos approximate daily sales collected during

interview

Evaluation of Entry into Ice cream Business for Bangladesh Limited 36

1048766 Target Group Most of the consumers belong to SEC A and higher SEC A with DMFI of at

least BDT 20000

1048766 Foreign delegates and resident foreigners also visit these boutiques

1048766 Main purposes of visits in the boutiques are

bull Youth hangout with friends and having ice cream and ice cream derivatives

bull Family Family night out or eat out at a restaurant and then having dessert

bull Foreigners Having dessert after dinner

1048766 Rush time at boutiques are Afternoon 2-4 pm and at night 9-11 pm

1048766 Offsite sales Most of the large operators also sell offsite They have small freezers for off-site

1048766 Club Gelato and MoumlvenPick serves ice cream at high society parties and programmes

1048766 MoumlvenPick also has kiosks in known hotels like Sheraton

1048766 Promotion No mass promotion is done by any of the companies Word of mouth is the most

important source of promotion Posters and banners outside the premise and occasional

newspaper advertisements are used to communicate special offers

1048766 Growth Drivers Market growth is driven by image innovation quality decoration of facility

environment and special offers

1048766 Club Gelato has the image of selling true Italian dairy ice cream with an excellent hangout

environment

1048766 MoumlvenPick imports ice cream directly from Switzerland and is perceived to be of high quality

1048766 Andersenrsquos operates with the image of ice cream from Denmark

1048766 Gelateria Igloo (from Igloo) and Sub Zero (from Kwality) could not establish the premium

artisan ice cream image

B Players in the Boutique Segment

There are very few players who have significant impact in the boutique segment Detailed

information of all the major boutique segment players is provided below

Evaluation of Entry into Ice cream Business for Bangladesh Limited 37

Club Gelato

Basic Company Information

1048766 Location Banani Road 11 (Planning for a second one in Dhanmondi)

1048766 Established in 2001

1048766 Seating Capacity 48

1048766 Area 1250 sft (including kitchen)

1048766 Owner Mr Jahangir Alam (Bangladesh)

1048766 Business Type Joint business partnership with Singapore

1048766 Staff 15 people (6 in the kitchen)

1048766 Production capacity 150 litres per day

Product Related Information

1048766 Product Italian style parlour scoop ice cream fruit juice coffee and pastries

1048766 Flavours Around 32 flavours available

1048766 Most selling Ferraro Rocher Vanilla Pistachio

1048766 Innovations New variants and ingredients are communicated by their Italian supplier and

Club Gelato decides what to take from them

1048766 Serve type Cup Cone Glasses Box for take away

Consumer Profile

1048766 Primary Teenagers and Young Adults (18-30) amp Diplomats

1048766 Secondary Family consumers for eat out

1048766 Income Group High income customers tentatively from SEC A and higher SEC A

1048766 Geographic Area Diversified

1048766 Rush time 8-10 pm

Sales and Price Information

1048766 Sales BDT 50000 (60 Ice cream 40 other desserts) daily in summer In winter however

other products sell more and thus they keep total sales at the same level

1048766 Price 750 per litre for any flavour

1048766 Sales Volume 50-60 litres per day

Supply Chain Placement Information

1048766 Milk Local sourcing from Milk Vita (4050 litres per day)

1048766 Chocolates amp Flavours Belgium France Germany

1048766 Transportation Mainly air (They can afford it due to high margin)

1048766 Contribution of various materials Flavours (30) Milk (20) other parts are water and air

Promotional Materials

1048766 Materials used are near premises POS materials for promoting the parlour only

Table 23 Detail of Club Gelato

Evaluation of Entry into Ice cream Business for Bangladesh Limited 38

MoumlvenPick of Switzerland

Basic Company Information

1048766 Location Gulshan

1048766 Established in 2000

1048766 Seating Capacity 55

1048766 Owner Mr Arif Mahmud

1048766 Business Type Franchise of International MoumlvenPick

1048766 Storage Capacity in Shop 150 litres

Product Related Information

1048766 Product Imported MoumlvenPick ice creams coffee chicken sandwich and Frappe

1048766 Flavours Around 30 to 35 flavours available

1048766 Most selling Swiss Chocolate caramel Vanilla Dream Espresso Strawberry

1048766 Innovations New variants are communicated by their franchiser and they decide on flavours

that they want

1048766 Serve type Cup Cone Glasses Box for take away

Consumer Profile

1048766 Primary Teenagers and Young Adults (18-30) (70) amp Diplomats

1048766 Secondary Family consumers for eat out

1048766 Income Group High income customers tentatively from SEC A

1048766 Geographic Area Concentrated in Gulshan and nearby areas

1048766 Rush time Afternoon- Young Adult 10 to 11 pm Foreigners

1048766 the company also serves at parties and has freezers in known hotels where their ice creams

are served

Sales and Price Information

1048766 Sales BDT 35-40000 daily in summer

1048766 Price 640 per litre for any flavour

1048766 Sales Volume 55-60 litres per day

Supply Chain Placement Information

1048766 Transportation Imported finished goods by ship

1048766 Ship travel time 19 days

1048766 Port clearance 10 days

1048766 Safety Cushion Extra 10 days

Promotional Materials

1048766 Materials used are near premises POS materials for promoting the parlour only

Table 24 Detail of MoumlvenPick of Switzerland

Evaluation of Entry into Ice cream Business for Bangladesh Limited 39

Andersenrsquos of Denmark

Basic Company Information

1048766 Location Gulshan (2 others in Uttara Dhanmondi)

1048766 Established in 2001

1048766 Seating Capacity 48

1048766 Owner United Group

1048766 Business Type Franchise of Australian company Andersenrsquos of Denmark

1048766 Production Tongi Factory of United Group

1048766 Production capacity 2000 litres per day in factory

1048766 Storage Capacity in Shop 150 litres

Product Related Information

1048766 Product Danish parlour scoop ice cream and coffee

1048766 Flavours Around 30 to 35 flavours available

1048766 Most selling Strawberry Butter Scotch Green

1048766 Innovations New variants and ingredients are communicated by their franchiser and they

decide on flavours that they want

1048766 Serve type Cup Cone Glasses Box for take away

Consumer Profile

1048766 Primary Teenagers and Young Adults (18-30) (70) amp Diplomats

1048766 Secondary Family consumers for eat out

1048766 Income Group High income customers tentatively from SEC A

1048766 Geographic Area Concentrated in Gulshan and nearby areas

1048766 Rush time 8 to 10 pm

Sales and Price Information

1048766 Sales BDT 10-12000 daily in summer

1048766 Price 460 per litre for any flavour

1048766 Sales Volume 40-50 litres per day

Supply Chain Placement Information

1048766 Milk 2025 kg packs are imported

1048766 Chocolates amp Flavours Imported

1048766 Butte paper Local sourcing

1048766 Transportation Ship

Promotional Materials

1048766 Materials used are near premises POS materials for promoting the parlour only

Table 25 Detail of Andersenrsquos of Denmark

Evaluation of Entry into Ice cream Business for Bangladesh Limited 40

Gelateria Igloo

Basic Company Information

1048766 Location Banani Kemal Ataturk Avenue (Two others in GEC Mor Chittagong and Naya

Paltan)

1048766 Established in 2000

1048766 Seating Capacity 20

1048766 Production From Igloo factory in Shyampur Narayanganj

Product Related Information

1048766 Product Parlour scoop ice cream and coffee only

1048766 Flavours Around 30 flavours available

1048766 Most selling Vanilla Strawberry Chocolate Pistachio Butter Scotch Tutti Fruity

1048766 Serve type Cup Cone Glasses Box for take away

Consumer Profile

1048766 Primary Teenagers and Young Adults (18-30)

1048766 Secondary Family consumers for eat out

1048766 Income Group High income customers tentatively from SEC A and B

1048766 Geographic Area Diversified

1048766 Rush Time afternoon and evening

Sales and Price Information

1048766 Sales BDT 8000 to 10000 daily in summer Nearly one fourth in winter

1048766 Price Varies but 350 per litre of vanilla

Promotional Materials

1048766 POS materials at the premises

Table 26 Detail of Gelateria Igloo

52 Price Comparison of Common and Boutique Segments

Price ranges of both common format and boutique segment cannot exactly be pin pointed as

products do not follow common structure and variations occur with use of toppings mixing of

flavours and use of coatings However a price comparison has been made among the brands

based on their price of per litre of vanilla flavoured ice cream in the market It appears to be as

following

Company

Price Litre Vanilla

Club Gelato

750

MoumlvenPick

640

Andersenrsquos

460

Dolce Vita

440

Igloo

100

Kwality

100

Polar

100

Milk-Vita

90

Savoy

85

Table 27 Comparative Price Analysis

As it can be seen there is price gap within the range of BDT 100-400 Ice cream kiosks and

small scooping boutiques can operate within that range

Evaluation of Entry into Ice cream Business for Bangladesh Limited 41

60 CONSUMER ANALYSIS

61 Target Group of Ice cream

Who are the consumers of ice cream This question does not have a clear answer Ice cream is a

food for all It is the only food consumed by a human being at less than 0 degree centigrade

temperature and people of all ages feel indulged to have it However we can determine focus

target groups for both branded common format and artisan boutique ice cream Group

discussions and market visits were done to get insight into the consumers along side resources

form secondary sources Age based target group is common for both segments but variation

among the groups occur mainly based on SEC and DMFI classification

611 Geographic Group

Branded ice cream remains an urban product till date Geographically branded ice cream has

reached urban and semi urban areas up to Thana Head Quarter levels Ice cream has reached

areas where electricity is available Small artisan players are available in places where large

branded players have no distribution

612 Target Age Group

Age wise grouping of target consumers is as follows

1048766 Urban kids in the age group of 5-14

1048766 They mainly consume normal sticks cups cones innovative fillers and water ice creams

1048766 Urban youth in the age group of 15-24

1048766 They consume premium and extrusion sticks and cones

1048766 Urban mothers in the age group of 25-35

1048766 They determine the family purchases Even when the father purchases ice cream decision is

taken by them

Consumption pattern of various age groups are depicted in the following chart Ice cream

consumption pattern50203005 to 14 yrs15 to 24 yrs25 to 35 yrs

Figure 11 Target Group wise Consumption Pattern Evaluation of Entry into Ice cream Business

for Bangladesh Limited 42

613 Target SEC and DMFI Group

Common Format

SEC A and B is the target group for common format ice cream However with rapid increase in

price level over the years has made it a ldquohard to consumerdquo product for SEC B consumers who

belong to lower DMFI group

Boutique Format

Boutique formatrsquos higher margin and high price range makes it an exclusively SEC A ice cream

People belonging to upper and upper middle class have access to the mediocre boutiques and

only higher upper class can have premium ice creams like Club Gelato and MoumlvenPick

Another unique target group for boutique format are the foreigners who live in Bangladesh

These people tend to visit the parlours to have ice cream as dessert especially after dinner

62 Ice cream in Consumer Lifestyle

Figure 12 Ice cream in Consumer Life style

This simple overview of ice cream in consumer lifestyle was determined based on in-depth

research analysis of UBL and validated through qualitative group discussions by the author

However detail of in-depth research is provided in a later section of this chapter

Evaluation of Entry into Ice cream Business for Bangladesh Limited 43

63 Highlights of Purchase Habit of Ice cream

631 Common Habits across Target Groups

There are some common habits that were identified in earlier researches and group discussions

with consumers Common habits mean the consumer approach towards ice cream that is seen

across all target groups eg kids youth and adult purchasers These are outlined below

1048766 Ice cream is mainly seen as a dessert or a snack Impulse ice cream is seen as a quick snack

that is consumed when it is in sight Visibility plays a big role here Regarding family packs

people see it as a post-food dessert

1048766 Ice cream purchase is commonly a planned event When the contexts arise people generally

take a bit of time to decide whether or not to have ice cream or when they want to go to a

boutique they make due considerations regarding which boutique to visit

1048766 Ice cream purchase decision is taken based on favourite flavour People tend to try out new

variants and flavours when they first see it They compare the taste with earlier experience and

when they purchase later they choose the flavour they have liked most

1048766 For In-Home segment decision is mostly taken on the flavour Generally people come up with

different flavours of choice and most voted flavour is chosen

1048766 People become aware of new variants or flavours mainly through word-of-mouth

Advertisement (new launches special offers and festivals) in newspaper is another source of

awareness

1048766 People are currently indifferent towards the price level of premium flavours However some

feel that price of Choc-bar or water ice creams (lolly) is a bit much If less they would have

consumed more Some also feel that companies should come up with branded ice cream in the

price range of BDT 5-8

1048766 Ice cream is purchased from nearby shops If required brand and flavour is not available 2-3

shops will be visited and then available flavour will be selected even if the required one is not

found This is done mainly not to ruin the mood for ice cream

1048766 People are very open to try new brands and flavours especially if it comes from a credible

source They would try new flavours and if they are satisfied with the taste they would repeat

purchase

1048766 Regarding boutique visits people feel that boutiques need to have a proper environment

enough flavours and other snacks

1048766 While visiting boutique with family or companion they want variation in flavours so that

they would order different flavours and taste each otherrsquos ice cream It is seen as a sign of

togetherness

1048766 Frequency of ice cream purchase varies among people It depends on peer pressure collective

family decision summer heat and attitude towards ldquoice creamrdquo itself as a product Evaluation of

Entry into Ice cream Business for Bangladesh Limited 44

632 Habits of Kids

1048766 Kids choose ice cream flavours by the look of the product (generally pictures shown in POS

materials and carts) They love colour and designs of the products let it be a common format or a

boutique ice cream

1048766 Kids (when in house) would go with the housemaid to the nearby shop choose the flavour

they want (within range of the amount given to the maid) and buy it

1048766 When with parents they would take the product they like even if the price is lower than some

other product However mothers play a role in this decision They would want their children not

to choose too high priced a product or coloured products

633 Habits of Youth

1048766 Young people are the main consumer of impulse ice cream They also are one of the major

consumers in the boutique segment

1048766 Young people love to try out new products that come into the market Another side of the coin

is that they are not very loyal to a brand or a flavour and tend to switch a lot

1048766 Regarding boutique visits young people go to boutiques to have an ldquoice cream hang outrdquo with

peer groups They would stay there for a longer period of time while they have their ice cream

1048766 Some times young people make milk shakes and other ice cream based desserts

634 Habits of Mothers

1048766 Mothers worry about their childrenrsquos health and they prefer ldquovanillardquo type of brands

However when price constraint occurs they go for water ice creams for their children They try

to convince their kidrsquos purchase decision

1048766 Regarding family purchase motherrsquos decision is sometimes prioritized by the whole family

64 Barriers to Ice cream Consumption

641 Emotional Barriers

1048766 Overindulge (close to sinful)

1048766 Undisciplined (no control)

1048766 Childish (licking)

1048766 Artificial Image

642 Functional Barriers

1048766 People of SEC B feel that ice cream is an expensive dessert (If less expensive would consume

more often)

1048766 It leads to cold cough - especially in winter rainy season

1048766 It contains artificial additives preservatives

1048766 It is very high in calories that lead to fattening

Evaluation of Entry into Ice cream Business for Bangladesh Limited 45

1048766 It does not quench ldquothirstrdquo

1048766 Less convenient (portable immediate eat)

1048766 Messy Dripping

65 Research Findings

The highlights regarding purchase habits triggers and barriers of ice cream consumption provide

a glimpse into the consumer world of ice cream industry However UBL CMI conducted a

formal research exclusively on ice cream consumers to identify

1048766 Occasions of ice cream

1048766 Frequency of ice cream consumption

1048766 Expectations from ice cream occasions

1048766 Personalities that they desire from ice cream

651 Relevant Occasions in Daily Lives of Consumers

Research question regarding ldquousual occasions of life that occurred most frequently in day-to-day

lives of the respondentsrdquo generated the following replies

Occasion

of Respondents saying Yes

Watching TV

93

Normal Dinner At Home

91

Normal Lunch At Home

89

At Home While ReadingMusicSurfing

86

Informal Family Get Together

85

Out Of Home Hanging Out With Friends

84

Out Shopping

84

Mid-Afternoon Break At Home

83

At Home By Myself During The Day

82

Special Dinner At Home

82

Informal Dinner Out Of Home

82

Normal Lunch Out Of Home

82

Leisure Walk

79

Coming Home From WorkSchool

78

Special Dinner Out Of Home

78

Celebration

78

A Night In With Friends

77

At Home By Myself In The Evening

77

Special Lunch Out Of Home

76

Mid-Afternoon Break Out Of Home

75

Special Lunch At Home

73

Day out with Partner

72

Midmorning Break

70

At Breakfast

68

Family Day Out

68

During Work Or At School

65

Evaluation of Entry into Ice cream Business for Bangladesh Limited 46

Travelling ToFrom WorkSchool

65

At The Cinema

61

Special Event

56

Clubbing At A Party

50

Post GymSports

48

Table 28 Relevant Occasions in Consumersrsquo Lives

Respondents were then asked to mention ldquofrequency of occurrence of the identified occasionsrdquo

The identified replies are as follows Normal dinner at homenormal lunch at homeComing home

from workschoolTraveling tofrom workschoolDay out with Partner SpouseMid-afternoon

break at homeOut of home hanging out with friendsLeisure walkMid-afternoon break out of

homeA night in with friendsSpecial dinner at homeSpecial lunch out of homeFamily day

outSpecial eventPost gymsportsDaily2-3 Times A WeekWeekly2-3 Times A MonthOnce A

MonthEvery 2-3 MonthsLess OftenNever Figure 13 Frequency of Occurrence of Occasions

This shows that ldquoNormal dinner at home Watching TV Normal Lunch At Home At Home

While ReadingMusicSurfing Coming Home From WorkSchool During Work Or At School

Travelling ToFrom WorkSchool Midmorning Break Day Out With Partner Spouse At Home

By Myself During The Dayrdquo are the most frequent daily rituals of busy lives of consumers

652 Frequency of Ice cream Consumption

Respondents were asked to mention ldquoconsumption pattern of ice cream during the identified

occasionrdquo on a scale of 1-5 depicting frequencies like ldquo(5) always (4) most of the times (3)

about half of the times (2) sometimes (1) never do not knowrdquo The responses are depicted in

the following table

Evaluation of Entry into Ice cream Business for Bangladesh Limited 47

444474544655555566756665775967779991011101111101210111110101113111412131314161

011121411131216181519181518211817171719181718201721222130303434253437403741394

046383944464746453745414641374638504843414839373030292726232725222020201926202

21722221317Midmorning

breakWhile clubbing at aAt the cinemaSpecial eventNormal lunch out ofA night in with

friendsNormal dinner atInformal dinner out ofAt home by myselfAt home by myself inOut

shoppingSpecial lunch atDay out with SpouseWatching TVAlwaysmost of the timesAbout half

of the timesSometimesneverdo not know

Figure 14 Frequency of Ice cream Consumption

As it can be seen ldquoDay out with Spouse Special lunch at home Special dinner at home

Watching TV Family day out Celebrationrdquo are the occasions where most frequently ice cream is

consumed

653 Market Character Mapping Relevant Occasions vs Frequency of Consumption

If we plot frequency of consumption on the X-axis of a chart and relevance of occasion

occurrence on the Y-axis taking the above mentioned values as cut-off values we get four

quadrants in the chart depicting four market scenarios that any ice cream manufacturer in

Bangladesh market might encounter given the current market situation This market

segmentation is based on frequency of ice cream consumption in daily occasions of consumer

lives

The segments are

1048766 OPPORTUNITY MARKET High Relevant Occasions-Low Ice cream Frequency

1048766 QUESTION MARKET Less Relevant Occasions-Low Ice cream Frequency

1048766 HIGH FREQUENCY MARKET Relevant Occasions-High Ice cream Frequency

1048766 CAPTIVE MARKET Less Relevant Occasions-High Ice cream Frequency

The chart looks as follows Evaluation of Entry into Ice cream Business for Bangladesh Limited

48

Figure 15 Relevance of Occasion-Frequency of Consumption Mapping

As it can be seen from the above chart Bangladesh Market still lies in the Opportunity and

Question market zone with a pull towards High frequency and Captive Market zones This is

evident from market data as penetration of ice cream still remains at Thana headquarters levels

Also this explains the high market growth rate of 17 as market is yet under developed and

branded quality ice cream has yet not reached all levels of consumers especially rural level that

constitutes around 75 of Bangladeshi market

From the above analysis we can establish that target of ice cream manufacturers should be to

penetrate more into the Bangladeshi market to create higher frequency of ice cream

consumption The following chart shows the strategies to follow for ice cream manufacturers

Figure 16 Required Market Strategy for Bangladesh

Evaluation of Entry into Ice cream Business for Bangladesh Limited 49

As relevance of ice cream consumption occasions can hardly be controlled by marketers their

endeavour should be to create more ldquoemotional and functionalrdquo attachment to ice cream in less

frequent occasions through ldquomarket developmentrdquo strategy to earn share from overall food

expenditure of consumers and at the same time make them consume more ice cream in highly

relevant occasions through ldquopenetrationrdquo strategy

654 Consumersrsquo Emotional Requirements and Product Attributes

All consumers under these clusters also identify the emotional requirements and the significant

product attributes they seek from their current preferred and future desired ice creams These are

provided below

Cluster

Emotional Functional Requirement

Product Attributes

Enjoyment

Flavour Variety

1048766 Combination of different flavours

1048766 Combination of different textures

1048766 Very sweet

1048766 With wafer or biscuit

1048766 With chocolate

1048766 Of a well known brand

Socially Involved

Spoonable Rich

1048766 Very creamy

1048766 Only natural ingredients

1048766 No mess

Care

Size Creaminess

1048766 Big

1048766 Rich full taste

1048766 Smooth

1048766 Value for money

1048766 No mess

Unwind amp Escape

Economy

1048766 Crunchy

1048766 Economic

1048766 Of a well known brand

1048766 Nutritious

Balanced Convenience

Health Conscious

1048766 Of a well known brand

1048766 Nutritious

1048766 Milk based

1048766 Low sugar

1048766 Low carbohydrates

1048766 Filling

Active Self-Grooming

Fruit Vitamins

1048766 Healthy

1048766 Fruit based

1048766 Low fat

1048766 Liquid or drinkable

1048766 Nutritious

1048766 Of a well known brand

Confidence

Drinkable Light

1048766 Low calories

1048766 Light on the stomach

1048766 Chewy or gooey

1048766 Not so sweet

1048766 Natural appearance

Sensual

Appeal or image

1048766 No artificial additives

Evaluation of Entry into Ice cream Business for Bangladesh Limited 50

1048766 Natural appearance

1048766 Melting slowly

1048766 Attractive packaging

1048766 High quality ingredients

1048766 Of a well known brand

Table 29 Requirements amp Product Attributes Desired by Consumer Clusters

Of these findings we see that the identified highlighted barriers to ice cream consumption are

pretty evident among the consumers Mostly people want products of a reliable source or a well

known brand low calories quality ingredients value for money economic type

Evaluation of Entry into Ice cream Business for Bangladesh Limited 51

70 INDUSTRY ATTRACTIVENESS AND ENTRY PROSPECTS

71 Driving Forces of Growth

As identified in the earlier sections there are several driving forces behind the growth of ice-

cream industry in Bangladesh

712 Trade and Infrastructural Level

1048766 As a result of globalization newer varieties have been introduced to the local products Many

foreign companies are also coming as franchise so there has been increased competition and

these boutiques are setting higher standards for the local producers

1048766 The present market growth rate is 18-19 which is being influenced by larger players like

Igloo who are expanding their distribution nation wide with expansion of national electricity

grid

1048766 With entry of Modern Trade and recent organized business approach of retailers has made it

possible for ice cream manufacturers to penetrate into shops even without providing them with

branded freezers

1048766 Weather change has increased ldquosummerrdquo season in our country which has reduced negative

seasonal impact on ice cream

1048766 Large companies like Igloo have taken global learning of using carts as an effective tool of

availability and visibility for ice cream

1048766 New and improved technologies are being used in the production process This technological

advancement has improved quality increased speed of production and made the process more

cost effective

713 Consumer Level

1048766 Only a few years back rich people could afford the luxury of having ice-cream but now it has

become a common product for everybody Ice-cream companies are producing different products

with a wide price range for consumers of every class and status

1048766 Nowadays companies are doing promotional campaigns more frequently the customers get to

know about the product which makes it easier for them to buy the best one

1048766 The improved standard of life and more modernized lifestyle of people is an important reason

for the increased consumption thus growth of the ice-cream industry

Evaluation of Entry into Ice cream Business for Bangladesh Limited 52

72 Prospects of Entry

The ice-cream industry of Bangladesh is an attractive one for the investors because there is a

huge market but number of producers is very small The major reasons behind industry

attractiveness are as follows

1048766 The industryrsquos current growth potential is very high with opportunity for market development

1048766 The competition currently permits adequate profitability and the competitive forces are

becoming stronger with time

1048766 Boutique segment is at a very high growth stage but no operator is currently operating with a

mid price range of BDT 100-400 Ice cream kiosks and small scooping boutiques can operate

within that range

1048766 Current industry driving forces are favourable for the future industry profitability

1048766 Globally oriented consumers look for variety in ice cream that is currently not available

Latest innovations came in the market in 2002 People would welcome new variety and flavours

1048766 There is a gap in the market for balanced convenience through ice cream where consumers can

get nutritional benefits for ice cream Also emotional attachment to ice cream could further be

improvised in promotional campaigns

1048766 There is high scope for market penetration and development to increase frequency of ice

cream consumption

1048766 Level of risk or uncertainty is very low in ice-cream industry because the consumer market is

so huge any product with a standard quality and careful pricing will be able to make significant

profit

1048766 As for geographic reach of the industry 60 market is still in Dhaka There is scope of

expansion and a new entrant can easily capture market share within Dhaka using carts even if

they do not want nation wide cold chain distribution

1048766 The production process is very complex and capital requirements are also high So before

going into production any company should know about their capabilities and weaknesses and

then start the business or else they might suffer huge loss at a certain level

1048766 Unilever can acquire the required resource and use existing multi-national multi-cultural

expertise to enter the market in a grand way

1048766 With high probability of entry from DANONE with more products like the ISIS diabetic ice

cream Unilever should consider entering in this industry as soon as possible

Evaluation of Entry into Ice cream Business for Bangladesh Limited 53

80 ENTRY STRATEGY FOR UNILEVER

While describing the suggested entry strategy for UBL certain issues have been kept

confidential and some issues have been touched but not explained to keep consistency with UBL

confidentiality policy

81 Suggested Entry Areas for UBL

1048766 Boutique segment of the Bangladesh ice cream is only 5 of the branded market UBL needs

to pursue a larger scope to make the entry viable

1048766 UBL cannot fight with unbranded segment as global product quality mandate of Unilever does

not allow UBL to fight in low price-low quality segment

1048766 Recommend entry should be in the common format segment with both single and multiple

servings and in the boutique segment with a different brand name (if possible BEN amp JERRYrsquoS)

1048766 UBL should build up state-of-art modern factory for manufacturing and establish cold chain

facilities initially focusing on metro cities

1048766 Investment issues are required to be addressed for building factory and cold chain and capital

requirement needs to be identified for that purpose4

1048766 UBL may have boutiques for driving image selective top-end offering

1048766 Kiosks can be setup near universities and shopping malls

1048766 Boutiques should be concentrated in Dhaka and Chittagong

1048766 Ice cream for boutiques and kiosks would be produced in factory as institutional packs of 9-10

litres

82 Products

1048766 As a Brand Building country in global Unilever operating framework UBL is entitled only to

bring products developed by the Brand Development countries

1048766 Unilever should focus on serving products that have nutritional benefits (already available

globally) along with usual satisfactions of sensual pleasure functional attributes etc

1048766 Current existent players especially Igloo and Kwality have extensively copied global and

regionally available Unilever products eg Cornelli is same as Wallrsquos Cornetto Vinetta is similar

to Vienetta Mega is similar to Magnum etc UBL needs to differentiate these to consumers on

the ldquotaste the originalrdquo platform where global quality is focused regarding the products

1048766 UBL should also bring regionally famous brands like Moo or Max to create image

differentiation

1048766 Magnum or Moo should be used as premium end ice cream to generate more profit margin

Evaluation of Entry into Ice cream Business for Bangladesh Limited 54

83 Placement

1048766 Distribution focus should be in Dhaka for entry as Dhaka contributes more than 60 of total

ice cream sales in the country

1048766 Company may use carts as distribution method They serve as good source of visibility and

availability It would help in increasing impulse purchase

1048766 At least 1500 outlets in Dhaka and Chittagong needs to be actively served using dedicated

branded refrigerators to generate sales

1048766 50 carts should operate in Dhaka and Chittagong

84 Price

1048766 UBL products should be priced at par with Igloo pricing for the common format ice creams

1048766 UBL can bring in premium single-serve SKUS for the higher economic classes in the price

range of BDT 60-80

1048766 Smaller SKUs (small lolly stick) can be introduced in the price range of BDT 10-15

1048766 In the boutique segment UBL should price products above the semi-premium segment

(Gelateria Igloo Sub Zero or Andersenrsquos) but lower than that of Club Gelato or MoumlvenPick

85 Promotion

1048766 UBL would require strong marketing campaign (As high as 50 of sales) to have a grand

entry in the market

1048766 Presence in the television media would be of utmost importance More than 50 of

promotional expense should be made here initially Gradually it can be reduced

1048766 Newspaper would serve as the second most important option

1048766 Billboards should also be used

1048766 Activations (similar to Lux Channel i Super Star or Igloo Festival) should be done to generate

trial

86 Scope of Opportunity

Table 30 Value and Volume Based Scope of Opportunity for UBL

Value (BDT Cr)

Volume (Tons)

Market

131

7835

Common

121

7600

Boutique

98

235

Evaluation of Entry into Ice cream Business for Bangladesh Limited 55

861 Geographic Contribution

1048766 Dhaka (61)

1048766 Chittagong (19)

1048766 Sylhet (10)

862 UBL objectives

Common Format Ice Creams

1048766 Target 10 Market share in 1st year operation

1048766 Value BDT 11 Cr

1048766 Production capacity required 21 Tons day

1048766 Freezer Placement 1500 freezers

1048766 Cart operation At least 50 carts

Boutiques

1048766 Target Further develop the market

1048766 Focus Dhaka Chittagong and Sylhet Metro

1048766 Franchise At least 20 franchisee operations nation wide in divisional towns

1048766 Pricing Below imported parlours above common formats with around BDT 400 per Litre

87 Critical Success Factors

1048766 UBL is considered as a high profile company in Bangladesh and thus they cannot operate in

the market only with common products like choc-bars and cups They must have premium

products (these require extrusion line) also to carry their brand image Otherwise UBL would not

be able to charge usual premium over competition products

1048766 Launch of ice cream would require huge promotional and activation support in order to gain

customers from Igloo People want novelty regarding ice cream and UBL have to let them know

about their products and create hype

1048766 Cart should be used as a source of distribution Recent successes of Unilever companies like

Indonesia shows that carts can generate more sales and can be used as source of visibility in the

minds of both retail traders and consumers Carts can also provide incremental sales to the

company

1048766 UBL have to create a strong cold chain for ice cream (initially in Dhaka and Chittagong) to

ensure quality products for consumers

1048766 UBL have to build capacity very rapidly to meet consumer demand if the launch is successful

Evaluation of Entry into Ice cream Business for Bangladesh Limited 56

90 BUSINESS PROJECTION

91 Basic Assumptions

Business projection for ice cream business was made based on a conservative approach UBL

would require spending significantly on production capacity and factory dedicated to ice cream

Thus to analyse business possibilities of ice cream certain assumptions were made and collected

data were used These are

1048766 Production equipments and cabinets would cost approximately BDT 55 crores

1048766 Production equipments 45

1048766 Packaging Equipments 15

1048766 Storage Facility 20

1048766 Branded Freezers 10

1048766 Distribution Investment 10 (Distributors would also invest themselves)

1048766 Ice cream factory with a floor size of 20000 sqft would cost BDT 25 crores

1048766 Objective is to capture 10 market share in Dhaka and Chittagong in the first year

1048766 Business would grow by 50 in year 2 and 3 30 in year 4 and 25 in year 5

1048766 Weighted price per litre is BDT 170 according to volume share of single serve ice cream

multiple serve ice cream and boutique ice cream

1048766 Other financial assumptions were also made List of them are provided below but amount has

been removed for confidentiality issues

Assumptions

Trade Margin

Distributors Margin

DutyVAT Rate

Trade Terms Expense of NPS

Trade Terms Expense of NSV

Advertising ampPromotion of NPS

Indirects (Salaries Wages etc)

Trading Tax

Table 31 Assumptions for Business Projection

Evaluation of Entry into Ice cream Business for Bangladesh Limited 57

100 CONCLUSION

Ice cream has good prospect in Bangladesh It is still a growing market with opportunities for big

new entrants With the barriers of entry UBL needs to consider its priorities UBL being an HPC

company traditionally needs to acquire expertise in cold chain distribution and has to invest a lot

of money to rip the benefits of the industry However to initiate company can take regional

support and acquire resource expertise The company should enter the business as soon as

possible since there is potential threat from DANONE to introduce more ice creams after ISIS

diabetic ice cream and also with potential of the industry arch rival Nestlersquo might consider

entering into the industry too

Evaluation of Entry into Ice cream Business for Bangladesh Limited 58

References

Web References

1 wwwunilevercom

2 wwwunilevercombd

3 wwwhllcom

4 wwwunilevercompk

5 wwwthedailystarcom - Life Style Magazine

6 wwwreuterscouk

Evaluation of Entry into Ice cream Business for Bangladesh Limited 59

Page 4: Square Ice cream

1048766 1965 Igloo opened up the first ice-cream parlour in Dhaka

1048766 1971 Igloo was nationalized by the government of Bangladesh after liberation

1048766 1972 In June Igloo was handed over to Bangladesh Sugar amp Food Industries Corporation

1048766 1983 Abdul Monem Ltd acquired Igloo under privatization policy

1048766 1986 Polar started operation introduced food grade plastic based packaging They

immediately became market leader with extensive campaign

1048766 1988 Dolce Vita Gelato one of the dedicated boutique operator brought premium ice cream

1048766 Early 1990s Rainbow and Snow White started extensive operation in the boutique segment

1048766 Late 1990s American Soft Ice cream started promoting the soft ice cream format

1048766 1995 Savoy was introduced but failed due to product quality though in suburban areas they

grabbed share with low price

1048766 1996 In September Igloo organized a massive marketing campaign

1048766 Introduced the first straight line extrusion ice-cream in the market

1048766 They initiated a massive campaign and became market leader after 10 years

1048766 1997 In February Igloo took a devastating decision to increase price for the cup line

1048766 Igloo not only incurred substantial financial loss but also lost the hard earned market share

The question of sustaining became a central issue

1048766 In summer Price of 11 items were revised and communicated as special discount

1048766 This instantly pushed them to the number one position

Evaluation of Entry into Ice cream Business for Bangladesh Limited 18

1048766 1999 Kwality ice-cream entered the market

1048766 2000 Entry of the premium boutique operators like Club Gelato MoumlvenPick and

Baskin31Robbins

1048766 2002 Kwality launched an extensive campaign and started to capture the ice-cream outlets of

the city by providing freezers

1048766 2004 Kwalityrsquos number of freezers exceeded Polarrsquos and moved to second position

1048766 2005 onwards Igloo leads the market and there is immense competition among Polar and

Kwality for the coveted 2nd spot

Historical progress of this industry is of great importance Bangladesh ice cream industry has

traditionally been exposed to high quality products for a long time Igloo initiated the progress of

boutique segment (1965) but it lost its way over time The segment picked up once again in the

recent years Also high quality products and innovations in the common format segment have

created an appreciation for continuous innovation and better products in the minds of the

consumers Consumers in Bangladesh see ice cream as a fun product which requires novelty and

quality coupled with continuous hype around the brand This is why we see Kwality and Polar

could create early impacts with their entry into the industry as they came up with innovations in

product or packaging and arranged massive marketing campaigns during their launches Igloo

had to minimize their effects with similar campaigns to hold on to their position

Evaluation of Entry into Ice cream Business for Bangladesh Limited 19

50 MARKET amp COMPETITION ANALYSIS

51 Market Description

Bangladesh ice-cream industry is growing With increasing market demand size of the industry

is growing but due to entry barriers of lengthy and complex production process and high

investment few companies enter this business Although local companies in the branded segment

have captured most of the market share small unbranded local companies own a huge market to

themselves Where branded ice cream consumers look for innovation and quality unbranded

users outside metro cities are currently inclined towards low price low quality products This

creates an opportunity for further market development on the hygiene and health platform On

the other hand the boutique industry is doing quite well with their approach towards ice cream

as a dessert item along with service of other snacks like cakes and coffee at their premises which

help them reduce seasonality effects of ice cream

With a complicated scenario in the market to analyze the industry condition and understand the

competitive realities details of market characteristics and players of both common and boutique

segments are explained in following sections However unbranded segment is excluded from

discussion as Unileverrsquos portfolio does not match the characteristics and price level of this

category

511 Market Characteristics of the Common Format Segment

A Market size

Due to promotion innovation and exposure to different cultures the consumption of ice cream

has increased As a result the total market size is expanding At present the local companies in

the common format segment have a huge market of about BDT 121 Cr This market is 16 times

larger than the boutique segment and nearly doubles the unbranded segment Over the years the

size increase of the industry shows the prospect of converting unbranded unhygienic ice cream

consumers into branded ice cream consumers However price level still remains a big problem

for the branded category as petty unbranded ice cream companies with a price range of Tk1 to

Tk5 have a total market size of BDT 79 Cr which shows a hint of high price sensitivity in lower

SEC consumers Overall market size of 220 Cr indicates that most of the people in the country

are exposed to ice cream or some kinds of derivatives of ice cream like ldquoBaarfirdquo however they

probably cannot afford higher priced icy fruit sticks (BDT 6-10) available in the branded

segment

B Competitive rivalry in the Market

Competition is not very intense among the existing five companies because the number of

operators is very small considering the total population Also complexities of production and

distribution process and other entry barriers are stopping new companies from entering the

industry Evaluation of Entry into Ice cream Business for Bangladesh Limited 20

Igloo is confident about its unbeatable first position but there is competition among other

companies such as Polar and Kwality for the 2nd position However in current market no

operator is showing much aggressive and visible activity towards growth It is expected that

recent announcement regarding introduction of ISIS diabetic ice cream by Polar in partnership

with DANONE would again create some hype in the market

Reasons behind existing level of rivalry among competitors can be attributed to following

reasons

1048766 The ice cream industry has few sellers because there is economy of scale through large-scale

production The larger firms have a cost advantage over smaller firms they can produce more

cheaply- making it hard for small firms to survive

1048766 Market is bigger than capability of current players and can accommodate them without much

trouble This is because PCC of ice cream in the country is still pretty low

1048766 This market has substantial amount of ldquobarriers to entryrdquo making it difficult for a large

number of competitors to enter the market The cost of setting up a new plant in this industry is

quite high The cost of entry works as an entry barrier

1048766 To get people to try new product the potential entrant will have to run a big competitive

advertising or massive promotional campaign which is expensive The prevailing companies

created barriers in entry for potential rivals by using extensive advertising and product

differentiation earlier which has its effects till now Another fact is that product awareness and

brand loyalty to the existing firms make it expensive for potential rivals to enter

1048766 To further elaborate present competitive reality of the industry the five competitive forces are

discussed below

1048766 The rivalry among the competing sellers is weak as market is yet to develop more

1048766 With various entry barriers not many new companies are attempting to enter this industry

1048766 As there are no direct substitute products to ice-cream the companies donrsquot face any

competition from other industries

1048766 As the number of suppliers is very low and the companies especially Igloo as the best product

enjoys high bargaining power or leverage over rivals But some of the companies such as Savoy

are concentrating on increasing profit margin of the retailers for securing a more prominent

position in the market

1048766 Mainly consumers or buyers decide the pricing Keeping in mind the various buying power of

people the companies decide the price of each items Price of the Items that have the most

market demand is kept low so that they are in the reach of the general customers By lowering

the price some companies such as Savoy are trying to maintain a competitive edge

Evaluation of Entry into Ice cream Business for Bangladesh Limited 21

C Market Sales and Growth Rate

Sales information of the five existing companies for the current years shows the following trend

Company Name

2007

2008

2009

Total Market

11307

12120

13122

Igloo

5785

6086

6425

Polar

168

1835

2019

Kwality

306

335

374

Savoy

388

415

458

Milk Vita

394

434

488

Table 9 Market Sales and Growth Rate of Branded Common Format Market

Volume based market size shows the following scenario prevailing in the Bangladesh market in

2009

Company Name

Single Vol (000 Ltrs)

Multi Vol (000 Ltrs)

Total Vol (000 Ltrs)

Total Market

32759

42967

7573

Igloo

16760

21983

3874

Polar

4867

6384

1125

Kwality

8865

11628

2049

Savoy

1124

1474

260

Milk Vita

1141

1497

264

Table 10 Volume Based Market Size

The total volume of the branded common format ice cream industry is 7500 Tons of which more

than 50 belongs to Igloo followed by Kwality with 27

D Market Share and Size of the rivals

Market share data for all the local companies show a trend where Igloo is the biggest ice-cream

company dominating with a huge market share Although even 1-2 years ago there was intense

competition between Kwality and Polar but now it seems that Kwality is 2nd largest ice-cream

manufacturing company in Bangladesh Polar is in the 3rd position with Savoy and Milk Vita

trailing in the market Market share percentage over the years is presented in the following table

Company Name

2007

2008

2009

Igloo

50

5031

5116

Kwality

256

2666

2706

Polar

17

161

1485

Milk Vita

34

332

348

Evaluation of Entry into Ice cream Business for Bangladesh Limited 22

Savoy

39

365

343

Table 11 Market Share of Competitors

E Geographic Sales Orientation

Ice cream still continues to be a city-oriented product and its demand is comparatively low in the

rural areas Reasons behind this are electricity problem outside urban areas and purchasing

power of people Geographic sales orientation of the common format ice cream industry is

provided below

611890690480590250DhakaChittagongKhulnaComillaBarisalOthers

Figure 7 Geographic Sales Orientation

Dhaka still is the largest contributor in the ice cream segment Nevertheless over the years this

trend is shifting Areas outside Dhaka are also growing making Dhakarsquos share lower by small

percentage As urban markets are the major contributors companies design their products

keeping in mind the tastes and styles of the urban consumers Compared to the other companies

Igloo is the most expensive in the common format segment so they target only city based

customers who have the purchasing power Although other companies such as Savoy are offering

low priced product even their main target is urban people due to nation wide electricity problem

F Seasonality of Sales

Ice cream industries in warmer part of the world are highly seasonal Same is true with

Bangladesh According to secondary data sources sales seasonality looks as follows

Period Name

Months

Contribution

Super-Peak

April May June

46

Peak

March July August

36

Off-Peak

February September October November

15

Super Off-Peak

December January

3

Table 12 Seasonality of Ice cream Sales

This data was validated through interviews with retailers during market visit According to them

more than 75 sales of ice cream came in the hot months Another insight that could be

identified was

Evaluation of Entry into Ice cream Business for Bangladesh Limited 23

various festivals and programmes provide scope for higher volume of ice cream sales According

to companies where only 10-15 sales occurs in the winter season same amount of sales occurs

during festivals like the two Eids and Nobobarsha

G Distribution Servicing System

Mainly common format ice-cream is distributed in two methods that are directly to retail shops

and through hawkers with ice cream carts trolleys

The various channels of retail shops other than cart that serve as distribution outlets for Ice cream

are

7 Urban General Stores (UGS)

8 Urban Neighbourhood Grocer (UNG)

9 Premium General Store (PGS) SMMT

10 Confectionary Bakery

11 Modern Trade (MT)

12 Fast Food shops (Recently some fast food shops keep branded ice cream cabinets)

Distribution details of all the companies are provided below However detail of Milk Vita is not

available as they are mainly milk producer and they have no dedicated ice cream cabinet for

retail stores and currently they are not distributing ice cream in Dhaka city

Company

Distribution Method

Frequency

No of Cabinets

No of Carts

Igloo

Distributor Cart

2 to 3 times a week

4000

100

Kwality

Distributor Cart

1 to 2 times a week

1050

20

Polar

Distributor Cart

1 to 2 times a week

800

50

Savoy

Company

1 to 2 times a fortnight

176

-

Milk-Vita

-

-

-

-

Table 13 Distribution Method of Market Players

Distribution Process Distribution process through both methods is described below

Retail Distribution The general distribution that is followed by companies is that distributor

sends large refrigerated trucks dedicated to specific territories These trucks are accompanied by

small refrigerated vans Main road side shops are served directly from the large truck and shops

that are inside small streets are served by the small vans

Order and delivery are done on the same day The strategy followed is that of replenishment If

the branded freezer of the company is empty they simply fill it up according to requirement of

different SKUs as the delivery people see fit However shopkeepers have to buy full cartons

(usually 24 pieces in a carton) of single serve ice cream they cannot buy in pieces

Evaluation of Entry into Ice cream Business for Bangladesh Limited 24

Among the retail shops there are about equal numbers of branded and unbranded freezers This

is a normal scene in Dhaka where all shopkeepers require freezer to keep other cold products

However basic distribution policy is that if a shop has branded cabinet of a company they

cannot keep competitor ice cream in that cabinet Thus penetration can be made possible in

shops where unbranded freezers are available

General branded freezer contract policy with Igloo and Polar is that traders have to pay BDT

5000 to take a freezer Maintenance of branded freezers is responsibility of the company but

electricity bill is paid by shopkeeper However Polar is not currently giving any new freezer

Kwality gave away their freezers for free however they ensured safety of their freezers by

checking background of the shopkeepers

Cart sellers Cart sellers collect required amount of ice cream from nearby distribution house or

company showroom (Igloo has one showroom in Panthapath) on a daily basis They also have to

buy cartons of products not pieces Kwality carts collect their ice cream from factory (Tejgaon)

or nearby distribution house Cart sellers contribute around BDT 3000 sales in a day and

generally sell at BDT 1-2 higher than set price of each product

The cart sellers generally keep at least a two-day stock so that they can meet sudden upsurge in

daily demand of ice cream or if they get the opportunity to sell at parties programs or any open

air event (Wedding at community centres or outside cultural programs at auditoriums) If cart

sellers need replenishment of stock they even take service more than once in a day either

revisiting showroom house or they call up company delivery people to serve them at their

location if there is opportunity for selling more ice cream

Policy regarding Damaged Ice cream All the ice cream producers have very good relationship

with the shopkeepers If the retailers have refrigeration problem company takes ice cream back

until the problem is fixed whether it is stored in branded freezer or not Also if any ice cream

gets damaged or there is bacterial formation company takes them back Usual return time varies

from 15-30 days For large sellers however they take less time

Payment Method for Ice cream Purchase All the companies give credit of around one month to

large volume contributing retail sellers and try to maintain good relationship with them This

trend is seen in all channels Also all the SMMTs and MTs are given credit of one month and

payment is made by cheque Other small shopkeepers have to purchase with cash However

according to shopkeepers Igloo is currently trying to cut down on credit sales as they believe

there is a consumer pull for their brand Companies like Polar and Kwality also give special

commission to large sellers Polar gives 5 commission on every bill

Evaluation of Entry into Ice cream Business for Bangladesh Limited 25

H Technology and Innovation

Technological advancement in the ice cream industry has been very rapid Starting with stick

mould and filler ice cream production the companies have come a long way Assessing the

consumer choice and demand the companies are introducing new products very often Improved

and new technology is used for faster production and better quality Igloo is trying to meet the

international standards and launching products such as Sundae Cornelli and Nuggets Other

companies are also introducing new flavours suitable for their target segments Igloo has both the

ISO and the HACCP certifications These were awarded in the year 2003 due to their relentless

pursuit of quality and innovation In September 1996 Igloo introduced the 3D Mould line and

straight line extrusion technology for the first time in the subcontinent Basically with Igloorsquos

pursuit all the modern technologies and quality innovations are available in the market

I Production Capacity

Current production capacity of the major players in the common format ice cream segment is

estimated to be as follows

Name

Capacity (Ltrs day)

Total Production (000 Ltrs)

Required Capacity (at 300 production days )

Estimated unutilized capacity (Ltrs day)

Igloo

22000

387433

12914

9086

Polar

6500

112513

3750

2750

Kwality

12100

204934

6831

5269

Savoy

1560

25985

866

694

Milk Vita

1330

26387

880

450

Table 14 Production Capacity of Current Market Players

From the table we can see that all the ice cream manufacturers are operating with unutilized

capacity However one point to be noted is that different ice cream SKUs require different

amount of item to be produced Exact machine production capacity at litre per day does not

represent the accurate scenario Nevertheless it can be safely assumed that all the manufacturers

have unused machine capacity at their premises Moreover the larger players like Polar and

Kwality have new technology available at their premises Kwality bought second hand machines

from Thailand but both Igloo and Polar bought theirrsquos from Italy and Denmark

J Products and Pricing

Products The products in the ice-cream market are differentiated A few firms dominate the

market but an endless variety of ice creams are offered to the consumers Igloo pioneers all

major innovations in the market The products that are available in the market can be classified

into single serving and multiple serving groups Which are then categorized based on functional

attributes designs These are

Single

Stick

Normal mould 3D mould extrusion

Evaluation of Entry into Ice cream Business for Bangladesh Limited 26

Cup and Sundae

Flat cup long cup

Cone

Normal cone (vanilla strawberry etc) premium cone (Ripple)

serving

Innovative Fillers

Snowball Animal shaped containers sandwich nuggets etc

Container

05 ltr 1 ltr and 2 ltr containers

Multiple serving

Family Pack

Assorted packs cakes shahi kulfi etc

Table 15 Ice cream Serve types

Among all the products available in the market most selling SKU for all the companies is Choc-

bar stick and highest selling flavour is Vanilla Following are the ranks of most selling SKUs and

flavours

SKU Name

Rank

Choc-bar (70 ml)

1

Vanilla Cup (100 ml)

2

Vanilla Box (05 and 1 Ltr)

3

Lemon Lolly (70 ml)

4

Normal Cone

5

Flavour

Rank

Vanilla

1

Chocolate

2

Strawberry

3

Ripple

4

Mango

5

Table 16 Rank of SKUs Table 17 Rank of Flavours

Choc-bar is one of the earliest vanilla based chocolate coated SKU that has dominated the

market strongly over the years Shopkeepers could not provide an exact percentage on SKU

based sales contribution Most of them ranked the SKUs and flavours according to sequence

shown in the above table Also according to newspapers and secondary sources Vanilla is the

most selling flavour with 60 sales contribution According to secondary sources percentage

sales contribution of various types of SKUs in the common format segment are as follows

Type of Ice cream

Value Share

Volume Share

Impulse dairy ice cream

514

443

Impulse water ice cream

112

138

Take-home dairy ice cream

374

419

Table 18 Volume Share of Different Serve Types

Impulse dairy ice cream provides more value share as price per litre is higher than take home

multiple serving ice creams Impulse water ice cream shows a similar trend as of take home ice

cream

Pricing Product pictures and price ranges of each category are provided below Evaluation of

Entry into Ice cream Business for Bangladesh Limited 27

Normal Premium Price Tk12 Tk20 Tk25 Cup amp Sundae Normal Cup Sundae Premium Cup

Price Tk20 Tk25 Cone Normal Premium PriceTk20 Tk25Innovative Fillers PriceLtr Tk100

Tk175 Container Normal Premium PriceLtrTk150 Tk 175 Tk 190 Family Packs Kulfi Mixed

Pack Cake Single ServingMultipleServingNormal Ice Fruit 3D Mould Premium Extrusion Price

Tk10 Tk15 Tk15 Tk20Stick Normal Cream

Figure 8 Serve Types and Pricing

As it can be seen from the above chart all impulse ice creams are priced within the range of

BDT 10 to 25 Other take home multiple servings are priced within the range of BDT 50 (05

Litres) to BDT 220 (2 Litres) Another noticeable factor in price is that there are both normal and

premium flavours in all types of ice creams

K Firms as Price Setters

The firms have capability to affect the market price to be low as profit margin is very high If

Igloo reduces the price of an item below the prevailing price level in order to increase its sales

its competitors will fear that their customers will go away from them to buy Igloo products To

retain their customers they will be forced to match the price cut of Igloo Historically this has

been proven to be true However due to price sensitivity companies cannot drastically increase

price even if they provide higher quality of product It was seen in 1997 when Igloo increased

price of 11 SKUs and faced drastic sales fall during that time It shows that the industry might

welcome overall industry price increase but not individual company price increase

L Promotion

The promotion scenario in the industry is not quite organized as of now Even proper data

regarding promotional expenditure is not available from research sources The reason being

there is not much consumer related activity seen in the market After Kwalityrsquos introduction in

the market in 1999 Igloo went on with massive Television promotion of their new products that

were available at that time

Evaluation of Entry into Ice cream Business for Bangladesh Limited 28

However in current times there is no TVC running from any company Companies promote their

launches mainly through billboards and newspaper promotions which is currently the most used

source of consumer promotion Some promotional activities that were done by the companies

over the years are listed below

Consumer Promotions

1 Larger players like Igloo and Kwality goes on with campaigns like ldquoGift on stickrdquo where

various prizesrsquo names are written on the sticks and consumers can get them

a Igloo ran a program on their launch of Macho variant where gift varied from cricket bat to

personal computer

b Igloo had a program in 2006 where gifts on sticks varied from Bangkok visit to sunglass

c Igloo ran one campaign in 2007 where gold bars were given on purchasing Choc-bar

d Kwality ran a similar program in 2008 where gifts varied from wrist watches to motorcycle

2 Some companies ran consumer TTS and gift programs where company products were given

free

a Igloo had a program in 2006 where Igloo butter was given free on purchasing Igloo ice cream

cake

b Kwality ran a program in 2008 where one SKU was given as gift with another SKU randomly

c ldquoCone Ice cream at your Homerdquo program was run by Igloo in 2002 where six cone biscuits

were given free with purchase of one litre ice cream

3 Media placement is another form of placement done by larger companies

a Igloo purchased ldquoGlimpse into World Cup Resultrdquo space in daily newspapers during World

Cup Football 2002

4 One interesting program is done by only Igloo in Bangladesh They did it in June 2006 The

program was ldquoIgloo Ice cream Festivalrdquo with main attractions of ldquoGet as much ice cream as you

want for BDT 200rdquo ldquoGet a Fantasy Kingdom Entry ticket with each Entry Couponrdquo ldquoLucky

Drawrdquo and ldquoCelebrity Addardquo

Trade Promotions

5 Trade promotions are mainly given to ldquoHighest retail purchasersrdquo and also based on time

bound trade schemes where various slabs of purchase amount are mentioned for different prizes

a Igloo takes their highest purchasers to visit countries like Singapore and Thailand

b Savoy has a purchase slab scheme where first prize is table fan

c Polar gives special sales commission to their highest purchasers (around 5)

Evaluation of Entry into Ice cream Business for Bangladesh Limited 29

M Players in the Common Format Segment

Branded common format ice cream segment is constituted of five players only Among them

Igloo is the largest player and Milk Vita is the smallest The following sections detail the basic

company detail of all the companies with special emphasis on Igloo the market leader

Igloo

The pioneering ice-cream company in Bangladesh started its operation in 1964 in Chittagong

under K Rahman amp Co Limited (KRC) with a small factory inside Coca Cola bottling factory of

KRC After the independence of Bangladesh in 1971 Igloo was taken over by the government of

Bangladesh Later in 1983 Abdul Monem Limited purchased the entire production setup of KRC

Limited including Coca-Cola bottling plant and Igloo ice-cream factory After taking full charge

of Igloo ice-cream by Abdul Monem Limited the manufacturing operations continued in

Chittagong till 1990 Although Dhaka fetched the maximum share of the total revenue the

distribution cost increased tremendously in the process of meeting the demand of Dhaka city To

cope with the distribution problem and handle Polar threat Abdul Monem Limited transferred

the factory to Dhaka changed the ice-cream packaging from the conventional paper to plastic

and expanded their market and distribution operation The new factory of Igloo was setup at

Shyampur Narayanganj and was nine kilometres away from the Motijheel office The company

apart from catering the capital city started to expand its operations in Comilla (1991) Khulna

(1992) and North Bengal (1993) These markets were served directly from Dhaka since the

storage facilities were not developed till then The company is now the market leader since 1997

with clear market share victory over others with sweeping 51 share It is to be noted that Igloo

is also a player in the boutique segment with three parlours (2 in Dhaka and 1 in Chittagong)

Product Range Igloo offers the widest choice of ice cream more than any other competitor in

the market Igloo is offering a total of fifty items including normal premium and novelty cup

stick and family pack items Igloo has thirty flavours more than anyone else in the industry and

is continuously launching new and innovative delicacies

Igloo ice-cream can be classified in six groups They are

Stick

Macho Choc-bar Mini Choc Clown Mega Shell n core Lolly

Cone

Cornelli 2 in one Cornelli classic

Cup

Shahi kulfi Vanilla Strawberry Mango Snow ball

Container

Vanilla Strawberry Mango Chocolate Coffee Diet Vanilla Tutti Frutti Ripple Pralin

Pistachio

Innovative

Nuggets Sandwich

Family

Ripple cake Party time Shahi Kulfi

Table 19 Products of Igloo

Single serve stick cups and cone items are easy to carry around and convenient to eat which

makes it most sold The core target segment of ice-cream is 6-24 years and this generation is

always on the Evaluation of Entry into Ice cream Business for Bangladesh Limited 30

move and thus prefers independent cone stick or cup items As Igloo initiated the concept of ice-

cream as a family product they offer some items to be enjoyed with the whole family

Quality and Innovation Igloo is committed to maintaining the highest quality standard through

its continuous RampD activities The major ingredients raw materials and packing materials are

procured from the best European sources Strict quality control is done at every stage of the

manufacturing process from procurement of material mixing material flow ice cream making

packaging storing (at main warehouse) distributing and market shelving by the Quality Control

Department Current supply chain for various materials of Igloo is as follows Australia (Milk

Powder) Denmark (Ingredients emulsifiers amp stabilizers) China amp UAE (Food grade sticks)

China Denmark Singapore amp Thailand (Food grade packing materials)

Figure 9 Igloo Supply Chain

Distribution Network Their distribution network is stretched all over the country with a long

fleet of refrigerated vans Firstly the ice cream products are stored at the central warehouse of

the factory and from there they are distributed through the haulage vehicle to the operational

centres located in Dhaka Chittagong Comilla Rajshahi Barisal Bogra Rangpur and Khulna

Strictest cold chain maintenance during the distribution and selling of the ice creams is ensured

Their distribution process is as follows Manufacture Stored at -24c Transported by Refrigerated

trucks at -Reaches amp Preserved in Eight regional stores Refrigerated vehicles (Distributors)Retail

outlets (Deep freezers)

Figure 10 Distribution Process of Igloo

Evaluation of Entry into Ice cream Business for Bangladesh Limited 31

Trolley Operation Igloo also operates through trolleys for extending its reach to consumers at

the furthest points The trolleys are operated near schools alleys streets parks etc and play

rhythmic music to attract the consumers These are very colourfully decorated with Igloo

umbrella and the puller wears specific uniforms Igloo was the first in introducing and operating

these trolleys in Bangladesh for any Fast Moving Consumer Goods (FMCG) Igloo has around

125 trolleys operating throughout the country Individual trolleys are provided with a regular

supply of igloo ice creams

Marketing The marketing commitment of Igloo is based on the relationship with its customers

and consumer by not only manufacturing the highest quality product but also delivering the

product by maintaining this quality To satisfy the ever-changing needs of the customer Igloo

has regularly launched new ice creams and introduced new flavours And this commitment has

positioned Igloo as the market-leading brand by gaining the consumers trust with the positioning

as ldquoA WORLD OF GREAT TASTErdquo

Facilities and Logistics at a glance As of 2009 following are the facilities and logistics enjoyed

by the company

Factory location

Dhaka

Production Lines

4

Packages

Stick Cup Family pack Others (Nuggets and sandwich)

Machine suppliers

1048766 Mark-Italy

1048766 Tetra Pak(Hoyer)-Denmark

1048766 Sabore Denmark

1048766 Hass- Austria

Machine models

1048766 Freemark 1100 Italy

1048766 FM 3000 FM 6000 Italy

1048766 SL600 Denmark

Cone baking

Hass- Austria

Chocolate making

Macentyre-UK

Coverage

Nationwide

Operational centre

10

Total market vehicles

30

Distribution channel

Directthrough appointed distributors

Outlet service

7500

Injected deep freezers

4000

Trolley operations

125

Warehouse no

8

Table 20 Igloo Facilities and Logistics

Kwality

Kwality is currently the second largest ice cream manufacturer of the country The mother

company for the Kwality brand is Sanowara Drinks amp Beverages Ltd a sister concern of

Sanowara Group The company is famous for powdered milk brands Red Cow and Diploma in

Bangladesh The drinks and beverage concern of Sanowara made an entry into the market in

1997 with ldquoYesrdquo brand drinking water and launched the ice cream brand in 1999 With heavy

communication and novelty products it Evaluation of Entry into Ice cream Business for

Bangladesh Limited 32

successfully removed Polar from the second place with a current market share of 27 The

company also operates in the boutique segment with two parlours in Dhaka and Chittagong

Kwality ice cream factory is situated in Chittagong with a floor space of 35000 sft and fully

automated machinery wrapping mix machinery equipments from Italy having capacity of

around 20000 litres of ice cream per shift The ice cream factory employs 140 people The

company is ISO 9001-2000 certified

Kwality was the first true competitor for Igloo products with some major innovation in product

design and communication but their quality is perceived to be lower in the minds of the

consumers and they do not have extrusion ice cream The product prices are also similar to that

of Igloo but they charge a bit lower than Igloo in premium multiple servings However during

market visits it was seen that shops that keep only Kwality or Igloo and Kwality both they can

sell Kwality too although the sales amount is lower than that of Igloo People who look for Igloo

shopkeepers give them that directly but if they get a chance and Kwality ice cream stock is high

they also push Kwality to dry the stock out This gives an indication that market is larger than

what the current players are capable of serving even in Dhaka

Kwality follows a similar distribution model like Igloo but distribution frequency is lower and

amount of cart sellers is limited to 25 and they operate only in Dhaka

Polar

Once a giant in the industry Dhaka Ice Cream Industries Ltd introduced the first hygienically

packed ice cream in Bangladesh in 1987 and the brand name Polar was thus born In the early

days the company started ice cream business with a wide range of products and a variety of

flavours in Dhaka city In 1988 the company started its distribution in the city of Chittagong

then Bogra and continued to cover more cities Presently Polar ice cream is available

throughout Bangladesh The company today trails in the market with 15 market share in the

common format segment Recently Polar has announced launch of ISIS diabetic ice cream with

support from DANONE to turn around in the market

The company has its head office as well as a modern large-scale industrial plant in Dhaka Polar

ice cream is made with Danish expertise using Danish equipment and technology The

production activities and quality control measures are supervised and managed by Danish

experts Polar offers a wide range of delicious flavours and tastes made by ingredients imported

from Europe

Dhaka Ice Cream at present has 3 cold stores in Dhaka Chittagong and Bogra in Bangladesh

From Dhaka cold store they distribute ice creams in Mymensingh Tangail Jamalpur Sherpur

Kishoreganj Netrakona Comilla Narsingdi Barisal Madaripur Agaeljhara Faridpur Magura

Chuadanga Jessore Satkhira Khulna Pirojpur and Sylhet through their distributors In case of

long distance delivery points the company uses auto cooling freezer van

Evaluation of Entry into Ice cream Business for Bangladesh Limited 33

In Dhaka city they distribute ice creams directly to retail stores in freezer vans Besides that

they have several distributors at different points of the city Distributors cover their individual

areas where company is not able to supply directly in their freezer vans Similar model is

followed by the company to distribute ice cream from their other cold storages through out the

country For storing and selling ice creams in retail stores the company like the other players

arranges a deep freezer with the Polar logo and canopy light box

In addition to this distribution the company also undertakes home delivery of ice creams for

special occasions

Savoy

Savoy Ice-cream brand is owned by Sena Kalyan Sangstha (SKS) Group of industries It started

its journey in March 1995 with a factory in Tejgaon Dhaka Yearly turnover is estimated at BDT

388 crores with a market share of roughly 35

The factory has been established with Sonali Bank finance at 6040 equity ratio The total

production capacity of the factory has been estimated at 2400 litres of Ice-cream per day Total

land area of the factory premise is 116 Bigha with 8000 sft area covered with a total project cost

of BDT 144 The factory employs 73 people

Product ranges of the company include all the basic designs and flavours of the industry

However the company has not been much of an innovator in the industry Their product quality

is substantially low than that of other players and they price their products at 10-15 lower than

the other competitors The company imports raw materials mainly from Europe The general raw

materials are Euro cream Skimmed Milk Powder Cocoa Powder and Flavour (Vanilla Mango

and Strawberry) Colour (Yellow Red Chocolate and Green) Ripple Sauce Cheney Fruit Palm

Kernel Oil Anhydrous Butter Oil (Ghee) and Sugar etc

Milk Vita

Milk Vita is one of the most famous brand names in Bangladesh for its liquid dairy milk Owned

by Bangladesh Milk Producersrsquo Co-operative Union Limited (BMPCUL) the company came in

the market with proper dairy milk ice cream in form of cups and choc-bar With a production

capacity of around 1600 litres per day the company is trailing in the market place with 3

market share

Although the Milk Vita Choc-bar was perceived to be extremely tasty by consumers they

probably could not do well due price competition Currently they do not even distribute ice

cream in Dhaka However their presence is seen in outskirts of Dhaka and other nearby towns

If the current market situation prevails Milk Vita would lose their remaining market share and

other companies would benefit especially Igloo However one of the advantages of Milk Vita

remains to be

Evaluation of Entry into Ice cream Business for Bangladesh Limited 34

their nation wide milk supply network They have skimmed milk powder production plant that

Igloo does not have Thus they can combat the seasonality of milk supply that Igloo with its

huge requirement of milk cannot

Strengths and Weaknesses of Competitors

Company

Strengths

Weaknesses

Igloo

1048766 Strong brand image

1048766 High product quality

1048766 Highest no of variety

1048766 Strong distribution network

1048766 Highest visibility

1048766 Strong promotion

1048766 High production capacity

1048766 Presence of extrusion ice cream

1048766 Items are generally a bit pricy

1048766 Igloo does not give free freezers like other companies

1048766 Reluctant in recent times regarding innovation

1048766 Local sourcing of liquid milk does not meet demand

1048766 Failure to use ERP technology slowing decision making

Kwality

1048766 Product variety

1048766 Strong promotion

1048766 Free freezer distributed

1048766 Presence in all price segments

1048766 High production capacity

1048766 Weak distribution

1048766 Lower exposure

1048766 low amount of carts in operation

Polar

1048766 Free freezer

1048766 Quality perceived to be high compared to Kwality

1048766 Discoloured freezers

1048766 Lower exposure

1048766 Low product variety

1048766 Unused capacity

Savoy

1048766 Price is lower

1048766 Discoloured freezers

1048766 Low product variety

1048766 Weak distribution

1048766 Small amount of freezers

1048766 Low production capacity

Milk Vita

1048766 Quality is good due to dairy cream

1048766 Brand leverage from Milk Vita milk

1048766 Low exposure

1048766 Low variety

Table 21 Strengths and Weaknesses of Competition

512 Market Characteristics of the Boutique Segment

With a small market of BDT 98 Cr and 567 share in the branded ice cream market the

boutique segment is currently an increasing segment in the ice cream industry Boutique

segmentrsquos history dates back to 1960s when Igloo launched boutiques in Dhaka to save

distribution cost and promote a culture of ldquoice cream eating outrdquo In later years boutiques lost

their glamour and retail common format segment picked up growth However with Dolce Vita in

the late lsquo80s craze for Italian Artisan ice cream was recreated in the market Although Dolce

Vita is failing in recent times emergence of MoumlvenPick and Club Gelato in 2000 has uplifted the

segment once again Current growth rate of the

Evaluation of Entry into Ice cream Business for Bangladesh Limited 35

segment can be estimated to be approx 20-22 (higher than the common format segment)

Following are the basic detail of all the major players in the segment with their estimated sales3

Players

Outlet

Sales (Cr Taka)

Share

Club Gelato

1

136

199

MoumlvenPick

1

119

174

Andersenrsquos

3

119

174

Gelateria Igloo

3

119

174

Sub Zero (Kwality)

2

051

75

Baskin Robbins

1

015

22

Dolce Vita

1

017

25

American Soft

1

009

12

Rainbow

1

009

12

Others (off site)

089

130

Total Market

682

Table 22 Players and Shares in Boutique Segment

A Detail of Operation

General operational procedure followed by all the operators is as follows

1048766 Operating method There is a variation in operational method among the large operators

1048766 Club Gelato uses kitchen at own premise where imported ingredients and local milk (daily

special service from Milk Vita) are used to make ice cream

1048766 MoumlvenPick directly imports ice cream from Switzerland

1048766 Andersenrsquos Gelateria Igloo and Sub Zero produce ice cream at their factory with a mix of

imported and local ingredients

1048766 Products Around 30-35 flavours of artisan dairy ice cream are served at the premises

1048766 Most sold flavours are Vanilla Ferrero Rocher Butterscotch Chocolate Caramel etc

1048766 Other Products Larger players also serve ice cream desserts (milk shakes ice cappuccino etc)

pastries and other desserts with normal coffee and tea facility at their premises

1048766 Boutiques fight ice cream seasonality with the other products sales during off-peak ice cream

seasons Usually ice cream and other products contribute at 6040 ratio in summer and during

winter and off-peak seasons the ratio reverses

1048766 Pricing Usually the prices of products in this segment are 3-4 times higher than that of the

common format segment

1048766 Prices do not vary with flavours Variation depends on serve style (Cone tub) and use of

toppings and other ingredients (Chocolate sauce nut fruits) etc

1048766 Usual margin charged is around 50-60 over production cost Similar margin is charged for

other products like coffee ice cappuccino etc

3 Yearly sales is estimated based on companyrsquos approximate daily sales collected during

interview

Evaluation of Entry into Ice cream Business for Bangladesh Limited 36

1048766 Target Group Most of the consumers belong to SEC A and higher SEC A with DMFI of at

least BDT 20000

1048766 Foreign delegates and resident foreigners also visit these boutiques

1048766 Main purposes of visits in the boutiques are

bull Youth hangout with friends and having ice cream and ice cream derivatives

bull Family Family night out or eat out at a restaurant and then having dessert

bull Foreigners Having dessert after dinner

1048766 Rush time at boutiques are Afternoon 2-4 pm and at night 9-11 pm

1048766 Offsite sales Most of the large operators also sell offsite They have small freezers for off-site

1048766 Club Gelato and MoumlvenPick serves ice cream at high society parties and programmes

1048766 MoumlvenPick also has kiosks in known hotels like Sheraton

1048766 Promotion No mass promotion is done by any of the companies Word of mouth is the most

important source of promotion Posters and banners outside the premise and occasional

newspaper advertisements are used to communicate special offers

1048766 Growth Drivers Market growth is driven by image innovation quality decoration of facility

environment and special offers

1048766 Club Gelato has the image of selling true Italian dairy ice cream with an excellent hangout

environment

1048766 MoumlvenPick imports ice cream directly from Switzerland and is perceived to be of high quality

1048766 Andersenrsquos operates with the image of ice cream from Denmark

1048766 Gelateria Igloo (from Igloo) and Sub Zero (from Kwality) could not establish the premium

artisan ice cream image

B Players in the Boutique Segment

There are very few players who have significant impact in the boutique segment Detailed

information of all the major boutique segment players is provided below

Evaluation of Entry into Ice cream Business for Bangladesh Limited 37

Club Gelato

Basic Company Information

1048766 Location Banani Road 11 (Planning for a second one in Dhanmondi)

1048766 Established in 2001

1048766 Seating Capacity 48

1048766 Area 1250 sft (including kitchen)

1048766 Owner Mr Jahangir Alam (Bangladesh)

1048766 Business Type Joint business partnership with Singapore

1048766 Staff 15 people (6 in the kitchen)

1048766 Production capacity 150 litres per day

Product Related Information

1048766 Product Italian style parlour scoop ice cream fruit juice coffee and pastries

1048766 Flavours Around 32 flavours available

1048766 Most selling Ferraro Rocher Vanilla Pistachio

1048766 Innovations New variants and ingredients are communicated by their Italian supplier and

Club Gelato decides what to take from them

1048766 Serve type Cup Cone Glasses Box for take away

Consumer Profile

1048766 Primary Teenagers and Young Adults (18-30) amp Diplomats

1048766 Secondary Family consumers for eat out

1048766 Income Group High income customers tentatively from SEC A and higher SEC A

1048766 Geographic Area Diversified

1048766 Rush time 8-10 pm

Sales and Price Information

1048766 Sales BDT 50000 (60 Ice cream 40 other desserts) daily in summer In winter however

other products sell more and thus they keep total sales at the same level

1048766 Price 750 per litre for any flavour

1048766 Sales Volume 50-60 litres per day

Supply Chain Placement Information

1048766 Milk Local sourcing from Milk Vita (4050 litres per day)

1048766 Chocolates amp Flavours Belgium France Germany

1048766 Transportation Mainly air (They can afford it due to high margin)

1048766 Contribution of various materials Flavours (30) Milk (20) other parts are water and air

Promotional Materials

1048766 Materials used are near premises POS materials for promoting the parlour only

Table 23 Detail of Club Gelato

Evaluation of Entry into Ice cream Business for Bangladesh Limited 38

MoumlvenPick of Switzerland

Basic Company Information

1048766 Location Gulshan

1048766 Established in 2000

1048766 Seating Capacity 55

1048766 Owner Mr Arif Mahmud

1048766 Business Type Franchise of International MoumlvenPick

1048766 Storage Capacity in Shop 150 litres

Product Related Information

1048766 Product Imported MoumlvenPick ice creams coffee chicken sandwich and Frappe

1048766 Flavours Around 30 to 35 flavours available

1048766 Most selling Swiss Chocolate caramel Vanilla Dream Espresso Strawberry

1048766 Innovations New variants are communicated by their franchiser and they decide on flavours

that they want

1048766 Serve type Cup Cone Glasses Box for take away

Consumer Profile

1048766 Primary Teenagers and Young Adults (18-30) (70) amp Diplomats

1048766 Secondary Family consumers for eat out

1048766 Income Group High income customers tentatively from SEC A

1048766 Geographic Area Concentrated in Gulshan and nearby areas

1048766 Rush time Afternoon- Young Adult 10 to 11 pm Foreigners

1048766 the company also serves at parties and has freezers in known hotels where their ice creams

are served

Sales and Price Information

1048766 Sales BDT 35-40000 daily in summer

1048766 Price 640 per litre for any flavour

1048766 Sales Volume 55-60 litres per day

Supply Chain Placement Information

1048766 Transportation Imported finished goods by ship

1048766 Ship travel time 19 days

1048766 Port clearance 10 days

1048766 Safety Cushion Extra 10 days

Promotional Materials

1048766 Materials used are near premises POS materials for promoting the parlour only

Table 24 Detail of MoumlvenPick of Switzerland

Evaluation of Entry into Ice cream Business for Bangladesh Limited 39

Andersenrsquos of Denmark

Basic Company Information

1048766 Location Gulshan (2 others in Uttara Dhanmondi)

1048766 Established in 2001

1048766 Seating Capacity 48

1048766 Owner United Group

1048766 Business Type Franchise of Australian company Andersenrsquos of Denmark

1048766 Production Tongi Factory of United Group

1048766 Production capacity 2000 litres per day in factory

1048766 Storage Capacity in Shop 150 litres

Product Related Information

1048766 Product Danish parlour scoop ice cream and coffee

1048766 Flavours Around 30 to 35 flavours available

1048766 Most selling Strawberry Butter Scotch Green

1048766 Innovations New variants and ingredients are communicated by their franchiser and they

decide on flavours that they want

1048766 Serve type Cup Cone Glasses Box for take away

Consumer Profile

1048766 Primary Teenagers and Young Adults (18-30) (70) amp Diplomats

1048766 Secondary Family consumers for eat out

1048766 Income Group High income customers tentatively from SEC A

1048766 Geographic Area Concentrated in Gulshan and nearby areas

1048766 Rush time 8 to 10 pm

Sales and Price Information

1048766 Sales BDT 10-12000 daily in summer

1048766 Price 460 per litre for any flavour

1048766 Sales Volume 40-50 litres per day

Supply Chain Placement Information

1048766 Milk 2025 kg packs are imported

1048766 Chocolates amp Flavours Imported

1048766 Butte paper Local sourcing

1048766 Transportation Ship

Promotional Materials

1048766 Materials used are near premises POS materials for promoting the parlour only

Table 25 Detail of Andersenrsquos of Denmark

Evaluation of Entry into Ice cream Business for Bangladesh Limited 40

Gelateria Igloo

Basic Company Information

1048766 Location Banani Kemal Ataturk Avenue (Two others in GEC Mor Chittagong and Naya

Paltan)

1048766 Established in 2000

1048766 Seating Capacity 20

1048766 Production From Igloo factory in Shyampur Narayanganj

Product Related Information

1048766 Product Parlour scoop ice cream and coffee only

1048766 Flavours Around 30 flavours available

1048766 Most selling Vanilla Strawberry Chocolate Pistachio Butter Scotch Tutti Fruity

1048766 Serve type Cup Cone Glasses Box for take away

Consumer Profile

1048766 Primary Teenagers and Young Adults (18-30)

1048766 Secondary Family consumers for eat out

1048766 Income Group High income customers tentatively from SEC A and B

1048766 Geographic Area Diversified

1048766 Rush Time afternoon and evening

Sales and Price Information

1048766 Sales BDT 8000 to 10000 daily in summer Nearly one fourth in winter

1048766 Price Varies but 350 per litre of vanilla

Promotional Materials

1048766 POS materials at the premises

Table 26 Detail of Gelateria Igloo

52 Price Comparison of Common and Boutique Segments

Price ranges of both common format and boutique segment cannot exactly be pin pointed as

products do not follow common structure and variations occur with use of toppings mixing of

flavours and use of coatings However a price comparison has been made among the brands

based on their price of per litre of vanilla flavoured ice cream in the market It appears to be as

following

Company

Price Litre Vanilla

Club Gelato

750

MoumlvenPick

640

Andersenrsquos

460

Dolce Vita

440

Igloo

100

Kwality

100

Polar

100

Milk-Vita

90

Savoy

85

Table 27 Comparative Price Analysis

As it can be seen there is price gap within the range of BDT 100-400 Ice cream kiosks and

small scooping boutiques can operate within that range

Evaluation of Entry into Ice cream Business for Bangladesh Limited 41

60 CONSUMER ANALYSIS

61 Target Group of Ice cream

Who are the consumers of ice cream This question does not have a clear answer Ice cream is a

food for all It is the only food consumed by a human being at less than 0 degree centigrade

temperature and people of all ages feel indulged to have it However we can determine focus

target groups for both branded common format and artisan boutique ice cream Group

discussions and market visits were done to get insight into the consumers along side resources

form secondary sources Age based target group is common for both segments but variation

among the groups occur mainly based on SEC and DMFI classification

611 Geographic Group

Branded ice cream remains an urban product till date Geographically branded ice cream has

reached urban and semi urban areas up to Thana Head Quarter levels Ice cream has reached

areas where electricity is available Small artisan players are available in places where large

branded players have no distribution

612 Target Age Group

Age wise grouping of target consumers is as follows

1048766 Urban kids in the age group of 5-14

1048766 They mainly consume normal sticks cups cones innovative fillers and water ice creams

1048766 Urban youth in the age group of 15-24

1048766 They consume premium and extrusion sticks and cones

1048766 Urban mothers in the age group of 25-35

1048766 They determine the family purchases Even when the father purchases ice cream decision is

taken by them

Consumption pattern of various age groups are depicted in the following chart Ice cream

consumption pattern50203005 to 14 yrs15 to 24 yrs25 to 35 yrs

Figure 11 Target Group wise Consumption Pattern Evaluation of Entry into Ice cream Business

for Bangladesh Limited 42

613 Target SEC and DMFI Group

Common Format

SEC A and B is the target group for common format ice cream However with rapid increase in

price level over the years has made it a ldquohard to consumerdquo product for SEC B consumers who

belong to lower DMFI group

Boutique Format

Boutique formatrsquos higher margin and high price range makes it an exclusively SEC A ice cream

People belonging to upper and upper middle class have access to the mediocre boutiques and

only higher upper class can have premium ice creams like Club Gelato and MoumlvenPick

Another unique target group for boutique format are the foreigners who live in Bangladesh

These people tend to visit the parlours to have ice cream as dessert especially after dinner

62 Ice cream in Consumer Lifestyle

Figure 12 Ice cream in Consumer Life style

This simple overview of ice cream in consumer lifestyle was determined based on in-depth

research analysis of UBL and validated through qualitative group discussions by the author

However detail of in-depth research is provided in a later section of this chapter

Evaluation of Entry into Ice cream Business for Bangladesh Limited 43

63 Highlights of Purchase Habit of Ice cream

631 Common Habits across Target Groups

There are some common habits that were identified in earlier researches and group discussions

with consumers Common habits mean the consumer approach towards ice cream that is seen

across all target groups eg kids youth and adult purchasers These are outlined below

1048766 Ice cream is mainly seen as a dessert or a snack Impulse ice cream is seen as a quick snack

that is consumed when it is in sight Visibility plays a big role here Regarding family packs

people see it as a post-food dessert

1048766 Ice cream purchase is commonly a planned event When the contexts arise people generally

take a bit of time to decide whether or not to have ice cream or when they want to go to a

boutique they make due considerations regarding which boutique to visit

1048766 Ice cream purchase decision is taken based on favourite flavour People tend to try out new

variants and flavours when they first see it They compare the taste with earlier experience and

when they purchase later they choose the flavour they have liked most

1048766 For In-Home segment decision is mostly taken on the flavour Generally people come up with

different flavours of choice and most voted flavour is chosen

1048766 People become aware of new variants or flavours mainly through word-of-mouth

Advertisement (new launches special offers and festivals) in newspaper is another source of

awareness

1048766 People are currently indifferent towards the price level of premium flavours However some

feel that price of Choc-bar or water ice creams (lolly) is a bit much If less they would have

consumed more Some also feel that companies should come up with branded ice cream in the

price range of BDT 5-8

1048766 Ice cream is purchased from nearby shops If required brand and flavour is not available 2-3

shops will be visited and then available flavour will be selected even if the required one is not

found This is done mainly not to ruin the mood for ice cream

1048766 People are very open to try new brands and flavours especially if it comes from a credible

source They would try new flavours and if they are satisfied with the taste they would repeat

purchase

1048766 Regarding boutique visits people feel that boutiques need to have a proper environment

enough flavours and other snacks

1048766 While visiting boutique with family or companion they want variation in flavours so that

they would order different flavours and taste each otherrsquos ice cream It is seen as a sign of

togetherness

1048766 Frequency of ice cream purchase varies among people It depends on peer pressure collective

family decision summer heat and attitude towards ldquoice creamrdquo itself as a product Evaluation of

Entry into Ice cream Business for Bangladesh Limited 44

632 Habits of Kids

1048766 Kids choose ice cream flavours by the look of the product (generally pictures shown in POS

materials and carts) They love colour and designs of the products let it be a common format or a

boutique ice cream

1048766 Kids (when in house) would go with the housemaid to the nearby shop choose the flavour

they want (within range of the amount given to the maid) and buy it

1048766 When with parents they would take the product they like even if the price is lower than some

other product However mothers play a role in this decision They would want their children not

to choose too high priced a product or coloured products

633 Habits of Youth

1048766 Young people are the main consumer of impulse ice cream They also are one of the major

consumers in the boutique segment

1048766 Young people love to try out new products that come into the market Another side of the coin

is that they are not very loyal to a brand or a flavour and tend to switch a lot

1048766 Regarding boutique visits young people go to boutiques to have an ldquoice cream hang outrdquo with

peer groups They would stay there for a longer period of time while they have their ice cream

1048766 Some times young people make milk shakes and other ice cream based desserts

634 Habits of Mothers

1048766 Mothers worry about their childrenrsquos health and they prefer ldquovanillardquo type of brands

However when price constraint occurs they go for water ice creams for their children They try

to convince their kidrsquos purchase decision

1048766 Regarding family purchase motherrsquos decision is sometimes prioritized by the whole family

64 Barriers to Ice cream Consumption

641 Emotional Barriers

1048766 Overindulge (close to sinful)

1048766 Undisciplined (no control)

1048766 Childish (licking)

1048766 Artificial Image

642 Functional Barriers

1048766 People of SEC B feel that ice cream is an expensive dessert (If less expensive would consume

more often)

1048766 It leads to cold cough - especially in winter rainy season

1048766 It contains artificial additives preservatives

1048766 It is very high in calories that lead to fattening

Evaluation of Entry into Ice cream Business for Bangladesh Limited 45

1048766 It does not quench ldquothirstrdquo

1048766 Less convenient (portable immediate eat)

1048766 Messy Dripping

65 Research Findings

The highlights regarding purchase habits triggers and barriers of ice cream consumption provide

a glimpse into the consumer world of ice cream industry However UBL CMI conducted a

formal research exclusively on ice cream consumers to identify

1048766 Occasions of ice cream

1048766 Frequency of ice cream consumption

1048766 Expectations from ice cream occasions

1048766 Personalities that they desire from ice cream

651 Relevant Occasions in Daily Lives of Consumers

Research question regarding ldquousual occasions of life that occurred most frequently in day-to-day

lives of the respondentsrdquo generated the following replies

Occasion

of Respondents saying Yes

Watching TV

93

Normal Dinner At Home

91

Normal Lunch At Home

89

At Home While ReadingMusicSurfing

86

Informal Family Get Together

85

Out Of Home Hanging Out With Friends

84

Out Shopping

84

Mid-Afternoon Break At Home

83

At Home By Myself During The Day

82

Special Dinner At Home

82

Informal Dinner Out Of Home

82

Normal Lunch Out Of Home

82

Leisure Walk

79

Coming Home From WorkSchool

78

Special Dinner Out Of Home

78

Celebration

78

A Night In With Friends

77

At Home By Myself In The Evening

77

Special Lunch Out Of Home

76

Mid-Afternoon Break Out Of Home

75

Special Lunch At Home

73

Day out with Partner

72

Midmorning Break

70

At Breakfast

68

Family Day Out

68

During Work Or At School

65

Evaluation of Entry into Ice cream Business for Bangladesh Limited 46

Travelling ToFrom WorkSchool

65

At The Cinema

61

Special Event

56

Clubbing At A Party

50

Post GymSports

48

Table 28 Relevant Occasions in Consumersrsquo Lives

Respondents were then asked to mention ldquofrequency of occurrence of the identified occasionsrdquo

The identified replies are as follows Normal dinner at homenormal lunch at homeComing home

from workschoolTraveling tofrom workschoolDay out with Partner SpouseMid-afternoon

break at homeOut of home hanging out with friendsLeisure walkMid-afternoon break out of

homeA night in with friendsSpecial dinner at homeSpecial lunch out of homeFamily day

outSpecial eventPost gymsportsDaily2-3 Times A WeekWeekly2-3 Times A MonthOnce A

MonthEvery 2-3 MonthsLess OftenNever Figure 13 Frequency of Occurrence of Occasions

This shows that ldquoNormal dinner at home Watching TV Normal Lunch At Home At Home

While ReadingMusicSurfing Coming Home From WorkSchool During Work Or At School

Travelling ToFrom WorkSchool Midmorning Break Day Out With Partner Spouse At Home

By Myself During The Dayrdquo are the most frequent daily rituals of busy lives of consumers

652 Frequency of Ice cream Consumption

Respondents were asked to mention ldquoconsumption pattern of ice cream during the identified

occasionrdquo on a scale of 1-5 depicting frequencies like ldquo(5) always (4) most of the times (3)

about half of the times (2) sometimes (1) never do not knowrdquo The responses are depicted in

the following table

Evaluation of Entry into Ice cream Business for Bangladesh Limited 47

444474544655555566756665775967779991011101111101210111110101113111412131314161

011121411131216181519181518211817171719181718201721222130303434253437403741394

046383944464746453745414641374638504843414839373030292726232725222020201926202

21722221317Midmorning

breakWhile clubbing at aAt the cinemaSpecial eventNormal lunch out ofA night in with

friendsNormal dinner atInformal dinner out ofAt home by myselfAt home by myself inOut

shoppingSpecial lunch atDay out with SpouseWatching TVAlwaysmost of the timesAbout half

of the timesSometimesneverdo not know

Figure 14 Frequency of Ice cream Consumption

As it can be seen ldquoDay out with Spouse Special lunch at home Special dinner at home

Watching TV Family day out Celebrationrdquo are the occasions where most frequently ice cream is

consumed

653 Market Character Mapping Relevant Occasions vs Frequency of Consumption

If we plot frequency of consumption on the X-axis of a chart and relevance of occasion

occurrence on the Y-axis taking the above mentioned values as cut-off values we get four

quadrants in the chart depicting four market scenarios that any ice cream manufacturer in

Bangladesh market might encounter given the current market situation This market

segmentation is based on frequency of ice cream consumption in daily occasions of consumer

lives

The segments are

1048766 OPPORTUNITY MARKET High Relevant Occasions-Low Ice cream Frequency

1048766 QUESTION MARKET Less Relevant Occasions-Low Ice cream Frequency

1048766 HIGH FREQUENCY MARKET Relevant Occasions-High Ice cream Frequency

1048766 CAPTIVE MARKET Less Relevant Occasions-High Ice cream Frequency

The chart looks as follows Evaluation of Entry into Ice cream Business for Bangladesh Limited

48

Figure 15 Relevance of Occasion-Frequency of Consumption Mapping

As it can be seen from the above chart Bangladesh Market still lies in the Opportunity and

Question market zone with a pull towards High frequency and Captive Market zones This is

evident from market data as penetration of ice cream still remains at Thana headquarters levels

Also this explains the high market growth rate of 17 as market is yet under developed and

branded quality ice cream has yet not reached all levels of consumers especially rural level that

constitutes around 75 of Bangladeshi market

From the above analysis we can establish that target of ice cream manufacturers should be to

penetrate more into the Bangladeshi market to create higher frequency of ice cream

consumption The following chart shows the strategies to follow for ice cream manufacturers

Figure 16 Required Market Strategy for Bangladesh

Evaluation of Entry into Ice cream Business for Bangladesh Limited 49

As relevance of ice cream consumption occasions can hardly be controlled by marketers their

endeavour should be to create more ldquoemotional and functionalrdquo attachment to ice cream in less

frequent occasions through ldquomarket developmentrdquo strategy to earn share from overall food

expenditure of consumers and at the same time make them consume more ice cream in highly

relevant occasions through ldquopenetrationrdquo strategy

654 Consumersrsquo Emotional Requirements and Product Attributes

All consumers under these clusters also identify the emotional requirements and the significant

product attributes they seek from their current preferred and future desired ice creams These are

provided below

Cluster

Emotional Functional Requirement

Product Attributes

Enjoyment

Flavour Variety

1048766 Combination of different flavours

1048766 Combination of different textures

1048766 Very sweet

1048766 With wafer or biscuit

1048766 With chocolate

1048766 Of a well known brand

Socially Involved

Spoonable Rich

1048766 Very creamy

1048766 Only natural ingredients

1048766 No mess

Care

Size Creaminess

1048766 Big

1048766 Rich full taste

1048766 Smooth

1048766 Value for money

1048766 No mess

Unwind amp Escape

Economy

1048766 Crunchy

1048766 Economic

1048766 Of a well known brand

1048766 Nutritious

Balanced Convenience

Health Conscious

1048766 Of a well known brand

1048766 Nutritious

1048766 Milk based

1048766 Low sugar

1048766 Low carbohydrates

1048766 Filling

Active Self-Grooming

Fruit Vitamins

1048766 Healthy

1048766 Fruit based

1048766 Low fat

1048766 Liquid or drinkable

1048766 Nutritious

1048766 Of a well known brand

Confidence

Drinkable Light

1048766 Low calories

1048766 Light on the stomach

1048766 Chewy or gooey

1048766 Not so sweet

1048766 Natural appearance

Sensual

Appeal or image

1048766 No artificial additives

Evaluation of Entry into Ice cream Business for Bangladesh Limited 50

1048766 Natural appearance

1048766 Melting slowly

1048766 Attractive packaging

1048766 High quality ingredients

1048766 Of a well known brand

Table 29 Requirements amp Product Attributes Desired by Consumer Clusters

Of these findings we see that the identified highlighted barriers to ice cream consumption are

pretty evident among the consumers Mostly people want products of a reliable source or a well

known brand low calories quality ingredients value for money economic type

Evaluation of Entry into Ice cream Business for Bangladesh Limited 51

70 INDUSTRY ATTRACTIVENESS AND ENTRY PROSPECTS

71 Driving Forces of Growth

As identified in the earlier sections there are several driving forces behind the growth of ice-

cream industry in Bangladesh

712 Trade and Infrastructural Level

1048766 As a result of globalization newer varieties have been introduced to the local products Many

foreign companies are also coming as franchise so there has been increased competition and

these boutiques are setting higher standards for the local producers

1048766 The present market growth rate is 18-19 which is being influenced by larger players like

Igloo who are expanding their distribution nation wide with expansion of national electricity

grid

1048766 With entry of Modern Trade and recent organized business approach of retailers has made it

possible for ice cream manufacturers to penetrate into shops even without providing them with

branded freezers

1048766 Weather change has increased ldquosummerrdquo season in our country which has reduced negative

seasonal impact on ice cream

1048766 Large companies like Igloo have taken global learning of using carts as an effective tool of

availability and visibility for ice cream

1048766 New and improved technologies are being used in the production process This technological

advancement has improved quality increased speed of production and made the process more

cost effective

713 Consumer Level

1048766 Only a few years back rich people could afford the luxury of having ice-cream but now it has

become a common product for everybody Ice-cream companies are producing different products

with a wide price range for consumers of every class and status

1048766 Nowadays companies are doing promotional campaigns more frequently the customers get to

know about the product which makes it easier for them to buy the best one

1048766 The improved standard of life and more modernized lifestyle of people is an important reason

for the increased consumption thus growth of the ice-cream industry

Evaluation of Entry into Ice cream Business for Bangladesh Limited 52

72 Prospects of Entry

The ice-cream industry of Bangladesh is an attractive one for the investors because there is a

huge market but number of producers is very small The major reasons behind industry

attractiveness are as follows

1048766 The industryrsquos current growth potential is very high with opportunity for market development

1048766 The competition currently permits adequate profitability and the competitive forces are

becoming stronger with time

1048766 Boutique segment is at a very high growth stage but no operator is currently operating with a

mid price range of BDT 100-400 Ice cream kiosks and small scooping boutiques can operate

within that range

1048766 Current industry driving forces are favourable for the future industry profitability

1048766 Globally oriented consumers look for variety in ice cream that is currently not available

Latest innovations came in the market in 2002 People would welcome new variety and flavours

1048766 There is a gap in the market for balanced convenience through ice cream where consumers can

get nutritional benefits for ice cream Also emotional attachment to ice cream could further be

improvised in promotional campaigns

1048766 There is high scope for market penetration and development to increase frequency of ice

cream consumption

1048766 Level of risk or uncertainty is very low in ice-cream industry because the consumer market is

so huge any product with a standard quality and careful pricing will be able to make significant

profit

1048766 As for geographic reach of the industry 60 market is still in Dhaka There is scope of

expansion and a new entrant can easily capture market share within Dhaka using carts even if

they do not want nation wide cold chain distribution

1048766 The production process is very complex and capital requirements are also high So before

going into production any company should know about their capabilities and weaknesses and

then start the business or else they might suffer huge loss at a certain level

1048766 Unilever can acquire the required resource and use existing multi-national multi-cultural

expertise to enter the market in a grand way

1048766 With high probability of entry from DANONE with more products like the ISIS diabetic ice

cream Unilever should consider entering in this industry as soon as possible

Evaluation of Entry into Ice cream Business for Bangladesh Limited 53

80 ENTRY STRATEGY FOR UNILEVER

While describing the suggested entry strategy for UBL certain issues have been kept

confidential and some issues have been touched but not explained to keep consistency with UBL

confidentiality policy

81 Suggested Entry Areas for UBL

1048766 Boutique segment of the Bangladesh ice cream is only 5 of the branded market UBL needs

to pursue a larger scope to make the entry viable

1048766 UBL cannot fight with unbranded segment as global product quality mandate of Unilever does

not allow UBL to fight in low price-low quality segment

1048766 Recommend entry should be in the common format segment with both single and multiple

servings and in the boutique segment with a different brand name (if possible BEN amp JERRYrsquoS)

1048766 UBL should build up state-of-art modern factory for manufacturing and establish cold chain

facilities initially focusing on metro cities

1048766 Investment issues are required to be addressed for building factory and cold chain and capital

requirement needs to be identified for that purpose4

1048766 UBL may have boutiques for driving image selective top-end offering

1048766 Kiosks can be setup near universities and shopping malls

1048766 Boutiques should be concentrated in Dhaka and Chittagong

1048766 Ice cream for boutiques and kiosks would be produced in factory as institutional packs of 9-10

litres

82 Products

1048766 As a Brand Building country in global Unilever operating framework UBL is entitled only to

bring products developed by the Brand Development countries

1048766 Unilever should focus on serving products that have nutritional benefits (already available

globally) along with usual satisfactions of sensual pleasure functional attributes etc

1048766 Current existent players especially Igloo and Kwality have extensively copied global and

regionally available Unilever products eg Cornelli is same as Wallrsquos Cornetto Vinetta is similar

to Vienetta Mega is similar to Magnum etc UBL needs to differentiate these to consumers on

the ldquotaste the originalrdquo platform where global quality is focused regarding the products

1048766 UBL should also bring regionally famous brands like Moo or Max to create image

differentiation

1048766 Magnum or Moo should be used as premium end ice cream to generate more profit margin

Evaluation of Entry into Ice cream Business for Bangladesh Limited 54

83 Placement

1048766 Distribution focus should be in Dhaka for entry as Dhaka contributes more than 60 of total

ice cream sales in the country

1048766 Company may use carts as distribution method They serve as good source of visibility and

availability It would help in increasing impulse purchase

1048766 At least 1500 outlets in Dhaka and Chittagong needs to be actively served using dedicated

branded refrigerators to generate sales

1048766 50 carts should operate in Dhaka and Chittagong

84 Price

1048766 UBL products should be priced at par with Igloo pricing for the common format ice creams

1048766 UBL can bring in premium single-serve SKUS for the higher economic classes in the price

range of BDT 60-80

1048766 Smaller SKUs (small lolly stick) can be introduced in the price range of BDT 10-15

1048766 In the boutique segment UBL should price products above the semi-premium segment

(Gelateria Igloo Sub Zero or Andersenrsquos) but lower than that of Club Gelato or MoumlvenPick

85 Promotion

1048766 UBL would require strong marketing campaign (As high as 50 of sales) to have a grand

entry in the market

1048766 Presence in the television media would be of utmost importance More than 50 of

promotional expense should be made here initially Gradually it can be reduced

1048766 Newspaper would serve as the second most important option

1048766 Billboards should also be used

1048766 Activations (similar to Lux Channel i Super Star or Igloo Festival) should be done to generate

trial

86 Scope of Opportunity

Table 30 Value and Volume Based Scope of Opportunity for UBL

Value (BDT Cr)

Volume (Tons)

Market

131

7835

Common

121

7600

Boutique

98

235

Evaluation of Entry into Ice cream Business for Bangladesh Limited 55

861 Geographic Contribution

1048766 Dhaka (61)

1048766 Chittagong (19)

1048766 Sylhet (10)

862 UBL objectives

Common Format Ice Creams

1048766 Target 10 Market share in 1st year operation

1048766 Value BDT 11 Cr

1048766 Production capacity required 21 Tons day

1048766 Freezer Placement 1500 freezers

1048766 Cart operation At least 50 carts

Boutiques

1048766 Target Further develop the market

1048766 Focus Dhaka Chittagong and Sylhet Metro

1048766 Franchise At least 20 franchisee operations nation wide in divisional towns

1048766 Pricing Below imported parlours above common formats with around BDT 400 per Litre

87 Critical Success Factors

1048766 UBL is considered as a high profile company in Bangladesh and thus they cannot operate in

the market only with common products like choc-bars and cups They must have premium

products (these require extrusion line) also to carry their brand image Otherwise UBL would not

be able to charge usual premium over competition products

1048766 Launch of ice cream would require huge promotional and activation support in order to gain

customers from Igloo People want novelty regarding ice cream and UBL have to let them know

about their products and create hype

1048766 Cart should be used as a source of distribution Recent successes of Unilever companies like

Indonesia shows that carts can generate more sales and can be used as source of visibility in the

minds of both retail traders and consumers Carts can also provide incremental sales to the

company

1048766 UBL have to create a strong cold chain for ice cream (initially in Dhaka and Chittagong) to

ensure quality products for consumers

1048766 UBL have to build capacity very rapidly to meet consumer demand if the launch is successful

Evaluation of Entry into Ice cream Business for Bangladesh Limited 56

90 BUSINESS PROJECTION

91 Basic Assumptions

Business projection for ice cream business was made based on a conservative approach UBL

would require spending significantly on production capacity and factory dedicated to ice cream

Thus to analyse business possibilities of ice cream certain assumptions were made and collected

data were used These are

1048766 Production equipments and cabinets would cost approximately BDT 55 crores

1048766 Production equipments 45

1048766 Packaging Equipments 15

1048766 Storage Facility 20

1048766 Branded Freezers 10

1048766 Distribution Investment 10 (Distributors would also invest themselves)

1048766 Ice cream factory with a floor size of 20000 sqft would cost BDT 25 crores

1048766 Objective is to capture 10 market share in Dhaka and Chittagong in the first year

1048766 Business would grow by 50 in year 2 and 3 30 in year 4 and 25 in year 5

1048766 Weighted price per litre is BDT 170 according to volume share of single serve ice cream

multiple serve ice cream and boutique ice cream

1048766 Other financial assumptions were also made List of them are provided below but amount has

been removed for confidentiality issues

Assumptions

Trade Margin

Distributors Margin

DutyVAT Rate

Trade Terms Expense of NPS

Trade Terms Expense of NSV

Advertising ampPromotion of NPS

Indirects (Salaries Wages etc)

Trading Tax

Table 31 Assumptions for Business Projection

Evaluation of Entry into Ice cream Business for Bangladesh Limited 57

100 CONCLUSION

Ice cream has good prospect in Bangladesh It is still a growing market with opportunities for big

new entrants With the barriers of entry UBL needs to consider its priorities UBL being an HPC

company traditionally needs to acquire expertise in cold chain distribution and has to invest a lot

of money to rip the benefits of the industry However to initiate company can take regional

support and acquire resource expertise The company should enter the business as soon as

possible since there is potential threat from DANONE to introduce more ice creams after ISIS

diabetic ice cream and also with potential of the industry arch rival Nestlersquo might consider

entering into the industry too

Evaluation of Entry into Ice cream Business for Bangladesh Limited 58

References

Web References

1 wwwunilevercom

2 wwwunilevercombd

3 wwwhllcom

4 wwwunilevercompk

5 wwwthedailystarcom - Life Style Magazine

6 wwwreuterscouk

Evaluation of Entry into Ice cream Business for Bangladesh Limited 59

Page 5: Square Ice cream

1048766 2000 Entry of the premium boutique operators like Club Gelato MoumlvenPick and

Baskin31Robbins

1048766 2002 Kwality launched an extensive campaign and started to capture the ice-cream outlets of

the city by providing freezers

1048766 2004 Kwalityrsquos number of freezers exceeded Polarrsquos and moved to second position

1048766 2005 onwards Igloo leads the market and there is immense competition among Polar and

Kwality for the coveted 2nd spot

Historical progress of this industry is of great importance Bangladesh ice cream industry has

traditionally been exposed to high quality products for a long time Igloo initiated the progress of

boutique segment (1965) but it lost its way over time The segment picked up once again in the

recent years Also high quality products and innovations in the common format segment have

created an appreciation for continuous innovation and better products in the minds of the

consumers Consumers in Bangladesh see ice cream as a fun product which requires novelty and

quality coupled with continuous hype around the brand This is why we see Kwality and Polar

could create early impacts with their entry into the industry as they came up with innovations in

product or packaging and arranged massive marketing campaigns during their launches Igloo

had to minimize their effects with similar campaigns to hold on to their position

Evaluation of Entry into Ice cream Business for Bangladesh Limited 19

50 MARKET amp COMPETITION ANALYSIS

51 Market Description

Bangladesh ice-cream industry is growing With increasing market demand size of the industry

is growing but due to entry barriers of lengthy and complex production process and high

investment few companies enter this business Although local companies in the branded segment

have captured most of the market share small unbranded local companies own a huge market to

themselves Where branded ice cream consumers look for innovation and quality unbranded

users outside metro cities are currently inclined towards low price low quality products This

creates an opportunity for further market development on the hygiene and health platform On

the other hand the boutique industry is doing quite well with their approach towards ice cream

as a dessert item along with service of other snacks like cakes and coffee at their premises which

help them reduce seasonality effects of ice cream

With a complicated scenario in the market to analyze the industry condition and understand the

competitive realities details of market characteristics and players of both common and boutique

segments are explained in following sections However unbranded segment is excluded from

discussion as Unileverrsquos portfolio does not match the characteristics and price level of this

category

511 Market Characteristics of the Common Format Segment

A Market size

Due to promotion innovation and exposure to different cultures the consumption of ice cream

has increased As a result the total market size is expanding At present the local companies in

the common format segment have a huge market of about BDT 121 Cr This market is 16 times

larger than the boutique segment and nearly doubles the unbranded segment Over the years the

size increase of the industry shows the prospect of converting unbranded unhygienic ice cream

consumers into branded ice cream consumers However price level still remains a big problem

for the branded category as petty unbranded ice cream companies with a price range of Tk1 to

Tk5 have a total market size of BDT 79 Cr which shows a hint of high price sensitivity in lower

SEC consumers Overall market size of 220 Cr indicates that most of the people in the country

are exposed to ice cream or some kinds of derivatives of ice cream like ldquoBaarfirdquo however they

probably cannot afford higher priced icy fruit sticks (BDT 6-10) available in the branded

segment

B Competitive rivalry in the Market

Competition is not very intense among the existing five companies because the number of

operators is very small considering the total population Also complexities of production and

distribution process and other entry barriers are stopping new companies from entering the

industry Evaluation of Entry into Ice cream Business for Bangladesh Limited 20

Igloo is confident about its unbeatable first position but there is competition among other

companies such as Polar and Kwality for the 2nd position However in current market no

operator is showing much aggressive and visible activity towards growth It is expected that

recent announcement regarding introduction of ISIS diabetic ice cream by Polar in partnership

with DANONE would again create some hype in the market

Reasons behind existing level of rivalry among competitors can be attributed to following

reasons

1048766 The ice cream industry has few sellers because there is economy of scale through large-scale

production The larger firms have a cost advantage over smaller firms they can produce more

cheaply- making it hard for small firms to survive

1048766 Market is bigger than capability of current players and can accommodate them without much

trouble This is because PCC of ice cream in the country is still pretty low

1048766 This market has substantial amount of ldquobarriers to entryrdquo making it difficult for a large

number of competitors to enter the market The cost of setting up a new plant in this industry is

quite high The cost of entry works as an entry barrier

1048766 To get people to try new product the potential entrant will have to run a big competitive

advertising or massive promotional campaign which is expensive The prevailing companies

created barriers in entry for potential rivals by using extensive advertising and product

differentiation earlier which has its effects till now Another fact is that product awareness and

brand loyalty to the existing firms make it expensive for potential rivals to enter

1048766 To further elaborate present competitive reality of the industry the five competitive forces are

discussed below

1048766 The rivalry among the competing sellers is weak as market is yet to develop more

1048766 With various entry barriers not many new companies are attempting to enter this industry

1048766 As there are no direct substitute products to ice-cream the companies donrsquot face any

competition from other industries

1048766 As the number of suppliers is very low and the companies especially Igloo as the best product

enjoys high bargaining power or leverage over rivals But some of the companies such as Savoy

are concentrating on increasing profit margin of the retailers for securing a more prominent

position in the market

1048766 Mainly consumers or buyers decide the pricing Keeping in mind the various buying power of

people the companies decide the price of each items Price of the Items that have the most

market demand is kept low so that they are in the reach of the general customers By lowering

the price some companies such as Savoy are trying to maintain a competitive edge

Evaluation of Entry into Ice cream Business for Bangladesh Limited 21

C Market Sales and Growth Rate

Sales information of the five existing companies for the current years shows the following trend

Company Name

2007

2008

2009

Total Market

11307

12120

13122

Igloo

5785

6086

6425

Polar

168

1835

2019

Kwality

306

335

374

Savoy

388

415

458

Milk Vita

394

434

488

Table 9 Market Sales and Growth Rate of Branded Common Format Market

Volume based market size shows the following scenario prevailing in the Bangladesh market in

2009

Company Name

Single Vol (000 Ltrs)

Multi Vol (000 Ltrs)

Total Vol (000 Ltrs)

Total Market

32759

42967

7573

Igloo

16760

21983

3874

Polar

4867

6384

1125

Kwality

8865

11628

2049

Savoy

1124

1474

260

Milk Vita

1141

1497

264

Table 10 Volume Based Market Size

The total volume of the branded common format ice cream industry is 7500 Tons of which more

than 50 belongs to Igloo followed by Kwality with 27

D Market Share and Size of the rivals

Market share data for all the local companies show a trend where Igloo is the biggest ice-cream

company dominating with a huge market share Although even 1-2 years ago there was intense

competition between Kwality and Polar but now it seems that Kwality is 2nd largest ice-cream

manufacturing company in Bangladesh Polar is in the 3rd position with Savoy and Milk Vita

trailing in the market Market share percentage over the years is presented in the following table

Company Name

2007

2008

2009

Igloo

50

5031

5116

Kwality

256

2666

2706

Polar

17

161

1485

Milk Vita

34

332

348

Evaluation of Entry into Ice cream Business for Bangladesh Limited 22

Savoy

39

365

343

Table 11 Market Share of Competitors

E Geographic Sales Orientation

Ice cream still continues to be a city-oriented product and its demand is comparatively low in the

rural areas Reasons behind this are electricity problem outside urban areas and purchasing

power of people Geographic sales orientation of the common format ice cream industry is

provided below

611890690480590250DhakaChittagongKhulnaComillaBarisalOthers

Figure 7 Geographic Sales Orientation

Dhaka still is the largest contributor in the ice cream segment Nevertheless over the years this

trend is shifting Areas outside Dhaka are also growing making Dhakarsquos share lower by small

percentage As urban markets are the major contributors companies design their products

keeping in mind the tastes and styles of the urban consumers Compared to the other companies

Igloo is the most expensive in the common format segment so they target only city based

customers who have the purchasing power Although other companies such as Savoy are offering

low priced product even their main target is urban people due to nation wide electricity problem

F Seasonality of Sales

Ice cream industries in warmer part of the world are highly seasonal Same is true with

Bangladesh According to secondary data sources sales seasonality looks as follows

Period Name

Months

Contribution

Super-Peak

April May June

46

Peak

March July August

36

Off-Peak

February September October November

15

Super Off-Peak

December January

3

Table 12 Seasonality of Ice cream Sales

This data was validated through interviews with retailers during market visit According to them

more than 75 sales of ice cream came in the hot months Another insight that could be

identified was

Evaluation of Entry into Ice cream Business for Bangladesh Limited 23

various festivals and programmes provide scope for higher volume of ice cream sales According

to companies where only 10-15 sales occurs in the winter season same amount of sales occurs

during festivals like the two Eids and Nobobarsha

G Distribution Servicing System

Mainly common format ice-cream is distributed in two methods that are directly to retail shops

and through hawkers with ice cream carts trolleys

The various channels of retail shops other than cart that serve as distribution outlets for Ice cream

are

7 Urban General Stores (UGS)

8 Urban Neighbourhood Grocer (UNG)

9 Premium General Store (PGS) SMMT

10 Confectionary Bakery

11 Modern Trade (MT)

12 Fast Food shops (Recently some fast food shops keep branded ice cream cabinets)

Distribution details of all the companies are provided below However detail of Milk Vita is not

available as they are mainly milk producer and they have no dedicated ice cream cabinet for

retail stores and currently they are not distributing ice cream in Dhaka city

Company

Distribution Method

Frequency

No of Cabinets

No of Carts

Igloo

Distributor Cart

2 to 3 times a week

4000

100

Kwality

Distributor Cart

1 to 2 times a week

1050

20

Polar

Distributor Cart

1 to 2 times a week

800

50

Savoy

Company

1 to 2 times a fortnight

176

-

Milk-Vita

-

-

-

-

Table 13 Distribution Method of Market Players

Distribution Process Distribution process through both methods is described below

Retail Distribution The general distribution that is followed by companies is that distributor

sends large refrigerated trucks dedicated to specific territories These trucks are accompanied by

small refrigerated vans Main road side shops are served directly from the large truck and shops

that are inside small streets are served by the small vans

Order and delivery are done on the same day The strategy followed is that of replenishment If

the branded freezer of the company is empty they simply fill it up according to requirement of

different SKUs as the delivery people see fit However shopkeepers have to buy full cartons

(usually 24 pieces in a carton) of single serve ice cream they cannot buy in pieces

Evaluation of Entry into Ice cream Business for Bangladesh Limited 24

Among the retail shops there are about equal numbers of branded and unbranded freezers This

is a normal scene in Dhaka where all shopkeepers require freezer to keep other cold products

However basic distribution policy is that if a shop has branded cabinet of a company they

cannot keep competitor ice cream in that cabinet Thus penetration can be made possible in

shops where unbranded freezers are available

General branded freezer contract policy with Igloo and Polar is that traders have to pay BDT

5000 to take a freezer Maintenance of branded freezers is responsibility of the company but

electricity bill is paid by shopkeeper However Polar is not currently giving any new freezer

Kwality gave away their freezers for free however they ensured safety of their freezers by

checking background of the shopkeepers

Cart sellers Cart sellers collect required amount of ice cream from nearby distribution house or

company showroom (Igloo has one showroom in Panthapath) on a daily basis They also have to

buy cartons of products not pieces Kwality carts collect their ice cream from factory (Tejgaon)

or nearby distribution house Cart sellers contribute around BDT 3000 sales in a day and

generally sell at BDT 1-2 higher than set price of each product

The cart sellers generally keep at least a two-day stock so that they can meet sudden upsurge in

daily demand of ice cream or if they get the opportunity to sell at parties programs or any open

air event (Wedding at community centres or outside cultural programs at auditoriums) If cart

sellers need replenishment of stock they even take service more than once in a day either

revisiting showroom house or they call up company delivery people to serve them at their

location if there is opportunity for selling more ice cream

Policy regarding Damaged Ice cream All the ice cream producers have very good relationship

with the shopkeepers If the retailers have refrigeration problem company takes ice cream back

until the problem is fixed whether it is stored in branded freezer or not Also if any ice cream

gets damaged or there is bacterial formation company takes them back Usual return time varies

from 15-30 days For large sellers however they take less time

Payment Method for Ice cream Purchase All the companies give credit of around one month to

large volume contributing retail sellers and try to maintain good relationship with them This

trend is seen in all channels Also all the SMMTs and MTs are given credit of one month and

payment is made by cheque Other small shopkeepers have to purchase with cash However

according to shopkeepers Igloo is currently trying to cut down on credit sales as they believe

there is a consumer pull for their brand Companies like Polar and Kwality also give special

commission to large sellers Polar gives 5 commission on every bill

Evaluation of Entry into Ice cream Business for Bangladesh Limited 25

H Technology and Innovation

Technological advancement in the ice cream industry has been very rapid Starting with stick

mould and filler ice cream production the companies have come a long way Assessing the

consumer choice and demand the companies are introducing new products very often Improved

and new technology is used for faster production and better quality Igloo is trying to meet the

international standards and launching products such as Sundae Cornelli and Nuggets Other

companies are also introducing new flavours suitable for their target segments Igloo has both the

ISO and the HACCP certifications These were awarded in the year 2003 due to their relentless

pursuit of quality and innovation In September 1996 Igloo introduced the 3D Mould line and

straight line extrusion technology for the first time in the subcontinent Basically with Igloorsquos

pursuit all the modern technologies and quality innovations are available in the market

I Production Capacity

Current production capacity of the major players in the common format ice cream segment is

estimated to be as follows

Name

Capacity (Ltrs day)

Total Production (000 Ltrs)

Required Capacity (at 300 production days )

Estimated unutilized capacity (Ltrs day)

Igloo

22000

387433

12914

9086

Polar

6500

112513

3750

2750

Kwality

12100

204934

6831

5269

Savoy

1560

25985

866

694

Milk Vita

1330

26387

880

450

Table 14 Production Capacity of Current Market Players

From the table we can see that all the ice cream manufacturers are operating with unutilized

capacity However one point to be noted is that different ice cream SKUs require different

amount of item to be produced Exact machine production capacity at litre per day does not

represent the accurate scenario Nevertheless it can be safely assumed that all the manufacturers

have unused machine capacity at their premises Moreover the larger players like Polar and

Kwality have new technology available at their premises Kwality bought second hand machines

from Thailand but both Igloo and Polar bought theirrsquos from Italy and Denmark

J Products and Pricing

Products The products in the ice-cream market are differentiated A few firms dominate the

market but an endless variety of ice creams are offered to the consumers Igloo pioneers all

major innovations in the market The products that are available in the market can be classified

into single serving and multiple serving groups Which are then categorized based on functional

attributes designs These are

Single

Stick

Normal mould 3D mould extrusion

Evaluation of Entry into Ice cream Business for Bangladesh Limited 26

Cup and Sundae

Flat cup long cup

Cone

Normal cone (vanilla strawberry etc) premium cone (Ripple)

serving

Innovative Fillers

Snowball Animal shaped containers sandwich nuggets etc

Container

05 ltr 1 ltr and 2 ltr containers

Multiple serving

Family Pack

Assorted packs cakes shahi kulfi etc

Table 15 Ice cream Serve types

Among all the products available in the market most selling SKU for all the companies is Choc-

bar stick and highest selling flavour is Vanilla Following are the ranks of most selling SKUs and

flavours

SKU Name

Rank

Choc-bar (70 ml)

1

Vanilla Cup (100 ml)

2

Vanilla Box (05 and 1 Ltr)

3

Lemon Lolly (70 ml)

4

Normal Cone

5

Flavour

Rank

Vanilla

1

Chocolate

2

Strawberry

3

Ripple

4

Mango

5

Table 16 Rank of SKUs Table 17 Rank of Flavours

Choc-bar is one of the earliest vanilla based chocolate coated SKU that has dominated the

market strongly over the years Shopkeepers could not provide an exact percentage on SKU

based sales contribution Most of them ranked the SKUs and flavours according to sequence

shown in the above table Also according to newspapers and secondary sources Vanilla is the

most selling flavour with 60 sales contribution According to secondary sources percentage

sales contribution of various types of SKUs in the common format segment are as follows

Type of Ice cream

Value Share

Volume Share

Impulse dairy ice cream

514

443

Impulse water ice cream

112

138

Take-home dairy ice cream

374

419

Table 18 Volume Share of Different Serve Types

Impulse dairy ice cream provides more value share as price per litre is higher than take home

multiple serving ice creams Impulse water ice cream shows a similar trend as of take home ice

cream

Pricing Product pictures and price ranges of each category are provided below Evaluation of

Entry into Ice cream Business for Bangladesh Limited 27

Normal Premium Price Tk12 Tk20 Tk25 Cup amp Sundae Normal Cup Sundae Premium Cup

Price Tk20 Tk25 Cone Normal Premium PriceTk20 Tk25Innovative Fillers PriceLtr Tk100

Tk175 Container Normal Premium PriceLtrTk150 Tk 175 Tk 190 Family Packs Kulfi Mixed

Pack Cake Single ServingMultipleServingNormal Ice Fruit 3D Mould Premium Extrusion Price

Tk10 Tk15 Tk15 Tk20Stick Normal Cream

Figure 8 Serve Types and Pricing

As it can be seen from the above chart all impulse ice creams are priced within the range of

BDT 10 to 25 Other take home multiple servings are priced within the range of BDT 50 (05

Litres) to BDT 220 (2 Litres) Another noticeable factor in price is that there are both normal and

premium flavours in all types of ice creams

K Firms as Price Setters

The firms have capability to affect the market price to be low as profit margin is very high If

Igloo reduces the price of an item below the prevailing price level in order to increase its sales

its competitors will fear that their customers will go away from them to buy Igloo products To

retain their customers they will be forced to match the price cut of Igloo Historically this has

been proven to be true However due to price sensitivity companies cannot drastically increase

price even if they provide higher quality of product It was seen in 1997 when Igloo increased

price of 11 SKUs and faced drastic sales fall during that time It shows that the industry might

welcome overall industry price increase but not individual company price increase

L Promotion

The promotion scenario in the industry is not quite organized as of now Even proper data

regarding promotional expenditure is not available from research sources The reason being

there is not much consumer related activity seen in the market After Kwalityrsquos introduction in

the market in 1999 Igloo went on with massive Television promotion of their new products that

were available at that time

Evaluation of Entry into Ice cream Business for Bangladesh Limited 28

However in current times there is no TVC running from any company Companies promote their

launches mainly through billboards and newspaper promotions which is currently the most used

source of consumer promotion Some promotional activities that were done by the companies

over the years are listed below

Consumer Promotions

1 Larger players like Igloo and Kwality goes on with campaigns like ldquoGift on stickrdquo where

various prizesrsquo names are written on the sticks and consumers can get them

a Igloo ran a program on their launch of Macho variant where gift varied from cricket bat to

personal computer

b Igloo had a program in 2006 where gifts on sticks varied from Bangkok visit to sunglass

c Igloo ran one campaign in 2007 where gold bars were given on purchasing Choc-bar

d Kwality ran a similar program in 2008 where gifts varied from wrist watches to motorcycle

2 Some companies ran consumer TTS and gift programs where company products were given

free

a Igloo had a program in 2006 where Igloo butter was given free on purchasing Igloo ice cream

cake

b Kwality ran a program in 2008 where one SKU was given as gift with another SKU randomly

c ldquoCone Ice cream at your Homerdquo program was run by Igloo in 2002 where six cone biscuits

were given free with purchase of one litre ice cream

3 Media placement is another form of placement done by larger companies

a Igloo purchased ldquoGlimpse into World Cup Resultrdquo space in daily newspapers during World

Cup Football 2002

4 One interesting program is done by only Igloo in Bangladesh They did it in June 2006 The

program was ldquoIgloo Ice cream Festivalrdquo with main attractions of ldquoGet as much ice cream as you

want for BDT 200rdquo ldquoGet a Fantasy Kingdom Entry ticket with each Entry Couponrdquo ldquoLucky

Drawrdquo and ldquoCelebrity Addardquo

Trade Promotions

5 Trade promotions are mainly given to ldquoHighest retail purchasersrdquo and also based on time

bound trade schemes where various slabs of purchase amount are mentioned for different prizes

a Igloo takes their highest purchasers to visit countries like Singapore and Thailand

b Savoy has a purchase slab scheme where first prize is table fan

c Polar gives special sales commission to their highest purchasers (around 5)

Evaluation of Entry into Ice cream Business for Bangladesh Limited 29

M Players in the Common Format Segment

Branded common format ice cream segment is constituted of five players only Among them

Igloo is the largest player and Milk Vita is the smallest The following sections detail the basic

company detail of all the companies with special emphasis on Igloo the market leader

Igloo

The pioneering ice-cream company in Bangladesh started its operation in 1964 in Chittagong

under K Rahman amp Co Limited (KRC) with a small factory inside Coca Cola bottling factory of

KRC After the independence of Bangladesh in 1971 Igloo was taken over by the government of

Bangladesh Later in 1983 Abdul Monem Limited purchased the entire production setup of KRC

Limited including Coca-Cola bottling plant and Igloo ice-cream factory After taking full charge

of Igloo ice-cream by Abdul Monem Limited the manufacturing operations continued in

Chittagong till 1990 Although Dhaka fetched the maximum share of the total revenue the

distribution cost increased tremendously in the process of meeting the demand of Dhaka city To

cope with the distribution problem and handle Polar threat Abdul Monem Limited transferred

the factory to Dhaka changed the ice-cream packaging from the conventional paper to plastic

and expanded their market and distribution operation The new factory of Igloo was setup at

Shyampur Narayanganj and was nine kilometres away from the Motijheel office The company

apart from catering the capital city started to expand its operations in Comilla (1991) Khulna

(1992) and North Bengal (1993) These markets were served directly from Dhaka since the

storage facilities were not developed till then The company is now the market leader since 1997

with clear market share victory over others with sweeping 51 share It is to be noted that Igloo

is also a player in the boutique segment with three parlours (2 in Dhaka and 1 in Chittagong)

Product Range Igloo offers the widest choice of ice cream more than any other competitor in

the market Igloo is offering a total of fifty items including normal premium and novelty cup

stick and family pack items Igloo has thirty flavours more than anyone else in the industry and

is continuously launching new and innovative delicacies

Igloo ice-cream can be classified in six groups They are

Stick

Macho Choc-bar Mini Choc Clown Mega Shell n core Lolly

Cone

Cornelli 2 in one Cornelli classic

Cup

Shahi kulfi Vanilla Strawberry Mango Snow ball

Container

Vanilla Strawberry Mango Chocolate Coffee Diet Vanilla Tutti Frutti Ripple Pralin

Pistachio

Innovative

Nuggets Sandwich

Family

Ripple cake Party time Shahi Kulfi

Table 19 Products of Igloo

Single serve stick cups and cone items are easy to carry around and convenient to eat which

makes it most sold The core target segment of ice-cream is 6-24 years and this generation is

always on the Evaluation of Entry into Ice cream Business for Bangladesh Limited 30

move and thus prefers independent cone stick or cup items As Igloo initiated the concept of ice-

cream as a family product they offer some items to be enjoyed with the whole family

Quality and Innovation Igloo is committed to maintaining the highest quality standard through

its continuous RampD activities The major ingredients raw materials and packing materials are

procured from the best European sources Strict quality control is done at every stage of the

manufacturing process from procurement of material mixing material flow ice cream making

packaging storing (at main warehouse) distributing and market shelving by the Quality Control

Department Current supply chain for various materials of Igloo is as follows Australia (Milk

Powder) Denmark (Ingredients emulsifiers amp stabilizers) China amp UAE (Food grade sticks)

China Denmark Singapore amp Thailand (Food grade packing materials)

Figure 9 Igloo Supply Chain

Distribution Network Their distribution network is stretched all over the country with a long

fleet of refrigerated vans Firstly the ice cream products are stored at the central warehouse of

the factory and from there they are distributed through the haulage vehicle to the operational

centres located in Dhaka Chittagong Comilla Rajshahi Barisal Bogra Rangpur and Khulna

Strictest cold chain maintenance during the distribution and selling of the ice creams is ensured

Their distribution process is as follows Manufacture Stored at -24c Transported by Refrigerated

trucks at -Reaches amp Preserved in Eight regional stores Refrigerated vehicles (Distributors)Retail

outlets (Deep freezers)

Figure 10 Distribution Process of Igloo

Evaluation of Entry into Ice cream Business for Bangladesh Limited 31

Trolley Operation Igloo also operates through trolleys for extending its reach to consumers at

the furthest points The trolleys are operated near schools alleys streets parks etc and play

rhythmic music to attract the consumers These are very colourfully decorated with Igloo

umbrella and the puller wears specific uniforms Igloo was the first in introducing and operating

these trolleys in Bangladesh for any Fast Moving Consumer Goods (FMCG) Igloo has around

125 trolleys operating throughout the country Individual trolleys are provided with a regular

supply of igloo ice creams

Marketing The marketing commitment of Igloo is based on the relationship with its customers

and consumer by not only manufacturing the highest quality product but also delivering the

product by maintaining this quality To satisfy the ever-changing needs of the customer Igloo

has regularly launched new ice creams and introduced new flavours And this commitment has

positioned Igloo as the market-leading brand by gaining the consumers trust with the positioning

as ldquoA WORLD OF GREAT TASTErdquo

Facilities and Logistics at a glance As of 2009 following are the facilities and logistics enjoyed

by the company

Factory location

Dhaka

Production Lines

4

Packages

Stick Cup Family pack Others (Nuggets and sandwich)

Machine suppliers

1048766 Mark-Italy

1048766 Tetra Pak(Hoyer)-Denmark

1048766 Sabore Denmark

1048766 Hass- Austria

Machine models

1048766 Freemark 1100 Italy

1048766 FM 3000 FM 6000 Italy

1048766 SL600 Denmark

Cone baking

Hass- Austria

Chocolate making

Macentyre-UK

Coverage

Nationwide

Operational centre

10

Total market vehicles

30

Distribution channel

Directthrough appointed distributors

Outlet service

7500

Injected deep freezers

4000

Trolley operations

125

Warehouse no

8

Table 20 Igloo Facilities and Logistics

Kwality

Kwality is currently the second largest ice cream manufacturer of the country The mother

company for the Kwality brand is Sanowara Drinks amp Beverages Ltd a sister concern of

Sanowara Group The company is famous for powdered milk brands Red Cow and Diploma in

Bangladesh The drinks and beverage concern of Sanowara made an entry into the market in

1997 with ldquoYesrdquo brand drinking water and launched the ice cream brand in 1999 With heavy

communication and novelty products it Evaluation of Entry into Ice cream Business for

Bangladesh Limited 32

successfully removed Polar from the second place with a current market share of 27 The

company also operates in the boutique segment with two parlours in Dhaka and Chittagong

Kwality ice cream factory is situated in Chittagong with a floor space of 35000 sft and fully

automated machinery wrapping mix machinery equipments from Italy having capacity of

around 20000 litres of ice cream per shift The ice cream factory employs 140 people The

company is ISO 9001-2000 certified

Kwality was the first true competitor for Igloo products with some major innovation in product

design and communication but their quality is perceived to be lower in the minds of the

consumers and they do not have extrusion ice cream The product prices are also similar to that

of Igloo but they charge a bit lower than Igloo in premium multiple servings However during

market visits it was seen that shops that keep only Kwality or Igloo and Kwality both they can

sell Kwality too although the sales amount is lower than that of Igloo People who look for Igloo

shopkeepers give them that directly but if they get a chance and Kwality ice cream stock is high

they also push Kwality to dry the stock out This gives an indication that market is larger than

what the current players are capable of serving even in Dhaka

Kwality follows a similar distribution model like Igloo but distribution frequency is lower and

amount of cart sellers is limited to 25 and they operate only in Dhaka

Polar

Once a giant in the industry Dhaka Ice Cream Industries Ltd introduced the first hygienically

packed ice cream in Bangladesh in 1987 and the brand name Polar was thus born In the early

days the company started ice cream business with a wide range of products and a variety of

flavours in Dhaka city In 1988 the company started its distribution in the city of Chittagong

then Bogra and continued to cover more cities Presently Polar ice cream is available

throughout Bangladesh The company today trails in the market with 15 market share in the

common format segment Recently Polar has announced launch of ISIS diabetic ice cream with

support from DANONE to turn around in the market

The company has its head office as well as a modern large-scale industrial plant in Dhaka Polar

ice cream is made with Danish expertise using Danish equipment and technology The

production activities and quality control measures are supervised and managed by Danish

experts Polar offers a wide range of delicious flavours and tastes made by ingredients imported

from Europe

Dhaka Ice Cream at present has 3 cold stores in Dhaka Chittagong and Bogra in Bangladesh

From Dhaka cold store they distribute ice creams in Mymensingh Tangail Jamalpur Sherpur

Kishoreganj Netrakona Comilla Narsingdi Barisal Madaripur Agaeljhara Faridpur Magura

Chuadanga Jessore Satkhira Khulna Pirojpur and Sylhet through their distributors In case of

long distance delivery points the company uses auto cooling freezer van

Evaluation of Entry into Ice cream Business for Bangladesh Limited 33

In Dhaka city they distribute ice creams directly to retail stores in freezer vans Besides that

they have several distributors at different points of the city Distributors cover their individual

areas where company is not able to supply directly in their freezer vans Similar model is

followed by the company to distribute ice cream from their other cold storages through out the

country For storing and selling ice creams in retail stores the company like the other players

arranges a deep freezer with the Polar logo and canopy light box

In addition to this distribution the company also undertakes home delivery of ice creams for

special occasions

Savoy

Savoy Ice-cream brand is owned by Sena Kalyan Sangstha (SKS) Group of industries It started

its journey in March 1995 with a factory in Tejgaon Dhaka Yearly turnover is estimated at BDT

388 crores with a market share of roughly 35

The factory has been established with Sonali Bank finance at 6040 equity ratio The total

production capacity of the factory has been estimated at 2400 litres of Ice-cream per day Total

land area of the factory premise is 116 Bigha with 8000 sft area covered with a total project cost

of BDT 144 The factory employs 73 people

Product ranges of the company include all the basic designs and flavours of the industry

However the company has not been much of an innovator in the industry Their product quality

is substantially low than that of other players and they price their products at 10-15 lower than

the other competitors The company imports raw materials mainly from Europe The general raw

materials are Euro cream Skimmed Milk Powder Cocoa Powder and Flavour (Vanilla Mango

and Strawberry) Colour (Yellow Red Chocolate and Green) Ripple Sauce Cheney Fruit Palm

Kernel Oil Anhydrous Butter Oil (Ghee) and Sugar etc

Milk Vita

Milk Vita is one of the most famous brand names in Bangladesh for its liquid dairy milk Owned

by Bangladesh Milk Producersrsquo Co-operative Union Limited (BMPCUL) the company came in

the market with proper dairy milk ice cream in form of cups and choc-bar With a production

capacity of around 1600 litres per day the company is trailing in the market place with 3

market share

Although the Milk Vita Choc-bar was perceived to be extremely tasty by consumers they

probably could not do well due price competition Currently they do not even distribute ice

cream in Dhaka However their presence is seen in outskirts of Dhaka and other nearby towns

If the current market situation prevails Milk Vita would lose their remaining market share and

other companies would benefit especially Igloo However one of the advantages of Milk Vita

remains to be

Evaluation of Entry into Ice cream Business for Bangladesh Limited 34

their nation wide milk supply network They have skimmed milk powder production plant that

Igloo does not have Thus they can combat the seasonality of milk supply that Igloo with its

huge requirement of milk cannot

Strengths and Weaknesses of Competitors

Company

Strengths

Weaknesses

Igloo

1048766 Strong brand image

1048766 High product quality

1048766 Highest no of variety

1048766 Strong distribution network

1048766 Highest visibility

1048766 Strong promotion

1048766 High production capacity

1048766 Presence of extrusion ice cream

1048766 Items are generally a bit pricy

1048766 Igloo does not give free freezers like other companies

1048766 Reluctant in recent times regarding innovation

1048766 Local sourcing of liquid milk does not meet demand

1048766 Failure to use ERP technology slowing decision making

Kwality

1048766 Product variety

1048766 Strong promotion

1048766 Free freezer distributed

1048766 Presence in all price segments

1048766 High production capacity

1048766 Weak distribution

1048766 Lower exposure

1048766 low amount of carts in operation

Polar

1048766 Free freezer

1048766 Quality perceived to be high compared to Kwality

1048766 Discoloured freezers

1048766 Lower exposure

1048766 Low product variety

1048766 Unused capacity

Savoy

1048766 Price is lower

1048766 Discoloured freezers

1048766 Low product variety

1048766 Weak distribution

1048766 Small amount of freezers

1048766 Low production capacity

Milk Vita

1048766 Quality is good due to dairy cream

1048766 Brand leverage from Milk Vita milk

1048766 Low exposure

1048766 Low variety

Table 21 Strengths and Weaknesses of Competition

512 Market Characteristics of the Boutique Segment

With a small market of BDT 98 Cr and 567 share in the branded ice cream market the

boutique segment is currently an increasing segment in the ice cream industry Boutique

segmentrsquos history dates back to 1960s when Igloo launched boutiques in Dhaka to save

distribution cost and promote a culture of ldquoice cream eating outrdquo In later years boutiques lost

their glamour and retail common format segment picked up growth However with Dolce Vita in

the late lsquo80s craze for Italian Artisan ice cream was recreated in the market Although Dolce

Vita is failing in recent times emergence of MoumlvenPick and Club Gelato in 2000 has uplifted the

segment once again Current growth rate of the

Evaluation of Entry into Ice cream Business for Bangladesh Limited 35

segment can be estimated to be approx 20-22 (higher than the common format segment)

Following are the basic detail of all the major players in the segment with their estimated sales3

Players

Outlet

Sales (Cr Taka)

Share

Club Gelato

1

136

199

MoumlvenPick

1

119

174

Andersenrsquos

3

119

174

Gelateria Igloo

3

119

174

Sub Zero (Kwality)

2

051

75

Baskin Robbins

1

015

22

Dolce Vita

1

017

25

American Soft

1

009

12

Rainbow

1

009

12

Others (off site)

089

130

Total Market

682

Table 22 Players and Shares in Boutique Segment

A Detail of Operation

General operational procedure followed by all the operators is as follows

1048766 Operating method There is a variation in operational method among the large operators

1048766 Club Gelato uses kitchen at own premise where imported ingredients and local milk (daily

special service from Milk Vita) are used to make ice cream

1048766 MoumlvenPick directly imports ice cream from Switzerland

1048766 Andersenrsquos Gelateria Igloo and Sub Zero produce ice cream at their factory with a mix of

imported and local ingredients

1048766 Products Around 30-35 flavours of artisan dairy ice cream are served at the premises

1048766 Most sold flavours are Vanilla Ferrero Rocher Butterscotch Chocolate Caramel etc

1048766 Other Products Larger players also serve ice cream desserts (milk shakes ice cappuccino etc)

pastries and other desserts with normal coffee and tea facility at their premises

1048766 Boutiques fight ice cream seasonality with the other products sales during off-peak ice cream

seasons Usually ice cream and other products contribute at 6040 ratio in summer and during

winter and off-peak seasons the ratio reverses

1048766 Pricing Usually the prices of products in this segment are 3-4 times higher than that of the

common format segment

1048766 Prices do not vary with flavours Variation depends on serve style (Cone tub) and use of

toppings and other ingredients (Chocolate sauce nut fruits) etc

1048766 Usual margin charged is around 50-60 over production cost Similar margin is charged for

other products like coffee ice cappuccino etc

3 Yearly sales is estimated based on companyrsquos approximate daily sales collected during

interview

Evaluation of Entry into Ice cream Business for Bangladesh Limited 36

1048766 Target Group Most of the consumers belong to SEC A and higher SEC A with DMFI of at

least BDT 20000

1048766 Foreign delegates and resident foreigners also visit these boutiques

1048766 Main purposes of visits in the boutiques are

bull Youth hangout with friends and having ice cream and ice cream derivatives

bull Family Family night out or eat out at a restaurant and then having dessert

bull Foreigners Having dessert after dinner

1048766 Rush time at boutiques are Afternoon 2-4 pm and at night 9-11 pm

1048766 Offsite sales Most of the large operators also sell offsite They have small freezers for off-site

1048766 Club Gelato and MoumlvenPick serves ice cream at high society parties and programmes

1048766 MoumlvenPick also has kiosks in known hotels like Sheraton

1048766 Promotion No mass promotion is done by any of the companies Word of mouth is the most

important source of promotion Posters and banners outside the premise and occasional

newspaper advertisements are used to communicate special offers

1048766 Growth Drivers Market growth is driven by image innovation quality decoration of facility

environment and special offers

1048766 Club Gelato has the image of selling true Italian dairy ice cream with an excellent hangout

environment

1048766 MoumlvenPick imports ice cream directly from Switzerland and is perceived to be of high quality

1048766 Andersenrsquos operates with the image of ice cream from Denmark

1048766 Gelateria Igloo (from Igloo) and Sub Zero (from Kwality) could not establish the premium

artisan ice cream image

B Players in the Boutique Segment

There are very few players who have significant impact in the boutique segment Detailed

information of all the major boutique segment players is provided below

Evaluation of Entry into Ice cream Business for Bangladesh Limited 37

Club Gelato

Basic Company Information

1048766 Location Banani Road 11 (Planning for a second one in Dhanmondi)

1048766 Established in 2001

1048766 Seating Capacity 48

1048766 Area 1250 sft (including kitchen)

1048766 Owner Mr Jahangir Alam (Bangladesh)

1048766 Business Type Joint business partnership with Singapore

1048766 Staff 15 people (6 in the kitchen)

1048766 Production capacity 150 litres per day

Product Related Information

1048766 Product Italian style parlour scoop ice cream fruit juice coffee and pastries

1048766 Flavours Around 32 flavours available

1048766 Most selling Ferraro Rocher Vanilla Pistachio

1048766 Innovations New variants and ingredients are communicated by their Italian supplier and

Club Gelato decides what to take from them

1048766 Serve type Cup Cone Glasses Box for take away

Consumer Profile

1048766 Primary Teenagers and Young Adults (18-30) amp Diplomats

1048766 Secondary Family consumers for eat out

1048766 Income Group High income customers tentatively from SEC A and higher SEC A

1048766 Geographic Area Diversified

1048766 Rush time 8-10 pm

Sales and Price Information

1048766 Sales BDT 50000 (60 Ice cream 40 other desserts) daily in summer In winter however

other products sell more and thus they keep total sales at the same level

1048766 Price 750 per litre for any flavour

1048766 Sales Volume 50-60 litres per day

Supply Chain Placement Information

1048766 Milk Local sourcing from Milk Vita (4050 litres per day)

1048766 Chocolates amp Flavours Belgium France Germany

1048766 Transportation Mainly air (They can afford it due to high margin)

1048766 Contribution of various materials Flavours (30) Milk (20) other parts are water and air

Promotional Materials

1048766 Materials used are near premises POS materials for promoting the parlour only

Table 23 Detail of Club Gelato

Evaluation of Entry into Ice cream Business for Bangladesh Limited 38

MoumlvenPick of Switzerland

Basic Company Information

1048766 Location Gulshan

1048766 Established in 2000

1048766 Seating Capacity 55

1048766 Owner Mr Arif Mahmud

1048766 Business Type Franchise of International MoumlvenPick

1048766 Storage Capacity in Shop 150 litres

Product Related Information

1048766 Product Imported MoumlvenPick ice creams coffee chicken sandwich and Frappe

1048766 Flavours Around 30 to 35 flavours available

1048766 Most selling Swiss Chocolate caramel Vanilla Dream Espresso Strawberry

1048766 Innovations New variants are communicated by their franchiser and they decide on flavours

that they want

1048766 Serve type Cup Cone Glasses Box for take away

Consumer Profile

1048766 Primary Teenagers and Young Adults (18-30) (70) amp Diplomats

1048766 Secondary Family consumers for eat out

1048766 Income Group High income customers tentatively from SEC A

1048766 Geographic Area Concentrated in Gulshan and nearby areas

1048766 Rush time Afternoon- Young Adult 10 to 11 pm Foreigners

1048766 the company also serves at parties and has freezers in known hotels where their ice creams

are served

Sales and Price Information

1048766 Sales BDT 35-40000 daily in summer

1048766 Price 640 per litre for any flavour

1048766 Sales Volume 55-60 litres per day

Supply Chain Placement Information

1048766 Transportation Imported finished goods by ship

1048766 Ship travel time 19 days

1048766 Port clearance 10 days

1048766 Safety Cushion Extra 10 days

Promotional Materials

1048766 Materials used are near premises POS materials for promoting the parlour only

Table 24 Detail of MoumlvenPick of Switzerland

Evaluation of Entry into Ice cream Business for Bangladesh Limited 39

Andersenrsquos of Denmark

Basic Company Information

1048766 Location Gulshan (2 others in Uttara Dhanmondi)

1048766 Established in 2001

1048766 Seating Capacity 48

1048766 Owner United Group

1048766 Business Type Franchise of Australian company Andersenrsquos of Denmark

1048766 Production Tongi Factory of United Group

1048766 Production capacity 2000 litres per day in factory

1048766 Storage Capacity in Shop 150 litres

Product Related Information

1048766 Product Danish parlour scoop ice cream and coffee

1048766 Flavours Around 30 to 35 flavours available

1048766 Most selling Strawberry Butter Scotch Green

1048766 Innovations New variants and ingredients are communicated by their franchiser and they

decide on flavours that they want

1048766 Serve type Cup Cone Glasses Box for take away

Consumer Profile

1048766 Primary Teenagers and Young Adults (18-30) (70) amp Diplomats

1048766 Secondary Family consumers for eat out

1048766 Income Group High income customers tentatively from SEC A

1048766 Geographic Area Concentrated in Gulshan and nearby areas

1048766 Rush time 8 to 10 pm

Sales and Price Information

1048766 Sales BDT 10-12000 daily in summer

1048766 Price 460 per litre for any flavour

1048766 Sales Volume 40-50 litres per day

Supply Chain Placement Information

1048766 Milk 2025 kg packs are imported

1048766 Chocolates amp Flavours Imported

1048766 Butte paper Local sourcing

1048766 Transportation Ship

Promotional Materials

1048766 Materials used are near premises POS materials for promoting the parlour only

Table 25 Detail of Andersenrsquos of Denmark

Evaluation of Entry into Ice cream Business for Bangladesh Limited 40

Gelateria Igloo

Basic Company Information

1048766 Location Banani Kemal Ataturk Avenue (Two others in GEC Mor Chittagong and Naya

Paltan)

1048766 Established in 2000

1048766 Seating Capacity 20

1048766 Production From Igloo factory in Shyampur Narayanganj

Product Related Information

1048766 Product Parlour scoop ice cream and coffee only

1048766 Flavours Around 30 flavours available

1048766 Most selling Vanilla Strawberry Chocolate Pistachio Butter Scotch Tutti Fruity

1048766 Serve type Cup Cone Glasses Box for take away

Consumer Profile

1048766 Primary Teenagers and Young Adults (18-30)

1048766 Secondary Family consumers for eat out

1048766 Income Group High income customers tentatively from SEC A and B

1048766 Geographic Area Diversified

1048766 Rush Time afternoon and evening

Sales and Price Information

1048766 Sales BDT 8000 to 10000 daily in summer Nearly one fourth in winter

1048766 Price Varies but 350 per litre of vanilla

Promotional Materials

1048766 POS materials at the premises

Table 26 Detail of Gelateria Igloo

52 Price Comparison of Common and Boutique Segments

Price ranges of both common format and boutique segment cannot exactly be pin pointed as

products do not follow common structure and variations occur with use of toppings mixing of

flavours and use of coatings However a price comparison has been made among the brands

based on their price of per litre of vanilla flavoured ice cream in the market It appears to be as

following

Company

Price Litre Vanilla

Club Gelato

750

MoumlvenPick

640

Andersenrsquos

460

Dolce Vita

440

Igloo

100

Kwality

100

Polar

100

Milk-Vita

90

Savoy

85

Table 27 Comparative Price Analysis

As it can be seen there is price gap within the range of BDT 100-400 Ice cream kiosks and

small scooping boutiques can operate within that range

Evaluation of Entry into Ice cream Business for Bangladesh Limited 41

60 CONSUMER ANALYSIS

61 Target Group of Ice cream

Who are the consumers of ice cream This question does not have a clear answer Ice cream is a

food for all It is the only food consumed by a human being at less than 0 degree centigrade

temperature and people of all ages feel indulged to have it However we can determine focus

target groups for both branded common format and artisan boutique ice cream Group

discussions and market visits were done to get insight into the consumers along side resources

form secondary sources Age based target group is common for both segments but variation

among the groups occur mainly based on SEC and DMFI classification

611 Geographic Group

Branded ice cream remains an urban product till date Geographically branded ice cream has

reached urban and semi urban areas up to Thana Head Quarter levels Ice cream has reached

areas where electricity is available Small artisan players are available in places where large

branded players have no distribution

612 Target Age Group

Age wise grouping of target consumers is as follows

1048766 Urban kids in the age group of 5-14

1048766 They mainly consume normal sticks cups cones innovative fillers and water ice creams

1048766 Urban youth in the age group of 15-24

1048766 They consume premium and extrusion sticks and cones

1048766 Urban mothers in the age group of 25-35

1048766 They determine the family purchases Even when the father purchases ice cream decision is

taken by them

Consumption pattern of various age groups are depicted in the following chart Ice cream

consumption pattern50203005 to 14 yrs15 to 24 yrs25 to 35 yrs

Figure 11 Target Group wise Consumption Pattern Evaluation of Entry into Ice cream Business

for Bangladesh Limited 42

613 Target SEC and DMFI Group

Common Format

SEC A and B is the target group for common format ice cream However with rapid increase in

price level over the years has made it a ldquohard to consumerdquo product for SEC B consumers who

belong to lower DMFI group

Boutique Format

Boutique formatrsquos higher margin and high price range makes it an exclusively SEC A ice cream

People belonging to upper and upper middle class have access to the mediocre boutiques and

only higher upper class can have premium ice creams like Club Gelato and MoumlvenPick

Another unique target group for boutique format are the foreigners who live in Bangladesh

These people tend to visit the parlours to have ice cream as dessert especially after dinner

62 Ice cream in Consumer Lifestyle

Figure 12 Ice cream in Consumer Life style

This simple overview of ice cream in consumer lifestyle was determined based on in-depth

research analysis of UBL and validated through qualitative group discussions by the author

However detail of in-depth research is provided in a later section of this chapter

Evaluation of Entry into Ice cream Business for Bangladesh Limited 43

63 Highlights of Purchase Habit of Ice cream

631 Common Habits across Target Groups

There are some common habits that were identified in earlier researches and group discussions

with consumers Common habits mean the consumer approach towards ice cream that is seen

across all target groups eg kids youth and adult purchasers These are outlined below

1048766 Ice cream is mainly seen as a dessert or a snack Impulse ice cream is seen as a quick snack

that is consumed when it is in sight Visibility plays a big role here Regarding family packs

people see it as a post-food dessert

1048766 Ice cream purchase is commonly a planned event When the contexts arise people generally

take a bit of time to decide whether or not to have ice cream or when they want to go to a

boutique they make due considerations regarding which boutique to visit

1048766 Ice cream purchase decision is taken based on favourite flavour People tend to try out new

variants and flavours when they first see it They compare the taste with earlier experience and

when they purchase later they choose the flavour they have liked most

1048766 For In-Home segment decision is mostly taken on the flavour Generally people come up with

different flavours of choice and most voted flavour is chosen

1048766 People become aware of new variants or flavours mainly through word-of-mouth

Advertisement (new launches special offers and festivals) in newspaper is another source of

awareness

1048766 People are currently indifferent towards the price level of premium flavours However some

feel that price of Choc-bar or water ice creams (lolly) is a bit much If less they would have

consumed more Some also feel that companies should come up with branded ice cream in the

price range of BDT 5-8

1048766 Ice cream is purchased from nearby shops If required brand and flavour is not available 2-3

shops will be visited and then available flavour will be selected even if the required one is not

found This is done mainly not to ruin the mood for ice cream

1048766 People are very open to try new brands and flavours especially if it comes from a credible

source They would try new flavours and if they are satisfied with the taste they would repeat

purchase

1048766 Regarding boutique visits people feel that boutiques need to have a proper environment

enough flavours and other snacks

1048766 While visiting boutique with family or companion they want variation in flavours so that

they would order different flavours and taste each otherrsquos ice cream It is seen as a sign of

togetherness

1048766 Frequency of ice cream purchase varies among people It depends on peer pressure collective

family decision summer heat and attitude towards ldquoice creamrdquo itself as a product Evaluation of

Entry into Ice cream Business for Bangladesh Limited 44

632 Habits of Kids

1048766 Kids choose ice cream flavours by the look of the product (generally pictures shown in POS

materials and carts) They love colour and designs of the products let it be a common format or a

boutique ice cream

1048766 Kids (when in house) would go with the housemaid to the nearby shop choose the flavour

they want (within range of the amount given to the maid) and buy it

1048766 When with parents they would take the product they like even if the price is lower than some

other product However mothers play a role in this decision They would want their children not

to choose too high priced a product or coloured products

633 Habits of Youth

1048766 Young people are the main consumer of impulse ice cream They also are one of the major

consumers in the boutique segment

1048766 Young people love to try out new products that come into the market Another side of the coin

is that they are not very loyal to a brand or a flavour and tend to switch a lot

1048766 Regarding boutique visits young people go to boutiques to have an ldquoice cream hang outrdquo with

peer groups They would stay there for a longer period of time while they have their ice cream

1048766 Some times young people make milk shakes and other ice cream based desserts

634 Habits of Mothers

1048766 Mothers worry about their childrenrsquos health and they prefer ldquovanillardquo type of brands

However when price constraint occurs they go for water ice creams for their children They try

to convince their kidrsquos purchase decision

1048766 Regarding family purchase motherrsquos decision is sometimes prioritized by the whole family

64 Barriers to Ice cream Consumption

641 Emotional Barriers

1048766 Overindulge (close to sinful)

1048766 Undisciplined (no control)

1048766 Childish (licking)

1048766 Artificial Image

642 Functional Barriers

1048766 People of SEC B feel that ice cream is an expensive dessert (If less expensive would consume

more often)

1048766 It leads to cold cough - especially in winter rainy season

1048766 It contains artificial additives preservatives

1048766 It is very high in calories that lead to fattening

Evaluation of Entry into Ice cream Business for Bangladesh Limited 45

1048766 It does not quench ldquothirstrdquo

1048766 Less convenient (portable immediate eat)

1048766 Messy Dripping

65 Research Findings

The highlights regarding purchase habits triggers and barriers of ice cream consumption provide

a glimpse into the consumer world of ice cream industry However UBL CMI conducted a

formal research exclusively on ice cream consumers to identify

1048766 Occasions of ice cream

1048766 Frequency of ice cream consumption

1048766 Expectations from ice cream occasions

1048766 Personalities that they desire from ice cream

651 Relevant Occasions in Daily Lives of Consumers

Research question regarding ldquousual occasions of life that occurred most frequently in day-to-day

lives of the respondentsrdquo generated the following replies

Occasion

of Respondents saying Yes

Watching TV

93

Normal Dinner At Home

91

Normal Lunch At Home

89

At Home While ReadingMusicSurfing

86

Informal Family Get Together

85

Out Of Home Hanging Out With Friends

84

Out Shopping

84

Mid-Afternoon Break At Home

83

At Home By Myself During The Day

82

Special Dinner At Home

82

Informal Dinner Out Of Home

82

Normal Lunch Out Of Home

82

Leisure Walk

79

Coming Home From WorkSchool

78

Special Dinner Out Of Home

78

Celebration

78

A Night In With Friends

77

At Home By Myself In The Evening

77

Special Lunch Out Of Home

76

Mid-Afternoon Break Out Of Home

75

Special Lunch At Home

73

Day out with Partner

72

Midmorning Break

70

At Breakfast

68

Family Day Out

68

During Work Or At School

65

Evaluation of Entry into Ice cream Business for Bangladesh Limited 46

Travelling ToFrom WorkSchool

65

At The Cinema

61

Special Event

56

Clubbing At A Party

50

Post GymSports

48

Table 28 Relevant Occasions in Consumersrsquo Lives

Respondents were then asked to mention ldquofrequency of occurrence of the identified occasionsrdquo

The identified replies are as follows Normal dinner at homenormal lunch at homeComing home

from workschoolTraveling tofrom workschoolDay out with Partner SpouseMid-afternoon

break at homeOut of home hanging out with friendsLeisure walkMid-afternoon break out of

homeA night in with friendsSpecial dinner at homeSpecial lunch out of homeFamily day

outSpecial eventPost gymsportsDaily2-3 Times A WeekWeekly2-3 Times A MonthOnce A

MonthEvery 2-3 MonthsLess OftenNever Figure 13 Frequency of Occurrence of Occasions

This shows that ldquoNormal dinner at home Watching TV Normal Lunch At Home At Home

While ReadingMusicSurfing Coming Home From WorkSchool During Work Or At School

Travelling ToFrom WorkSchool Midmorning Break Day Out With Partner Spouse At Home

By Myself During The Dayrdquo are the most frequent daily rituals of busy lives of consumers

652 Frequency of Ice cream Consumption

Respondents were asked to mention ldquoconsumption pattern of ice cream during the identified

occasionrdquo on a scale of 1-5 depicting frequencies like ldquo(5) always (4) most of the times (3)

about half of the times (2) sometimes (1) never do not knowrdquo The responses are depicted in

the following table

Evaluation of Entry into Ice cream Business for Bangladesh Limited 47

444474544655555566756665775967779991011101111101210111110101113111412131314161

011121411131216181519181518211817171719181718201721222130303434253437403741394

046383944464746453745414641374638504843414839373030292726232725222020201926202

21722221317Midmorning

breakWhile clubbing at aAt the cinemaSpecial eventNormal lunch out ofA night in with

friendsNormal dinner atInformal dinner out ofAt home by myselfAt home by myself inOut

shoppingSpecial lunch atDay out with SpouseWatching TVAlwaysmost of the timesAbout half

of the timesSometimesneverdo not know

Figure 14 Frequency of Ice cream Consumption

As it can be seen ldquoDay out with Spouse Special lunch at home Special dinner at home

Watching TV Family day out Celebrationrdquo are the occasions where most frequently ice cream is

consumed

653 Market Character Mapping Relevant Occasions vs Frequency of Consumption

If we plot frequency of consumption on the X-axis of a chart and relevance of occasion

occurrence on the Y-axis taking the above mentioned values as cut-off values we get four

quadrants in the chart depicting four market scenarios that any ice cream manufacturer in

Bangladesh market might encounter given the current market situation This market

segmentation is based on frequency of ice cream consumption in daily occasions of consumer

lives

The segments are

1048766 OPPORTUNITY MARKET High Relevant Occasions-Low Ice cream Frequency

1048766 QUESTION MARKET Less Relevant Occasions-Low Ice cream Frequency

1048766 HIGH FREQUENCY MARKET Relevant Occasions-High Ice cream Frequency

1048766 CAPTIVE MARKET Less Relevant Occasions-High Ice cream Frequency

The chart looks as follows Evaluation of Entry into Ice cream Business for Bangladesh Limited

48

Figure 15 Relevance of Occasion-Frequency of Consumption Mapping

As it can be seen from the above chart Bangladesh Market still lies in the Opportunity and

Question market zone with a pull towards High frequency and Captive Market zones This is

evident from market data as penetration of ice cream still remains at Thana headquarters levels

Also this explains the high market growth rate of 17 as market is yet under developed and

branded quality ice cream has yet not reached all levels of consumers especially rural level that

constitutes around 75 of Bangladeshi market

From the above analysis we can establish that target of ice cream manufacturers should be to

penetrate more into the Bangladeshi market to create higher frequency of ice cream

consumption The following chart shows the strategies to follow for ice cream manufacturers

Figure 16 Required Market Strategy for Bangladesh

Evaluation of Entry into Ice cream Business for Bangladesh Limited 49

As relevance of ice cream consumption occasions can hardly be controlled by marketers their

endeavour should be to create more ldquoemotional and functionalrdquo attachment to ice cream in less

frequent occasions through ldquomarket developmentrdquo strategy to earn share from overall food

expenditure of consumers and at the same time make them consume more ice cream in highly

relevant occasions through ldquopenetrationrdquo strategy

654 Consumersrsquo Emotional Requirements and Product Attributes

All consumers under these clusters also identify the emotional requirements and the significant

product attributes they seek from their current preferred and future desired ice creams These are

provided below

Cluster

Emotional Functional Requirement

Product Attributes

Enjoyment

Flavour Variety

1048766 Combination of different flavours

1048766 Combination of different textures

1048766 Very sweet

1048766 With wafer or biscuit

1048766 With chocolate

1048766 Of a well known brand

Socially Involved

Spoonable Rich

1048766 Very creamy

1048766 Only natural ingredients

1048766 No mess

Care

Size Creaminess

1048766 Big

1048766 Rich full taste

1048766 Smooth

1048766 Value for money

1048766 No mess

Unwind amp Escape

Economy

1048766 Crunchy

1048766 Economic

1048766 Of a well known brand

1048766 Nutritious

Balanced Convenience

Health Conscious

1048766 Of a well known brand

1048766 Nutritious

1048766 Milk based

1048766 Low sugar

1048766 Low carbohydrates

1048766 Filling

Active Self-Grooming

Fruit Vitamins

1048766 Healthy

1048766 Fruit based

1048766 Low fat

1048766 Liquid or drinkable

1048766 Nutritious

1048766 Of a well known brand

Confidence

Drinkable Light

1048766 Low calories

1048766 Light on the stomach

1048766 Chewy or gooey

1048766 Not so sweet

1048766 Natural appearance

Sensual

Appeal or image

1048766 No artificial additives

Evaluation of Entry into Ice cream Business for Bangladesh Limited 50

1048766 Natural appearance

1048766 Melting slowly

1048766 Attractive packaging

1048766 High quality ingredients

1048766 Of a well known brand

Table 29 Requirements amp Product Attributes Desired by Consumer Clusters

Of these findings we see that the identified highlighted barriers to ice cream consumption are

pretty evident among the consumers Mostly people want products of a reliable source or a well

known brand low calories quality ingredients value for money economic type

Evaluation of Entry into Ice cream Business for Bangladesh Limited 51

70 INDUSTRY ATTRACTIVENESS AND ENTRY PROSPECTS

71 Driving Forces of Growth

As identified in the earlier sections there are several driving forces behind the growth of ice-

cream industry in Bangladesh

712 Trade and Infrastructural Level

1048766 As a result of globalization newer varieties have been introduced to the local products Many

foreign companies are also coming as franchise so there has been increased competition and

these boutiques are setting higher standards for the local producers

1048766 The present market growth rate is 18-19 which is being influenced by larger players like

Igloo who are expanding their distribution nation wide with expansion of national electricity

grid

1048766 With entry of Modern Trade and recent organized business approach of retailers has made it

possible for ice cream manufacturers to penetrate into shops even without providing them with

branded freezers

1048766 Weather change has increased ldquosummerrdquo season in our country which has reduced negative

seasonal impact on ice cream

1048766 Large companies like Igloo have taken global learning of using carts as an effective tool of

availability and visibility for ice cream

1048766 New and improved technologies are being used in the production process This technological

advancement has improved quality increased speed of production and made the process more

cost effective

713 Consumer Level

1048766 Only a few years back rich people could afford the luxury of having ice-cream but now it has

become a common product for everybody Ice-cream companies are producing different products

with a wide price range for consumers of every class and status

1048766 Nowadays companies are doing promotional campaigns more frequently the customers get to

know about the product which makes it easier for them to buy the best one

1048766 The improved standard of life and more modernized lifestyle of people is an important reason

for the increased consumption thus growth of the ice-cream industry

Evaluation of Entry into Ice cream Business for Bangladesh Limited 52

72 Prospects of Entry

The ice-cream industry of Bangladesh is an attractive one for the investors because there is a

huge market but number of producers is very small The major reasons behind industry

attractiveness are as follows

1048766 The industryrsquos current growth potential is very high with opportunity for market development

1048766 The competition currently permits adequate profitability and the competitive forces are

becoming stronger with time

1048766 Boutique segment is at a very high growth stage but no operator is currently operating with a

mid price range of BDT 100-400 Ice cream kiosks and small scooping boutiques can operate

within that range

1048766 Current industry driving forces are favourable for the future industry profitability

1048766 Globally oriented consumers look for variety in ice cream that is currently not available

Latest innovations came in the market in 2002 People would welcome new variety and flavours

1048766 There is a gap in the market for balanced convenience through ice cream where consumers can

get nutritional benefits for ice cream Also emotional attachment to ice cream could further be

improvised in promotional campaigns

1048766 There is high scope for market penetration and development to increase frequency of ice

cream consumption

1048766 Level of risk or uncertainty is very low in ice-cream industry because the consumer market is

so huge any product with a standard quality and careful pricing will be able to make significant

profit

1048766 As for geographic reach of the industry 60 market is still in Dhaka There is scope of

expansion and a new entrant can easily capture market share within Dhaka using carts even if

they do not want nation wide cold chain distribution

1048766 The production process is very complex and capital requirements are also high So before

going into production any company should know about their capabilities and weaknesses and

then start the business or else they might suffer huge loss at a certain level

1048766 Unilever can acquire the required resource and use existing multi-national multi-cultural

expertise to enter the market in a grand way

1048766 With high probability of entry from DANONE with more products like the ISIS diabetic ice

cream Unilever should consider entering in this industry as soon as possible

Evaluation of Entry into Ice cream Business for Bangladesh Limited 53

80 ENTRY STRATEGY FOR UNILEVER

While describing the suggested entry strategy for UBL certain issues have been kept

confidential and some issues have been touched but not explained to keep consistency with UBL

confidentiality policy

81 Suggested Entry Areas for UBL

1048766 Boutique segment of the Bangladesh ice cream is only 5 of the branded market UBL needs

to pursue a larger scope to make the entry viable

1048766 UBL cannot fight with unbranded segment as global product quality mandate of Unilever does

not allow UBL to fight in low price-low quality segment

1048766 Recommend entry should be in the common format segment with both single and multiple

servings and in the boutique segment with a different brand name (if possible BEN amp JERRYrsquoS)

1048766 UBL should build up state-of-art modern factory for manufacturing and establish cold chain

facilities initially focusing on metro cities

1048766 Investment issues are required to be addressed for building factory and cold chain and capital

requirement needs to be identified for that purpose4

1048766 UBL may have boutiques for driving image selective top-end offering

1048766 Kiosks can be setup near universities and shopping malls

1048766 Boutiques should be concentrated in Dhaka and Chittagong

1048766 Ice cream for boutiques and kiosks would be produced in factory as institutional packs of 9-10

litres

82 Products

1048766 As a Brand Building country in global Unilever operating framework UBL is entitled only to

bring products developed by the Brand Development countries

1048766 Unilever should focus on serving products that have nutritional benefits (already available

globally) along with usual satisfactions of sensual pleasure functional attributes etc

1048766 Current existent players especially Igloo and Kwality have extensively copied global and

regionally available Unilever products eg Cornelli is same as Wallrsquos Cornetto Vinetta is similar

to Vienetta Mega is similar to Magnum etc UBL needs to differentiate these to consumers on

the ldquotaste the originalrdquo platform where global quality is focused regarding the products

1048766 UBL should also bring regionally famous brands like Moo or Max to create image

differentiation

1048766 Magnum or Moo should be used as premium end ice cream to generate more profit margin

Evaluation of Entry into Ice cream Business for Bangladesh Limited 54

83 Placement

1048766 Distribution focus should be in Dhaka for entry as Dhaka contributes more than 60 of total

ice cream sales in the country

1048766 Company may use carts as distribution method They serve as good source of visibility and

availability It would help in increasing impulse purchase

1048766 At least 1500 outlets in Dhaka and Chittagong needs to be actively served using dedicated

branded refrigerators to generate sales

1048766 50 carts should operate in Dhaka and Chittagong

84 Price

1048766 UBL products should be priced at par with Igloo pricing for the common format ice creams

1048766 UBL can bring in premium single-serve SKUS for the higher economic classes in the price

range of BDT 60-80

1048766 Smaller SKUs (small lolly stick) can be introduced in the price range of BDT 10-15

1048766 In the boutique segment UBL should price products above the semi-premium segment

(Gelateria Igloo Sub Zero or Andersenrsquos) but lower than that of Club Gelato or MoumlvenPick

85 Promotion

1048766 UBL would require strong marketing campaign (As high as 50 of sales) to have a grand

entry in the market

1048766 Presence in the television media would be of utmost importance More than 50 of

promotional expense should be made here initially Gradually it can be reduced

1048766 Newspaper would serve as the second most important option

1048766 Billboards should also be used

1048766 Activations (similar to Lux Channel i Super Star or Igloo Festival) should be done to generate

trial

86 Scope of Opportunity

Table 30 Value and Volume Based Scope of Opportunity for UBL

Value (BDT Cr)

Volume (Tons)

Market

131

7835

Common

121

7600

Boutique

98

235

Evaluation of Entry into Ice cream Business for Bangladesh Limited 55

861 Geographic Contribution

1048766 Dhaka (61)

1048766 Chittagong (19)

1048766 Sylhet (10)

862 UBL objectives

Common Format Ice Creams

1048766 Target 10 Market share in 1st year operation

1048766 Value BDT 11 Cr

1048766 Production capacity required 21 Tons day

1048766 Freezer Placement 1500 freezers

1048766 Cart operation At least 50 carts

Boutiques

1048766 Target Further develop the market

1048766 Focus Dhaka Chittagong and Sylhet Metro

1048766 Franchise At least 20 franchisee operations nation wide in divisional towns

1048766 Pricing Below imported parlours above common formats with around BDT 400 per Litre

87 Critical Success Factors

1048766 UBL is considered as a high profile company in Bangladesh and thus they cannot operate in

the market only with common products like choc-bars and cups They must have premium

products (these require extrusion line) also to carry their brand image Otherwise UBL would not

be able to charge usual premium over competition products

1048766 Launch of ice cream would require huge promotional and activation support in order to gain

customers from Igloo People want novelty regarding ice cream and UBL have to let them know

about their products and create hype

1048766 Cart should be used as a source of distribution Recent successes of Unilever companies like

Indonesia shows that carts can generate more sales and can be used as source of visibility in the

minds of both retail traders and consumers Carts can also provide incremental sales to the

company

1048766 UBL have to create a strong cold chain for ice cream (initially in Dhaka and Chittagong) to

ensure quality products for consumers

1048766 UBL have to build capacity very rapidly to meet consumer demand if the launch is successful

Evaluation of Entry into Ice cream Business for Bangladesh Limited 56

90 BUSINESS PROJECTION

91 Basic Assumptions

Business projection for ice cream business was made based on a conservative approach UBL

would require spending significantly on production capacity and factory dedicated to ice cream

Thus to analyse business possibilities of ice cream certain assumptions were made and collected

data were used These are

1048766 Production equipments and cabinets would cost approximately BDT 55 crores

1048766 Production equipments 45

1048766 Packaging Equipments 15

1048766 Storage Facility 20

1048766 Branded Freezers 10

1048766 Distribution Investment 10 (Distributors would also invest themselves)

1048766 Ice cream factory with a floor size of 20000 sqft would cost BDT 25 crores

1048766 Objective is to capture 10 market share in Dhaka and Chittagong in the first year

1048766 Business would grow by 50 in year 2 and 3 30 in year 4 and 25 in year 5

1048766 Weighted price per litre is BDT 170 according to volume share of single serve ice cream

multiple serve ice cream and boutique ice cream

1048766 Other financial assumptions were also made List of them are provided below but amount has

been removed for confidentiality issues

Assumptions

Trade Margin

Distributors Margin

DutyVAT Rate

Trade Terms Expense of NPS

Trade Terms Expense of NSV

Advertising ampPromotion of NPS

Indirects (Salaries Wages etc)

Trading Tax

Table 31 Assumptions for Business Projection

Evaluation of Entry into Ice cream Business for Bangladesh Limited 57

100 CONCLUSION

Ice cream has good prospect in Bangladesh It is still a growing market with opportunities for big

new entrants With the barriers of entry UBL needs to consider its priorities UBL being an HPC

company traditionally needs to acquire expertise in cold chain distribution and has to invest a lot

of money to rip the benefits of the industry However to initiate company can take regional

support and acquire resource expertise The company should enter the business as soon as

possible since there is potential threat from DANONE to introduce more ice creams after ISIS

diabetic ice cream and also with potential of the industry arch rival Nestlersquo might consider

entering into the industry too

Evaluation of Entry into Ice cream Business for Bangladesh Limited 58

References

Web References

1 wwwunilevercom

2 wwwunilevercombd

3 wwwhllcom

4 wwwunilevercompk

5 wwwthedailystarcom - Life Style Magazine

6 wwwreuterscouk

Evaluation of Entry into Ice cream Business for Bangladesh Limited 59

Page 6: Square Ice cream

the other hand the boutique industry is doing quite well with their approach towards ice cream

as a dessert item along with service of other snacks like cakes and coffee at their premises which

help them reduce seasonality effects of ice cream

With a complicated scenario in the market to analyze the industry condition and understand the

competitive realities details of market characteristics and players of both common and boutique

segments are explained in following sections However unbranded segment is excluded from

discussion as Unileverrsquos portfolio does not match the characteristics and price level of this

category

511 Market Characteristics of the Common Format Segment

A Market size

Due to promotion innovation and exposure to different cultures the consumption of ice cream

has increased As a result the total market size is expanding At present the local companies in

the common format segment have a huge market of about BDT 121 Cr This market is 16 times

larger than the boutique segment and nearly doubles the unbranded segment Over the years the

size increase of the industry shows the prospect of converting unbranded unhygienic ice cream

consumers into branded ice cream consumers However price level still remains a big problem

for the branded category as petty unbranded ice cream companies with a price range of Tk1 to

Tk5 have a total market size of BDT 79 Cr which shows a hint of high price sensitivity in lower

SEC consumers Overall market size of 220 Cr indicates that most of the people in the country

are exposed to ice cream or some kinds of derivatives of ice cream like ldquoBaarfirdquo however they

probably cannot afford higher priced icy fruit sticks (BDT 6-10) available in the branded

segment

B Competitive rivalry in the Market

Competition is not very intense among the existing five companies because the number of

operators is very small considering the total population Also complexities of production and

distribution process and other entry barriers are stopping new companies from entering the

industry Evaluation of Entry into Ice cream Business for Bangladesh Limited 20

Igloo is confident about its unbeatable first position but there is competition among other

companies such as Polar and Kwality for the 2nd position However in current market no

operator is showing much aggressive and visible activity towards growth It is expected that

recent announcement regarding introduction of ISIS diabetic ice cream by Polar in partnership

with DANONE would again create some hype in the market

Reasons behind existing level of rivalry among competitors can be attributed to following

reasons

1048766 The ice cream industry has few sellers because there is economy of scale through large-scale

production The larger firms have a cost advantage over smaller firms they can produce more

cheaply- making it hard for small firms to survive

1048766 Market is bigger than capability of current players and can accommodate them without much

trouble This is because PCC of ice cream in the country is still pretty low

1048766 This market has substantial amount of ldquobarriers to entryrdquo making it difficult for a large

number of competitors to enter the market The cost of setting up a new plant in this industry is

quite high The cost of entry works as an entry barrier

1048766 To get people to try new product the potential entrant will have to run a big competitive

advertising or massive promotional campaign which is expensive The prevailing companies

created barriers in entry for potential rivals by using extensive advertising and product

differentiation earlier which has its effects till now Another fact is that product awareness and

brand loyalty to the existing firms make it expensive for potential rivals to enter

1048766 To further elaborate present competitive reality of the industry the five competitive forces are

discussed below

1048766 The rivalry among the competing sellers is weak as market is yet to develop more

1048766 With various entry barriers not many new companies are attempting to enter this industry

1048766 As there are no direct substitute products to ice-cream the companies donrsquot face any

competition from other industries

1048766 As the number of suppliers is very low and the companies especially Igloo as the best product

enjoys high bargaining power or leverage over rivals But some of the companies such as Savoy

are concentrating on increasing profit margin of the retailers for securing a more prominent

position in the market

1048766 Mainly consumers or buyers decide the pricing Keeping in mind the various buying power of

people the companies decide the price of each items Price of the Items that have the most

market demand is kept low so that they are in the reach of the general customers By lowering

the price some companies such as Savoy are trying to maintain a competitive edge

Evaluation of Entry into Ice cream Business for Bangladesh Limited 21

C Market Sales and Growth Rate

Sales information of the five existing companies for the current years shows the following trend

Company Name

2007

2008

2009

Total Market

11307

12120

13122

Igloo

5785

6086

6425

Polar

168

1835

2019

Kwality

306

335

374

Savoy

388

415

458

Milk Vita

394

434

488

Table 9 Market Sales and Growth Rate of Branded Common Format Market

Volume based market size shows the following scenario prevailing in the Bangladesh market in

2009

Company Name

Single Vol (000 Ltrs)

Multi Vol (000 Ltrs)

Total Vol (000 Ltrs)

Total Market

32759

42967

7573

Igloo

16760

21983

3874

Polar

4867

6384

1125

Kwality

8865

11628

2049

Savoy

1124

1474

260

Milk Vita

1141

1497

264

Table 10 Volume Based Market Size

The total volume of the branded common format ice cream industry is 7500 Tons of which more

than 50 belongs to Igloo followed by Kwality with 27

D Market Share and Size of the rivals

Market share data for all the local companies show a trend where Igloo is the biggest ice-cream

company dominating with a huge market share Although even 1-2 years ago there was intense

competition between Kwality and Polar but now it seems that Kwality is 2nd largest ice-cream

manufacturing company in Bangladesh Polar is in the 3rd position with Savoy and Milk Vita

trailing in the market Market share percentage over the years is presented in the following table

Company Name

2007

2008

2009

Igloo

50

5031

5116

Kwality

256

2666

2706

Polar

17

161

1485

Milk Vita

34

332

348

Evaluation of Entry into Ice cream Business for Bangladesh Limited 22

Savoy

39

365

343

Table 11 Market Share of Competitors

E Geographic Sales Orientation

Ice cream still continues to be a city-oriented product and its demand is comparatively low in the

rural areas Reasons behind this are electricity problem outside urban areas and purchasing

power of people Geographic sales orientation of the common format ice cream industry is

provided below

611890690480590250DhakaChittagongKhulnaComillaBarisalOthers

Figure 7 Geographic Sales Orientation

Dhaka still is the largest contributor in the ice cream segment Nevertheless over the years this

trend is shifting Areas outside Dhaka are also growing making Dhakarsquos share lower by small

percentage As urban markets are the major contributors companies design their products

keeping in mind the tastes and styles of the urban consumers Compared to the other companies

Igloo is the most expensive in the common format segment so they target only city based

customers who have the purchasing power Although other companies such as Savoy are offering

low priced product even their main target is urban people due to nation wide electricity problem

F Seasonality of Sales

Ice cream industries in warmer part of the world are highly seasonal Same is true with

Bangladesh According to secondary data sources sales seasonality looks as follows

Period Name

Months

Contribution

Super-Peak

April May June

46

Peak

March July August

36

Off-Peak

February September October November

15

Super Off-Peak

December January

3

Table 12 Seasonality of Ice cream Sales

This data was validated through interviews with retailers during market visit According to them

more than 75 sales of ice cream came in the hot months Another insight that could be

identified was

Evaluation of Entry into Ice cream Business for Bangladesh Limited 23

various festivals and programmes provide scope for higher volume of ice cream sales According

to companies where only 10-15 sales occurs in the winter season same amount of sales occurs

during festivals like the two Eids and Nobobarsha

G Distribution Servicing System

Mainly common format ice-cream is distributed in two methods that are directly to retail shops

and through hawkers with ice cream carts trolleys

The various channels of retail shops other than cart that serve as distribution outlets for Ice cream

are

7 Urban General Stores (UGS)

8 Urban Neighbourhood Grocer (UNG)

9 Premium General Store (PGS) SMMT

10 Confectionary Bakery

11 Modern Trade (MT)

12 Fast Food shops (Recently some fast food shops keep branded ice cream cabinets)

Distribution details of all the companies are provided below However detail of Milk Vita is not

available as they are mainly milk producer and they have no dedicated ice cream cabinet for

retail stores and currently they are not distributing ice cream in Dhaka city

Company

Distribution Method

Frequency

No of Cabinets

No of Carts

Igloo

Distributor Cart

2 to 3 times a week

4000

100

Kwality

Distributor Cart

1 to 2 times a week

1050

20

Polar

Distributor Cart

1 to 2 times a week

800

50

Savoy

Company

1 to 2 times a fortnight

176

-

Milk-Vita

-

-

-

-

Table 13 Distribution Method of Market Players

Distribution Process Distribution process through both methods is described below

Retail Distribution The general distribution that is followed by companies is that distributor

sends large refrigerated trucks dedicated to specific territories These trucks are accompanied by

small refrigerated vans Main road side shops are served directly from the large truck and shops

that are inside small streets are served by the small vans

Order and delivery are done on the same day The strategy followed is that of replenishment If

the branded freezer of the company is empty they simply fill it up according to requirement of

different SKUs as the delivery people see fit However shopkeepers have to buy full cartons

(usually 24 pieces in a carton) of single serve ice cream they cannot buy in pieces

Evaluation of Entry into Ice cream Business for Bangladesh Limited 24

Among the retail shops there are about equal numbers of branded and unbranded freezers This

is a normal scene in Dhaka where all shopkeepers require freezer to keep other cold products

However basic distribution policy is that if a shop has branded cabinet of a company they

cannot keep competitor ice cream in that cabinet Thus penetration can be made possible in

shops where unbranded freezers are available

General branded freezer contract policy with Igloo and Polar is that traders have to pay BDT

5000 to take a freezer Maintenance of branded freezers is responsibility of the company but

electricity bill is paid by shopkeeper However Polar is not currently giving any new freezer

Kwality gave away their freezers for free however they ensured safety of their freezers by

checking background of the shopkeepers

Cart sellers Cart sellers collect required amount of ice cream from nearby distribution house or

company showroom (Igloo has one showroom in Panthapath) on a daily basis They also have to

buy cartons of products not pieces Kwality carts collect their ice cream from factory (Tejgaon)

or nearby distribution house Cart sellers contribute around BDT 3000 sales in a day and

generally sell at BDT 1-2 higher than set price of each product

The cart sellers generally keep at least a two-day stock so that they can meet sudden upsurge in

daily demand of ice cream or if they get the opportunity to sell at parties programs or any open

air event (Wedding at community centres or outside cultural programs at auditoriums) If cart

sellers need replenishment of stock they even take service more than once in a day either

revisiting showroom house or they call up company delivery people to serve them at their

location if there is opportunity for selling more ice cream

Policy regarding Damaged Ice cream All the ice cream producers have very good relationship

with the shopkeepers If the retailers have refrigeration problem company takes ice cream back

until the problem is fixed whether it is stored in branded freezer or not Also if any ice cream

gets damaged or there is bacterial formation company takes them back Usual return time varies

from 15-30 days For large sellers however they take less time

Payment Method for Ice cream Purchase All the companies give credit of around one month to

large volume contributing retail sellers and try to maintain good relationship with them This

trend is seen in all channels Also all the SMMTs and MTs are given credit of one month and

payment is made by cheque Other small shopkeepers have to purchase with cash However

according to shopkeepers Igloo is currently trying to cut down on credit sales as they believe

there is a consumer pull for their brand Companies like Polar and Kwality also give special

commission to large sellers Polar gives 5 commission on every bill

Evaluation of Entry into Ice cream Business for Bangladesh Limited 25

H Technology and Innovation

Technological advancement in the ice cream industry has been very rapid Starting with stick

mould and filler ice cream production the companies have come a long way Assessing the

consumer choice and demand the companies are introducing new products very often Improved

and new technology is used for faster production and better quality Igloo is trying to meet the

international standards and launching products such as Sundae Cornelli and Nuggets Other

companies are also introducing new flavours suitable for their target segments Igloo has both the

ISO and the HACCP certifications These were awarded in the year 2003 due to their relentless

pursuit of quality and innovation In September 1996 Igloo introduced the 3D Mould line and

straight line extrusion technology for the first time in the subcontinent Basically with Igloorsquos

pursuit all the modern technologies and quality innovations are available in the market

I Production Capacity

Current production capacity of the major players in the common format ice cream segment is

estimated to be as follows

Name

Capacity (Ltrs day)

Total Production (000 Ltrs)

Required Capacity (at 300 production days )

Estimated unutilized capacity (Ltrs day)

Igloo

22000

387433

12914

9086

Polar

6500

112513

3750

2750

Kwality

12100

204934

6831

5269

Savoy

1560

25985

866

694

Milk Vita

1330

26387

880

450

Table 14 Production Capacity of Current Market Players

From the table we can see that all the ice cream manufacturers are operating with unutilized

capacity However one point to be noted is that different ice cream SKUs require different

amount of item to be produced Exact machine production capacity at litre per day does not

represent the accurate scenario Nevertheless it can be safely assumed that all the manufacturers

have unused machine capacity at their premises Moreover the larger players like Polar and

Kwality have new technology available at their premises Kwality bought second hand machines

from Thailand but both Igloo and Polar bought theirrsquos from Italy and Denmark

J Products and Pricing

Products The products in the ice-cream market are differentiated A few firms dominate the

market but an endless variety of ice creams are offered to the consumers Igloo pioneers all

major innovations in the market The products that are available in the market can be classified

into single serving and multiple serving groups Which are then categorized based on functional

attributes designs These are

Single

Stick

Normal mould 3D mould extrusion

Evaluation of Entry into Ice cream Business for Bangladesh Limited 26

Cup and Sundae

Flat cup long cup

Cone

Normal cone (vanilla strawberry etc) premium cone (Ripple)

serving

Innovative Fillers

Snowball Animal shaped containers sandwich nuggets etc

Container

05 ltr 1 ltr and 2 ltr containers

Multiple serving

Family Pack

Assorted packs cakes shahi kulfi etc

Table 15 Ice cream Serve types

Among all the products available in the market most selling SKU for all the companies is Choc-

bar stick and highest selling flavour is Vanilla Following are the ranks of most selling SKUs and

flavours

SKU Name

Rank

Choc-bar (70 ml)

1

Vanilla Cup (100 ml)

2

Vanilla Box (05 and 1 Ltr)

3

Lemon Lolly (70 ml)

4

Normal Cone

5

Flavour

Rank

Vanilla

1

Chocolate

2

Strawberry

3

Ripple

4

Mango

5

Table 16 Rank of SKUs Table 17 Rank of Flavours

Choc-bar is one of the earliest vanilla based chocolate coated SKU that has dominated the

market strongly over the years Shopkeepers could not provide an exact percentage on SKU

based sales contribution Most of them ranked the SKUs and flavours according to sequence

shown in the above table Also according to newspapers and secondary sources Vanilla is the

most selling flavour with 60 sales contribution According to secondary sources percentage

sales contribution of various types of SKUs in the common format segment are as follows

Type of Ice cream

Value Share

Volume Share

Impulse dairy ice cream

514

443

Impulse water ice cream

112

138

Take-home dairy ice cream

374

419

Table 18 Volume Share of Different Serve Types

Impulse dairy ice cream provides more value share as price per litre is higher than take home

multiple serving ice creams Impulse water ice cream shows a similar trend as of take home ice

cream

Pricing Product pictures and price ranges of each category are provided below Evaluation of

Entry into Ice cream Business for Bangladesh Limited 27

Normal Premium Price Tk12 Tk20 Tk25 Cup amp Sundae Normal Cup Sundae Premium Cup

Price Tk20 Tk25 Cone Normal Premium PriceTk20 Tk25Innovative Fillers PriceLtr Tk100

Tk175 Container Normal Premium PriceLtrTk150 Tk 175 Tk 190 Family Packs Kulfi Mixed

Pack Cake Single ServingMultipleServingNormal Ice Fruit 3D Mould Premium Extrusion Price

Tk10 Tk15 Tk15 Tk20Stick Normal Cream

Figure 8 Serve Types and Pricing

As it can be seen from the above chart all impulse ice creams are priced within the range of

BDT 10 to 25 Other take home multiple servings are priced within the range of BDT 50 (05

Litres) to BDT 220 (2 Litres) Another noticeable factor in price is that there are both normal and

premium flavours in all types of ice creams

K Firms as Price Setters

The firms have capability to affect the market price to be low as profit margin is very high If

Igloo reduces the price of an item below the prevailing price level in order to increase its sales

its competitors will fear that their customers will go away from them to buy Igloo products To

retain their customers they will be forced to match the price cut of Igloo Historically this has

been proven to be true However due to price sensitivity companies cannot drastically increase

price even if they provide higher quality of product It was seen in 1997 when Igloo increased

price of 11 SKUs and faced drastic sales fall during that time It shows that the industry might

welcome overall industry price increase but not individual company price increase

L Promotion

The promotion scenario in the industry is not quite organized as of now Even proper data

regarding promotional expenditure is not available from research sources The reason being

there is not much consumer related activity seen in the market After Kwalityrsquos introduction in

the market in 1999 Igloo went on with massive Television promotion of their new products that

were available at that time

Evaluation of Entry into Ice cream Business for Bangladesh Limited 28

However in current times there is no TVC running from any company Companies promote their

launches mainly through billboards and newspaper promotions which is currently the most used

source of consumer promotion Some promotional activities that were done by the companies

over the years are listed below

Consumer Promotions

1 Larger players like Igloo and Kwality goes on with campaigns like ldquoGift on stickrdquo where

various prizesrsquo names are written on the sticks and consumers can get them

a Igloo ran a program on their launch of Macho variant where gift varied from cricket bat to

personal computer

b Igloo had a program in 2006 where gifts on sticks varied from Bangkok visit to sunglass

c Igloo ran one campaign in 2007 where gold bars were given on purchasing Choc-bar

d Kwality ran a similar program in 2008 where gifts varied from wrist watches to motorcycle

2 Some companies ran consumer TTS and gift programs where company products were given

free

a Igloo had a program in 2006 where Igloo butter was given free on purchasing Igloo ice cream

cake

b Kwality ran a program in 2008 where one SKU was given as gift with another SKU randomly

c ldquoCone Ice cream at your Homerdquo program was run by Igloo in 2002 where six cone biscuits

were given free with purchase of one litre ice cream

3 Media placement is another form of placement done by larger companies

a Igloo purchased ldquoGlimpse into World Cup Resultrdquo space in daily newspapers during World

Cup Football 2002

4 One interesting program is done by only Igloo in Bangladesh They did it in June 2006 The

program was ldquoIgloo Ice cream Festivalrdquo with main attractions of ldquoGet as much ice cream as you

want for BDT 200rdquo ldquoGet a Fantasy Kingdom Entry ticket with each Entry Couponrdquo ldquoLucky

Drawrdquo and ldquoCelebrity Addardquo

Trade Promotions

5 Trade promotions are mainly given to ldquoHighest retail purchasersrdquo and also based on time

bound trade schemes where various slabs of purchase amount are mentioned for different prizes

a Igloo takes their highest purchasers to visit countries like Singapore and Thailand

b Savoy has a purchase slab scheme where first prize is table fan

c Polar gives special sales commission to their highest purchasers (around 5)

Evaluation of Entry into Ice cream Business for Bangladesh Limited 29

M Players in the Common Format Segment

Branded common format ice cream segment is constituted of five players only Among them

Igloo is the largest player and Milk Vita is the smallest The following sections detail the basic

company detail of all the companies with special emphasis on Igloo the market leader

Igloo

The pioneering ice-cream company in Bangladesh started its operation in 1964 in Chittagong

under K Rahman amp Co Limited (KRC) with a small factory inside Coca Cola bottling factory of

KRC After the independence of Bangladesh in 1971 Igloo was taken over by the government of

Bangladesh Later in 1983 Abdul Monem Limited purchased the entire production setup of KRC

Limited including Coca-Cola bottling plant and Igloo ice-cream factory After taking full charge

of Igloo ice-cream by Abdul Monem Limited the manufacturing operations continued in

Chittagong till 1990 Although Dhaka fetched the maximum share of the total revenue the

distribution cost increased tremendously in the process of meeting the demand of Dhaka city To

cope with the distribution problem and handle Polar threat Abdul Monem Limited transferred

the factory to Dhaka changed the ice-cream packaging from the conventional paper to plastic

and expanded their market and distribution operation The new factory of Igloo was setup at

Shyampur Narayanganj and was nine kilometres away from the Motijheel office The company

apart from catering the capital city started to expand its operations in Comilla (1991) Khulna

(1992) and North Bengal (1993) These markets were served directly from Dhaka since the

storage facilities were not developed till then The company is now the market leader since 1997

with clear market share victory over others with sweeping 51 share It is to be noted that Igloo

is also a player in the boutique segment with three parlours (2 in Dhaka and 1 in Chittagong)

Product Range Igloo offers the widest choice of ice cream more than any other competitor in

the market Igloo is offering a total of fifty items including normal premium and novelty cup

stick and family pack items Igloo has thirty flavours more than anyone else in the industry and

is continuously launching new and innovative delicacies

Igloo ice-cream can be classified in six groups They are

Stick

Macho Choc-bar Mini Choc Clown Mega Shell n core Lolly

Cone

Cornelli 2 in one Cornelli classic

Cup

Shahi kulfi Vanilla Strawberry Mango Snow ball

Container

Vanilla Strawberry Mango Chocolate Coffee Diet Vanilla Tutti Frutti Ripple Pralin

Pistachio

Innovative

Nuggets Sandwich

Family

Ripple cake Party time Shahi Kulfi

Table 19 Products of Igloo

Single serve stick cups and cone items are easy to carry around and convenient to eat which

makes it most sold The core target segment of ice-cream is 6-24 years and this generation is

always on the Evaluation of Entry into Ice cream Business for Bangladesh Limited 30

move and thus prefers independent cone stick or cup items As Igloo initiated the concept of ice-

cream as a family product they offer some items to be enjoyed with the whole family

Quality and Innovation Igloo is committed to maintaining the highest quality standard through

its continuous RampD activities The major ingredients raw materials and packing materials are

procured from the best European sources Strict quality control is done at every stage of the

manufacturing process from procurement of material mixing material flow ice cream making

packaging storing (at main warehouse) distributing and market shelving by the Quality Control

Department Current supply chain for various materials of Igloo is as follows Australia (Milk

Powder) Denmark (Ingredients emulsifiers amp stabilizers) China amp UAE (Food grade sticks)

China Denmark Singapore amp Thailand (Food grade packing materials)

Figure 9 Igloo Supply Chain

Distribution Network Their distribution network is stretched all over the country with a long

fleet of refrigerated vans Firstly the ice cream products are stored at the central warehouse of

the factory and from there they are distributed through the haulage vehicle to the operational

centres located in Dhaka Chittagong Comilla Rajshahi Barisal Bogra Rangpur and Khulna

Strictest cold chain maintenance during the distribution and selling of the ice creams is ensured

Their distribution process is as follows Manufacture Stored at -24c Transported by Refrigerated

trucks at -Reaches amp Preserved in Eight regional stores Refrigerated vehicles (Distributors)Retail

outlets (Deep freezers)

Figure 10 Distribution Process of Igloo

Evaluation of Entry into Ice cream Business for Bangladesh Limited 31

Trolley Operation Igloo also operates through trolleys for extending its reach to consumers at

the furthest points The trolleys are operated near schools alleys streets parks etc and play

rhythmic music to attract the consumers These are very colourfully decorated with Igloo

umbrella and the puller wears specific uniforms Igloo was the first in introducing and operating

these trolleys in Bangladesh for any Fast Moving Consumer Goods (FMCG) Igloo has around

125 trolleys operating throughout the country Individual trolleys are provided with a regular

supply of igloo ice creams

Marketing The marketing commitment of Igloo is based on the relationship with its customers

and consumer by not only manufacturing the highest quality product but also delivering the

product by maintaining this quality To satisfy the ever-changing needs of the customer Igloo

has regularly launched new ice creams and introduced new flavours And this commitment has

positioned Igloo as the market-leading brand by gaining the consumers trust with the positioning

as ldquoA WORLD OF GREAT TASTErdquo

Facilities and Logistics at a glance As of 2009 following are the facilities and logistics enjoyed

by the company

Factory location

Dhaka

Production Lines

4

Packages

Stick Cup Family pack Others (Nuggets and sandwich)

Machine suppliers

1048766 Mark-Italy

1048766 Tetra Pak(Hoyer)-Denmark

1048766 Sabore Denmark

1048766 Hass- Austria

Machine models

1048766 Freemark 1100 Italy

1048766 FM 3000 FM 6000 Italy

1048766 SL600 Denmark

Cone baking

Hass- Austria

Chocolate making

Macentyre-UK

Coverage

Nationwide

Operational centre

10

Total market vehicles

30

Distribution channel

Directthrough appointed distributors

Outlet service

7500

Injected deep freezers

4000

Trolley operations

125

Warehouse no

8

Table 20 Igloo Facilities and Logistics

Kwality

Kwality is currently the second largest ice cream manufacturer of the country The mother

company for the Kwality brand is Sanowara Drinks amp Beverages Ltd a sister concern of

Sanowara Group The company is famous for powdered milk brands Red Cow and Diploma in

Bangladesh The drinks and beverage concern of Sanowara made an entry into the market in

1997 with ldquoYesrdquo brand drinking water and launched the ice cream brand in 1999 With heavy

communication and novelty products it Evaluation of Entry into Ice cream Business for

Bangladesh Limited 32

successfully removed Polar from the second place with a current market share of 27 The

company also operates in the boutique segment with two parlours in Dhaka and Chittagong

Kwality ice cream factory is situated in Chittagong with a floor space of 35000 sft and fully

automated machinery wrapping mix machinery equipments from Italy having capacity of

around 20000 litres of ice cream per shift The ice cream factory employs 140 people The

company is ISO 9001-2000 certified

Kwality was the first true competitor for Igloo products with some major innovation in product

design and communication but their quality is perceived to be lower in the minds of the

consumers and they do not have extrusion ice cream The product prices are also similar to that

of Igloo but they charge a bit lower than Igloo in premium multiple servings However during

market visits it was seen that shops that keep only Kwality or Igloo and Kwality both they can

sell Kwality too although the sales amount is lower than that of Igloo People who look for Igloo

shopkeepers give them that directly but if they get a chance and Kwality ice cream stock is high

they also push Kwality to dry the stock out This gives an indication that market is larger than

what the current players are capable of serving even in Dhaka

Kwality follows a similar distribution model like Igloo but distribution frequency is lower and

amount of cart sellers is limited to 25 and they operate only in Dhaka

Polar

Once a giant in the industry Dhaka Ice Cream Industries Ltd introduced the first hygienically

packed ice cream in Bangladesh in 1987 and the brand name Polar was thus born In the early

days the company started ice cream business with a wide range of products and a variety of

flavours in Dhaka city In 1988 the company started its distribution in the city of Chittagong

then Bogra and continued to cover more cities Presently Polar ice cream is available

throughout Bangladesh The company today trails in the market with 15 market share in the

common format segment Recently Polar has announced launch of ISIS diabetic ice cream with

support from DANONE to turn around in the market

The company has its head office as well as a modern large-scale industrial plant in Dhaka Polar

ice cream is made with Danish expertise using Danish equipment and technology The

production activities and quality control measures are supervised and managed by Danish

experts Polar offers a wide range of delicious flavours and tastes made by ingredients imported

from Europe

Dhaka Ice Cream at present has 3 cold stores in Dhaka Chittagong and Bogra in Bangladesh

From Dhaka cold store they distribute ice creams in Mymensingh Tangail Jamalpur Sherpur

Kishoreganj Netrakona Comilla Narsingdi Barisal Madaripur Agaeljhara Faridpur Magura

Chuadanga Jessore Satkhira Khulna Pirojpur and Sylhet through their distributors In case of

long distance delivery points the company uses auto cooling freezer van

Evaluation of Entry into Ice cream Business for Bangladesh Limited 33

In Dhaka city they distribute ice creams directly to retail stores in freezer vans Besides that

they have several distributors at different points of the city Distributors cover their individual

areas where company is not able to supply directly in their freezer vans Similar model is

followed by the company to distribute ice cream from their other cold storages through out the

country For storing and selling ice creams in retail stores the company like the other players

arranges a deep freezer with the Polar logo and canopy light box

In addition to this distribution the company also undertakes home delivery of ice creams for

special occasions

Savoy

Savoy Ice-cream brand is owned by Sena Kalyan Sangstha (SKS) Group of industries It started

its journey in March 1995 with a factory in Tejgaon Dhaka Yearly turnover is estimated at BDT

388 crores with a market share of roughly 35

The factory has been established with Sonali Bank finance at 6040 equity ratio The total

production capacity of the factory has been estimated at 2400 litres of Ice-cream per day Total

land area of the factory premise is 116 Bigha with 8000 sft area covered with a total project cost

of BDT 144 The factory employs 73 people

Product ranges of the company include all the basic designs and flavours of the industry

However the company has not been much of an innovator in the industry Their product quality

is substantially low than that of other players and they price their products at 10-15 lower than

the other competitors The company imports raw materials mainly from Europe The general raw

materials are Euro cream Skimmed Milk Powder Cocoa Powder and Flavour (Vanilla Mango

and Strawberry) Colour (Yellow Red Chocolate and Green) Ripple Sauce Cheney Fruit Palm

Kernel Oil Anhydrous Butter Oil (Ghee) and Sugar etc

Milk Vita

Milk Vita is one of the most famous brand names in Bangladesh for its liquid dairy milk Owned

by Bangladesh Milk Producersrsquo Co-operative Union Limited (BMPCUL) the company came in

the market with proper dairy milk ice cream in form of cups and choc-bar With a production

capacity of around 1600 litres per day the company is trailing in the market place with 3

market share

Although the Milk Vita Choc-bar was perceived to be extremely tasty by consumers they

probably could not do well due price competition Currently they do not even distribute ice

cream in Dhaka However their presence is seen in outskirts of Dhaka and other nearby towns

If the current market situation prevails Milk Vita would lose their remaining market share and

other companies would benefit especially Igloo However one of the advantages of Milk Vita

remains to be

Evaluation of Entry into Ice cream Business for Bangladesh Limited 34

their nation wide milk supply network They have skimmed milk powder production plant that

Igloo does not have Thus they can combat the seasonality of milk supply that Igloo with its

huge requirement of milk cannot

Strengths and Weaknesses of Competitors

Company

Strengths

Weaknesses

Igloo

1048766 Strong brand image

1048766 High product quality

1048766 Highest no of variety

1048766 Strong distribution network

1048766 Highest visibility

1048766 Strong promotion

1048766 High production capacity

1048766 Presence of extrusion ice cream

1048766 Items are generally a bit pricy

1048766 Igloo does not give free freezers like other companies

1048766 Reluctant in recent times regarding innovation

1048766 Local sourcing of liquid milk does not meet demand

1048766 Failure to use ERP technology slowing decision making

Kwality

1048766 Product variety

1048766 Strong promotion

1048766 Free freezer distributed

1048766 Presence in all price segments

1048766 High production capacity

1048766 Weak distribution

1048766 Lower exposure

1048766 low amount of carts in operation

Polar

1048766 Free freezer

1048766 Quality perceived to be high compared to Kwality

1048766 Discoloured freezers

1048766 Lower exposure

1048766 Low product variety

1048766 Unused capacity

Savoy

1048766 Price is lower

1048766 Discoloured freezers

1048766 Low product variety

1048766 Weak distribution

1048766 Small amount of freezers

1048766 Low production capacity

Milk Vita

1048766 Quality is good due to dairy cream

1048766 Brand leverage from Milk Vita milk

1048766 Low exposure

1048766 Low variety

Table 21 Strengths and Weaknesses of Competition

512 Market Characteristics of the Boutique Segment

With a small market of BDT 98 Cr and 567 share in the branded ice cream market the

boutique segment is currently an increasing segment in the ice cream industry Boutique

segmentrsquos history dates back to 1960s when Igloo launched boutiques in Dhaka to save

distribution cost and promote a culture of ldquoice cream eating outrdquo In later years boutiques lost

their glamour and retail common format segment picked up growth However with Dolce Vita in

the late lsquo80s craze for Italian Artisan ice cream was recreated in the market Although Dolce

Vita is failing in recent times emergence of MoumlvenPick and Club Gelato in 2000 has uplifted the

segment once again Current growth rate of the

Evaluation of Entry into Ice cream Business for Bangladesh Limited 35

segment can be estimated to be approx 20-22 (higher than the common format segment)

Following are the basic detail of all the major players in the segment with their estimated sales3

Players

Outlet

Sales (Cr Taka)

Share

Club Gelato

1

136

199

MoumlvenPick

1

119

174

Andersenrsquos

3

119

174

Gelateria Igloo

3

119

174

Sub Zero (Kwality)

2

051

75

Baskin Robbins

1

015

22

Dolce Vita

1

017

25

American Soft

1

009

12

Rainbow

1

009

12

Others (off site)

089

130

Total Market

682

Table 22 Players and Shares in Boutique Segment

A Detail of Operation

General operational procedure followed by all the operators is as follows

1048766 Operating method There is a variation in operational method among the large operators

1048766 Club Gelato uses kitchen at own premise where imported ingredients and local milk (daily

special service from Milk Vita) are used to make ice cream

1048766 MoumlvenPick directly imports ice cream from Switzerland

1048766 Andersenrsquos Gelateria Igloo and Sub Zero produce ice cream at their factory with a mix of

imported and local ingredients

1048766 Products Around 30-35 flavours of artisan dairy ice cream are served at the premises

1048766 Most sold flavours are Vanilla Ferrero Rocher Butterscotch Chocolate Caramel etc

1048766 Other Products Larger players also serve ice cream desserts (milk shakes ice cappuccino etc)

pastries and other desserts with normal coffee and tea facility at their premises

1048766 Boutiques fight ice cream seasonality with the other products sales during off-peak ice cream

seasons Usually ice cream and other products contribute at 6040 ratio in summer and during

winter and off-peak seasons the ratio reverses

1048766 Pricing Usually the prices of products in this segment are 3-4 times higher than that of the

common format segment

1048766 Prices do not vary with flavours Variation depends on serve style (Cone tub) and use of

toppings and other ingredients (Chocolate sauce nut fruits) etc

1048766 Usual margin charged is around 50-60 over production cost Similar margin is charged for

other products like coffee ice cappuccino etc

3 Yearly sales is estimated based on companyrsquos approximate daily sales collected during

interview

Evaluation of Entry into Ice cream Business for Bangladesh Limited 36

1048766 Target Group Most of the consumers belong to SEC A and higher SEC A with DMFI of at

least BDT 20000

1048766 Foreign delegates and resident foreigners also visit these boutiques

1048766 Main purposes of visits in the boutiques are

bull Youth hangout with friends and having ice cream and ice cream derivatives

bull Family Family night out or eat out at a restaurant and then having dessert

bull Foreigners Having dessert after dinner

1048766 Rush time at boutiques are Afternoon 2-4 pm and at night 9-11 pm

1048766 Offsite sales Most of the large operators also sell offsite They have small freezers for off-site

1048766 Club Gelato and MoumlvenPick serves ice cream at high society parties and programmes

1048766 MoumlvenPick also has kiosks in known hotels like Sheraton

1048766 Promotion No mass promotion is done by any of the companies Word of mouth is the most

important source of promotion Posters and banners outside the premise and occasional

newspaper advertisements are used to communicate special offers

1048766 Growth Drivers Market growth is driven by image innovation quality decoration of facility

environment and special offers

1048766 Club Gelato has the image of selling true Italian dairy ice cream with an excellent hangout

environment

1048766 MoumlvenPick imports ice cream directly from Switzerland and is perceived to be of high quality

1048766 Andersenrsquos operates with the image of ice cream from Denmark

1048766 Gelateria Igloo (from Igloo) and Sub Zero (from Kwality) could not establish the premium

artisan ice cream image

B Players in the Boutique Segment

There are very few players who have significant impact in the boutique segment Detailed

information of all the major boutique segment players is provided below

Evaluation of Entry into Ice cream Business for Bangladesh Limited 37

Club Gelato

Basic Company Information

1048766 Location Banani Road 11 (Planning for a second one in Dhanmondi)

1048766 Established in 2001

1048766 Seating Capacity 48

1048766 Area 1250 sft (including kitchen)

1048766 Owner Mr Jahangir Alam (Bangladesh)

1048766 Business Type Joint business partnership with Singapore

1048766 Staff 15 people (6 in the kitchen)

1048766 Production capacity 150 litres per day

Product Related Information

1048766 Product Italian style parlour scoop ice cream fruit juice coffee and pastries

1048766 Flavours Around 32 flavours available

1048766 Most selling Ferraro Rocher Vanilla Pistachio

1048766 Innovations New variants and ingredients are communicated by their Italian supplier and

Club Gelato decides what to take from them

1048766 Serve type Cup Cone Glasses Box for take away

Consumer Profile

1048766 Primary Teenagers and Young Adults (18-30) amp Diplomats

1048766 Secondary Family consumers for eat out

1048766 Income Group High income customers tentatively from SEC A and higher SEC A

1048766 Geographic Area Diversified

1048766 Rush time 8-10 pm

Sales and Price Information

1048766 Sales BDT 50000 (60 Ice cream 40 other desserts) daily in summer In winter however

other products sell more and thus they keep total sales at the same level

1048766 Price 750 per litre for any flavour

1048766 Sales Volume 50-60 litres per day

Supply Chain Placement Information

1048766 Milk Local sourcing from Milk Vita (4050 litres per day)

1048766 Chocolates amp Flavours Belgium France Germany

1048766 Transportation Mainly air (They can afford it due to high margin)

1048766 Contribution of various materials Flavours (30) Milk (20) other parts are water and air

Promotional Materials

1048766 Materials used are near premises POS materials for promoting the parlour only

Table 23 Detail of Club Gelato

Evaluation of Entry into Ice cream Business for Bangladesh Limited 38

MoumlvenPick of Switzerland

Basic Company Information

1048766 Location Gulshan

1048766 Established in 2000

1048766 Seating Capacity 55

1048766 Owner Mr Arif Mahmud

1048766 Business Type Franchise of International MoumlvenPick

1048766 Storage Capacity in Shop 150 litres

Product Related Information

1048766 Product Imported MoumlvenPick ice creams coffee chicken sandwich and Frappe

1048766 Flavours Around 30 to 35 flavours available

1048766 Most selling Swiss Chocolate caramel Vanilla Dream Espresso Strawberry

1048766 Innovations New variants are communicated by their franchiser and they decide on flavours

that they want

1048766 Serve type Cup Cone Glasses Box for take away

Consumer Profile

1048766 Primary Teenagers and Young Adults (18-30) (70) amp Diplomats

1048766 Secondary Family consumers for eat out

1048766 Income Group High income customers tentatively from SEC A

1048766 Geographic Area Concentrated in Gulshan and nearby areas

1048766 Rush time Afternoon- Young Adult 10 to 11 pm Foreigners

1048766 the company also serves at parties and has freezers in known hotels where their ice creams

are served

Sales and Price Information

1048766 Sales BDT 35-40000 daily in summer

1048766 Price 640 per litre for any flavour

1048766 Sales Volume 55-60 litres per day

Supply Chain Placement Information

1048766 Transportation Imported finished goods by ship

1048766 Ship travel time 19 days

1048766 Port clearance 10 days

1048766 Safety Cushion Extra 10 days

Promotional Materials

1048766 Materials used are near premises POS materials for promoting the parlour only

Table 24 Detail of MoumlvenPick of Switzerland

Evaluation of Entry into Ice cream Business for Bangladesh Limited 39

Andersenrsquos of Denmark

Basic Company Information

1048766 Location Gulshan (2 others in Uttara Dhanmondi)

1048766 Established in 2001

1048766 Seating Capacity 48

1048766 Owner United Group

1048766 Business Type Franchise of Australian company Andersenrsquos of Denmark

1048766 Production Tongi Factory of United Group

1048766 Production capacity 2000 litres per day in factory

1048766 Storage Capacity in Shop 150 litres

Product Related Information

1048766 Product Danish parlour scoop ice cream and coffee

1048766 Flavours Around 30 to 35 flavours available

1048766 Most selling Strawberry Butter Scotch Green

1048766 Innovations New variants and ingredients are communicated by their franchiser and they

decide on flavours that they want

1048766 Serve type Cup Cone Glasses Box for take away

Consumer Profile

1048766 Primary Teenagers and Young Adults (18-30) (70) amp Diplomats

1048766 Secondary Family consumers for eat out

1048766 Income Group High income customers tentatively from SEC A

1048766 Geographic Area Concentrated in Gulshan and nearby areas

1048766 Rush time 8 to 10 pm

Sales and Price Information

1048766 Sales BDT 10-12000 daily in summer

1048766 Price 460 per litre for any flavour

1048766 Sales Volume 40-50 litres per day

Supply Chain Placement Information

1048766 Milk 2025 kg packs are imported

1048766 Chocolates amp Flavours Imported

1048766 Butte paper Local sourcing

1048766 Transportation Ship

Promotional Materials

1048766 Materials used are near premises POS materials for promoting the parlour only

Table 25 Detail of Andersenrsquos of Denmark

Evaluation of Entry into Ice cream Business for Bangladesh Limited 40

Gelateria Igloo

Basic Company Information

1048766 Location Banani Kemal Ataturk Avenue (Two others in GEC Mor Chittagong and Naya

Paltan)

1048766 Established in 2000

1048766 Seating Capacity 20

1048766 Production From Igloo factory in Shyampur Narayanganj

Product Related Information

1048766 Product Parlour scoop ice cream and coffee only

1048766 Flavours Around 30 flavours available

1048766 Most selling Vanilla Strawberry Chocolate Pistachio Butter Scotch Tutti Fruity

1048766 Serve type Cup Cone Glasses Box for take away

Consumer Profile

1048766 Primary Teenagers and Young Adults (18-30)

1048766 Secondary Family consumers for eat out

1048766 Income Group High income customers tentatively from SEC A and B

1048766 Geographic Area Diversified

1048766 Rush Time afternoon and evening

Sales and Price Information

1048766 Sales BDT 8000 to 10000 daily in summer Nearly one fourth in winter

1048766 Price Varies but 350 per litre of vanilla

Promotional Materials

1048766 POS materials at the premises

Table 26 Detail of Gelateria Igloo

52 Price Comparison of Common and Boutique Segments

Price ranges of both common format and boutique segment cannot exactly be pin pointed as

products do not follow common structure and variations occur with use of toppings mixing of

flavours and use of coatings However a price comparison has been made among the brands

based on their price of per litre of vanilla flavoured ice cream in the market It appears to be as

following

Company

Price Litre Vanilla

Club Gelato

750

MoumlvenPick

640

Andersenrsquos

460

Dolce Vita

440

Igloo

100

Kwality

100

Polar

100

Milk-Vita

90

Savoy

85

Table 27 Comparative Price Analysis

As it can be seen there is price gap within the range of BDT 100-400 Ice cream kiosks and

small scooping boutiques can operate within that range

Evaluation of Entry into Ice cream Business for Bangladesh Limited 41

60 CONSUMER ANALYSIS

61 Target Group of Ice cream

Who are the consumers of ice cream This question does not have a clear answer Ice cream is a

food for all It is the only food consumed by a human being at less than 0 degree centigrade

temperature and people of all ages feel indulged to have it However we can determine focus

target groups for both branded common format and artisan boutique ice cream Group

discussions and market visits were done to get insight into the consumers along side resources

form secondary sources Age based target group is common for both segments but variation

among the groups occur mainly based on SEC and DMFI classification

611 Geographic Group

Branded ice cream remains an urban product till date Geographically branded ice cream has

reached urban and semi urban areas up to Thana Head Quarter levels Ice cream has reached

areas where electricity is available Small artisan players are available in places where large

branded players have no distribution

612 Target Age Group

Age wise grouping of target consumers is as follows

1048766 Urban kids in the age group of 5-14

1048766 They mainly consume normal sticks cups cones innovative fillers and water ice creams

1048766 Urban youth in the age group of 15-24

1048766 They consume premium and extrusion sticks and cones

1048766 Urban mothers in the age group of 25-35

1048766 They determine the family purchases Even when the father purchases ice cream decision is

taken by them

Consumption pattern of various age groups are depicted in the following chart Ice cream

consumption pattern50203005 to 14 yrs15 to 24 yrs25 to 35 yrs

Figure 11 Target Group wise Consumption Pattern Evaluation of Entry into Ice cream Business

for Bangladesh Limited 42

613 Target SEC and DMFI Group

Common Format

SEC A and B is the target group for common format ice cream However with rapid increase in

price level over the years has made it a ldquohard to consumerdquo product for SEC B consumers who

belong to lower DMFI group

Boutique Format

Boutique formatrsquos higher margin and high price range makes it an exclusively SEC A ice cream

People belonging to upper and upper middle class have access to the mediocre boutiques and

only higher upper class can have premium ice creams like Club Gelato and MoumlvenPick

Another unique target group for boutique format are the foreigners who live in Bangladesh

These people tend to visit the parlours to have ice cream as dessert especially after dinner

62 Ice cream in Consumer Lifestyle

Figure 12 Ice cream in Consumer Life style

This simple overview of ice cream in consumer lifestyle was determined based on in-depth

research analysis of UBL and validated through qualitative group discussions by the author

However detail of in-depth research is provided in a later section of this chapter

Evaluation of Entry into Ice cream Business for Bangladesh Limited 43

63 Highlights of Purchase Habit of Ice cream

631 Common Habits across Target Groups

There are some common habits that were identified in earlier researches and group discussions

with consumers Common habits mean the consumer approach towards ice cream that is seen

across all target groups eg kids youth and adult purchasers These are outlined below

1048766 Ice cream is mainly seen as a dessert or a snack Impulse ice cream is seen as a quick snack

that is consumed when it is in sight Visibility plays a big role here Regarding family packs

people see it as a post-food dessert

1048766 Ice cream purchase is commonly a planned event When the contexts arise people generally

take a bit of time to decide whether or not to have ice cream or when they want to go to a

boutique they make due considerations regarding which boutique to visit

1048766 Ice cream purchase decision is taken based on favourite flavour People tend to try out new

variants and flavours when they first see it They compare the taste with earlier experience and

when they purchase later they choose the flavour they have liked most

1048766 For In-Home segment decision is mostly taken on the flavour Generally people come up with

different flavours of choice and most voted flavour is chosen

1048766 People become aware of new variants or flavours mainly through word-of-mouth

Advertisement (new launches special offers and festivals) in newspaper is another source of

awareness

1048766 People are currently indifferent towards the price level of premium flavours However some

feel that price of Choc-bar or water ice creams (lolly) is a bit much If less they would have

consumed more Some also feel that companies should come up with branded ice cream in the

price range of BDT 5-8

1048766 Ice cream is purchased from nearby shops If required brand and flavour is not available 2-3

shops will be visited and then available flavour will be selected even if the required one is not

found This is done mainly not to ruin the mood for ice cream

1048766 People are very open to try new brands and flavours especially if it comes from a credible

source They would try new flavours and if they are satisfied with the taste they would repeat

purchase

1048766 Regarding boutique visits people feel that boutiques need to have a proper environment

enough flavours and other snacks

1048766 While visiting boutique with family or companion they want variation in flavours so that

they would order different flavours and taste each otherrsquos ice cream It is seen as a sign of

togetherness

1048766 Frequency of ice cream purchase varies among people It depends on peer pressure collective

family decision summer heat and attitude towards ldquoice creamrdquo itself as a product Evaluation of

Entry into Ice cream Business for Bangladesh Limited 44

632 Habits of Kids

1048766 Kids choose ice cream flavours by the look of the product (generally pictures shown in POS

materials and carts) They love colour and designs of the products let it be a common format or a

boutique ice cream

1048766 Kids (when in house) would go with the housemaid to the nearby shop choose the flavour

they want (within range of the amount given to the maid) and buy it

1048766 When with parents they would take the product they like even if the price is lower than some

other product However mothers play a role in this decision They would want their children not

to choose too high priced a product or coloured products

633 Habits of Youth

1048766 Young people are the main consumer of impulse ice cream They also are one of the major

consumers in the boutique segment

1048766 Young people love to try out new products that come into the market Another side of the coin

is that they are not very loyal to a brand or a flavour and tend to switch a lot

1048766 Regarding boutique visits young people go to boutiques to have an ldquoice cream hang outrdquo with

peer groups They would stay there for a longer period of time while they have their ice cream

1048766 Some times young people make milk shakes and other ice cream based desserts

634 Habits of Mothers

1048766 Mothers worry about their childrenrsquos health and they prefer ldquovanillardquo type of brands

However when price constraint occurs they go for water ice creams for their children They try

to convince their kidrsquos purchase decision

1048766 Regarding family purchase motherrsquos decision is sometimes prioritized by the whole family

64 Barriers to Ice cream Consumption

641 Emotional Barriers

1048766 Overindulge (close to sinful)

1048766 Undisciplined (no control)

1048766 Childish (licking)

1048766 Artificial Image

642 Functional Barriers

1048766 People of SEC B feel that ice cream is an expensive dessert (If less expensive would consume

more often)

1048766 It leads to cold cough - especially in winter rainy season

1048766 It contains artificial additives preservatives

1048766 It is very high in calories that lead to fattening

Evaluation of Entry into Ice cream Business for Bangladesh Limited 45

1048766 It does not quench ldquothirstrdquo

1048766 Less convenient (portable immediate eat)

1048766 Messy Dripping

65 Research Findings

The highlights regarding purchase habits triggers and barriers of ice cream consumption provide

a glimpse into the consumer world of ice cream industry However UBL CMI conducted a

formal research exclusively on ice cream consumers to identify

1048766 Occasions of ice cream

1048766 Frequency of ice cream consumption

1048766 Expectations from ice cream occasions

1048766 Personalities that they desire from ice cream

651 Relevant Occasions in Daily Lives of Consumers

Research question regarding ldquousual occasions of life that occurred most frequently in day-to-day

lives of the respondentsrdquo generated the following replies

Occasion

of Respondents saying Yes

Watching TV

93

Normal Dinner At Home

91

Normal Lunch At Home

89

At Home While ReadingMusicSurfing

86

Informal Family Get Together

85

Out Of Home Hanging Out With Friends

84

Out Shopping

84

Mid-Afternoon Break At Home

83

At Home By Myself During The Day

82

Special Dinner At Home

82

Informal Dinner Out Of Home

82

Normal Lunch Out Of Home

82

Leisure Walk

79

Coming Home From WorkSchool

78

Special Dinner Out Of Home

78

Celebration

78

A Night In With Friends

77

At Home By Myself In The Evening

77

Special Lunch Out Of Home

76

Mid-Afternoon Break Out Of Home

75

Special Lunch At Home

73

Day out with Partner

72

Midmorning Break

70

At Breakfast

68

Family Day Out

68

During Work Or At School

65

Evaluation of Entry into Ice cream Business for Bangladesh Limited 46

Travelling ToFrom WorkSchool

65

At The Cinema

61

Special Event

56

Clubbing At A Party

50

Post GymSports

48

Table 28 Relevant Occasions in Consumersrsquo Lives

Respondents were then asked to mention ldquofrequency of occurrence of the identified occasionsrdquo

The identified replies are as follows Normal dinner at homenormal lunch at homeComing home

from workschoolTraveling tofrom workschoolDay out with Partner SpouseMid-afternoon

break at homeOut of home hanging out with friendsLeisure walkMid-afternoon break out of

homeA night in with friendsSpecial dinner at homeSpecial lunch out of homeFamily day

outSpecial eventPost gymsportsDaily2-3 Times A WeekWeekly2-3 Times A MonthOnce A

MonthEvery 2-3 MonthsLess OftenNever Figure 13 Frequency of Occurrence of Occasions

This shows that ldquoNormal dinner at home Watching TV Normal Lunch At Home At Home

While ReadingMusicSurfing Coming Home From WorkSchool During Work Or At School

Travelling ToFrom WorkSchool Midmorning Break Day Out With Partner Spouse At Home

By Myself During The Dayrdquo are the most frequent daily rituals of busy lives of consumers

652 Frequency of Ice cream Consumption

Respondents were asked to mention ldquoconsumption pattern of ice cream during the identified

occasionrdquo on a scale of 1-5 depicting frequencies like ldquo(5) always (4) most of the times (3)

about half of the times (2) sometimes (1) never do not knowrdquo The responses are depicted in

the following table

Evaluation of Entry into Ice cream Business for Bangladesh Limited 47

444474544655555566756665775967779991011101111101210111110101113111412131314161

011121411131216181519181518211817171719181718201721222130303434253437403741394

046383944464746453745414641374638504843414839373030292726232725222020201926202

21722221317Midmorning

breakWhile clubbing at aAt the cinemaSpecial eventNormal lunch out ofA night in with

friendsNormal dinner atInformal dinner out ofAt home by myselfAt home by myself inOut

shoppingSpecial lunch atDay out with SpouseWatching TVAlwaysmost of the timesAbout half

of the timesSometimesneverdo not know

Figure 14 Frequency of Ice cream Consumption

As it can be seen ldquoDay out with Spouse Special lunch at home Special dinner at home

Watching TV Family day out Celebrationrdquo are the occasions where most frequently ice cream is

consumed

653 Market Character Mapping Relevant Occasions vs Frequency of Consumption

If we plot frequency of consumption on the X-axis of a chart and relevance of occasion

occurrence on the Y-axis taking the above mentioned values as cut-off values we get four

quadrants in the chart depicting four market scenarios that any ice cream manufacturer in

Bangladesh market might encounter given the current market situation This market

segmentation is based on frequency of ice cream consumption in daily occasions of consumer

lives

The segments are

1048766 OPPORTUNITY MARKET High Relevant Occasions-Low Ice cream Frequency

1048766 QUESTION MARKET Less Relevant Occasions-Low Ice cream Frequency

1048766 HIGH FREQUENCY MARKET Relevant Occasions-High Ice cream Frequency

1048766 CAPTIVE MARKET Less Relevant Occasions-High Ice cream Frequency

The chart looks as follows Evaluation of Entry into Ice cream Business for Bangladesh Limited

48

Figure 15 Relevance of Occasion-Frequency of Consumption Mapping

As it can be seen from the above chart Bangladesh Market still lies in the Opportunity and

Question market zone with a pull towards High frequency and Captive Market zones This is

evident from market data as penetration of ice cream still remains at Thana headquarters levels

Also this explains the high market growth rate of 17 as market is yet under developed and

branded quality ice cream has yet not reached all levels of consumers especially rural level that

constitutes around 75 of Bangladeshi market

From the above analysis we can establish that target of ice cream manufacturers should be to

penetrate more into the Bangladeshi market to create higher frequency of ice cream

consumption The following chart shows the strategies to follow for ice cream manufacturers

Figure 16 Required Market Strategy for Bangladesh

Evaluation of Entry into Ice cream Business for Bangladesh Limited 49

As relevance of ice cream consumption occasions can hardly be controlled by marketers their

endeavour should be to create more ldquoemotional and functionalrdquo attachment to ice cream in less

frequent occasions through ldquomarket developmentrdquo strategy to earn share from overall food

expenditure of consumers and at the same time make them consume more ice cream in highly

relevant occasions through ldquopenetrationrdquo strategy

654 Consumersrsquo Emotional Requirements and Product Attributes

All consumers under these clusters also identify the emotional requirements and the significant

product attributes they seek from their current preferred and future desired ice creams These are

provided below

Cluster

Emotional Functional Requirement

Product Attributes

Enjoyment

Flavour Variety

1048766 Combination of different flavours

1048766 Combination of different textures

1048766 Very sweet

1048766 With wafer or biscuit

1048766 With chocolate

1048766 Of a well known brand

Socially Involved

Spoonable Rich

1048766 Very creamy

1048766 Only natural ingredients

1048766 No mess

Care

Size Creaminess

1048766 Big

1048766 Rich full taste

1048766 Smooth

1048766 Value for money

1048766 No mess

Unwind amp Escape

Economy

1048766 Crunchy

1048766 Economic

1048766 Of a well known brand

1048766 Nutritious

Balanced Convenience

Health Conscious

1048766 Of a well known brand

1048766 Nutritious

1048766 Milk based

1048766 Low sugar

1048766 Low carbohydrates

1048766 Filling

Active Self-Grooming

Fruit Vitamins

1048766 Healthy

1048766 Fruit based

1048766 Low fat

1048766 Liquid or drinkable

1048766 Nutritious

1048766 Of a well known brand

Confidence

Drinkable Light

1048766 Low calories

1048766 Light on the stomach

1048766 Chewy or gooey

1048766 Not so sweet

1048766 Natural appearance

Sensual

Appeal or image

1048766 No artificial additives

Evaluation of Entry into Ice cream Business for Bangladesh Limited 50

1048766 Natural appearance

1048766 Melting slowly

1048766 Attractive packaging

1048766 High quality ingredients

1048766 Of a well known brand

Table 29 Requirements amp Product Attributes Desired by Consumer Clusters

Of these findings we see that the identified highlighted barriers to ice cream consumption are

pretty evident among the consumers Mostly people want products of a reliable source or a well

known brand low calories quality ingredients value for money economic type

Evaluation of Entry into Ice cream Business for Bangladesh Limited 51

70 INDUSTRY ATTRACTIVENESS AND ENTRY PROSPECTS

71 Driving Forces of Growth

As identified in the earlier sections there are several driving forces behind the growth of ice-

cream industry in Bangladesh

712 Trade and Infrastructural Level

1048766 As a result of globalization newer varieties have been introduced to the local products Many

foreign companies are also coming as franchise so there has been increased competition and

these boutiques are setting higher standards for the local producers

1048766 The present market growth rate is 18-19 which is being influenced by larger players like

Igloo who are expanding their distribution nation wide with expansion of national electricity

grid

1048766 With entry of Modern Trade and recent organized business approach of retailers has made it

possible for ice cream manufacturers to penetrate into shops even without providing them with

branded freezers

1048766 Weather change has increased ldquosummerrdquo season in our country which has reduced negative

seasonal impact on ice cream

1048766 Large companies like Igloo have taken global learning of using carts as an effective tool of

availability and visibility for ice cream

1048766 New and improved technologies are being used in the production process This technological

advancement has improved quality increased speed of production and made the process more

cost effective

713 Consumer Level

1048766 Only a few years back rich people could afford the luxury of having ice-cream but now it has

become a common product for everybody Ice-cream companies are producing different products

with a wide price range for consumers of every class and status

1048766 Nowadays companies are doing promotional campaigns more frequently the customers get to

know about the product which makes it easier for them to buy the best one

1048766 The improved standard of life and more modernized lifestyle of people is an important reason

for the increased consumption thus growth of the ice-cream industry

Evaluation of Entry into Ice cream Business for Bangladesh Limited 52

72 Prospects of Entry

The ice-cream industry of Bangladesh is an attractive one for the investors because there is a

huge market but number of producers is very small The major reasons behind industry

attractiveness are as follows

1048766 The industryrsquos current growth potential is very high with opportunity for market development

1048766 The competition currently permits adequate profitability and the competitive forces are

becoming stronger with time

1048766 Boutique segment is at a very high growth stage but no operator is currently operating with a

mid price range of BDT 100-400 Ice cream kiosks and small scooping boutiques can operate

within that range

1048766 Current industry driving forces are favourable for the future industry profitability

1048766 Globally oriented consumers look for variety in ice cream that is currently not available

Latest innovations came in the market in 2002 People would welcome new variety and flavours

1048766 There is a gap in the market for balanced convenience through ice cream where consumers can

get nutritional benefits for ice cream Also emotional attachment to ice cream could further be

improvised in promotional campaigns

1048766 There is high scope for market penetration and development to increase frequency of ice

cream consumption

1048766 Level of risk or uncertainty is very low in ice-cream industry because the consumer market is

so huge any product with a standard quality and careful pricing will be able to make significant

profit

1048766 As for geographic reach of the industry 60 market is still in Dhaka There is scope of

expansion and a new entrant can easily capture market share within Dhaka using carts even if

they do not want nation wide cold chain distribution

1048766 The production process is very complex and capital requirements are also high So before

going into production any company should know about their capabilities and weaknesses and

then start the business or else they might suffer huge loss at a certain level

1048766 Unilever can acquire the required resource and use existing multi-national multi-cultural

expertise to enter the market in a grand way

1048766 With high probability of entry from DANONE with more products like the ISIS diabetic ice

cream Unilever should consider entering in this industry as soon as possible

Evaluation of Entry into Ice cream Business for Bangladesh Limited 53

80 ENTRY STRATEGY FOR UNILEVER

While describing the suggested entry strategy for UBL certain issues have been kept

confidential and some issues have been touched but not explained to keep consistency with UBL

confidentiality policy

81 Suggested Entry Areas for UBL

1048766 Boutique segment of the Bangladesh ice cream is only 5 of the branded market UBL needs

to pursue a larger scope to make the entry viable

1048766 UBL cannot fight with unbranded segment as global product quality mandate of Unilever does

not allow UBL to fight in low price-low quality segment

1048766 Recommend entry should be in the common format segment with both single and multiple

servings and in the boutique segment with a different brand name (if possible BEN amp JERRYrsquoS)

1048766 UBL should build up state-of-art modern factory for manufacturing and establish cold chain

facilities initially focusing on metro cities

1048766 Investment issues are required to be addressed for building factory and cold chain and capital

requirement needs to be identified for that purpose4

1048766 UBL may have boutiques for driving image selective top-end offering

1048766 Kiosks can be setup near universities and shopping malls

1048766 Boutiques should be concentrated in Dhaka and Chittagong

1048766 Ice cream for boutiques and kiosks would be produced in factory as institutional packs of 9-10

litres

82 Products

1048766 As a Brand Building country in global Unilever operating framework UBL is entitled only to

bring products developed by the Brand Development countries

1048766 Unilever should focus on serving products that have nutritional benefits (already available

globally) along with usual satisfactions of sensual pleasure functional attributes etc

1048766 Current existent players especially Igloo and Kwality have extensively copied global and

regionally available Unilever products eg Cornelli is same as Wallrsquos Cornetto Vinetta is similar

to Vienetta Mega is similar to Magnum etc UBL needs to differentiate these to consumers on

the ldquotaste the originalrdquo platform where global quality is focused regarding the products

1048766 UBL should also bring regionally famous brands like Moo or Max to create image

differentiation

1048766 Magnum or Moo should be used as premium end ice cream to generate more profit margin

Evaluation of Entry into Ice cream Business for Bangladesh Limited 54

83 Placement

1048766 Distribution focus should be in Dhaka for entry as Dhaka contributes more than 60 of total

ice cream sales in the country

1048766 Company may use carts as distribution method They serve as good source of visibility and

availability It would help in increasing impulse purchase

1048766 At least 1500 outlets in Dhaka and Chittagong needs to be actively served using dedicated

branded refrigerators to generate sales

1048766 50 carts should operate in Dhaka and Chittagong

84 Price

1048766 UBL products should be priced at par with Igloo pricing for the common format ice creams

1048766 UBL can bring in premium single-serve SKUS for the higher economic classes in the price

range of BDT 60-80

1048766 Smaller SKUs (small lolly stick) can be introduced in the price range of BDT 10-15

1048766 In the boutique segment UBL should price products above the semi-premium segment

(Gelateria Igloo Sub Zero or Andersenrsquos) but lower than that of Club Gelato or MoumlvenPick

85 Promotion

1048766 UBL would require strong marketing campaign (As high as 50 of sales) to have a grand

entry in the market

1048766 Presence in the television media would be of utmost importance More than 50 of

promotional expense should be made here initially Gradually it can be reduced

1048766 Newspaper would serve as the second most important option

1048766 Billboards should also be used

1048766 Activations (similar to Lux Channel i Super Star or Igloo Festival) should be done to generate

trial

86 Scope of Opportunity

Table 30 Value and Volume Based Scope of Opportunity for UBL

Value (BDT Cr)

Volume (Tons)

Market

131

7835

Common

121

7600

Boutique

98

235

Evaluation of Entry into Ice cream Business for Bangladesh Limited 55

861 Geographic Contribution

1048766 Dhaka (61)

1048766 Chittagong (19)

1048766 Sylhet (10)

862 UBL objectives

Common Format Ice Creams

1048766 Target 10 Market share in 1st year operation

1048766 Value BDT 11 Cr

1048766 Production capacity required 21 Tons day

1048766 Freezer Placement 1500 freezers

1048766 Cart operation At least 50 carts

Boutiques

1048766 Target Further develop the market

1048766 Focus Dhaka Chittagong and Sylhet Metro

1048766 Franchise At least 20 franchisee operations nation wide in divisional towns

1048766 Pricing Below imported parlours above common formats with around BDT 400 per Litre

87 Critical Success Factors

1048766 UBL is considered as a high profile company in Bangladesh and thus they cannot operate in

the market only with common products like choc-bars and cups They must have premium

products (these require extrusion line) also to carry their brand image Otherwise UBL would not

be able to charge usual premium over competition products

1048766 Launch of ice cream would require huge promotional and activation support in order to gain

customers from Igloo People want novelty regarding ice cream and UBL have to let them know

about their products and create hype

1048766 Cart should be used as a source of distribution Recent successes of Unilever companies like

Indonesia shows that carts can generate more sales and can be used as source of visibility in the

minds of both retail traders and consumers Carts can also provide incremental sales to the

company

1048766 UBL have to create a strong cold chain for ice cream (initially in Dhaka and Chittagong) to

ensure quality products for consumers

1048766 UBL have to build capacity very rapidly to meet consumer demand if the launch is successful

Evaluation of Entry into Ice cream Business for Bangladesh Limited 56

90 BUSINESS PROJECTION

91 Basic Assumptions

Business projection for ice cream business was made based on a conservative approach UBL

would require spending significantly on production capacity and factory dedicated to ice cream

Thus to analyse business possibilities of ice cream certain assumptions were made and collected

data were used These are

1048766 Production equipments and cabinets would cost approximately BDT 55 crores

1048766 Production equipments 45

1048766 Packaging Equipments 15

1048766 Storage Facility 20

1048766 Branded Freezers 10

1048766 Distribution Investment 10 (Distributors would also invest themselves)

1048766 Ice cream factory with a floor size of 20000 sqft would cost BDT 25 crores

1048766 Objective is to capture 10 market share in Dhaka and Chittagong in the first year

1048766 Business would grow by 50 in year 2 and 3 30 in year 4 and 25 in year 5

1048766 Weighted price per litre is BDT 170 according to volume share of single serve ice cream

multiple serve ice cream and boutique ice cream

1048766 Other financial assumptions were also made List of them are provided below but amount has

been removed for confidentiality issues

Assumptions

Trade Margin

Distributors Margin

DutyVAT Rate

Trade Terms Expense of NPS

Trade Terms Expense of NSV

Advertising ampPromotion of NPS

Indirects (Salaries Wages etc)

Trading Tax

Table 31 Assumptions for Business Projection

Evaluation of Entry into Ice cream Business for Bangladesh Limited 57

100 CONCLUSION

Ice cream has good prospect in Bangladesh It is still a growing market with opportunities for big

new entrants With the barriers of entry UBL needs to consider its priorities UBL being an HPC

company traditionally needs to acquire expertise in cold chain distribution and has to invest a lot

of money to rip the benefits of the industry However to initiate company can take regional

support and acquire resource expertise The company should enter the business as soon as

possible since there is potential threat from DANONE to introduce more ice creams after ISIS

diabetic ice cream and also with potential of the industry arch rival Nestlersquo might consider

entering into the industry too

Evaluation of Entry into Ice cream Business for Bangladesh Limited 58

References

Web References

1 wwwunilevercom

2 wwwunilevercombd

3 wwwhllcom

4 wwwunilevercompk

5 wwwthedailystarcom - Life Style Magazine

6 wwwreuterscouk

Evaluation of Entry into Ice cream Business for Bangladesh Limited 59

Page 7: Square Ice cream

Igloo is confident about its unbeatable first position but there is competition among other

companies such as Polar and Kwality for the 2nd position However in current market no

operator is showing much aggressive and visible activity towards growth It is expected that

recent announcement regarding introduction of ISIS diabetic ice cream by Polar in partnership

with DANONE would again create some hype in the market

Reasons behind existing level of rivalry among competitors can be attributed to following

reasons

1048766 The ice cream industry has few sellers because there is economy of scale through large-scale

production The larger firms have a cost advantage over smaller firms they can produce more

cheaply- making it hard for small firms to survive

1048766 Market is bigger than capability of current players and can accommodate them without much

trouble This is because PCC of ice cream in the country is still pretty low

1048766 This market has substantial amount of ldquobarriers to entryrdquo making it difficult for a large

number of competitors to enter the market The cost of setting up a new plant in this industry is

quite high The cost of entry works as an entry barrier

1048766 To get people to try new product the potential entrant will have to run a big competitive

advertising or massive promotional campaign which is expensive The prevailing companies

created barriers in entry for potential rivals by using extensive advertising and product

differentiation earlier which has its effects till now Another fact is that product awareness and

brand loyalty to the existing firms make it expensive for potential rivals to enter

1048766 To further elaborate present competitive reality of the industry the five competitive forces are

discussed below

1048766 The rivalry among the competing sellers is weak as market is yet to develop more

1048766 With various entry barriers not many new companies are attempting to enter this industry

1048766 As there are no direct substitute products to ice-cream the companies donrsquot face any

competition from other industries

1048766 As the number of suppliers is very low and the companies especially Igloo as the best product

enjoys high bargaining power or leverage over rivals But some of the companies such as Savoy

are concentrating on increasing profit margin of the retailers for securing a more prominent

position in the market

1048766 Mainly consumers or buyers decide the pricing Keeping in mind the various buying power of

people the companies decide the price of each items Price of the Items that have the most

market demand is kept low so that they are in the reach of the general customers By lowering

the price some companies such as Savoy are trying to maintain a competitive edge

Evaluation of Entry into Ice cream Business for Bangladesh Limited 21

C Market Sales and Growth Rate

Sales information of the five existing companies for the current years shows the following trend

Company Name

2007

2008

2009

Total Market

11307

12120

13122

Igloo

5785

6086

6425

Polar

168

1835

2019

Kwality

306

335

374

Savoy

388

415

458

Milk Vita

394

434

488

Table 9 Market Sales and Growth Rate of Branded Common Format Market

Volume based market size shows the following scenario prevailing in the Bangladesh market in

2009

Company Name

Single Vol (000 Ltrs)

Multi Vol (000 Ltrs)

Total Vol (000 Ltrs)

Total Market

32759

42967

7573

Igloo

16760

21983

3874

Polar

4867

6384

1125

Kwality

8865

11628

2049

Savoy

1124

1474

260

Milk Vita

1141

1497

264

Table 10 Volume Based Market Size

The total volume of the branded common format ice cream industry is 7500 Tons of which more

than 50 belongs to Igloo followed by Kwality with 27

D Market Share and Size of the rivals

Market share data for all the local companies show a trend where Igloo is the biggest ice-cream

company dominating with a huge market share Although even 1-2 years ago there was intense

competition between Kwality and Polar but now it seems that Kwality is 2nd largest ice-cream

manufacturing company in Bangladesh Polar is in the 3rd position with Savoy and Milk Vita

trailing in the market Market share percentage over the years is presented in the following table

Company Name

2007

2008

2009

Igloo

50

5031

5116

Kwality

256

2666

2706

Polar

17

161

1485

Milk Vita

34

332

348

Evaluation of Entry into Ice cream Business for Bangladesh Limited 22

Savoy

39

365

343

Table 11 Market Share of Competitors

E Geographic Sales Orientation

Ice cream still continues to be a city-oriented product and its demand is comparatively low in the

rural areas Reasons behind this are electricity problem outside urban areas and purchasing

power of people Geographic sales orientation of the common format ice cream industry is

provided below

611890690480590250DhakaChittagongKhulnaComillaBarisalOthers

Figure 7 Geographic Sales Orientation

Dhaka still is the largest contributor in the ice cream segment Nevertheless over the years this

trend is shifting Areas outside Dhaka are also growing making Dhakarsquos share lower by small

percentage As urban markets are the major contributors companies design their products

keeping in mind the tastes and styles of the urban consumers Compared to the other companies

Igloo is the most expensive in the common format segment so they target only city based

customers who have the purchasing power Although other companies such as Savoy are offering

low priced product even their main target is urban people due to nation wide electricity problem

F Seasonality of Sales

Ice cream industries in warmer part of the world are highly seasonal Same is true with

Bangladesh According to secondary data sources sales seasonality looks as follows

Period Name

Months

Contribution

Super-Peak

April May June

46

Peak

March July August

36

Off-Peak

February September October November

15

Super Off-Peak

December January

3

Table 12 Seasonality of Ice cream Sales

This data was validated through interviews with retailers during market visit According to them

more than 75 sales of ice cream came in the hot months Another insight that could be

identified was

Evaluation of Entry into Ice cream Business for Bangladesh Limited 23

various festivals and programmes provide scope for higher volume of ice cream sales According

to companies where only 10-15 sales occurs in the winter season same amount of sales occurs

during festivals like the two Eids and Nobobarsha

G Distribution Servicing System

Mainly common format ice-cream is distributed in two methods that are directly to retail shops

and through hawkers with ice cream carts trolleys

The various channels of retail shops other than cart that serve as distribution outlets for Ice cream

are

7 Urban General Stores (UGS)

8 Urban Neighbourhood Grocer (UNG)

9 Premium General Store (PGS) SMMT

10 Confectionary Bakery

11 Modern Trade (MT)

12 Fast Food shops (Recently some fast food shops keep branded ice cream cabinets)

Distribution details of all the companies are provided below However detail of Milk Vita is not

available as they are mainly milk producer and they have no dedicated ice cream cabinet for

retail stores and currently they are not distributing ice cream in Dhaka city

Company

Distribution Method

Frequency

No of Cabinets

No of Carts

Igloo

Distributor Cart

2 to 3 times a week

4000

100

Kwality

Distributor Cart

1 to 2 times a week

1050

20

Polar

Distributor Cart

1 to 2 times a week

800

50

Savoy

Company

1 to 2 times a fortnight

176

-

Milk-Vita

-

-

-

-

Table 13 Distribution Method of Market Players

Distribution Process Distribution process through both methods is described below

Retail Distribution The general distribution that is followed by companies is that distributor

sends large refrigerated trucks dedicated to specific territories These trucks are accompanied by

small refrigerated vans Main road side shops are served directly from the large truck and shops

that are inside small streets are served by the small vans

Order and delivery are done on the same day The strategy followed is that of replenishment If

the branded freezer of the company is empty they simply fill it up according to requirement of

different SKUs as the delivery people see fit However shopkeepers have to buy full cartons

(usually 24 pieces in a carton) of single serve ice cream they cannot buy in pieces

Evaluation of Entry into Ice cream Business for Bangladesh Limited 24

Among the retail shops there are about equal numbers of branded and unbranded freezers This

is a normal scene in Dhaka where all shopkeepers require freezer to keep other cold products

However basic distribution policy is that if a shop has branded cabinet of a company they

cannot keep competitor ice cream in that cabinet Thus penetration can be made possible in

shops where unbranded freezers are available

General branded freezer contract policy with Igloo and Polar is that traders have to pay BDT

5000 to take a freezer Maintenance of branded freezers is responsibility of the company but

electricity bill is paid by shopkeeper However Polar is not currently giving any new freezer

Kwality gave away their freezers for free however they ensured safety of their freezers by

checking background of the shopkeepers

Cart sellers Cart sellers collect required amount of ice cream from nearby distribution house or

company showroom (Igloo has one showroom in Panthapath) on a daily basis They also have to

buy cartons of products not pieces Kwality carts collect their ice cream from factory (Tejgaon)

or nearby distribution house Cart sellers contribute around BDT 3000 sales in a day and

generally sell at BDT 1-2 higher than set price of each product

The cart sellers generally keep at least a two-day stock so that they can meet sudden upsurge in

daily demand of ice cream or if they get the opportunity to sell at parties programs or any open

air event (Wedding at community centres or outside cultural programs at auditoriums) If cart

sellers need replenishment of stock they even take service more than once in a day either

revisiting showroom house or they call up company delivery people to serve them at their

location if there is opportunity for selling more ice cream

Policy regarding Damaged Ice cream All the ice cream producers have very good relationship

with the shopkeepers If the retailers have refrigeration problem company takes ice cream back

until the problem is fixed whether it is stored in branded freezer or not Also if any ice cream

gets damaged or there is bacterial formation company takes them back Usual return time varies

from 15-30 days For large sellers however they take less time

Payment Method for Ice cream Purchase All the companies give credit of around one month to

large volume contributing retail sellers and try to maintain good relationship with them This

trend is seen in all channels Also all the SMMTs and MTs are given credit of one month and

payment is made by cheque Other small shopkeepers have to purchase with cash However

according to shopkeepers Igloo is currently trying to cut down on credit sales as they believe

there is a consumer pull for their brand Companies like Polar and Kwality also give special

commission to large sellers Polar gives 5 commission on every bill

Evaluation of Entry into Ice cream Business for Bangladesh Limited 25

H Technology and Innovation

Technological advancement in the ice cream industry has been very rapid Starting with stick

mould and filler ice cream production the companies have come a long way Assessing the

consumer choice and demand the companies are introducing new products very often Improved

and new technology is used for faster production and better quality Igloo is trying to meet the

international standards and launching products such as Sundae Cornelli and Nuggets Other

companies are also introducing new flavours suitable for their target segments Igloo has both the

ISO and the HACCP certifications These were awarded in the year 2003 due to their relentless

pursuit of quality and innovation In September 1996 Igloo introduced the 3D Mould line and

straight line extrusion technology for the first time in the subcontinent Basically with Igloorsquos

pursuit all the modern technologies and quality innovations are available in the market

I Production Capacity

Current production capacity of the major players in the common format ice cream segment is

estimated to be as follows

Name

Capacity (Ltrs day)

Total Production (000 Ltrs)

Required Capacity (at 300 production days )

Estimated unutilized capacity (Ltrs day)

Igloo

22000

387433

12914

9086

Polar

6500

112513

3750

2750

Kwality

12100

204934

6831

5269

Savoy

1560

25985

866

694

Milk Vita

1330

26387

880

450

Table 14 Production Capacity of Current Market Players

From the table we can see that all the ice cream manufacturers are operating with unutilized

capacity However one point to be noted is that different ice cream SKUs require different

amount of item to be produced Exact machine production capacity at litre per day does not

represent the accurate scenario Nevertheless it can be safely assumed that all the manufacturers

have unused machine capacity at their premises Moreover the larger players like Polar and

Kwality have new technology available at their premises Kwality bought second hand machines

from Thailand but both Igloo and Polar bought theirrsquos from Italy and Denmark

J Products and Pricing

Products The products in the ice-cream market are differentiated A few firms dominate the

market but an endless variety of ice creams are offered to the consumers Igloo pioneers all

major innovations in the market The products that are available in the market can be classified

into single serving and multiple serving groups Which are then categorized based on functional

attributes designs These are

Single

Stick

Normal mould 3D mould extrusion

Evaluation of Entry into Ice cream Business for Bangladesh Limited 26

Cup and Sundae

Flat cup long cup

Cone

Normal cone (vanilla strawberry etc) premium cone (Ripple)

serving

Innovative Fillers

Snowball Animal shaped containers sandwich nuggets etc

Container

05 ltr 1 ltr and 2 ltr containers

Multiple serving

Family Pack

Assorted packs cakes shahi kulfi etc

Table 15 Ice cream Serve types

Among all the products available in the market most selling SKU for all the companies is Choc-

bar stick and highest selling flavour is Vanilla Following are the ranks of most selling SKUs and

flavours

SKU Name

Rank

Choc-bar (70 ml)

1

Vanilla Cup (100 ml)

2

Vanilla Box (05 and 1 Ltr)

3

Lemon Lolly (70 ml)

4

Normal Cone

5

Flavour

Rank

Vanilla

1

Chocolate

2

Strawberry

3

Ripple

4

Mango

5

Table 16 Rank of SKUs Table 17 Rank of Flavours

Choc-bar is one of the earliest vanilla based chocolate coated SKU that has dominated the

market strongly over the years Shopkeepers could not provide an exact percentage on SKU

based sales contribution Most of them ranked the SKUs and flavours according to sequence

shown in the above table Also according to newspapers and secondary sources Vanilla is the

most selling flavour with 60 sales contribution According to secondary sources percentage

sales contribution of various types of SKUs in the common format segment are as follows

Type of Ice cream

Value Share

Volume Share

Impulse dairy ice cream

514

443

Impulse water ice cream

112

138

Take-home dairy ice cream

374

419

Table 18 Volume Share of Different Serve Types

Impulse dairy ice cream provides more value share as price per litre is higher than take home

multiple serving ice creams Impulse water ice cream shows a similar trend as of take home ice

cream

Pricing Product pictures and price ranges of each category are provided below Evaluation of

Entry into Ice cream Business for Bangladesh Limited 27

Normal Premium Price Tk12 Tk20 Tk25 Cup amp Sundae Normal Cup Sundae Premium Cup

Price Tk20 Tk25 Cone Normal Premium PriceTk20 Tk25Innovative Fillers PriceLtr Tk100

Tk175 Container Normal Premium PriceLtrTk150 Tk 175 Tk 190 Family Packs Kulfi Mixed

Pack Cake Single ServingMultipleServingNormal Ice Fruit 3D Mould Premium Extrusion Price

Tk10 Tk15 Tk15 Tk20Stick Normal Cream

Figure 8 Serve Types and Pricing

As it can be seen from the above chart all impulse ice creams are priced within the range of

BDT 10 to 25 Other take home multiple servings are priced within the range of BDT 50 (05

Litres) to BDT 220 (2 Litres) Another noticeable factor in price is that there are both normal and

premium flavours in all types of ice creams

K Firms as Price Setters

The firms have capability to affect the market price to be low as profit margin is very high If

Igloo reduces the price of an item below the prevailing price level in order to increase its sales

its competitors will fear that their customers will go away from them to buy Igloo products To

retain their customers they will be forced to match the price cut of Igloo Historically this has

been proven to be true However due to price sensitivity companies cannot drastically increase

price even if they provide higher quality of product It was seen in 1997 when Igloo increased

price of 11 SKUs and faced drastic sales fall during that time It shows that the industry might

welcome overall industry price increase but not individual company price increase

L Promotion

The promotion scenario in the industry is not quite organized as of now Even proper data

regarding promotional expenditure is not available from research sources The reason being

there is not much consumer related activity seen in the market After Kwalityrsquos introduction in

the market in 1999 Igloo went on with massive Television promotion of their new products that

were available at that time

Evaluation of Entry into Ice cream Business for Bangladesh Limited 28

However in current times there is no TVC running from any company Companies promote their

launches mainly through billboards and newspaper promotions which is currently the most used

source of consumer promotion Some promotional activities that were done by the companies

over the years are listed below

Consumer Promotions

1 Larger players like Igloo and Kwality goes on with campaigns like ldquoGift on stickrdquo where

various prizesrsquo names are written on the sticks and consumers can get them

a Igloo ran a program on their launch of Macho variant where gift varied from cricket bat to

personal computer

b Igloo had a program in 2006 where gifts on sticks varied from Bangkok visit to sunglass

c Igloo ran one campaign in 2007 where gold bars were given on purchasing Choc-bar

d Kwality ran a similar program in 2008 where gifts varied from wrist watches to motorcycle

2 Some companies ran consumer TTS and gift programs where company products were given

free

a Igloo had a program in 2006 where Igloo butter was given free on purchasing Igloo ice cream

cake

b Kwality ran a program in 2008 where one SKU was given as gift with another SKU randomly

c ldquoCone Ice cream at your Homerdquo program was run by Igloo in 2002 where six cone biscuits

were given free with purchase of one litre ice cream

3 Media placement is another form of placement done by larger companies

a Igloo purchased ldquoGlimpse into World Cup Resultrdquo space in daily newspapers during World

Cup Football 2002

4 One interesting program is done by only Igloo in Bangladesh They did it in June 2006 The

program was ldquoIgloo Ice cream Festivalrdquo with main attractions of ldquoGet as much ice cream as you

want for BDT 200rdquo ldquoGet a Fantasy Kingdom Entry ticket with each Entry Couponrdquo ldquoLucky

Drawrdquo and ldquoCelebrity Addardquo

Trade Promotions

5 Trade promotions are mainly given to ldquoHighest retail purchasersrdquo and also based on time

bound trade schemes where various slabs of purchase amount are mentioned for different prizes

a Igloo takes their highest purchasers to visit countries like Singapore and Thailand

b Savoy has a purchase slab scheme where first prize is table fan

c Polar gives special sales commission to their highest purchasers (around 5)

Evaluation of Entry into Ice cream Business for Bangladesh Limited 29

M Players in the Common Format Segment

Branded common format ice cream segment is constituted of five players only Among them

Igloo is the largest player and Milk Vita is the smallest The following sections detail the basic

company detail of all the companies with special emphasis on Igloo the market leader

Igloo

The pioneering ice-cream company in Bangladesh started its operation in 1964 in Chittagong

under K Rahman amp Co Limited (KRC) with a small factory inside Coca Cola bottling factory of

KRC After the independence of Bangladesh in 1971 Igloo was taken over by the government of

Bangladesh Later in 1983 Abdul Monem Limited purchased the entire production setup of KRC

Limited including Coca-Cola bottling plant and Igloo ice-cream factory After taking full charge

of Igloo ice-cream by Abdul Monem Limited the manufacturing operations continued in

Chittagong till 1990 Although Dhaka fetched the maximum share of the total revenue the

distribution cost increased tremendously in the process of meeting the demand of Dhaka city To

cope with the distribution problem and handle Polar threat Abdul Monem Limited transferred

the factory to Dhaka changed the ice-cream packaging from the conventional paper to plastic

and expanded their market and distribution operation The new factory of Igloo was setup at

Shyampur Narayanganj and was nine kilometres away from the Motijheel office The company

apart from catering the capital city started to expand its operations in Comilla (1991) Khulna

(1992) and North Bengal (1993) These markets were served directly from Dhaka since the

storage facilities were not developed till then The company is now the market leader since 1997

with clear market share victory over others with sweeping 51 share It is to be noted that Igloo

is also a player in the boutique segment with three parlours (2 in Dhaka and 1 in Chittagong)

Product Range Igloo offers the widest choice of ice cream more than any other competitor in

the market Igloo is offering a total of fifty items including normal premium and novelty cup

stick and family pack items Igloo has thirty flavours more than anyone else in the industry and

is continuously launching new and innovative delicacies

Igloo ice-cream can be classified in six groups They are

Stick

Macho Choc-bar Mini Choc Clown Mega Shell n core Lolly

Cone

Cornelli 2 in one Cornelli classic

Cup

Shahi kulfi Vanilla Strawberry Mango Snow ball

Container

Vanilla Strawberry Mango Chocolate Coffee Diet Vanilla Tutti Frutti Ripple Pralin

Pistachio

Innovative

Nuggets Sandwich

Family

Ripple cake Party time Shahi Kulfi

Table 19 Products of Igloo

Single serve stick cups and cone items are easy to carry around and convenient to eat which

makes it most sold The core target segment of ice-cream is 6-24 years and this generation is

always on the Evaluation of Entry into Ice cream Business for Bangladesh Limited 30

move and thus prefers independent cone stick or cup items As Igloo initiated the concept of ice-

cream as a family product they offer some items to be enjoyed with the whole family

Quality and Innovation Igloo is committed to maintaining the highest quality standard through

its continuous RampD activities The major ingredients raw materials and packing materials are

procured from the best European sources Strict quality control is done at every stage of the

manufacturing process from procurement of material mixing material flow ice cream making

packaging storing (at main warehouse) distributing and market shelving by the Quality Control

Department Current supply chain for various materials of Igloo is as follows Australia (Milk

Powder) Denmark (Ingredients emulsifiers amp stabilizers) China amp UAE (Food grade sticks)

China Denmark Singapore amp Thailand (Food grade packing materials)

Figure 9 Igloo Supply Chain

Distribution Network Their distribution network is stretched all over the country with a long

fleet of refrigerated vans Firstly the ice cream products are stored at the central warehouse of

the factory and from there they are distributed through the haulage vehicle to the operational

centres located in Dhaka Chittagong Comilla Rajshahi Barisal Bogra Rangpur and Khulna

Strictest cold chain maintenance during the distribution and selling of the ice creams is ensured

Their distribution process is as follows Manufacture Stored at -24c Transported by Refrigerated

trucks at -Reaches amp Preserved in Eight regional stores Refrigerated vehicles (Distributors)Retail

outlets (Deep freezers)

Figure 10 Distribution Process of Igloo

Evaluation of Entry into Ice cream Business for Bangladesh Limited 31

Trolley Operation Igloo also operates through trolleys for extending its reach to consumers at

the furthest points The trolleys are operated near schools alleys streets parks etc and play

rhythmic music to attract the consumers These are very colourfully decorated with Igloo

umbrella and the puller wears specific uniforms Igloo was the first in introducing and operating

these trolleys in Bangladesh for any Fast Moving Consumer Goods (FMCG) Igloo has around

125 trolleys operating throughout the country Individual trolleys are provided with a regular

supply of igloo ice creams

Marketing The marketing commitment of Igloo is based on the relationship with its customers

and consumer by not only manufacturing the highest quality product but also delivering the

product by maintaining this quality To satisfy the ever-changing needs of the customer Igloo

has regularly launched new ice creams and introduced new flavours And this commitment has

positioned Igloo as the market-leading brand by gaining the consumers trust with the positioning

as ldquoA WORLD OF GREAT TASTErdquo

Facilities and Logistics at a glance As of 2009 following are the facilities and logistics enjoyed

by the company

Factory location

Dhaka

Production Lines

4

Packages

Stick Cup Family pack Others (Nuggets and sandwich)

Machine suppliers

1048766 Mark-Italy

1048766 Tetra Pak(Hoyer)-Denmark

1048766 Sabore Denmark

1048766 Hass- Austria

Machine models

1048766 Freemark 1100 Italy

1048766 FM 3000 FM 6000 Italy

1048766 SL600 Denmark

Cone baking

Hass- Austria

Chocolate making

Macentyre-UK

Coverage

Nationwide

Operational centre

10

Total market vehicles

30

Distribution channel

Directthrough appointed distributors

Outlet service

7500

Injected deep freezers

4000

Trolley operations

125

Warehouse no

8

Table 20 Igloo Facilities and Logistics

Kwality

Kwality is currently the second largest ice cream manufacturer of the country The mother

company for the Kwality brand is Sanowara Drinks amp Beverages Ltd a sister concern of

Sanowara Group The company is famous for powdered milk brands Red Cow and Diploma in

Bangladesh The drinks and beverage concern of Sanowara made an entry into the market in

1997 with ldquoYesrdquo brand drinking water and launched the ice cream brand in 1999 With heavy

communication and novelty products it Evaluation of Entry into Ice cream Business for

Bangladesh Limited 32

successfully removed Polar from the second place with a current market share of 27 The

company also operates in the boutique segment with two parlours in Dhaka and Chittagong

Kwality ice cream factory is situated in Chittagong with a floor space of 35000 sft and fully

automated machinery wrapping mix machinery equipments from Italy having capacity of

around 20000 litres of ice cream per shift The ice cream factory employs 140 people The

company is ISO 9001-2000 certified

Kwality was the first true competitor for Igloo products with some major innovation in product

design and communication but their quality is perceived to be lower in the minds of the

consumers and they do not have extrusion ice cream The product prices are also similar to that

of Igloo but they charge a bit lower than Igloo in premium multiple servings However during

market visits it was seen that shops that keep only Kwality or Igloo and Kwality both they can

sell Kwality too although the sales amount is lower than that of Igloo People who look for Igloo

shopkeepers give them that directly but if they get a chance and Kwality ice cream stock is high

they also push Kwality to dry the stock out This gives an indication that market is larger than

what the current players are capable of serving even in Dhaka

Kwality follows a similar distribution model like Igloo but distribution frequency is lower and

amount of cart sellers is limited to 25 and they operate only in Dhaka

Polar

Once a giant in the industry Dhaka Ice Cream Industries Ltd introduced the first hygienically

packed ice cream in Bangladesh in 1987 and the brand name Polar was thus born In the early

days the company started ice cream business with a wide range of products and a variety of

flavours in Dhaka city In 1988 the company started its distribution in the city of Chittagong

then Bogra and continued to cover more cities Presently Polar ice cream is available

throughout Bangladesh The company today trails in the market with 15 market share in the

common format segment Recently Polar has announced launch of ISIS diabetic ice cream with

support from DANONE to turn around in the market

The company has its head office as well as a modern large-scale industrial plant in Dhaka Polar

ice cream is made with Danish expertise using Danish equipment and technology The

production activities and quality control measures are supervised and managed by Danish

experts Polar offers a wide range of delicious flavours and tastes made by ingredients imported

from Europe

Dhaka Ice Cream at present has 3 cold stores in Dhaka Chittagong and Bogra in Bangladesh

From Dhaka cold store they distribute ice creams in Mymensingh Tangail Jamalpur Sherpur

Kishoreganj Netrakona Comilla Narsingdi Barisal Madaripur Agaeljhara Faridpur Magura

Chuadanga Jessore Satkhira Khulna Pirojpur and Sylhet through their distributors In case of

long distance delivery points the company uses auto cooling freezer van

Evaluation of Entry into Ice cream Business for Bangladesh Limited 33

In Dhaka city they distribute ice creams directly to retail stores in freezer vans Besides that

they have several distributors at different points of the city Distributors cover their individual

areas where company is not able to supply directly in their freezer vans Similar model is

followed by the company to distribute ice cream from their other cold storages through out the

country For storing and selling ice creams in retail stores the company like the other players

arranges a deep freezer with the Polar logo and canopy light box

In addition to this distribution the company also undertakes home delivery of ice creams for

special occasions

Savoy

Savoy Ice-cream brand is owned by Sena Kalyan Sangstha (SKS) Group of industries It started

its journey in March 1995 with a factory in Tejgaon Dhaka Yearly turnover is estimated at BDT

388 crores with a market share of roughly 35

The factory has been established with Sonali Bank finance at 6040 equity ratio The total

production capacity of the factory has been estimated at 2400 litres of Ice-cream per day Total

land area of the factory premise is 116 Bigha with 8000 sft area covered with a total project cost

of BDT 144 The factory employs 73 people

Product ranges of the company include all the basic designs and flavours of the industry

However the company has not been much of an innovator in the industry Their product quality

is substantially low than that of other players and they price their products at 10-15 lower than

the other competitors The company imports raw materials mainly from Europe The general raw

materials are Euro cream Skimmed Milk Powder Cocoa Powder and Flavour (Vanilla Mango

and Strawberry) Colour (Yellow Red Chocolate and Green) Ripple Sauce Cheney Fruit Palm

Kernel Oil Anhydrous Butter Oil (Ghee) and Sugar etc

Milk Vita

Milk Vita is one of the most famous brand names in Bangladesh for its liquid dairy milk Owned

by Bangladesh Milk Producersrsquo Co-operative Union Limited (BMPCUL) the company came in

the market with proper dairy milk ice cream in form of cups and choc-bar With a production

capacity of around 1600 litres per day the company is trailing in the market place with 3

market share

Although the Milk Vita Choc-bar was perceived to be extremely tasty by consumers they

probably could not do well due price competition Currently they do not even distribute ice

cream in Dhaka However their presence is seen in outskirts of Dhaka and other nearby towns

If the current market situation prevails Milk Vita would lose their remaining market share and

other companies would benefit especially Igloo However one of the advantages of Milk Vita

remains to be

Evaluation of Entry into Ice cream Business for Bangladesh Limited 34

their nation wide milk supply network They have skimmed milk powder production plant that

Igloo does not have Thus they can combat the seasonality of milk supply that Igloo with its

huge requirement of milk cannot

Strengths and Weaknesses of Competitors

Company

Strengths

Weaknesses

Igloo

1048766 Strong brand image

1048766 High product quality

1048766 Highest no of variety

1048766 Strong distribution network

1048766 Highest visibility

1048766 Strong promotion

1048766 High production capacity

1048766 Presence of extrusion ice cream

1048766 Items are generally a bit pricy

1048766 Igloo does not give free freezers like other companies

1048766 Reluctant in recent times regarding innovation

1048766 Local sourcing of liquid milk does not meet demand

1048766 Failure to use ERP technology slowing decision making

Kwality

1048766 Product variety

1048766 Strong promotion

1048766 Free freezer distributed

1048766 Presence in all price segments

1048766 High production capacity

1048766 Weak distribution

1048766 Lower exposure

1048766 low amount of carts in operation

Polar

1048766 Free freezer

1048766 Quality perceived to be high compared to Kwality

1048766 Discoloured freezers

1048766 Lower exposure

1048766 Low product variety

1048766 Unused capacity

Savoy

1048766 Price is lower

1048766 Discoloured freezers

1048766 Low product variety

1048766 Weak distribution

1048766 Small amount of freezers

1048766 Low production capacity

Milk Vita

1048766 Quality is good due to dairy cream

1048766 Brand leverage from Milk Vita milk

1048766 Low exposure

1048766 Low variety

Table 21 Strengths and Weaknesses of Competition

512 Market Characteristics of the Boutique Segment

With a small market of BDT 98 Cr and 567 share in the branded ice cream market the

boutique segment is currently an increasing segment in the ice cream industry Boutique

segmentrsquos history dates back to 1960s when Igloo launched boutiques in Dhaka to save

distribution cost and promote a culture of ldquoice cream eating outrdquo In later years boutiques lost

their glamour and retail common format segment picked up growth However with Dolce Vita in

the late lsquo80s craze for Italian Artisan ice cream was recreated in the market Although Dolce

Vita is failing in recent times emergence of MoumlvenPick and Club Gelato in 2000 has uplifted the

segment once again Current growth rate of the

Evaluation of Entry into Ice cream Business for Bangladesh Limited 35

segment can be estimated to be approx 20-22 (higher than the common format segment)

Following are the basic detail of all the major players in the segment with their estimated sales3

Players

Outlet

Sales (Cr Taka)

Share

Club Gelato

1

136

199

MoumlvenPick

1

119

174

Andersenrsquos

3

119

174

Gelateria Igloo

3

119

174

Sub Zero (Kwality)

2

051

75

Baskin Robbins

1

015

22

Dolce Vita

1

017

25

American Soft

1

009

12

Rainbow

1

009

12

Others (off site)

089

130

Total Market

682

Table 22 Players and Shares in Boutique Segment

A Detail of Operation

General operational procedure followed by all the operators is as follows

1048766 Operating method There is a variation in operational method among the large operators

1048766 Club Gelato uses kitchen at own premise where imported ingredients and local milk (daily

special service from Milk Vita) are used to make ice cream

1048766 MoumlvenPick directly imports ice cream from Switzerland

1048766 Andersenrsquos Gelateria Igloo and Sub Zero produce ice cream at their factory with a mix of

imported and local ingredients

1048766 Products Around 30-35 flavours of artisan dairy ice cream are served at the premises

1048766 Most sold flavours are Vanilla Ferrero Rocher Butterscotch Chocolate Caramel etc

1048766 Other Products Larger players also serve ice cream desserts (milk shakes ice cappuccino etc)

pastries and other desserts with normal coffee and tea facility at their premises

1048766 Boutiques fight ice cream seasonality with the other products sales during off-peak ice cream

seasons Usually ice cream and other products contribute at 6040 ratio in summer and during

winter and off-peak seasons the ratio reverses

1048766 Pricing Usually the prices of products in this segment are 3-4 times higher than that of the

common format segment

1048766 Prices do not vary with flavours Variation depends on serve style (Cone tub) and use of

toppings and other ingredients (Chocolate sauce nut fruits) etc

1048766 Usual margin charged is around 50-60 over production cost Similar margin is charged for

other products like coffee ice cappuccino etc

3 Yearly sales is estimated based on companyrsquos approximate daily sales collected during

interview

Evaluation of Entry into Ice cream Business for Bangladesh Limited 36

1048766 Target Group Most of the consumers belong to SEC A and higher SEC A with DMFI of at

least BDT 20000

1048766 Foreign delegates and resident foreigners also visit these boutiques

1048766 Main purposes of visits in the boutiques are

bull Youth hangout with friends and having ice cream and ice cream derivatives

bull Family Family night out or eat out at a restaurant and then having dessert

bull Foreigners Having dessert after dinner

1048766 Rush time at boutiques are Afternoon 2-4 pm and at night 9-11 pm

1048766 Offsite sales Most of the large operators also sell offsite They have small freezers for off-site

1048766 Club Gelato and MoumlvenPick serves ice cream at high society parties and programmes

1048766 MoumlvenPick also has kiosks in known hotels like Sheraton

1048766 Promotion No mass promotion is done by any of the companies Word of mouth is the most

important source of promotion Posters and banners outside the premise and occasional

newspaper advertisements are used to communicate special offers

1048766 Growth Drivers Market growth is driven by image innovation quality decoration of facility

environment and special offers

1048766 Club Gelato has the image of selling true Italian dairy ice cream with an excellent hangout

environment

1048766 MoumlvenPick imports ice cream directly from Switzerland and is perceived to be of high quality

1048766 Andersenrsquos operates with the image of ice cream from Denmark

1048766 Gelateria Igloo (from Igloo) and Sub Zero (from Kwality) could not establish the premium

artisan ice cream image

B Players in the Boutique Segment

There are very few players who have significant impact in the boutique segment Detailed

information of all the major boutique segment players is provided below

Evaluation of Entry into Ice cream Business for Bangladesh Limited 37

Club Gelato

Basic Company Information

1048766 Location Banani Road 11 (Planning for a second one in Dhanmondi)

1048766 Established in 2001

1048766 Seating Capacity 48

1048766 Area 1250 sft (including kitchen)

1048766 Owner Mr Jahangir Alam (Bangladesh)

1048766 Business Type Joint business partnership with Singapore

1048766 Staff 15 people (6 in the kitchen)

1048766 Production capacity 150 litres per day

Product Related Information

1048766 Product Italian style parlour scoop ice cream fruit juice coffee and pastries

1048766 Flavours Around 32 flavours available

1048766 Most selling Ferraro Rocher Vanilla Pistachio

1048766 Innovations New variants and ingredients are communicated by their Italian supplier and

Club Gelato decides what to take from them

1048766 Serve type Cup Cone Glasses Box for take away

Consumer Profile

1048766 Primary Teenagers and Young Adults (18-30) amp Diplomats

1048766 Secondary Family consumers for eat out

1048766 Income Group High income customers tentatively from SEC A and higher SEC A

1048766 Geographic Area Diversified

1048766 Rush time 8-10 pm

Sales and Price Information

1048766 Sales BDT 50000 (60 Ice cream 40 other desserts) daily in summer In winter however

other products sell more and thus they keep total sales at the same level

1048766 Price 750 per litre for any flavour

1048766 Sales Volume 50-60 litres per day

Supply Chain Placement Information

1048766 Milk Local sourcing from Milk Vita (4050 litres per day)

1048766 Chocolates amp Flavours Belgium France Germany

1048766 Transportation Mainly air (They can afford it due to high margin)

1048766 Contribution of various materials Flavours (30) Milk (20) other parts are water and air

Promotional Materials

1048766 Materials used are near premises POS materials for promoting the parlour only

Table 23 Detail of Club Gelato

Evaluation of Entry into Ice cream Business for Bangladesh Limited 38

MoumlvenPick of Switzerland

Basic Company Information

1048766 Location Gulshan

1048766 Established in 2000

1048766 Seating Capacity 55

1048766 Owner Mr Arif Mahmud

1048766 Business Type Franchise of International MoumlvenPick

1048766 Storage Capacity in Shop 150 litres

Product Related Information

1048766 Product Imported MoumlvenPick ice creams coffee chicken sandwich and Frappe

1048766 Flavours Around 30 to 35 flavours available

1048766 Most selling Swiss Chocolate caramel Vanilla Dream Espresso Strawberry

1048766 Innovations New variants are communicated by their franchiser and they decide on flavours

that they want

1048766 Serve type Cup Cone Glasses Box for take away

Consumer Profile

1048766 Primary Teenagers and Young Adults (18-30) (70) amp Diplomats

1048766 Secondary Family consumers for eat out

1048766 Income Group High income customers tentatively from SEC A

1048766 Geographic Area Concentrated in Gulshan and nearby areas

1048766 Rush time Afternoon- Young Adult 10 to 11 pm Foreigners

1048766 the company also serves at parties and has freezers in known hotels where their ice creams

are served

Sales and Price Information

1048766 Sales BDT 35-40000 daily in summer

1048766 Price 640 per litre for any flavour

1048766 Sales Volume 55-60 litres per day

Supply Chain Placement Information

1048766 Transportation Imported finished goods by ship

1048766 Ship travel time 19 days

1048766 Port clearance 10 days

1048766 Safety Cushion Extra 10 days

Promotional Materials

1048766 Materials used are near premises POS materials for promoting the parlour only

Table 24 Detail of MoumlvenPick of Switzerland

Evaluation of Entry into Ice cream Business for Bangladesh Limited 39

Andersenrsquos of Denmark

Basic Company Information

1048766 Location Gulshan (2 others in Uttara Dhanmondi)

1048766 Established in 2001

1048766 Seating Capacity 48

1048766 Owner United Group

1048766 Business Type Franchise of Australian company Andersenrsquos of Denmark

1048766 Production Tongi Factory of United Group

1048766 Production capacity 2000 litres per day in factory

1048766 Storage Capacity in Shop 150 litres

Product Related Information

1048766 Product Danish parlour scoop ice cream and coffee

1048766 Flavours Around 30 to 35 flavours available

1048766 Most selling Strawberry Butter Scotch Green

1048766 Innovations New variants and ingredients are communicated by their franchiser and they

decide on flavours that they want

1048766 Serve type Cup Cone Glasses Box for take away

Consumer Profile

1048766 Primary Teenagers and Young Adults (18-30) (70) amp Diplomats

1048766 Secondary Family consumers for eat out

1048766 Income Group High income customers tentatively from SEC A

1048766 Geographic Area Concentrated in Gulshan and nearby areas

1048766 Rush time 8 to 10 pm

Sales and Price Information

1048766 Sales BDT 10-12000 daily in summer

1048766 Price 460 per litre for any flavour

1048766 Sales Volume 40-50 litres per day

Supply Chain Placement Information

1048766 Milk 2025 kg packs are imported

1048766 Chocolates amp Flavours Imported

1048766 Butte paper Local sourcing

1048766 Transportation Ship

Promotional Materials

1048766 Materials used are near premises POS materials for promoting the parlour only

Table 25 Detail of Andersenrsquos of Denmark

Evaluation of Entry into Ice cream Business for Bangladesh Limited 40

Gelateria Igloo

Basic Company Information

1048766 Location Banani Kemal Ataturk Avenue (Two others in GEC Mor Chittagong and Naya

Paltan)

1048766 Established in 2000

1048766 Seating Capacity 20

1048766 Production From Igloo factory in Shyampur Narayanganj

Product Related Information

1048766 Product Parlour scoop ice cream and coffee only

1048766 Flavours Around 30 flavours available

1048766 Most selling Vanilla Strawberry Chocolate Pistachio Butter Scotch Tutti Fruity

1048766 Serve type Cup Cone Glasses Box for take away

Consumer Profile

1048766 Primary Teenagers and Young Adults (18-30)

1048766 Secondary Family consumers for eat out

1048766 Income Group High income customers tentatively from SEC A and B

1048766 Geographic Area Diversified

1048766 Rush Time afternoon and evening

Sales and Price Information

1048766 Sales BDT 8000 to 10000 daily in summer Nearly one fourth in winter

1048766 Price Varies but 350 per litre of vanilla

Promotional Materials

1048766 POS materials at the premises

Table 26 Detail of Gelateria Igloo

52 Price Comparison of Common and Boutique Segments

Price ranges of both common format and boutique segment cannot exactly be pin pointed as

products do not follow common structure and variations occur with use of toppings mixing of

flavours and use of coatings However a price comparison has been made among the brands

based on their price of per litre of vanilla flavoured ice cream in the market It appears to be as

following

Company

Price Litre Vanilla

Club Gelato

750

MoumlvenPick

640

Andersenrsquos

460

Dolce Vita

440

Igloo

100

Kwality

100

Polar

100

Milk-Vita

90

Savoy

85

Table 27 Comparative Price Analysis

As it can be seen there is price gap within the range of BDT 100-400 Ice cream kiosks and

small scooping boutiques can operate within that range

Evaluation of Entry into Ice cream Business for Bangladesh Limited 41

60 CONSUMER ANALYSIS

61 Target Group of Ice cream

Who are the consumers of ice cream This question does not have a clear answer Ice cream is a

food for all It is the only food consumed by a human being at less than 0 degree centigrade

temperature and people of all ages feel indulged to have it However we can determine focus

target groups for both branded common format and artisan boutique ice cream Group

discussions and market visits were done to get insight into the consumers along side resources

form secondary sources Age based target group is common for both segments but variation

among the groups occur mainly based on SEC and DMFI classification

611 Geographic Group

Branded ice cream remains an urban product till date Geographically branded ice cream has

reached urban and semi urban areas up to Thana Head Quarter levels Ice cream has reached

areas where electricity is available Small artisan players are available in places where large

branded players have no distribution

612 Target Age Group

Age wise grouping of target consumers is as follows

1048766 Urban kids in the age group of 5-14

1048766 They mainly consume normal sticks cups cones innovative fillers and water ice creams

1048766 Urban youth in the age group of 15-24

1048766 They consume premium and extrusion sticks and cones

1048766 Urban mothers in the age group of 25-35

1048766 They determine the family purchases Even when the father purchases ice cream decision is

taken by them

Consumption pattern of various age groups are depicted in the following chart Ice cream

consumption pattern50203005 to 14 yrs15 to 24 yrs25 to 35 yrs

Figure 11 Target Group wise Consumption Pattern Evaluation of Entry into Ice cream Business

for Bangladesh Limited 42

613 Target SEC and DMFI Group

Common Format

SEC A and B is the target group for common format ice cream However with rapid increase in

price level over the years has made it a ldquohard to consumerdquo product for SEC B consumers who

belong to lower DMFI group

Boutique Format

Boutique formatrsquos higher margin and high price range makes it an exclusively SEC A ice cream

People belonging to upper and upper middle class have access to the mediocre boutiques and

only higher upper class can have premium ice creams like Club Gelato and MoumlvenPick

Another unique target group for boutique format are the foreigners who live in Bangladesh

These people tend to visit the parlours to have ice cream as dessert especially after dinner

62 Ice cream in Consumer Lifestyle

Figure 12 Ice cream in Consumer Life style

This simple overview of ice cream in consumer lifestyle was determined based on in-depth

research analysis of UBL and validated through qualitative group discussions by the author

However detail of in-depth research is provided in a later section of this chapter

Evaluation of Entry into Ice cream Business for Bangladesh Limited 43

63 Highlights of Purchase Habit of Ice cream

631 Common Habits across Target Groups

There are some common habits that were identified in earlier researches and group discussions

with consumers Common habits mean the consumer approach towards ice cream that is seen

across all target groups eg kids youth and adult purchasers These are outlined below

1048766 Ice cream is mainly seen as a dessert or a snack Impulse ice cream is seen as a quick snack

that is consumed when it is in sight Visibility plays a big role here Regarding family packs

people see it as a post-food dessert

1048766 Ice cream purchase is commonly a planned event When the contexts arise people generally

take a bit of time to decide whether or not to have ice cream or when they want to go to a

boutique they make due considerations regarding which boutique to visit

1048766 Ice cream purchase decision is taken based on favourite flavour People tend to try out new

variants and flavours when they first see it They compare the taste with earlier experience and

when they purchase later they choose the flavour they have liked most

1048766 For In-Home segment decision is mostly taken on the flavour Generally people come up with

different flavours of choice and most voted flavour is chosen

1048766 People become aware of new variants or flavours mainly through word-of-mouth

Advertisement (new launches special offers and festivals) in newspaper is another source of

awareness

1048766 People are currently indifferent towards the price level of premium flavours However some

feel that price of Choc-bar or water ice creams (lolly) is a bit much If less they would have

consumed more Some also feel that companies should come up with branded ice cream in the

price range of BDT 5-8

1048766 Ice cream is purchased from nearby shops If required brand and flavour is not available 2-3

shops will be visited and then available flavour will be selected even if the required one is not

found This is done mainly not to ruin the mood for ice cream

1048766 People are very open to try new brands and flavours especially if it comes from a credible

source They would try new flavours and if they are satisfied with the taste they would repeat

purchase

1048766 Regarding boutique visits people feel that boutiques need to have a proper environment

enough flavours and other snacks

1048766 While visiting boutique with family or companion they want variation in flavours so that

they would order different flavours and taste each otherrsquos ice cream It is seen as a sign of

togetherness

1048766 Frequency of ice cream purchase varies among people It depends on peer pressure collective

family decision summer heat and attitude towards ldquoice creamrdquo itself as a product Evaluation of

Entry into Ice cream Business for Bangladesh Limited 44

632 Habits of Kids

1048766 Kids choose ice cream flavours by the look of the product (generally pictures shown in POS

materials and carts) They love colour and designs of the products let it be a common format or a

boutique ice cream

1048766 Kids (when in house) would go with the housemaid to the nearby shop choose the flavour

they want (within range of the amount given to the maid) and buy it

1048766 When with parents they would take the product they like even if the price is lower than some

other product However mothers play a role in this decision They would want their children not

to choose too high priced a product or coloured products

633 Habits of Youth

1048766 Young people are the main consumer of impulse ice cream They also are one of the major

consumers in the boutique segment

1048766 Young people love to try out new products that come into the market Another side of the coin

is that they are not very loyal to a brand or a flavour and tend to switch a lot

1048766 Regarding boutique visits young people go to boutiques to have an ldquoice cream hang outrdquo with

peer groups They would stay there for a longer period of time while they have their ice cream

1048766 Some times young people make milk shakes and other ice cream based desserts

634 Habits of Mothers

1048766 Mothers worry about their childrenrsquos health and they prefer ldquovanillardquo type of brands

However when price constraint occurs they go for water ice creams for their children They try

to convince their kidrsquos purchase decision

1048766 Regarding family purchase motherrsquos decision is sometimes prioritized by the whole family

64 Barriers to Ice cream Consumption

641 Emotional Barriers

1048766 Overindulge (close to sinful)

1048766 Undisciplined (no control)

1048766 Childish (licking)

1048766 Artificial Image

642 Functional Barriers

1048766 People of SEC B feel that ice cream is an expensive dessert (If less expensive would consume

more often)

1048766 It leads to cold cough - especially in winter rainy season

1048766 It contains artificial additives preservatives

1048766 It is very high in calories that lead to fattening

Evaluation of Entry into Ice cream Business for Bangladesh Limited 45

1048766 It does not quench ldquothirstrdquo

1048766 Less convenient (portable immediate eat)

1048766 Messy Dripping

65 Research Findings

The highlights regarding purchase habits triggers and barriers of ice cream consumption provide

a glimpse into the consumer world of ice cream industry However UBL CMI conducted a

formal research exclusively on ice cream consumers to identify

1048766 Occasions of ice cream

1048766 Frequency of ice cream consumption

1048766 Expectations from ice cream occasions

1048766 Personalities that they desire from ice cream

651 Relevant Occasions in Daily Lives of Consumers

Research question regarding ldquousual occasions of life that occurred most frequently in day-to-day

lives of the respondentsrdquo generated the following replies

Occasion

of Respondents saying Yes

Watching TV

93

Normal Dinner At Home

91

Normal Lunch At Home

89

At Home While ReadingMusicSurfing

86

Informal Family Get Together

85

Out Of Home Hanging Out With Friends

84

Out Shopping

84

Mid-Afternoon Break At Home

83

At Home By Myself During The Day

82

Special Dinner At Home

82

Informal Dinner Out Of Home

82

Normal Lunch Out Of Home

82

Leisure Walk

79

Coming Home From WorkSchool

78

Special Dinner Out Of Home

78

Celebration

78

A Night In With Friends

77

At Home By Myself In The Evening

77

Special Lunch Out Of Home

76

Mid-Afternoon Break Out Of Home

75

Special Lunch At Home

73

Day out with Partner

72

Midmorning Break

70

At Breakfast

68

Family Day Out

68

During Work Or At School

65

Evaluation of Entry into Ice cream Business for Bangladesh Limited 46

Travelling ToFrom WorkSchool

65

At The Cinema

61

Special Event

56

Clubbing At A Party

50

Post GymSports

48

Table 28 Relevant Occasions in Consumersrsquo Lives

Respondents were then asked to mention ldquofrequency of occurrence of the identified occasionsrdquo

The identified replies are as follows Normal dinner at homenormal lunch at homeComing home

from workschoolTraveling tofrom workschoolDay out with Partner SpouseMid-afternoon

break at homeOut of home hanging out with friendsLeisure walkMid-afternoon break out of

homeA night in with friendsSpecial dinner at homeSpecial lunch out of homeFamily day

outSpecial eventPost gymsportsDaily2-3 Times A WeekWeekly2-3 Times A MonthOnce A

MonthEvery 2-3 MonthsLess OftenNever Figure 13 Frequency of Occurrence of Occasions

This shows that ldquoNormal dinner at home Watching TV Normal Lunch At Home At Home

While ReadingMusicSurfing Coming Home From WorkSchool During Work Or At School

Travelling ToFrom WorkSchool Midmorning Break Day Out With Partner Spouse At Home

By Myself During The Dayrdquo are the most frequent daily rituals of busy lives of consumers

652 Frequency of Ice cream Consumption

Respondents were asked to mention ldquoconsumption pattern of ice cream during the identified

occasionrdquo on a scale of 1-5 depicting frequencies like ldquo(5) always (4) most of the times (3)

about half of the times (2) sometimes (1) never do not knowrdquo The responses are depicted in

the following table

Evaluation of Entry into Ice cream Business for Bangladesh Limited 47

444474544655555566756665775967779991011101111101210111110101113111412131314161

011121411131216181519181518211817171719181718201721222130303434253437403741394

046383944464746453745414641374638504843414839373030292726232725222020201926202

21722221317Midmorning

breakWhile clubbing at aAt the cinemaSpecial eventNormal lunch out ofA night in with

friendsNormal dinner atInformal dinner out ofAt home by myselfAt home by myself inOut

shoppingSpecial lunch atDay out with SpouseWatching TVAlwaysmost of the timesAbout half

of the timesSometimesneverdo not know

Figure 14 Frequency of Ice cream Consumption

As it can be seen ldquoDay out with Spouse Special lunch at home Special dinner at home

Watching TV Family day out Celebrationrdquo are the occasions where most frequently ice cream is

consumed

653 Market Character Mapping Relevant Occasions vs Frequency of Consumption

If we plot frequency of consumption on the X-axis of a chart and relevance of occasion

occurrence on the Y-axis taking the above mentioned values as cut-off values we get four

quadrants in the chart depicting four market scenarios that any ice cream manufacturer in

Bangladesh market might encounter given the current market situation This market

segmentation is based on frequency of ice cream consumption in daily occasions of consumer

lives

The segments are

1048766 OPPORTUNITY MARKET High Relevant Occasions-Low Ice cream Frequency

1048766 QUESTION MARKET Less Relevant Occasions-Low Ice cream Frequency

1048766 HIGH FREQUENCY MARKET Relevant Occasions-High Ice cream Frequency

1048766 CAPTIVE MARKET Less Relevant Occasions-High Ice cream Frequency

The chart looks as follows Evaluation of Entry into Ice cream Business for Bangladesh Limited

48

Figure 15 Relevance of Occasion-Frequency of Consumption Mapping

As it can be seen from the above chart Bangladesh Market still lies in the Opportunity and

Question market zone with a pull towards High frequency and Captive Market zones This is

evident from market data as penetration of ice cream still remains at Thana headquarters levels

Also this explains the high market growth rate of 17 as market is yet under developed and

branded quality ice cream has yet not reached all levels of consumers especially rural level that

constitutes around 75 of Bangladeshi market

From the above analysis we can establish that target of ice cream manufacturers should be to

penetrate more into the Bangladeshi market to create higher frequency of ice cream

consumption The following chart shows the strategies to follow for ice cream manufacturers

Figure 16 Required Market Strategy for Bangladesh

Evaluation of Entry into Ice cream Business for Bangladesh Limited 49

As relevance of ice cream consumption occasions can hardly be controlled by marketers their

endeavour should be to create more ldquoemotional and functionalrdquo attachment to ice cream in less

frequent occasions through ldquomarket developmentrdquo strategy to earn share from overall food

expenditure of consumers and at the same time make them consume more ice cream in highly

relevant occasions through ldquopenetrationrdquo strategy

654 Consumersrsquo Emotional Requirements and Product Attributes

All consumers under these clusters also identify the emotional requirements and the significant

product attributes they seek from their current preferred and future desired ice creams These are

provided below

Cluster

Emotional Functional Requirement

Product Attributes

Enjoyment

Flavour Variety

1048766 Combination of different flavours

1048766 Combination of different textures

1048766 Very sweet

1048766 With wafer or biscuit

1048766 With chocolate

1048766 Of a well known brand

Socially Involved

Spoonable Rich

1048766 Very creamy

1048766 Only natural ingredients

1048766 No mess

Care

Size Creaminess

1048766 Big

1048766 Rich full taste

1048766 Smooth

1048766 Value for money

1048766 No mess

Unwind amp Escape

Economy

1048766 Crunchy

1048766 Economic

1048766 Of a well known brand

1048766 Nutritious

Balanced Convenience

Health Conscious

1048766 Of a well known brand

1048766 Nutritious

1048766 Milk based

1048766 Low sugar

1048766 Low carbohydrates

1048766 Filling

Active Self-Grooming

Fruit Vitamins

1048766 Healthy

1048766 Fruit based

1048766 Low fat

1048766 Liquid or drinkable

1048766 Nutritious

1048766 Of a well known brand

Confidence

Drinkable Light

1048766 Low calories

1048766 Light on the stomach

1048766 Chewy or gooey

1048766 Not so sweet

1048766 Natural appearance

Sensual

Appeal or image

1048766 No artificial additives

Evaluation of Entry into Ice cream Business for Bangladesh Limited 50

1048766 Natural appearance

1048766 Melting slowly

1048766 Attractive packaging

1048766 High quality ingredients

1048766 Of a well known brand

Table 29 Requirements amp Product Attributes Desired by Consumer Clusters

Of these findings we see that the identified highlighted barriers to ice cream consumption are

pretty evident among the consumers Mostly people want products of a reliable source or a well

known brand low calories quality ingredients value for money economic type

Evaluation of Entry into Ice cream Business for Bangladesh Limited 51

70 INDUSTRY ATTRACTIVENESS AND ENTRY PROSPECTS

71 Driving Forces of Growth

As identified in the earlier sections there are several driving forces behind the growth of ice-

cream industry in Bangladesh

712 Trade and Infrastructural Level

1048766 As a result of globalization newer varieties have been introduced to the local products Many

foreign companies are also coming as franchise so there has been increased competition and

these boutiques are setting higher standards for the local producers

1048766 The present market growth rate is 18-19 which is being influenced by larger players like

Igloo who are expanding their distribution nation wide with expansion of national electricity

grid

1048766 With entry of Modern Trade and recent organized business approach of retailers has made it

possible for ice cream manufacturers to penetrate into shops even without providing them with

branded freezers

1048766 Weather change has increased ldquosummerrdquo season in our country which has reduced negative

seasonal impact on ice cream

1048766 Large companies like Igloo have taken global learning of using carts as an effective tool of

availability and visibility for ice cream

1048766 New and improved technologies are being used in the production process This technological

advancement has improved quality increased speed of production and made the process more

cost effective

713 Consumer Level

1048766 Only a few years back rich people could afford the luxury of having ice-cream but now it has

become a common product for everybody Ice-cream companies are producing different products

with a wide price range for consumers of every class and status

1048766 Nowadays companies are doing promotional campaigns more frequently the customers get to

know about the product which makes it easier for them to buy the best one

1048766 The improved standard of life and more modernized lifestyle of people is an important reason

for the increased consumption thus growth of the ice-cream industry

Evaluation of Entry into Ice cream Business for Bangladesh Limited 52

72 Prospects of Entry

The ice-cream industry of Bangladesh is an attractive one for the investors because there is a

huge market but number of producers is very small The major reasons behind industry

attractiveness are as follows

1048766 The industryrsquos current growth potential is very high with opportunity for market development

1048766 The competition currently permits adequate profitability and the competitive forces are

becoming stronger with time

1048766 Boutique segment is at a very high growth stage but no operator is currently operating with a

mid price range of BDT 100-400 Ice cream kiosks and small scooping boutiques can operate

within that range

1048766 Current industry driving forces are favourable for the future industry profitability

1048766 Globally oriented consumers look for variety in ice cream that is currently not available

Latest innovations came in the market in 2002 People would welcome new variety and flavours

1048766 There is a gap in the market for balanced convenience through ice cream where consumers can

get nutritional benefits for ice cream Also emotional attachment to ice cream could further be

improvised in promotional campaigns

1048766 There is high scope for market penetration and development to increase frequency of ice

cream consumption

1048766 Level of risk or uncertainty is very low in ice-cream industry because the consumer market is

so huge any product with a standard quality and careful pricing will be able to make significant

profit

1048766 As for geographic reach of the industry 60 market is still in Dhaka There is scope of

expansion and a new entrant can easily capture market share within Dhaka using carts even if

they do not want nation wide cold chain distribution

1048766 The production process is very complex and capital requirements are also high So before

going into production any company should know about their capabilities and weaknesses and

then start the business or else they might suffer huge loss at a certain level

1048766 Unilever can acquire the required resource and use existing multi-national multi-cultural

expertise to enter the market in a grand way

1048766 With high probability of entry from DANONE with more products like the ISIS diabetic ice

cream Unilever should consider entering in this industry as soon as possible

Evaluation of Entry into Ice cream Business for Bangladesh Limited 53

80 ENTRY STRATEGY FOR UNILEVER

While describing the suggested entry strategy for UBL certain issues have been kept

confidential and some issues have been touched but not explained to keep consistency with UBL

confidentiality policy

81 Suggested Entry Areas for UBL

1048766 Boutique segment of the Bangladesh ice cream is only 5 of the branded market UBL needs

to pursue a larger scope to make the entry viable

1048766 UBL cannot fight with unbranded segment as global product quality mandate of Unilever does

not allow UBL to fight in low price-low quality segment

1048766 Recommend entry should be in the common format segment with both single and multiple

servings and in the boutique segment with a different brand name (if possible BEN amp JERRYrsquoS)

1048766 UBL should build up state-of-art modern factory for manufacturing and establish cold chain

facilities initially focusing on metro cities

1048766 Investment issues are required to be addressed for building factory and cold chain and capital

requirement needs to be identified for that purpose4

1048766 UBL may have boutiques for driving image selective top-end offering

1048766 Kiosks can be setup near universities and shopping malls

1048766 Boutiques should be concentrated in Dhaka and Chittagong

1048766 Ice cream for boutiques and kiosks would be produced in factory as institutional packs of 9-10

litres

82 Products

1048766 As a Brand Building country in global Unilever operating framework UBL is entitled only to

bring products developed by the Brand Development countries

1048766 Unilever should focus on serving products that have nutritional benefits (already available

globally) along with usual satisfactions of sensual pleasure functional attributes etc

1048766 Current existent players especially Igloo and Kwality have extensively copied global and

regionally available Unilever products eg Cornelli is same as Wallrsquos Cornetto Vinetta is similar

to Vienetta Mega is similar to Magnum etc UBL needs to differentiate these to consumers on

the ldquotaste the originalrdquo platform where global quality is focused regarding the products

1048766 UBL should also bring regionally famous brands like Moo or Max to create image

differentiation

1048766 Magnum or Moo should be used as premium end ice cream to generate more profit margin

Evaluation of Entry into Ice cream Business for Bangladesh Limited 54

83 Placement

1048766 Distribution focus should be in Dhaka for entry as Dhaka contributes more than 60 of total

ice cream sales in the country

1048766 Company may use carts as distribution method They serve as good source of visibility and

availability It would help in increasing impulse purchase

1048766 At least 1500 outlets in Dhaka and Chittagong needs to be actively served using dedicated

branded refrigerators to generate sales

1048766 50 carts should operate in Dhaka and Chittagong

84 Price

1048766 UBL products should be priced at par with Igloo pricing for the common format ice creams

1048766 UBL can bring in premium single-serve SKUS for the higher economic classes in the price

range of BDT 60-80

1048766 Smaller SKUs (small lolly stick) can be introduced in the price range of BDT 10-15

1048766 In the boutique segment UBL should price products above the semi-premium segment

(Gelateria Igloo Sub Zero or Andersenrsquos) but lower than that of Club Gelato or MoumlvenPick

85 Promotion

1048766 UBL would require strong marketing campaign (As high as 50 of sales) to have a grand

entry in the market

1048766 Presence in the television media would be of utmost importance More than 50 of

promotional expense should be made here initially Gradually it can be reduced

1048766 Newspaper would serve as the second most important option

1048766 Billboards should also be used

1048766 Activations (similar to Lux Channel i Super Star or Igloo Festival) should be done to generate

trial

86 Scope of Opportunity

Table 30 Value and Volume Based Scope of Opportunity for UBL

Value (BDT Cr)

Volume (Tons)

Market

131

7835

Common

121

7600

Boutique

98

235

Evaluation of Entry into Ice cream Business for Bangladesh Limited 55

861 Geographic Contribution

1048766 Dhaka (61)

1048766 Chittagong (19)

1048766 Sylhet (10)

862 UBL objectives

Common Format Ice Creams

1048766 Target 10 Market share in 1st year operation

1048766 Value BDT 11 Cr

1048766 Production capacity required 21 Tons day

1048766 Freezer Placement 1500 freezers

1048766 Cart operation At least 50 carts

Boutiques

1048766 Target Further develop the market

1048766 Focus Dhaka Chittagong and Sylhet Metro

1048766 Franchise At least 20 franchisee operations nation wide in divisional towns

1048766 Pricing Below imported parlours above common formats with around BDT 400 per Litre

87 Critical Success Factors

1048766 UBL is considered as a high profile company in Bangladesh and thus they cannot operate in

the market only with common products like choc-bars and cups They must have premium

products (these require extrusion line) also to carry their brand image Otherwise UBL would not

be able to charge usual premium over competition products

1048766 Launch of ice cream would require huge promotional and activation support in order to gain

customers from Igloo People want novelty regarding ice cream and UBL have to let them know

about their products and create hype

1048766 Cart should be used as a source of distribution Recent successes of Unilever companies like

Indonesia shows that carts can generate more sales and can be used as source of visibility in the

minds of both retail traders and consumers Carts can also provide incremental sales to the

company

1048766 UBL have to create a strong cold chain for ice cream (initially in Dhaka and Chittagong) to

ensure quality products for consumers

1048766 UBL have to build capacity very rapidly to meet consumer demand if the launch is successful

Evaluation of Entry into Ice cream Business for Bangladesh Limited 56

90 BUSINESS PROJECTION

91 Basic Assumptions

Business projection for ice cream business was made based on a conservative approach UBL

would require spending significantly on production capacity and factory dedicated to ice cream

Thus to analyse business possibilities of ice cream certain assumptions were made and collected

data were used These are

1048766 Production equipments and cabinets would cost approximately BDT 55 crores

1048766 Production equipments 45

1048766 Packaging Equipments 15

1048766 Storage Facility 20

1048766 Branded Freezers 10

1048766 Distribution Investment 10 (Distributors would also invest themselves)

1048766 Ice cream factory with a floor size of 20000 sqft would cost BDT 25 crores

1048766 Objective is to capture 10 market share in Dhaka and Chittagong in the first year

1048766 Business would grow by 50 in year 2 and 3 30 in year 4 and 25 in year 5

1048766 Weighted price per litre is BDT 170 according to volume share of single serve ice cream

multiple serve ice cream and boutique ice cream

1048766 Other financial assumptions were also made List of them are provided below but amount has

been removed for confidentiality issues

Assumptions

Trade Margin

Distributors Margin

DutyVAT Rate

Trade Terms Expense of NPS

Trade Terms Expense of NSV

Advertising ampPromotion of NPS

Indirects (Salaries Wages etc)

Trading Tax

Table 31 Assumptions for Business Projection

Evaluation of Entry into Ice cream Business for Bangladesh Limited 57

100 CONCLUSION

Ice cream has good prospect in Bangladesh It is still a growing market with opportunities for big

new entrants With the barriers of entry UBL needs to consider its priorities UBL being an HPC

company traditionally needs to acquire expertise in cold chain distribution and has to invest a lot

of money to rip the benefits of the industry However to initiate company can take regional

support and acquire resource expertise The company should enter the business as soon as

possible since there is potential threat from DANONE to introduce more ice creams after ISIS

diabetic ice cream and also with potential of the industry arch rival Nestlersquo might consider

entering into the industry too

Evaluation of Entry into Ice cream Business for Bangladesh Limited 58

References

Web References

1 wwwunilevercom

2 wwwunilevercombd

3 wwwhllcom

4 wwwunilevercompk

5 wwwthedailystarcom - Life Style Magazine

6 wwwreuterscouk

Evaluation of Entry into Ice cream Business for Bangladesh Limited 59

Page 8: Square Ice cream

1048766 As the number of suppliers is very low and the companies especially Igloo as the best product

enjoys high bargaining power or leverage over rivals But some of the companies such as Savoy

are concentrating on increasing profit margin of the retailers for securing a more prominent

position in the market

1048766 Mainly consumers or buyers decide the pricing Keeping in mind the various buying power of

people the companies decide the price of each items Price of the Items that have the most

market demand is kept low so that they are in the reach of the general customers By lowering

the price some companies such as Savoy are trying to maintain a competitive edge

Evaluation of Entry into Ice cream Business for Bangladesh Limited 21

C Market Sales and Growth Rate

Sales information of the five existing companies for the current years shows the following trend

Company Name

2007

2008

2009

Total Market

11307

12120

13122

Igloo

5785

6086

6425

Polar

168

1835

2019

Kwality

306

335

374

Savoy

388

415

458

Milk Vita

394

434

488

Table 9 Market Sales and Growth Rate of Branded Common Format Market

Volume based market size shows the following scenario prevailing in the Bangladesh market in

2009

Company Name

Single Vol (000 Ltrs)

Multi Vol (000 Ltrs)

Total Vol (000 Ltrs)

Total Market

32759

42967

7573

Igloo

16760

21983

3874

Polar

4867

6384

1125

Kwality

8865

11628

2049

Savoy

1124

1474

260

Milk Vita

1141

1497

264

Table 10 Volume Based Market Size

The total volume of the branded common format ice cream industry is 7500 Tons of which more

than 50 belongs to Igloo followed by Kwality with 27

D Market Share and Size of the rivals

Market share data for all the local companies show a trend where Igloo is the biggest ice-cream

company dominating with a huge market share Although even 1-2 years ago there was intense

competition between Kwality and Polar but now it seems that Kwality is 2nd largest ice-cream

manufacturing company in Bangladesh Polar is in the 3rd position with Savoy and Milk Vita

trailing in the market Market share percentage over the years is presented in the following table

Company Name

2007

2008

2009

Igloo

50

5031

5116

Kwality

256

2666

2706

Polar

17

161

1485

Milk Vita

34

332

348

Evaluation of Entry into Ice cream Business for Bangladesh Limited 22

Savoy

39

365

343

Table 11 Market Share of Competitors

E Geographic Sales Orientation

Ice cream still continues to be a city-oriented product and its demand is comparatively low in the

rural areas Reasons behind this are electricity problem outside urban areas and purchasing

power of people Geographic sales orientation of the common format ice cream industry is

provided below

611890690480590250DhakaChittagongKhulnaComillaBarisalOthers

Figure 7 Geographic Sales Orientation

Dhaka still is the largest contributor in the ice cream segment Nevertheless over the years this

trend is shifting Areas outside Dhaka are also growing making Dhakarsquos share lower by small

percentage As urban markets are the major contributors companies design their products

keeping in mind the tastes and styles of the urban consumers Compared to the other companies

Igloo is the most expensive in the common format segment so they target only city based

customers who have the purchasing power Although other companies such as Savoy are offering

low priced product even their main target is urban people due to nation wide electricity problem

F Seasonality of Sales

Ice cream industries in warmer part of the world are highly seasonal Same is true with

Bangladesh According to secondary data sources sales seasonality looks as follows

Period Name

Months

Contribution

Super-Peak

April May June

46

Peak

March July August

36

Off-Peak

February September October November

15

Super Off-Peak

December January

3

Table 12 Seasonality of Ice cream Sales

This data was validated through interviews with retailers during market visit According to them

more than 75 sales of ice cream came in the hot months Another insight that could be

identified was

Evaluation of Entry into Ice cream Business for Bangladesh Limited 23

various festivals and programmes provide scope for higher volume of ice cream sales According

to companies where only 10-15 sales occurs in the winter season same amount of sales occurs

during festivals like the two Eids and Nobobarsha

G Distribution Servicing System

Mainly common format ice-cream is distributed in two methods that are directly to retail shops

and through hawkers with ice cream carts trolleys

The various channels of retail shops other than cart that serve as distribution outlets for Ice cream

are

7 Urban General Stores (UGS)

8 Urban Neighbourhood Grocer (UNG)

9 Premium General Store (PGS) SMMT

10 Confectionary Bakery

11 Modern Trade (MT)

12 Fast Food shops (Recently some fast food shops keep branded ice cream cabinets)

Distribution details of all the companies are provided below However detail of Milk Vita is not

available as they are mainly milk producer and they have no dedicated ice cream cabinet for

retail stores and currently they are not distributing ice cream in Dhaka city

Company

Distribution Method

Frequency

No of Cabinets

No of Carts

Igloo

Distributor Cart

2 to 3 times a week

4000

100

Kwality

Distributor Cart

1 to 2 times a week

1050

20

Polar

Distributor Cart

1 to 2 times a week

800

50

Savoy

Company

1 to 2 times a fortnight

176

-

Milk-Vita

-

-

-

-

Table 13 Distribution Method of Market Players

Distribution Process Distribution process through both methods is described below

Retail Distribution The general distribution that is followed by companies is that distributor

sends large refrigerated trucks dedicated to specific territories These trucks are accompanied by

small refrigerated vans Main road side shops are served directly from the large truck and shops

that are inside small streets are served by the small vans

Order and delivery are done on the same day The strategy followed is that of replenishment If

the branded freezer of the company is empty they simply fill it up according to requirement of

different SKUs as the delivery people see fit However shopkeepers have to buy full cartons

(usually 24 pieces in a carton) of single serve ice cream they cannot buy in pieces

Evaluation of Entry into Ice cream Business for Bangladesh Limited 24

Among the retail shops there are about equal numbers of branded and unbranded freezers This

is a normal scene in Dhaka where all shopkeepers require freezer to keep other cold products

However basic distribution policy is that if a shop has branded cabinet of a company they

cannot keep competitor ice cream in that cabinet Thus penetration can be made possible in

shops where unbranded freezers are available

General branded freezer contract policy with Igloo and Polar is that traders have to pay BDT

5000 to take a freezer Maintenance of branded freezers is responsibility of the company but

electricity bill is paid by shopkeeper However Polar is not currently giving any new freezer

Kwality gave away their freezers for free however they ensured safety of their freezers by

checking background of the shopkeepers

Cart sellers Cart sellers collect required amount of ice cream from nearby distribution house or

company showroom (Igloo has one showroom in Panthapath) on a daily basis They also have to

buy cartons of products not pieces Kwality carts collect their ice cream from factory (Tejgaon)

or nearby distribution house Cart sellers contribute around BDT 3000 sales in a day and

generally sell at BDT 1-2 higher than set price of each product

The cart sellers generally keep at least a two-day stock so that they can meet sudden upsurge in

daily demand of ice cream or if they get the opportunity to sell at parties programs or any open

air event (Wedding at community centres or outside cultural programs at auditoriums) If cart

sellers need replenishment of stock they even take service more than once in a day either

revisiting showroom house or they call up company delivery people to serve them at their

location if there is opportunity for selling more ice cream

Policy regarding Damaged Ice cream All the ice cream producers have very good relationship

with the shopkeepers If the retailers have refrigeration problem company takes ice cream back

until the problem is fixed whether it is stored in branded freezer or not Also if any ice cream

gets damaged or there is bacterial formation company takes them back Usual return time varies

from 15-30 days For large sellers however they take less time

Payment Method for Ice cream Purchase All the companies give credit of around one month to

large volume contributing retail sellers and try to maintain good relationship with them This

trend is seen in all channels Also all the SMMTs and MTs are given credit of one month and

payment is made by cheque Other small shopkeepers have to purchase with cash However

according to shopkeepers Igloo is currently trying to cut down on credit sales as they believe

there is a consumer pull for their brand Companies like Polar and Kwality also give special

commission to large sellers Polar gives 5 commission on every bill

Evaluation of Entry into Ice cream Business for Bangladesh Limited 25

H Technology and Innovation

Technological advancement in the ice cream industry has been very rapid Starting with stick

mould and filler ice cream production the companies have come a long way Assessing the

consumer choice and demand the companies are introducing new products very often Improved

and new technology is used for faster production and better quality Igloo is trying to meet the

international standards and launching products such as Sundae Cornelli and Nuggets Other

companies are also introducing new flavours suitable for their target segments Igloo has both the

ISO and the HACCP certifications These were awarded in the year 2003 due to their relentless

pursuit of quality and innovation In September 1996 Igloo introduced the 3D Mould line and

straight line extrusion technology for the first time in the subcontinent Basically with Igloorsquos

pursuit all the modern technologies and quality innovations are available in the market

I Production Capacity

Current production capacity of the major players in the common format ice cream segment is

estimated to be as follows

Name

Capacity (Ltrs day)

Total Production (000 Ltrs)

Required Capacity (at 300 production days )

Estimated unutilized capacity (Ltrs day)

Igloo

22000

387433

12914

9086

Polar

6500

112513

3750

2750

Kwality

12100

204934

6831

5269

Savoy

1560

25985

866

694

Milk Vita

1330

26387

880

450

Table 14 Production Capacity of Current Market Players

From the table we can see that all the ice cream manufacturers are operating with unutilized

capacity However one point to be noted is that different ice cream SKUs require different

amount of item to be produced Exact machine production capacity at litre per day does not

represent the accurate scenario Nevertheless it can be safely assumed that all the manufacturers

have unused machine capacity at their premises Moreover the larger players like Polar and

Kwality have new technology available at their premises Kwality bought second hand machines

from Thailand but both Igloo and Polar bought theirrsquos from Italy and Denmark

J Products and Pricing

Products The products in the ice-cream market are differentiated A few firms dominate the

market but an endless variety of ice creams are offered to the consumers Igloo pioneers all

major innovations in the market The products that are available in the market can be classified

into single serving and multiple serving groups Which are then categorized based on functional

attributes designs These are

Single

Stick

Normal mould 3D mould extrusion

Evaluation of Entry into Ice cream Business for Bangladesh Limited 26

Cup and Sundae

Flat cup long cup

Cone

Normal cone (vanilla strawberry etc) premium cone (Ripple)

serving

Innovative Fillers

Snowball Animal shaped containers sandwich nuggets etc

Container

05 ltr 1 ltr and 2 ltr containers

Multiple serving

Family Pack

Assorted packs cakes shahi kulfi etc

Table 15 Ice cream Serve types

Among all the products available in the market most selling SKU for all the companies is Choc-

bar stick and highest selling flavour is Vanilla Following are the ranks of most selling SKUs and

flavours

SKU Name

Rank

Choc-bar (70 ml)

1

Vanilla Cup (100 ml)

2

Vanilla Box (05 and 1 Ltr)

3

Lemon Lolly (70 ml)

4

Normal Cone

5

Flavour

Rank

Vanilla

1

Chocolate

2

Strawberry

3

Ripple

4

Mango

5

Table 16 Rank of SKUs Table 17 Rank of Flavours

Choc-bar is one of the earliest vanilla based chocolate coated SKU that has dominated the

market strongly over the years Shopkeepers could not provide an exact percentage on SKU

based sales contribution Most of them ranked the SKUs and flavours according to sequence

shown in the above table Also according to newspapers and secondary sources Vanilla is the

most selling flavour with 60 sales contribution According to secondary sources percentage

sales contribution of various types of SKUs in the common format segment are as follows

Type of Ice cream

Value Share

Volume Share

Impulse dairy ice cream

514

443

Impulse water ice cream

112

138

Take-home dairy ice cream

374

419

Table 18 Volume Share of Different Serve Types

Impulse dairy ice cream provides more value share as price per litre is higher than take home

multiple serving ice creams Impulse water ice cream shows a similar trend as of take home ice

cream

Pricing Product pictures and price ranges of each category are provided below Evaluation of

Entry into Ice cream Business for Bangladesh Limited 27

Normal Premium Price Tk12 Tk20 Tk25 Cup amp Sundae Normal Cup Sundae Premium Cup

Price Tk20 Tk25 Cone Normal Premium PriceTk20 Tk25Innovative Fillers PriceLtr Tk100

Tk175 Container Normal Premium PriceLtrTk150 Tk 175 Tk 190 Family Packs Kulfi Mixed

Pack Cake Single ServingMultipleServingNormal Ice Fruit 3D Mould Premium Extrusion Price

Tk10 Tk15 Tk15 Tk20Stick Normal Cream

Figure 8 Serve Types and Pricing

As it can be seen from the above chart all impulse ice creams are priced within the range of

BDT 10 to 25 Other take home multiple servings are priced within the range of BDT 50 (05

Litres) to BDT 220 (2 Litres) Another noticeable factor in price is that there are both normal and

premium flavours in all types of ice creams

K Firms as Price Setters

The firms have capability to affect the market price to be low as profit margin is very high If

Igloo reduces the price of an item below the prevailing price level in order to increase its sales

its competitors will fear that their customers will go away from them to buy Igloo products To

retain their customers they will be forced to match the price cut of Igloo Historically this has

been proven to be true However due to price sensitivity companies cannot drastically increase

price even if they provide higher quality of product It was seen in 1997 when Igloo increased

price of 11 SKUs and faced drastic sales fall during that time It shows that the industry might

welcome overall industry price increase but not individual company price increase

L Promotion

The promotion scenario in the industry is not quite organized as of now Even proper data

regarding promotional expenditure is not available from research sources The reason being

there is not much consumer related activity seen in the market After Kwalityrsquos introduction in

the market in 1999 Igloo went on with massive Television promotion of their new products that

were available at that time

Evaluation of Entry into Ice cream Business for Bangladesh Limited 28

However in current times there is no TVC running from any company Companies promote their

launches mainly through billboards and newspaper promotions which is currently the most used

source of consumer promotion Some promotional activities that were done by the companies

over the years are listed below

Consumer Promotions

1 Larger players like Igloo and Kwality goes on with campaigns like ldquoGift on stickrdquo where

various prizesrsquo names are written on the sticks and consumers can get them

a Igloo ran a program on their launch of Macho variant where gift varied from cricket bat to

personal computer

b Igloo had a program in 2006 where gifts on sticks varied from Bangkok visit to sunglass

c Igloo ran one campaign in 2007 where gold bars were given on purchasing Choc-bar

d Kwality ran a similar program in 2008 where gifts varied from wrist watches to motorcycle

2 Some companies ran consumer TTS and gift programs where company products were given

free

a Igloo had a program in 2006 where Igloo butter was given free on purchasing Igloo ice cream

cake

b Kwality ran a program in 2008 where one SKU was given as gift with another SKU randomly

c ldquoCone Ice cream at your Homerdquo program was run by Igloo in 2002 where six cone biscuits

were given free with purchase of one litre ice cream

3 Media placement is another form of placement done by larger companies

a Igloo purchased ldquoGlimpse into World Cup Resultrdquo space in daily newspapers during World

Cup Football 2002

4 One interesting program is done by only Igloo in Bangladesh They did it in June 2006 The

program was ldquoIgloo Ice cream Festivalrdquo with main attractions of ldquoGet as much ice cream as you

want for BDT 200rdquo ldquoGet a Fantasy Kingdom Entry ticket with each Entry Couponrdquo ldquoLucky

Drawrdquo and ldquoCelebrity Addardquo

Trade Promotions

5 Trade promotions are mainly given to ldquoHighest retail purchasersrdquo and also based on time

bound trade schemes where various slabs of purchase amount are mentioned for different prizes

a Igloo takes their highest purchasers to visit countries like Singapore and Thailand

b Savoy has a purchase slab scheme where first prize is table fan

c Polar gives special sales commission to their highest purchasers (around 5)

Evaluation of Entry into Ice cream Business for Bangladesh Limited 29

M Players in the Common Format Segment

Branded common format ice cream segment is constituted of five players only Among them

Igloo is the largest player and Milk Vita is the smallest The following sections detail the basic

company detail of all the companies with special emphasis on Igloo the market leader

Igloo

The pioneering ice-cream company in Bangladesh started its operation in 1964 in Chittagong

under K Rahman amp Co Limited (KRC) with a small factory inside Coca Cola bottling factory of

KRC After the independence of Bangladesh in 1971 Igloo was taken over by the government of

Bangladesh Later in 1983 Abdul Monem Limited purchased the entire production setup of KRC

Limited including Coca-Cola bottling plant and Igloo ice-cream factory After taking full charge

of Igloo ice-cream by Abdul Monem Limited the manufacturing operations continued in

Chittagong till 1990 Although Dhaka fetched the maximum share of the total revenue the

distribution cost increased tremendously in the process of meeting the demand of Dhaka city To

cope with the distribution problem and handle Polar threat Abdul Monem Limited transferred

the factory to Dhaka changed the ice-cream packaging from the conventional paper to plastic

and expanded their market and distribution operation The new factory of Igloo was setup at

Shyampur Narayanganj and was nine kilometres away from the Motijheel office The company

apart from catering the capital city started to expand its operations in Comilla (1991) Khulna

(1992) and North Bengal (1993) These markets were served directly from Dhaka since the

storage facilities were not developed till then The company is now the market leader since 1997

with clear market share victory over others with sweeping 51 share It is to be noted that Igloo

is also a player in the boutique segment with three parlours (2 in Dhaka and 1 in Chittagong)

Product Range Igloo offers the widest choice of ice cream more than any other competitor in

the market Igloo is offering a total of fifty items including normal premium and novelty cup

stick and family pack items Igloo has thirty flavours more than anyone else in the industry and

is continuously launching new and innovative delicacies

Igloo ice-cream can be classified in six groups They are

Stick

Macho Choc-bar Mini Choc Clown Mega Shell n core Lolly

Cone

Cornelli 2 in one Cornelli classic

Cup

Shahi kulfi Vanilla Strawberry Mango Snow ball

Container

Vanilla Strawberry Mango Chocolate Coffee Diet Vanilla Tutti Frutti Ripple Pralin

Pistachio

Innovative

Nuggets Sandwich

Family

Ripple cake Party time Shahi Kulfi

Table 19 Products of Igloo

Single serve stick cups and cone items are easy to carry around and convenient to eat which

makes it most sold The core target segment of ice-cream is 6-24 years and this generation is

always on the Evaluation of Entry into Ice cream Business for Bangladesh Limited 30

move and thus prefers independent cone stick or cup items As Igloo initiated the concept of ice-

cream as a family product they offer some items to be enjoyed with the whole family

Quality and Innovation Igloo is committed to maintaining the highest quality standard through

its continuous RampD activities The major ingredients raw materials and packing materials are

procured from the best European sources Strict quality control is done at every stage of the

manufacturing process from procurement of material mixing material flow ice cream making

packaging storing (at main warehouse) distributing and market shelving by the Quality Control

Department Current supply chain for various materials of Igloo is as follows Australia (Milk

Powder) Denmark (Ingredients emulsifiers amp stabilizers) China amp UAE (Food grade sticks)

China Denmark Singapore amp Thailand (Food grade packing materials)

Figure 9 Igloo Supply Chain

Distribution Network Their distribution network is stretched all over the country with a long

fleet of refrigerated vans Firstly the ice cream products are stored at the central warehouse of

the factory and from there they are distributed through the haulage vehicle to the operational

centres located in Dhaka Chittagong Comilla Rajshahi Barisal Bogra Rangpur and Khulna

Strictest cold chain maintenance during the distribution and selling of the ice creams is ensured

Their distribution process is as follows Manufacture Stored at -24c Transported by Refrigerated

trucks at -Reaches amp Preserved in Eight regional stores Refrigerated vehicles (Distributors)Retail

outlets (Deep freezers)

Figure 10 Distribution Process of Igloo

Evaluation of Entry into Ice cream Business for Bangladesh Limited 31

Trolley Operation Igloo also operates through trolleys for extending its reach to consumers at

the furthest points The trolleys are operated near schools alleys streets parks etc and play

rhythmic music to attract the consumers These are very colourfully decorated with Igloo

umbrella and the puller wears specific uniforms Igloo was the first in introducing and operating

these trolleys in Bangladesh for any Fast Moving Consumer Goods (FMCG) Igloo has around

125 trolleys operating throughout the country Individual trolleys are provided with a regular

supply of igloo ice creams

Marketing The marketing commitment of Igloo is based on the relationship with its customers

and consumer by not only manufacturing the highest quality product but also delivering the

product by maintaining this quality To satisfy the ever-changing needs of the customer Igloo

has regularly launched new ice creams and introduced new flavours And this commitment has

positioned Igloo as the market-leading brand by gaining the consumers trust with the positioning

as ldquoA WORLD OF GREAT TASTErdquo

Facilities and Logistics at a glance As of 2009 following are the facilities and logistics enjoyed

by the company

Factory location

Dhaka

Production Lines

4

Packages

Stick Cup Family pack Others (Nuggets and sandwich)

Machine suppliers

1048766 Mark-Italy

1048766 Tetra Pak(Hoyer)-Denmark

1048766 Sabore Denmark

1048766 Hass- Austria

Machine models

1048766 Freemark 1100 Italy

1048766 FM 3000 FM 6000 Italy

1048766 SL600 Denmark

Cone baking

Hass- Austria

Chocolate making

Macentyre-UK

Coverage

Nationwide

Operational centre

10

Total market vehicles

30

Distribution channel

Directthrough appointed distributors

Outlet service

7500

Injected deep freezers

4000

Trolley operations

125

Warehouse no

8

Table 20 Igloo Facilities and Logistics

Kwality

Kwality is currently the second largest ice cream manufacturer of the country The mother

company for the Kwality brand is Sanowara Drinks amp Beverages Ltd a sister concern of

Sanowara Group The company is famous for powdered milk brands Red Cow and Diploma in

Bangladesh The drinks and beverage concern of Sanowara made an entry into the market in

1997 with ldquoYesrdquo brand drinking water and launched the ice cream brand in 1999 With heavy

communication and novelty products it Evaluation of Entry into Ice cream Business for

Bangladesh Limited 32

successfully removed Polar from the second place with a current market share of 27 The

company also operates in the boutique segment with two parlours in Dhaka and Chittagong

Kwality ice cream factory is situated in Chittagong with a floor space of 35000 sft and fully

automated machinery wrapping mix machinery equipments from Italy having capacity of

around 20000 litres of ice cream per shift The ice cream factory employs 140 people The

company is ISO 9001-2000 certified

Kwality was the first true competitor for Igloo products with some major innovation in product

design and communication but their quality is perceived to be lower in the minds of the

consumers and they do not have extrusion ice cream The product prices are also similar to that

of Igloo but they charge a bit lower than Igloo in premium multiple servings However during

market visits it was seen that shops that keep only Kwality or Igloo and Kwality both they can

sell Kwality too although the sales amount is lower than that of Igloo People who look for Igloo

shopkeepers give them that directly but if they get a chance and Kwality ice cream stock is high

they also push Kwality to dry the stock out This gives an indication that market is larger than

what the current players are capable of serving even in Dhaka

Kwality follows a similar distribution model like Igloo but distribution frequency is lower and

amount of cart sellers is limited to 25 and they operate only in Dhaka

Polar

Once a giant in the industry Dhaka Ice Cream Industries Ltd introduced the first hygienically

packed ice cream in Bangladesh in 1987 and the brand name Polar was thus born In the early

days the company started ice cream business with a wide range of products and a variety of

flavours in Dhaka city In 1988 the company started its distribution in the city of Chittagong

then Bogra and continued to cover more cities Presently Polar ice cream is available

throughout Bangladesh The company today trails in the market with 15 market share in the

common format segment Recently Polar has announced launch of ISIS diabetic ice cream with

support from DANONE to turn around in the market

The company has its head office as well as a modern large-scale industrial plant in Dhaka Polar

ice cream is made with Danish expertise using Danish equipment and technology The

production activities and quality control measures are supervised and managed by Danish

experts Polar offers a wide range of delicious flavours and tastes made by ingredients imported

from Europe

Dhaka Ice Cream at present has 3 cold stores in Dhaka Chittagong and Bogra in Bangladesh

From Dhaka cold store they distribute ice creams in Mymensingh Tangail Jamalpur Sherpur

Kishoreganj Netrakona Comilla Narsingdi Barisal Madaripur Agaeljhara Faridpur Magura

Chuadanga Jessore Satkhira Khulna Pirojpur and Sylhet through their distributors In case of

long distance delivery points the company uses auto cooling freezer van

Evaluation of Entry into Ice cream Business for Bangladesh Limited 33

In Dhaka city they distribute ice creams directly to retail stores in freezer vans Besides that

they have several distributors at different points of the city Distributors cover their individual

areas where company is not able to supply directly in their freezer vans Similar model is

followed by the company to distribute ice cream from their other cold storages through out the

country For storing and selling ice creams in retail stores the company like the other players

arranges a deep freezer with the Polar logo and canopy light box

In addition to this distribution the company also undertakes home delivery of ice creams for

special occasions

Savoy

Savoy Ice-cream brand is owned by Sena Kalyan Sangstha (SKS) Group of industries It started

its journey in March 1995 with a factory in Tejgaon Dhaka Yearly turnover is estimated at BDT

388 crores with a market share of roughly 35

The factory has been established with Sonali Bank finance at 6040 equity ratio The total

production capacity of the factory has been estimated at 2400 litres of Ice-cream per day Total

land area of the factory premise is 116 Bigha with 8000 sft area covered with a total project cost

of BDT 144 The factory employs 73 people

Product ranges of the company include all the basic designs and flavours of the industry

However the company has not been much of an innovator in the industry Their product quality

is substantially low than that of other players and they price their products at 10-15 lower than

the other competitors The company imports raw materials mainly from Europe The general raw

materials are Euro cream Skimmed Milk Powder Cocoa Powder and Flavour (Vanilla Mango

and Strawberry) Colour (Yellow Red Chocolate and Green) Ripple Sauce Cheney Fruit Palm

Kernel Oil Anhydrous Butter Oil (Ghee) and Sugar etc

Milk Vita

Milk Vita is one of the most famous brand names in Bangladesh for its liquid dairy milk Owned

by Bangladesh Milk Producersrsquo Co-operative Union Limited (BMPCUL) the company came in

the market with proper dairy milk ice cream in form of cups and choc-bar With a production

capacity of around 1600 litres per day the company is trailing in the market place with 3

market share

Although the Milk Vita Choc-bar was perceived to be extremely tasty by consumers they

probably could not do well due price competition Currently they do not even distribute ice

cream in Dhaka However their presence is seen in outskirts of Dhaka and other nearby towns

If the current market situation prevails Milk Vita would lose their remaining market share and

other companies would benefit especially Igloo However one of the advantages of Milk Vita

remains to be

Evaluation of Entry into Ice cream Business for Bangladesh Limited 34

their nation wide milk supply network They have skimmed milk powder production plant that

Igloo does not have Thus they can combat the seasonality of milk supply that Igloo with its

huge requirement of milk cannot

Strengths and Weaknesses of Competitors

Company

Strengths

Weaknesses

Igloo

1048766 Strong brand image

1048766 High product quality

1048766 Highest no of variety

1048766 Strong distribution network

1048766 Highest visibility

1048766 Strong promotion

1048766 High production capacity

1048766 Presence of extrusion ice cream

1048766 Items are generally a bit pricy

1048766 Igloo does not give free freezers like other companies

1048766 Reluctant in recent times regarding innovation

1048766 Local sourcing of liquid milk does not meet demand

1048766 Failure to use ERP technology slowing decision making

Kwality

1048766 Product variety

1048766 Strong promotion

1048766 Free freezer distributed

1048766 Presence in all price segments

1048766 High production capacity

1048766 Weak distribution

1048766 Lower exposure

1048766 low amount of carts in operation

Polar

1048766 Free freezer

1048766 Quality perceived to be high compared to Kwality

1048766 Discoloured freezers

1048766 Lower exposure

1048766 Low product variety

1048766 Unused capacity

Savoy

1048766 Price is lower

1048766 Discoloured freezers

1048766 Low product variety

1048766 Weak distribution

1048766 Small amount of freezers

1048766 Low production capacity

Milk Vita

1048766 Quality is good due to dairy cream

1048766 Brand leverage from Milk Vita milk

1048766 Low exposure

1048766 Low variety

Table 21 Strengths and Weaknesses of Competition

512 Market Characteristics of the Boutique Segment

With a small market of BDT 98 Cr and 567 share in the branded ice cream market the

boutique segment is currently an increasing segment in the ice cream industry Boutique

segmentrsquos history dates back to 1960s when Igloo launched boutiques in Dhaka to save

distribution cost and promote a culture of ldquoice cream eating outrdquo In later years boutiques lost

their glamour and retail common format segment picked up growth However with Dolce Vita in

the late lsquo80s craze for Italian Artisan ice cream was recreated in the market Although Dolce

Vita is failing in recent times emergence of MoumlvenPick and Club Gelato in 2000 has uplifted the

segment once again Current growth rate of the

Evaluation of Entry into Ice cream Business for Bangladesh Limited 35

segment can be estimated to be approx 20-22 (higher than the common format segment)

Following are the basic detail of all the major players in the segment with their estimated sales3

Players

Outlet

Sales (Cr Taka)

Share

Club Gelato

1

136

199

MoumlvenPick

1

119

174

Andersenrsquos

3

119

174

Gelateria Igloo

3

119

174

Sub Zero (Kwality)

2

051

75

Baskin Robbins

1

015

22

Dolce Vita

1

017

25

American Soft

1

009

12

Rainbow

1

009

12

Others (off site)

089

130

Total Market

682

Table 22 Players and Shares in Boutique Segment

A Detail of Operation

General operational procedure followed by all the operators is as follows

1048766 Operating method There is a variation in operational method among the large operators

1048766 Club Gelato uses kitchen at own premise where imported ingredients and local milk (daily

special service from Milk Vita) are used to make ice cream

1048766 MoumlvenPick directly imports ice cream from Switzerland

1048766 Andersenrsquos Gelateria Igloo and Sub Zero produce ice cream at their factory with a mix of

imported and local ingredients

1048766 Products Around 30-35 flavours of artisan dairy ice cream are served at the premises

1048766 Most sold flavours are Vanilla Ferrero Rocher Butterscotch Chocolate Caramel etc

1048766 Other Products Larger players also serve ice cream desserts (milk shakes ice cappuccino etc)

pastries and other desserts with normal coffee and tea facility at their premises

1048766 Boutiques fight ice cream seasonality with the other products sales during off-peak ice cream

seasons Usually ice cream and other products contribute at 6040 ratio in summer and during

winter and off-peak seasons the ratio reverses

1048766 Pricing Usually the prices of products in this segment are 3-4 times higher than that of the

common format segment

1048766 Prices do not vary with flavours Variation depends on serve style (Cone tub) and use of

toppings and other ingredients (Chocolate sauce nut fruits) etc

1048766 Usual margin charged is around 50-60 over production cost Similar margin is charged for

other products like coffee ice cappuccino etc

3 Yearly sales is estimated based on companyrsquos approximate daily sales collected during

interview

Evaluation of Entry into Ice cream Business for Bangladesh Limited 36

1048766 Target Group Most of the consumers belong to SEC A and higher SEC A with DMFI of at

least BDT 20000

1048766 Foreign delegates and resident foreigners also visit these boutiques

1048766 Main purposes of visits in the boutiques are

bull Youth hangout with friends and having ice cream and ice cream derivatives

bull Family Family night out or eat out at a restaurant and then having dessert

bull Foreigners Having dessert after dinner

1048766 Rush time at boutiques are Afternoon 2-4 pm and at night 9-11 pm

1048766 Offsite sales Most of the large operators also sell offsite They have small freezers for off-site

1048766 Club Gelato and MoumlvenPick serves ice cream at high society parties and programmes

1048766 MoumlvenPick also has kiosks in known hotels like Sheraton

1048766 Promotion No mass promotion is done by any of the companies Word of mouth is the most

important source of promotion Posters and banners outside the premise and occasional

newspaper advertisements are used to communicate special offers

1048766 Growth Drivers Market growth is driven by image innovation quality decoration of facility

environment and special offers

1048766 Club Gelato has the image of selling true Italian dairy ice cream with an excellent hangout

environment

1048766 MoumlvenPick imports ice cream directly from Switzerland and is perceived to be of high quality

1048766 Andersenrsquos operates with the image of ice cream from Denmark

1048766 Gelateria Igloo (from Igloo) and Sub Zero (from Kwality) could not establish the premium

artisan ice cream image

B Players in the Boutique Segment

There are very few players who have significant impact in the boutique segment Detailed

information of all the major boutique segment players is provided below

Evaluation of Entry into Ice cream Business for Bangladesh Limited 37

Club Gelato

Basic Company Information

1048766 Location Banani Road 11 (Planning for a second one in Dhanmondi)

1048766 Established in 2001

1048766 Seating Capacity 48

1048766 Area 1250 sft (including kitchen)

1048766 Owner Mr Jahangir Alam (Bangladesh)

1048766 Business Type Joint business partnership with Singapore

1048766 Staff 15 people (6 in the kitchen)

1048766 Production capacity 150 litres per day

Product Related Information

1048766 Product Italian style parlour scoop ice cream fruit juice coffee and pastries

1048766 Flavours Around 32 flavours available

1048766 Most selling Ferraro Rocher Vanilla Pistachio

1048766 Innovations New variants and ingredients are communicated by their Italian supplier and

Club Gelato decides what to take from them

1048766 Serve type Cup Cone Glasses Box for take away

Consumer Profile

1048766 Primary Teenagers and Young Adults (18-30) amp Diplomats

1048766 Secondary Family consumers for eat out

1048766 Income Group High income customers tentatively from SEC A and higher SEC A

1048766 Geographic Area Diversified

1048766 Rush time 8-10 pm

Sales and Price Information

1048766 Sales BDT 50000 (60 Ice cream 40 other desserts) daily in summer In winter however

other products sell more and thus they keep total sales at the same level

1048766 Price 750 per litre for any flavour

1048766 Sales Volume 50-60 litres per day

Supply Chain Placement Information

1048766 Milk Local sourcing from Milk Vita (4050 litres per day)

1048766 Chocolates amp Flavours Belgium France Germany

1048766 Transportation Mainly air (They can afford it due to high margin)

1048766 Contribution of various materials Flavours (30) Milk (20) other parts are water and air

Promotional Materials

1048766 Materials used are near premises POS materials for promoting the parlour only

Table 23 Detail of Club Gelato

Evaluation of Entry into Ice cream Business for Bangladesh Limited 38

MoumlvenPick of Switzerland

Basic Company Information

1048766 Location Gulshan

1048766 Established in 2000

1048766 Seating Capacity 55

1048766 Owner Mr Arif Mahmud

1048766 Business Type Franchise of International MoumlvenPick

1048766 Storage Capacity in Shop 150 litres

Product Related Information

1048766 Product Imported MoumlvenPick ice creams coffee chicken sandwich and Frappe

1048766 Flavours Around 30 to 35 flavours available

1048766 Most selling Swiss Chocolate caramel Vanilla Dream Espresso Strawberry

1048766 Innovations New variants are communicated by their franchiser and they decide on flavours

that they want

1048766 Serve type Cup Cone Glasses Box for take away

Consumer Profile

1048766 Primary Teenagers and Young Adults (18-30) (70) amp Diplomats

1048766 Secondary Family consumers for eat out

1048766 Income Group High income customers tentatively from SEC A

1048766 Geographic Area Concentrated in Gulshan and nearby areas

1048766 Rush time Afternoon- Young Adult 10 to 11 pm Foreigners

1048766 the company also serves at parties and has freezers in known hotels where their ice creams

are served

Sales and Price Information

1048766 Sales BDT 35-40000 daily in summer

1048766 Price 640 per litre for any flavour

1048766 Sales Volume 55-60 litres per day

Supply Chain Placement Information

1048766 Transportation Imported finished goods by ship

1048766 Ship travel time 19 days

1048766 Port clearance 10 days

1048766 Safety Cushion Extra 10 days

Promotional Materials

1048766 Materials used are near premises POS materials for promoting the parlour only

Table 24 Detail of MoumlvenPick of Switzerland

Evaluation of Entry into Ice cream Business for Bangladesh Limited 39

Andersenrsquos of Denmark

Basic Company Information

1048766 Location Gulshan (2 others in Uttara Dhanmondi)

1048766 Established in 2001

1048766 Seating Capacity 48

1048766 Owner United Group

1048766 Business Type Franchise of Australian company Andersenrsquos of Denmark

1048766 Production Tongi Factory of United Group

1048766 Production capacity 2000 litres per day in factory

1048766 Storage Capacity in Shop 150 litres

Product Related Information

1048766 Product Danish parlour scoop ice cream and coffee

1048766 Flavours Around 30 to 35 flavours available

1048766 Most selling Strawberry Butter Scotch Green

1048766 Innovations New variants and ingredients are communicated by their franchiser and they

decide on flavours that they want

1048766 Serve type Cup Cone Glasses Box for take away

Consumer Profile

1048766 Primary Teenagers and Young Adults (18-30) (70) amp Diplomats

1048766 Secondary Family consumers for eat out

1048766 Income Group High income customers tentatively from SEC A

1048766 Geographic Area Concentrated in Gulshan and nearby areas

1048766 Rush time 8 to 10 pm

Sales and Price Information

1048766 Sales BDT 10-12000 daily in summer

1048766 Price 460 per litre for any flavour

1048766 Sales Volume 40-50 litres per day

Supply Chain Placement Information

1048766 Milk 2025 kg packs are imported

1048766 Chocolates amp Flavours Imported

1048766 Butte paper Local sourcing

1048766 Transportation Ship

Promotional Materials

1048766 Materials used are near premises POS materials for promoting the parlour only

Table 25 Detail of Andersenrsquos of Denmark

Evaluation of Entry into Ice cream Business for Bangladesh Limited 40

Gelateria Igloo

Basic Company Information

1048766 Location Banani Kemal Ataturk Avenue (Two others in GEC Mor Chittagong and Naya

Paltan)

1048766 Established in 2000

1048766 Seating Capacity 20

1048766 Production From Igloo factory in Shyampur Narayanganj

Product Related Information

1048766 Product Parlour scoop ice cream and coffee only

1048766 Flavours Around 30 flavours available

1048766 Most selling Vanilla Strawberry Chocolate Pistachio Butter Scotch Tutti Fruity

1048766 Serve type Cup Cone Glasses Box for take away

Consumer Profile

1048766 Primary Teenagers and Young Adults (18-30)

1048766 Secondary Family consumers for eat out

1048766 Income Group High income customers tentatively from SEC A and B

1048766 Geographic Area Diversified

1048766 Rush Time afternoon and evening

Sales and Price Information

1048766 Sales BDT 8000 to 10000 daily in summer Nearly one fourth in winter

1048766 Price Varies but 350 per litre of vanilla

Promotional Materials

1048766 POS materials at the premises

Table 26 Detail of Gelateria Igloo

52 Price Comparison of Common and Boutique Segments

Price ranges of both common format and boutique segment cannot exactly be pin pointed as

products do not follow common structure and variations occur with use of toppings mixing of

flavours and use of coatings However a price comparison has been made among the brands

based on their price of per litre of vanilla flavoured ice cream in the market It appears to be as

following

Company

Price Litre Vanilla

Club Gelato

750

MoumlvenPick

640

Andersenrsquos

460

Dolce Vita

440

Igloo

100

Kwality

100

Polar

100

Milk-Vita

90

Savoy

85

Table 27 Comparative Price Analysis

As it can be seen there is price gap within the range of BDT 100-400 Ice cream kiosks and

small scooping boutiques can operate within that range

Evaluation of Entry into Ice cream Business for Bangladesh Limited 41

60 CONSUMER ANALYSIS

61 Target Group of Ice cream

Who are the consumers of ice cream This question does not have a clear answer Ice cream is a

food for all It is the only food consumed by a human being at less than 0 degree centigrade

temperature and people of all ages feel indulged to have it However we can determine focus

target groups for both branded common format and artisan boutique ice cream Group

discussions and market visits were done to get insight into the consumers along side resources

form secondary sources Age based target group is common for both segments but variation

among the groups occur mainly based on SEC and DMFI classification

611 Geographic Group

Branded ice cream remains an urban product till date Geographically branded ice cream has

reached urban and semi urban areas up to Thana Head Quarter levels Ice cream has reached

areas where electricity is available Small artisan players are available in places where large

branded players have no distribution

612 Target Age Group

Age wise grouping of target consumers is as follows

1048766 Urban kids in the age group of 5-14

1048766 They mainly consume normal sticks cups cones innovative fillers and water ice creams

1048766 Urban youth in the age group of 15-24

1048766 They consume premium and extrusion sticks and cones

1048766 Urban mothers in the age group of 25-35

1048766 They determine the family purchases Even when the father purchases ice cream decision is

taken by them

Consumption pattern of various age groups are depicted in the following chart Ice cream

consumption pattern50203005 to 14 yrs15 to 24 yrs25 to 35 yrs

Figure 11 Target Group wise Consumption Pattern Evaluation of Entry into Ice cream Business

for Bangladesh Limited 42

613 Target SEC and DMFI Group

Common Format

SEC A and B is the target group for common format ice cream However with rapid increase in

price level over the years has made it a ldquohard to consumerdquo product for SEC B consumers who

belong to lower DMFI group

Boutique Format

Boutique formatrsquos higher margin and high price range makes it an exclusively SEC A ice cream

People belonging to upper and upper middle class have access to the mediocre boutiques and

only higher upper class can have premium ice creams like Club Gelato and MoumlvenPick

Another unique target group for boutique format are the foreigners who live in Bangladesh

These people tend to visit the parlours to have ice cream as dessert especially after dinner

62 Ice cream in Consumer Lifestyle

Figure 12 Ice cream in Consumer Life style

This simple overview of ice cream in consumer lifestyle was determined based on in-depth

research analysis of UBL and validated through qualitative group discussions by the author

However detail of in-depth research is provided in a later section of this chapter

Evaluation of Entry into Ice cream Business for Bangladesh Limited 43

63 Highlights of Purchase Habit of Ice cream

631 Common Habits across Target Groups

There are some common habits that were identified in earlier researches and group discussions

with consumers Common habits mean the consumer approach towards ice cream that is seen

across all target groups eg kids youth and adult purchasers These are outlined below

1048766 Ice cream is mainly seen as a dessert or a snack Impulse ice cream is seen as a quick snack

that is consumed when it is in sight Visibility plays a big role here Regarding family packs

people see it as a post-food dessert

1048766 Ice cream purchase is commonly a planned event When the contexts arise people generally

take a bit of time to decide whether or not to have ice cream or when they want to go to a

boutique they make due considerations regarding which boutique to visit

1048766 Ice cream purchase decision is taken based on favourite flavour People tend to try out new

variants and flavours when they first see it They compare the taste with earlier experience and

when they purchase later they choose the flavour they have liked most

1048766 For In-Home segment decision is mostly taken on the flavour Generally people come up with

different flavours of choice and most voted flavour is chosen

1048766 People become aware of new variants or flavours mainly through word-of-mouth

Advertisement (new launches special offers and festivals) in newspaper is another source of

awareness

1048766 People are currently indifferent towards the price level of premium flavours However some

feel that price of Choc-bar or water ice creams (lolly) is a bit much If less they would have

consumed more Some also feel that companies should come up with branded ice cream in the

price range of BDT 5-8

1048766 Ice cream is purchased from nearby shops If required brand and flavour is not available 2-3

shops will be visited and then available flavour will be selected even if the required one is not

found This is done mainly not to ruin the mood for ice cream

1048766 People are very open to try new brands and flavours especially if it comes from a credible

source They would try new flavours and if they are satisfied with the taste they would repeat

purchase

1048766 Regarding boutique visits people feel that boutiques need to have a proper environment

enough flavours and other snacks

1048766 While visiting boutique with family or companion they want variation in flavours so that

they would order different flavours and taste each otherrsquos ice cream It is seen as a sign of

togetherness

1048766 Frequency of ice cream purchase varies among people It depends on peer pressure collective

family decision summer heat and attitude towards ldquoice creamrdquo itself as a product Evaluation of

Entry into Ice cream Business for Bangladesh Limited 44

632 Habits of Kids

1048766 Kids choose ice cream flavours by the look of the product (generally pictures shown in POS

materials and carts) They love colour and designs of the products let it be a common format or a

boutique ice cream

1048766 Kids (when in house) would go with the housemaid to the nearby shop choose the flavour

they want (within range of the amount given to the maid) and buy it

1048766 When with parents they would take the product they like even if the price is lower than some

other product However mothers play a role in this decision They would want their children not

to choose too high priced a product or coloured products

633 Habits of Youth

1048766 Young people are the main consumer of impulse ice cream They also are one of the major

consumers in the boutique segment

1048766 Young people love to try out new products that come into the market Another side of the coin

is that they are not very loyal to a brand or a flavour and tend to switch a lot

1048766 Regarding boutique visits young people go to boutiques to have an ldquoice cream hang outrdquo with

peer groups They would stay there for a longer period of time while they have their ice cream

1048766 Some times young people make milk shakes and other ice cream based desserts

634 Habits of Mothers

1048766 Mothers worry about their childrenrsquos health and they prefer ldquovanillardquo type of brands

However when price constraint occurs they go for water ice creams for their children They try

to convince their kidrsquos purchase decision

1048766 Regarding family purchase motherrsquos decision is sometimes prioritized by the whole family

64 Barriers to Ice cream Consumption

641 Emotional Barriers

1048766 Overindulge (close to sinful)

1048766 Undisciplined (no control)

1048766 Childish (licking)

1048766 Artificial Image

642 Functional Barriers

1048766 People of SEC B feel that ice cream is an expensive dessert (If less expensive would consume

more often)

1048766 It leads to cold cough - especially in winter rainy season

1048766 It contains artificial additives preservatives

1048766 It is very high in calories that lead to fattening

Evaluation of Entry into Ice cream Business for Bangladesh Limited 45

1048766 It does not quench ldquothirstrdquo

1048766 Less convenient (portable immediate eat)

1048766 Messy Dripping

65 Research Findings

The highlights regarding purchase habits triggers and barriers of ice cream consumption provide

a glimpse into the consumer world of ice cream industry However UBL CMI conducted a

formal research exclusively on ice cream consumers to identify

1048766 Occasions of ice cream

1048766 Frequency of ice cream consumption

1048766 Expectations from ice cream occasions

1048766 Personalities that they desire from ice cream

651 Relevant Occasions in Daily Lives of Consumers

Research question regarding ldquousual occasions of life that occurred most frequently in day-to-day

lives of the respondentsrdquo generated the following replies

Occasion

of Respondents saying Yes

Watching TV

93

Normal Dinner At Home

91

Normal Lunch At Home

89

At Home While ReadingMusicSurfing

86

Informal Family Get Together

85

Out Of Home Hanging Out With Friends

84

Out Shopping

84

Mid-Afternoon Break At Home

83

At Home By Myself During The Day

82

Special Dinner At Home

82

Informal Dinner Out Of Home

82

Normal Lunch Out Of Home

82

Leisure Walk

79

Coming Home From WorkSchool

78

Special Dinner Out Of Home

78

Celebration

78

A Night In With Friends

77

At Home By Myself In The Evening

77

Special Lunch Out Of Home

76

Mid-Afternoon Break Out Of Home

75

Special Lunch At Home

73

Day out with Partner

72

Midmorning Break

70

At Breakfast

68

Family Day Out

68

During Work Or At School

65

Evaluation of Entry into Ice cream Business for Bangladesh Limited 46

Travelling ToFrom WorkSchool

65

At The Cinema

61

Special Event

56

Clubbing At A Party

50

Post GymSports

48

Table 28 Relevant Occasions in Consumersrsquo Lives

Respondents were then asked to mention ldquofrequency of occurrence of the identified occasionsrdquo

The identified replies are as follows Normal dinner at homenormal lunch at homeComing home

from workschoolTraveling tofrom workschoolDay out with Partner SpouseMid-afternoon

break at homeOut of home hanging out with friendsLeisure walkMid-afternoon break out of

homeA night in with friendsSpecial dinner at homeSpecial lunch out of homeFamily day

outSpecial eventPost gymsportsDaily2-3 Times A WeekWeekly2-3 Times A MonthOnce A

MonthEvery 2-3 MonthsLess OftenNever Figure 13 Frequency of Occurrence of Occasions

This shows that ldquoNormal dinner at home Watching TV Normal Lunch At Home At Home

While ReadingMusicSurfing Coming Home From WorkSchool During Work Or At School

Travelling ToFrom WorkSchool Midmorning Break Day Out With Partner Spouse At Home

By Myself During The Dayrdquo are the most frequent daily rituals of busy lives of consumers

652 Frequency of Ice cream Consumption

Respondents were asked to mention ldquoconsumption pattern of ice cream during the identified

occasionrdquo on a scale of 1-5 depicting frequencies like ldquo(5) always (4) most of the times (3)

about half of the times (2) sometimes (1) never do not knowrdquo The responses are depicted in

the following table

Evaluation of Entry into Ice cream Business for Bangladesh Limited 47

444474544655555566756665775967779991011101111101210111110101113111412131314161

011121411131216181519181518211817171719181718201721222130303434253437403741394

046383944464746453745414641374638504843414839373030292726232725222020201926202

21722221317Midmorning

breakWhile clubbing at aAt the cinemaSpecial eventNormal lunch out ofA night in with

friendsNormal dinner atInformal dinner out ofAt home by myselfAt home by myself inOut

shoppingSpecial lunch atDay out with SpouseWatching TVAlwaysmost of the timesAbout half

of the timesSometimesneverdo not know

Figure 14 Frequency of Ice cream Consumption

As it can be seen ldquoDay out with Spouse Special lunch at home Special dinner at home

Watching TV Family day out Celebrationrdquo are the occasions where most frequently ice cream is

consumed

653 Market Character Mapping Relevant Occasions vs Frequency of Consumption

If we plot frequency of consumption on the X-axis of a chart and relevance of occasion

occurrence on the Y-axis taking the above mentioned values as cut-off values we get four

quadrants in the chart depicting four market scenarios that any ice cream manufacturer in

Bangladesh market might encounter given the current market situation This market

segmentation is based on frequency of ice cream consumption in daily occasions of consumer

lives

The segments are

1048766 OPPORTUNITY MARKET High Relevant Occasions-Low Ice cream Frequency

1048766 QUESTION MARKET Less Relevant Occasions-Low Ice cream Frequency

1048766 HIGH FREQUENCY MARKET Relevant Occasions-High Ice cream Frequency

1048766 CAPTIVE MARKET Less Relevant Occasions-High Ice cream Frequency

The chart looks as follows Evaluation of Entry into Ice cream Business for Bangladesh Limited

48

Figure 15 Relevance of Occasion-Frequency of Consumption Mapping

As it can be seen from the above chart Bangladesh Market still lies in the Opportunity and

Question market zone with a pull towards High frequency and Captive Market zones This is

evident from market data as penetration of ice cream still remains at Thana headquarters levels

Also this explains the high market growth rate of 17 as market is yet under developed and

branded quality ice cream has yet not reached all levels of consumers especially rural level that

constitutes around 75 of Bangladeshi market

From the above analysis we can establish that target of ice cream manufacturers should be to

penetrate more into the Bangladeshi market to create higher frequency of ice cream

consumption The following chart shows the strategies to follow for ice cream manufacturers

Figure 16 Required Market Strategy for Bangladesh

Evaluation of Entry into Ice cream Business for Bangladesh Limited 49

As relevance of ice cream consumption occasions can hardly be controlled by marketers their

endeavour should be to create more ldquoemotional and functionalrdquo attachment to ice cream in less

frequent occasions through ldquomarket developmentrdquo strategy to earn share from overall food

expenditure of consumers and at the same time make them consume more ice cream in highly

relevant occasions through ldquopenetrationrdquo strategy

654 Consumersrsquo Emotional Requirements and Product Attributes

All consumers under these clusters also identify the emotional requirements and the significant

product attributes they seek from their current preferred and future desired ice creams These are

provided below

Cluster

Emotional Functional Requirement

Product Attributes

Enjoyment

Flavour Variety

1048766 Combination of different flavours

1048766 Combination of different textures

1048766 Very sweet

1048766 With wafer or biscuit

1048766 With chocolate

1048766 Of a well known brand

Socially Involved

Spoonable Rich

1048766 Very creamy

1048766 Only natural ingredients

1048766 No mess

Care

Size Creaminess

1048766 Big

1048766 Rich full taste

1048766 Smooth

1048766 Value for money

1048766 No mess

Unwind amp Escape

Economy

1048766 Crunchy

1048766 Economic

1048766 Of a well known brand

1048766 Nutritious

Balanced Convenience

Health Conscious

1048766 Of a well known brand

1048766 Nutritious

1048766 Milk based

1048766 Low sugar

1048766 Low carbohydrates

1048766 Filling

Active Self-Grooming

Fruit Vitamins

1048766 Healthy

1048766 Fruit based

1048766 Low fat

1048766 Liquid or drinkable

1048766 Nutritious

1048766 Of a well known brand

Confidence

Drinkable Light

1048766 Low calories

1048766 Light on the stomach

1048766 Chewy or gooey

1048766 Not so sweet

1048766 Natural appearance

Sensual

Appeal or image

1048766 No artificial additives

Evaluation of Entry into Ice cream Business for Bangladesh Limited 50

1048766 Natural appearance

1048766 Melting slowly

1048766 Attractive packaging

1048766 High quality ingredients

1048766 Of a well known brand

Table 29 Requirements amp Product Attributes Desired by Consumer Clusters

Of these findings we see that the identified highlighted barriers to ice cream consumption are

pretty evident among the consumers Mostly people want products of a reliable source or a well

known brand low calories quality ingredients value for money economic type

Evaluation of Entry into Ice cream Business for Bangladesh Limited 51

70 INDUSTRY ATTRACTIVENESS AND ENTRY PROSPECTS

71 Driving Forces of Growth

As identified in the earlier sections there are several driving forces behind the growth of ice-

cream industry in Bangladesh

712 Trade and Infrastructural Level

1048766 As a result of globalization newer varieties have been introduced to the local products Many

foreign companies are also coming as franchise so there has been increased competition and

these boutiques are setting higher standards for the local producers

1048766 The present market growth rate is 18-19 which is being influenced by larger players like

Igloo who are expanding their distribution nation wide with expansion of national electricity

grid

1048766 With entry of Modern Trade and recent organized business approach of retailers has made it

possible for ice cream manufacturers to penetrate into shops even without providing them with

branded freezers

1048766 Weather change has increased ldquosummerrdquo season in our country which has reduced negative

seasonal impact on ice cream

1048766 Large companies like Igloo have taken global learning of using carts as an effective tool of

availability and visibility for ice cream

1048766 New and improved technologies are being used in the production process This technological

advancement has improved quality increased speed of production and made the process more

cost effective

713 Consumer Level

1048766 Only a few years back rich people could afford the luxury of having ice-cream but now it has

become a common product for everybody Ice-cream companies are producing different products

with a wide price range for consumers of every class and status

1048766 Nowadays companies are doing promotional campaigns more frequently the customers get to

know about the product which makes it easier for them to buy the best one

1048766 The improved standard of life and more modernized lifestyle of people is an important reason

for the increased consumption thus growth of the ice-cream industry

Evaluation of Entry into Ice cream Business for Bangladesh Limited 52

72 Prospects of Entry

The ice-cream industry of Bangladesh is an attractive one for the investors because there is a

huge market but number of producers is very small The major reasons behind industry

attractiveness are as follows

1048766 The industryrsquos current growth potential is very high with opportunity for market development

1048766 The competition currently permits adequate profitability and the competitive forces are

becoming stronger with time

1048766 Boutique segment is at a very high growth stage but no operator is currently operating with a

mid price range of BDT 100-400 Ice cream kiosks and small scooping boutiques can operate

within that range

1048766 Current industry driving forces are favourable for the future industry profitability

1048766 Globally oriented consumers look for variety in ice cream that is currently not available

Latest innovations came in the market in 2002 People would welcome new variety and flavours

1048766 There is a gap in the market for balanced convenience through ice cream where consumers can

get nutritional benefits for ice cream Also emotional attachment to ice cream could further be

improvised in promotional campaigns

1048766 There is high scope for market penetration and development to increase frequency of ice

cream consumption

1048766 Level of risk or uncertainty is very low in ice-cream industry because the consumer market is

so huge any product with a standard quality and careful pricing will be able to make significant

profit

1048766 As for geographic reach of the industry 60 market is still in Dhaka There is scope of

expansion and a new entrant can easily capture market share within Dhaka using carts even if

they do not want nation wide cold chain distribution

1048766 The production process is very complex and capital requirements are also high So before

going into production any company should know about their capabilities and weaknesses and

then start the business or else they might suffer huge loss at a certain level

1048766 Unilever can acquire the required resource and use existing multi-national multi-cultural

expertise to enter the market in a grand way

1048766 With high probability of entry from DANONE with more products like the ISIS diabetic ice

cream Unilever should consider entering in this industry as soon as possible

Evaluation of Entry into Ice cream Business for Bangladesh Limited 53

80 ENTRY STRATEGY FOR UNILEVER

While describing the suggested entry strategy for UBL certain issues have been kept

confidential and some issues have been touched but not explained to keep consistency with UBL

confidentiality policy

81 Suggested Entry Areas for UBL

1048766 Boutique segment of the Bangladesh ice cream is only 5 of the branded market UBL needs

to pursue a larger scope to make the entry viable

1048766 UBL cannot fight with unbranded segment as global product quality mandate of Unilever does

not allow UBL to fight in low price-low quality segment

1048766 Recommend entry should be in the common format segment with both single and multiple

servings and in the boutique segment with a different brand name (if possible BEN amp JERRYrsquoS)

1048766 UBL should build up state-of-art modern factory for manufacturing and establish cold chain

facilities initially focusing on metro cities

1048766 Investment issues are required to be addressed for building factory and cold chain and capital

requirement needs to be identified for that purpose4

1048766 UBL may have boutiques for driving image selective top-end offering

1048766 Kiosks can be setup near universities and shopping malls

1048766 Boutiques should be concentrated in Dhaka and Chittagong

1048766 Ice cream for boutiques and kiosks would be produced in factory as institutional packs of 9-10

litres

82 Products

1048766 As a Brand Building country in global Unilever operating framework UBL is entitled only to

bring products developed by the Brand Development countries

1048766 Unilever should focus on serving products that have nutritional benefits (already available

globally) along with usual satisfactions of sensual pleasure functional attributes etc

1048766 Current existent players especially Igloo and Kwality have extensively copied global and

regionally available Unilever products eg Cornelli is same as Wallrsquos Cornetto Vinetta is similar

to Vienetta Mega is similar to Magnum etc UBL needs to differentiate these to consumers on

the ldquotaste the originalrdquo platform where global quality is focused regarding the products

1048766 UBL should also bring regionally famous brands like Moo or Max to create image

differentiation

1048766 Magnum or Moo should be used as premium end ice cream to generate more profit margin

Evaluation of Entry into Ice cream Business for Bangladesh Limited 54

83 Placement

1048766 Distribution focus should be in Dhaka for entry as Dhaka contributes more than 60 of total

ice cream sales in the country

1048766 Company may use carts as distribution method They serve as good source of visibility and

availability It would help in increasing impulse purchase

1048766 At least 1500 outlets in Dhaka and Chittagong needs to be actively served using dedicated

branded refrigerators to generate sales

1048766 50 carts should operate in Dhaka and Chittagong

84 Price

1048766 UBL products should be priced at par with Igloo pricing for the common format ice creams

1048766 UBL can bring in premium single-serve SKUS for the higher economic classes in the price

range of BDT 60-80

1048766 Smaller SKUs (small lolly stick) can be introduced in the price range of BDT 10-15

1048766 In the boutique segment UBL should price products above the semi-premium segment

(Gelateria Igloo Sub Zero or Andersenrsquos) but lower than that of Club Gelato or MoumlvenPick

85 Promotion

1048766 UBL would require strong marketing campaign (As high as 50 of sales) to have a grand

entry in the market

1048766 Presence in the television media would be of utmost importance More than 50 of

promotional expense should be made here initially Gradually it can be reduced

1048766 Newspaper would serve as the second most important option

1048766 Billboards should also be used

1048766 Activations (similar to Lux Channel i Super Star or Igloo Festival) should be done to generate

trial

86 Scope of Opportunity

Table 30 Value and Volume Based Scope of Opportunity for UBL

Value (BDT Cr)

Volume (Tons)

Market

131

7835

Common

121

7600

Boutique

98

235

Evaluation of Entry into Ice cream Business for Bangladesh Limited 55

861 Geographic Contribution

1048766 Dhaka (61)

1048766 Chittagong (19)

1048766 Sylhet (10)

862 UBL objectives

Common Format Ice Creams

1048766 Target 10 Market share in 1st year operation

1048766 Value BDT 11 Cr

1048766 Production capacity required 21 Tons day

1048766 Freezer Placement 1500 freezers

1048766 Cart operation At least 50 carts

Boutiques

1048766 Target Further develop the market

1048766 Focus Dhaka Chittagong and Sylhet Metro

1048766 Franchise At least 20 franchisee operations nation wide in divisional towns

1048766 Pricing Below imported parlours above common formats with around BDT 400 per Litre

87 Critical Success Factors

1048766 UBL is considered as a high profile company in Bangladesh and thus they cannot operate in

the market only with common products like choc-bars and cups They must have premium

products (these require extrusion line) also to carry their brand image Otherwise UBL would not

be able to charge usual premium over competition products

1048766 Launch of ice cream would require huge promotional and activation support in order to gain

customers from Igloo People want novelty regarding ice cream and UBL have to let them know

about their products and create hype

1048766 Cart should be used as a source of distribution Recent successes of Unilever companies like

Indonesia shows that carts can generate more sales and can be used as source of visibility in the

minds of both retail traders and consumers Carts can also provide incremental sales to the

company

1048766 UBL have to create a strong cold chain for ice cream (initially in Dhaka and Chittagong) to

ensure quality products for consumers

1048766 UBL have to build capacity very rapidly to meet consumer demand if the launch is successful

Evaluation of Entry into Ice cream Business for Bangladesh Limited 56

90 BUSINESS PROJECTION

91 Basic Assumptions

Business projection for ice cream business was made based on a conservative approach UBL

would require spending significantly on production capacity and factory dedicated to ice cream

Thus to analyse business possibilities of ice cream certain assumptions were made and collected

data were used These are

1048766 Production equipments and cabinets would cost approximately BDT 55 crores

1048766 Production equipments 45

1048766 Packaging Equipments 15

1048766 Storage Facility 20

1048766 Branded Freezers 10

1048766 Distribution Investment 10 (Distributors would also invest themselves)

1048766 Ice cream factory with a floor size of 20000 sqft would cost BDT 25 crores

1048766 Objective is to capture 10 market share in Dhaka and Chittagong in the first year

1048766 Business would grow by 50 in year 2 and 3 30 in year 4 and 25 in year 5

1048766 Weighted price per litre is BDT 170 according to volume share of single serve ice cream

multiple serve ice cream and boutique ice cream

1048766 Other financial assumptions were also made List of them are provided below but amount has

been removed for confidentiality issues

Assumptions

Trade Margin

Distributors Margin

DutyVAT Rate

Trade Terms Expense of NPS

Trade Terms Expense of NSV

Advertising ampPromotion of NPS

Indirects (Salaries Wages etc)

Trading Tax

Table 31 Assumptions for Business Projection

Evaluation of Entry into Ice cream Business for Bangladesh Limited 57

100 CONCLUSION

Ice cream has good prospect in Bangladesh It is still a growing market with opportunities for big

new entrants With the barriers of entry UBL needs to consider its priorities UBL being an HPC

company traditionally needs to acquire expertise in cold chain distribution and has to invest a lot

of money to rip the benefits of the industry However to initiate company can take regional

support and acquire resource expertise The company should enter the business as soon as

possible since there is potential threat from DANONE to introduce more ice creams after ISIS

diabetic ice cream and also with potential of the industry arch rival Nestlersquo might consider

entering into the industry too

Evaluation of Entry into Ice cream Business for Bangladesh Limited 58

References

Web References

1 wwwunilevercom

2 wwwunilevercombd

3 wwwhllcom

4 wwwunilevercompk

5 wwwthedailystarcom - Life Style Magazine

6 wwwreuterscouk

Evaluation of Entry into Ice cream Business for Bangladesh Limited 59

Page 9: Square Ice cream

Polar

168

1835

2019

Kwality

306

335

374

Savoy

388

415

458

Milk Vita

394

434

488

Table 9 Market Sales and Growth Rate of Branded Common Format Market

Volume based market size shows the following scenario prevailing in the Bangladesh market in

2009

Company Name

Single Vol (000 Ltrs)

Multi Vol (000 Ltrs)

Total Vol (000 Ltrs)

Total Market

32759

42967

7573

Igloo

16760

21983

3874

Polar

4867

6384

1125

Kwality

8865

11628

2049

Savoy

1124

1474

260

Milk Vita

1141

1497

264

Table 10 Volume Based Market Size

The total volume of the branded common format ice cream industry is 7500 Tons of which more

than 50 belongs to Igloo followed by Kwality with 27

D Market Share and Size of the rivals

Market share data for all the local companies show a trend where Igloo is the biggest ice-cream

company dominating with a huge market share Although even 1-2 years ago there was intense

competition between Kwality and Polar but now it seems that Kwality is 2nd largest ice-cream

manufacturing company in Bangladesh Polar is in the 3rd position with Savoy and Milk Vita

trailing in the market Market share percentage over the years is presented in the following table

Company Name

2007

2008

2009

Igloo

50

5031

5116

Kwality

256

2666

2706

Polar

17

161

1485

Milk Vita

34

332

348

Evaluation of Entry into Ice cream Business for Bangladesh Limited 22

Savoy

39

365

343

Table 11 Market Share of Competitors

E Geographic Sales Orientation

Ice cream still continues to be a city-oriented product and its demand is comparatively low in the

rural areas Reasons behind this are electricity problem outside urban areas and purchasing

power of people Geographic sales orientation of the common format ice cream industry is

provided below

611890690480590250DhakaChittagongKhulnaComillaBarisalOthers

Figure 7 Geographic Sales Orientation

Dhaka still is the largest contributor in the ice cream segment Nevertheless over the years this

trend is shifting Areas outside Dhaka are also growing making Dhakarsquos share lower by small

percentage As urban markets are the major contributors companies design their products

keeping in mind the tastes and styles of the urban consumers Compared to the other companies

Igloo is the most expensive in the common format segment so they target only city based

customers who have the purchasing power Although other companies such as Savoy are offering

low priced product even their main target is urban people due to nation wide electricity problem

F Seasonality of Sales

Ice cream industries in warmer part of the world are highly seasonal Same is true with

Bangladesh According to secondary data sources sales seasonality looks as follows

Period Name

Months

Contribution

Super-Peak

April May June

46

Peak

March July August

36

Off-Peak

February September October November

15

Super Off-Peak

December January

3

Table 12 Seasonality of Ice cream Sales

This data was validated through interviews with retailers during market visit According to them

more than 75 sales of ice cream came in the hot months Another insight that could be

identified was

Evaluation of Entry into Ice cream Business for Bangladesh Limited 23

various festivals and programmes provide scope for higher volume of ice cream sales According

to companies where only 10-15 sales occurs in the winter season same amount of sales occurs

during festivals like the two Eids and Nobobarsha

G Distribution Servicing System

Mainly common format ice-cream is distributed in two methods that are directly to retail shops

and through hawkers with ice cream carts trolleys

The various channels of retail shops other than cart that serve as distribution outlets for Ice cream

are

7 Urban General Stores (UGS)

8 Urban Neighbourhood Grocer (UNG)

9 Premium General Store (PGS) SMMT

10 Confectionary Bakery

11 Modern Trade (MT)

12 Fast Food shops (Recently some fast food shops keep branded ice cream cabinets)

Distribution details of all the companies are provided below However detail of Milk Vita is not

available as they are mainly milk producer and they have no dedicated ice cream cabinet for

retail stores and currently they are not distributing ice cream in Dhaka city

Company

Distribution Method

Frequency

No of Cabinets

No of Carts

Igloo

Distributor Cart

2 to 3 times a week

4000

100

Kwality

Distributor Cart

1 to 2 times a week

1050

20

Polar

Distributor Cart

1 to 2 times a week

800

50

Savoy

Company

1 to 2 times a fortnight

176

-

Milk-Vita

-

-

-

-

Table 13 Distribution Method of Market Players

Distribution Process Distribution process through both methods is described below

Retail Distribution The general distribution that is followed by companies is that distributor

sends large refrigerated trucks dedicated to specific territories These trucks are accompanied by

small refrigerated vans Main road side shops are served directly from the large truck and shops

that are inside small streets are served by the small vans

Order and delivery are done on the same day The strategy followed is that of replenishment If

the branded freezer of the company is empty they simply fill it up according to requirement of

different SKUs as the delivery people see fit However shopkeepers have to buy full cartons

(usually 24 pieces in a carton) of single serve ice cream they cannot buy in pieces

Evaluation of Entry into Ice cream Business for Bangladesh Limited 24

Among the retail shops there are about equal numbers of branded and unbranded freezers This

is a normal scene in Dhaka where all shopkeepers require freezer to keep other cold products

However basic distribution policy is that if a shop has branded cabinet of a company they

cannot keep competitor ice cream in that cabinet Thus penetration can be made possible in

shops where unbranded freezers are available

General branded freezer contract policy with Igloo and Polar is that traders have to pay BDT

5000 to take a freezer Maintenance of branded freezers is responsibility of the company but

electricity bill is paid by shopkeeper However Polar is not currently giving any new freezer

Kwality gave away their freezers for free however they ensured safety of their freezers by

checking background of the shopkeepers

Cart sellers Cart sellers collect required amount of ice cream from nearby distribution house or

company showroom (Igloo has one showroom in Panthapath) on a daily basis They also have to

buy cartons of products not pieces Kwality carts collect their ice cream from factory (Tejgaon)

or nearby distribution house Cart sellers contribute around BDT 3000 sales in a day and

generally sell at BDT 1-2 higher than set price of each product

The cart sellers generally keep at least a two-day stock so that they can meet sudden upsurge in

daily demand of ice cream or if they get the opportunity to sell at parties programs or any open

air event (Wedding at community centres or outside cultural programs at auditoriums) If cart

sellers need replenishment of stock they even take service more than once in a day either

revisiting showroom house or they call up company delivery people to serve them at their

location if there is opportunity for selling more ice cream

Policy regarding Damaged Ice cream All the ice cream producers have very good relationship

with the shopkeepers If the retailers have refrigeration problem company takes ice cream back

until the problem is fixed whether it is stored in branded freezer or not Also if any ice cream

gets damaged or there is bacterial formation company takes them back Usual return time varies

from 15-30 days For large sellers however they take less time

Payment Method for Ice cream Purchase All the companies give credit of around one month to

large volume contributing retail sellers and try to maintain good relationship with them This

trend is seen in all channels Also all the SMMTs and MTs are given credit of one month and

payment is made by cheque Other small shopkeepers have to purchase with cash However

according to shopkeepers Igloo is currently trying to cut down on credit sales as they believe

there is a consumer pull for their brand Companies like Polar and Kwality also give special

commission to large sellers Polar gives 5 commission on every bill

Evaluation of Entry into Ice cream Business for Bangladesh Limited 25

H Technology and Innovation

Technological advancement in the ice cream industry has been very rapid Starting with stick

mould and filler ice cream production the companies have come a long way Assessing the

consumer choice and demand the companies are introducing new products very often Improved

and new technology is used for faster production and better quality Igloo is trying to meet the

international standards and launching products such as Sundae Cornelli and Nuggets Other

companies are also introducing new flavours suitable for their target segments Igloo has both the

ISO and the HACCP certifications These were awarded in the year 2003 due to their relentless

pursuit of quality and innovation In September 1996 Igloo introduced the 3D Mould line and

straight line extrusion technology for the first time in the subcontinent Basically with Igloorsquos

pursuit all the modern technologies and quality innovations are available in the market

I Production Capacity

Current production capacity of the major players in the common format ice cream segment is

estimated to be as follows

Name

Capacity (Ltrs day)

Total Production (000 Ltrs)

Required Capacity (at 300 production days )

Estimated unutilized capacity (Ltrs day)

Igloo

22000

387433

12914

9086

Polar

6500

112513

3750

2750

Kwality

12100

204934

6831

5269

Savoy

1560

25985

866

694

Milk Vita

1330

26387

880

450

Table 14 Production Capacity of Current Market Players

From the table we can see that all the ice cream manufacturers are operating with unutilized

capacity However one point to be noted is that different ice cream SKUs require different

amount of item to be produced Exact machine production capacity at litre per day does not

represent the accurate scenario Nevertheless it can be safely assumed that all the manufacturers

have unused machine capacity at their premises Moreover the larger players like Polar and

Kwality have new technology available at their premises Kwality bought second hand machines

from Thailand but both Igloo and Polar bought theirrsquos from Italy and Denmark

J Products and Pricing

Products The products in the ice-cream market are differentiated A few firms dominate the

market but an endless variety of ice creams are offered to the consumers Igloo pioneers all

major innovations in the market The products that are available in the market can be classified

into single serving and multiple serving groups Which are then categorized based on functional

attributes designs These are

Single

Stick

Normal mould 3D mould extrusion

Evaluation of Entry into Ice cream Business for Bangladesh Limited 26

Cup and Sundae

Flat cup long cup

Cone

Normal cone (vanilla strawberry etc) premium cone (Ripple)

serving

Innovative Fillers

Snowball Animal shaped containers sandwich nuggets etc

Container

05 ltr 1 ltr and 2 ltr containers

Multiple serving

Family Pack

Assorted packs cakes shahi kulfi etc

Table 15 Ice cream Serve types

Among all the products available in the market most selling SKU for all the companies is Choc-

bar stick and highest selling flavour is Vanilla Following are the ranks of most selling SKUs and

flavours

SKU Name

Rank

Choc-bar (70 ml)

1

Vanilla Cup (100 ml)

2

Vanilla Box (05 and 1 Ltr)

3

Lemon Lolly (70 ml)

4

Normal Cone

5

Flavour

Rank

Vanilla

1

Chocolate

2

Strawberry

3

Ripple

4

Mango

5

Table 16 Rank of SKUs Table 17 Rank of Flavours

Choc-bar is one of the earliest vanilla based chocolate coated SKU that has dominated the

market strongly over the years Shopkeepers could not provide an exact percentage on SKU

based sales contribution Most of them ranked the SKUs and flavours according to sequence

shown in the above table Also according to newspapers and secondary sources Vanilla is the

most selling flavour with 60 sales contribution According to secondary sources percentage

sales contribution of various types of SKUs in the common format segment are as follows

Type of Ice cream

Value Share

Volume Share

Impulse dairy ice cream

514

443

Impulse water ice cream

112

138

Take-home dairy ice cream

374

419

Table 18 Volume Share of Different Serve Types

Impulse dairy ice cream provides more value share as price per litre is higher than take home

multiple serving ice creams Impulse water ice cream shows a similar trend as of take home ice

cream

Pricing Product pictures and price ranges of each category are provided below Evaluation of

Entry into Ice cream Business for Bangladesh Limited 27

Normal Premium Price Tk12 Tk20 Tk25 Cup amp Sundae Normal Cup Sundae Premium Cup

Price Tk20 Tk25 Cone Normal Premium PriceTk20 Tk25Innovative Fillers PriceLtr Tk100

Tk175 Container Normal Premium PriceLtrTk150 Tk 175 Tk 190 Family Packs Kulfi Mixed

Pack Cake Single ServingMultipleServingNormal Ice Fruit 3D Mould Premium Extrusion Price

Tk10 Tk15 Tk15 Tk20Stick Normal Cream

Figure 8 Serve Types and Pricing

As it can be seen from the above chart all impulse ice creams are priced within the range of

BDT 10 to 25 Other take home multiple servings are priced within the range of BDT 50 (05

Litres) to BDT 220 (2 Litres) Another noticeable factor in price is that there are both normal and

premium flavours in all types of ice creams

K Firms as Price Setters

The firms have capability to affect the market price to be low as profit margin is very high If

Igloo reduces the price of an item below the prevailing price level in order to increase its sales

its competitors will fear that their customers will go away from them to buy Igloo products To

retain their customers they will be forced to match the price cut of Igloo Historically this has

been proven to be true However due to price sensitivity companies cannot drastically increase

price even if they provide higher quality of product It was seen in 1997 when Igloo increased

price of 11 SKUs and faced drastic sales fall during that time It shows that the industry might

welcome overall industry price increase but not individual company price increase

L Promotion

The promotion scenario in the industry is not quite organized as of now Even proper data

regarding promotional expenditure is not available from research sources The reason being

there is not much consumer related activity seen in the market After Kwalityrsquos introduction in

the market in 1999 Igloo went on with massive Television promotion of their new products that

were available at that time

Evaluation of Entry into Ice cream Business for Bangladesh Limited 28

However in current times there is no TVC running from any company Companies promote their

launches mainly through billboards and newspaper promotions which is currently the most used

source of consumer promotion Some promotional activities that were done by the companies

over the years are listed below

Consumer Promotions

1 Larger players like Igloo and Kwality goes on with campaigns like ldquoGift on stickrdquo where

various prizesrsquo names are written on the sticks and consumers can get them

a Igloo ran a program on their launch of Macho variant where gift varied from cricket bat to

personal computer

b Igloo had a program in 2006 where gifts on sticks varied from Bangkok visit to sunglass

c Igloo ran one campaign in 2007 where gold bars were given on purchasing Choc-bar

d Kwality ran a similar program in 2008 where gifts varied from wrist watches to motorcycle

2 Some companies ran consumer TTS and gift programs where company products were given

free

a Igloo had a program in 2006 where Igloo butter was given free on purchasing Igloo ice cream

cake

b Kwality ran a program in 2008 where one SKU was given as gift with another SKU randomly

c ldquoCone Ice cream at your Homerdquo program was run by Igloo in 2002 where six cone biscuits

were given free with purchase of one litre ice cream

3 Media placement is another form of placement done by larger companies

a Igloo purchased ldquoGlimpse into World Cup Resultrdquo space in daily newspapers during World

Cup Football 2002

4 One interesting program is done by only Igloo in Bangladesh They did it in June 2006 The

program was ldquoIgloo Ice cream Festivalrdquo with main attractions of ldquoGet as much ice cream as you

want for BDT 200rdquo ldquoGet a Fantasy Kingdom Entry ticket with each Entry Couponrdquo ldquoLucky

Drawrdquo and ldquoCelebrity Addardquo

Trade Promotions

5 Trade promotions are mainly given to ldquoHighest retail purchasersrdquo and also based on time

bound trade schemes where various slabs of purchase amount are mentioned for different prizes

a Igloo takes their highest purchasers to visit countries like Singapore and Thailand

b Savoy has a purchase slab scheme where first prize is table fan

c Polar gives special sales commission to their highest purchasers (around 5)

Evaluation of Entry into Ice cream Business for Bangladesh Limited 29

M Players in the Common Format Segment

Branded common format ice cream segment is constituted of five players only Among them

Igloo is the largest player and Milk Vita is the smallest The following sections detail the basic

company detail of all the companies with special emphasis on Igloo the market leader

Igloo

The pioneering ice-cream company in Bangladesh started its operation in 1964 in Chittagong

under K Rahman amp Co Limited (KRC) with a small factory inside Coca Cola bottling factory of

KRC After the independence of Bangladesh in 1971 Igloo was taken over by the government of

Bangladesh Later in 1983 Abdul Monem Limited purchased the entire production setup of KRC

Limited including Coca-Cola bottling plant and Igloo ice-cream factory After taking full charge

of Igloo ice-cream by Abdul Monem Limited the manufacturing operations continued in

Chittagong till 1990 Although Dhaka fetched the maximum share of the total revenue the

distribution cost increased tremendously in the process of meeting the demand of Dhaka city To

cope with the distribution problem and handle Polar threat Abdul Monem Limited transferred

the factory to Dhaka changed the ice-cream packaging from the conventional paper to plastic

and expanded their market and distribution operation The new factory of Igloo was setup at

Shyampur Narayanganj and was nine kilometres away from the Motijheel office The company

apart from catering the capital city started to expand its operations in Comilla (1991) Khulna

(1992) and North Bengal (1993) These markets were served directly from Dhaka since the

storage facilities were not developed till then The company is now the market leader since 1997

with clear market share victory over others with sweeping 51 share It is to be noted that Igloo

is also a player in the boutique segment with three parlours (2 in Dhaka and 1 in Chittagong)

Product Range Igloo offers the widest choice of ice cream more than any other competitor in

the market Igloo is offering a total of fifty items including normal premium and novelty cup

stick and family pack items Igloo has thirty flavours more than anyone else in the industry and

is continuously launching new and innovative delicacies

Igloo ice-cream can be classified in six groups They are

Stick

Macho Choc-bar Mini Choc Clown Mega Shell n core Lolly

Cone

Cornelli 2 in one Cornelli classic

Cup

Shahi kulfi Vanilla Strawberry Mango Snow ball

Container

Vanilla Strawberry Mango Chocolate Coffee Diet Vanilla Tutti Frutti Ripple Pralin

Pistachio

Innovative

Nuggets Sandwich

Family

Ripple cake Party time Shahi Kulfi

Table 19 Products of Igloo

Single serve stick cups and cone items are easy to carry around and convenient to eat which

makes it most sold The core target segment of ice-cream is 6-24 years and this generation is

always on the Evaluation of Entry into Ice cream Business for Bangladesh Limited 30

move and thus prefers independent cone stick or cup items As Igloo initiated the concept of ice-

cream as a family product they offer some items to be enjoyed with the whole family

Quality and Innovation Igloo is committed to maintaining the highest quality standard through

its continuous RampD activities The major ingredients raw materials and packing materials are

procured from the best European sources Strict quality control is done at every stage of the

manufacturing process from procurement of material mixing material flow ice cream making

packaging storing (at main warehouse) distributing and market shelving by the Quality Control

Department Current supply chain for various materials of Igloo is as follows Australia (Milk

Powder) Denmark (Ingredients emulsifiers amp stabilizers) China amp UAE (Food grade sticks)

China Denmark Singapore amp Thailand (Food grade packing materials)

Figure 9 Igloo Supply Chain

Distribution Network Their distribution network is stretched all over the country with a long

fleet of refrigerated vans Firstly the ice cream products are stored at the central warehouse of

the factory and from there they are distributed through the haulage vehicle to the operational

centres located in Dhaka Chittagong Comilla Rajshahi Barisal Bogra Rangpur and Khulna

Strictest cold chain maintenance during the distribution and selling of the ice creams is ensured

Their distribution process is as follows Manufacture Stored at -24c Transported by Refrigerated

trucks at -Reaches amp Preserved in Eight regional stores Refrigerated vehicles (Distributors)Retail

outlets (Deep freezers)

Figure 10 Distribution Process of Igloo

Evaluation of Entry into Ice cream Business for Bangladesh Limited 31

Trolley Operation Igloo also operates through trolleys for extending its reach to consumers at

the furthest points The trolleys are operated near schools alleys streets parks etc and play

rhythmic music to attract the consumers These are very colourfully decorated with Igloo

umbrella and the puller wears specific uniforms Igloo was the first in introducing and operating

these trolleys in Bangladesh for any Fast Moving Consumer Goods (FMCG) Igloo has around

125 trolleys operating throughout the country Individual trolleys are provided with a regular

supply of igloo ice creams

Marketing The marketing commitment of Igloo is based on the relationship with its customers

and consumer by not only manufacturing the highest quality product but also delivering the

product by maintaining this quality To satisfy the ever-changing needs of the customer Igloo

has regularly launched new ice creams and introduced new flavours And this commitment has

positioned Igloo as the market-leading brand by gaining the consumers trust with the positioning

as ldquoA WORLD OF GREAT TASTErdquo

Facilities and Logistics at a glance As of 2009 following are the facilities and logistics enjoyed

by the company

Factory location

Dhaka

Production Lines

4

Packages

Stick Cup Family pack Others (Nuggets and sandwich)

Machine suppliers

1048766 Mark-Italy

1048766 Tetra Pak(Hoyer)-Denmark

1048766 Sabore Denmark

1048766 Hass- Austria

Machine models

1048766 Freemark 1100 Italy

1048766 FM 3000 FM 6000 Italy

1048766 SL600 Denmark

Cone baking

Hass- Austria

Chocolate making

Macentyre-UK

Coverage

Nationwide

Operational centre

10

Total market vehicles

30

Distribution channel

Directthrough appointed distributors

Outlet service

7500

Injected deep freezers

4000

Trolley operations

125

Warehouse no

8

Table 20 Igloo Facilities and Logistics

Kwality

Kwality is currently the second largest ice cream manufacturer of the country The mother

company for the Kwality brand is Sanowara Drinks amp Beverages Ltd a sister concern of

Sanowara Group The company is famous for powdered milk brands Red Cow and Diploma in

Bangladesh The drinks and beverage concern of Sanowara made an entry into the market in

1997 with ldquoYesrdquo brand drinking water and launched the ice cream brand in 1999 With heavy

communication and novelty products it Evaluation of Entry into Ice cream Business for

Bangladesh Limited 32

successfully removed Polar from the second place with a current market share of 27 The

company also operates in the boutique segment with two parlours in Dhaka and Chittagong

Kwality ice cream factory is situated in Chittagong with a floor space of 35000 sft and fully

automated machinery wrapping mix machinery equipments from Italy having capacity of

around 20000 litres of ice cream per shift The ice cream factory employs 140 people The

company is ISO 9001-2000 certified

Kwality was the first true competitor for Igloo products with some major innovation in product

design and communication but their quality is perceived to be lower in the minds of the

consumers and they do not have extrusion ice cream The product prices are also similar to that

of Igloo but they charge a bit lower than Igloo in premium multiple servings However during

market visits it was seen that shops that keep only Kwality or Igloo and Kwality both they can

sell Kwality too although the sales amount is lower than that of Igloo People who look for Igloo

shopkeepers give them that directly but if they get a chance and Kwality ice cream stock is high

they also push Kwality to dry the stock out This gives an indication that market is larger than

what the current players are capable of serving even in Dhaka

Kwality follows a similar distribution model like Igloo but distribution frequency is lower and

amount of cart sellers is limited to 25 and they operate only in Dhaka

Polar

Once a giant in the industry Dhaka Ice Cream Industries Ltd introduced the first hygienically

packed ice cream in Bangladesh in 1987 and the brand name Polar was thus born In the early

days the company started ice cream business with a wide range of products and a variety of

flavours in Dhaka city In 1988 the company started its distribution in the city of Chittagong

then Bogra and continued to cover more cities Presently Polar ice cream is available

throughout Bangladesh The company today trails in the market with 15 market share in the

common format segment Recently Polar has announced launch of ISIS diabetic ice cream with

support from DANONE to turn around in the market

The company has its head office as well as a modern large-scale industrial plant in Dhaka Polar

ice cream is made with Danish expertise using Danish equipment and technology The

production activities and quality control measures are supervised and managed by Danish

experts Polar offers a wide range of delicious flavours and tastes made by ingredients imported

from Europe

Dhaka Ice Cream at present has 3 cold stores in Dhaka Chittagong and Bogra in Bangladesh

From Dhaka cold store they distribute ice creams in Mymensingh Tangail Jamalpur Sherpur

Kishoreganj Netrakona Comilla Narsingdi Barisal Madaripur Agaeljhara Faridpur Magura

Chuadanga Jessore Satkhira Khulna Pirojpur and Sylhet through their distributors In case of

long distance delivery points the company uses auto cooling freezer van

Evaluation of Entry into Ice cream Business for Bangladesh Limited 33

In Dhaka city they distribute ice creams directly to retail stores in freezer vans Besides that

they have several distributors at different points of the city Distributors cover their individual

areas where company is not able to supply directly in their freezer vans Similar model is

followed by the company to distribute ice cream from their other cold storages through out the

country For storing and selling ice creams in retail stores the company like the other players

arranges a deep freezer with the Polar logo and canopy light box

In addition to this distribution the company also undertakes home delivery of ice creams for

special occasions

Savoy

Savoy Ice-cream brand is owned by Sena Kalyan Sangstha (SKS) Group of industries It started

its journey in March 1995 with a factory in Tejgaon Dhaka Yearly turnover is estimated at BDT

388 crores with a market share of roughly 35

The factory has been established with Sonali Bank finance at 6040 equity ratio The total

production capacity of the factory has been estimated at 2400 litres of Ice-cream per day Total

land area of the factory premise is 116 Bigha with 8000 sft area covered with a total project cost

of BDT 144 The factory employs 73 people

Product ranges of the company include all the basic designs and flavours of the industry

However the company has not been much of an innovator in the industry Their product quality

is substantially low than that of other players and they price their products at 10-15 lower than

the other competitors The company imports raw materials mainly from Europe The general raw

materials are Euro cream Skimmed Milk Powder Cocoa Powder and Flavour (Vanilla Mango

and Strawberry) Colour (Yellow Red Chocolate and Green) Ripple Sauce Cheney Fruit Palm

Kernel Oil Anhydrous Butter Oil (Ghee) and Sugar etc

Milk Vita

Milk Vita is one of the most famous brand names in Bangladesh for its liquid dairy milk Owned

by Bangladesh Milk Producersrsquo Co-operative Union Limited (BMPCUL) the company came in

the market with proper dairy milk ice cream in form of cups and choc-bar With a production

capacity of around 1600 litres per day the company is trailing in the market place with 3

market share

Although the Milk Vita Choc-bar was perceived to be extremely tasty by consumers they

probably could not do well due price competition Currently they do not even distribute ice

cream in Dhaka However their presence is seen in outskirts of Dhaka and other nearby towns

If the current market situation prevails Milk Vita would lose their remaining market share and

other companies would benefit especially Igloo However one of the advantages of Milk Vita

remains to be

Evaluation of Entry into Ice cream Business for Bangladesh Limited 34

their nation wide milk supply network They have skimmed milk powder production plant that

Igloo does not have Thus they can combat the seasonality of milk supply that Igloo with its

huge requirement of milk cannot

Strengths and Weaknesses of Competitors

Company

Strengths

Weaknesses

Igloo

1048766 Strong brand image

1048766 High product quality

1048766 Highest no of variety

1048766 Strong distribution network

1048766 Highest visibility

1048766 Strong promotion

1048766 High production capacity

1048766 Presence of extrusion ice cream

1048766 Items are generally a bit pricy

1048766 Igloo does not give free freezers like other companies

1048766 Reluctant in recent times regarding innovation

1048766 Local sourcing of liquid milk does not meet demand

1048766 Failure to use ERP technology slowing decision making

Kwality

1048766 Product variety

1048766 Strong promotion

1048766 Free freezer distributed

1048766 Presence in all price segments

1048766 High production capacity

1048766 Weak distribution

1048766 Lower exposure

1048766 low amount of carts in operation

Polar

1048766 Free freezer

1048766 Quality perceived to be high compared to Kwality

1048766 Discoloured freezers

1048766 Lower exposure

1048766 Low product variety

1048766 Unused capacity

Savoy

1048766 Price is lower

1048766 Discoloured freezers

1048766 Low product variety

1048766 Weak distribution

1048766 Small amount of freezers

1048766 Low production capacity

Milk Vita

1048766 Quality is good due to dairy cream

1048766 Brand leverage from Milk Vita milk

1048766 Low exposure

1048766 Low variety

Table 21 Strengths and Weaknesses of Competition

512 Market Characteristics of the Boutique Segment

With a small market of BDT 98 Cr and 567 share in the branded ice cream market the

boutique segment is currently an increasing segment in the ice cream industry Boutique

segmentrsquos history dates back to 1960s when Igloo launched boutiques in Dhaka to save

distribution cost and promote a culture of ldquoice cream eating outrdquo In later years boutiques lost

their glamour and retail common format segment picked up growth However with Dolce Vita in

the late lsquo80s craze for Italian Artisan ice cream was recreated in the market Although Dolce

Vita is failing in recent times emergence of MoumlvenPick and Club Gelato in 2000 has uplifted the

segment once again Current growth rate of the

Evaluation of Entry into Ice cream Business for Bangladesh Limited 35

segment can be estimated to be approx 20-22 (higher than the common format segment)

Following are the basic detail of all the major players in the segment with their estimated sales3

Players

Outlet

Sales (Cr Taka)

Share

Club Gelato

1

136

199

MoumlvenPick

1

119

174

Andersenrsquos

3

119

174

Gelateria Igloo

3

119

174

Sub Zero (Kwality)

2

051

75

Baskin Robbins

1

015

22

Dolce Vita

1

017

25

American Soft

1

009

12

Rainbow

1

009

12

Others (off site)

089

130

Total Market

682

Table 22 Players and Shares in Boutique Segment

A Detail of Operation

General operational procedure followed by all the operators is as follows

1048766 Operating method There is a variation in operational method among the large operators

1048766 Club Gelato uses kitchen at own premise where imported ingredients and local milk (daily

special service from Milk Vita) are used to make ice cream

1048766 MoumlvenPick directly imports ice cream from Switzerland

1048766 Andersenrsquos Gelateria Igloo and Sub Zero produce ice cream at their factory with a mix of

imported and local ingredients

1048766 Products Around 30-35 flavours of artisan dairy ice cream are served at the premises

1048766 Most sold flavours are Vanilla Ferrero Rocher Butterscotch Chocolate Caramel etc

1048766 Other Products Larger players also serve ice cream desserts (milk shakes ice cappuccino etc)

pastries and other desserts with normal coffee and tea facility at their premises

1048766 Boutiques fight ice cream seasonality with the other products sales during off-peak ice cream

seasons Usually ice cream and other products contribute at 6040 ratio in summer and during

winter and off-peak seasons the ratio reverses

1048766 Pricing Usually the prices of products in this segment are 3-4 times higher than that of the

common format segment

1048766 Prices do not vary with flavours Variation depends on serve style (Cone tub) and use of

toppings and other ingredients (Chocolate sauce nut fruits) etc

1048766 Usual margin charged is around 50-60 over production cost Similar margin is charged for

other products like coffee ice cappuccino etc

3 Yearly sales is estimated based on companyrsquos approximate daily sales collected during

interview

Evaluation of Entry into Ice cream Business for Bangladesh Limited 36

1048766 Target Group Most of the consumers belong to SEC A and higher SEC A with DMFI of at

least BDT 20000

1048766 Foreign delegates and resident foreigners also visit these boutiques

1048766 Main purposes of visits in the boutiques are

bull Youth hangout with friends and having ice cream and ice cream derivatives

bull Family Family night out or eat out at a restaurant and then having dessert

bull Foreigners Having dessert after dinner

1048766 Rush time at boutiques are Afternoon 2-4 pm and at night 9-11 pm

1048766 Offsite sales Most of the large operators also sell offsite They have small freezers for off-site

1048766 Club Gelato and MoumlvenPick serves ice cream at high society parties and programmes

1048766 MoumlvenPick also has kiosks in known hotels like Sheraton

1048766 Promotion No mass promotion is done by any of the companies Word of mouth is the most

important source of promotion Posters and banners outside the premise and occasional

newspaper advertisements are used to communicate special offers

1048766 Growth Drivers Market growth is driven by image innovation quality decoration of facility

environment and special offers

1048766 Club Gelato has the image of selling true Italian dairy ice cream with an excellent hangout

environment

1048766 MoumlvenPick imports ice cream directly from Switzerland and is perceived to be of high quality

1048766 Andersenrsquos operates with the image of ice cream from Denmark

1048766 Gelateria Igloo (from Igloo) and Sub Zero (from Kwality) could not establish the premium

artisan ice cream image

B Players in the Boutique Segment

There are very few players who have significant impact in the boutique segment Detailed

information of all the major boutique segment players is provided below

Evaluation of Entry into Ice cream Business for Bangladesh Limited 37

Club Gelato

Basic Company Information

1048766 Location Banani Road 11 (Planning for a second one in Dhanmondi)

1048766 Established in 2001

1048766 Seating Capacity 48

1048766 Area 1250 sft (including kitchen)

1048766 Owner Mr Jahangir Alam (Bangladesh)

1048766 Business Type Joint business partnership with Singapore

1048766 Staff 15 people (6 in the kitchen)

1048766 Production capacity 150 litres per day

Product Related Information

1048766 Product Italian style parlour scoop ice cream fruit juice coffee and pastries

1048766 Flavours Around 32 flavours available

1048766 Most selling Ferraro Rocher Vanilla Pistachio

1048766 Innovations New variants and ingredients are communicated by their Italian supplier and

Club Gelato decides what to take from them

1048766 Serve type Cup Cone Glasses Box for take away

Consumer Profile

1048766 Primary Teenagers and Young Adults (18-30) amp Diplomats

1048766 Secondary Family consumers for eat out

1048766 Income Group High income customers tentatively from SEC A and higher SEC A

1048766 Geographic Area Diversified

1048766 Rush time 8-10 pm

Sales and Price Information

1048766 Sales BDT 50000 (60 Ice cream 40 other desserts) daily in summer In winter however

other products sell more and thus they keep total sales at the same level

1048766 Price 750 per litre for any flavour

1048766 Sales Volume 50-60 litres per day

Supply Chain Placement Information

1048766 Milk Local sourcing from Milk Vita (4050 litres per day)

1048766 Chocolates amp Flavours Belgium France Germany

1048766 Transportation Mainly air (They can afford it due to high margin)

1048766 Contribution of various materials Flavours (30) Milk (20) other parts are water and air

Promotional Materials

1048766 Materials used are near premises POS materials for promoting the parlour only

Table 23 Detail of Club Gelato

Evaluation of Entry into Ice cream Business for Bangladesh Limited 38

MoumlvenPick of Switzerland

Basic Company Information

1048766 Location Gulshan

1048766 Established in 2000

1048766 Seating Capacity 55

1048766 Owner Mr Arif Mahmud

1048766 Business Type Franchise of International MoumlvenPick

1048766 Storage Capacity in Shop 150 litres

Product Related Information

1048766 Product Imported MoumlvenPick ice creams coffee chicken sandwich and Frappe

1048766 Flavours Around 30 to 35 flavours available

1048766 Most selling Swiss Chocolate caramel Vanilla Dream Espresso Strawberry

1048766 Innovations New variants are communicated by their franchiser and they decide on flavours

that they want

1048766 Serve type Cup Cone Glasses Box for take away

Consumer Profile

1048766 Primary Teenagers and Young Adults (18-30) (70) amp Diplomats

1048766 Secondary Family consumers for eat out

1048766 Income Group High income customers tentatively from SEC A

1048766 Geographic Area Concentrated in Gulshan and nearby areas

1048766 Rush time Afternoon- Young Adult 10 to 11 pm Foreigners

1048766 the company also serves at parties and has freezers in known hotels where their ice creams

are served

Sales and Price Information

1048766 Sales BDT 35-40000 daily in summer

1048766 Price 640 per litre for any flavour

1048766 Sales Volume 55-60 litres per day

Supply Chain Placement Information

1048766 Transportation Imported finished goods by ship

1048766 Ship travel time 19 days

1048766 Port clearance 10 days

1048766 Safety Cushion Extra 10 days

Promotional Materials

1048766 Materials used are near premises POS materials for promoting the parlour only

Table 24 Detail of MoumlvenPick of Switzerland

Evaluation of Entry into Ice cream Business for Bangladesh Limited 39

Andersenrsquos of Denmark

Basic Company Information

1048766 Location Gulshan (2 others in Uttara Dhanmondi)

1048766 Established in 2001

1048766 Seating Capacity 48

1048766 Owner United Group

1048766 Business Type Franchise of Australian company Andersenrsquos of Denmark

1048766 Production Tongi Factory of United Group

1048766 Production capacity 2000 litres per day in factory

1048766 Storage Capacity in Shop 150 litres

Product Related Information

1048766 Product Danish parlour scoop ice cream and coffee

1048766 Flavours Around 30 to 35 flavours available

1048766 Most selling Strawberry Butter Scotch Green

1048766 Innovations New variants and ingredients are communicated by their franchiser and they

decide on flavours that they want

1048766 Serve type Cup Cone Glasses Box for take away

Consumer Profile

1048766 Primary Teenagers and Young Adults (18-30) (70) amp Diplomats

1048766 Secondary Family consumers for eat out

1048766 Income Group High income customers tentatively from SEC A

1048766 Geographic Area Concentrated in Gulshan and nearby areas

1048766 Rush time 8 to 10 pm

Sales and Price Information

1048766 Sales BDT 10-12000 daily in summer

1048766 Price 460 per litre for any flavour

1048766 Sales Volume 40-50 litres per day

Supply Chain Placement Information

1048766 Milk 2025 kg packs are imported

1048766 Chocolates amp Flavours Imported

1048766 Butte paper Local sourcing

1048766 Transportation Ship

Promotional Materials

1048766 Materials used are near premises POS materials for promoting the parlour only

Table 25 Detail of Andersenrsquos of Denmark

Evaluation of Entry into Ice cream Business for Bangladesh Limited 40

Gelateria Igloo

Basic Company Information

1048766 Location Banani Kemal Ataturk Avenue (Two others in GEC Mor Chittagong and Naya

Paltan)

1048766 Established in 2000

1048766 Seating Capacity 20

1048766 Production From Igloo factory in Shyampur Narayanganj

Product Related Information

1048766 Product Parlour scoop ice cream and coffee only

1048766 Flavours Around 30 flavours available

1048766 Most selling Vanilla Strawberry Chocolate Pistachio Butter Scotch Tutti Fruity

1048766 Serve type Cup Cone Glasses Box for take away

Consumer Profile

1048766 Primary Teenagers and Young Adults (18-30)

1048766 Secondary Family consumers for eat out

1048766 Income Group High income customers tentatively from SEC A and B

1048766 Geographic Area Diversified

1048766 Rush Time afternoon and evening

Sales and Price Information

1048766 Sales BDT 8000 to 10000 daily in summer Nearly one fourth in winter

1048766 Price Varies but 350 per litre of vanilla

Promotional Materials

1048766 POS materials at the premises

Table 26 Detail of Gelateria Igloo

52 Price Comparison of Common and Boutique Segments

Price ranges of both common format and boutique segment cannot exactly be pin pointed as

products do not follow common structure and variations occur with use of toppings mixing of

flavours and use of coatings However a price comparison has been made among the brands

based on their price of per litre of vanilla flavoured ice cream in the market It appears to be as

following

Company

Price Litre Vanilla

Club Gelato

750

MoumlvenPick

640

Andersenrsquos

460

Dolce Vita

440

Igloo

100

Kwality

100

Polar

100

Milk-Vita

90

Savoy

85

Table 27 Comparative Price Analysis

As it can be seen there is price gap within the range of BDT 100-400 Ice cream kiosks and

small scooping boutiques can operate within that range

Evaluation of Entry into Ice cream Business for Bangladesh Limited 41

60 CONSUMER ANALYSIS

61 Target Group of Ice cream

Who are the consumers of ice cream This question does not have a clear answer Ice cream is a

food for all It is the only food consumed by a human being at less than 0 degree centigrade

temperature and people of all ages feel indulged to have it However we can determine focus

target groups for both branded common format and artisan boutique ice cream Group

discussions and market visits were done to get insight into the consumers along side resources

form secondary sources Age based target group is common for both segments but variation

among the groups occur mainly based on SEC and DMFI classification

611 Geographic Group

Branded ice cream remains an urban product till date Geographically branded ice cream has

reached urban and semi urban areas up to Thana Head Quarter levels Ice cream has reached

areas where electricity is available Small artisan players are available in places where large

branded players have no distribution

612 Target Age Group

Age wise grouping of target consumers is as follows

1048766 Urban kids in the age group of 5-14

1048766 They mainly consume normal sticks cups cones innovative fillers and water ice creams

1048766 Urban youth in the age group of 15-24

1048766 They consume premium and extrusion sticks and cones

1048766 Urban mothers in the age group of 25-35

1048766 They determine the family purchases Even when the father purchases ice cream decision is

taken by them

Consumption pattern of various age groups are depicted in the following chart Ice cream

consumption pattern50203005 to 14 yrs15 to 24 yrs25 to 35 yrs

Figure 11 Target Group wise Consumption Pattern Evaluation of Entry into Ice cream Business

for Bangladesh Limited 42

613 Target SEC and DMFI Group

Common Format

SEC A and B is the target group for common format ice cream However with rapid increase in

price level over the years has made it a ldquohard to consumerdquo product for SEC B consumers who

belong to lower DMFI group

Boutique Format

Boutique formatrsquos higher margin and high price range makes it an exclusively SEC A ice cream

People belonging to upper and upper middle class have access to the mediocre boutiques and

only higher upper class can have premium ice creams like Club Gelato and MoumlvenPick

Another unique target group for boutique format are the foreigners who live in Bangladesh

These people tend to visit the parlours to have ice cream as dessert especially after dinner

62 Ice cream in Consumer Lifestyle

Figure 12 Ice cream in Consumer Life style

This simple overview of ice cream in consumer lifestyle was determined based on in-depth

research analysis of UBL and validated through qualitative group discussions by the author

However detail of in-depth research is provided in a later section of this chapter

Evaluation of Entry into Ice cream Business for Bangladesh Limited 43

63 Highlights of Purchase Habit of Ice cream

631 Common Habits across Target Groups

There are some common habits that were identified in earlier researches and group discussions

with consumers Common habits mean the consumer approach towards ice cream that is seen

across all target groups eg kids youth and adult purchasers These are outlined below

1048766 Ice cream is mainly seen as a dessert or a snack Impulse ice cream is seen as a quick snack

that is consumed when it is in sight Visibility plays a big role here Regarding family packs

people see it as a post-food dessert

1048766 Ice cream purchase is commonly a planned event When the contexts arise people generally

take a bit of time to decide whether or not to have ice cream or when they want to go to a

boutique they make due considerations regarding which boutique to visit

1048766 Ice cream purchase decision is taken based on favourite flavour People tend to try out new

variants and flavours when they first see it They compare the taste with earlier experience and

when they purchase later they choose the flavour they have liked most

1048766 For In-Home segment decision is mostly taken on the flavour Generally people come up with

different flavours of choice and most voted flavour is chosen

1048766 People become aware of new variants or flavours mainly through word-of-mouth

Advertisement (new launches special offers and festivals) in newspaper is another source of

awareness

1048766 People are currently indifferent towards the price level of premium flavours However some

feel that price of Choc-bar or water ice creams (lolly) is a bit much If less they would have

consumed more Some also feel that companies should come up with branded ice cream in the

price range of BDT 5-8

1048766 Ice cream is purchased from nearby shops If required brand and flavour is not available 2-3

shops will be visited and then available flavour will be selected even if the required one is not

found This is done mainly not to ruin the mood for ice cream

1048766 People are very open to try new brands and flavours especially if it comes from a credible

source They would try new flavours and if they are satisfied with the taste they would repeat

purchase

1048766 Regarding boutique visits people feel that boutiques need to have a proper environment

enough flavours and other snacks

1048766 While visiting boutique with family or companion they want variation in flavours so that

they would order different flavours and taste each otherrsquos ice cream It is seen as a sign of

togetherness

1048766 Frequency of ice cream purchase varies among people It depends on peer pressure collective

family decision summer heat and attitude towards ldquoice creamrdquo itself as a product Evaluation of

Entry into Ice cream Business for Bangladesh Limited 44

632 Habits of Kids

1048766 Kids choose ice cream flavours by the look of the product (generally pictures shown in POS

materials and carts) They love colour and designs of the products let it be a common format or a

boutique ice cream

1048766 Kids (when in house) would go with the housemaid to the nearby shop choose the flavour

they want (within range of the amount given to the maid) and buy it

1048766 When with parents they would take the product they like even if the price is lower than some

other product However mothers play a role in this decision They would want their children not

to choose too high priced a product or coloured products

633 Habits of Youth

1048766 Young people are the main consumer of impulse ice cream They also are one of the major

consumers in the boutique segment

1048766 Young people love to try out new products that come into the market Another side of the coin

is that they are not very loyal to a brand or a flavour and tend to switch a lot

1048766 Regarding boutique visits young people go to boutiques to have an ldquoice cream hang outrdquo with

peer groups They would stay there for a longer period of time while they have their ice cream

1048766 Some times young people make milk shakes and other ice cream based desserts

634 Habits of Mothers

1048766 Mothers worry about their childrenrsquos health and they prefer ldquovanillardquo type of brands

However when price constraint occurs they go for water ice creams for their children They try

to convince their kidrsquos purchase decision

1048766 Regarding family purchase motherrsquos decision is sometimes prioritized by the whole family

64 Barriers to Ice cream Consumption

641 Emotional Barriers

1048766 Overindulge (close to sinful)

1048766 Undisciplined (no control)

1048766 Childish (licking)

1048766 Artificial Image

642 Functional Barriers

1048766 People of SEC B feel that ice cream is an expensive dessert (If less expensive would consume

more often)

1048766 It leads to cold cough - especially in winter rainy season

1048766 It contains artificial additives preservatives

1048766 It is very high in calories that lead to fattening

Evaluation of Entry into Ice cream Business for Bangladesh Limited 45

1048766 It does not quench ldquothirstrdquo

1048766 Less convenient (portable immediate eat)

1048766 Messy Dripping

65 Research Findings

The highlights regarding purchase habits triggers and barriers of ice cream consumption provide

a glimpse into the consumer world of ice cream industry However UBL CMI conducted a

formal research exclusively on ice cream consumers to identify

1048766 Occasions of ice cream

1048766 Frequency of ice cream consumption

1048766 Expectations from ice cream occasions

1048766 Personalities that they desire from ice cream

651 Relevant Occasions in Daily Lives of Consumers

Research question regarding ldquousual occasions of life that occurred most frequently in day-to-day

lives of the respondentsrdquo generated the following replies

Occasion

of Respondents saying Yes

Watching TV

93

Normal Dinner At Home

91

Normal Lunch At Home

89

At Home While ReadingMusicSurfing

86

Informal Family Get Together

85

Out Of Home Hanging Out With Friends

84

Out Shopping

84

Mid-Afternoon Break At Home

83

At Home By Myself During The Day

82

Special Dinner At Home

82

Informal Dinner Out Of Home

82

Normal Lunch Out Of Home

82

Leisure Walk

79

Coming Home From WorkSchool

78

Special Dinner Out Of Home

78

Celebration

78

A Night In With Friends

77

At Home By Myself In The Evening

77

Special Lunch Out Of Home

76

Mid-Afternoon Break Out Of Home

75

Special Lunch At Home

73

Day out with Partner

72

Midmorning Break

70

At Breakfast

68

Family Day Out

68

During Work Or At School

65

Evaluation of Entry into Ice cream Business for Bangladesh Limited 46

Travelling ToFrom WorkSchool

65

At The Cinema

61

Special Event

56

Clubbing At A Party

50

Post GymSports

48

Table 28 Relevant Occasions in Consumersrsquo Lives

Respondents were then asked to mention ldquofrequency of occurrence of the identified occasionsrdquo

The identified replies are as follows Normal dinner at homenormal lunch at homeComing home

from workschoolTraveling tofrom workschoolDay out with Partner SpouseMid-afternoon

break at homeOut of home hanging out with friendsLeisure walkMid-afternoon break out of

homeA night in with friendsSpecial dinner at homeSpecial lunch out of homeFamily day

outSpecial eventPost gymsportsDaily2-3 Times A WeekWeekly2-3 Times A MonthOnce A

MonthEvery 2-3 MonthsLess OftenNever Figure 13 Frequency of Occurrence of Occasions

This shows that ldquoNormal dinner at home Watching TV Normal Lunch At Home At Home

While ReadingMusicSurfing Coming Home From WorkSchool During Work Or At School

Travelling ToFrom WorkSchool Midmorning Break Day Out With Partner Spouse At Home

By Myself During The Dayrdquo are the most frequent daily rituals of busy lives of consumers

652 Frequency of Ice cream Consumption

Respondents were asked to mention ldquoconsumption pattern of ice cream during the identified

occasionrdquo on a scale of 1-5 depicting frequencies like ldquo(5) always (4) most of the times (3)

about half of the times (2) sometimes (1) never do not knowrdquo The responses are depicted in

the following table

Evaluation of Entry into Ice cream Business for Bangladesh Limited 47

444474544655555566756665775967779991011101111101210111110101113111412131314161

011121411131216181519181518211817171719181718201721222130303434253437403741394

046383944464746453745414641374638504843414839373030292726232725222020201926202

21722221317Midmorning

breakWhile clubbing at aAt the cinemaSpecial eventNormal lunch out ofA night in with

friendsNormal dinner atInformal dinner out ofAt home by myselfAt home by myself inOut

shoppingSpecial lunch atDay out with SpouseWatching TVAlwaysmost of the timesAbout half

of the timesSometimesneverdo not know

Figure 14 Frequency of Ice cream Consumption

As it can be seen ldquoDay out with Spouse Special lunch at home Special dinner at home

Watching TV Family day out Celebrationrdquo are the occasions where most frequently ice cream is

consumed

653 Market Character Mapping Relevant Occasions vs Frequency of Consumption

If we plot frequency of consumption on the X-axis of a chart and relevance of occasion

occurrence on the Y-axis taking the above mentioned values as cut-off values we get four

quadrants in the chart depicting four market scenarios that any ice cream manufacturer in

Bangladesh market might encounter given the current market situation This market

segmentation is based on frequency of ice cream consumption in daily occasions of consumer

lives

The segments are

1048766 OPPORTUNITY MARKET High Relevant Occasions-Low Ice cream Frequency

1048766 QUESTION MARKET Less Relevant Occasions-Low Ice cream Frequency

1048766 HIGH FREQUENCY MARKET Relevant Occasions-High Ice cream Frequency

1048766 CAPTIVE MARKET Less Relevant Occasions-High Ice cream Frequency

The chart looks as follows Evaluation of Entry into Ice cream Business for Bangladesh Limited

48

Figure 15 Relevance of Occasion-Frequency of Consumption Mapping

As it can be seen from the above chart Bangladesh Market still lies in the Opportunity and

Question market zone with a pull towards High frequency and Captive Market zones This is

evident from market data as penetration of ice cream still remains at Thana headquarters levels

Also this explains the high market growth rate of 17 as market is yet under developed and

branded quality ice cream has yet not reached all levels of consumers especially rural level that

constitutes around 75 of Bangladeshi market

From the above analysis we can establish that target of ice cream manufacturers should be to

penetrate more into the Bangladeshi market to create higher frequency of ice cream

consumption The following chart shows the strategies to follow for ice cream manufacturers

Figure 16 Required Market Strategy for Bangladesh

Evaluation of Entry into Ice cream Business for Bangladesh Limited 49

As relevance of ice cream consumption occasions can hardly be controlled by marketers their

endeavour should be to create more ldquoemotional and functionalrdquo attachment to ice cream in less

frequent occasions through ldquomarket developmentrdquo strategy to earn share from overall food

expenditure of consumers and at the same time make them consume more ice cream in highly

relevant occasions through ldquopenetrationrdquo strategy

654 Consumersrsquo Emotional Requirements and Product Attributes

All consumers under these clusters also identify the emotional requirements and the significant

product attributes they seek from their current preferred and future desired ice creams These are

provided below

Cluster

Emotional Functional Requirement

Product Attributes

Enjoyment

Flavour Variety

1048766 Combination of different flavours

1048766 Combination of different textures

1048766 Very sweet

1048766 With wafer or biscuit

1048766 With chocolate

1048766 Of a well known brand

Socially Involved

Spoonable Rich

1048766 Very creamy

1048766 Only natural ingredients

1048766 No mess

Care

Size Creaminess

1048766 Big

1048766 Rich full taste

1048766 Smooth

1048766 Value for money

1048766 No mess

Unwind amp Escape

Economy

1048766 Crunchy

1048766 Economic

1048766 Of a well known brand

1048766 Nutritious

Balanced Convenience

Health Conscious

1048766 Of a well known brand

1048766 Nutritious

1048766 Milk based

1048766 Low sugar

1048766 Low carbohydrates

1048766 Filling

Active Self-Grooming

Fruit Vitamins

1048766 Healthy

1048766 Fruit based

1048766 Low fat

1048766 Liquid or drinkable

1048766 Nutritious

1048766 Of a well known brand

Confidence

Drinkable Light

1048766 Low calories

1048766 Light on the stomach

1048766 Chewy or gooey

1048766 Not so sweet

1048766 Natural appearance

Sensual

Appeal or image

1048766 No artificial additives

Evaluation of Entry into Ice cream Business for Bangladesh Limited 50

1048766 Natural appearance

1048766 Melting slowly

1048766 Attractive packaging

1048766 High quality ingredients

1048766 Of a well known brand

Table 29 Requirements amp Product Attributes Desired by Consumer Clusters

Of these findings we see that the identified highlighted barriers to ice cream consumption are

pretty evident among the consumers Mostly people want products of a reliable source or a well

known brand low calories quality ingredients value for money economic type

Evaluation of Entry into Ice cream Business for Bangladesh Limited 51

70 INDUSTRY ATTRACTIVENESS AND ENTRY PROSPECTS

71 Driving Forces of Growth

As identified in the earlier sections there are several driving forces behind the growth of ice-

cream industry in Bangladesh

712 Trade and Infrastructural Level

1048766 As a result of globalization newer varieties have been introduced to the local products Many

foreign companies are also coming as franchise so there has been increased competition and

these boutiques are setting higher standards for the local producers

1048766 The present market growth rate is 18-19 which is being influenced by larger players like

Igloo who are expanding their distribution nation wide with expansion of national electricity

grid

1048766 With entry of Modern Trade and recent organized business approach of retailers has made it

possible for ice cream manufacturers to penetrate into shops even without providing them with

branded freezers

1048766 Weather change has increased ldquosummerrdquo season in our country which has reduced negative

seasonal impact on ice cream

1048766 Large companies like Igloo have taken global learning of using carts as an effective tool of

availability and visibility for ice cream

1048766 New and improved technologies are being used in the production process This technological

advancement has improved quality increased speed of production and made the process more

cost effective

713 Consumer Level

1048766 Only a few years back rich people could afford the luxury of having ice-cream but now it has

become a common product for everybody Ice-cream companies are producing different products

with a wide price range for consumers of every class and status

1048766 Nowadays companies are doing promotional campaigns more frequently the customers get to

know about the product which makes it easier for them to buy the best one

1048766 The improved standard of life and more modernized lifestyle of people is an important reason

for the increased consumption thus growth of the ice-cream industry

Evaluation of Entry into Ice cream Business for Bangladesh Limited 52

72 Prospects of Entry

The ice-cream industry of Bangladesh is an attractive one for the investors because there is a

huge market but number of producers is very small The major reasons behind industry

attractiveness are as follows

1048766 The industryrsquos current growth potential is very high with opportunity for market development

1048766 The competition currently permits adequate profitability and the competitive forces are

becoming stronger with time

1048766 Boutique segment is at a very high growth stage but no operator is currently operating with a

mid price range of BDT 100-400 Ice cream kiosks and small scooping boutiques can operate

within that range

1048766 Current industry driving forces are favourable for the future industry profitability

1048766 Globally oriented consumers look for variety in ice cream that is currently not available

Latest innovations came in the market in 2002 People would welcome new variety and flavours

1048766 There is a gap in the market for balanced convenience through ice cream where consumers can

get nutritional benefits for ice cream Also emotional attachment to ice cream could further be

improvised in promotional campaigns

1048766 There is high scope for market penetration and development to increase frequency of ice

cream consumption

1048766 Level of risk or uncertainty is very low in ice-cream industry because the consumer market is

so huge any product with a standard quality and careful pricing will be able to make significant

profit

1048766 As for geographic reach of the industry 60 market is still in Dhaka There is scope of

expansion and a new entrant can easily capture market share within Dhaka using carts even if

they do not want nation wide cold chain distribution

1048766 The production process is very complex and capital requirements are also high So before

going into production any company should know about their capabilities and weaknesses and

then start the business or else they might suffer huge loss at a certain level

1048766 Unilever can acquire the required resource and use existing multi-national multi-cultural

expertise to enter the market in a grand way

1048766 With high probability of entry from DANONE with more products like the ISIS diabetic ice

cream Unilever should consider entering in this industry as soon as possible

Evaluation of Entry into Ice cream Business for Bangladesh Limited 53

80 ENTRY STRATEGY FOR UNILEVER

While describing the suggested entry strategy for UBL certain issues have been kept

confidential and some issues have been touched but not explained to keep consistency with UBL

confidentiality policy

81 Suggested Entry Areas for UBL

1048766 Boutique segment of the Bangladesh ice cream is only 5 of the branded market UBL needs

to pursue a larger scope to make the entry viable

1048766 UBL cannot fight with unbranded segment as global product quality mandate of Unilever does

not allow UBL to fight in low price-low quality segment

1048766 Recommend entry should be in the common format segment with both single and multiple

servings and in the boutique segment with a different brand name (if possible BEN amp JERRYrsquoS)

1048766 UBL should build up state-of-art modern factory for manufacturing and establish cold chain

facilities initially focusing on metro cities

1048766 Investment issues are required to be addressed for building factory and cold chain and capital

requirement needs to be identified for that purpose4

1048766 UBL may have boutiques for driving image selective top-end offering

1048766 Kiosks can be setup near universities and shopping malls

1048766 Boutiques should be concentrated in Dhaka and Chittagong

1048766 Ice cream for boutiques and kiosks would be produced in factory as institutional packs of 9-10

litres

82 Products

1048766 As a Brand Building country in global Unilever operating framework UBL is entitled only to

bring products developed by the Brand Development countries

1048766 Unilever should focus on serving products that have nutritional benefits (already available

globally) along with usual satisfactions of sensual pleasure functional attributes etc

1048766 Current existent players especially Igloo and Kwality have extensively copied global and

regionally available Unilever products eg Cornelli is same as Wallrsquos Cornetto Vinetta is similar

to Vienetta Mega is similar to Magnum etc UBL needs to differentiate these to consumers on

the ldquotaste the originalrdquo platform where global quality is focused regarding the products

1048766 UBL should also bring regionally famous brands like Moo or Max to create image

differentiation

1048766 Magnum or Moo should be used as premium end ice cream to generate more profit margin

Evaluation of Entry into Ice cream Business for Bangladesh Limited 54

83 Placement

1048766 Distribution focus should be in Dhaka for entry as Dhaka contributes more than 60 of total

ice cream sales in the country

1048766 Company may use carts as distribution method They serve as good source of visibility and

availability It would help in increasing impulse purchase

1048766 At least 1500 outlets in Dhaka and Chittagong needs to be actively served using dedicated

branded refrigerators to generate sales

1048766 50 carts should operate in Dhaka and Chittagong

84 Price

1048766 UBL products should be priced at par with Igloo pricing for the common format ice creams

1048766 UBL can bring in premium single-serve SKUS for the higher economic classes in the price

range of BDT 60-80

1048766 Smaller SKUs (small lolly stick) can be introduced in the price range of BDT 10-15

1048766 In the boutique segment UBL should price products above the semi-premium segment

(Gelateria Igloo Sub Zero or Andersenrsquos) but lower than that of Club Gelato or MoumlvenPick

85 Promotion

1048766 UBL would require strong marketing campaign (As high as 50 of sales) to have a grand

entry in the market

1048766 Presence in the television media would be of utmost importance More than 50 of

promotional expense should be made here initially Gradually it can be reduced

1048766 Newspaper would serve as the second most important option

1048766 Billboards should also be used

1048766 Activations (similar to Lux Channel i Super Star or Igloo Festival) should be done to generate

trial

86 Scope of Opportunity

Table 30 Value and Volume Based Scope of Opportunity for UBL

Value (BDT Cr)

Volume (Tons)

Market

131

7835

Common

121

7600

Boutique

98

235

Evaluation of Entry into Ice cream Business for Bangladesh Limited 55

861 Geographic Contribution

1048766 Dhaka (61)

1048766 Chittagong (19)

1048766 Sylhet (10)

862 UBL objectives

Common Format Ice Creams

1048766 Target 10 Market share in 1st year operation

1048766 Value BDT 11 Cr

1048766 Production capacity required 21 Tons day

1048766 Freezer Placement 1500 freezers

1048766 Cart operation At least 50 carts

Boutiques

1048766 Target Further develop the market

1048766 Focus Dhaka Chittagong and Sylhet Metro

1048766 Franchise At least 20 franchisee operations nation wide in divisional towns

1048766 Pricing Below imported parlours above common formats with around BDT 400 per Litre

87 Critical Success Factors

1048766 UBL is considered as a high profile company in Bangladesh and thus they cannot operate in

the market only with common products like choc-bars and cups They must have premium

products (these require extrusion line) also to carry their brand image Otherwise UBL would not

be able to charge usual premium over competition products

1048766 Launch of ice cream would require huge promotional and activation support in order to gain

customers from Igloo People want novelty regarding ice cream and UBL have to let them know

about their products and create hype

1048766 Cart should be used as a source of distribution Recent successes of Unilever companies like

Indonesia shows that carts can generate more sales and can be used as source of visibility in the

minds of both retail traders and consumers Carts can also provide incremental sales to the

company

1048766 UBL have to create a strong cold chain for ice cream (initially in Dhaka and Chittagong) to

ensure quality products for consumers

1048766 UBL have to build capacity very rapidly to meet consumer demand if the launch is successful

Evaluation of Entry into Ice cream Business for Bangladesh Limited 56

90 BUSINESS PROJECTION

91 Basic Assumptions

Business projection for ice cream business was made based on a conservative approach UBL

would require spending significantly on production capacity and factory dedicated to ice cream

Thus to analyse business possibilities of ice cream certain assumptions were made and collected

data were used These are

1048766 Production equipments and cabinets would cost approximately BDT 55 crores

1048766 Production equipments 45

1048766 Packaging Equipments 15

1048766 Storage Facility 20

1048766 Branded Freezers 10

1048766 Distribution Investment 10 (Distributors would also invest themselves)

1048766 Ice cream factory with a floor size of 20000 sqft would cost BDT 25 crores

1048766 Objective is to capture 10 market share in Dhaka and Chittagong in the first year

1048766 Business would grow by 50 in year 2 and 3 30 in year 4 and 25 in year 5

1048766 Weighted price per litre is BDT 170 according to volume share of single serve ice cream

multiple serve ice cream and boutique ice cream

1048766 Other financial assumptions were also made List of them are provided below but amount has

been removed for confidentiality issues

Assumptions

Trade Margin

Distributors Margin

DutyVAT Rate

Trade Terms Expense of NPS

Trade Terms Expense of NSV

Advertising ampPromotion of NPS

Indirects (Salaries Wages etc)

Trading Tax

Table 31 Assumptions for Business Projection

Evaluation of Entry into Ice cream Business for Bangladesh Limited 57

100 CONCLUSION

Ice cream has good prospect in Bangladesh It is still a growing market with opportunities for big

new entrants With the barriers of entry UBL needs to consider its priorities UBL being an HPC

company traditionally needs to acquire expertise in cold chain distribution and has to invest a lot

of money to rip the benefits of the industry However to initiate company can take regional

support and acquire resource expertise The company should enter the business as soon as

possible since there is potential threat from DANONE to introduce more ice creams after ISIS

diabetic ice cream and also with potential of the industry arch rival Nestlersquo might consider

entering into the industry too

Evaluation of Entry into Ice cream Business for Bangladesh Limited 58

References

Web References

1 wwwunilevercom

2 wwwunilevercombd

3 wwwhllcom

4 wwwunilevercompk

5 wwwthedailystarcom - Life Style Magazine

6 wwwreuterscouk

Evaluation of Entry into Ice cream Business for Bangladesh Limited 59

Page 10: Square Ice cream

Multi Vol (000 Ltrs)

Total Vol (000 Ltrs)

Total Market

32759

42967

7573

Igloo

16760

21983

3874

Polar

4867

6384

1125

Kwality

8865

11628

2049

Savoy

1124

1474

260

Milk Vita

1141

1497

264

Table 10 Volume Based Market Size

The total volume of the branded common format ice cream industry is 7500 Tons of which more

than 50 belongs to Igloo followed by Kwality with 27

D Market Share and Size of the rivals

Market share data for all the local companies show a trend where Igloo is the biggest ice-cream

company dominating with a huge market share Although even 1-2 years ago there was intense

competition between Kwality and Polar but now it seems that Kwality is 2nd largest ice-cream

manufacturing company in Bangladesh Polar is in the 3rd position with Savoy and Milk Vita

trailing in the market Market share percentage over the years is presented in the following table

Company Name

2007

2008

2009

Igloo

50

5031

5116

Kwality

256

2666

2706

Polar

17

161

1485

Milk Vita

34

332

348

Evaluation of Entry into Ice cream Business for Bangladesh Limited 22

Savoy

39

365

343

Table 11 Market Share of Competitors

E Geographic Sales Orientation

Ice cream still continues to be a city-oriented product and its demand is comparatively low in the

rural areas Reasons behind this are electricity problem outside urban areas and purchasing

power of people Geographic sales orientation of the common format ice cream industry is

provided below

611890690480590250DhakaChittagongKhulnaComillaBarisalOthers

Figure 7 Geographic Sales Orientation

Dhaka still is the largest contributor in the ice cream segment Nevertheless over the years this

trend is shifting Areas outside Dhaka are also growing making Dhakarsquos share lower by small

percentage As urban markets are the major contributors companies design their products

keeping in mind the tastes and styles of the urban consumers Compared to the other companies

Igloo is the most expensive in the common format segment so they target only city based

customers who have the purchasing power Although other companies such as Savoy are offering

low priced product even their main target is urban people due to nation wide electricity problem

F Seasonality of Sales

Ice cream industries in warmer part of the world are highly seasonal Same is true with

Bangladesh According to secondary data sources sales seasonality looks as follows

Period Name

Months

Contribution

Super-Peak

April May June

46

Peak

March July August

36

Off-Peak

February September October November

15

Super Off-Peak

December January

3

Table 12 Seasonality of Ice cream Sales

This data was validated through interviews with retailers during market visit According to them

more than 75 sales of ice cream came in the hot months Another insight that could be

identified was

Evaluation of Entry into Ice cream Business for Bangladesh Limited 23

various festivals and programmes provide scope for higher volume of ice cream sales According

to companies where only 10-15 sales occurs in the winter season same amount of sales occurs

during festivals like the two Eids and Nobobarsha

G Distribution Servicing System

Mainly common format ice-cream is distributed in two methods that are directly to retail shops

and through hawkers with ice cream carts trolleys

The various channels of retail shops other than cart that serve as distribution outlets for Ice cream

are

7 Urban General Stores (UGS)

8 Urban Neighbourhood Grocer (UNG)

9 Premium General Store (PGS) SMMT

10 Confectionary Bakery

11 Modern Trade (MT)

12 Fast Food shops (Recently some fast food shops keep branded ice cream cabinets)

Distribution details of all the companies are provided below However detail of Milk Vita is not

available as they are mainly milk producer and they have no dedicated ice cream cabinet for

retail stores and currently they are not distributing ice cream in Dhaka city

Company

Distribution Method

Frequency

No of Cabinets

No of Carts

Igloo

Distributor Cart

2 to 3 times a week

4000

100

Kwality

Distributor Cart

1 to 2 times a week

1050

20

Polar

Distributor Cart

1 to 2 times a week

800

50

Savoy

Company

1 to 2 times a fortnight

176

-

Milk-Vita

-

-

-

-

Table 13 Distribution Method of Market Players

Distribution Process Distribution process through both methods is described below

Retail Distribution The general distribution that is followed by companies is that distributor

sends large refrigerated trucks dedicated to specific territories These trucks are accompanied by

small refrigerated vans Main road side shops are served directly from the large truck and shops

that are inside small streets are served by the small vans

Order and delivery are done on the same day The strategy followed is that of replenishment If

the branded freezer of the company is empty they simply fill it up according to requirement of

different SKUs as the delivery people see fit However shopkeepers have to buy full cartons

(usually 24 pieces in a carton) of single serve ice cream they cannot buy in pieces

Evaluation of Entry into Ice cream Business for Bangladesh Limited 24

Among the retail shops there are about equal numbers of branded and unbranded freezers This

is a normal scene in Dhaka where all shopkeepers require freezer to keep other cold products

However basic distribution policy is that if a shop has branded cabinet of a company they

cannot keep competitor ice cream in that cabinet Thus penetration can be made possible in

shops where unbranded freezers are available

General branded freezer contract policy with Igloo and Polar is that traders have to pay BDT

5000 to take a freezer Maintenance of branded freezers is responsibility of the company but

electricity bill is paid by shopkeeper However Polar is not currently giving any new freezer

Kwality gave away their freezers for free however they ensured safety of their freezers by

checking background of the shopkeepers

Cart sellers Cart sellers collect required amount of ice cream from nearby distribution house or

company showroom (Igloo has one showroom in Panthapath) on a daily basis They also have to

buy cartons of products not pieces Kwality carts collect their ice cream from factory (Tejgaon)

or nearby distribution house Cart sellers contribute around BDT 3000 sales in a day and

generally sell at BDT 1-2 higher than set price of each product

The cart sellers generally keep at least a two-day stock so that they can meet sudden upsurge in

daily demand of ice cream or if they get the opportunity to sell at parties programs or any open

air event (Wedding at community centres or outside cultural programs at auditoriums) If cart

sellers need replenishment of stock they even take service more than once in a day either

revisiting showroom house or they call up company delivery people to serve them at their

location if there is opportunity for selling more ice cream

Policy regarding Damaged Ice cream All the ice cream producers have very good relationship

with the shopkeepers If the retailers have refrigeration problem company takes ice cream back

until the problem is fixed whether it is stored in branded freezer or not Also if any ice cream

gets damaged or there is bacterial formation company takes them back Usual return time varies

from 15-30 days For large sellers however they take less time

Payment Method for Ice cream Purchase All the companies give credit of around one month to

large volume contributing retail sellers and try to maintain good relationship with them This

trend is seen in all channels Also all the SMMTs and MTs are given credit of one month and

payment is made by cheque Other small shopkeepers have to purchase with cash However

according to shopkeepers Igloo is currently trying to cut down on credit sales as they believe

there is a consumer pull for their brand Companies like Polar and Kwality also give special

commission to large sellers Polar gives 5 commission on every bill

Evaluation of Entry into Ice cream Business for Bangladesh Limited 25

H Technology and Innovation

Technological advancement in the ice cream industry has been very rapid Starting with stick

mould and filler ice cream production the companies have come a long way Assessing the

consumer choice and demand the companies are introducing new products very often Improved

and new technology is used for faster production and better quality Igloo is trying to meet the

international standards and launching products such as Sundae Cornelli and Nuggets Other

companies are also introducing new flavours suitable for their target segments Igloo has both the

ISO and the HACCP certifications These were awarded in the year 2003 due to their relentless

pursuit of quality and innovation In September 1996 Igloo introduced the 3D Mould line and

straight line extrusion technology for the first time in the subcontinent Basically with Igloorsquos

pursuit all the modern technologies and quality innovations are available in the market

I Production Capacity

Current production capacity of the major players in the common format ice cream segment is

estimated to be as follows

Name

Capacity (Ltrs day)

Total Production (000 Ltrs)

Required Capacity (at 300 production days )

Estimated unutilized capacity (Ltrs day)

Igloo

22000

387433

12914

9086

Polar

6500

112513

3750

2750

Kwality

12100

204934

6831

5269

Savoy

1560

25985

866

694

Milk Vita

1330

26387

880

450

Table 14 Production Capacity of Current Market Players

From the table we can see that all the ice cream manufacturers are operating with unutilized

capacity However one point to be noted is that different ice cream SKUs require different

amount of item to be produced Exact machine production capacity at litre per day does not

represent the accurate scenario Nevertheless it can be safely assumed that all the manufacturers

have unused machine capacity at their premises Moreover the larger players like Polar and

Kwality have new technology available at their premises Kwality bought second hand machines

from Thailand but both Igloo and Polar bought theirrsquos from Italy and Denmark

J Products and Pricing

Products The products in the ice-cream market are differentiated A few firms dominate the

market but an endless variety of ice creams are offered to the consumers Igloo pioneers all

major innovations in the market The products that are available in the market can be classified

into single serving and multiple serving groups Which are then categorized based on functional

attributes designs These are

Single

Stick

Normal mould 3D mould extrusion

Evaluation of Entry into Ice cream Business for Bangladesh Limited 26

Cup and Sundae

Flat cup long cup

Cone

Normal cone (vanilla strawberry etc) premium cone (Ripple)

serving

Innovative Fillers

Snowball Animal shaped containers sandwich nuggets etc

Container

05 ltr 1 ltr and 2 ltr containers

Multiple serving

Family Pack

Assorted packs cakes shahi kulfi etc

Table 15 Ice cream Serve types

Among all the products available in the market most selling SKU for all the companies is Choc-

bar stick and highest selling flavour is Vanilla Following are the ranks of most selling SKUs and

flavours

SKU Name

Rank

Choc-bar (70 ml)

1

Vanilla Cup (100 ml)

2

Vanilla Box (05 and 1 Ltr)

3

Lemon Lolly (70 ml)

4

Normal Cone

5

Flavour

Rank

Vanilla

1

Chocolate

2

Strawberry

3

Ripple

4

Mango

5

Table 16 Rank of SKUs Table 17 Rank of Flavours

Choc-bar is one of the earliest vanilla based chocolate coated SKU that has dominated the

market strongly over the years Shopkeepers could not provide an exact percentage on SKU

based sales contribution Most of them ranked the SKUs and flavours according to sequence

shown in the above table Also according to newspapers and secondary sources Vanilla is the

most selling flavour with 60 sales contribution According to secondary sources percentage

sales contribution of various types of SKUs in the common format segment are as follows

Type of Ice cream

Value Share

Volume Share

Impulse dairy ice cream

514

443

Impulse water ice cream

112

138

Take-home dairy ice cream

374

419

Table 18 Volume Share of Different Serve Types

Impulse dairy ice cream provides more value share as price per litre is higher than take home

multiple serving ice creams Impulse water ice cream shows a similar trend as of take home ice

cream

Pricing Product pictures and price ranges of each category are provided below Evaluation of

Entry into Ice cream Business for Bangladesh Limited 27

Normal Premium Price Tk12 Tk20 Tk25 Cup amp Sundae Normal Cup Sundae Premium Cup

Price Tk20 Tk25 Cone Normal Premium PriceTk20 Tk25Innovative Fillers PriceLtr Tk100

Tk175 Container Normal Premium PriceLtrTk150 Tk 175 Tk 190 Family Packs Kulfi Mixed

Pack Cake Single ServingMultipleServingNormal Ice Fruit 3D Mould Premium Extrusion Price

Tk10 Tk15 Tk15 Tk20Stick Normal Cream

Figure 8 Serve Types and Pricing

As it can be seen from the above chart all impulse ice creams are priced within the range of

BDT 10 to 25 Other take home multiple servings are priced within the range of BDT 50 (05

Litres) to BDT 220 (2 Litres) Another noticeable factor in price is that there are both normal and

premium flavours in all types of ice creams

K Firms as Price Setters

The firms have capability to affect the market price to be low as profit margin is very high If

Igloo reduces the price of an item below the prevailing price level in order to increase its sales

its competitors will fear that their customers will go away from them to buy Igloo products To

retain their customers they will be forced to match the price cut of Igloo Historically this has

been proven to be true However due to price sensitivity companies cannot drastically increase

price even if they provide higher quality of product It was seen in 1997 when Igloo increased

price of 11 SKUs and faced drastic sales fall during that time It shows that the industry might

welcome overall industry price increase but not individual company price increase

L Promotion

The promotion scenario in the industry is not quite organized as of now Even proper data

regarding promotional expenditure is not available from research sources The reason being

there is not much consumer related activity seen in the market After Kwalityrsquos introduction in

the market in 1999 Igloo went on with massive Television promotion of their new products that

were available at that time

Evaluation of Entry into Ice cream Business for Bangladesh Limited 28

However in current times there is no TVC running from any company Companies promote their

launches mainly through billboards and newspaper promotions which is currently the most used

source of consumer promotion Some promotional activities that were done by the companies

over the years are listed below

Consumer Promotions

1 Larger players like Igloo and Kwality goes on with campaigns like ldquoGift on stickrdquo where

various prizesrsquo names are written on the sticks and consumers can get them

a Igloo ran a program on their launch of Macho variant where gift varied from cricket bat to

personal computer

b Igloo had a program in 2006 where gifts on sticks varied from Bangkok visit to sunglass

c Igloo ran one campaign in 2007 where gold bars were given on purchasing Choc-bar

d Kwality ran a similar program in 2008 where gifts varied from wrist watches to motorcycle

2 Some companies ran consumer TTS and gift programs where company products were given

free

a Igloo had a program in 2006 where Igloo butter was given free on purchasing Igloo ice cream

cake

b Kwality ran a program in 2008 where one SKU was given as gift with another SKU randomly

c ldquoCone Ice cream at your Homerdquo program was run by Igloo in 2002 where six cone biscuits

were given free with purchase of one litre ice cream

3 Media placement is another form of placement done by larger companies

a Igloo purchased ldquoGlimpse into World Cup Resultrdquo space in daily newspapers during World

Cup Football 2002

4 One interesting program is done by only Igloo in Bangladesh They did it in June 2006 The

program was ldquoIgloo Ice cream Festivalrdquo with main attractions of ldquoGet as much ice cream as you

want for BDT 200rdquo ldquoGet a Fantasy Kingdom Entry ticket with each Entry Couponrdquo ldquoLucky

Drawrdquo and ldquoCelebrity Addardquo

Trade Promotions

5 Trade promotions are mainly given to ldquoHighest retail purchasersrdquo and also based on time

bound trade schemes where various slabs of purchase amount are mentioned for different prizes

a Igloo takes their highest purchasers to visit countries like Singapore and Thailand

b Savoy has a purchase slab scheme where first prize is table fan

c Polar gives special sales commission to their highest purchasers (around 5)

Evaluation of Entry into Ice cream Business for Bangladesh Limited 29

M Players in the Common Format Segment

Branded common format ice cream segment is constituted of five players only Among them

Igloo is the largest player and Milk Vita is the smallest The following sections detail the basic

company detail of all the companies with special emphasis on Igloo the market leader

Igloo

The pioneering ice-cream company in Bangladesh started its operation in 1964 in Chittagong

under K Rahman amp Co Limited (KRC) with a small factory inside Coca Cola bottling factory of

KRC After the independence of Bangladesh in 1971 Igloo was taken over by the government of

Bangladesh Later in 1983 Abdul Monem Limited purchased the entire production setup of KRC

Limited including Coca-Cola bottling plant and Igloo ice-cream factory After taking full charge

of Igloo ice-cream by Abdul Monem Limited the manufacturing operations continued in

Chittagong till 1990 Although Dhaka fetched the maximum share of the total revenue the

distribution cost increased tremendously in the process of meeting the demand of Dhaka city To

cope with the distribution problem and handle Polar threat Abdul Monem Limited transferred

the factory to Dhaka changed the ice-cream packaging from the conventional paper to plastic

and expanded their market and distribution operation The new factory of Igloo was setup at

Shyampur Narayanganj and was nine kilometres away from the Motijheel office The company

apart from catering the capital city started to expand its operations in Comilla (1991) Khulna

(1992) and North Bengal (1993) These markets were served directly from Dhaka since the

storage facilities were not developed till then The company is now the market leader since 1997

with clear market share victory over others with sweeping 51 share It is to be noted that Igloo

is also a player in the boutique segment with three parlours (2 in Dhaka and 1 in Chittagong)

Product Range Igloo offers the widest choice of ice cream more than any other competitor in

the market Igloo is offering a total of fifty items including normal premium and novelty cup

stick and family pack items Igloo has thirty flavours more than anyone else in the industry and

is continuously launching new and innovative delicacies

Igloo ice-cream can be classified in six groups They are

Stick

Macho Choc-bar Mini Choc Clown Mega Shell n core Lolly

Cone

Cornelli 2 in one Cornelli classic

Cup

Shahi kulfi Vanilla Strawberry Mango Snow ball

Container

Vanilla Strawberry Mango Chocolate Coffee Diet Vanilla Tutti Frutti Ripple Pralin

Pistachio

Innovative

Nuggets Sandwich

Family

Ripple cake Party time Shahi Kulfi

Table 19 Products of Igloo

Single serve stick cups and cone items are easy to carry around and convenient to eat which

makes it most sold The core target segment of ice-cream is 6-24 years and this generation is

always on the Evaluation of Entry into Ice cream Business for Bangladesh Limited 30

move and thus prefers independent cone stick or cup items As Igloo initiated the concept of ice-

cream as a family product they offer some items to be enjoyed with the whole family

Quality and Innovation Igloo is committed to maintaining the highest quality standard through

its continuous RampD activities The major ingredients raw materials and packing materials are

procured from the best European sources Strict quality control is done at every stage of the

manufacturing process from procurement of material mixing material flow ice cream making

packaging storing (at main warehouse) distributing and market shelving by the Quality Control

Department Current supply chain for various materials of Igloo is as follows Australia (Milk

Powder) Denmark (Ingredients emulsifiers amp stabilizers) China amp UAE (Food grade sticks)

China Denmark Singapore amp Thailand (Food grade packing materials)

Figure 9 Igloo Supply Chain

Distribution Network Their distribution network is stretched all over the country with a long

fleet of refrigerated vans Firstly the ice cream products are stored at the central warehouse of

the factory and from there they are distributed through the haulage vehicle to the operational

centres located in Dhaka Chittagong Comilla Rajshahi Barisal Bogra Rangpur and Khulna

Strictest cold chain maintenance during the distribution and selling of the ice creams is ensured

Their distribution process is as follows Manufacture Stored at -24c Transported by Refrigerated

trucks at -Reaches amp Preserved in Eight regional stores Refrigerated vehicles (Distributors)Retail

outlets (Deep freezers)

Figure 10 Distribution Process of Igloo

Evaluation of Entry into Ice cream Business for Bangladesh Limited 31

Trolley Operation Igloo also operates through trolleys for extending its reach to consumers at

the furthest points The trolleys are operated near schools alleys streets parks etc and play

rhythmic music to attract the consumers These are very colourfully decorated with Igloo

umbrella and the puller wears specific uniforms Igloo was the first in introducing and operating

these trolleys in Bangladesh for any Fast Moving Consumer Goods (FMCG) Igloo has around

125 trolleys operating throughout the country Individual trolleys are provided with a regular

supply of igloo ice creams

Marketing The marketing commitment of Igloo is based on the relationship with its customers

and consumer by not only manufacturing the highest quality product but also delivering the

product by maintaining this quality To satisfy the ever-changing needs of the customer Igloo

has regularly launched new ice creams and introduced new flavours And this commitment has

positioned Igloo as the market-leading brand by gaining the consumers trust with the positioning

as ldquoA WORLD OF GREAT TASTErdquo

Facilities and Logistics at a glance As of 2009 following are the facilities and logistics enjoyed

by the company

Factory location

Dhaka

Production Lines

4

Packages

Stick Cup Family pack Others (Nuggets and sandwich)

Machine suppliers

1048766 Mark-Italy

1048766 Tetra Pak(Hoyer)-Denmark

1048766 Sabore Denmark

1048766 Hass- Austria

Machine models

1048766 Freemark 1100 Italy

1048766 FM 3000 FM 6000 Italy

1048766 SL600 Denmark

Cone baking

Hass- Austria

Chocolate making

Macentyre-UK

Coverage

Nationwide

Operational centre

10

Total market vehicles

30

Distribution channel

Directthrough appointed distributors

Outlet service

7500

Injected deep freezers

4000

Trolley operations

125

Warehouse no

8

Table 20 Igloo Facilities and Logistics

Kwality

Kwality is currently the second largest ice cream manufacturer of the country The mother

company for the Kwality brand is Sanowara Drinks amp Beverages Ltd a sister concern of

Sanowara Group The company is famous for powdered milk brands Red Cow and Diploma in

Bangladesh The drinks and beverage concern of Sanowara made an entry into the market in

1997 with ldquoYesrdquo brand drinking water and launched the ice cream brand in 1999 With heavy

communication and novelty products it Evaluation of Entry into Ice cream Business for

Bangladesh Limited 32

successfully removed Polar from the second place with a current market share of 27 The

company also operates in the boutique segment with two parlours in Dhaka and Chittagong

Kwality ice cream factory is situated in Chittagong with a floor space of 35000 sft and fully

automated machinery wrapping mix machinery equipments from Italy having capacity of

around 20000 litres of ice cream per shift The ice cream factory employs 140 people The

company is ISO 9001-2000 certified

Kwality was the first true competitor for Igloo products with some major innovation in product

design and communication but their quality is perceived to be lower in the minds of the

consumers and they do not have extrusion ice cream The product prices are also similar to that

of Igloo but they charge a bit lower than Igloo in premium multiple servings However during

market visits it was seen that shops that keep only Kwality or Igloo and Kwality both they can

sell Kwality too although the sales amount is lower than that of Igloo People who look for Igloo

shopkeepers give them that directly but if they get a chance and Kwality ice cream stock is high

they also push Kwality to dry the stock out This gives an indication that market is larger than

what the current players are capable of serving even in Dhaka

Kwality follows a similar distribution model like Igloo but distribution frequency is lower and

amount of cart sellers is limited to 25 and they operate only in Dhaka

Polar

Once a giant in the industry Dhaka Ice Cream Industries Ltd introduced the first hygienically

packed ice cream in Bangladesh in 1987 and the brand name Polar was thus born In the early

days the company started ice cream business with a wide range of products and a variety of

flavours in Dhaka city In 1988 the company started its distribution in the city of Chittagong

then Bogra and continued to cover more cities Presently Polar ice cream is available

throughout Bangladesh The company today trails in the market with 15 market share in the

common format segment Recently Polar has announced launch of ISIS diabetic ice cream with

support from DANONE to turn around in the market

The company has its head office as well as a modern large-scale industrial plant in Dhaka Polar

ice cream is made with Danish expertise using Danish equipment and technology The

production activities and quality control measures are supervised and managed by Danish

experts Polar offers a wide range of delicious flavours and tastes made by ingredients imported

from Europe

Dhaka Ice Cream at present has 3 cold stores in Dhaka Chittagong and Bogra in Bangladesh

From Dhaka cold store they distribute ice creams in Mymensingh Tangail Jamalpur Sherpur

Kishoreganj Netrakona Comilla Narsingdi Barisal Madaripur Agaeljhara Faridpur Magura

Chuadanga Jessore Satkhira Khulna Pirojpur and Sylhet through their distributors In case of

long distance delivery points the company uses auto cooling freezer van

Evaluation of Entry into Ice cream Business for Bangladesh Limited 33

In Dhaka city they distribute ice creams directly to retail stores in freezer vans Besides that

they have several distributors at different points of the city Distributors cover their individual

areas where company is not able to supply directly in their freezer vans Similar model is

followed by the company to distribute ice cream from their other cold storages through out the

country For storing and selling ice creams in retail stores the company like the other players

arranges a deep freezer with the Polar logo and canopy light box

In addition to this distribution the company also undertakes home delivery of ice creams for

special occasions

Savoy

Savoy Ice-cream brand is owned by Sena Kalyan Sangstha (SKS) Group of industries It started

its journey in March 1995 with a factory in Tejgaon Dhaka Yearly turnover is estimated at BDT

388 crores with a market share of roughly 35

The factory has been established with Sonali Bank finance at 6040 equity ratio The total

production capacity of the factory has been estimated at 2400 litres of Ice-cream per day Total

land area of the factory premise is 116 Bigha with 8000 sft area covered with a total project cost

of BDT 144 The factory employs 73 people

Product ranges of the company include all the basic designs and flavours of the industry

However the company has not been much of an innovator in the industry Their product quality

is substantially low than that of other players and they price their products at 10-15 lower than

the other competitors The company imports raw materials mainly from Europe The general raw

materials are Euro cream Skimmed Milk Powder Cocoa Powder and Flavour (Vanilla Mango

and Strawberry) Colour (Yellow Red Chocolate and Green) Ripple Sauce Cheney Fruit Palm

Kernel Oil Anhydrous Butter Oil (Ghee) and Sugar etc

Milk Vita

Milk Vita is one of the most famous brand names in Bangladesh for its liquid dairy milk Owned

by Bangladesh Milk Producersrsquo Co-operative Union Limited (BMPCUL) the company came in

the market with proper dairy milk ice cream in form of cups and choc-bar With a production

capacity of around 1600 litres per day the company is trailing in the market place with 3

market share

Although the Milk Vita Choc-bar was perceived to be extremely tasty by consumers they

probably could not do well due price competition Currently they do not even distribute ice

cream in Dhaka However their presence is seen in outskirts of Dhaka and other nearby towns

If the current market situation prevails Milk Vita would lose their remaining market share and

other companies would benefit especially Igloo However one of the advantages of Milk Vita

remains to be

Evaluation of Entry into Ice cream Business for Bangladesh Limited 34

their nation wide milk supply network They have skimmed milk powder production plant that

Igloo does not have Thus they can combat the seasonality of milk supply that Igloo with its

huge requirement of milk cannot

Strengths and Weaknesses of Competitors

Company

Strengths

Weaknesses

Igloo

1048766 Strong brand image

1048766 High product quality

1048766 Highest no of variety

1048766 Strong distribution network

1048766 Highest visibility

1048766 Strong promotion

1048766 High production capacity

1048766 Presence of extrusion ice cream

1048766 Items are generally a bit pricy

1048766 Igloo does not give free freezers like other companies

1048766 Reluctant in recent times regarding innovation

1048766 Local sourcing of liquid milk does not meet demand

1048766 Failure to use ERP technology slowing decision making

Kwality

1048766 Product variety

1048766 Strong promotion

1048766 Free freezer distributed

1048766 Presence in all price segments

1048766 High production capacity

1048766 Weak distribution

1048766 Lower exposure

1048766 low amount of carts in operation

Polar

1048766 Free freezer

1048766 Quality perceived to be high compared to Kwality

1048766 Discoloured freezers

1048766 Lower exposure

1048766 Low product variety

1048766 Unused capacity

Savoy

1048766 Price is lower

1048766 Discoloured freezers

1048766 Low product variety

1048766 Weak distribution

1048766 Small amount of freezers

1048766 Low production capacity

Milk Vita

1048766 Quality is good due to dairy cream

1048766 Brand leverage from Milk Vita milk

1048766 Low exposure

1048766 Low variety

Table 21 Strengths and Weaknesses of Competition

512 Market Characteristics of the Boutique Segment

With a small market of BDT 98 Cr and 567 share in the branded ice cream market the

boutique segment is currently an increasing segment in the ice cream industry Boutique

segmentrsquos history dates back to 1960s when Igloo launched boutiques in Dhaka to save

distribution cost and promote a culture of ldquoice cream eating outrdquo In later years boutiques lost

their glamour and retail common format segment picked up growth However with Dolce Vita in

the late lsquo80s craze for Italian Artisan ice cream was recreated in the market Although Dolce

Vita is failing in recent times emergence of MoumlvenPick and Club Gelato in 2000 has uplifted the

segment once again Current growth rate of the

Evaluation of Entry into Ice cream Business for Bangladesh Limited 35

segment can be estimated to be approx 20-22 (higher than the common format segment)

Following are the basic detail of all the major players in the segment with their estimated sales3

Players

Outlet

Sales (Cr Taka)

Share

Club Gelato

1

136

199

MoumlvenPick

1

119

174

Andersenrsquos

3

119

174

Gelateria Igloo

3

119

174

Sub Zero (Kwality)

2

051

75

Baskin Robbins

1

015

22

Dolce Vita

1

017

25

American Soft

1

009

12

Rainbow

1

009

12

Others (off site)

089

130

Total Market

682

Table 22 Players and Shares in Boutique Segment

A Detail of Operation

General operational procedure followed by all the operators is as follows

1048766 Operating method There is a variation in operational method among the large operators

1048766 Club Gelato uses kitchen at own premise where imported ingredients and local milk (daily

special service from Milk Vita) are used to make ice cream

1048766 MoumlvenPick directly imports ice cream from Switzerland

1048766 Andersenrsquos Gelateria Igloo and Sub Zero produce ice cream at their factory with a mix of

imported and local ingredients

1048766 Products Around 30-35 flavours of artisan dairy ice cream are served at the premises

1048766 Most sold flavours are Vanilla Ferrero Rocher Butterscotch Chocolate Caramel etc

1048766 Other Products Larger players also serve ice cream desserts (milk shakes ice cappuccino etc)

pastries and other desserts with normal coffee and tea facility at their premises

1048766 Boutiques fight ice cream seasonality with the other products sales during off-peak ice cream

seasons Usually ice cream and other products contribute at 6040 ratio in summer and during

winter and off-peak seasons the ratio reverses

1048766 Pricing Usually the prices of products in this segment are 3-4 times higher than that of the

common format segment

1048766 Prices do not vary with flavours Variation depends on serve style (Cone tub) and use of

toppings and other ingredients (Chocolate sauce nut fruits) etc

1048766 Usual margin charged is around 50-60 over production cost Similar margin is charged for

other products like coffee ice cappuccino etc

3 Yearly sales is estimated based on companyrsquos approximate daily sales collected during

interview

Evaluation of Entry into Ice cream Business for Bangladesh Limited 36

1048766 Target Group Most of the consumers belong to SEC A and higher SEC A with DMFI of at

least BDT 20000

1048766 Foreign delegates and resident foreigners also visit these boutiques

1048766 Main purposes of visits in the boutiques are

bull Youth hangout with friends and having ice cream and ice cream derivatives

bull Family Family night out or eat out at a restaurant and then having dessert

bull Foreigners Having dessert after dinner

1048766 Rush time at boutiques are Afternoon 2-4 pm and at night 9-11 pm

1048766 Offsite sales Most of the large operators also sell offsite They have small freezers for off-site

1048766 Club Gelato and MoumlvenPick serves ice cream at high society parties and programmes

1048766 MoumlvenPick also has kiosks in known hotels like Sheraton

1048766 Promotion No mass promotion is done by any of the companies Word of mouth is the most

important source of promotion Posters and banners outside the premise and occasional

newspaper advertisements are used to communicate special offers

1048766 Growth Drivers Market growth is driven by image innovation quality decoration of facility

environment and special offers

1048766 Club Gelato has the image of selling true Italian dairy ice cream with an excellent hangout

environment

1048766 MoumlvenPick imports ice cream directly from Switzerland and is perceived to be of high quality

1048766 Andersenrsquos operates with the image of ice cream from Denmark

1048766 Gelateria Igloo (from Igloo) and Sub Zero (from Kwality) could not establish the premium

artisan ice cream image

B Players in the Boutique Segment

There are very few players who have significant impact in the boutique segment Detailed

information of all the major boutique segment players is provided below

Evaluation of Entry into Ice cream Business for Bangladesh Limited 37

Club Gelato

Basic Company Information

1048766 Location Banani Road 11 (Planning for a second one in Dhanmondi)

1048766 Established in 2001

1048766 Seating Capacity 48

1048766 Area 1250 sft (including kitchen)

1048766 Owner Mr Jahangir Alam (Bangladesh)

1048766 Business Type Joint business partnership with Singapore

1048766 Staff 15 people (6 in the kitchen)

1048766 Production capacity 150 litres per day

Product Related Information

1048766 Product Italian style parlour scoop ice cream fruit juice coffee and pastries

1048766 Flavours Around 32 flavours available

1048766 Most selling Ferraro Rocher Vanilla Pistachio

1048766 Innovations New variants and ingredients are communicated by their Italian supplier and

Club Gelato decides what to take from them

1048766 Serve type Cup Cone Glasses Box for take away

Consumer Profile

1048766 Primary Teenagers and Young Adults (18-30) amp Diplomats

1048766 Secondary Family consumers for eat out

1048766 Income Group High income customers tentatively from SEC A and higher SEC A

1048766 Geographic Area Diversified

1048766 Rush time 8-10 pm

Sales and Price Information

1048766 Sales BDT 50000 (60 Ice cream 40 other desserts) daily in summer In winter however

other products sell more and thus they keep total sales at the same level

1048766 Price 750 per litre for any flavour

1048766 Sales Volume 50-60 litres per day

Supply Chain Placement Information

1048766 Milk Local sourcing from Milk Vita (4050 litres per day)

1048766 Chocolates amp Flavours Belgium France Germany

1048766 Transportation Mainly air (They can afford it due to high margin)

1048766 Contribution of various materials Flavours (30) Milk (20) other parts are water and air

Promotional Materials

1048766 Materials used are near premises POS materials for promoting the parlour only

Table 23 Detail of Club Gelato

Evaluation of Entry into Ice cream Business for Bangladesh Limited 38

MoumlvenPick of Switzerland

Basic Company Information

1048766 Location Gulshan

1048766 Established in 2000

1048766 Seating Capacity 55

1048766 Owner Mr Arif Mahmud

1048766 Business Type Franchise of International MoumlvenPick

1048766 Storage Capacity in Shop 150 litres

Product Related Information

1048766 Product Imported MoumlvenPick ice creams coffee chicken sandwich and Frappe

1048766 Flavours Around 30 to 35 flavours available

1048766 Most selling Swiss Chocolate caramel Vanilla Dream Espresso Strawberry

1048766 Innovations New variants are communicated by their franchiser and they decide on flavours

that they want

1048766 Serve type Cup Cone Glasses Box for take away

Consumer Profile

1048766 Primary Teenagers and Young Adults (18-30) (70) amp Diplomats

1048766 Secondary Family consumers for eat out

1048766 Income Group High income customers tentatively from SEC A

1048766 Geographic Area Concentrated in Gulshan and nearby areas

1048766 Rush time Afternoon- Young Adult 10 to 11 pm Foreigners

1048766 the company also serves at parties and has freezers in known hotels where their ice creams

are served

Sales and Price Information

1048766 Sales BDT 35-40000 daily in summer

1048766 Price 640 per litre for any flavour

1048766 Sales Volume 55-60 litres per day

Supply Chain Placement Information

1048766 Transportation Imported finished goods by ship

1048766 Ship travel time 19 days

1048766 Port clearance 10 days

1048766 Safety Cushion Extra 10 days

Promotional Materials

1048766 Materials used are near premises POS materials for promoting the parlour only

Table 24 Detail of MoumlvenPick of Switzerland

Evaluation of Entry into Ice cream Business for Bangladesh Limited 39

Andersenrsquos of Denmark

Basic Company Information

1048766 Location Gulshan (2 others in Uttara Dhanmondi)

1048766 Established in 2001

1048766 Seating Capacity 48

1048766 Owner United Group

1048766 Business Type Franchise of Australian company Andersenrsquos of Denmark

1048766 Production Tongi Factory of United Group

1048766 Production capacity 2000 litres per day in factory

1048766 Storage Capacity in Shop 150 litres

Product Related Information

1048766 Product Danish parlour scoop ice cream and coffee

1048766 Flavours Around 30 to 35 flavours available

1048766 Most selling Strawberry Butter Scotch Green

1048766 Innovations New variants and ingredients are communicated by their franchiser and they

decide on flavours that they want

1048766 Serve type Cup Cone Glasses Box for take away

Consumer Profile

1048766 Primary Teenagers and Young Adults (18-30) (70) amp Diplomats

1048766 Secondary Family consumers for eat out

1048766 Income Group High income customers tentatively from SEC A

1048766 Geographic Area Concentrated in Gulshan and nearby areas

1048766 Rush time 8 to 10 pm

Sales and Price Information

1048766 Sales BDT 10-12000 daily in summer

1048766 Price 460 per litre for any flavour

1048766 Sales Volume 40-50 litres per day

Supply Chain Placement Information

1048766 Milk 2025 kg packs are imported

1048766 Chocolates amp Flavours Imported

1048766 Butte paper Local sourcing

1048766 Transportation Ship

Promotional Materials

1048766 Materials used are near premises POS materials for promoting the parlour only

Table 25 Detail of Andersenrsquos of Denmark

Evaluation of Entry into Ice cream Business for Bangladesh Limited 40

Gelateria Igloo

Basic Company Information

1048766 Location Banani Kemal Ataturk Avenue (Two others in GEC Mor Chittagong and Naya

Paltan)

1048766 Established in 2000

1048766 Seating Capacity 20

1048766 Production From Igloo factory in Shyampur Narayanganj

Product Related Information

1048766 Product Parlour scoop ice cream and coffee only

1048766 Flavours Around 30 flavours available

1048766 Most selling Vanilla Strawberry Chocolate Pistachio Butter Scotch Tutti Fruity

1048766 Serve type Cup Cone Glasses Box for take away

Consumer Profile

1048766 Primary Teenagers and Young Adults (18-30)

1048766 Secondary Family consumers for eat out

1048766 Income Group High income customers tentatively from SEC A and B

1048766 Geographic Area Diversified

1048766 Rush Time afternoon and evening

Sales and Price Information

1048766 Sales BDT 8000 to 10000 daily in summer Nearly one fourth in winter

1048766 Price Varies but 350 per litre of vanilla

Promotional Materials

1048766 POS materials at the premises

Table 26 Detail of Gelateria Igloo

52 Price Comparison of Common and Boutique Segments

Price ranges of both common format and boutique segment cannot exactly be pin pointed as

products do not follow common structure and variations occur with use of toppings mixing of

flavours and use of coatings However a price comparison has been made among the brands

based on their price of per litre of vanilla flavoured ice cream in the market It appears to be as

following

Company

Price Litre Vanilla

Club Gelato

750

MoumlvenPick

640

Andersenrsquos

460

Dolce Vita

440

Igloo

100

Kwality

100

Polar

100

Milk-Vita

90

Savoy

85

Table 27 Comparative Price Analysis

As it can be seen there is price gap within the range of BDT 100-400 Ice cream kiosks and

small scooping boutiques can operate within that range

Evaluation of Entry into Ice cream Business for Bangladesh Limited 41

60 CONSUMER ANALYSIS

61 Target Group of Ice cream

Who are the consumers of ice cream This question does not have a clear answer Ice cream is a

food for all It is the only food consumed by a human being at less than 0 degree centigrade

temperature and people of all ages feel indulged to have it However we can determine focus

target groups for both branded common format and artisan boutique ice cream Group

discussions and market visits were done to get insight into the consumers along side resources

form secondary sources Age based target group is common for both segments but variation

among the groups occur mainly based on SEC and DMFI classification

611 Geographic Group

Branded ice cream remains an urban product till date Geographically branded ice cream has

reached urban and semi urban areas up to Thana Head Quarter levels Ice cream has reached

areas where electricity is available Small artisan players are available in places where large

branded players have no distribution

612 Target Age Group

Age wise grouping of target consumers is as follows

1048766 Urban kids in the age group of 5-14

1048766 They mainly consume normal sticks cups cones innovative fillers and water ice creams

1048766 Urban youth in the age group of 15-24

1048766 They consume premium and extrusion sticks and cones

1048766 Urban mothers in the age group of 25-35

1048766 They determine the family purchases Even when the father purchases ice cream decision is

taken by them

Consumption pattern of various age groups are depicted in the following chart Ice cream

consumption pattern50203005 to 14 yrs15 to 24 yrs25 to 35 yrs

Figure 11 Target Group wise Consumption Pattern Evaluation of Entry into Ice cream Business

for Bangladesh Limited 42

613 Target SEC and DMFI Group

Common Format

SEC A and B is the target group for common format ice cream However with rapid increase in

price level over the years has made it a ldquohard to consumerdquo product for SEC B consumers who

belong to lower DMFI group

Boutique Format

Boutique formatrsquos higher margin and high price range makes it an exclusively SEC A ice cream

People belonging to upper and upper middle class have access to the mediocre boutiques and

only higher upper class can have premium ice creams like Club Gelato and MoumlvenPick

Another unique target group for boutique format are the foreigners who live in Bangladesh

These people tend to visit the parlours to have ice cream as dessert especially after dinner

62 Ice cream in Consumer Lifestyle

Figure 12 Ice cream in Consumer Life style

This simple overview of ice cream in consumer lifestyle was determined based on in-depth

research analysis of UBL and validated through qualitative group discussions by the author

However detail of in-depth research is provided in a later section of this chapter

Evaluation of Entry into Ice cream Business for Bangladesh Limited 43

63 Highlights of Purchase Habit of Ice cream

631 Common Habits across Target Groups

There are some common habits that were identified in earlier researches and group discussions

with consumers Common habits mean the consumer approach towards ice cream that is seen

across all target groups eg kids youth and adult purchasers These are outlined below

1048766 Ice cream is mainly seen as a dessert or a snack Impulse ice cream is seen as a quick snack

that is consumed when it is in sight Visibility plays a big role here Regarding family packs

people see it as a post-food dessert

1048766 Ice cream purchase is commonly a planned event When the contexts arise people generally

take a bit of time to decide whether or not to have ice cream or when they want to go to a

boutique they make due considerations regarding which boutique to visit

1048766 Ice cream purchase decision is taken based on favourite flavour People tend to try out new

variants and flavours when they first see it They compare the taste with earlier experience and

when they purchase later they choose the flavour they have liked most

1048766 For In-Home segment decision is mostly taken on the flavour Generally people come up with

different flavours of choice and most voted flavour is chosen

1048766 People become aware of new variants or flavours mainly through word-of-mouth

Advertisement (new launches special offers and festivals) in newspaper is another source of

awareness

1048766 People are currently indifferent towards the price level of premium flavours However some

feel that price of Choc-bar or water ice creams (lolly) is a bit much If less they would have

consumed more Some also feel that companies should come up with branded ice cream in the

price range of BDT 5-8

1048766 Ice cream is purchased from nearby shops If required brand and flavour is not available 2-3

shops will be visited and then available flavour will be selected even if the required one is not

found This is done mainly not to ruin the mood for ice cream

1048766 People are very open to try new brands and flavours especially if it comes from a credible

source They would try new flavours and if they are satisfied with the taste they would repeat

purchase

1048766 Regarding boutique visits people feel that boutiques need to have a proper environment

enough flavours and other snacks

1048766 While visiting boutique with family or companion they want variation in flavours so that

they would order different flavours and taste each otherrsquos ice cream It is seen as a sign of

togetherness

1048766 Frequency of ice cream purchase varies among people It depends on peer pressure collective

family decision summer heat and attitude towards ldquoice creamrdquo itself as a product Evaluation of

Entry into Ice cream Business for Bangladesh Limited 44

632 Habits of Kids

1048766 Kids choose ice cream flavours by the look of the product (generally pictures shown in POS

materials and carts) They love colour and designs of the products let it be a common format or a

boutique ice cream

1048766 Kids (when in house) would go with the housemaid to the nearby shop choose the flavour

they want (within range of the amount given to the maid) and buy it

1048766 When with parents they would take the product they like even if the price is lower than some

other product However mothers play a role in this decision They would want their children not

to choose too high priced a product or coloured products

633 Habits of Youth

1048766 Young people are the main consumer of impulse ice cream They also are one of the major

consumers in the boutique segment

1048766 Young people love to try out new products that come into the market Another side of the coin

is that they are not very loyal to a brand or a flavour and tend to switch a lot

1048766 Regarding boutique visits young people go to boutiques to have an ldquoice cream hang outrdquo with

peer groups They would stay there for a longer period of time while they have their ice cream

1048766 Some times young people make milk shakes and other ice cream based desserts

634 Habits of Mothers

1048766 Mothers worry about their childrenrsquos health and they prefer ldquovanillardquo type of brands

However when price constraint occurs they go for water ice creams for their children They try

to convince their kidrsquos purchase decision

1048766 Regarding family purchase motherrsquos decision is sometimes prioritized by the whole family

64 Barriers to Ice cream Consumption

641 Emotional Barriers

1048766 Overindulge (close to sinful)

1048766 Undisciplined (no control)

1048766 Childish (licking)

1048766 Artificial Image

642 Functional Barriers

1048766 People of SEC B feel that ice cream is an expensive dessert (If less expensive would consume

more often)

1048766 It leads to cold cough - especially in winter rainy season

1048766 It contains artificial additives preservatives

1048766 It is very high in calories that lead to fattening

Evaluation of Entry into Ice cream Business for Bangladesh Limited 45

1048766 It does not quench ldquothirstrdquo

1048766 Less convenient (portable immediate eat)

1048766 Messy Dripping

65 Research Findings

The highlights regarding purchase habits triggers and barriers of ice cream consumption provide

a glimpse into the consumer world of ice cream industry However UBL CMI conducted a

formal research exclusively on ice cream consumers to identify

1048766 Occasions of ice cream

1048766 Frequency of ice cream consumption

1048766 Expectations from ice cream occasions

1048766 Personalities that they desire from ice cream

651 Relevant Occasions in Daily Lives of Consumers

Research question regarding ldquousual occasions of life that occurred most frequently in day-to-day

lives of the respondentsrdquo generated the following replies

Occasion

of Respondents saying Yes

Watching TV

93

Normal Dinner At Home

91

Normal Lunch At Home

89

At Home While ReadingMusicSurfing

86

Informal Family Get Together

85

Out Of Home Hanging Out With Friends

84

Out Shopping

84

Mid-Afternoon Break At Home

83

At Home By Myself During The Day

82

Special Dinner At Home

82

Informal Dinner Out Of Home

82

Normal Lunch Out Of Home

82

Leisure Walk

79

Coming Home From WorkSchool

78

Special Dinner Out Of Home

78

Celebration

78

A Night In With Friends

77

At Home By Myself In The Evening

77

Special Lunch Out Of Home

76

Mid-Afternoon Break Out Of Home

75

Special Lunch At Home

73

Day out with Partner

72

Midmorning Break

70

At Breakfast

68

Family Day Out

68

During Work Or At School

65

Evaluation of Entry into Ice cream Business for Bangladesh Limited 46

Travelling ToFrom WorkSchool

65

At The Cinema

61

Special Event

56

Clubbing At A Party

50

Post GymSports

48

Table 28 Relevant Occasions in Consumersrsquo Lives

Respondents were then asked to mention ldquofrequency of occurrence of the identified occasionsrdquo

The identified replies are as follows Normal dinner at homenormal lunch at homeComing home

from workschoolTraveling tofrom workschoolDay out with Partner SpouseMid-afternoon

break at homeOut of home hanging out with friendsLeisure walkMid-afternoon break out of

homeA night in with friendsSpecial dinner at homeSpecial lunch out of homeFamily day

outSpecial eventPost gymsportsDaily2-3 Times A WeekWeekly2-3 Times A MonthOnce A

MonthEvery 2-3 MonthsLess OftenNever Figure 13 Frequency of Occurrence of Occasions

This shows that ldquoNormal dinner at home Watching TV Normal Lunch At Home At Home

While ReadingMusicSurfing Coming Home From WorkSchool During Work Or At School

Travelling ToFrom WorkSchool Midmorning Break Day Out With Partner Spouse At Home

By Myself During The Dayrdquo are the most frequent daily rituals of busy lives of consumers

652 Frequency of Ice cream Consumption

Respondents were asked to mention ldquoconsumption pattern of ice cream during the identified

occasionrdquo on a scale of 1-5 depicting frequencies like ldquo(5) always (4) most of the times (3)

about half of the times (2) sometimes (1) never do not knowrdquo The responses are depicted in

the following table

Evaluation of Entry into Ice cream Business for Bangladesh Limited 47

444474544655555566756665775967779991011101111101210111110101113111412131314161

011121411131216181519181518211817171719181718201721222130303434253437403741394

046383944464746453745414641374638504843414839373030292726232725222020201926202

21722221317Midmorning

breakWhile clubbing at aAt the cinemaSpecial eventNormal lunch out ofA night in with

friendsNormal dinner atInformal dinner out ofAt home by myselfAt home by myself inOut

shoppingSpecial lunch atDay out with SpouseWatching TVAlwaysmost of the timesAbout half

of the timesSometimesneverdo not know

Figure 14 Frequency of Ice cream Consumption

As it can be seen ldquoDay out with Spouse Special lunch at home Special dinner at home

Watching TV Family day out Celebrationrdquo are the occasions where most frequently ice cream is

consumed

653 Market Character Mapping Relevant Occasions vs Frequency of Consumption

If we plot frequency of consumption on the X-axis of a chart and relevance of occasion

occurrence on the Y-axis taking the above mentioned values as cut-off values we get four

quadrants in the chart depicting four market scenarios that any ice cream manufacturer in

Bangladesh market might encounter given the current market situation This market

segmentation is based on frequency of ice cream consumption in daily occasions of consumer

lives

The segments are

1048766 OPPORTUNITY MARKET High Relevant Occasions-Low Ice cream Frequency

1048766 QUESTION MARKET Less Relevant Occasions-Low Ice cream Frequency

1048766 HIGH FREQUENCY MARKET Relevant Occasions-High Ice cream Frequency

1048766 CAPTIVE MARKET Less Relevant Occasions-High Ice cream Frequency

The chart looks as follows Evaluation of Entry into Ice cream Business for Bangladesh Limited

48

Figure 15 Relevance of Occasion-Frequency of Consumption Mapping

As it can be seen from the above chart Bangladesh Market still lies in the Opportunity and

Question market zone with a pull towards High frequency and Captive Market zones This is

evident from market data as penetration of ice cream still remains at Thana headquarters levels

Also this explains the high market growth rate of 17 as market is yet under developed and

branded quality ice cream has yet not reached all levels of consumers especially rural level that

constitutes around 75 of Bangladeshi market

From the above analysis we can establish that target of ice cream manufacturers should be to

penetrate more into the Bangladeshi market to create higher frequency of ice cream

consumption The following chart shows the strategies to follow for ice cream manufacturers

Figure 16 Required Market Strategy for Bangladesh

Evaluation of Entry into Ice cream Business for Bangladesh Limited 49

As relevance of ice cream consumption occasions can hardly be controlled by marketers their

endeavour should be to create more ldquoemotional and functionalrdquo attachment to ice cream in less

frequent occasions through ldquomarket developmentrdquo strategy to earn share from overall food

expenditure of consumers and at the same time make them consume more ice cream in highly

relevant occasions through ldquopenetrationrdquo strategy

654 Consumersrsquo Emotional Requirements and Product Attributes

All consumers under these clusters also identify the emotional requirements and the significant

product attributes they seek from their current preferred and future desired ice creams These are

provided below

Cluster

Emotional Functional Requirement

Product Attributes

Enjoyment

Flavour Variety

1048766 Combination of different flavours

1048766 Combination of different textures

1048766 Very sweet

1048766 With wafer or biscuit

1048766 With chocolate

1048766 Of a well known brand

Socially Involved

Spoonable Rich

1048766 Very creamy

1048766 Only natural ingredients

1048766 No mess

Care

Size Creaminess

1048766 Big

1048766 Rich full taste

1048766 Smooth

1048766 Value for money

1048766 No mess

Unwind amp Escape

Economy

1048766 Crunchy

1048766 Economic

1048766 Of a well known brand

1048766 Nutritious

Balanced Convenience

Health Conscious

1048766 Of a well known brand

1048766 Nutritious

1048766 Milk based

1048766 Low sugar

1048766 Low carbohydrates

1048766 Filling

Active Self-Grooming

Fruit Vitamins

1048766 Healthy

1048766 Fruit based

1048766 Low fat

1048766 Liquid or drinkable

1048766 Nutritious

1048766 Of a well known brand

Confidence

Drinkable Light

1048766 Low calories

1048766 Light on the stomach

1048766 Chewy or gooey

1048766 Not so sweet

1048766 Natural appearance

Sensual

Appeal or image

1048766 No artificial additives

Evaluation of Entry into Ice cream Business for Bangladesh Limited 50

1048766 Natural appearance

1048766 Melting slowly

1048766 Attractive packaging

1048766 High quality ingredients

1048766 Of a well known brand

Table 29 Requirements amp Product Attributes Desired by Consumer Clusters

Of these findings we see that the identified highlighted barriers to ice cream consumption are

pretty evident among the consumers Mostly people want products of a reliable source or a well

known brand low calories quality ingredients value for money economic type

Evaluation of Entry into Ice cream Business for Bangladesh Limited 51

70 INDUSTRY ATTRACTIVENESS AND ENTRY PROSPECTS

71 Driving Forces of Growth

As identified in the earlier sections there are several driving forces behind the growth of ice-

cream industry in Bangladesh

712 Trade and Infrastructural Level

1048766 As a result of globalization newer varieties have been introduced to the local products Many

foreign companies are also coming as franchise so there has been increased competition and

these boutiques are setting higher standards for the local producers

1048766 The present market growth rate is 18-19 which is being influenced by larger players like

Igloo who are expanding their distribution nation wide with expansion of national electricity

grid

1048766 With entry of Modern Trade and recent organized business approach of retailers has made it

possible for ice cream manufacturers to penetrate into shops even without providing them with

branded freezers

1048766 Weather change has increased ldquosummerrdquo season in our country which has reduced negative

seasonal impact on ice cream

1048766 Large companies like Igloo have taken global learning of using carts as an effective tool of

availability and visibility for ice cream

1048766 New and improved technologies are being used in the production process This technological

advancement has improved quality increased speed of production and made the process more

cost effective

713 Consumer Level

1048766 Only a few years back rich people could afford the luxury of having ice-cream but now it has

become a common product for everybody Ice-cream companies are producing different products

with a wide price range for consumers of every class and status

1048766 Nowadays companies are doing promotional campaigns more frequently the customers get to

know about the product which makes it easier for them to buy the best one

1048766 The improved standard of life and more modernized lifestyle of people is an important reason

for the increased consumption thus growth of the ice-cream industry

Evaluation of Entry into Ice cream Business for Bangladesh Limited 52

72 Prospects of Entry

The ice-cream industry of Bangladesh is an attractive one for the investors because there is a

huge market but number of producers is very small The major reasons behind industry

attractiveness are as follows

1048766 The industryrsquos current growth potential is very high with opportunity for market development

1048766 The competition currently permits adequate profitability and the competitive forces are

becoming stronger with time

1048766 Boutique segment is at a very high growth stage but no operator is currently operating with a

mid price range of BDT 100-400 Ice cream kiosks and small scooping boutiques can operate

within that range

1048766 Current industry driving forces are favourable for the future industry profitability

1048766 Globally oriented consumers look for variety in ice cream that is currently not available

Latest innovations came in the market in 2002 People would welcome new variety and flavours

1048766 There is a gap in the market for balanced convenience through ice cream where consumers can

get nutritional benefits for ice cream Also emotional attachment to ice cream could further be

improvised in promotional campaigns

1048766 There is high scope for market penetration and development to increase frequency of ice

cream consumption

1048766 Level of risk or uncertainty is very low in ice-cream industry because the consumer market is

so huge any product with a standard quality and careful pricing will be able to make significant

profit

1048766 As for geographic reach of the industry 60 market is still in Dhaka There is scope of

expansion and a new entrant can easily capture market share within Dhaka using carts even if

they do not want nation wide cold chain distribution

1048766 The production process is very complex and capital requirements are also high So before

going into production any company should know about their capabilities and weaknesses and

then start the business or else they might suffer huge loss at a certain level

1048766 Unilever can acquire the required resource and use existing multi-national multi-cultural

expertise to enter the market in a grand way

1048766 With high probability of entry from DANONE with more products like the ISIS diabetic ice

cream Unilever should consider entering in this industry as soon as possible

Evaluation of Entry into Ice cream Business for Bangladesh Limited 53

80 ENTRY STRATEGY FOR UNILEVER

While describing the suggested entry strategy for UBL certain issues have been kept

confidential and some issues have been touched but not explained to keep consistency with UBL

confidentiality policy

81 Suggested Entry Areas for UBL

1048766 Boutique segment of the Bangladesh ice cream is only 5 of the branded market UBL needs

to pursue a larger scope to make the entry viable

1048766 UBL cannot fight with unbranded segment as global product quality mandate of Unilever does

not allow UBL to fight in low price-low quality segment

1048766 Recommend entry should be in the common format segment with both single and multiple

servings and in the boutique segment with a different brand name (if possible BEN amp JERRYrsquoS)

1048766 UBL should build up state-of-art modern factory for manufacturing and establish cold chain

facilities initially focusing on metro cities

1048766 Investment issues are required to be addressed for building factory and cold chain and capital

requirement needs to be identified for that purpose4

1048766 UBL may have boutiques for driving image selective top-end offering

1048766 Kiosks can be setup near universities and shopping malls

1048766 Boutiques should be concentrated in Dhaka and Chittagong

1048766 Ice cream for boutiques and kiosks would be produced in factory as institutional packs of 9-10

litres

82 Products

1048766 As a Brand Building country in global Unilever operating framework UBL is entitled only to

bring products developed by the Brand Development countries

1048766 Unilever should focus on serving products that have nutritional benefits (already available

globally) along with usual satisfactions of sensual pleasure functional attributes etc

1048766 Current existent players especially Igloo and Kwality have extensively copied global and

regionally available Unilever products eg Cornelli is same as Wallrsquos Cornetto Vinetta is similar

to Vienetta Mega is similar to Magnum etc UBL needs to differentiate these to consumers on

the ldquotaste the originalrdquo platform where global quality is focused regarding the products

1048766 UBL should also bring regionally famous brands like Moo or Max to create image

differentiation

1048766 Magnum or Moo should be used as premium end ice cream to generate more profit margin

Evaluation of Entry into Ice cream Business for Bangladesh Limited 54

83 Placement

1048766 Distribution focus should be in Dhaka for entry as Dhaka contributes more than 60 of total

ice cream sales in the country

1048766 Company may use carts as distribution method They serve as good source of visibility and

availability It would help in increasing impulse purchase

1048766 At least 1500 outlets in Dhaka and Chittagong needs to be actively served using dedicated

branded refrigerators to generate sales

1048766 50 carts should operate in Dhaka and Chittagong

84 Price

1048766 UBL products should be priced at par with Igloo pricing for the common format ice creams

1048766 UBL can bring in premium single-serve SKUS for the higher economic classes in the price

range of BDT 60-80

1048766 Smaller SKUs (small lolly stick) can be introduced in the price range of BDT 10-15

1048766 In the boutique segment UBL should price products above the semi-premium segment

(Gelateria Igloo Sub Zero or Andersenrsquos) but lower than that of Club Gelato or MoumlvenPick

85 Promotion

1048766 UBL would require strong marketing campaign (As high as 50 of sales) to have a grand

entry in the market

1048766 Presence in the television media would be of utmost importance More than 50 of

promotional expense should be made here initially Gradually it can be reduced

1048766 Newspaper would serve as the second most important option

1048766 Billboards should also be used

1048766 Activations (similar to Lux Channel i Super Star or Igloo Festival) should be done to generate

trial

86 Scope of Opportunity

Table 30 Value and Volume Based Scope of Opportunity for UBL

Value (BDT Cr)

Volume (Tons)

Market

131

7835

Common

121

7600

Boutique

98

235

Evaluation of Entry into Ice cream Business for Bangladesh Limited 55

861 Geographic Contribution

1048766 Dhaka (61)

1048766 Chittagong (19)

1048766 Sylhet (10)

862 UBL objectives

Common Format Ice Creams

1048766 Target 10 Market share in 1st year operation

1048766 Value BDT 11 Cr

1048766 Production capacity required 21 Tons day

1048766 Freezer Placement 1500 freezers

1048766 Cart operation At least 50 carts

Boutiques

1048766 Target Further develop the market

1048766 Focus Dhaka Chittagong and Sylhet Metro

1048766 Franchise At least 20 franchisee operations nation wide in divisional towns

1048766 Pricing Below imported parlours above common formats with around BDT 400 per Litre

87 Critical Success Factors

1048766 UBL is considered as a high profile company in Bangladesh and thus they cannot operate in

the market only with common products like choc-bars and cups They must have premium

products (these require extrusion line) also to carry their brand image Otherwise UBL would not

be able to charge usual premium over competition products

1048766 Launch of ice cream would require huge promotional and activation support in order to gain

customers from Igloo People want novelty regarding ice cream and UBL have to let them know

about their products and create hype

1048766 Cart should be used as a source of distribution Recent successes of Unilever companies like

Indonesia shows that carts can generate more sales and can be used as source of visibility in the

minds of both retail traders and consumers Carts can also provide incremental sales to the

company

1048766 UBL have to create a strong cold chain for ice cream (initially in Dhaka and Chittagong) to

ensure quality products for consumers

1048766 UBL have to build capacity very rapidly to meet consumer demand if the launch is successful

Evaluation of Entry into Ice cream Business for Bangladesh Limited 56

90 BUSINESS PROJECTION

91 Basic Assumptions

Business projection for ice cream business was made based on a conservative approach UBL

would require spending significantly on production capacity and factory dedicated to ice cream

Thus to analyse business possibilities of ice cream certain assumptions were made and collected

data were used These are

1048766 Production equipments and cabinets would cost approximately BDT 55 crores

1048766 Production equipments 45

1048766 Packaging Equipments 15

1048766 Storage Facility 20

1048766 Branded Freezers 10

1048766 Distribution Investment 10 (Distributors would also invest themselves)

1048766 Ice cream factory with a floor size of 20000 sqft would cost BDT 25 crores

1048766 Objective is to capture 10 market share in Dhaka and Chittagong in the first year

1048766 Business would grow by 50 in year 2 and 3 30 in year 4 and 25 in year 5

1048766 Weighted price per litre is BDT 170 according to volume share of single serve ice cream

multiple serve ice cream and boutique ice cream

1048766 Other financial assumptions were also made List of them are provided below but amount has

been removed for confidentiality issues

Assumptions

Trade Margin

Distributors Margin

DutyVAT Rate

Trade Terms Expense of NPS

Trade Terms Expense of NSV

Advertising ampPromotion of NPS

Indirects (Salaries Wages etc)

Trading Tax

Table 31 Assumptions for Business Projection

Evaluation of Entry into Ice cream Business for Bangladesh Limited 57

100 CONCLUSION

Ice cream has good prospect in Bangladesh It is still a growing market with opportunities for big

new entrants With the barriers of entry UBL needs to consider its priorities UBL being an HPC

company traditionally needs to acquire expertise in cold chain distribution and has to invest a lot

of money to rip the benefits of the industry However to initiate company can take regional

support and acquire resource expertise The company should enter the business as soon as

possible since there is potential threat from DANONE to introduce more ice creams after ISIS

diabetic ice cream and also with potential of the industry arch rival Nestlersquo might consider

entering into the industry too

Evaluation of Entry into Ice cream Business for Bangladesh Limited 58

References

Web References

1 wwwunilevercom

2 wwwunilevercombd

3 wwwhllcom

4 wwwunilevercompk

5 wwwthedailystarcom - Life Style Magazine

6 wwwreuterscouk

Evaluation of Entry into Ice cream Business for Bangladesh Limited 59

Page 11: Square Ice cream

260

Milk Vita

1141

1497

264

Table 10 Volume Based Market Size

The total volume of the branded common format ice cream industry is 7500 Tons of which more

than 50 belongs to Igloo followed by Kwality with 27

D Market Share and Size of the rivals

Market share data for all the local companies show a trend where Igloo is the biggest ice-cream

company dominating with a huge market share Although even 1-2 years ago there was intense

competition between Kwality and Polar but now it seems that Kwality is 2nd largest ice-cream

manufacturing company in Bangladesh Polar is in the 3rd position with Savoy and Milk Vita

trailing in the market Market share percentage over the years is presented in the following table

Company Name

2007

2008

2009

Igloo

50

5031

5116

Kwality

256

2666

2706

Polar

17

161

1485

Milk Vita

34

332

348

Evaluation of Entry into Ice cream Business for Bangladesh Limited 22

Savoy

39

365

343

Table 11 Market Share of Competitors

E Geographic Sales Orientation

Ice cream still continues to be a city-oriented product and its demand is comparatively low in the

rural areas Reasons behind this are electricity problem outside urban areas and purchasing

power of people Geographic sales orientation of the common format ice cream industry is

provided below

611890690480590250DhakaChittagongKhulnaComillaBarisalOthers

Figure 7 Geographic Sales Orientation

Dhaka still is the largest contributor in the ice cream segment Nevertheless over the years this

trend is shifting Areas outside Dhaka are also growing making Dhakarsquos share lower by small

percentage As urban markets are the major contributors companies design their products

keeping in mind the tastes and styles of the urban consumers Compared to the other companies

Igloo is the most expensive in the common format segment so they target only city based

customers who have the purchasing power Although other companies such as Savoy are offering

low priced product even their main target is urban people due to nation wide electricity problem

F Seasonality of Sales

Ice cream industries in warmer part of the world are highly seasonal Same is true with

Bangladesh According to secondary data sources sales seasonality looks as follows

Period Name

Months

Contribution

Super-Peak

April May June

46

Peak

March July August

36

Off-Peak

February September October November

15

Super Off-Peak

December January

3

Table 12 Seasonality of Ice cream Sales

This data was validated through interviews with retailers during market visit According to them

more than 75 sales of ice cream came in the hot months Another insight that could be

identified was

Evaluation of Entry into Ice cream Business for Bangladesh Limited 23

various festivals and programmes provide scope for higher volume of ice cream sales According

to companies where only 10-15 sales occurs in the winter season same amount of sales occurs

during festivals like the two Eids and Nobobarsha

G Distribution Servicing System

Mainly common format ice-cream is distributed in two methods that are directly to retail shops

and through hawkers with ice cream carts trolleys

The various channels of retail shops other than cart that serve as distribution outlets for Ice cream

are

7 Urban General Stores (UGS)

8 Urban Neighbourhood Grocer (UNG)

9 Premium General Store (PGS) SMMT

10 Confectionary Bakery

11 Modern Trade (MT)

12 Fast Food shops (Recently some fast food shops keep branded ice cream cabinets)

Distribution details of all the companies are provided below However detail of Milk Vita is not

available as they are mainly milk producer and they have no dedicated ice cream cabinet for

retail stores and currently they are not distributing ice cream in Dhaka city

Company

Distribution Method

Frequency

No of Cabinets

No of Carts

Igloo

Distributor Cart

2 to 3 times a week

4000

100

Kwality

Distributor Cart

1 to 2 times a week

1050

20

Polar

Distributor Cart

1 to 2 times a week

800

50

Savoy

Company

1 to 2 times a fortnight

176

-

Milk-Vita

-

-

-

-

Table 13 Distribution Method of Market Players

Distribution Process Distribution process through both methods is described below

Retail Distribution The general distribution that is followed by companies is that distributor

sends large refrigerated trucks dedicated to specific territories These trucks are accompanied by

small refrigerated vans Main road side shops are served directly from the large truck and shops

that are inside small streets are served by the small vans

Order and delivery are done on the same day The strategy followed is that of replenishment If

the branded freezer of the company is empty they simply fill it up according to requirement of

different SKUs as the delivery people see fit However shopkeepers have to buy full cartons

(usually 24 pieces in a carton) of single serve ice cream they cannot buy in pieces

Evaluation of Entry into Ice cream Business for Bangladesh Limited 24

Among the retail shops there are about equal numbers of branded and unbranded freezers This

is a normal scene in Dhaka where all shopkeepers require freezer to keep other cold products

However basic distribution policy is that if a shop has branded cabinet of a company they

cannot keep competitor ice cream in that cabinet Thus penetration can be made possible in

shops where unbranded freezers are available

General branded freezer contract policy with Igloo and Polar is that traders have to pay BDT

5000 to take a freezer Maintenance of branded freezers is responsibility of the company but

electricity bill is paid by shopkeeper However Polar is not currently giving any new freezer

Kwality gave away their freezers for free however they ensured safety of their freezers by

checking background of the shopkeepers

Cart sellers Cart sellers collect required amount of ice cream from nearby distribution house or

company showroom (Igloo has one showroom in Panthapath) on a daily basis They also have to

buy cartons of products not pieces Kwality carts collect their ice cream from factory (Tejgaon)

or nearby distribution house Cart sellers contribute around BDT 3000 sales in a day and

generally sell at BDT 1-2 higher than set price of each product

The cart sellers generally keep at least a two-day stock so that they can meet sudden upsurge in

daily demand of ice cream or if they get the opportunity to sell at parties programs or any open

air event (Wedding at community centres or outside cultural programs at auditoriums) If cart

sellers need replenishment of stock they even take service more than once in a day either

revisiting showroom house or they call up company delivery people to serve them at their

location if there is opportunity for selling more ice cream

Policy regarding Damaged Ice cream All the ice cream producers have very good relationship

with the shopkeepers If the retailers have refrigeration problem company takes ice cream back

until the problem is fixed whether it is stored in branded freezer or not Also if any ice cream

gets damaged or there is bacterial formation company takes them back Usual return time varies

from 15-30 days For large sellers however they take less time

Payment Method for Ice cream Purchase All the companies give credit of around one month to

large volume contributing retail sellers and try to maintain good relationship with them This

trend is seen in all channels Also all the SMMTs and MTs are given credit of one month and

payment is made by cheque Other small shopkeepers have to purchase with cash However

according to shopkeepers Igloo is currently trying to cut down on credit sales as they believe

there is a consumer pull for their brand Companies like Polar and Kwality also give special

commission to large sellers Polar gives 5 commission on every bill

Evaluation of Entry into Ice cream Business for Bangladesh Limited 25

H Technology and Innovation

Technological advancement in the ice cream industry has been very rapid Starting with stick

mould and filler ice cream production the companies have come a long way Assessing the

consumer choice and demand the companies are introducing new products very often Improved

and new technology is used for faster production and better quality Igloo is trying to meet the

international standards and launching products such as Sundae Cornelli and Nuggets Other

companies are also introducing new flavours suitable for their target segments Igloo has both the

ISO and the HACCP certifications These were awarded in the year 2003 due to their relentless

pursuit of quality and innovation In September 1996 Igloo introduced the 3D Mould line and

straight line extrusion technology for the first time in the subcontinent Basically with Igloorsquos

pursuit all the modern technologies and quality innovations are available in the market

I Production Capacity

Current production capacity of the major players in the common format ice cream segment is

estimated to be as follows

Name

Capacity (Ltrs day)

Total Production (000 Ltrs)

Required Capacity (at 300 production days )

Estimated unutilized capacity (Ltrs day)

Igloo

22000

387433

12914

9086

Polar

6500

112513

3750

2750

Kwality

12100

204934

6831

5269

Savoy

1560

25985

866

694

Milk Vita

1330

26387

880

450

Table 14 Production Capacity of Current Market Players

From the table we can see that all the ice cream manufacturers are operating with unutilized

capacity However one point to be noted is that different ice cream SKUs require different

amount of item to be produced Exact machine production capacity at litre per day does not

represent the accurate scenario Nevertheless it can be safely assumed that all the manufacturers

have unused machine capacity at their premises Moreover the larger players like Polar and

Kwality have new technology available at their premises Kwality bought second hand machines

from Thailand but both Igloo and Polar bought theirrsquos from Italy and Denmark

J Products and Pricing

Products The products in the ice-cream market are differentiated A few firms dominate the

market but an endless variety of ice creams are offered to the consumers Igloo pioneers all

major innovations in the market The products that are available in the market can be classified

into single serving and multiple serving groups Which are then categorized based on functional

attributes designs These are

Single

Stick

Normal mould 3D mould extrusion

Evaluation of Entry into Ice cream Business for Bangladesh Limited 26

Cup and Sundae

Flat cup long cup

Cone

Normal cone (vanilla strawberry etc) premium cone (Ripple)

serving

Innovative Fillers

Snowball Animal shaped containers sandwich nuggets etc

Container

05 ltr 1 ltr and 2 ltr containers

Multiple serving

Family Pack

Assorted packs cakes shahi kulfi etc

Table 15 Ice cream Serve types

Among all the products available in the market most selling SKU for all the companies is Choc-

bar stick and highest selling flavour is Vanilla Following are the ranks of most selling SKUs and

flavours

SKU Name

Rank

Choc-bar (70 ml)

1

Vanilla Cup (100 ml)

2

Vanilla Box (05 and 1 Ltr)

3

Lemon Lolly (70 ml)

4

Normal Cone

5

Flavour

Rank

Vanilla

1

Chocolate

2

Strawberry

3

Ripple

4

Mango

5

Table 16 Rank of SKUs Table 17 Rank of Flavours

Choc-bar is one of the earliest vanilla based chocolate coated SKU that has dominated the

market strongly over the years Shopkeepers could not provide an exact percentage on SKU

based sales contribution Most of them ranked the SKUs and flavours according to sequence

shown in the above table Also according to newspapers and secondary sources Vanilla is the

most selling flavour with 60 sales contribution According to secondary sources percentage

sales contribution of various types of SKUs in the common format segment are as follows

Type of Ice cream

Value Share

Volume Share

Impulse dairy ice cream

514

443

Impulse water ice cream

112

138

Take-home dairy ice cream

374

419

Table 18 Volume Share of Different Serve Types

Impulse dairy ice cream provides more value share as price per litre is higher than take home

multiple serving ice creams Impulse water ice cream shows a similar trend as of take home ice

cream

Pricing Product pictures and price ranges of each category are provided below Evaluation of

Entry into Ice cream Business for Bangladesh Limited 27

Normal Premium Price Tk12 Tk20 Tk25 Cup amp Sundae Normal Cup Sundae Premium Cup

Price Tk20 Tk25 Cone Normal Premium PriceTk20 Tk25Innovative Fillers PriceLtr Tk100

Tk175 Container Normal Premium PriceLtrTk150 Tk 175 Tk 190 Family Packs Kulfi Mixed

Pack Cake Single ServingMultipleServingNormal Ice Fruit 3D Mould Premium Extrusion Price

Tk10 Tk15 Tk15 Tk20Stick Normal Cream

Figure 8 Serve Types and Pricing

As it can be seen from the above chart all impulse ice creams are priced within the range of

BDT 10 to 25 Other take home multiple servings are priced within the range of BDT 50 (05

Litres) to BDT 220 (2 Litres) Another noticeable factor in price is that there are both normal and

premium flavours in all types of ice creams

K Firms as Price Setters

The firms have capability to affect the market price to be low as profit margin is very high If

Igloo reduces the price of an item below the prevailing price level in order to increase its sales

its competitors will fear that their customers will go away from them to buy Igloo products To

retain their customers they will be forced to match the price cut of Igloo Historically this has

been proven to be true However due to price sensitivity companies cannot drastically increase

price even if they provide higher quality of product It was seen in 1997 when Igloo increased

price of 11 SKUs and faced drastic sales fall during that time It shows that the industry might

welcome overall industry price increase but not individual company price increase

L Promotion

The promotion scenario in the industry is not quite organized as of now Even proper data

regarding promotional expenditure is not available from research sources The reason being

there is not much consumer related activity seen in the market After Kwalityrsquos introduction in

the market in 1999 Igloo went on with massive Television promotion of their new products that

were available at that time

Evaluation of Entry into Ice cream Business for Bangladesh Limited 28

However in current times there is no TVC running from any company Companies promote their

launches mainly through billboards and newspaper promotions which is currently the most used

source of consumer promotion Some promotional activities that were done by the companies

over the years are listed below

Consumer Promotions

1 Larger players like Igloo and Kwality goes on with campaigns like ldquoGift on stickrdquo where

various prizesrsquo names are written on the sticks and consumers can get them

a Igloo ran a program on their launch of Macho variant where gift varied from cricket bat to

personal computer

b Igloo had a program in 2006 where gifts on sticks varied from Bangkok visit to sunglass

c Igloo ran one campaign in 2007 where gold bars were given on purchasing Choc-bar

d Kwality ran a similar program in 2008 where gifts varied from wrist watches to motorcycle

2 Some companies ran consumer TTS and gift programs where company products were given

free

a Igloo had a program in 2006 where Igloo butter was given free on purchasing Igloo ice cream

cake

b Kwality ran a program in 2008 where one SKU was given as gift with another SKU randomly

c ldquoCone Ice cream at your Homerdquo program was run by Igloo in 2002 where six cone biscuits

were given free with purchase of one litre ice cream

3 Media placement is another form of placement done by larger companies

a Igloo purchased ldquoGlimpse into World Cup Resultrdquo space in daily newspapers during World

Cup Football 2002

4 One interesting program is done by only Igloo in Bangladesh They did it in June 2006 The

program was ldquoIgloo Ice cream Festivalrdquo with main attractions of ldquoGet as much ice cream as you

want for BDT 200rdquo ldquoGet a Fantasy Kingdom Entry ticket with each Entry Couponrdquo ldquoLucky

Drawrdquo and ldquoCelebrity Addardquo

Trade Promotions

5 Trade promotions are mainly given to ldquoHighest retail purchasersrdquo and also based on time

bound trade schemes where various slabs of purchase amount are mentioned for different prizes

a Igloo takes their highest purchasers to visit countries like Singapore and Thailand

b Savoy has a purchase slab scheme where first prize is table fan

c Polar gives special sales commission to their highest purchasers (around 5)

Evaluation of Entry into Ice cream Business for Bangladesh Limited 29

M Players in the Common Format Segment

Branded common format ice cream segment is constituted of five players only Among them

Igloo is the largest player and Milk Vita is the smallest The following sections detail the basic

company detail of all the companies with special emphasis on Igloo the market leader

Igloo

The pioneering ice-cream company in Bangladesh started its operation in 1964 in Chittagong

under K Rahman amp Co Limited (KRC) with a small factory inside Coca Cola bottling factory of

KRC After the independence of Bangladesh in 1971 Igloo was taken over by the government of

Bangladesh Later in 1983 Abdul Monem Limited purchased the entire production setup of KRC

Limited including Coca-Cola bottling plant and Igloo ice-cream factory After taking full charge

of Igloo ice-cream by Abdul Monem Limited the manufacturing operations continued in

Chittagong till 1990 Although Dhaka fetched the maximum share of the total revenue the

distribution cost increased tremendously in the process of meeting the demand of Dhaka city To

cope with the distribution problem and handle Polar threat Abdul Monem Limited transferred

the factory to Dhaka changed the ice-cream packaging from the conventional paper to plastic

and expanded their market and distribution operation The new factory of Igloo was setup at

Shyampur Narayanganj and was nine kilometres away from the Motijheel office The company

apart from catering the capital city started to expand its operations in Comilla (1991) Khulna

(1992) and North Bengal (1993) These markets were served directly from Dhaka since the

storage facilities were not developed till then The company is now the market leader since 1997

with clear market share victory over others with sweeping 51 share It is to be noted that Igloo

is also a player in the boutique segment with three parlours (2 in Dhaka and 1 in Chittagong)

Product Range Igloo offers the widest choice of ice cream more than any other competitor in

the market Igloo is offering a total of fifty items including normal premium and novelty cup

stick and family pack items Igloo has thirty flavours more than anyone else in the industry and

is continuously launching new and innovative delicacies

Igloo ice-cream can be classified in six groups They are

Stick

Macho Choc-bar Mini Choc Clown Mega Shell n core Lolly

Cone

Cornelli 2 in one Cornelli classic

Cup

Shahi kulfi Vanilla Strawberry Mango Snow ball

Container

Vanilla Strawberry Mango Chocolate Coffee Diet Vanilla Tutti Frutti Ripple Pralin

Pistachio

Innovative

Nuggets Sandwich

Family

Ripple cake Party time Shahi Kulfi

Table 19 Products of Igloo

Single serve stick cups and cone items are easy to carry around and convenient to eat which

makes it most sold The core target segment of ice-cream is 6-24 years and this generation is

always on the Evaluation of Entry into Ice cream Business for Bangladesh Limited 30

move and thus prefers independent cone stick or cup items As Igloo initiated the concept of ice-

cream as a family product they offer some items to be enjoyed with the whole family

Quality and Innovation Igloo is committed to maintaining the highest quality standard through

its continuous RampD activities The major ingredients raw materials and packing materials are

procured from the best European sources Strict quality control is done at every stage of the

manufacturing process from procurement of material mixing material flow ice cream making

packaging storing (at main warehouse) distributing and market shelving by the Quality Control

Department Current supply chain for various materials of Igloo is as follows Australia (Milk

Powder) Denmark (Ingredients emulsifiers amp stabilizers) China amp UAE (Food grade sticks)

China Denmark Singapore amp Thailand (Food grade packing materials)

Figure 9 Igloo Supply Chain

Distribution Network Their distribution network is stretched all over the country with a long

fleet of refrigerated vans Firstly the ice cream products are stored at the central warehouse of

the factory and from there they are distributed through the haulage vehicle to the operational

centres located in Dhaka Chittagong Comilla Rajshahi Barisal Bogra Rangpur and Khulna

Strictest cold chain maintenance during the distribution and selling of the ice creams is ensured

Their distribution process is as follows Manufacture Stored at -24c Transported by Refrigerated

trucks at -Reaches amp Preserved in Eight regional stores Refrigerated vehicles (Distributors)Retail

outlets (Deep freezers)

Figure 10 Distribution Process of Igloo

Evaluation of Entry into Ice cream Business for Bangladesh Limited 31

Trolley Operation Igloo also operates through trolleys for extending its reach to consumers at

the furthest points The trolleys are operated near schools alleys streets parks etc and play

rhythmic music to attract the consumers These are very colourfully decorated with Igloo

umbrella and the puller wears specific uniforms Igloo was the first in introducing and operating

these trolleys in Bangladesh for any Fast Moving Consumer Goods (FMCG) Igloo has around

125 trolleys operating throughout the country Individual trolleys are provided with a regular

supply of igloo ice creams

Marketing The marketing commitment of Igloo is based on the relationship with its customers

and consumer by not only manufacturing the highest quality product but also delivering the

product by maintaining this quality To satisfy the ever-changing needs of the customer Igloo

has regularly launched new ice creams and introduced new flavours And this commitment has

positioned Igloo as the market-leading brand by gaining the consumers trust with the positioning

as ldquoA WORLD OF GREAT TASTErdquo

Facilities and Logistics at a glance As of 2009 following are the facilities and logistics enjoyed

by the company

Factory location

Dhaka

Production Lines

4

Packages

Stick Cup Family pack Others (Nuggets and sandwich)

Machine suppliers

1048766 Mark-Italy

1048766 Tetra Pak(Hoyer)-Denmark

1048766 Sabore Denmark

1048766 Hass- Austria

Machine models

1048766 Freemark 1100 Italy

1048766 FM 3000 FM 6000 Italy

1048766 SL600 Denmark

Cone baking

Hass- Austria

Chocolate making

Macentyre-UK

Coverage

Nationwide

Operational centre

10

Total market vehicles

30

Distribution channel

Directthrough appointed distributors

Outlet service

7500

Injected deep freezers

4000

Trolley operations

125

Warehouse no

8

Table 20 Igloo Facilities and Logistics

Kwality

Kwality is currently the second largest ice cream manufacturer of the country The mother

company for the Kwality brand is Sanowara Drinks amp Beverages Ltd a sister concern of

Sanowara Group The company is famous for powdered milk brands Red Cow and Diploma in

Bangladesh The drinks and beverage concern of Sanowara made an entry into the market in

1997 with ldquoYesrdquo brand drinking water and launched the ice cream brand in 1999 With heavy

communication and novelty products it Evaluation of Entry into Ice cream Business for

Bangladesh Limited 32

successfully removed Polar from the second place with a current market share of 27 The

company also operates in the boutique segment with two parlours in Dhaka and Chittagong

Kwality ice cream factory is situated in Chittagong with a floor space of 35000 sft and fully

automated machinery wrapping mix machinery equipments from Italy having capacity of

around 20000 litres of ice cream per shift The ice cream factory employs 140 people The

company is ISO 9001-2000 certified

Kwality was the first true competitor for Igloo products with some major innovation in product

design and communication but their quality is perceived to be lower in the minds of the

consumers and they do not have extrusion ice cream The product prices are also similar to that

of Igloo but they charge a bit lower than Igloo in premium multiple servings However during

market visits it was seen that shops that keep only Kwality or Igloo and Kwality both they can

sell Kwality too although the sales amount is lower than that of Igloo People who look for Igloo

shopkeepers give them that directly but if they get a chance and Kwality ice cream stock is high

they also push Kwality to dry the stock out This gives an indication that market is larger than

what the current players are capable of serving even in Dhaka

Kwality follows a similar distribution model like Igloo but distribution frequency is lower and

amount of cart sellers is limited to 25 and they operate only in Dhaka

Polar

Once a giant in the industry Dhaka Ice Cream Industries Ltd introduced the first hygienically

packed ice cream in Bangladesh in 1987 and the brand name Polar was thus born In the early

days the company started ice cream business with a wide range of products and a variety of

flavours in Dhaka city In 1988 the company started its distribution in the city of Chittagong

then Bogra and continued to cover more cities Presently Polar ice cream is available

throughout Bangladesh The company today trails in the market with 15 market share in the

common format segment Recently Polar has announced launch of ISIS diabetic ice cream with

support from DANONE to turn around in the market

The company has its head office as well as a modern large-scale industrial plant in Dhaka Polar

ice cream is made with Danish expertise using Danish equipment and technology The

production activities and quality control measures are supervised and managed by Danish

experts Polar offers a wide range of delicious flavours and tastes made by ingredients imported

from Europe

Dhaka Ice Cream at present has 3 cold stores in Dhaka Chittagong and Bogra in Bangladesh

From Dhaka cold store they distribute ice creams in Mymensingh Tangail Jamalpur Sherpur

Kishoreganj Netrakona Comilla Narsingdi Barisal Madaripur Agaeljhara Faridpur Magura

Chuadanga Jessore Satkhira Khulna Pirojpur and Sylhet through their distributors In case of

long distance delivery points the company uses auto cooling freezer van

Evaluation of Entry into Ice cream Business for Bangladesh Limited 33

In Dhaka city they distribute ice creams directly to retail stores in freezer vans Besides that

they have several distributors at different points of the city Distributors cover their individual

areas where company is not able to supply directly in their freezer vans Similar model is

followed by the company to distribute ice cream from their other cold storages through out the

country For storing and selling ice creams in retail stores the company like the other players

arranges a deep freezer with the Polar logo and canopy light box

In addition to this distribution the company also undertakes home delivery of ice creams for

special occasions

Savoy

Savoy Ice-cream brand is owned by Sena Kalyan Sangstha (SKS) Group of industries It started

its journey in March 1995 with a factory in Tejgaon Dhaka Yearly turnover is estimated at BDT

388 crores with a market share of roughly 35

The factory has been established with Sonali Bank finance at 6040 equity ratio The total

production capacity of the factory has been estimated at 2400 litres of Ice-cream per day Total

land area of the factory premise is 116 Bigha with 8000 sft area covered with a total project cost

of BDT 144 The factory employs 73 people

Product ranges of the company include all the basic designs and flavours of the industry

However the company has not been much of an innovator in the industry Their product quality

is substantially low than that of other players and they price their products at 10-15 lower than

the other competitors The company imports raw materials mainly from Europe The general raw

materials are Euro cream Skimmed Milk Powder Cocoa Powder and Flavour (Vanilla Mango

and Strawberry) Colour (Yellow Red Chocolate and Green) Ripple Sauce Cheney Fruit Palm

Kernel Oil Anhydrous Butter Oil (Ghee) and Sugar etc

Milk Vita

Milk Vita is one of the most famous brand names in Bangladesh for its liquid dairy milk Owned

by Bangladesh Milk Producersrsquo Co-operative Union Limited (BMPCUL) the company came in

the market with proper dairy milk ice cream in form of cups and choc-bar With a production

capacity of around 1600 litres per day the company is trailing in the market place with 3

market share

Although the Milk Vita Choc-bar was perceived to be extremely tasty by consumers they

probably could not do well due price competition Currently they do not even distribute ice

cream in Dhaka However their presence is seen in outskirts of Dhaka and other nearby towns

If the current market situation prevails Milk Vita would lose their remaining market share and

other companies would benefit especially Igloo However one of the advantages of Milk Vita

remains to be

Evaluation of Entry into Ice cream Business for Bangladesh Limited 34

their nation wide milk supply network They have skimmed milk powder production plant that

Igloo does not have Thus they can combat the seasonality of milk supply that Igloo with its

huge requirement of milk cannot

Strengths and Weaknesses of Competitors

Company

Strengths

Weaknesses

Igloo

1048766 Strong brand image

1048766 High product quality

1048766 Highest no of variety

1048766 Strong distribution network

1048766 Highest visibility

1048766 Strong promotion

1048766 High production capacity

1048766 Presence of extrusion ice cream

1048766 Items are generally a bit pricy

1048766 Igloo does not give free freezers like other companies

1048766 Reluctant in recent times regarding innovation

1048766 Local sourcing of liquid milk does not meet demand

1048766 Failure to use ERP technology slowing decision making

Kwality

1048766 Product variety

1048766 Strong promotion

1048766 Free freezer distributed

1048766 Presence in all price segments

1048766 High production capacity

1048766 Weak distribution

1048766 Lower exposure

1048766 low amount of carts in operation

Polar

1048766 Free freezer

1048766 Quality perceived to be high compared to Kwality

1048766 Discoloured freezers

1048766 Lower exposure

1048766 Low product variety

1048766 Unused capacity

Savoy

1048766 Price is lower

1048766 Discoloured freezers

1048766 Low product variety

1048766 Weak distribution

1048766 Small amount of freezers

1048766 Low production capacity

Milk Vita

1048766 Quality is good due to dairy cream

1048766 Brand leverage from Milk Vita milk

1048766 Low exposure

1048766 Low variety

Table 21 Strengths and Weaknesses of Competition

512 Market Characteristics of the Boutique Segment

With a small market of BDT 98 Cr and 567 share in the branded ice cream market the

boutique segment is currently an increasing segment in the ice cream industry Boutique

segmentrsquos history dates back to 1960s when Igloo launched boutiques in Dhaka to save

distribution cost and promote a culture of ldquoice cream eating outrdquo In later years boutiques lost

their glamour and retail common format segment picked up growth However with Dolce Vita in

the late lsquo80s craze for Italian Artisan ice cream was recreated in the market Although Dolce

Vita is failing in recent times emergence of MoumlvenPick and Club Gelato in 2000 has uplifted the

segment once again Current growth rate of the

Evaluation of Entry into Ice cream Business for Bangladesh Limited 35

segment can be estimated to be approx 20-22 (higher than the common format segment)

Following are the basic detail of all the major players in the segment with their estimated sales3

Players

Outlet

Sales (Cr Taka)

Share

Club Gelato

1

136

199

MoumlvenPick

1

119

174

Andersenrsquos

3

119

174

Gelateria Igloo

3

119

174

Sub Zero (Kwality)

2

051

75

Baskin Robbins

1

015

22

Dolce Vita

1

017

25

American Soft

1

009

12

Rainbow

1

009

12

Others (off site)

089

130

Total Market

682

Table 22 Players and Shares in Boutique Segment

A Detail of Operation

General operational procedure followed by all the operators is as follows

1048766 Operating method There is a variation in operational method among the large operators

1048766 Club Gelato uses kitchen at own premise where imported ingredients and local milk (daily

special service from Milk Vita) are used to make ice cream

1048766 MoumlvenPick directly imports ice cream from Switzerland

1048766 Andersenrsquos Gelateria Igloo and Sub Zero produce ice cream at their factory with a mix of

imported and local ingredients

1048766 Products Around 30-35 flavours of artisan dairy ice cream are served at the premises

1048766 Most sold flavours are Vanilla Ferrero Rocher Butterscotch Chocolate Caramel etc

1048766 Other Products Larger players also serve ice cream desserts (milk shakes ice cappuccino etc)

pastries and other desserts with normal coffee and tea facility at their premises

1048766 Boutiques fight ice cream seasonality with the other products sales during off-peak ice cream

seasons Usually ice cream and other products contribute at 6040 ratio in summer and during

winter and off-peak seasons the ratio reverses

1048766 Pricing Usually the prices of products in this segment are 3-4 times higher than that of the

common format segment

1048766 Prices do not vary with flavours Variation depends on serve style (Cone tub) and use of

toppings and other ingredients (Chocolate sauce nut fruits) etc

1048766 Usual margin charged is around 50-60 over production cost Similar margin is charged for

other products like coffee ice cappuccino etc

3 Yearly sales is estimated based on companyrsquos approximate daily sales collected during

interview

Evaluation of Entry into Ice cream Business for Bangladesh Limited 36

1048766 Target Group Most of the consumers belong to SEC A and higher SEC A with DMFI of at

least BDT 20000

1048766 Foreign delegates and resident foreigners also visit these boutiques

1048766 Main purposes of visits in the boutiques are

bull Youth hangout with friends and having ice cream and ice cream derivatives

bull Family Family night out or eat out at a restaurant and then having dessert

bull Foreigners Having dessert after dinner

1048766 Rush time at boutiques are Afternoon 2-4 pm and at night 9-11 pm

1048766 Offsite sales Most of the large operators also sell offsite They have small freezers for off-site

1048766 Club Gelato and MoumlvenPick serves ice cream at high society parties and programmes

1048766 MoumlvenPick also has kiosks in known hotels like Sheraton

1048766 Promotion No mass promotion is done by any of the companies Word of mouth is the most

important source of promotion Posters and banners outside the premise and occasional

newspaper advertisements are used to communicate special offers

1048766 Growth Drivers Market growth is driven by image innovation quality decoration of facility

environment and special offers

1048766 Club Gelato has the image of selling true Italian dairy ice cream with an excellent hangout

environment

1048766 MoumlvenPick imports ice cream directly from Switzerland and is perceived to be of high quality

1048766 Andersenrsquos operates with the image of ice cream from Denmark

1048766 Gelateria Igloo (from Igloo) and Sub Zero (from Kwality) could not establish the premium

artisan ice cream image

B Players in the Boutique Segment

There are very few players who have significant impact in the boutique segment Detailed

information of all the major boutique segment players is provided below

Evaluation of Entry into Ice cream Business for Bangladesh Limited 37

Club Gelato

Basic Company Information

1048766 Location Banani Road 11 (Planning for a second one in Dhanmondi)

1048766 Established in 2001

1048766 Seating Capacity 48

1048766 Area 1250 sft (including kitchen)

1048766 Owner Mr Jahangir Alam (Bangladesh)

1048766 Business Type Joint business partnership with Singapore

1048766 Staff 15 people (6 in the kitchen)

1048766 Production capacity 150 litres per day

Product Related Information

1048766 Product Italian style parlour scoop ice cream fruit juice coffee and pastries

1048766 Flavours Around 32 flavours available

1048766 Most selling Ferraro Rocher Vanilla Pistachio

1048766 Innovations New variants and ingredients are communicated by their Italian supplier and

Club Gelato decides what to take from them

1048766 Serve type Cup Cone Glasses Box for take away

Consumer Profile

1048766 Primary Teenagers and Young Adults (18-30) amp Diplomats

1048766 Secondary Family consumers for eat out

1048766 Income Group High income customers tentatively from SEC A and higher SEC A

1048766 Geographic Area Diversified

1048766 Rush time 8-10 pm

Sales and Price Information

1048766 Sales BDT 50000 (60 Ice cream 40 other desserts) daily in summer In winter however

other products sell more and thus they keep total sales at the same level

1048766 Price 750 per litre for any flavour

1048766 Sales Volume 50-60 litres per day

Supply Chain Placement Information

1048766 Milk Local sourcing from Milk Vita (4050 litres per day)

1048766 Chocolates amp Flavours Belgium France Germany

1048766 Transportation Mainly air (They can afford it due to high margin)

1048766 Contribution of various materials Flavours (30) Milk (20) other parts are water and air

Promotional Materials

1048766 Materials used are near premises POS materials for promoting the parlour only

Table 23 Detail of Club Gelato

Evaluation of Entry into Ice cream Business for Bangladesh Limited 38

MoumlvenPick of Switzerland

Basic Company Information

1048766 Location Gulshan

1048766 Established in 2000

1048766 Seating Capacity 55

1048766 Owner Mr Arif Mahmud

1048766 Business Type Franchise of International MoumlvenPick

1048766 Storage Capacity in Shop 150 litres

Product Related Information

1048766 Product Imported MoumlvenPick ice creams coffee chicken sandwich and Frappe

1048766 Flavours Around 30 to 35 flavours available

1048766 Most selling Swiss Chocolate caramel Vanilla Dream Espresso Strawberry

1048766 Innovations New variants are communicated by their franchiser and they decide on flavours

that they want

1048766 Serve type Cup Cone Glasses Box for take away

Consumer Profile

1048766 Primary Teenagers and Young Adults (18-30) (70) amp Diplomats

1048766 Secondary Family consumers for eat out

1048766 Income Group High income customers tentatively from SEC A

1048766 Geographic Area Concentrated in Gulshan and nearby areas

1048766 Rush time Afternoon- Young Adult 10 to 11 pm Foreigners

1048766 the company also serves at parties and has freezers in known hotels where their ice creams

are served

Sales and Price Information

1048766 Sales BDT 35-40000 daily in summer

1048766 Price 640 per litre for any flavour

1048766 Sales Volume 55-60 litres per day

Supply Chain Placement Information

1048766 Transportation Imported finished goods by ship

1048766 Ship travel time 19 days

1048766 Port clearance 10 days

1048766 Safety Cushion Extra 10 days

Promotional Materials

1048766 Materials used are near premises POS materials for promoting the parlour only

Table 24 Detail of MoumlvenPick of Switzerland

Evaluation of Entry into Ice cream Business for Bangladesh Limited 39

Andersenrsquos of Denmark

Basic Company Information

1048766 Location Gulshan (2 others in Uttara Dhanmondi)

1048766 Established in 2001

1048766 Seating Capacity 48

1048766 Owner United Group

1048766 Business Type Franchise of Australian company Andersenrsquos of Denmark

1048766 Production Tongi Factory of United Group

1048766 Production capacity 2000 litres per day in factory

1048766 Storage Capacity in Shop 150 litres

Product Related Information

1048766 Product Danish parlour scoop ice cream and coffee

1048766 Flavours Around 30 to 35 flavours available

1048766 Most selling Strawberry Butter Scotch Green

1048766 Innovations New variants and ingredients are communicated by their franchiser and they

decide on flavours that they want

1048766 Serve type Cup Cone Glasses Box for take away

Consumer Profile

1048766 Primary Teenagers and Young Adults (18-30) (70) amp Diplomats

1048766 Secondary Family consumers for eat out

1048766 Income Group High income customers tentatively from SEC A

1048766 Geographic Area Concentrated in Gulshan and nearby areas

1048766 Rush time 8 to 10 pm

Sales and Price Information

1048766 Sales BDT 10-12000 daily in summer

1048766 Price 460 per litre for any flavour

1048766 Sales Volume 40-50 litres per day

Supply Chain Placement Information

1048766 Milk 2025 kg packs are imported

1048766 Chocolates amp Flavours Imported

1048766 Butte paper Local sourcing

1048766 Transportation Ship

Promotional Materials

1048766 Materials used are near premises POS materials for promoting the parlour only

Table 25 Detail of Andersenrsquos of Denmark

Evaluation of Entry into Ice cream Business for Bangladesh Limited 40

Gelateria Igloo

Basic Company Information

1048766 Location Banani Kemal Ataturk Avenue (Two others in GEC Mor Chittagong and Naya

Paltan)

1048766 Established in 2000

1048766 Seating Capacity 20

1048766 Production From Igloo factory in Shyampur Narayanganj

Product Related Information

1048766 Product Parlour scoop ice cream and coffee only

1048766 Flavours Around 30 flavours available

1048766 Most selling Vanilla Strawberry Chocolate Pistachio Butter Scotch Tutti Fruity

1048766 Serve type Cup Cone Glasses Box for take away

Consumer Profile

1048766 Primary Teenagers and Young Adults (18-30)

1048766 Secondary Family consumers for eat out

1048766 Income Group High income customers tentatively from SEC A and B

1048766 Geographic Area Diversified

1048766 Rush Time afternoon and evening

Sales and Price Information

1048766 Sales BDT 8000 to 10000 daily in summer Nearly one fourth in winter

1048766 Price Varies but 350 per litre of vanilla

Promotional Materials

1048766 POS materials at the premises

Table 26 Detail of Gelateria Igloo

52 Price Comparison of Common and Boutique Segments

Price ranges of both common format and boutique segment cannot exactly be pin pointed as

products do not follow common structure and variations occur with use of toppings mixing of

flavours and use of coatings However a price comparison has been made among the brands

based on their price of per litre of vanilla flavoured ice cream in the market It appears to be as

following

Company

Price Litre Vanilla

Club Gelato

750

MoumlvenPick

640

Andersenrsquos

460

Dolce Vita

440

Igloo

100

Kwality

100

Polar

100

Milk-Vita

90

Savoy

85

Table 27 Comparative Price Analysis

As it can be seen there is price gap within the range of BDT 100-400 Ice cream kiosks and

small scooping boutiques can operate within that range

Evaluation of Entry into Ice cream Business for Bangladesh Limited 41

60 CONSUMER ANALYSIS

61 Target Group of Ice cream

Who are the consumers of ice cream This question does not have a clear answer Ice cream is a

food for all It is the only food consumed by a human being at less than 0 degree centigrade

temperature and people of all ages feel indulged to have it However we can determine focus

target groups for both branded common format and artisan boutique ice cream Group

discussions and market visits were done to get insight into the consumers along side resources

form secondary sources Age based target group is common for both segments but variation

among the groups occur mainly based on SEC and DMFI classification

611 Geographic Group

Branded ice cream remains an urban product till date Geographically branded ice cream has

reached urban and semi urban areas up to Thana Head Quarter levels Ice cream has reached

areas where electricity is available Small artisan players are available in places where large

branded players have no distribution

612 Target Age Group

Age wise grouping of target consumers is as follows

1048766 Urban kids in the age group of 5-14

1048766 They mainly consume normal sticks cups cones innovative fillers and water ice creams

1048766 Urban youth in the age group of 15-24

1048766 They consume premium and extrusion sticks and cones

1048766 Urban mothers in the age group of 25-35

1048766 They determine the family purchases Even when the father purchases ice cream decision is

taken by them

Consumption pattern of various age groups are depicted in the following chart Ice cream

consumption pattern50203005 to 14 yrs15 to 24 yrs25 to 35 yrs

Figure 11 Target Group wise Consumption Pattern Evaluation of Entry into Ice cream Business

for Bangladesh Limited 42

613 Target SEC and DMFI Group

Common Format

SEC A and B is the target group for common format ice cream However with rapid increase in

price level over the years has made it a ldquohard to consumerdquo product for SEC B consumers who

belong to lower DMFI group

Boutique Format

Boutique formatrsquos higher margin and high price range makes it an exclusively SEC A ice cream

People belonging to upper and upper middle class have access to the mediocre boutiques and

only higher upper class can have premium ice creams like Club Gelato and MoumlvenPick

Another unique target group for boutique format are the foreigners who live in Bangladesh

These people tend to visit the parlours to have ice cream as dessert especially after dinner

62 Ice cream in Consumer Lifestyle

Figure 12 Ice cream in Consumer Life style

This simple overview of ice cream in consumer lifestyle was determined based on in-depth

research analysis of UBL and validated through qualitative group discussions by the author

However detail of in-depth research is provided in a later section of this chapter

Evaluation of Entry into Ice cream Business for Bangladesh Limited 43

63 Highlights of Purchase Habit of Ice cream

631 Common Habits across Target Groups

There are some common habits that were identified in earlier researches and group discussions

with consumers Common habits mean the consumer approach towards ice cream that is seen

across all target groups eg kids youth and adult purchasers These are outlined below

1048766 Ice cream is mainly seen as a dessert or a snack Impulse ice cream is seen as a quick snack

that is consumed when it is in sight Visibility plays a big role here Regarding family packs

people see it as a post-food dessert

1048766 Ice cream purchase is commonly a planned event When the contexts arise people generally

take a bit of time to decide whether or not to have ice cream or when they want to go to a

boutique they make due considerations regarding which boutique to visit

1048766 Ice cream purchase decision is taken based on favourite flavour People tend to try out new

variants and flavours when they first see it They compare the taste with earlier experience and

when they purchase later they choose the flavour they have liked most

1048766 For In-Home segment decision is mostly taken on the flavour Generally people come up with

different flavours of choice and most voted flavour is chosen

1048766 People become aware of new variants or flavours mainly through word-of-mouth

Advertisement (new launches special offers and festivals) in newspaper is another source of

awareness

1048766 People are currently indifferent towards the price level of premium flavours However some

feel that price of Choc-bar or water ice creams (lolly) is a bit much If less they would have

consumed more Some also feel that companies should come up with branded ice cream in the

price range of BDT 5-8

1048766 Ice cream is purchased from nearby shops If required brand and flavour is not available 2-3

shops will be visited and then available flavour will be selected even if the required one is not

found This is done mainly not to ruin the mood for ice cream

1048766 People are very open to try new brands and flavours especially if it comes from a credible

source They would try new flavours and if they are satisfied with the taste they would repeat

purchase

1048766 Regarding boutique visits people feel that boutiques need to have a proper environment

enough flavours and other snacks

1048766 While visiting boutique with family or companion they want variation in flavours so that

they would order different flavours and taste each otherrsquos ice cream It is seen as a sign of

togetherness

1048766 Frequency of ice cream purchase varies among people It depends on peer pressure collective

family decision summer heat and attitude towards ldquoice creamrdquo itself as a product Evaluation of

Entry into Ice cream Business for Bangladesh Limited 44

632 Habits of Kids

1048766 Kids choose ice cream flavours by the look of the product (generally pictures shown in POS

materials and carts) They love colour and designs of the products let it be a common format or a

boutique ice cream

1048766 Kids (when in house) would go with the housemaid to the nearby shop choose the flavour

they want (within range of the amount given to the maid) and buy it

1048766 When with parents they would take the product they like even if the price is lower than some

other product However mothers play a role in this decision They would want their children not

to choose too high priced a product or coloured products

633 Habits of Youth

1048766 Young people are the main consumer of impulse ice cream They also are one of the major

consumers in the boutique segment

1048766 Young people love to try out new products that come into the market Another side of the coin

is that they are not very loyal to a brand or a flavour and tend to switch a lot

1048766 Regarding boutique visits young people go to boutiques to have an ldquoice cream hang outrdquo with

peer groups They would stay there for a longer period of time while they have their ice cream

1048766 Some times young people make milk shakes and other ice cream based desserts

634 Habits of Mothers

1048766 Mothers worry about their childrenrsquos health and they prefer ldquovanillardquo type of brands

However when price constraint occurs they go for water ice creams for their children They try

to convince their kidrsquos purchase decision

1048766 Regarding family purchase motherrsquos decision is sometimes prioritized by the whole family

64 Barriers to Ice cream Consumption

641 Emotional Barriers

1048766 Overindulge (close to sinful)

1048766 Undisciplined (no control)

1048766 Childish (licking)

1048766 Artificial Image

642 Functional Barriers

1048766 People of SEC B feel that ice cream is an expensive dessert (If less expensive would consume

more often)

1048766 It leads to cold cough - especially in winter rainy season

1048766 It contains artificial additives preservatives

1048766 It is very high in calories that lead to fattening

Evaluation of Entry into Ice cream Business for Bangladesh Limited 45

1048766 It does not quench ldquothirstrdquo

1048766 Less convenient (portable immediate eat)

1048766 Messy Dripping

65 Research Findings

The highlights regarding purchase habits triggers and barriers of ice cream consumption provide

a glimpse into the consumer world of ice cream industry However UBL CMI conducted a

formal research exclusively on ice cream consumers to identify

1048766 Occasions of ice cream

1048766 Frequency of ice cream consumption

1048766 Expectations from ice cream occasions

1048766 Personalities that they desire from ice cream

651 Relevant Occasions in Daily Lives of Consumers

Research question regarding ldquousual occasions of life that occurred most frequently in day-to-day

lives of the respondentsrdquo generated the following replies

Occasion

of Respondents saying Yes

Watching TV

93

Normal Dinner At Home

91

Normal Lunch At Home

89

At Home While ReadingMusicSurfing

86

Informal Family Get Together

85

Out Of Home Hanging Out With Friends

84

Out Shopping

84

Mid-Afternoon Break At Home

83

At Home By Myself During The Day

82

Special Dinner At Home

82

Informal Dinner Out Of Home

82

Normal Lunch Out Of Home

82

Leisure Walk

79

Coming Home From WorkSchool

78

Special Dinner Out Of Home

78

Celebration

78

A Night In With Friends

77

At Home By Myself In The Evening

77

Special Lunch Out Of Home

76

Mid-Afternoon Break Out Of Home

75

Special Lunch At Home

73

Day out with Partner

72

Midmorning Break

70

At Breakfast

68

Family Day Out

68

During Work Or At School

65

Evaluation of Entry into Ice cream Business for Bangladesh Limited 46

Travelling ToFrom WorkSchool

65

At The Cinema

61

Special Event

56

Clubbing At A Party

50

Post GymSports

48

Table 28 Relevant Occasions in Consumersrsquo Lives

Respondents were then asked to mention ldquofrequency of occurrence of the identified occasionsrdquo

The identified replies are as follows Normal dinner at homenormal lunch at homeComing home

from workschoolTraveling tofrom workschoolDay out with Partner SpouseMid-afternoon

break at homeOut of home hanging out with friendsLeisure walkMid-afternoon break out of

homeA night in with friendsSpecial dinner at homeSpecial lunch out of homeFamily day

outSpecial eventPost gymsportsDaily2-3 Times A WeekWeekly2-3 Times A MonthOnce A

MonthEvery 2-3 MonthsLess OftenNever Figure 13 Frequency of Occurrence of Occasions

This shows that ldquoNormal dinner at home Watching TV Normal Lunch At Home At Home

While ReadingMusicSurfing Coming Home From WorkSchool During Work Or At School

Travelling ToFrom WorkSchool Midmorning Break Day Out With Partner Spouse At Home

By Myself During The Dayrdquo are the most frequent daily rituals of busy lives of consumers

652 Frequency of Ice cream Consumption

Respondents were asked to mention ldquoconsumption pattern of ice cream during the identified

occasionrdquo on a scale of 1-5 depicting frequencies like ldquo(5) always (4) most of the times (3)

about half of the times (2) sometimes (1) never do not knowrdquo The responses are depicted in

the following table

Evaluation of Entry into Ice cream Business for Bangladesh Limited 47

444474544655555566756665775967779991011101111101210111110101113111412131314161

011121411131216181519181518211817171719181718201721222130303434253437403741394

046383944464746453745414641374638504843414839373030292726232725222020201926202

21722221317Midmorning

breakWhile clubbing at aAt the cinemaSpecial eventNormal lunch out ofA night in with

friendsNormal dinner atInformal dinner out ofAt home by myselfAt home by myself inOut

shoppingSpecial lunch atDay out with SpouseWatching TVAlwaysmost of the timesAbout half

of the timesSometimesneverdo not know

Figure 14 Frequency of Ice cream Consumption

As it can be seen ldquoDay out with Spouse Special lunch at home Special dinner at home

Watching TV Family day out Celebrationrdquo are the occasions where most frequently ice cream is

consumed

653 Market Character Mapping Relevant Occasions vs Frequency of Consumption

If we plot frequency of consumption on the X-axis of a chart and relevance of occasion

occurrence on the Y-axis taking the above mentioned values as cut-off values we get four

quadrants in the chart depicting four market scenarios that any ice cream manufacturer in

Bangladesh market might encounter given the current market situation This market

segmentation is based on frequency of ice cream consumption in daily occasions of consumer

lives

The segments are

1048766 OPPORTUNITY MARKET High Relevant Occasions-Low Ice cream Frequency

1048766 QUESTION MARKET Less Relevant Occasions-Low Ice cream Frequency

1048766 HIGH FREQUENCY MARKET Relevant Occasions-High Ice cream Frequency

1048766 CAPTIVE MARKET Less Relevant Occasions-High Ice cream Frequency

The chart looks as follows Evaluation of Entry into Ice cream Business for Bangladesh Limited

48

Figure 15 Relevance of Occasion-Frequency of Consumption Mapping

As it can be seen from the above chart Bangladesh Market still lies in the Opportunity and

Question market zone with a pull towards High frequency and Captive Market zones This is

evident from market data as penetration of ice cream still remains at Thana headquarters levels

Also this explains the high market growth rate of 17 as market is yet under developed and

branded quality ice cream has yet not reached all levels of consumers especially rural level that

constitutes around 75 of Bangladeshi market

From the above analysis we can establish that target of ice cream manufacturers should be to

penetrate more into the Bangladeshi market to create higher frequency of ice cream

consumption The following chart shows the strategies to follow for ice cream manufacturers

Figure 16 Required Market Strategy for Bangladesh

Evaluation of Entry into Ice cream Business for Bangladesh Limited 49

As relevance of ice cream consumption occasions can hardly be controlled by marketers their

endeavour should be to create more ldquoemotional and functionalrdquo attachment to ice cream in less

frequent occasions through ldquomarket developmentrdquo strategy to earn share from overall food

expenditure of consumers and at the same time make them consume more ice cream in highly

relevant occasions through ldquopenetrationrdquo strategy

654 Consumersrsquo Emotional Requirements and Product Attributes

All consumers under these clusters also identify the emotional requirements and the significant

product attributes they seek from their current preferred and future desired ice creams These are

provided below

Cluster

Emotional Functional Requirement

Product Attributes

Enjoyment

Flavour Variety

1048766 Combination of different flavours

1048766 Combination of different textures

1048766 Very sweet

1048766 With wafer or biscuit

1048766 With chocolate

1048766 Of a well known brand

Socially Involved

Spoonable Rich

1048766 Very creamy

1048766 Only natural ingredients

1048766 No mess

Care

Size Creaminess

1048766 Big

1048766 Rich full taste

1048766 Smooth

1048766 Value for money

1048766 No mess

Unwind amp Escape

Economy

1048766 Crunchy

1048766 Economic

1048766 Of a well known brand

1048766 Nutritious

Balanced Convenience

Health Conscious

1048766 Of a well known brand

1048766 Nutritious

1048766 Milk based

1048766 Low sugar

1048766 Low carbohydrates

1048766 Filling

Active Self-Grooming

Fruit Vitamins

1048766 Healthy

1048766 Fruit based

1048766 Low fat

1048766 Liquid or drinkable

1048766 Nutritious

1048766 Of a well known brand

Confidence

Drinkable Light

1048766 Low calories

1048766 Light on the stomach

1048766 Chewy or gooey

1048766 Not so sweet

1048766 Natural appearance

Sensual

Appeal or image

1048766 No artificial additives

Evaluation of Entry into Ice cream Business for Bangladesh Limited 50

1048766 Natural appearance

1048766 Melting slowly

1048766 Attractive packaging

1048766 High quality ingredients

1048766 Of a well known brand

Table 29 Requirements amp Product Attributes Desired by Consumer Clusters

Of these findings we see that the identified highlighted barriers to ice cream consumption are

pretty evident among the consumers Mostly people want products of a reliable source or a well

known brand low calories quality ingredients value for money economic type

Evaluation of Entry into Ice cream Business for Bangladesh Limited 51

70 INDUSTRY ATTRACTIVENESS AND ENTRY PROSPECTS

71 Driving Forces of Growth

As identified in the earlier sections there are several driving forces behind the growth of ice-

cream industry in Bangladesh

712 Trade and Infrastructural Level

1048766 As a result of globalization newer varieties have been introduced to the local products Many

foreign companies are also coming as franchise so there has been increased competition and

these boutiques are setting higher standards for the local producers

1048766 The present market growth rate is 18-19 which is being influenced by larger players like

Igloo who are expanding their distribution nation wide with expansion of national electricity

grid

1048766 With entry of Modern Trade and recent organized business approach of retailers has made it

possible for ice cream manufacturers to penetrate into shops even without providing them with

branded freezers

1048766 Weather change has increased ldquosummerrdquo season in our country which has reduced negative

seasonal impact on ice cream

1048766 Large companies like Igloo have taken global learning of using carts as an effective tool of

availability and visibility for ice cream

1048766 New and improved technologies are being used in the production process This technological

advancement has improved quality increased speed of production and made the process more

cost effective

713 Consumer Level

1048766 Only a few years back rich people could afford the luxury of having ice-cream but now it has

become a common product for everybody Ice-cream companies are producing different products

with a wide price range for consumers of every class and status

1048766 Nowadays companies are doing promotional campaigns more frequently the customers get to

know about the product which makes it easier for them to buy the best one

1048766 The improved standard of life and more modernized lifestyle of people is an important reason

for the increased consumption thus growth of the ice-cream industry

Evaluation of Entry into Ice cream Business for Bangladesh Limited 52

72 Prospects of Entry

The ice-cream industry of Bangladesh is an attractive one for the investors because there is a

huge market but number of producers is very small The major reasons behind industry

attractiveness are as follows

1048766 The industryrsquos current growth potential is very high with opportunity for market development

1048766 The competition currently permits adequate profitability and the competitive forces are

becoming stronger with time

1048766 Boutique segment is at a very high growth stage but no operator is currently operating with a

mid price range of BDT 100-400 Ice cream kiosks and small scooping boutiques can operate

within that range

1048766 Current industry driving forces are favourable for the future industry profitability

1048766 Globally oriented consumers look for variety in ice cream that is currently not available

Latest innovations came in the market in 2002 People would welcome new variety and flavours

1048766 There is a gap in the market for balanced convenience through ice cream where consumers can

get nutritional benefits for ice cream Also emotional attachment to ice cream could further be

improvised in promotional campaigns

1048766 There is high scope for market penetration and development to increase frequency of ice

cream consumption

1048766 Level of risk or uncertainty is very low in ice-cream industry because the consumer market is

so huge any product with a standard quality and careful pricing will be able to make significant

profit

1048766 As for geographic reach of the industry 60 market is still in Dhaka There is scope of

expansion and a new entrant can easily capture market share within Dhaka using carts even if

they do not want nation wide cold chain distribution

1048766 The production process is very complex and capital requirements are also high So before

going into production any company should know about their capabilities and weaknesses and

then start the business or else they might suffer huge loss at a certain level

1048766 Unilever can acquire the required resource and use existing multi-national multi-cultural

expertise to enter the market in a grand way

1048766 With high probability of entry from DANONE with more products like the ISIS diabetic ice

cream Unilever should consider entering in this industry as soon as possible

Evaluation of Entry into Ice cream Business for Bangladesh Limited 53

80 ENTRY STRATEGY FOR UNILEVER

While describing the suggested entry strategy for UBL certain issues have been kept

confidential and some issues have been touched but not explained to keep consistency with UBL

confidentiality policy

81 Suggested Entry Areas for UBL

1048766 Boutique segment of the Bangladesh ice cream is only 5 of the branded market UBL needs

to pursue a larger scope to make the entry viable

1048766 UBL cannot fight with unbranded segment as global product quality mandate of Unilever does

not allow UBL to fight in low price-low quality segment

1048766 Recommend entry should be in the common format segment with both single and multiple

servings and in the boutique segment with a different brand name (if possible BEN amp JERRYrsquoS)

1048766 UBL should build up state-of-art modern factory for manufacturing and establish cold chain

facilities initially focusing on metro cities

1048766 Investment issues are required to be addressed for building factory and cold chain and capital

requirement needs to be identified for that purpose4

1048766 UBL may have boutiques for driving image selective top-end offering

1048766 Kiosks can be setup near universities and shopping malls

1048766 Boutiques should be concentrated in Dhaka and Chittagong

1048766 Ice cream for boutiques and kiosks would be produced in factory as institutional packs of 9-10

litres

82 Products

1048766 As a Brand Building country in global Unilever operating framework UBL is entitled only to

bring products developed by the Brand Development countries

1048766 Unilever should focus on serving products that have nutritional benefits (already available

globally) along with usual satisfactions of sensual pleasure functional attributes etc

1048766 Current existent players especially Igloo and Kwality have extensively copied global and

regionally available Unilever products eg Cornelli is same as Wallrsquos Cornetto Vinetta is similar

to Vienetta Mega is similar to Magnum etc UBL needs to differentiate these to consumers on

the ldquotaste the originalrdquo platform where global quality is focused regarding the products

1048766 UBL should also bring regionally famous brands like Moo or Max to create image

differentiation

1048766 Magnum or Moo should be used as premium end ice cream to generate more profit margin

Evaluation of Entry into Ice cream Business for Bangladesh Limited 54

83 Placement

1048766 Distribution focus should be in Dhaka for entry as Dhaka contributes more than 60 of total

ice cream sales in the country

1048766 Company may use carts as distribution method They serve as good source of visibility and

availability It would help in increasing impulse purchase

1048766 At least 1500 outlets in Dhaka and Chittagong needs to be actively served using dedicated

branded refrigerators to generate sales

1048766 50 carts should operate in Dhaka and Chittagong

84 Price

1048766 UBL products should be priced at par with Igloo pricing for the common format ice creams

1048766 UBL can bring in premium single-serve SKUS for the higher economic classes in the price

range of BDT 60-80

1048766 Smaller SKUs (small lolly stick) can be introduced in the price range of BDT 10-15

1048766 In the boutique segment UBL should price products above the semi-premium segment

(Gelateria Igloo Sub Zero or Andersenrsquos) but lower than that of Club Gelato or MoumlvenPick

85 Promotion

1048766 UBL would require strong marketing campaign (As high as 50 of sales) to have a grand

entry in the market

1048766 Presence in the television media would be of utmost importance More than 50 of

promotional expense should be made here initially Gradually it can be reduced

1048766 Newspaper would serve as the second most important option

1048766 Billboards should also be used

1048766 Activations (similar to Lux Channel i Super Star or Igloo Festival) should be done to generate

trial

86 Scope of Opportunity

Table 30 Value and Volume Based Scope of Opportunity for UBL

Value (BDT Cr)

Volume (Tons)

Market

131

7835

Common

121

7600

Boutique

98

235

Evaluation of Entry into Ice cream Business for Bangladesh Limited 55

861 Geographic Contribution

1048766 Dhaka (61)

1048766 Chittagong (19)

1048766 Sylhet (10)

862 UBL objectives

Common Format Ice Creams

1048766 Target 10 Market share in 1st year operation

1048766 Value BDT 11 Cr

1048766 Production capacity required 21 Tons day

1048766 Freezer Placement 1500 freezers

1048766 Cart operation At least 50 carts

Boutiques

1048766 Target Further develop the market

1048766 Focus Dhaka Chittagong and Sylhet Metro

1048766 Franchise At least 20 franchisee operations nation wide in divisional towns

1048766 Pricing Below imported parlours above common formats with around BDT 400 per Litre

87 Critical Success Factors

1048766 UBL is considered as a high profile company in Bangladesh and thus they cannot operate in

the market only with common products like choc-bars and cups They must have premium

products (these require extrusion line) also to carry their brand image Otherwise UBL would not

be able to charge usual premium over competition products

1048766 Launch of ice cream would require huge promotional and activation support in order to gain

customers from Igloo People want novelty regarding ice cream and UBL have to let them know

about their products and create hype

1048766 Cart should be used as a source of distribution Recent successes of Unilever companies like

Indonesia shows that carts can generate more sales and can be used as source of visibility in the

minds of both retail traders and consumers Carts can also provide incremental sales to the

company

1048766 UBL have to create a strong cold chain for ice cream (initially in Dhaka and Chittagong) to

ensure quality products for consumers

1048766 UBL have to build capacity very rapidly to meet consumer demand if the launch is successful

Evaluation of Entry into Ice cream Business for Bangladesh Limited 56

90 BUSINESS PROJECTION

91 Basic Assumptions

Business projection for ice cream business was made based on a conservative approach UBL

would require spending significantly on production capacity and factory dedicated to ice cream

Thus to analyse business possibilities of ice cream certain assumptions were made and collected

data were used These are

1048766 Production equipments and cabinets would cost approximately BDT 55 crores

1048766 Production equipments 45

1048766 Packaging Equipments 15

1048766 Storage Facility 20

1048766 Branded Freezers 10

1048766 Distribution Investment 10 (Distributors would also invest themselves)

1048766 Ice cream factory with a floor size of 20000 sqft would cost BDT 25 crores

1048766 Objective is to capture 10 market share in Dhaka and Chittagong in the first year

1048766 Business would grow by 50 in year 2 and 3 30 in year 4 and 25 in year 5

1048766 Weighted price per litre is BDT 170 according to volume share of single serve ice cream

multiple serve ice cream and boutique ice cream

1048766 Other financial assumptions were also made List of them are provided below but amount has

been removed for confidentiality issues

Assumptions

Trade Margin

Distributors Margin

DutyVAT Rate

Trade Terms Expense of NPS

Trade Terms Expense of NSV

Advertising ampPromotion of NPS

Indirects (Salaries Wages etc)

Trading Tax

Table 31 Assumptions for Business Projection

Evaluation of Entry into Ice cream Business for Bangladesh Limited 57

100 CONCLUSION

Ice cream has good prospect in Bangladesh It is still a growing market with opportunities for big

new entrants With the barriers of entry UBL needs to consider its priorities UBL being an HPC

company traditionally needs to acquire expertise in cold chain distribution and has to invest a lot

of money to rip the benefits of the industry However to initiate company can take regional

support and acquire resource expertise The company should enter the business as soon as

possible since there is potential threat from DANONE to introduce more ice creams after ISIS

diabetic ice cream and also with potential of the industry arch rival Nestlersquo might consider

entering into the industry too

Evaluation of Entry into Ice cream Business for Bangladesh Limited 58

References

Web References

1 wwwunilevercom

2 wwwunilevercombd

3 wwwhllcom

4 wwwunilevercompk

5 wwwthedailystarcom - Life Style Magazine

6 wwwreuterscouk

Evaluation of Entry into Ice cream Business for Bangladesh Limited 59

Page 12: Square Ice cream

256

2666

2706

Polar

17

161

1485

Milk Vita

34

332

348

Evaluation of Entry into Ice cream Business for Bangladesh Limited 22

Savoy

39

365

343

Table 11 Market Share of Competitors

E Geographic Sales Orientation

Ice cream still continues to be a city-oriented product and its demand is comparatively low in the

rural areas Reasons behind this are electricity problem outside urban areas and purchasing

power of people Geographic sales orientation of the common format ice cream industry is

provided below

611890690480590250DhakaChittagongKhulnaComillaBarisalOthers

Figure 7 Geographic Sales Orientation

Dhaka still is the largest contributor in the ice cream segment Nevertheless over the years this

trend is shifting Areas outside Dhaka are also growing making Dhakarsquos share lower by small

percentage As urban markets are the major contributors companies design their products

keeping in mind the tastes and styles of the urban consumers Compared to the other companies

Igloo is the most expensive in the common format segment so they target only city based

customers who have the purchasing power Although other companies such as Savoy are offering

low priced product even their main target is urban people due to nation wide electricity problem

F Seasonality of Sales

Ice cream industries in warmer part of the world are highly seasonal Same is true with

Bangladesh According to secondary data sources sales seasonality looks as follows

Period Name

Months

Contribution

Super-Peak

April May June

46

Peak

March July August

36

Off-Peak

February September October November

15

Super Off-Peak

December January

3

Table 12 Seasonality of Ice cream Sales

This data was validated through interviews with retailers during market visit According to them

more than 75 sales of ice cream came in the hot months Another insight that could be

identified was

Evaluation of Entry into Ice cream Business for Bangladesh Limited 23

various festivals and programmes provide scope for higher volume of ice cream sales According

to companies where only 10-15 sales occurs in the winter season same amount of sales occurs

during festivals like the two Eids and Nobobarsha

G Distribution Servicing System

Mainly common format ice-cream is distributed in two methods that are directly to retail shops

and through hawkers with ice cream carts trolleys

The various channels of retail shops other than cart that serve as distribution outlets for Ice cream

are

7 Urban General Stores (UGS)

8 Urban Neighbourhood Grocer (UNG)

9 Premium General Store (PGS) SMMT

10 Confectionary Bakery

11 Modern Trade (MT)

12 Fast Food shops (Recently some fast food shops keep branded ice cream cabinets)

Distribution details of all the companies are provided below However detail of Milk Vita is not

available as they are mainly milk producer and they have no dedicated ice cream cabinet for

retail stores and currently they are not distributing ice cream in Dhaka city

Company

Distribution Method

Frequency

No of Cabinets

No of Carts

Igloo

Distributor Cart

2 to 3 times a week

4000

100

Kwality

Distributor Cart

1 to 2 times a week

1050

20

Polar

Distributor Cart

1 to 2 times a week

800

50

Savoy

Company

1 to 2 times a fortnight

176

-

Milk-Vita

-

-

-

-

Table 13 Distribution Method of Market Players

Distribution Process Distribution process through both methods is described below

Retail Distribution The general distribution that is followed by companies is that distributor

sends large refrigerated trucks dedicated to specific territories These trucks are accompanied by

small refrigerated vans Main road side shops are served directly from the large truck and shops

that are inside small streets are served by the small vans

Order and delivery are done on the same day The strategy followed is that of replenishment If

the branded freezer of the company is empty they simply fill it up according to requirement of

different SKUs as the delivery people see fit However shopkeepers have to buy full cartons

(usually 24 pieces in a carton) of single serve ice cream they cannot buy in pieces

Evaluation of Entry into Ice cream Business for Bangladesh Limited 24

Among the retail shops there are about equal numbers of branded and unbranded freezers This

is a normal scene in Dhaka where all shopkeepers require freezer to keep other cold products

However basic distribution policy is that if a shop has branded cabinet of a company they

cannot keep competitor ice cream in that cabinet Thus penetration can be made possible in

shops where unbranded freezers are available

General branded freezer contract policy with Igloo and Polar is that traders have to pay BDT

5000 to take a freezer Maintenance of branded freezers is responsibility of the company but

electricity bill is paid by shopkeeper However Polar is not currently giving any new freezer

Kwality gave away their freezers for free however they ensured safety of their freezers by

checking background of the shopkeepers

Cart sellers Cart sellers collect required amount of ice cream from nearby distribution house or

company showroom (Igloo has one showroom in Panthapath) on a daily basis They also have to

buy cartons of products not pieces Kwality carts collect their ice cream from factory (Tejgaon)

or nearby distribution house Cart sellers contribute around BDT 3000 sales in a day and

generally sell at BDT 1-2 higher than set price of each product

The cart sellers generally keep at least a two-day stock so that they can meet sudden upsurge in

daily demand of ice cream or if they get the opportunity to sell at parties programs or any open

air event (Wedding at community centres or outside cultural programs at auditoriums) If cart

sellers need replenishment of stock they even take service more than once in a day either

revisiting showroom house or they call up company delivery people to serve them at their

location if there is opportunity for selling more ice cream

Policy regarding Damaged Ice cream All the ice cream producers have very good relationship

with the shopkeepers If the retailers have refrigeration problem company takes ice cream back

until the problem is fixed whether it is stored in branded freezer or not Also if any ice cream

gets damaged or there is bacterial formation company takes them back Usual return time varies

from 15-30 days For large sellers however they take less time

Payment Method for Ice cream Purchase All the companies give credit of around one month to

large volume contributing retail sellers and try to maintain good relationship with them This

trend is seen in all channels Also all the SMMTs and MTs are given credit of one month and

payment is made by cheque Other small shopkeepers have to purchase with cash However

according to shopkeepers Igloo is currently trying to cut down on credit sales as they believe

there is a consumer pull for their brand Companies like Polar and Kwality also give special

commission to large sellers Polar gives 5 commission on every bill

Evaluation of Entry into Ice cream Business for Bangladesh Limited 25

H Technology and Innovation

Technological advancement in the ice cream industry has been very rapid Starting with stick

mould and filler ice cream production the companies have come a long way Assessing the

consumer choice and demand the companies are introducing new products very often Improved

and new technology is used for faster production and better quality Igloo is trying to meet the

international standards and launching products such as Sundae Cornelli and Nuggets Other

companies are also introducing new flavours suitable for their target segments Igloo has both the

ISO and the HACCP certifications These were awarded in the year 2003 due to their relentless

pursuit of quality and innovation In September 1996 Igloo introduced the 3D Mould line and

straight line extrusion technology for the first time in the subcontinent Basically with Igloorsquos

pursuit all the modern technologies and quality innovations are available in the market

I Production Capacity

Current production capacity of the major players in the common format ice cream segment is

estimated to be as follows

Name

Capacity (Ltrs day)

Total Production (000 Ltrs)

Required Capacity (at 300 production days )

Estimated unutilized capacity (Ltrs day)

Igloo

22000

387433

12914

9086

Polar

6500

112513

3750

2750

Kwality

12100

204934

6831

5269

Savoy

1560

25985

866

694

Milk Vita

1330

26387

880

450

Table 14 Production Capacity of Current Market Players

From the table we can see that all the ice cream manufacturers are operating with unutilized

capacity However one point to be noted is that different ice cream SKUs require different

amount of item to be produced Exact machine production capacity at litre per day does not

represent the accurate scenario Nevertheless it can be safely assumed that all the manufacturers

have unused machine capacity at their premises Moreover the larger players like Polar and

Kwality have new technology available at their premises Kwality bought second hand machines

from Thailand but both Igloo and Polar bought theirrsquos from Italy and Denmark

J Products and Pricing

Products The products in the ice-cream market are differentiated A few firms dominate the

market but an endless variety of ice creams are offered to the consumers Igloo pioneers all

major innovations in the market The products that are available in the market can be classified

into single serving and multiple serving groups Which are then categorized based on functional

attributes designs These are

Single

Stick

Normal mould 3D mould extrusion

Evaluation of Entry into Ice cream Business for Bangladesh Limited 26

Cup and Sundae

Flat cup long cup

Cone

Normal cone (vanilla strawberry etc) premium cone (Ripple)

serving

Innovative Fillers

Snowball Animal shaped containers sandwich nuggets etc

Container

05 ltr 1 ltr and 2 ltr containers

Multiple serving

Family Pack

Assorted packs cakes shahi kulfi etc

Table 15 Ice cream Serve types

Among all the products available in the market most selling SKU for all the companies is Choc-

bar stick and highest selling flavour is Vanilla Following are the ranks of most selling SKUs and

flavours

SKU Name

Rank

Choc-bar (70 ml)

1

Vanilla Cup (100 ml)

2

Vanilla Box (05 and 1 Ltr)

3

Lemon Lolly (70 ml)

4

Normal Cone

5

Flavour

Rank

Vanilla

1

Chocolate

2

Strawberry

3

Ripple

4

Mango

5

Table 16 Rank of SKUs Table 17 Rank of Flavours

Choc-bar is one of the earliest vanilla based chocolate coated SKU that has dominated the

market strongly over the years Shopkeepers could not provide an exact percentage on SKU

based sales contribution Most of them ranked the SKUs and flavours according to sequence

shown in the above table Also according to newspapers and secondary sources Vanilla is the

most selling flavour with 60 sales contribution According to secondary sources percentage

sales contribution of various types of SKUs in the common format segment are as follows

Type of Ice cream

Value Share

Volume Share

Impulse dairy ice cream

514

443

Impulse water ice cream

112

138

Take-home dairy ice cream

374

419

Table 18 Volume Share of Different Serve Types

Impulse dairy ice cream provides more value share as price per litre is higher than take home

multiple serving ice creams Impulse water ice cream shows a similar trend as of take home ice

cream

Pricing Product pictures and price ranges of each category are provided below Evaluation of

Entry into Ice cream Business for Bangladesh Limited 27

Normal Premium Price Tk12 Tk20 Tk25 Cup amp Sundae Normal Cup Sundae Premium Cup

Price Tk20 Tk25 Cone Normal Premium PriceTk20 Tk25Innovative Fillers PriceLtr Tk100

Tk175 Container Normal Premium PriceLtrTk150 Tk 175 Tk 190 Family Packs Kulfi Mixed

Pack Cake Single ServingMultipleServingNormal Ice Fruit 3D Mould Premium Extrusion Price

Tk10 Tk15 Tk15 Tk20Stick Normal Cream

Figure 8 Serve Types and Pricing

As it can be seen from the above chart all impulse ice creams are priced within the range of

BDT 10 to 25 Other take home multiple servings are priced within the range of BDT 50 (05

Litres) to BDT 220 (2 Litres) Another noticeable factor in price is that there are both normal and

premium flavours in all types of ice creams

K Firms as Price Setters

The firms have capability to affect the market price to be low as profit margin is very high If

Igloo reduces the price of an item below the prevailing price level in order to increase its sales

its competitors will fear that their customers will go away from them to buy Igloo products To

retain their customers they will be forced to match the price cut of Igloo Historically this has

been proven to be true However due to price sensitivity companies cannot drastically increase

price even if they provide higher quality of product It was seen in 1997 when Igloo increased

price of 11 SKUs and faced drastic sales fall during that time It shows that the industry might

welcome overall industry price increase but not individual company price increase

L Promotion

The promotion scenario in the industry is not quite organized as of now Even proper data

regarding promotional expenditure is not available from research sources The reason being

there is not much consumer related activity seen in the market After Kwalityrsquos introduction in

the market in 1999 Igloo went on with massive Television promotion of their new products that

were available at that time

Evaluation of Entry into Ice cream Business for Bangladesh Limited 28

However in current times there is no TVC running from any company Companies promote their

launches mainly through billboards and newspaper promotions which is currently the most used

source of consumer promotion Some promotional activities that were done by the companies

over the years are listed below

Consumer Promotions

1 Larger players like Igloo and Kwality goes on with campaigns like ldquoGift on stickrdquo where

various prizesrsquo names are written on the sticks and consumers can get them

a Igloo ran a program on their launch of Macho variant where gift varied from cricket bat to

personal computer

b Igloo had a program in 2006 where gifts on sticks varied from Bangkok visit to sunglass

c Igloo ran one campaign in 2007 where gold bars were given on purchasing Choc-bar

d Kwality ran a similar program in 2008 where gifts varied from wrist watches to motorcycle

2 Some companies ran consumer TTS and gift programs where company products were given

free

a Igloo had a program in 2006 where Igloo butter was given free on purchasing Igloo ice cream

cake

b Kwality ran a program in 2008 where one SKU was given as gift with another SKU randomly

c ldquoCone Ice cream at your Homerdquo program was run by Igloo in 2002 where six cone biscuits

were given free with purchase of one litre ice cream

3 Media placement is another form of placement done by larger companies

a Igloo purchased ldquoGlimpse into World Cup Resultrdquo space in daily newspapers during World

Cup Football 2002

4 One interesting program is done by only Igloo in Bangladesh They did it in June 2006 The

program was ldquoIgloo Ice cream Festivalrdquo with main attractions of ldquoGet as much ice cream as you

want for BDT 200rdquo ldquoGet a Fantasy Kingdom Entry ticket with each Entry Couponrdquo ldquoLucky

Drawrdquo and ldquoCelebrity Addardquo

Trade Promotions

5 Trade promotions are mainly given to ldquoHighest retail purchasersrdquo and also based on time

bound trade schemes where various slabs of purchase amount are mentioned for different prizes

a Igloo takes their highest purchasers to visit countries like Singapore and Thailand

b Savoy has a purchase slab scheme where first prize is table fan

c Polar gives special sales commission to their highest purchasers (around 5)

Evaluation of Entry into Ice cream Business for Bangladesh Limited 29

M Players in the Common Format Segment

Branded common format ice cream segment is constituted of five players only Among them

Igloo is the largest player and Milk Vita is the smallest The following sections detail the basic

company detail of all the companies with special emphasis on Igloo the market leader

Igloo

The pioneering ice-cream company in Bangladesh started its operation in 1964 in Chittagong

under K Rahman amp Co Limited (KRC) with a small factory inside Coca Cola bottling factory of

KRC After the independence of Bangladesh in 1971 Igloo was taken over by the government of

Bangladesh Later in 1983 Abdul Monem Limited purchased the entire production setup of KRC

Limited including Coca-Cola bottling plant and Igloo ice-cream factory After taking full charge

of Igloo ice-cream by Abdul Monem Limited the manufacturing operations continued in

Chittagong till 1990 Although Dhaka fetched the maximum share of the total revenue the

distribution cost increased tremendously in the process of meeting the demand of Dhaka city To

cope with the distribution problem and handle Polar threat Abdul Monem Limited transferred

the factory to Dhaka changed the ice-cream packaging from the conventional paper to plastic

and expanded their market and distribution operation The new factory of Igloo was setup at

Shyampur Narayanganj and was nine kilometres away from the Motijheel office The company

apart from catering the capital city started to expand its operations in Comilla (1991) Khulna

(1992) and North Bengal (1993) These markets were served directly from Dhaka since the

storage facilities were not developed till then The company is now the market leader since 1997

with clear market share victory over others with sweeping 51 share It is to be noted that Igloo

is also a player in the boutique segment with three parlours (2 in Dhaka and 1 in Chittagong)

Product Range Igloo offers the widest choice of ice cream more than any other competitor in

the market Igloo is offering a total of fifty items including normal premium and novelty cup

stick and family pack items Igloo has thirty flavours more than anyone else in the industry and

is continuously launching new and innovative delicacies

Igloo ice-cream can be classified in six groups They are

Stick

Macho Choc-bar Mini Choc Clown Mega Shell n core Lolly

Cone

Cornelli 2 in one Cornelli classic

Cup

Shahi kulfi Vanilla Strawberry Mango Snow ball

Container

Vanilla Strawberry Mango Chocolate Coffee Diet Vanilla Tutti Frutti Ripple Pralin

Pistachio

Innovative

Nuggets Sandwich

Family

Ripple cake Party time Shahi Kulfi

Table 19 Products of Igloo

Single serve stick cups and cone items are easy to carry around and convenient to eat which

makes it most sold The core target segment of ice-cream is 6-24 years and this generation is

always on the Evaluation of Entry into Ice cream Business for Bangladesh Limited 30

move and thus prefers independent cone stick or cup items As Igloo initiated the concept of ice-

cream as a family product they offer some items to be enjoyed with the whole family

Quality and Innovation Igloo is committed to maintaining the highest quality standard through

its continuous RampD activities The major ingredients raw materials and packing materials are

procured from the best European sources Strict quality control is done at every stage of the

manufacturing process from procurement of material mixing material flow ice cream making

packaging storing (at main warehouse) distributing and market shelving by the Quality Control

Department Current supply chain for various materials of Igloo is as follows Australia (Milk

Powder) Denmark (Ingredients emulsifiers amp stabilizers) China amp UAE (Food grade sticks)

China Denmark Singapore amp Thailand (Food grade packing materials)

Figure 9 Igloo Supply Chain

Distribution Network Their distribution network is stretched all over the country with a long

fleet of refrigerated vans Firstly the ice cream products are stored at the central warehouse of

the factory and from there they are distributed through the haulage vehicle to the operational

centres located in Dhaka Chittagong Comilla Rajshahi Barisal Bogra Rangpur and Khulna

Strictest cold chain maintenance during the distribution and selling of the ice creams is ensured

Their distribution process is as follows Manufacture Stored at -24c Transported by Refrigerated

trucks at -Reaches amp Preserved in Eight regional stores Refrigerated vehicles (Distributors)Retail

outlets (Deep freezers)

Figure 10 Distribution Process of Igloo

Evaluation of Entry into Ice cream Business for Bangladesh Limited 31

Trolley Operation Igloo also operates through trolleys for extending its reach to consumers at

the furthest points The trolleys are operated near schools alleys streets parks etc and play

rhythmic music to attract the consumers These are very colourfully decorated with Igloo

umbrella and the puller wears specific uniforms Igloo was the first in introducing and operating

these trolleys in Bangladesh for any Fast Moving Consumer Goods (FMCG) Igloo has around

125 trolleys operating throughout the country Individual trolleys are provided with a regular

supply of igloo ice creams

Marketing The marketing commitment of Igloo is based on the relationship with its customers

and consumer by not only manufacturing the highest quality product but also delivering the

product by maintaining this quality To satisfy the ever-changing needs of the customer Igloo

has regularly launched new ice creams and introduced new flavours And this commitment has

positioned Igloo as the market-leading brand by gaining the consumers trust with the positioning

as ldquoA WORLD OF GREAT TASTErdquo

Facilities and Logistics at a glance As of 2009 following are the facilities and logistics enjoyed

by the company

Factory location

Dhaka

Production Lines

4

Packages

Stick Cup Family pack Others (Nuggets and sandwich)

Machine suppliers

1048766 Mark-Italy

1048766 Tetra Pak(Hoyer)-Denmark

1048766 Sabore Denmark

1048766 Hass- Austria

Machine models

1048766 Freemark 1100 Italy

1048766 FM 3000 FM 6000 Italy

1048766 SL600 Denmark

Cone baking

Hass- Austria

Chocolate making

Macentyre-UK

Coverage

Nationwide

Operational centre

10

Total market vehicles

30

Distribution channel

Directthrough appointed distributors

Outlet service

7500

Injected deep freezers

4000

Trolley operations

125

Warehouse no

8

Table 20 Igloo Facilities and Logistics

Kwality

Kwality is currently the second largest ice cream manufacturer of the country The mother

company for the Kwality brand is Sanowara Drinks amp Beverages Ltd a sister concern of

Sanowara Group The company is famous for powdered milk brands Red Cow and Diploma in

Bangladesh The drinks and beverage concern of Sanowara made an entry into the market in

1997 with ldquoYesrdquo brand drinking water and launched the ice cream brand in 1999 With heavy

communication and novelty products it Evaluation of Entry into Ice cream Business for

Bangladesh Limited 32

successfully removed Polar from the second place with a current market share of 27 The

company also operates in the boutique segment with two parlours in Dhaka and Chittagong

Kwality ice cream factory is situated in Chittagong with a floor space of 35000 sft and fully

automated machinery wrapping mix machinery equipments from Italy having capacity of

around 20000 litres of ice cream per shift The ice cream factory employs 140 people The

company is ISO 9001-2000 certified

Kwality was the first true competitor for Igloo products with some major innovation in product

design and communication but their quality is perceived to be lower in the minds of the

consumers and they do not have extrusion ice cream The product prices are also similar to that

of Igloo but they charge a bit lower than Igloo in premium multiple servings However during

market visits it was seen that shops that keep only Kwality or Igloo and Kwality both they can

sell Kwality too although the sales amount is lower than that of Igloo People who look for Igloo

shopkeepers give them that directly but if they get a chance and Kwality ice cream stock is high

they also push Kwality to dry the stock out This gives an indication that market is larger than

what the current players are capable of serving even in Dhaka

Kwality follows a similar distribution model like Igloo but distribution frequency is lower and

amount of cart sellers is limited to 25 and they operate only in Dhaka

Polar

Once a giant in the industry Dhaka Ice Cream Industries Ltd introduced the first hygienically

packed ice cream in Bangladesh in 1987 and the brand name Polar was thus born In the early

days the company started ice cream business with a wide range of products and a variety of

flavours in Dhaka city In 1988 the company started its distribution in the city of Chittagong

then Bogra and continued to cover more cities Presently Polar ice cream is available

throughout Bangladesh The company today trails in the market with 15 market share in the

common format segment Recently Polar has announced launch of ISIS diabetic ice cream with

support from DANONE to turn around in the market

The company has its head office as well as a modern large-scale industrial plant in Dhaka Polar

ice cream is made with Danish expertise using Danish equipment and technology The

production activities and quality control measures are supervised and managed by Danish

experts Polar offers a wide range of delicious flavours and tastes made by ingredients imported

from Europe

Dhaka Ice Cream at present has 3 cold stores in Dhaka Chittagong and Bogra in Bangladesh

From Dhaka cold store they distribute ice creams in Mymensingh Tangail Jamalpur Sherpur

Kishoreganj Netrakona Comilla Narsingdi Barisal Madaripur Agaeljhara Faridpur Magura

Chuadanga Jessore Satkhira Khulna Pirojpur and Sylhet through their distributors In case of

long distance delivery points the company uses auto cooling freezer van

Evaluation of Entry into Ice cream Business for Bangladesh Limited 33

In Dhaka city they distribute ice creams directly to retail stores in freezer vans Besides that

they have several distributors at different points of the city Distributors cover their individual

areas where company is not able to supply directly in their freezer vans Similar model is

followed by the company to distribute ice cream from their other cold storages through out the

country For storing and selling ice creams in retail stores the company like the other players

arranges a deep freezer with the Polar logo and canopy light box

In addition to this distribution the company also undertakes home delivery of ice creams for

special occasions

Savoy

Savoy Ice-cream brand is owned by Sena Kalyan Sangstha (SKS) Group of industries It started

its journey in March 1995 with a factory in Tejgaon Dhaka Yearly turnover is estimated at BDT

388 crores with a market share of roughly 35

The factory has been established with Sonali Bank finance at 6040 equity ratio The total

production capacity of the factory has been estimated at 2400 litres of Ice-cream per day Total

land area of the factory premise is 116 Bigha with 8000 sft area covered with a total project cost

of BDT 144 The factory employs 73 people

Product ranges of the company include all the basic designs and flavours of the industry

However the company has not been much of an innovator in the industry Their product quality

is substantially low than that of other players and they price their products at 10-15 lower than

the other competitors The company imports raw materials mainly from Europe The general raw

materials are Euro cream Skimmed Milk Powder Cocoa Powder and Flavour (Vanilla Mango

and Strawberry) Colour (Yellow Red Chocolate and Green) Ripple Sauce Cheney Fruit Palm

Kernel Oil Anhydrous Butter Oil (Ghee) and Sugar etc

Milk Vita

Milk Vita is one of the most famous brand names in Bangladesh for its liquid dairy milk Owned

by Bangladesh Milk Producersrsquo Co-operative Union Limited (BMPCUL) the company came in

the market with proper dairy milk ice cream in form of cups and choc-bar With a production

capacity of around 1600 litres per day the company is trailing in the market place with 3

market share

Although the Milk Vita Choc-bar was perceived to be extremely tasty by consumers they

probably could not do well due price competition Currently they do not even distribute ice

cream in Dhaka However their presence is seen in outskirts of Dhaka and other nearby towns

If the current market situation prevails Milk Vita would lose their remaining market share and

other companies would benefit especially Igloo However one of the advantages of Milk Vita

remains to be

Evaluation of Entry into Ice cream Business for Bangladesh Limited 34

their nation wide milk supply network They have skimmed milk powder production plant that

Igloo does not have Thus they can combat the seasonality of milk supply that Igloo with its

huge requirement of milk cannot

Strengths and Weaknesses of Competitors

Company

Strengths

Weaknesses

Igloo

1048766 Strong brand image

1048766 High product quality

1048766 Highest no of variety

1048766 Strong distribution network

1048766 Highest visibility

1048766 Strong promotion

1048766 High production capacity

1048766 Presence of extrusion ice cream

1048766 Items are generally a bit pricy

1048766 Igloo does not give free freezers like other companies

1048766 Reluctant in recent times regarding innovation

1048766 Local sourcing of liquid milk does not meet demand

1048766 Failure to use ERP technology slowing decision making

Kwality

1048766 Product variety

1048766 Strong promotion

1048766 Free freezer distributed

1048766 Presence in all price segments

1048766 High production capacity

1048766 Weak distribution

1048766 Lower exposure

1048766 low amount of carts in operation

Polar

1048766 Free freezer

1048766 Quality perceived to be high compared to Kwality

1048766 Discoloured freezers

1048766 Lower exposure

1048766 Low product variety

1048766 Unused capacity

Savoy

1048766 Price is lower

1048766 Discoloured freezers

1048766 Low product variety

1048766 Weak distribution

1048766 Small amount of freezers

1048766 Low production capacity

Milk Vita

1048766 Quality is good due to dairy cream

1048766 Brand leverage from Milk Vita milk

1048766 Low exposure

1048766 Low variety

Table 21 Strengths and Weaknesses of Competition

512 Market Characteristics of the Boutique Segment

With a small market of BDT 98 Cr and 567 share in the branded ice cream market the

boutique segment is currently an increasing segment in the ice cream industry Boutique

segmentrsquos history dates back to 1960s when Igloo launched boutiques in Dhaka to save

distribution cost and promote a culture of ldquoice cream eating outrdquo In later years boutiques lost

their glamour and retail common format segment picked up growth However with Dolce Vita in

the late lsquo80s craze for Italian Artisan ice cream was recreated in the market Although Dolce

Vita is failing in recent times emergence of MoumlvenPick and Club Gelato in 2000 has uplifted the

segment once again Current growth rate of the

Evaluation of Entry into Ice cream Business for Bangladesh Limited 35

segment can be estimated to be approx 20-22 (higher than the common format segment)

Following are the basic detail of all the major players in the segment with their estimated sales3

Players

Outlet

Sales (Cr Taka)

Share

Club Gelato

1

136

199

MoumlvenPick

1

119

174

Andersenrsquos

3

119

174

Gelateria Igloo

3

119

174

Sub Zero (Kwality)

2

051

75

Baskin Robbins

1

015

22

Dolce Vita

1

017

25

American Soft

1

009

12

Rainbow

1

009

12

Others (off site)

089

130

Total Market

682

Table 22 Players and Shares in Boutique Segment

A Detail of Operation

General operational procedure followed by all the operators is as follows

1048766 Operating method There is a variation in operational method among the large operators

1048766 Club Gelato uses kitchen at own premise where imported ingredients and local milk (daily

special service from Milk Vita) are used to make ice cream

1048766 MoumlvenPick directly imports ice cream from Switzerland

1048766 Andersenrsquos Gelateria Igloo and Sub Zero produce ice cream at their factory with a mix of

imported and local ingredients

1048766 Products Around 30-35 flavours of artisan dairy ice cream are served at the premises

1048766 Most sold flavours are Vanilla Ferrero Rocher Butterscotch Chocolate Caramel etc

1048766 Other Products Larger players also serve ice cream desserts (milk shakes ice cappuccino etc)

pastries and other desserts with normal coffee and tea facility at their premises

1048766 Boutiques fight ice cream seasonality with the other products sales during off-peak ice cream

seasons Usually ice cream and other products contribute at 6040 ratio in summer and during

winter and off-peak seasons the ratio reverses

1048766 Pricing Usually the prices of products in this segment are 3-4 times higher than that of the

common format segment

1048766 Prices do not vary with flavours Variation depends on serve style (Cone tub) and use of

toppings and other ingredients (Chocolate sauce nut fruits) etc

1048766 Usual margin charged is around 50-60 over production cost Similar margin is charged for

other products like coffee ice cappuccino etc

3 Yearly sales is estimated based on companyrsquos approximate daily sales collected during

interview

Evaluation of Entry into Ice cream Business for Bangladesh Limited 36

1048766 Target Group Most of the consumers belong to SEC A and higher SEC A with DMFI of at

least BDT 20000

1048766 Foreign delegates and resident foreigners also visit these boutiques

1048766 Main purposes of visits in the boutiques are

bull Youth hangout with friends and having ice cream and ice cream derivatives

bull Family Family night out or eat out at a restaurant and then having dessert

bull Foreigners Having dessert after dinner

1048766 Rush time at boutiques are Afternoon 2-4 pm and at night 9-11 pm

1048766 Offsite sales Most of the large operators also sell offsite They have small freezers for off-site

1048766 Club Gelato and MoumlvenPick serves ice cream at high society parties and programmes

1048766 MoumlvenPick also has kiosks in known hotels like Sheraton

1048766 Promotion No mass promotion is done by any of the companies Word of mouth is the most

important source of promotion Posters and banners outside the premise and occasional

newspaper advertisements are used to communicate special offers

1048766 Growth Drivers Market growth is driven by image innovation quality decoration of facility

environment and special offers

1048766 Club Gelato has the image of selling true Italian dairy ice cream with an excellent hangout

environment

1048766 MoumlvenPick imports ice cream directly from Switzerland and is perceived to be of high quality

1048766 Andersenrsquos operates with the image of ice cream from Denmark

1048766 Gelateria Igloo (from Igloo) and Sub Zero (from Kwality) could not establish the premium

artisan ice cream image

B Players in the Boutique Segment

There are very few players who have significant impact in the boutique segment Detailed

information of all the major boutique segment players is provided below

Evaluation of Entry into Ice cream Business for Bangladesh Limited 37

Club Gelato

Basic Company Information

1048766 Location Banani Road 11 (Planning for a second one in Dhanmondi)

1048766 Established in 2001

1048766 Seating Capacity 48

1048766 Area 1250 sft (including kitchen)

1048766 Owner Mr Jahangir Alam (Bangladesh)

1048766 Business Type Joint business partnership with Singapore

1048766 Staff 15 people (6 in the kitchen)

1048766 Production capacity 150 litres per day

Product Related Information

1048766 Product Italian style parlour scoop ice cream fruit juice coffee and pastries

1048766 Flavours Around 32 flavours available

1048766 Most selling Ferraro Rocher Vanilla Pistachio

1048766 Innovations New variants and ingredients are communicated by their Italian supplier and

Club Gelato decides what to take from them

1048766 Serve type Cup Cone Glasses Box for take away

Consumer Profile

1048766 Primary Teenagers and Young Adults (18-30) amp Diplomats

1048766 Secondary Family consumers for eat out

1048766 Income Group High income customers tentatively from SEC A and higher SEC A

1048766 Geographic Area Diversified

1048766 Rush time 8-10 pm

Sales and Price Information

1048766 Sales BDT 50000 (60 Ice cream 40 other desserts) daily in summer In winter however

other products sell more and thus they keep total sales at the same level

1048766 Price 750 per litre for any flavour

1048766 Sales Volume 50-60 litres per day

Supply Chain Placement Information

1048766 Milk Local sourcing from Milk Vita (4050 litres per day)

1048766 Chocolates amp Flavours Belgium France Germany

1048766 Transportation Mainly air (They can afford it due to high margin)

1048766 Contribution of various materials Flavours (30) Milk (20) other parts are water and air

Promotional Materials

1048766 Materials used are near premises POS materials for promoting the parlour only

Table 23 Detail of Club Gelato

Evaluation of Entry into Ice cream Business for Bangladesh Limited 38

MoumlvenPick of Switzerland

Basic Company Information

1048766 Location Gulshan

1048766 Established in 2000

1048766 Seating Capacity 55

1048766 Owner Mr Arif Mahmud

1048766 Business Type Franchise of International MoumlvenPick

1048766 Storage Capacity in Shop 150 litres

Product Related Information

1048766 Product Imported MoumlvenPick ice creams coffee chicken sandwich and Frappe

1048766 Flavours Around 30 to 35 flavours available

1048766 Most selling Swiss Chocolate caramel Vanilla Dream Espresso Strawberry

1048766 Innovations New variants are communicated by their franchiser and they decide on flavours

that they want

1048766 Serve type Cup Cone Glasses Box for take away

Consumer Profile

1048766 Primary Teenagers and Young Adults (18-30) (70) amp Diplomats

1048766 Secondary Family consumers for eat out

1048766 Income Group High income customers tentatively from SEC A

1048766 Geographic Area Concentrated in Gulshan and nearby areas

1048766 Rush time Afternoon- Young Adult 10 to 11 pm Foreigners

1048766 the company also serves at parties and has freezers in known hotels where their ice creams

are served

Sales and Price Information

1048766 Sales BDT 35-40000 daily in summer

1048766 Price 640 per litre for any flavour

1048766 Sales Volume 55-60 litres per day

Supply Chain Placement Information

1048766 Transportation Imported finished goods by ship

1048766 Ship travel time 19 days

1048766 Port clearance 10 days

1048766 Safety Cushion Extra 10 days

Promotional Materials

1048766 Materials used are near premises POS materials for promoting the parlour only

Table 24 Detail of MoumlvenPick of Switzerland

Evaluation of Entry into Ice cream Business for Bangladesh Limited 39

Andersenrsquos of Denmark

Basic Company Information

1048766 Location Gulshan (2 others in Uttara Dhanmondi)

1048766 Established in 2001

1048766 Seating Capacity 48

1048766 Owner United Group

1048766 Business Type Franchise of Australian company Andersenrsquos of Denmark

1048766 Production Tongi Factory of United Group

1048766 Production capacity 2000 litres per day in factory

1048766 Storage Capacity in Shop 150 litres

Product Related Information

1048766 Product Danish parlour scoop ice cream and coffee

1048766 Flavours Around 30 to 35 flavours available

1048766 Most selling Strawberry Butter Scotch Green

1048766 Innovations New variants and ingredients are communicated by their franchiser and they

decide on flavours that they want

1048766 Serve type Cup Cone Glasses Box for take away

Consumer Profile

1048766 Primary Teenagers and Young Adults (18-30) (70) amp Diplomats

1048766 Secondary Family consumers for eat out

1048766 Income Group High income customers tentatively from SEC A

1048766 Geographic Area Concentrated in Gulshan and nearby areas

1048766 Rush time 8 to 10 pm

Sales and Price Information

1048766 Sales BDT 10-12000 daily in summer

1048766 Price 460 per litre for any flavour

1048766 Sales Volume 40-50 litres per day

Supply Chain Placement Information

1048766 Milk 2025 kg packs are imported

1048766 Chocolates amp Flavours Imported

1048766 Butte paper Local sourcing

1048766 Transportation Ship

Promotional Materials

1048766 Materials used are near premises POS materials for promoting the parlour only

Table 25 Detail of Andersenrsquos of Denmark

Evaluation of Entry into Ice cream Business for Bangladesh Limited 40

Gelateria Igloo

Basic Company Information

1048766 Location Banani Kemal Ataturk Avenue (Two others in GEC Mor Chittagong and Naya

Paltan)

1048766 Established in 2000

1048766 Seating Capacity 20

1048766 Production From Igloo factory in Shyampur Narayanganj

Product Related Information

1048766 Product Parlour scoop ice cream and coffee only

1048766 Flavours Around 30 flavours available

1048766 Most selling Vanilla Strawberry Chocolate Pistachio Butter Scotch Tutti Fruity

1048766 Serve type Cup Cone Glasses Box for take away

Consumer Profile

1048766 Primary Teenagers and Young Adults (18-30)

1048766 Secondary Family consumers for eat out

1048766 Income Group High income customers tentatively from SEC A and B

1048766 Geographic Area Diversified

1048766 Rush Time afternoon and evening

Sales and Price Information

1048766 Sales BDT 8000 to 10000 daily in summer Nearly one fourth in winter

1048766 Price Varies but 350 per litre of vanilla

Promotional Materials

1048766 POS materials at the premises

Table 26 Detail of Gelateria Igloo

52 Price Comparison of Common and Boutique Segments

Price ranges of both common format and boutique segment cannot exactly be pin pointed as

products do not follow common structure and variations occur with use of toppings mixing of

flavours and use of coatings However a price comparison has been made among the brands

based on their price of per litre of vanilla flavoured ice cream in the market It appears to be as

following

Company

Price Litre Vanilla

Club Gelato

750

MoumlvenPick

640

Andersenrsquos

460

Dolce Vita

440

Igloo

100

Kwality

100

Polar

100

Milk-Vita

90

Savoy

85

Table 27 Comparative Price Analysis

As it can be seen there is price gap within the range of BDT 100-400 Ice cream kiosks and

small scooping boutiques can operate within that range

Evaluation of Entry into Ice cream Business for Bangladesh Limited 41

60 CONSUMER ANALYSIS

61 Target Group of Ice cream

Who are the consumers of ice cream This question does not have a clear answer Ice cream is a

food for all It is the only food consumed by a human being at less than 0 degree centigrade

temperature and people of all ages feel indulged to have it However we can determine focus

target groups for both branded common format and artisan boutique ice cream Group

discussions and market visits were done to get insight into the consumers along side resources

form secondary sources Age based target group is common for both segments but variation

among the groups occur mainly based on SEC and DMFI classification

611 Geographic Group

Branded ice cream remains an urban product till date Geographically branded ice cream has

reached urban and semi urban areas up to Thana Head Quarter levels Ice cream has reached

areas where electricity is available Small artisan players are available in places where large

branded players have no distribution

612 Target Age Group

Age wise grouping of target consumers is as follows

1048766 Urban kids in the age group of 5-14

1048766 They mainly consume normal sticks cups cones innovative fillers and water ice creams

1048766 Urban youth in the age group of 15-24

1048766 They consume premium and extrusion sticks and cones

1048766 Urban mothers in the age group of 25-35

1048766 They determine the family purchases Even when the father purchases ice cream decision is

taken by them

Consumption pattern of various age groups are depicted in the following chart Ice cream

consumption pattern50203005 to 14 yrs15 to 24 yrs25 to 35 yrs

Figure 11 Target Group wise Consumption Pattern Evaluation of Entry into Ice cream Business

for Bangladesh Limited 42

613 Target SEC and DMFI Group

Common Format

SEC A and B is the target group for common format ice cream However with rapid increase in

price level over the years has made it a ldquohard to consumerdquo product for SEC B consumers who

belong to lower DMFI group

Boutique Format

Boutique formatrsquos higher margin and high price range makes it an exclusively SEC A ice cream

People belonging to upper and upper middle class have access to the mediocre boutiques and

only higher upper class can have premium ice creams like Club Gelato and MoumlvenPick

Another unique target group for boutique format are the foreigners who live in Bangladesh

These people tend to visit the parlours to have ice cream as dessert especially after dinner

62 Ice cream in Consumer Lifestyle

Figure 12 Ice cream in Consumer Life style

This simple overview of ice cream in consumer lifestyle was determined based on in-depth

research analysis of UBL and validated through qualitative group discussions by the author

However detail of in-depth research is provided in a later section of this chapter

Evaluation of Entry into Ice cream Business for Bangladesh Limited 43

63 Highlights of Purchase Habit of Ice cream

631 Common Habits across Target Groups

There are some common habits that were identified in earlier researches and group discussions

with consumers Common habits mean the consumer approach towards ice cream that is seen

across all target groups eg kids youth and adult purchasers These are outlined below

1048766 Ice cream is mainly seen as a dessert or a snack Impulse ice cream is seen as a quick snack

that is consumed when it is in sight Visibility plays a big role here Regarding family packs

people see it as a post-food dessert

1048766 Ice cream purchase is commonly a planned event When the contexts arise people generally

take a bit of time to decide whether or not to have ice cream or when they want to go to a

boutique they make due considerations regarding which boutique to visit

1048766 Ice cream purchase decision is taken based on favourite flavour People tend to try out new

variants and flavours when they first see it They compare the taste with earlier experience and

when they purchase later they choose the flavour they have liked most

1048766 For In-Home segment decision is mostly taken on the flavour Generally people come up with

different flavours of choice and most voted flavour is chosen

1048766 People become aware of new variants or flavours mainly through word-of-mouth

Advertisement (new launches special offers and festivals) in newspaper is another source of

awareness

1048766 People are currently indifferent towards the price level of premium flavours However some

feel that price of Choc-bar or water ice creams (lolly) is a bit much If less they would have

consumed more Some also feel that companies should come up with branded ice cream in the

price range of BDT 5-8

1048766 Ice cream is purchased from nearby shops If required brand and flavour is not available 2-3

shops will be visited and then available flavour will be selected even if the required one is not

found This is done mainly not to ruin the mood for ice cream

1048766 People are very open to try new brands and flavours especially if it comes from a credible

source They would try new flavours and if they are satisfied with the taste they would repeat

purchase

1048766 Regarding boutique visits people feel that boutiques need to have a proper environment

enough flavours and other snacks

1048766 While visiting boutique with family or companion they want variation in flavours so that

they would order different flavours and taste each otherrsquos ice cream It is seen as a sign of

togetherness

1048766 Frequency of ice cream purchase varies among people It depends on peer pressure collective

family decision summer heat and attitude towards ldquoice creamrdquo itself as a product Evaluation of

Entry into Ice cream Business for Bangladesh Limited 44

632 Habits of Kids

1048766 Kids choose ice cream flavours by the look of the product (generally pictures shown in POS

materials and carts) They love colour and designs of the products let it be a common format or a

boutique ice cream

1048766 Kids (when in house) would go with the housemaid to the nearby shop choose the flavour

they want (within range of the amount given to the maid) and buy it

1048766 When with parents they would take the product they like even if the price is lower than some

other product However mothers play a role in this decision They would want their children not

to choose too high priced a product or coloured products

633 Habits of Youth

1048766 Young people are the main consumer of impulse ice cream They also are one of the major

consumers in the boutique segment

1048766 Young people love to try out new products that come into the market Another side of the coin

is that they are not very loyal to a brand or a flavour and tend to switch a lot

1048766 Regarding boutique visits young people go to boutiques to have an ldquoice cream hang outrdquo with

peer groups They would stay there for a longer period of time while they have their ice cream

1048766 Some times young people make milk shakes and other ice cream based desserts

634 Habits of Mothers

1048766 Mothers worry about their childrenrsquos health and they prefer ldquovanillardquo type of brands

However when price constraint occurs they go for water ice creams for their children They try

to convince their kidrsquos purchase decision

1048766 Regarding family purchase motherrsquos decision is sometimes prioritized by the whole family

64 Barriers to Ice cream Consumption

641 Emotional Barriers

1048766 Overindulge (close to sinful)

1048766 Undisciplined (no control)

1048766 Childish (licking)

1048766 Artificial Image

642 Functional Barriers

1048766 People of SEC B feel that ice cream is an expensive dessert (If less expensive would consume

more often)

1048766 It leads to cold cough - especially in winter rainy season

1048766 It contains artificial additives preservatives

1048766 It is very high in calories that lead to fattening

Evaluation of Entry into Ice cream Business for Bangladesh Limited 45

1048766 It does not quench ldquothirstrdquo

1048766 Less convenient (portable immediate eat)

1048766 Messy Dripping

65 Research Findings

The highlights regarding purchase habits triggers and barriers of ice cream consumption provide

a glimpse into the consumer world of ice cream industry However UBL CMI conducted a

formal research exclusively on ice cream consumers to identify

1048766 Occasions of ice cream

1048766 Frequency of ice cream consumption

1048766 Expectations from ice cream occasions

1048766 Personalities that they desire from ice cream

651 Relevant Occasions in Daily Lives of Consumers

Research question regarding ldquousual occasions of life that occurred most frequently in day-to-day

lives of the respondentsrdquo generated the following replies

Occasion

of Respondents saying Yes

Watching TV

93

Normal Dinner At Home

91

Normal Lunch At Home

89

At Home While ReadingMusicSurfing

86

Informal Family Get Together

85

Out Of Home Hanging Out With Friends

84

Out Shopping

84

Mid-Afternoon Break At Home

83

At Home By Myself During The Day

82

Special Dinner At Home

82

Informal Dinner Out Of Home

82

Normal Lunch Out Of Home

82

Leisure Walk

79

Coming Home From WorkSchool

78

Special Dinner Out Of Home

78

Celebration

78

A Night In With Friends

77

At Home By Myself In The Evening

77

Special Lunch Out Of Home

76

Mid-Afternoon Break Out Of Home

75

Special Lunch At Home

73

Day out with Partner

72

Midmorning Break

70

At Breakfast

68

Family Day Out

68

During Work Or At School

65

Evaluation of Entry into Ice cream Business for Bangladesh Limited 46

Travelling ToFrom WorkSchool

65

At The Cinema

61

Special Event

56

Clubbing At A Party

50

Post GymSports

48

Table 28 Relevant Occasions in Consumersrsquo Lives

Respondents were then asked to mention ldquofrequency of occurrence of the identified occasionsrdquo

The identified replies are as follows Normal dinner at homenormal lunch at homeComing home

from workschoolTraveling tofrom workschoolDay out with Partner SpouseMid-afternoon

break at homeOut of home hanging out with friendsLeisure walkMid-afternoon break out of

homeA night in with friendsSpecial dinner at homeSpecial lunch out of homeFamily day

outSpecial eventPost gymsportsDaily2-3 Times A WeekWeekly2-3 Times A MonthOnce A

MonthEvery 2-3 MonthsLess OftenNever Figure 13 Frequency of Occurrence of Occasions

This shows that ldquoNormal dinner at home Watching TV Normal Lunch At Home At Home

While ReadingMusicSurfing Coming Home From WorkSchool During Work Or At School

Travelling ToFrom WorkSchool Midmorning Break Day Out With Partner Spouse At Home

By Myself During The Dayrdquo are the most frequent daily rituals of busy lives of consumers

652 Frequency of Ice cream Consumption

Respondents were asked to mention ldquoconsumption pattern of ice cream during the identified

occasionrdquo on a scale of 1-5 depicting frequencies like ldquo(5) always (4) most of the times (3)

about half of the times (2) sometimes (1) never do not knowrdquo The responses are depicted in

the following table

Evaluation of Entry into Ice cream Business for Bangladesh Limited 47

444474544655555566756665775967779991011101111101210111110101113111412131314161

011121411131216181519181518211817171719181718201721222130303434253437403741394

046383944464746453745414641374638504843414839373030292726232725222020201926202

21722221317Midmorning

breakWhile clubbing at aAt the cinemaSpecial eventNormal lunch out ofA night in with

friendsNormal dinner atInformal dinner out ofAt home by myselfAt home by myself inOut

shoppingSpecial lunch atDay out with SpouseWatching TVAlwaysmost of the timesAbout half

of the timesSometimesneverdo not know

Figure 14 Frequency of Ice cream Consumption

As it can be seen ldquoDay out with Spouse Special lunch at home Special dinner at home

Watching TV Family day out Celebrationrdquo are the occasions where most frequently ice cream is

consumed

653 Market Character Mapping Relevant Occasions vs Frequency of Consumption

If we plot frequency of consumption on the X-axis of a chart and relevance of occasion

occurrence on the Y-axis taking the above mentioned values as cut-off values we get four

quadrants in the chart depicting four market scenarios that any ice cream manufacturer in

Bangladesh market might encounter given the current market situation This market

segmentation is based on frequency of ice cream consumption in daily occasions of consumer

lives

The segments are

1048766 OPPORTUNITY MARKET High Relevant Occasions-Low Ice cream Frequency

1048766 QUESTION MARKET Less Relevant Occasions-Low Ice cream Frequency

1048766 HIGH FREQUENCY MARKET Relevant Occasions-High Ice cream Frequency

1048766 CAPTIVE MARKET Less Relevant Occasions-High Ice cream Frequency

The chart looks as follows Evaluation of Entry into Ice cream Business for Bangladesh Limited

48

Figure 15 Relevance of Occasion-Frequency of Consumption Mapping

As it can be seen from the above chart Bangladesh Market still lies in the Opportunity and

Question market zone with a pull towards High frequency and Captive Market zones This is

evident from market data as penetration of ice cream still remains at Thana headquarters levels

Also this explains the high market growth rate of 17 as market is yet under developed and

branded quality ice cream has yet not reached all levels of consumers especially rural level that

constitutes around 75 of Bangladeshi market

From the above analysis we can establish that target of ice cream manufacturers should be to

penetrate more into the Bangladeshi market to create higher frequency of ice cream

consumption The following chart shows the strategies to follow for ice cream manufacturers

Figure 16 Required Market Strategy for Bangladesh

Evaluation of Entry into Ice cream Business for Bangladesh Limited 49

As relevance of ice cream consumption occasions can hardly be controlled by marketers their

endeavour should be to create more ldquoemotional and functionalrdquo attachment to ice cream in less

frequent occasions through ldquomarket developmentrdquo strategy to earn share from overall food

expenditure of consumers and at the same time make them consume more ice cream in highly

relevant occasions through ldquopenetrationrdquo strategy

654 Consumersrsquo Emotional Requirements and Product Attributes

All consumers under these clusters also identify the emotional requirements and the significant

product attributes they seek from their current preferred and future desired ice creams These are

provided below

Cluster

Emotional Functional Requirement

Product Attributes

Enjoyment

Flavour Variety

1048766 Combination of different flavours

1048766 Combination of different textures

1048766 Very sweet

1048766 With wafer or biscuit

1048766 With chocolate

1048766 Of a well known brand

Socially Involved

Spoonable Rich

1048766 Very creamy

1048766 Only natural ingredients

1048766 No mess

Care

Size Creaminess

1048766 Big

1048766 Rich full taste

1048766 Smooth

1048766 Value for money

1048766 No mess

Unwind amp Escape

Economy

1048766 Crunchy

1048766 Economic

1048766 Of a well known brand

1048766 Nutritious

Balanced Convenience

Health Conscious

1048766 Of a well known brand

1048766 Nutritious

1048766 Milk based

1048766 Low sugar

1048766 Low carbohydrates

1048766 Filling

Active Self-Grooming

Fruit Vitamins

1048766 Healthy

1048766 Fruit based

1048766 Low fat

1048766 Liquid or drinkable

1048766 Nutritious

1048766 Of a well known brand

Confidence

Drinkable Light

1048766 Low calories

1048766 Light on the stomach

1048766 Chewy or gooey

1048766 Not so sweet

1048766 Natural appearance

Sensual

Appeal or image

1048766 No artificial additives

Evaluation of Entry into Ice cream Business for Bangladesh Limited 50

1048766 Natural appearance

1048766 Melting slowly

1048766 Attractive packaging

1048766 High quality ingredients

1048766 Of a well known brand

Table 29 Requirements amp Product Attributes Desired by Consumer Clusters

Of these findings we see that the identified highlighted barriers to ice cream consumption are

pretty evident among the consumers Mostly people want products of a reliable source or a well

known brand low calories quality ingredients value for money economic type

Evaluation of Entry into Ice cream Business for Bangladesh Limited 51

70 INDUSTRY ATTRACTIVENESS AND ENTRY PROSPECTS

71 Driving Forces of Growth

As identified in the earlier sections there are several driving forces behind the growth of ice-

cream industry in Bangladesh

712 Trade and Infrastructural Level

1048766 As a result of globalization newer varieties have been introduced to the local products Many

foreign companies are also coming as franchise so there has been increased competition and

these boutiques are setting higher standards for the local producers

1048766 The present market growth rate is 18-19 which is being influenced by larger players like

Igloo who are expanding their distribution nation wide with expansion of national electricity

grid

1048766 With entry of Modern Trade and recent organized business approach of retailers has made it

possible for ice cream manufacturers to penetrate into shops even without providing them with

branded freezers

1048766 Weather change has increased ldquosummerrdquo season in our country which has reduced negative

seasonal impact on ice cream

1048766 Large companies like Igloo have taken global learning of using carts as an effective tool of

availability and visibility for ice cream

1048766 New and improved technologies are being used in the production process This technological

advancement has improved quality increased speed of production and made the process more

cost effective

713 Consumer Level

1048766 Only a few years back rich people could afford the luxury of having ice-cream but now it has

become a common product for everybody Ice-cream companies are producing different products

with a wide price range for consumers of every class and status

1048766 Nowadays companies are doing promotional campaigns more frequently the customers get to

know about the product which makes it easier for them to buy the best one

1048766 The improved standard of life and more modernized lifestyle of people is an important reason

for the increased consumption thus growth of the ice-cream industry

Evaluation of Entry into Ice cream Business for Bangladesh Limited 52

72 Prospects of Entry

The ice-cream industry of Bangladesh is an attractive one for the investors because there is a

huge market but number of producers is very small The major reasons behind industry

attractiveness are as follows

1048766 The industryrsquos current growth potential is very high with opportunity for market development

1048766 The competition currently permits adequate profitability and the competitive forces are

becoming stronger with time

1048766 Boutique segment is at a very high growth stage but no operator is currently operating with a

mid price range of BDT 100-400 Ice cream kiosks and small scooping boutiques can operate

within that range

1048766 Current industry driving forces are favourable for the future industry profitability

1048766 Globally oriented consumers look for variety in ice cream that is currently not available

Latest innovations came in the market in 2002 People would welcome new variety and flavours

1048766 There is a gap in the market for balanced convenience through ice cream where consumers can

get nutritional benefits for ice cream Also emotional attachment to ice cream could further be

improvised in promotional campaigns

1048766 There is high scope for market penetration and development to increase frequency of ice

cream consumption

1048766 Level of risk or uncertainty is very low in ice-cream industry because the consumer market is

so huge any product with a standard quality and careful pricing will be able to make significant

profit

1048766 As for geographic reach of the industry 60 market is still in Dhaka There is scope of

expansion and a new entrant can easily capture market share within Dhaka using carts even if

they do not want nation wide cold chain distribution

1048766 The production process is very complex and capital requirements are also high So before

going into production any company should know about their capabilities and weaknesses and

then start the business or else they might suffer huge loss at a certain level

1048766 Unilever can acquire the required resource and use existing multi-national multi-cultural

expertise to enter the market in a grand way

1048766 With high probability of entry from DANONE with more products like the ISIS diabetic ice

cream Unilever should consider entering in this industry as soon as possible

Evaluation of Entry into Ice cream Business for Bangladesh Limited 53

80 ENTRY STRATEGY FOR UNILEVER

While describing the suggested entry strategy for UBL certain issues have been kept

confidential and some issues have been touched but not explained to keep consistency with UBL

confidentiality policy

81 Suggested Entry Areas for UBL

1048766 Boutique segment of the Bangladesh ice cream is only 5 of the branded market UBL needs

to pursue a larger scope to make the entry viable

1048766 UBL cannot fight with unbranded segment as global product quality mandate of Unilever does

not allow UBL to fight in low price-low quality segment

1048766 Recommend entry should be in the common format segment with both single and multiple

servings and in the boutique segment with a different brand name (if possible BEN amp JERRYrsquoS)

1048766 UBL should build up state-of-art modern factory for manufacturing and establish cold chain

facilities initially focusing on metro cities

1048766 Investment issues are required to be addressed for building factory and cold chain and capital

requirement needs to be identified for that purpose4

1048766 UBL may have boutiques for driving image selective top-end offering

1048766 Kiosks can be setup near universities and shopping malls

1048766 Boutiques should be concentrated in Dhaka and Chittagong

1048766 Ice cream for boutiques and kiosks would be produced in factory as institutional packs of 9-10

litres

82 Products

1048766 As a Brand Building country in global Unilever operating framework UBL is entitled only to

bring products developed by the Brand Development countries

1048766 Unilever should focus on serving products that have nutritional benefits (already available

globally) along with usual satisfactions of sensual pleasure functional attributes etc

1048766 Current existent players especially Igloo and Kwality have extensively copied global and

regionally available Unilever products eg Cornelli is same as Wallrsquos Cornetto Vinetta is similar

to Vienetta Mega is similar to Magnum etc UBL needs to differentiate these to consumers on

the ldquotaste the originalrdquo platform where global quality is focused regarding the products

1048766 UBL should also bring regionally famous brands like Moo or Max to create image

differentiation

1048766 Magnum or Moo should be used as premium end ice cream to generate more profit margin

Evaluation of Entry into Ice cream Business for Bangladesh Limited 54

83 Placement

1048766 Distribution focus should be in Dhaka for entry as Dhaka contributes more than 60 of total

ice cream sales in the country

1048766 Company may use carts as distribution method They serve as good source of visibility and

availability It would help in increasing impulse purchase

1048766 At least 1500 outlets in Dhaka and Chittagong needs to be actively served using dedicated

branded refrigerators to generate sales

1048766 50 carts should operate in Dhaka and Chittagong

84 Price

1048766 UBL products should be priced at par with Igloo pricing for the common format ice creams

1048766 UBL can bring in premium single-serve SKUS for the higher economic classes in the price

range of BDT 60-80

1048766 Smaller SKUs (small lolly stick) can be introduced in the price range of BDT 10-15

1048766 In the boutique segment UBL should price products above the semi-premium segment

(Gelateria Igloo Sub Zero or Andersenrsquos) but lower than that of Club Gelato or MoumlvenPick

85 Promotion

1048766 UBL would require strong marketing campaign (As high as 50 of sales) to have a grand

entry in the market

1048766 Presence in the television media would be of utmost importance More than 50 of

promotional expense should be made here initially Gradually it can be reduced

1048766 Newspaper would serve as the second most important option

1048766 Billboards should also be used

1048766 Activations (similar to Lux Channel i Super Star or Igloo Festival) should be done to generate

trial

86 Scope of Opportunity

Table 30 Value and Volume Based Scope of Opportunity for UBL

Value (BDT Cr)

Volume (Tons)

Market

131

7835

Common

121

7600

Boutique

98

235

Evaluation of Entry into Ice cream Business for Bangladesh Limited 55

861 Geographic Contribution

1048766 Dhaka (61)

1048766 Chittagong (19)

1048766 Sylhet (10)

862 UBL objectives

Common Format Ice Creams

1048766 Target 10 Market share in 1st year operation

1048766 Value BDT 11 Cr

1048766 Production capacity required 21 Tons day

1048766 Freezer Placement 1500 freezers

1048766 Cart operation At least 50 carts

Boutiques

1048766 Target Further develop the market

1048766 Focus Dhaka Chittagong and Sylhet Metro

1048766 Franchise At least 20 franchisee operations nation wide in divisional towns

1048766 Pricing Below imported parlours above common formats with around BDT 400 per Litre

87 Critical Success Factors

1048766 UBL is considered as a high profile company in Bangladesh and thus they cannot operate in

the market only with common products like choc-bars and cups They must have premium

products (these require extrusion line) also to carry their brand image Otherwise UBL would not

be able to charge usual premium over competition products

1048766 Launch of ice cream would require huge promotional and activation support in order to gain

customers from Igloo People want novelty regarding ice cream and UBL have to let them know

about their products and create hype

1048766 Cart should be used as a source of distribution Recent successes of Unilever companies like

Indonesia shows that carts can generate more sales and can be used as source of visibility in the

minds of both retail traders and consumers Carts can also provide incremental sales to the

company

1048766 UBL have to create a strong cold chain for ice cream (initially in Dhaka and Chittagong) to

ensure quality products for consumers

1048766 UBL have to build capacity very rapidly to meet consumer demand if the launch is successful

Evaluation of Entry into Ice cream Business for Bangladesh Limited 56

90 BUSINESS PROJECTION

91 Basic Assumptions

Business projection for ice cream business was made based on a conservative approach UBL

would require spending significantly on production capacity and factory dedicated to ice cream

Thus to analyse business possibilities of ice cream certain assumptions were made and collected

data were used These are

1048766 Production equipments and cabinets would cost approximately BDT 55 crores

1048766 Production equipments 45

1048766 Packaging Equipments 15

1048766 Storage Facility 20

1048766 Branded Freezers 10

1048766 Distribution Investment 10 (Distributors would also invest themselves)

1048766 Ice cream factory with a floor size of 20000 sqft would cost BDT 25 crores

1048766 Objective is to capture 10 market share in Dhaka and Chittagong in the first year

1048766 Business would grow by 50 in year 2 and 3 30 in year 4 and 25 in year 5

1048766 Weighted price per litre is BDT 170 according to volume share of single serve ice cream

multiple serve ice cream and boutique ice cream

1048766 Other financial assumptions were also made List of them are provided below but amount has

been removed for confidentiality issues

Assumptions

Trade Margin

Distributors Margin

DutyVAT Rate

Trade Terms Expense of NPS

Trade Terms Expense of NSV

Advertising ampPromotion of NPS

Indirects (Salaries Wages etc)

Trading Tax

Table 31 Assumptions for Business Projection

Evaluation of Entry into Ice cream Business for Bangladesh Limited 57

100 CONCLUSION

Ice cream has good prospect in Bangladesh It is still a growing market with opportunities for big

new entrants With the barriers of entry UBL needs to consider its priorities UBL being an HPC

company traditionally needs to acquire expertise in cold chain distribution and has to invest a lot

of money to rip the benefits of the industry However to initiate company can take regional

support and acquire resource expertise The company should enter the business as soon as

possible since there is potential threat from DANONE to introduce more ice creams after ISIS

diabetic ice cream and also with potential of the industry arch rival Nestlersquo might consider

entering into the industry too

Evaluation of Entry into Ice cream Business for Bangladesh Limited 58

References

Web References

1 wwwunilevercom

2 wwwunilevercombd

3 wwwhllcom

4 wwwunilevercompk

5 wwwthedailystarcom - Life Style Magazine

6 wwwreuterscouk

Evaluation of Entry into Ice cream Business for Bangladesh Limited 59

Page 13: Square Ice cream

provided below

611890690480590250DhakaChittagongKhulnaComillaBarisalOthers

Figure 7 Geographic Sales Orientation

Dhaka still is the largest contributor in the ice cream segment Nevertheless over the years this

trend is shifting Areas outside Dhaka are also growing making Dhakarsquos share lower by small

percentage As urban markets are the major contributors companies design their products

keeping in mind the tastes and styles of the urban consumers Compared to the other companies

Igloo is the most expensive in the common format segment so they target only city based

customers who have the purchasing power Although other companies such as Savoy are offering

low priced product even their main target is urban people due to nation wide electricity problem

F Seasonality of Sales

Ice cream industries in warmer part of the world are highly seasonal Same is true with

Bangladesh According to secondary data sources sales seasonality looks as follows

Period Name

Months

Contribution

Super-Peak

April May June

46

Peak

March July August

36

Off-Peak

February September October November

15

Super Off-Peak

December January

3

Table 12 Seasonality of Ice cream Sales

This data was validated through interviews with retailers during market visit According to them

more than 75 sales of ice cream came in the hot months Another insight that could be

identified was

Evaluation of Entry into Ice cream Business for Bangladesh Limited 23

various festivals and programmes provide scope for higher volume of ice cream sales According

to companies where only 10-15 sales occurs in the winter season same amount of sales occurs

during festivals like the two Eids and Nobobarsha

G Distribution Servicing System

Mainly common format ice-cream is distributed in two methods that are directly to retail shops

and through hawkers with ice cream carts trolleys

The various channels of retail shops other than cart that serve as distribution outlets for Ice cream

are

7 Urban General Stores (UGS)

8 Urban Neighbourhood Grocer (UNG)

9 Premium General Store (PGS) SMMT

10 Confectionary Bakery

11 Modern Trade (MT)

12 Fast Food shops (Recently some fast food shops keep branded ice cream cabinets)

Distribution details of all the companies are provided below However detail of Milk Vita is not

available as they are mainly milk producer and they have no dedicated ice cream cabinet for

retail stores and currently they are not distributing ice cream in Dhaka city

Company

Distribution Method

Frequency

No of Cabinets

No of Carts

Igloo

Distributor Cart

2 to 3 times a week

4000

100

Kwality

Distributor Cart

1 to 2 times a week

1050

20

Polar

Distributor Cart

1 to 2 times a week

800

50

Savoy

Company

1 to 2 times a fortnight

176

-

Milk-Vita

-

-

-

-

Table 13 Distribution Method of Market Players

Distribution Process Distribution process through both methods is described below

Retail Distribution The general distribution that is followed by companies is that distributor

sends large refrigerated trucks dedicated to specific territories These trucks are accompanied by

small refrigerated vans Main road side shops are served directly from the large truck and shops

that are inside small streets are served by the small vans

Order and delivery are done on the same day The strategy followed is that of replenishment If

the branded freezer of the company is empty they simply fill it up according to requirement of

different SKUs as the delivery people see fit However shopkeepers have to buy full cartons

(usually 24 pieces in a carton) of single serve ice cream they cannot buy in pieces

Evaluation of Entry into Ice cream Business for Bangladesh Limited 24

Among the retail shops there are about equal numbers of branded and unbranded freezers This

is a normal scene in Dhaka where all shopkeepers require freezer to keep other cold products

However basic distribution policy is that if a shop has branded cabinet of a company they

cannot keep competitor ice cream in that cabinet Thus penetration can be made possible in

shops where unbranded freezers are available

General branded freezer contract policy with Igloo and Polar is that traders have to pay BDT

5000 to take a freezer Maintenance of branded freezers is responsibility of the company but

electricity bill is paid by shopkeeper However Polar is not currently giving any new freezer

Kwality gave away their freezers for free however they ensured safety of their freezers by

checking background of the shopkeepers

Cart sellers Cart sellers collect required amount of ice cream from nearby distribution house or

company showroom (Igloo has one showroom in Panthapath) on a daily basis They also have to

buy cartons of products not pieces Kwality carts collect their ice cream from factory (Tejgaon)

or nearby distribution house Cart sellers contribute around BDT 3000 sales in a day and

generally sell at BDT 1-2 higher than set price of each product

The cart sellers generally keep at least a two-day stock so that they can meet sudden upsurge in

daily demand of ice cream or if they get the opportunity to sell at parties programs or any open

air event (Wedding at community centres or outside cultural programs at auditoriums) If cart

sellers need replenishment of stock they even take service more than once in a day either

revisiting showroom house or they call up company delivery people to serve them at their

location if there is opportunity for selling more ice cream

Policy regarding Damaged Ice cream All the ice cream producers have very good relationship

with the shopkeepers If the retailers have refrigeration problem company takes ice cream back

until the problem is fixed whether it is stored in branded freezer or not Also if any ice cream

gets damaged or there is bacterial formation company takes them back Usual return time varies

from 15-30 days For large sellers however they take less time

Payment Method for Ice cream Purchase All the companies give credit of around one month to

large volume contributing retail sellers and try to maintain good relationship with them This

trend is seen in all channels Also all the SMMTs and MTs are given credit of one month and

payment is made by cheque Other small shopkeepers have to purchase with cash However

according to shopkeepers Igloo is currently trying to cut down on credit sales as they believe

there is a consumer pull for their brand Companies like Polar and Kwality also give special

commission to large sellers Polar gives 5 commission on every bill

Evaluation of Entry into Ice cream Business for Bangladesh Limited 25

H Technology and Innovation

Technological advancement in the ice cream industry has been very rapid Starting with stick

mould and filler ice cream production the companies have come a long way Assessing the

consumer choice and demand the companies are introducing new products very often Improved

and new technology is used for faster production and better quality Igloo is trying to meet the

international standards and launching products such as Sundae Cornelli and Nuggets Other

companies are also introducing new flavours suitable for their target segments Igloo has both the

ISO and the HACCP certifications These were awarded in the year 2003 due to their relentless

pursuit of quality and innovation In September 1996 Igloo introduced the 3D Mould line and

straight line extrusion technology for the first time in the subcontinent Basically with Igloorsquos

pursuit all the modern technologies and quality innovations are available in the market

I Production Capacity

Current production capacity of the major players in the common format ice cream segment is

estimated to be as follows

Name

Capacity (Ltrs day)

Total Production (000 Ltrs)

Required Capacity (at 300 production days )

Estimated unutilized capacity (Ltrs day)

Igloo

22000

387433

12914

9086

Polar

6500

112513

3750

2750

Kwality

12100

204934

6831

5269

Savoy

1560

25985

866

694

Milk Vita

1330

26387

880

450

Table 14 Production Capacity of Current Market Players

From the table we can see that all the ice cream manufacturers are operating with unutilized

capacity However one point to be noted is that different ice cream SKUs require different

amount of item to be produced Exact machine production capacity at litre per day does not

represent the accurate scenario Nevertheless it can be safely assumed that all the manufacturers

have unused machine capacity at their premises Moreover the larger players like Polar and

Kwality have new technology available at their premises Kwality bought second hand machines

from Thailand but both Igloo and Polar bought theirrsquos from Italy and Denmark

J Products and Pricing

Products The products in the ice-cream market are differentiated A few firms dominate the

market but an endless variety of ice creams are offered to the consumers Igloo pioneers all

major innovations in the market The products that are available in the market can be classified

into single serving and multiple serving groups Which are then categorized based on functional

attributes designs These are

Single

Stick

Normal mould 3D mould extrusion

Evaluation of Entry into Ice cream Business for Bangladesh Limited 26

Cup and Sundae

Flat cup long cup

Cone

Normal cone (vanilla strawberry etc) premium cone (Ripple)

serving

Innovative Fillers

Snowball Animal shaped containers sandwich nuggets etc

Container

05 ltr 1 ltr and 2 ltr containers

Multiple serving

Family Pack

Assorted packs cakes shahi kulfi etc

Table 15 Ice cream Serve types

Among all the products available in the market most selling SKU for all the companies is Choc-

bar stick and highest selling flavour is Vanilla Following are the ranks of most selling SKUs and

flavours

SKU Name

Rank

Choc-bar (70 ml)

1

Vanilla Cup (100 ml)

2

Vanilla Box (05 and 1 Ltr)

3

Lemon Lolly (70 ml)

4

Normal Cone

5

Flavour

Rank

Vanilla

1

Chocolate

2

Strawberry

3

Ripple

4

Mango

5

Table 16 Rank of SKUs Table 17 Rank of Flavours

Choc-bar is one of the earliest vanilla based chocolate coated SKU that has dominated the

market strongly over the years Shopkeepers could not provide an exact percentage on SKU

based sales contribution Most of them ranked the SKUs and flavours according to sequence

shown in the above table Also according to newspapers and secondary sources Vanilla is the

most selling flavour with 60 sales contribution According to secondary sources percentage

sales contribution of various types of SKUs in the common format segment are as follows

Type of Ice cream

Value Share

Volume Share

Impulse dairy ice cream

514

443

Impulse water ice cream

112

138

Take-home dairy ice cream

374

419

Table 18 Volume Share of Different Serve Types

Impulse dairy ice cream provides more value share as price per litre is higher than take home

multiple serving ice creams Impulse water ice cream shows a similar trend as of take home ice

cream

Pricing Product pictures and price ranges of each category are provided below Evaluation of

Entry into Ice cream Business for Bangladesh Limited 27

Normal Premium Price Tk12 Tk20 Tk25 Cup amp Sundae Normal Cup Sundae Premium Cup

Price Tk20 Tk25 Cone Normal Premium PriceTk20 Tk25Innovative Fillers PriceLtr Tk100

Tk175 Container Normal Premium PriceLtrTk150 Tk 175 Tk 190 Family Packs Kulfi Mixed

Pack Cake Single ServingMultipleServingNormal Ice Fruit 3D Mould Premium Extrusion Price

Tk10 Tk15 Tk15 Tk20Stick Normal Cream

Figure 8 Serve Types and Pricing

As it can be seen from the above chart all impulse ice creams are priced within the range of

BDT 10 to 25 Other take home multiple servings are priced within the range of BDT 50 (05

Litres) to BDT 220 (2 Litres) Another noticeable factor in price is that there are both normal and

premium flavours in all types of ice creams

K Firms as Price Setters

The firms have capability to affect the market price to be low as profit margin is very high If

Igloo reduces the price of an item below the prevailing price level in order to increase its sales

its competitors will fear that their customers will go away from them to buy Igloo products To

retain their customers they will be forced to match the price cut of Igloo Historically this has

been proven to be true However due to price sensitivity companies cannot drastically increase

price even if they provide higher quality of product It was seen in 1997 when Igloo increased

price of 11 SKUs and faced drastic sales fall during that time It shows that the industry might

welcome overall industry price increase but not individual company price increase

L Promotion

The promotion scenario in the industry is not quite organized as of now Even proper data

regarding promotional expenditure is not available from research sources The reason being

there is not much consumer related activity seen in the market After Kwalityrsquos introduction in

the market in 1999 Igloo went on with massive Television promotion of their new products that

were available at that time

Evaluation of Entry into Ice cream Business for Bangladesh Limited 28

However in current times there is no TVC running from any company Companies promote their

launches mainly through billboards and newspaper promotions which is currently the most used

source of consumer promotion Some promotional activities that were done by the companies

over the years are listed below

Consumer Promotions

1 Larger players like Igloo and Kwality goes on with campaigns like ldquoGift on stickrdquo where

various prizesrsquo names are written on the sticks and consumers can get them

a Igloo ran a program on their launch of Macho variant where gift varied from cricket bat to

personal computer

b Igloo had a program in 2006 where gifts on sticks varied from Bangkok visit to sunglass

c Igloo ran one campaign in 2007 where gold bars were given on purchasing Choc-bar

d Kwality ran a similar program in 2008 where gifts varied from wrist watches to motorcycle

2 Some companies ran consumer TTS and gift programs where company products were given

free

a Igloo had a program in 2006 where Igloo butter was given free on purchasing Igloo ice cream

cake

b Kwality ran a program in 2008 where one SKU was given as gift with another SKU randomly

c ldquoCone Ice cream at your Homerdquo program was run by Igloo in 2002 where six cone biscuits

were given free with purchase of one litre ice cream

3 Media placement is another form of placement done by larger companies

a Igloo purchased ldquoGlimpse into World Cup Resultrdquo space in daily newspapers during World

Cup Football 2002

4 One interesting program is done by only Igloo in Bangladesh They did it in June 2006 The

program was ldquoIgloo Ice cream Festivalrdquo with main attractions of ldquoGet as much ice cream as you

want for BDT 200rdquo ldquoGet a Fantasy Kingdom Entry ticket with each Entry Couponrdquo ldquoLucky

Drawrdquo and ldquoCelebrity Addardquo

Trade Promotions

5 Trade promotions are mainly given to ldquoHighest retail purchasersrdquo and also based on time

bound trade schemes where various slabs of purchase amount are mentioned for different prizes

a Igloo takes their highest purchasers to visit countries like Singapore and Thailand

b Savoy has a purchase slab scheme where first prize is table fan

c Polar gives special sales commission to their highest purchasers (around 5)

Evaluation of Entry into Ice cream Business for Bangladesh Limited 29

M Players in the Common Format Segment

Branded common format ice cream segment is constituted of five players only Among them

Igloo is the largest player and Milk Vita is the smallest The following sections detail the basic

company detail of all the companies with special emphasis on Igloo the market leader

Igloo

The pioneering ice-cream company in Bangladesh started its operation in 1964 in Chittagong

under K Rahman amp Co Limited (KRC) with a small factory inside Coca Cola bottling factory of

KRC After the independence of Bangladesh in 1971 Igloo was taken over by the government of

Bangladesh Later in 1983 Abdul Monem Limited purchased the entire production setup of KRC

Limited including Coca-Cola bottling plant and Igloo ice-cream factory After taking full charge

of Igloo ice-cream by Abdul Monem Limited the manufacturing operations continued in

Chittagong till 1990 Although Dhaka fetched the maximum share of the total revenue the

distribution cost increased tremendously in the process of meeting the demand of Dhaka city To

cope with the distribution problem and handle Polar threat Abdul Monem Limited transferred

the factory to Dhaka changed the ice-cream packaging from the conventional paper to plastic

and expanded their market and distribution operation The new factory of Igloo was setup at

Shyampur Narayanganj and was nine kilometres away from the Motijheel office The company

apart from catering the capital city started to expand its operations in Comilla (1991) Khulna

(1992) and North Bengal (1993) These markets were served directly from Dhaka since the

storage facilities were not developed till then The company is now the market leader since 1997

with clear market share victory over others with sweeping 51 share It is to be noted that Igloo

is also a player in the boutique segment with three parlours (2 in Dhaka and 1 in Chittagong)

Product Range Igloo offers the widest choice of ice cream more than any other competitor in

the market Igloo is offering a total of fifty items including normal premium and novelty cup

stick and family pack items Igloo has thirty flavours more than anyone else in the industry and

is continuously launching new and innovative delicacies

Igloo ice-cream can be classified in six groups They are

Stick

Macho Choc-bar Mini Choc Clown Mega Shell n core Lolly

Cone

Cornelli 2 in one Cornelli classic

Cup

Shahi kulfi Vanilla Strawberry Mango Snow ball

Container

Vanilla Strawberry Mango Chocolate Coffee Diet Vanilla Tutti Frutti Ripple Pralin

Pistachio

Innovative

Nuggets Sandwich

Family

Ripple cake Party time Shahi Kulfi

Table 19 Products of Igloo

Single serve stick cups and cone items are easy to carry around and convenient to eat which

makes it most sold The core target segment of ice-cream is 6-24 years and this generation is

always on the Evaluation of Entry into Ice cream Business for Bangladesh Limited 30

move and thus prefers independent cone stick or cup items As Igloo initiated the concept of ice-

cream as a family product they offer some items to be enjoyed with the whole family

Quality and Innovation Igloo is committed to maintaining the highest quality standard through

its continuous RampD activities The major ingredients raw materials and packing materials are

procured from the best European sources Strict quality control is done at every stage of the

manufacturing process from procurement of material mixing material flow ice cream making

packaging storing (at main warehouse) distributing and market shelving by the Quality Control

Department Current supply chain for various materials of Igloo is as follows Australia (Milk

Powder) Denmark (Ingredients emulsifiers amp stabilizers) China amp UAE (Food grade sticks)

China Denmark Singapore amp Thailand (Food grade packing materials)

Figure 9 Igloo Supply Chain

Distribution Network Their distribution network is stretched all over the country with a long

fleet of refrigerated vans Firstly the ice cream products are stored at the central warehouse of

the factory and from there they are distributed through the haulage vehicle to the operational

centres located in Dhaka Chittagong Comilla Rajshahi Barisal Bogra Rangpur and Khulna

Strictest cold chain maintenance during the distribution and selling of the ice creams is ensured

Their distribution process is as follows Manufacture Stored at -24c Transported by Refrigerated

trucks at -Reaches amp Preserved in Eight regional stores Refrigerated vehicles (Distributors)Retail

outlets (Deep freezers)

Figure 10 Distribution Process of Igloo

Evaluation of Entry into Ice cream Business for Bangladesh Limited 31

Trolley Operation Igloo also operates through trolleys for extending its reach to consumers at

the furthest points The trolleys are operated near schools alleys streets parks etc and play

rhythmic music to attract the consumers These are very colourfully decorated with Igloo

umbrella and the puller wears specific uniforms Igloo was the first in introducing and operating

these trolleys in Bangladesh for any Fast Moving Consumer Goods (FMCG) Igloo has around

125 trolleys operating throughout the country Individual trolleys are provided with a regular

supply of igloo ice creams

Marketing The marketing commitment of Igloo is based on the relationship with its customers

and consumer by not only manufacturing the highest quality product but also delivering the

product by maintaining this quality To satisfy the ever-changing needs of the customer Igloo

has regularly launched new ice creams and introduced new flavours And this commitment has

positioned Igloo as the market-leading brand by gaining the consumers trust with the positioning

as ldquoA WORLD OF GREAT TASTErdquo

Facilities and Logistics at a glance As of 2009 following are the facilities and logistics enjoyed

by the company

Factory location

Dhaka

Production Lines

4

Packages

Stick Cup Family pack Others (Nuggets and sandwich)

Machine suppliers

1048766 Mark-Italy

1048766 Tetra Pak(Hoyer)-Denmark

1048766 Sabore Denmark

1048766 Hass- Austria

Machine models

1048766 Freemark 1100 Italy

1048766 FM 3000 FM 6000 Italy

1048766 SL600 Denmark

Cone baking

Hass- Austria

Chocolate making

Macentyre-UK

Coverage

Nationwide

Operational centre

10

Total market vehicles

30

Distribution channel

Directthrough appointed distributors

Outlet service

7500

Injected deep freezers

4000

Trolley operations

125

Warehouse no

8

Table 20 Igloo Facilities and Logistics

Kwality

Kwality is currently the second largest ice cream manufacturer of the country The mother

company for the Kwality brand is Sanowara Drinks amp Beverages Ltd a sister concern of

Sanowara Group The company is famous for powdered milk brands Red Cow and Diploma in

Bangladesh The drinks and beverage concern of Sanowara made an entry into the market in

1997 with ldquoYesrdquo brand drinking water and launched the ice cream brand in 1999 With heavy

communication and novelty products it Evaluation of Entry into Ice cream Business for

Bangladesh Limited 32

successfully removed Polar from the second place with a current market share of 27 The

company also operates in the boutique segment with two parlours in Dhaka and Chittagong

Kwality ice cream factory is situated in Chittagong with a floor space of 35000 sft and fully

automated machinery wrapping mix machinery equipments from Italy having capacity of

around 20000 litres of ice cream per shift The ice cream factory employs 140 people The

company is ISO 9001-2000 certified

Kwality was the first true competitor for Igloo products with some major innovation in product

design and communication but their quality is perceived to be lower in the minds of the

consumers and they do not have extrusion ice cream The product prices are also similar to that

of Igloo but they charge a bit lower than Igloo in premium multiple servings However during

market visits it was seen that shops that keep only Kwality or Igloo and Kwality both they can

sell Kwality too although the sales amount is lower than that of Igloo People who look for Igloo

shopkeepers give them that directly but if they get a chance and Kwality ice cream stock is high

they also push Kwality to dry the stock out This gives an indication that market is larger than

what the current players are capable of serving even in Dhaka

Kwality follows a similar distribution model like Igloo but distribution frequency is lower and

amount of cart sellers is limited to 25 and they operate only in Dhaka

Polar

Once a giant in the industry Dhaka Ice Cream Industries Ltd introduced the first hygienically

packed ice cream in Bangladesh in 1987 and the brand name Polar was thus born In the early

days the company started ice cream business with a wide range of products and a variety of

flavours in Dhaka city In 1988 the company started its distribution in the city of Chittagong

then Bogra and continued to cover more cities Presently Polar ice cream is available

throughout Bangladesh The company today trails in the market with 15 market share in the

common format segment Recently Polar has announced launch of ISIS diabetic ice cream with

support from DANONE to turn around in the market

The company has its head office as well as a modern large-scale industrial plant in Dhaka Polar

ice cream is made with Danish expertise using Danish equipment and technology The

production activities and quality control measures are supervised and managed by Danish

experts Polar offers a wide range of delicious flavours and tastes made by ingredients imported

from Europe

Dhaka Ice Cream at present has 3 cold stores in Dhaka Chittagong and Bogra in Bangladesh

From Dhaka cold store they distribute ice creams in Mymensingh Tangail Jamalpur Sherpur

Kishoreganj Netrakona Comilla Narsingdi Barisal Madaripur Agaeljhara Faridpur Magura

Chuadanga Jessore Satkhira Khulna Pirojpur and Sylhet through their distributors In case of

long distance delivery points the company uses auto cooling freezer van

Evaluation of Entry into Ice cream Business for Bangladesh Limited 33

In Dhaka city they distribute ice creams directly to retail stores in freezer vans Besides that

they have several distributors at different points of the city Distributors cover their individual

areas where company is not able to supply directly in their freezer vans Similar model is

followed by the company to distribute ice cream from their other cold storages through out the

country For storing and selling ice creams in retail stores the company like the other players

arranges a deep freezer with the Polar logo and canopy light box

In addition to this distribution the company also undertakes home delivery of ice creams for

special occasions

Savoy

Savoy Ice-cream brand is owned by Sena Kalyan Sangstha (SKS) Group of industries It started

its journey in March 1995 with a factory in Tejgaon Dhaka Yearly turnover is estimated at BDT

388 crores with a market share of roughly 35

The factory has been established with Sonali Bank finance at 6040 equity ratio The total

production capacity of the factory has been estimated at 2400 litres of Ice-cream per day Total

land area of the factory premise is 116 Bigha with 8000 sft area covered with a total project cost

of BDT 144 The factory employs 73 people

Product ranges of the company include all the basic designs and flavours of the industry

However the company has not been much of an innovator in the industry Their product quality

is substantially low than that of other players and they price their products at 10-15 lower than

the other competitors The company imports raw materials mainly from Europe The general raw

materials are Euro cream Skimmed Milk Powder Cocoa Powder and Flavour (Vanilla Mango

and Strawberry) Colour (Yellow Red Chocolate and Green) Ripple Sauce Cheney Fruit Palm

Kernel Oil Anhydrous Butter Oil (Ghee) and Sugar etc

Milk Vita

Milk Vita is one of the most famous brand names in Bangladesh for its liquid dairy milk Owned

by Bangladesh Milk Producersrsquo Co-operative Union Limited (BMPCUL) the company came in

the market with proper dairy milk ice cream in form of cups and choc-bar With a production

capacity of around 1600 litres per day the company is trailing in the market place with 3

market share

Although the Milk Vita Choc-bar was perceived to be extremely tasty by consumers they

probably could not do well due price competition Currently they do not even distribute ice

cream in Dhaka However their presence is seen in outskirts of Dhaka and other nearby towns

If the current market situation prevails Milk Vita would lose their remaining market share and

other companies would benefit especially Igloo However one of the advantages of Milk Vita

remains to be

Evaluation of Entry into Ice cream Business for Bangladesh Limited 34

their nation wide milk supply network They have skimmed milk powder production plant that

Igloo does not have Thus they can combat the seasonality of milk supply that Igloo with its

huge requirement of milk cannot

Strengths and Weaknesses of Competitors

Company

Strengths

Weaknesses

Igloo

1048766 Strong brand image

1048766 High product quality

1048766 Highest no of variety

1048766 Strong distribution network

1048766 Highest visibility

1048766 Strong promotion

1048766 High production capacity

1048766 Presence of extrusion ice cream

1048766 Items are generally a bit pricy

1048766 Igloo does not give free freezers like other companies

1048766 Reluctant in recent times regarding innovation

1048766 Local sourcing of liquid milk does not meet demand

1048766 Failure to use ERP technology slowing decision making

Kwality

1048766 Product variety

1048766 Strong promotion

1048766 Free freezer distributed

1048766 Presence in all price segments

1048766 High production capacity

1048766 Weak distribution

1048766 Lower exposure

1048766 low amount of carts in operation

Polar

1048766 Free freezer

1048766 Quality perceived to be high compared to Kwality

1048766 Discoloured freezers

1048766 Lower exposure

1048766 Low product variety

1048766 Unused capacity

Savoy

1048766 Price is lower

1048766 Discoloured freezers

1048766 Low product variety

1048766 Weak distribution

1048766 Small amount of freezers

1048766 Low production capacity

Milk Vita

1048766 Quality is good due to dairy cream

1048766 Brand leverage from Milk Vita milk

1048766 Low exposure

1048766 Low variety

Table 21 Strengths and Weaknesses of Competition

512 Market Characteristics of the Boutique Segment

With a small market of BDT 98 Cr and 567 share in the branded ice cream market the

boutique segment is currently an increasing segment in the ice cream industry Boutique

segmentrsquos history dates back to 1960s when Igloo launched boutiques in Dhaka to save

distribution cost and promote a culture of ldquoice cream eating outrdquo In later years boutiques lost

their glamour and retail common format segment picked up growth However with Dolce Vita in

the late lsquo80s craze for Italian Artisan ice cream was recreated in the market Although Dolce

Vita is failing in recent times emergence of MoumlvenPick and Club Gelato in 2000 has uplifted the

segment once again Current growth rate of the

Evaluation of Entry into Ice cream Business for Bangladesh Limited 35

segment can be estimated to be approx 20-22 (higher than the common format segment)

Following are the basic detail of all the major players in the segment with their estimated sales3

Players

Outlet

Sales (Cr Taka)

Share

Club Gelato

1

136

199

MoumlvenPick

1

119

174

Andersenrsquos

3

119

174

Gelateria Igloo

3

119

174

Sub Zero (Kwality)

2

051

75

Baskin Robbins

1

015

22

Dolce Vita

1

017

25

American Soft

1

009

12

Rainbow

1

009

12

Others (off site)

089

130

Total Market

682

Table 22 Players and Shares in Boutique Segment

A Detail of Operation

General operational procedure followed by all the operators is as follows

1048766 Operating method There is a variation in operational method among the large operators

1048766 Club Gelato uses kitchen at own premise where imported ingredients and local milk (daily

special service from Milk Vita) are used to make ice cream

1048766 MoumlvenPick directly imports ice cream from Switzerland

1048766 Andersenrsquos Gelateria Igloo and Sub Zero produce ice cream at their factory with a mix of

imported and local ingredients

1048766 Products Around 30-35 flavours of artisan dairy ice cream are served at the premises

1048766 Most sold flavours are Vanilla Ferrero Rocher Butterscotch Chocolate Caramel etc

1048766 Other Products Larger players also serve ice cream desserts (milk shakes ice cappuccino etc)

pastries and other desserts with normal coffee and tea facility at their premises

1048766 Boutiques fight ice cream seasonality with the other products sales during off-peak ice cream

seasons Usually ice cream and other products contribute at 6040 ratio in summer and during

winter and off-peak seasons the ratio reverses

1048766 Pricing Usually the prices of products in this segment are 3-4 times higher than that of the

common format segment

1048766 Prices do not vary with flavours Variation depends on serve style (Cone tub) and use of

toppings and other ingredients (Chocolate sauce nut fruits) etc

1048766 Usual margin charged is around 50-60 over production cost Similar margin is charged for

other products like coffee ice cappuccino etc

3 Yearly sales is estimated based on companyrsquos approximate daily sales collected during

interview

Evaluation of Entry into Ice cream Business for Bangladesh Limited 36

1048766 Target Group Most of the consumers belong to SEC A and higher SEC A with DMFI of at

least BDT 20000

1048766 Foreign delegates and resident foreigners also visit these boutiques

1048766 Main purposes of visits in the boutiques are

bull Youth hangout with friends and having ice cream and ice cream derivatives

bull Family Family night out or eat out at a restaurant and then having dessert

bull Foreigners Having dessert after dinner

1048766 Rush time at boutiques are Afternoon 2-4 pm and at night 9-11 pm

1048766 Offsite sales Most of the large operators also sell offsite They have small freezers for off-site

1048766 Club Gelato and MoumlvenPick serves ice cream at high society parties and programmes

1048766 MoumlvenPick also has kiosks in known hotels like Sheraton

1048766 Promotion No mass promotion is done by any of the companies Word of mouth is the most

important source of promotion Posters and banners outside the premise and occasional

newspaper advertisements are used to communicate special offers

1048766 Growth Drivers Market growth is driven by image innovation quality decoration of facility

environment and special offers

1048766 Club Gelato has the image of selling true Italian dairy ice cream with an excellent hangout

environment

1048766 MoumlvenPick imports ice cream directly from Switzerland and is perceived to be of high quality

1048766 Andersenrsquos operates with the image of ice cream from Denmark

1048766 Gelateria Igloo (from Igloo) and Sub Zero (from Kwality) could not establish the premium

artisan ice cream image

B Players in the Boutique Segment

There are very few players who have significant impact in the boutique segment Detailed

information of all the major boutique segment players is provided below

Evaluation of Entry into Ice cream Business for Bangladesh Limited 37

Club Gelato

Basic Company Information

1048766 Location Banani Road 11 (Planning for a second one in Dhanmondi)

1048766 Established in 2001

1048766 Seating Capacity 48

1048766 Area 1250 sft (including kitchen)

1048766 Owner Mr Jahangir Alam (Bangladesh)

1048766 Business Type Joint business partnership with Singapore

1048766 Staff 15 people (6 in the kitchen)

1048766 Production capacity 150 litres per day

Product Related Information

1048766 Product Italian style parlour scoop ice cream fruit juice coffee and pastries

1048766 Flavours Around 32 flavours available

1048766 Most selling Ferraro Rocher Vanilla Pistachio

1048766 Innovations New variants and ingredients are communicated by their Italian supplier and

Club Gelato decides what to take from them

1048766 Serve type Cup Cone Glasses Box for take away

Consumer Profile

1048766 Primary Teenagers and Young Adults (18-30) amp Diplomats

1048766 Secondary Family consumers for eat out

1048766 Income Group High income customers tentatively from SEC A and higher SEC A

1048766 Geographic Area Diversified

1048766 Rush time 8-10 pm

Sales and Price Information

1048766 Sales BDT 50000 (60 Ice cream 40 other desserts) daily in summer In winter however

other products sell more and thus they keep total sales at the same level

1048766 Price 750 per litre for any flavour

1048766 Sales Volume 50-60 litres per day

Supply Chain Placement Information

1048766 Milk Local sourcing from Milk Vita (4050 litres per day)

1048766 Chocolates amp Flavours Belgium France Germany

1048766 Transportation Mainly air (They can afford it due to high margin)

1048766 Contribution of various materials Flavours (30) Milk (20) other parts are water and air

Promotional Materials

1048766 Materials used are near premises POS materials for promoting the parlour only

Table 23 Detail of Club Gelato

Evaluation of Entry into Ice cream Business for Bangladesh Limited 38

MoumlvenPick of Switzerland

Basic Company Information

1048766 Location Gulshan

1048766 Established in 2000

1048766 Seating Capacity 55

1048766 Owner Mr Arif Mahmud

1048766 Business Type Franchise of International MoumlvenPick

1048766 Storage Capacity in Shop 150 litres

Product Related Information

1048766 Product Imported MoumlvenPick ice creams coffee chicken sandwich and Frappe

1048766 Flavours Around 30 to 35 flavours available

1048766 Most selling Swiss Chocolate caramel Vanilla Dream Espresso Strawberry

1048766 Innovations New variants are communicated by their franchiser and they decide on flavours

that they want

1048766 Serve type Cup Cone Glasses Box for take away

Consumer Profile

1048766 Primary Teenagers and Young Adults (18-30) (70) amp Diplomats

1048766 Secondary Family consumers for eat out

1048766 Income Group High income customers tentatively from SEC A

1048766 Geographic Area Concentrated in Gulshan and nearby areas

1048766 Rush time Afternoon- Young Adult 10 to 11 pm Foreigners

1048766 the company also serves at parties and has freezers in known hotels where their ice creams

are served

Sales and Price Information

1048766 Sales BDT 35-40000 daily in summer

1048766 Price 640 per litre for any flavour

1048766 Sales Volume 55-60 litres per day

Supply Chain Placement Information

1048766 Transportation Imported finished goods by ship

1048766 Ship travel time 19 days

1048766 Port clearance 10 days

1048766 Safety Cushion Extra 10 days

Promotional Materials

1048766 Materials used are near premises POS materials for promoting the parlour only

Table 24 Detail of MoumlvenPick of Switzerland

Evaluation of Entry into Ice cream Business for Bangladesh Limited 39

Andersenrsquos of Denmark

Basic Company Information

1048766 Location Gulshan (2 others in Uttara Dhanmondi)

1048766 Established in 2001

1048766 Seating Capacity 48

1048766 Owner United Group

1048766 Business Type Franchise of Australian company Andersenrsquos of Denmark

1048766 Production Tongi Factory of United Group

1048766 Production capacity 2000 litres per day in factory

1048766 Storage Capacity in Shop 150 litres

Product Related Information

1048766 Product Danish parlour scoop ice cream and coffee

1048766 Flavours Around 30 to 35 flavours available

1048766 Most selling Strawberry Butter Scotch Green

1048766 Innovations New variants and ingredients are communicated by their franchiser and they

decide on flavours that they want

1048766 Serve type Cup Cone Glasses Box for take away

Consumer Profile

1048766 Primary Teenagers and Young Adults (18-30) (70) amp Diplomats

1048766 Secondary Family consumers for eat out

1048766 Income Group High income customers tentatively from SEC A

1048766 Geographic Area Concentrated in Gulshan and nearby areas

1048766 Rush time 8 to 10 pm

Sales and Price Information

1048766 Sales BDT 10-12000 daily in summer

1048766 Price 460 per litre for any flavour

1048766 Sales Volume 40-50 litres per day

Supply Chain Placement Information

1048766 Milk 2025 kg packs are imported

1048766 Chocolates amp Flavours Imported

1048766 Butte paper Local sourcing

1048766 Transportation Ship

Promotional Materials

1048766 Materials used are near premises POS materials for promoting the parlour only

Table 25 Detail of Andersenrsquos of Denmark

Evaluation of Entry into Ice cream Business for Bangladesh Limited 40

Gelateria Igloo

Basic Company Information

1048766 Location Banani Kemal Ataturk Avenue (Two others in GEC Mor Chittagong and Naya

Paltan)

1048766 Established in 2000

1048766 Seating Capacity 20

1048766 Production From Igloo factory in Shyampur Narayanganj

Product Related Information

1048766 Product Parlour scoop ice cream and coffee only

1048766 Flavours Around 30 flavours available

1048766 Most selling Vanilla Strawberry Chocolate Pistachio Butter Scotch Tutti Fruity

1048766 Serve type Cup Cone Glasses Box for take away

Consumer Profile

1048766 Primary Teenagers and Young Adults (18-30)

1048766 Secondary Family consumers for eat out

1048766 Income Group High income customers tentatively from SEC A and B

1048766 Geographic Area Diversified

1048766 Rush Time afternoon and evening

Sales and Price Information

1048766 Sales BDT 8000 to 10000 daily in summer Nearly one fourth in winter

1048766 Price Varies but 350 per litre of vanilla

Promotional Materials

1048766 POS materials at the premises

Table 26 Detail of Gelateria Igloo

52 Price Comparison of Common and Boutique Segments

Price ranges of both common format and boutique segment cannot exactly be pin pointed as

products do not follow common structure and variations occur with use of toppings mixing of

flavours and use of coatings However a price comparison has been made among the brands

based on their price of per litre of vanilla flavoured ice cream in the market It appears to be as

following

Company

Price Litre Vanilla

Club Gelato

750

MoumlvenPick

640

Andersenrsquos

460

Dolce Vita

440

Igloo

100

Kwality

100

Polar

100

Milk-Vita

90

Savoy

85

Table 27 Comparative Price Analysis

As it can be seen there is price gap within the range of BDT 100-400 Ice cream kiosks and

small scooping boutiques can operate within that range

Evaluation of Entry into Ice cream Business for Bangladesh Limited 41

60 CONSUMER ANALYSIS

61 Target Group of Ice cream

Who are the consumers of ice cream This question does not have a clear answer Ice cream is a

food for all It is the only food consumed by a human being at less than 0 degree centigrade

temperature and people of all ages feel indulged to have it However we can determine focus

target groups for both branded common format and artisan boutique ice cream Group

discussions and market visits were done to get insight into the consumers along side resources

form secondary sources Age based target group is common for both segments but variation

among the groups occur mainly based on SEC and DMFI classification

611 Geographic Group

Branded ice cream remains an urban product till date Geographically branded ice cream has

reached urban and semi urban areas up to Thana Head Quarter levels Ice cream has reached

areas where electricity is available Small artisan players are available in places where large

branded players have no distribution

612 Target Age Group

Age wise grouping of target consumers is as follows

1048766 Urban kids in the age group of 5-14

1048766 They mainly consume normal sticks cups cones innovative fillers and water ice creams

1048766 Urban youth in the age group of 15-24

1048766 They consume premium and extrusion sticks and cones

1048766 Urban mothers in the age group of 25-35

1048766 They determine the family purchases Even when the father purchases ice cream decision is

taken by them

Consumption pattern of various age groups are depicted in the following chart Ice cream

consumption pattern50203005 to 14 yrs15 to 24 yrs25 to 35 yrs

Figure 11 Target Group wise Consumption Pattern Evaluation of Entry into Ice cream Business

for Bangladesh Limited 42

613 Target SEC and DMFI Group

Common Format

SEC A and B is the target group for common format ice cream However with rapid increase in

price level over the years has made it a ldquohard to consumerdquo product for SEC B consumers who

belong to lower DMFI group

Boutique Format

Boutique formatrsquos higher margin and high price range makes it an exclusively SEC A ice cream

People belonging to upper and upper middle class have access to the mediocre boutiques and

only higher upper class can have premium ice creams like Club Gelato and MoumlvenPick

Another unique target group for boutique format are the foreigners who live in Bangladesh

These people tend to visit the parlours to have ice cream as dessert especially after dinner

62 Ice cream in Consumer Lifestyle

Figure 12 Ice cream in Consumer Life style

This simple overview of ice cream in consumer lifestyle was determined based on in-depth

research analysis of UBL and validated through qualitative group discussions by the author

However detail of in-depth research is provided in a later section of this chapter

Evaluation of Entry into Ice cream Business for Bangladesh Limited 43

63 Highlights of Purchase Habit of Ice cream

631 Common Habits across Target Groups

There are some common habits that were identified in earlier researches and group discussions

with consumers Common habits mean the consumer approach towards ice cream that is seen

across all target groups eg kids youth and adult purchasers These are outlined below

1048766 Ice cream is mainly seen as a dessert or a snack Impulse ice cream is seen as a quick snack

that is consumed when it is in sight Visibility plays a big role here Regarding family packs

people see it as a post-food dessert

1048766 Ice cream purchase is commonly a planned event When the contexts arise people generally

take a bit of time to decide whether or not to have ice cream or when they want to go to a

boutique they make due considerations regarding which boutique to visit

1048766 Ice cream purchase decision is taken based on favourite flavour People tend to try out new

variants and flavours when they first see it They compare the taste with earlier experience and

when they purchase later they choose the flavour they have liked most

1048766 For In-Home segment decision is mostly taken on the flavour Generally people come up with

different flavours of choice and most voted flavour is chosen

1048766 People become aware of new variants or flavours mainly through word-of-mouth

Advertisement (new launches special offers and festivals) in newspaper is another source of

awareness

1048766 People are currently indifferent towards the price level of premium flavours However some

feel that price of Choc-bar or water ice creams (lolly) is a bit much If less they would have

consumed more Some also feel that companies should come up with branded ice cream in the

price range of BDT 5-8

1048766 Ice cream is purchased from nearby shops If required brand and flavour is not available 2-3

shops will be visited and then available flavour will be selected even if the required one is not

found This is done mainly not to ruin the mood for ice cream

1048766 People are very open to try new brands and flavours especially if it comes from a credible

source They would try new flavours and if they are satisfied with the taste they would repeat

purchase

1048766 Regarding boutique visits people feel that boutiques need to have a proper environment

enough flavours and other snacks

1048766 While visiting boutique with family or companion they want variation in flavours so that

they would order different flavours and taste each otherrsquos ice cream It is seen as a sign of

togetherness

1048766 Frequency of ice cream purchase varies among people It depends on peer pressure collective

family decision summer heat and attitude towards ldquoice creamrdquo itself as a product Evaluation of

Entry into Ice cream Business for Bangladesh Limited 44

632 Habits of Kids

1048766 Kids choose ice cream flavours by the look of the product (generally pictures shown in POS

materials and carts) They love colour and designs of the products let it be a common format or a

boutique ice cream

1048766 Kids (when in house) would go with the housemaid to the nearby shop choose the flavour

they want (within range of the amount given to the maid) and buy it

1048766 When with parents they would take the product they like even if the price is lower than some

other product However mothers play a role in this decision They would want their children not

to choose too high priced a product or coloured products

633 Habits of Youth

1048766 Young people are the main consumer of impulse ice cream They also are one of the major

consumers in the boutique segment

1048766 Young people love to try out new products that come into the market Another side of the coin

is that they are not very loyal to a brand or a flavour and tend to switch a lot

1048766 Regarding boutique visits young people go to boutiques to have an ldquoice cream hang outrdquo with

peer groups They would stay there for a longer period of time while they have their ice cream

1048766 Some times young people make milk shakes and other ice cream based desserts

634 Habits of Mothers

1048766 Mothers worry about their childrenrsquos health and they prefer ldquovanillardquo type of brands

However when price constraint occurs they go for water ice creams for their children They try

to convince their kidrsquos purchase decision

1048766 Regarding family purchase motherrsquos decision is sometimes prioritized by the whole family

64 Barriers to Ice cream Consumption

641 Emotional Barriers

1048766 Overindulge (close to sinful)

1048766 Undisciplined (no control)

1048766 Childish (licking)

1048766 Artificial Image

642 Functional Barriers

1048766 People of SEC B feel that ice cream is an expensive dessert (If less expensive would consume

more often)

1048766 It leads to cold cough - especially in winter rainy season

1048766 It contains artificial additives preservatives

1048766 It is very high in calories that lead to fattening

Evaluation of Entry into Ice cream Business for Bangladesh Limited 45

1048766 It does not quench ldquothirstrdquo

1048766 Less convenient (portable immediate eat)

1048766 Messy Dripping

65 Research Findings

The highlights regarding purchase habits triggers and barriers of ice cream consumption provide

a glimpse into the consumer world of ice cream industry However UBL CMI conducted a

formal research exclusively on ice cream consumers to identify

1048766 Occasions of ice cream

1048766 Frequency of ice cream consumption

1048766 Expectations from ice cream occasions

1048766 Personalities that they desire from ice cream

651 Relevant Occasions in Daily Lives of Consumers

Research question regarding ldquousual occasions of life that occurred most frequently in day-to-day

lives of the respondentsrdquo generated the following replies

Occasion

of Respondents saying Yes

Watching TV

93

Normal Dinner At Home

91

Normal Lunch At Home

89

At Home While ReadingMusicSurfing

86

Informal Family Get Together

85

Out Of Home Hanging Out With Friends

84

Out Shopping

84

Mid-Afternoon Break At Home

83

At Home By Myself During The Day

82

Special Dinner At Home

82

Informal Dinner Out Of Home

82

Normal Lunch Out Of Home

82

Leisure Walk

79

Coming Home From WorkSchool

78

Special Dinner Out Of Home

78

Celebration

78

A Night In With Friends

77

At Home By Myself In The Evening

77

Special Lunch Out Of Home

76

Mid-Afternoon Break Out Of Home

75

Special Lunch At Home

73

Day out with Partner

72

Midmorning Break

70

At Breakfast

68

Family Day Out

68

During Work Or At School

65

Evaluation of Entry into Ice cream Business for Bangladesh Limited 46

Travelling ToFrom WorkSchool

65

At The Cinema

61

Special Event

56

Clubbing At A Party

50

Post GymSports

48

Table 28 Relevant Occasions in Consumersrsquo Lives

Respondents were then asked to mention ldquofrequency of occurrence of the identified occasionsrdquo

The identified replies are as follows Normal dinner at homenormal lunch at homeComing home

from workschoolTraveling tofrom workschoolDay out with Partner SpouseMid-afternoon

break at homeOut of home hanging out with friendsLeisure walkMid-afternoon break out of

homeA night in with friendsSpecial dinner at homeSpecial lunch out of homeFamily day

outSpecial eventPost gymsportsDaily2-3 Times A WeekWeekly2-3 Times A MonthOnce A

MonthEvery 2-3 MonthsLess OftenNever Figure 13 Frequency of Occurrence of Occasions

This shows that ldquoNormal dinner at home Watching TV Normal Lunch At Home At Home

While ReadingMusicSurfing Coming Home From WorkSchool During Work Or At School

Travelling ToFrom WorkSchool Midmorning Break Day Out With Partner Spouse At Home

By Myself During The Dayrdquo are the most frequent daily rituals of busy lives of consumers

652 Frequency of Ice cream Consumption

Respondents were asked to mention ldquoconsumption pattern of ice cream during the identified

occasionrdquo on a scale of 1-5 depicting frequencies like ldquo(5) always (4) most of the times (3)

about half of the times (2) sometimes (1) never do not knowrdquo The responses are depicted in

the following table

Evaluation of Entry into Ice cream Business for Bangladesh Limited 47

444474544655555566756665775967779991011101111101210111110101113111412131314161

011121411131216181519181518211817171719181718201721222130303434253437403741394

046383944464746453745414641374638504843414839373030292726232725222020201926202

21722221317Midmorning

breakWhile clubbing at aAt the cinemaSpecial eventNormal lunch out ofA night in with

friendsNormal dinner atInformal dinner out ofAt home by myselfAt home by myself inOut

shoppingSpecial lunch atDay out with SpouseWatching TVAlwaysmost of the timesAbout half

of the timesSometimesneverdo not know

Figure 14 Frequency of Ice cream Consumption

As it can be seen ldquoDay out with Spouse Special lunch at home Special dinner at home

Watching TV Family day out Celebrationrdquo are the occasions where most frequently ice cream is

consumed

653 Market Character Mapping Relevant Occasions vs Frequency of Consumption

If we plot frequency of consumption on the X-axis of a chart and relevance of occasion

occurrence on the Y-axis taking the above mentioned values as cut-off values we get four

quadrants in the chart depicting four market scenarios that any ice cream manufacturer in

Bangladesh market might encounter given the current market situation This market

segmentation is based on frequency of ice cream consumption in daily occasions of consumer

lives

The segments are

1048766 OPPORTUNITY MARKET High Relevant Occasions-Low Ice cream Frequency

1048766 QUESTION MARKET Less Relevant Occasions-Low Ice cream Frequency

1048766 HIGH FREQUENCY MARKET Relevant Occasions-High Ice cream Frequency

1048766 CAPTIVE MARKET Less Relevant Occasions-High Ice cream Frequency

The chart looks as follows Evaluation of Entry into Ice cream Business for Bangladesh Limited

48

Figure 15 Relevance of Occasion-Frequency of Consumption Mapping

As it can be seen from the above chart Bangladesh Market still lies in the Opportunity and

Question market zone with a pull towards High frequency and Captive Market zones This is

evident from market data as penetration of ice cream still remains at Thana headquarters levels

Also this explains the high market growth rate of 17 as market is yet under developed and

branded quality ice cream has yet not reached all levels of consumers especially rural level that

constitutes around 75 of Bangladeshi market

From the above analysis we can establish that target of ice cream manufacturers should be to

penetrate more into the Bangladeshi market to create higher frequency of ice cream

consumption The following chart shows the strategies to follow for ice cream manufacturers

Figure 16 Required Market Strategy for Bangladesh

Evaluation of Entry into Ice cream Business for Bangladesh Limited 49

As relevance of ice cream consumption occasions can hardly be controlled by marketers their

endeavour should be to create more ldquoemotional and functionalrdquo attachment to ice cream in less

frequent occasions through ldquomarket developmentrdquo strategy to earn share from overall food

expenditure of consumers and at the same time make them consume more ice cream in highly

relevant occasions through ldquopenetrationrdquo strategy

654 Consumersrsquo Emotional Requirements and Product Attributes

All consumers under these clusters also identify the emotional requirements and the significant

product attributes they seek from their current preferred and future desired ice creams These are

provided below

Cluster

Emotional Functional Requirement

Product Attributes

Enjoyment

Flavour Variety

1048766 Combination of different flavours

1048766 Combination of different textures

1048766 Very sweet

1048766 With wafer or biscuit

1048766 With chocolate

1048766 Of a well known brand

Socially Involved

Spoonable Rich

1048766 Very creamy

1048766 Only natural ingredients

1048766 No mess

Care

Size Creaminess

1048766 Big

1048766 Rich full taste

1048766 Smooth

1048766 Value for money

1048766 No mess

Unwind amp Escape

Economy

1048766 Crunchy

1048766 Economic

1048766 Of a well known brand

1048766 Nutritious

Balanced Convenience

Health Conscious

1048766 Of a well known brand

1048766 Nutritious

1048766 Milk based

1048766 Low sugar

1048766 Low carbohydrates

1048766 Filling

Active Self-Grooming

Fruit Vitamins

1048766 Healthy

1048766 Fruit based

1048766 Low fat

1048766 Liquid or drinkable

1048766 Nutritious

1048766 Of a well known brand

Confidence

Drinkable Light

1048766 Low calories

1048766 Light on the stomach

1048766 Chewy or gooey

1048766 Not so sweet

1048766 Natural appearance

Sensual

Appeal or image

1048766 No artificial additives

Evaluation of Entry into Ice cream Business for Bangladesh Limited 50

1048766 Natural appearance

1048766 Melting slowly

1048766 Attractive packaging

1048766 High quality ingredients

1048766 Of a well known brand

Table 29 Requirements amp Product Attributes Desired by Consumer Clusters

Of these findings we see that the identified highlighted barriers to ice cream consumption are

pretty evident among the consumers Mostly people want products of a reliable source or a well

known brand low calories quality ingredients value for money economic type

Evaluation of Entry into Ice cream Business for Bangladesh Limited 51

70 INDUSTRY ATTRACTIVENESS AND ENTRY PROSPECTS

71 Driving Forces of Growth

As identified in the earlier sections there are several driving forces behind the growth of ice-

cream industry in Bangladesh

712 Trade and Infrastructural Level

1048766 As a result of globalization newer varieties have been introduced to the local products Many

foreign companies are also coming as franchise so there has been increased competition and

these boutiques are setting higher standards for the local producers

1048766 The present market growth rate is 18-19 which is being influenced by larger players like

Igloo who are expanding their distribution nation wide with expansion of national electricity

grid

1048766 With entry of Modern Trade and recent organized business approach of retailers has made it

possible for ice cream manufacturers to penetrate into shops even without providing them with

branded freezers

1048766 Weather change has increased ldquosummerrdquo season in our country which has reduced negative

seasonal impact on ice cream

1048766 Large companies like Igloo have taken global learning of using carts as an effective tool of

availability and visibility for ice cream

1048766 New and improved technologies are being used in the production process This technological

advancement has improved quality increased speed of production and made the process more

cost effective

713 Consumer Level

1048766 Only a few years back rich people could afford the luxury of having ice-cream but now it has

become a common product for everybody Ice-cream companies are producing different products

with a wide price range for consumers of every class and status

1048766 Nowadays companies are doing promotional campaigns more frequently the customers get to

know about the product which makes it easier for them to buy the best one

1048766 The improved standard of life and more modernized lifestyle of people is an important reason

for the increased consumption thus growth of the ice-cream industry

Evaluation of Entry into Ice cream Business for Bangladesh Limited 52

72 Prospects of Entry

The ice-cream industry of Bangladesh is an attractive one for the investors because there is a

huge market but number of producers is very small The major reasons behind industry

attractiveness are as follows

1048766 The industryrsquos current growth potential is very high with opportunity for market development

1048766 The competition currently permits adequate profitability and the competitive forces are

becoming stronger with time

1048766 Boutique segment is at a very high growth stage but no operator is currently operating with a

mid price range of BDT 100-400 Ice cream kiosks and small scooping boutiques can operate

within that range

1048766 Current industry driving forces are favourable for the future industry profitability

1048766 Globally oriented consumers look for variety in ice cream that is currently not available

Latest innovations came in the market in 2002 People would welcome new variety and flavours

1048766 There is a gap in the market for balanced convenience through ice cream where consumers can

get nutritional benefits for ice cream Also emotional attachment to ice cream could further be

improvised in promotional campaigns

1048766 There is high scope for market penetration and development to increase frequency of ice

cream consumption

1048766 Level of risk or uncertainty is very low in ice-cream industry because the consumer market is

so huge any product with a standard quality and careful pricing will be able to make significant

profit

1048766 As for geographic reach of the industry 60 market is still in Dhaka There is scope of

expansion and a new entrant can easily capture market share within Dhaka using carts even if

they do not want nation wide cold chain distribution

1048766 The production process is very complex and capital requirements are also high So before

going into production any company should know about their capabilities and weaknesses and

then start the business or else they might suffer huge loss at a certain level

1048766 Unilever can acquire the required resource and use existing multi-national multi-cultural

expertise to enter the market in a grand way

1048766 With high probability of entry from DANONE with more products like the ISIS diabetic ice

cream Unilever should consider entering in this industry as soon as possible

Evaluation of Entry into Ice cream Business for Bangladesh Limited 53

80 ENTRY STRATEGY FOR UNILEVER

While describing the suggested entry strategy for UBL certain issues have been kept

confidential and some issues have been touched but not explained to keep consistency with UBL

confidentiality policy

81 Suggested Entry Areas for UBL

1048766 Boutique segment of the Bangladesh ice cream is only 5 of the branded market UBL needs

to pursue a larger scope to make the entry viable

1048766 UBL cannot fight with unbranded segment as global product quality mandate of Unilever does

not allow UBL to fight in low price-low quality segment

1048766 Recommend entry should be in the common format segment with both single and multiple

servings and in the boutique segment with a different brand name (if possible BEN amp JERRYrsquoS)

1048766 UBL should build up state-of-art modern factory for manufacturing and establish cold chain

facilities initially focusing on metro cities

1048766 Investment issues are required to be addressed for building factory and cold chain and capital

requirement needs to be identified for that purpose4

1048766 UBL may have boutiques for driving image selective top-end offering

1048766 Kiosks can be setup near universities and shopping malls

1048766 Boutiques should be concentrated in Dhaka and Chittagong

1048766 Ice cream for boutiques and kiosks would be produced in factory as institutional packs of 9-10

litres

82 Products

1048766 As a Brand Building country in global Unilever operating framework UBL is entitled only to

bring products developed by the Brand Development countries

1048766 Unilever should focus on serving products that have nutritional benefits (already available

globally) along with usual satisfactions of sensual pleasure functional attributes etc

1048766 Current existent players especially Igloo and Kwality have extensively copied global and

regionally available Unilever products eg Cornelli is same as Wallrsquos Cornetto Vinetta is similar

to Vienetta Mega is similar to Magnum etc UBL needs to differentiate these to consumers on

the ldquotaste the originalrdquo platform where global quality is focused regarding the products

1048766 UBL should also bring regionally famous brands like Moo or Max to create image

differentiation

1048766 Magnum or Moo should be used as premium end ice cream to generate more profit margin

Evaluation of Entry into Ice cream Business for Bangladesh Limited 54

83 Placement

1048766 Distribution focus should be in Dhaka for entry as Dhaka contributes more than 60 of total

ice cream sales in the country

1048766 Company may use carts as distribution method They serve as good source of visibility and

availability It would help in increasing impulse purchase

1048766 At least 1500 outlets in Dhaka and Chittagong needs to be actively served using dedicated

branded refrigerators to generate sales

1048766 50 carts should operate in Dhaka and Chittagong

84 Price

1048766 UBL products should be priced at par with Igloo pricing for the common format ice creams

1048766 UBL can bring in premium single-serve SKUS for the higher economic classes in the price

range of BDT 60-80

1048766 Smaller SKUs (small lolly stick) can be introduced in the price range of BDT 10-15

1048766 In the boutique segment UBL should price products above the semi-premium segment

(Gelateria Igloo Sub Zero or Andersenrsquos) but lower than that of Club Gelato or MoumlvenPick

85 Promotion

1048766 UBL would require strong marketing campaign (As high as 50 of sales) to have a grand

entry in the market

1048766 Presence in the television media would be of utmost importance More than 50 of

promotional expense should be made here initially Gradually it can be reduced

1048766 Newspaper would serve as the second most important option

1048766 Billboards should also be used

1048766 Activations (similar to Lux Channel i Super Star or Igloo Festival) should be done to generate

trial

86 Scope of Opportunity

Table 30 Value and Volume Based Scope of Opportunity for UBL

Value (BDT Cr)

Volume (Tons)

Market

131

7835

Common

121

7600

Boutique

98

235

Evaluation of Entry into Ice cream Business for Bangladesh Limited 55

861 Geographic Contribution

1048766 Dhaka (61)

1048766 Chittagong (19)

1048766 Sylhet (10)

862 UBL objectives

Common Format Ice Creams

1048766 Target 10 Market share in 1st year operation

1048766 Value BDT 11 Cr

1048766 Production capacity required 21 Tons day

1048766 Freezer Placement 1500 freezers

1048766 Cart operation At least 50 carts

Boutiques

1048766 Target Further develop the market

1048766 Focus Dhaka Chittagong and Sylhet Metro

1048766 Franchise At least 20 franchisee operations nation wide in divisional towns

1048766 Pricing Below imported parlours above common formats with around BDT 400 per Litre

87 Critical Success Factors

1048766 UBL is considered as a high profile company in Bangladesh and thus they cannot operate in

the market only with common products like choc-bars and cups They must have premium

products (these require extrusion line) also to carry their brand image Otherwise UBL would not

be able to charge usual premium over competition products

1048766 Launch of ice cream would require huge promotional and activation support in order to gain

customers from Igloo People want novelty regarding ice cream and UBL have to let them know

about their products and create hype

1048766 Cart should be used as a source of distribution Recent successes of Unilever companies like

Indonesia shows that carts can generate more sales and can be used as source of visibility in the

minds of both retail traders and consumers Carts can also provide incremental sales to the

company

1048766 UBL have to create a strong cold chain for ice cream (initially in Dhaka and Chittagong) to

ensure quality products for consumers

1048766 UBL have to build capacity very rapidly to meet consumer demand if the launch is successful

Evaluation of Entry into Ice cream Business for Bangladesh Limited 56

90 BUSINESS PROJECTION

91 Basic Assumptions

Business projection for ice cream business was made based on a conservative approach UBL

would require spending significantly on production capacity and factory dedicated to ice cream

Thus to analyse business possibilities of ice cream certain assumptions were made and collected

data were used These are

1048766 Production equipments and cabinets would cost approximately BDT 55 crores

1048766 Production equipments 45

1048766 Packaging Equipments 15

1048766 Storage Facility 20

1048766 Branded Freezers 10

1048766 Distribution Investment 10 (Distributors would also invest themselves)

1048766 Ice cream factory with a floor size of 20000 sqft would cost BDT 25 crores

1048766 Objective is to capture 10 market share in Dhaka and Chittagong in the first year

1048766 Business would grow by 50 in year 2 and 3 30 in year 4 and 25 in year 5

1048766 Weighted price per litre is BDT 170 according to volume share of single serve ice cream

multiple serve ice cream and boutique ice cream

1048766 Other financial assumptions were also made List of them are provided below but amount has

been removed for confidentiality issues

Assumptions

Trade Margin

Distributors Margin

DutyVAT Rate

Trade Terms Expense of NPS

Trade Terms Expense of NSV

Advertising ampPromotion of NPS

Indirects (Salaries Wages etc)

Trading Tax

Table 31 Assumptions for Business Projection

Evaluation of Entry into Ice cream Business for Bangladesh Limited 57

100 CONCLUSION

Ice cream has good prospect in Bangladesh It is still a growing market with opportunities for big

new entrants With the barriers of entry UBL needs to consider its priorities UBL being an HPC

company traditionally needs to acquire expertise in cold chain distribution and has to invest a lot

of money to rip the benefits of the industry However to initiate company can take regional

support and acquire resource expertise The company should enter the business as soon as

possible since there is potential threat from DANONE to introduce more ice creams after ISIS

diabetic ice cream and also with potential of the industry arch rival Nestlersquo might consider

entering into the industry too

Evaluation of Entry into Ice cream Business for Bangladesh Limited 58

References

Web References

1 wwwunilevercom

2 wwwunilevercombd

3 wwwhllcom

4 wwwunilevercompk

5 wwwthedailystarcom - Life Style Magazine

6 wwwreuterscouk

Evaluation of Entry into Ice cream Business for Bangladesh Limited 59

Page 14: Square Ice cream

15

Super Off-Peak

December January

3

Table 12 Seasonality of Ice cream Sales

This data was validated through interviews with retailers during market visit According to them

more than 75 sales of ice cream came in the hot months Another insight that could be

identified was

Evaluation of Entry into Ice cream Business for Bangladesh Limited 23

various festivals and programmes provide scope for higher volume of ice cream sales According

to companies where only 10-15 sales occurs in the winter season same amount of sales occurs

during festivals like the two Eids and Nobobarsha

G Distribution Servicing System

Mainly common format ice-cream is distributed in two methods that are directly to retail shops

and through hawkers with ice cream carts trolleys

The various channels of retail shops other than cart that serve as distribution outlets for Ice cream

are

7 Urban General Stores (UGS)

8 Urban Neighbourhood Grocer (UNG)

9 Premium General Store (PGS) SMMT

10 Confectionary Bakery

11 Modern Trade (MT)

12 Fast Food shops (Recently some fast food shops keep branded ice cream cabinets)

Distribution details of all the companies are provided below However detail of Milk Vita is not

available as they are mainly milk producer and they have no dedicated ice cream cabinet for

retail stores and currently they are not distributing ice cream in Dhaka city

Company

Distribution Method

Frequency

No of Cabinets

No of Carts

Igloo

Distributor Cart

2 to 3 times a week

4000

100

Kwality

Distributor Cart

1 to 2 times a week

1050

20

Polar

Distributor Cart

1 to 2 times a week

800

50

Savoy

Company

1 to 2 times a fortnight

176

-

Milk-Vita

-

-

-

-

Table 13 Distribution Method of Market Players

Distribution Process Distribution process through both methods is described below

Retail Distribution The general distribution that is followed by companies is that distributor

sends large refrigerated trucks dedicated to specific territories These trucks are accompanied by

small refrigerated vans Main road side shops are served directly from the large truck and shops

that are inside small streets are served by the small vans

Order and delivery are done on the same day The strategy followed is that of replenishment If

the branded freezer of the company is empty they simply fill it up according to requirement of

different SKUs as the delivery people see fit However shopkeepers have to buy full cartons

(usually 24 pieces in a carton) of single serve ice cream they cannot buy in pieces

Evaluation of Entry into Ice cream Business for Bangladesh Limited 24

Among the retail shops there are about equal numbers of branded and unbranded freezers This

is a normal scene in Dhaka where all shopkeepers require freezer to keep other cold products

However basic distribution policy is that if a shop has branded cabinet of a company they

cannot keep competitor ice cream in that cabinet Thus penetration can be made possible in

shops where unbranded freezers are available

General branded freezer contract policy with Igloo and Polar is that traders have to pay BDT

5000 to take a freezer Maintenance of branded freezers is responsibility of the company but

electricity bill is paid by shopkeeper However Polar is not currently giving any new freezer

Kwality gave away their freezers for free however they ensured safety of their freezers by

checking background of the shopkeepers

Cart sellers Cart sellers collect required amount of ice cream from nearby distribution house or

company showroom (Igloo has one showroom in Panthapath) on a daily basis They also have to

buy cartons of products not pieces Kwality carts collect their ice cream from factory (Tejgaon)

or nearby distribution house Cart sellers contribute around BDT 3000 sales in a day and

generally sell at BDT 1-2 higher than set price of each product

The cart sellers generally keep at least a two-day stock so that they can meet sudden upsurge in

daily demand of ice cream or if they get the opportunity to sell at parties programs or any open

air event (Wedding at community centres or outside cultural programs at auditoriums) If cart

sellers need replenishment of stock they even take service more than once in a day either

revisiting showroom house or they call up company delivery people to serve them at their

location if there is opportunity for selling more ice cream

Policy regarding Damaged Ice cream All the ice cream producers have very good relationship

with the shopkeepers If the retailers have refrigeration problem company takes ice cream back

until the problem is fixed whether it is stored in branded freezer or not Also if any ice cream

gets damaged or there is bacterial formation company takes them back Usual return time varies

from 15-30 days For large sellers however they take less time

Payment Method for Ice cream Purchase All the companies give credit of around one month to

large volume contributing retail sellers and try to maintain good relationship with them This

trend is seen in all channels Also all the SMMTs and MTs are given credit of one month and

payment is made by cheque Other small shopkeepers have to purchase with cash However

according to shopkeepers Igloo is currently trying to cut down on credit sales as they believe

there is a consumer pull for their brand Companies like Polar and Kwality also give special

commission to large sellers Polar gives 5 commission on every bill

Evaluation of Entry into Ice cream Business for Bangladesh Limited 25

H Technology and Innovation

Technological advancement in the ice cream industry has been very rapid Starting with stick

mould and filler ice cream production the companies have come a long way Assessing the

consumer choice and demand the companies are introducing new products very often Improved

and new technology is used for faster production and better quality Igloo is trying to meet the

international standards and launching products such as Sundae Cornelli and Nuggets Other

companies are also introducing new flavours suitable for their target segments Igloo has both the

ISO and the HACCP certifications These were awarded in the year 2003 due to their relentless

pursuit of quality and innovation In September 1996 Igloo introduced the 3D Mould line and

straight line extrusion technology for the first time in the subcontinent Basically with Igloorsquos

pursuit all the modern technologies and quality innovations are available in the market

I Production Capacity

Current production capacity of the major players in the common format ice cream segment is

estimated to be as follows

Name

Capacity (Ltrs day)

Total Production (000 Ltrs)

Required Capacity (at 300 production days )

Estimated unutilized capacity (Ltrs day)

Igloo

22000

387433

12914

9086

Polar

6500

112513

3750

2750

Kwality

12100

204934

6831

5269

Savoy

1560

25985

866

694

Milk Vita

1330

26387

880

450

Table 14 Production Capacity of Current Market Players

From the table we can see that all the ice cream manufacturers are operating with unutilized

capacity However one point to be noted is that different ice cream SKUs require different

amount of item to be produced Exact machine production capacity at litre per day does not

represent the accurate scenario Nevertheless it can be safely assumed that all the manufacturers

have unused machine capacity at their premises Moreover the larger players like Polar and

Kwality have new technology available at their premises Kwality bought second hand machines

from Thailand but both Igloo and Polar bought theirrsquos from Italy and Denmark

J Products and Pricing

Products The products in the ice-cream market are differentiated A few firms dominate the

market but an endless variety of ice creams are offered to the consumers Igloo pioneers all

major innovations in the market The products that are available in the market can be classified

into single serving and multiple serving groups Which are then categorized based on functional

attributes designs These are

Single

Stick

Normal mould 3D mould extrusion

Evaluation of Entry into Ice cream Business for Bangladesh Limited 26

Cup and Sundae

Flat cup long cup

Cone

Normal cone (vanilla strawberry etc) premium cone (Ripple)

serving

Innovative Fillers

Snowball Animal shaped containers sandwich nuggets etc

Container

05 ltr 1 ltr and 2 ltr containers

Multiple serving

Family Pack

Assorted packs cakes shahi kulfi etc

Table 15 Ice cream Serve types

Among all the products available in the market most selling SKU for all the companies is Choc-

bar stick and highest selling flavour is Vanilla Following are the ranks of most selling SKUs and

flavours

SKU Name

Rank

Choc-bar (70 ml)

1

Vanilla Cup (100 ml)

2

Vanilla Box (05 and 1 Ltr)

3

Lemon Lolly (70 ml)

4

Normal Cone

5

Flavour

Rank

Vanilla

1

Chocolate

2

Strawberry

3

Ripple

4

Mango

5

Table 16 Rank of SKUs Table 17 Rank of Flavours

Choc-bar is one of the earliest vanilla based chocolate coated SKU that has dominated the

market strongly over the years Shopkeepers could not provide an exact percentage on SKU

based sales contribution Most of them ranked the SKUs and flavours according to sequence

shown in the above table Also according to newspapers and secondary sources Vanilla is the

most selling flavour with 60 sales contribution According to secondary sources percentage

sales contribution of various types of SKUs in the common format segment are as follows

Type of Ice cream

Value Share

Volume Share

Impulse dairy ice cream

514

443

Impulse water ice cream

112

138

Take-home dairy ice cream

374

419

Table 18 Volume Share of Different Serve Types

Impulse dairy ice cream provides more value share as price per litre is higher than take home

multiple serving ice creams Impulse water ice cream shows a similar trend as of take home ice

cream

Pricing Product pictures and price ranges of each category are provided below Evaluation of

Entry into Ice cream Business for Bangladesh Limited 27

Normal Premium Price Tk12 Tk20 Tk25 Cup amp Sundae Normal Cup Sundae Premium Cup

Price Tk20 Tk25 Cone Normal Premium PriceTk20 Tk25Innovative Fillers PriceLtr Tk100

Tk175 Container Normal Premium PriceLtrTk150 Tk 175 Tk 190 Family Packs Kulfi Mixed

Pack Cake Single ServingMultipleServingNormal Ice Fruit 3D Mould Premium Extrusion Price

Tk10 Tk15 Tk15 Tk20Stick Normal Cream

Figure 8 Serve Types and Pricing

As it can be seen from the above chart all impulse ice creams are priced within the range of

BDT 10 to 25 Other take home multiple servings are priced within the range of BDT 50 (05

Litres) to BDT 220 (2 Litres) Another noticeable factor in price is that there are both normal and

premium flavours in all types of ice creams

K Firms as Price Setters

The firms have capability to affect the market price to be low as profit margin is very high If

Igloo reduces the price of an item below the prevailing price level in order to increase its sales

its competitors will fear that their customers will go away from them to buy Igloo products To

retain their customers they will be forced to match the price cut of Igloo Historically this has

been proven to be true However due to price sensitivity companies cannot drastically increase

price even if they provide higher quality of product It was seen in 1997 when Igloo increased

price of 11 SKUs and faced drastic sales fall during that time It shows that the industry might

welcome overall industry price increase but not individual company price increase

L Promotion

The promotion scenario in the industry is not quite organized as of now Even proper data

regarding promotional expenditure is not available from research sources The reason being

there is not much consumer related activity seen in the market After Kwalityrsquos introduction in

the market in 1999 Igloo went on with massive Television promotion of their new products that

were available at that time

Evaluation of Entry into Ice cream Business for Bangladesh Limited 28

However in current times there is no TVC running from any company Companies promote their

launches mainly through billboards and newspaper promotions which is currently the most used

source of consumer promotion Some promotional activities that were done by the companies

over the years are listed below

Consumer Promotions

1 Larger players like Igloo and Kwality goes on with campaigns like ldquoGift on stickrdquo where

various prizesrsquo names are written on the sticks and consumers can get them

a Igloo ran a program on their launch of Macho variant where gift varied from cricket bat to

personal computer

b Igloo had a program in 2006 where gifts on sticks varied from Bangkok visit to sunglass

c Igloo ran one campaign in 2007 where gold bars were given on purchasing Choc-bar

d Kwality ran a similar program in 2008 where gifts varied from wrist watches to motorcycle

2 Some companies ran consumer TTS and gift programs where company products were given

free

a Igloo had a program in 2006 where Igloo butter was given free on purchasing Igloo ice cream

cake

b Kwality ran a program in 2008 where one SKU was given as gift with another SKU randomly

c ldquoCone Ice cream at your Homerdquo program was run by Igloo in 2002 where six cone biscuits

were given free with purchase of one litre ice cream

3 Media placement is another form of placement done by larger companies

a Igloo purchased ldquoGlimpse into World Cup Resultrdquo space in daily newspapers during World

Cup Football 2002

4 One interesting program is done by only Igloo in Bangladesh They did it in June 2006 The

program was ldquoIgloo Ice cream Festivalrdquo with main attractions of ldquoGet as much ice cream as you

want for BDT 200rdquo ldquoGet a Fantasy Kingdom Entry ticket with each Entry Couponrdquo ldquoLucky

Drawrdquo and ldquoCelebrity Addardquo

Trade Promotions

5 Trade promotions are mainly given to ldquoHighest retail purchasersrdquo and also based on time

bound trade schemes where various slabs of purchase amount are mentioned for different prizes

a Igloo takes their highest purchasers to visit countries like Singapore and Thailand

b Savoy has a purchase slab scheme where first prize is table fan

c Polar gives special sales commission to their highest purchasers (around 5)

Evaluation of Entry into Ice cream Business for Bangladesh Limited 29

M Players in the Common Format Segment

Branded common format ice cream segment is constituted of five players only Among them

Igloo is the largest player and Milk Vita is the smallest The following sections detail the basic

company detail of all the companies with special emphasis on Igloo the market leader

Igloo

The pioneering ice-cream company in Bangladesh started its operation in 1964 in Chittagong

under K Rahman amp Co Limited (KRC) with a small factory inside Coca Cola bottling factory of

KRC After the independence of Bangladesh in 1971 Igloo was taken over by the government of

Bangladesh Later in 1983 Abdul Monem Limited purchased the entire production setup of KRC

Limited including Coca-Cola bottling plant and Igloo ice-cream factory After taking full charge

of Igloo ice-cream by Abdul Monem Limited the manufacturing operations continued in

Chittagong till 1990 Although Dhaka fetched the maximum share of the total revenue the

distribution cost increased tremendously in the process of meeting the demand of Dhaka city To

cope with the distribution problem and handle Polar threat Abdul Monem Limited transferred

the factory to Dhaka changed the ice-cream packaging from the conventional paper to plastic

and expanded their market and distribution operation The new factory of Igloo was setup at

Shyampur Narayanganj and was nine kilometres away from the Motijheel office The company

apart from catering the capital city started to expand its operations in Comilla (1991) Khulna

(1992) and North Bengal (1993) These markets were served directly from Dhaka since the

storage facilities were not developed till then The company is now the market leader since 1997

with clear market share victory over others with sweeping 51 share It is to be noted that Igloo

is also a player in the boutique segment with three parlours (2 in Dhaka and 1 in Chittagong)

Product Range Igloo offers the widest choice of ice cream more than any other competitor in

the market Igloo is offering a total of fifty items including normal premium and novelty cup

stick and family pack items Igloo has thirty flavours more than anyone else in the industry and

is continuously launching new and innovative delicacies

Igloo ice-cream can be classified in six groups They are

Stick

Macho Choc-bar Mini Choc Clown Mega Shell n core Lolly

Cone

Cornelli 2 in one Cornelli classic

Cup

Shahi kulfi Vanilla Strawberry Mango Snow ball

Container

Vanilla Strawberry Mango Chocolate Coffee Diet Vanilla Tutti Frutti Ripple Pralin

Pistachio

Innovative

Nuggets Sandwich

Family

Ripple cake Party time Shahi Kulfi

Table 19 Products of Igloo

Single serve stick cups and cone items are easy to carry around and convenient to eat which

makes it most sold The core target segment of ice-cream is 6-24 years and this generation is

always on the Evaluation of Entry into Ice cream Business for Bangladesh Limited 30

move and thus prefers independent cone stick or cup items As Igloo initiated the concept of ice-

cream as a family product they offer some items to be enjoyed with the whole family

Quality and Innovation Igloo is committed to maintaining the highest quality standard through

its continuous RampD activities The major ingredients raw materials and packing materials are

procured from the best European sources Strict quality control is done at every stage of the

manufacturing process from procurement of material mixing material flow ice cream making

packaging storing (at main warehouse) distributing and market shelving by the Quality Control

Department Current supply chain for various materials of Igloo is as follows Australia (Milk

Powder) Denmark (Ingredients emulsifiers amp stabilizers) China amp UAE (Food grade sticks)

China Denmark Singapore amp Thailand (Food grade packing materials)

Figure 9 Igloo Supply Chain

Distribution Network Their distribution network is stretched all over the country with a long

fleet of refrigerated vans Firstly the ice cream products are stored at the central warehouse of

the factory and from there they are distributed through the haulage vehicle to the operational

centres located in Dhaka Chittagong Comilla Rajshahi Barisal Bogra Rangpur and Khulna

Strictest cold chain maintenance during the distribution and selling of the ice creams is ensured

Their distribution process is as follows Manufacture Stored at -24c Transported by Refrigerated

trucks at -Reaches amp Preserved in Eight regional stores Refrigerated vehicles (Distributors)Retail

outlets (Deep freezers)

Figure 10 Distribution Process of Igloo

Evaluation of Entry into Ice cream Business for Bangladesh Limited 31

Trolley Operation Igloo also operates through trolleys for extending its reach to consumers at

the furthest points The trolleys are operated near schools alleys streets parks etc and play

rhythmic music to attract the consumers These are very colourfully decorated with Igloo

umbrella and the puller wears specific uniforms Igloo was the first in introducing and operating

these trolleys in Bangladesh for any Fast Moving Consumer Goods (FMCG) Igloo has around

125 trolleys operating throughout the country Individual trolleys are provided with a regular

supply of igloo ice creams

Marketing The marketing commitment of Igloo is based on the relationship with its customers

and consumer by not only manufacturing the highest quality product but also delivering the

product by maintaining this quality To satisfy the ever-changing needs of the customer Igloo

has regularly launched new ice creams and introduced new flavours And this commitment has

positioned Igloo as the market-leading brand by gaining the consumers trust with the positioning

as ldquoA WORLD OF GREAT TASTErdquo

Facilities and Logistics at a glance As of 2009 following are the facilities and logistics enjoyed

by the company

Factory location

Dhaka

Production Lines

4

Packages

Stick Cup Family pack Others (Nuggets and sandwich)

Machine suppliers

1048766 Mark-Italy

1048766 Tetra Pak(Hoyer)-Denmark

1048766 Sabore Denmark

1048766 Hass- Austria

Machine models

1048766 Freemark 1100 Italy

1048766 FM 3000 FM 6000 Italy

1048766 SL600 Denmark

Cone baking

Hass- Austria

Chocolate making

Macentyre-UK

Coverage

Nationwide

Operational centre

10

Total market vehicles

30

Distribution channel

Directthrough appointed distributors

Outlet service

7500

Injected deep freezers

4000

Trolley operations

125

Warehouse no

8

Table 20 Igloo Facilities and Logistics

Kwality

Kwality is currently the second largest ice cream manufacturer of the country The mother

company for the Kwality brand is Sanowara Drinks amp Beverages Ltd a sister concern of

Sanowara Group The company is famous for powdered milk brands Red Cow and Diploma in

Bangladesh The drinks and beverage concern of Sanowara made an entry into the market in

1997 with ldquoYesrdquo brand drinking water and launched the ice cream brand in 1999 With heavy

communication and novelty products it Evaluation of Entry into Ice cream Business for

Bangladesh Limited 32

successfully removed Polar from the second place with a current market share of 27 The

company also operates in the boutique segment with two parlours in Dhaka and Chittagong

Kwality ice cream factory is situated in Chittagong with a floor space of 35000 sft and fully

automated machinery wrapping mix machinery equipments from Italy having capacity of

around 20000 litres of ice cream per shift The ice cream factory employs 140 people The

company is ISO 9001-2000 certified

Kwality was the first true competitor for Igloo products with some major innovation in product

design and communication but their quality is perceived to be lower in the minds of the

consumers and they do not have extrusion ice cream The product prices are also similar to that

of Igloo but they charge a bit lower than Igloo in premium multiple servings However during

market visits it was seen that shops that keep only Kwality or Igloo and Kwality both they can

sell Kwality too although the sales amount is lower than that of Igloo People who look for Igloo

shopkeepers give them that directly but if they get a chance and Kwality ice cream stock is high

they also push Kwality to dry the stock out This gives an indication that market is larger than

what the current players are capable of serving even in Dhaka

Kwality follows a similar distribution model like Igloo but distribution frequency is lower and

amount of cart sellers is limited to 25 and they operate only in Dhaka

Polar

Once a giant in the industry Dhaka Ice Cream Industries Ltd introduced the first hygienically

packed ice cream in Bangladesh in 1987 and the brand name Polar was thus born In the early

days the company started ice cream business with a wide range of products and a variety of

flavours in Dhaka city In 1988 the company started its distribution in the city of Chittagong

then Bogra and continued to cover more cities Presently Polar ice cream is available

throughout Bangladesh The company today trails in the market with 15 market share in the

common format segment Recently Polar has announced launch of ISIS diabetic ice cream with

support from DANONE to turn around in the market

The company has its head office as well as a modern large-scale industrial plant in Dhaka Polar

ice cream is made with Danish expertise using Danish equipment and technology The

production activities and quality control measures are supervised and managed by Danish

experts Polar offers a wide range of delicious flavours and tastes made by ingredients imported

from Europe

Dhaka Ice Cream at present has 3 cold stores in Dhaka Chittagong and Bogra in Bangladesh

From Dhaka cold store they distribute ice creams in Mymensingh Tangail Jamalpur Sherpur

Kishoreganj Netrakona Comilla Narsingdi Barisal Madaripur Agaeljhara Faridpur Magura

Chuadanga Jessore Satkhira Khulna Pirojpur and Sylhet through their distributors In case of

long distance delivery points the company uses auto cooling freezer van

Evaluation of Entry into Ice cream Business for Bangladesh Limited 33

In Dhaka city they distribute ice creams directly to retail stores in freezer vans Besides that

they have several distributors at different points of the city Distributors cover their individual

areas where company is not able to supply directly in their freezer vans Similar model is

followed by the company to distribute ice cream from their other cold storages through out the

country For storing and selling ice creams in retail stores the company like the other players

arranges a deep freezer with the Polar logo and canopy light box

In addition to this distribution the company also undertakes home delivery of ice creams for

special occasions

Savoy

Savoy Ice-cream brand is owned by Sena Kalyan Sangstha (SKS) Group of industries It started

its journey in March 1995 with a factory in Tejgaon Dhaka Yearly turnover is estimated at BDT

388 crores with a market share of roughly 35

The factory has been established with Sonali Bank finance at 6040 equity ratio The total

production capacity of the factory has been estimated at 2400 litres of Ice-cream per day Total

land area of the factory premise is 116 Bigha with 8000 sft area covered with a total project cost

of BDT 144 The factory employs 73 people

Product ranges of the company include all the basic designs and flavours of the industry

However the company has not been much of an innovator in the industry Their product quality

is substantially low than that of other players and they price their products at 10-15 lower than

the other competitors The company imports raw materials mainly from Europe The general raw

materials are Euro cream Skimmed Milk Powder Cocoa Powder and Flavour (Vanilla Mango

and Strawberry) Colour (Yellow Red Chocolate and Green) Ripple Sauce Cheney Fruit Palm

Kernel Oil Anhydrous Butter Oil (Ghee) and Sugar etc

Milk Vita

Milk Vita is one of the most famous brand names in Bangladesh for its liquid dairy milk Owned

by Bangladesh Milk Producersrsquo Co-operative Union Limited (BMPCUL) the company came in

the market with proper dairy milk ice cream in form of cups and choc-bar With a production

capacity of around 1600 litres per day the company is trailing in the market place with 3

market share

Although the Milk Vita Choc-bar was perceived to be extremely tasty by consumers they

probably could not do well due price competition Currently they do not even distribute ice

cream in Dhaka However their presence is seen in outskirts of Dhaka and other nearby towns

If the current market situation prevails Milk Vita would lose their remaining market share and

other companies would benefit especially Igloo However one of the advantages of Milk Vita

remains to be

Evaluation of Entry into Ice cream Business for Bangladesh Limited 34

their nation wide milk supply network They have skimmed milk powder production plant that

Igloo does not have Thus they can combat the seasonality of milk supply that Igloo with its

huge requirement of milk cannot

Strengths and Weaknesses of Competitors

Company

Strengths

Weaknesses

Igloo

1048766 Strong brand image

1048766 High product quality

1048766 Highest no of variety

1048766 Strong distribution network

1048766 Highest visibility

1048766 Strong promotion

1048766 High production capacity

1048766 Presence of extrusion ice cream

1048766 Items are generally a bit pricy

1048766 Igloo does not give free freezers like other companies

1048766 Reluctant in recent times regarding innovation

1048766 Local sourcing of liquid milk does not meet demand

1048766 Failure to use ERP technology slowing decision making

Kwality

1048766 Product variety

1048766 Strong promotion

1048766 Free freezer distributed

1048766 Presence in all price segments

1048766 High production capacity

1048766 Weak distribution

1048766 Lower exposure

1048766 low amount of carts in operation

Polar

1048766 Free freezer

1048766 Quality perceived to be high compared to Kwality

1048766 Discoloured freezers

1048766 Lower exposure

1048766 Low product variety

1048766 Unused capacity

Savoy

1048766 Price is lower

1048766 Discoloured freezers

1048766 Low product variety

1048766 Weak distribution

1048766 Small amount of freezers

1048766 Low production capacity

Milk Vita

1048766 Quality is good due to dairy cream

1048766 Brand leverage from Milk Vita milk

1048766 Low exposure

1048766 Low variety

Table 21 Strengths and Weaknesses of Competition

512 Market Characteristics of the Boutique Segment

With a small market of BDT 98 Cr and 567 share in the branded ice cream market the

boutique segment is currently an increasing segment in the ice cream industry Boutique

segmentrsquos history dates back to 1960s when Igloo launched boutiques in Dhaka to save

distribution cost and promote a culture of ldquoice cream eating outrdquo In later years boutiques lost

their glamour and retail common format segment picked up growth However with Dolce Vita in

the late lsquo80s craze for Italian Artisan ice cream was recreated in the market Although Dolce

Vita is failing in recent times emergence of MoumlvenPick and Club Gelato in 2000 has uplifted the

segment once again Current growth rate of the

Evaluation of Entry into Ice cream Business for Bangladesh Limited 35

segment can be estimated to be approx 20-22 (higher than the common format segment)

Following are the basic detail of all the major players in the segment with their estimated sales3

Players

Outlet

Sales (Cr Taka)

Share

Club Gelato

1

136

199

MoumlvenPick

1

119

174

Andersenrsquos

3

119

174

Gelateria Igloo

3

119

174

Sub Zero (Kwality)

2

051

75

Baskin Robbins

1

015

22

Dolce Vita

1

017

25

American Soft

1

009

12

Rainbow

1

009

12

Others (off site)

089

130

Total Market

682

Table 22 Players and Shares in Boutique Segment

A Detail of Operation

General operational procedure followed by all the operators is as follows

1048766 Operating method There is a variation in operational method among the large operators

1048766 Club Gelato uses kitchen at own premise where imported ingredients and local milk (daily

special service from Milk Vita) are used to make ice cream

1048766 MoumlvenPick directly imports ice cream from Switzerland

1048766 Andersenrsquos Gelateria Igloo and Sub Zero produce ice cream at their factory with a mix of

imported and local ingredients

1048766 Products Around 30-35 flavours of artisan dairy ice cream are served at the premises

1048766 Most sold flavours are Vanilla Ferrero Rocher Butterscotch Chocolate Caramel etc

1048766 Other Products Larger players also serve ice cream desserts (milk shakes ice cappuccino etc)

pastries and other desserts with normal coffee and tea facility at their premises

1048766 Boutiques fight ice cream seasonality with the other products sales during off-peak ice cream

seasons Usually ice cream and other products contribute at 6040 ratio in summer and during

winter and off-peak seasons the ratio reverses

1048766 Pricing Usually the prices of products in this segment are 3-4 times higher than that of the

common format segment

1048766 Prices do not vary with flavours Variation depends on serve style (Cone tub) and use of

toppings and other ingredients (Chocolate sauce nut fruits) etc

1048766 Usual margin charged is around 50-60 over production cost Similar margin is charged for

other products like coffee ice cappuccino etc

3 Yearly sales is estimated based on companyrsquos approximate daily sales collected during

interview

Evaluation of Entry into Ice cream Business for Bangladesh Limited 36

1048766 Target Group Most of the consumers belong to SEC A and higher SEC A with DMFI of at

least BDT 20000

1048766 Foreign delegates and resident foreigners also visit these boutiques

1048766 Main purposes of visits in the boutiques are

bull Youth hangout with friends and having ice cream and ice cream derivatives

bull Family Family night out or eat out at a restaurant and then having dessert

bull Foreigners Having dessert after dinner

1048766 Rush time at boutiques are Afternoon 2-4 pm and at night 9-11 pm

1048766 Offsite sales Most of the large operators also sell offsite They have small freezers for off-site

1048766 Club Gelato and MoumlvenPick serves ice cream at high society parties and programmes

1048766 MoumlvenPick also has kiosks in known hotels like Sheraton

1048766 Promotion No mass promotion is done by any of the companies Word of mouth is the most

important source of promotion Posters and banners outside the premise and occasional

newspaper advertisements are used to communicate special offers

1048766 Growth Drivers Market growth is driven by image innovation quality decoration of facility

environment and special offers

1048766 Club Gelato has the image of selling true Italian dairy ice cream with an excellent hangout

environment

1048766 MoumlvenPick imports ice cream directly from Switzerland and is perceived to be of high quality

1048766 Andersenrsquos operates with the image of ice cream from Denmark

1048766 Gelateria Igloo (from Igloo) and Sub Zero (from Kwality) could not establish the premium

artisan ice cream image

B Players in the Boutique Segment

There are very few players who have significant impact in the boutique segment Detailed

information of all the major boutique segment players is provided below

Evaluation of Entry into Ice cream Business for Bangladesh Limited 37

Club Gelato

Basic Company Information

1048766 Location Banani Road 11 (Planning for a second one in Dhanmondi)

1048766 Established in 2001

1048766 Seating Capacity 48

1048766 Area 1250 sft (including kitchen)

1048766 Owner Mr Jahangir Alam (Bangladesh)

1048766 Business Type Joint business partnership with Singapore

1048766 Staff 15 people (6 in the kitchen)

1048766 Production capacity 150 litres per day

Product Related Information

1048766 Product Italian style parlour scoop ice cream fruit juice coffee and pastries

1048766 Flavours Around 32 flavours available

1048766 Most selling Ferraro Rocher Vanilla Pistachio

1048766 Innovations New variants and ingredients are communicated by their Italian supplier and

Club Gelato decides what to take from them

1048766 Serve type Cup Cone Glasses Box for take away

Consumer Profile

1048766 Primary Teenagers and Young Adults (18-30) amp Diplomats

1048766 Secondary Family consumers for eat out

1048766 Income Group High income customers tentatively from SEC A and higher SEC A

1048766 Geographic Area Diversified

1048766 Rush time 8-10 pm

Sales and Price Information

1048766 Sales BDT 50000 (60 Ice cream 40 other desserts) daily in summer In winter however

other products sell more and thus they keep total sales at the same level

1048766 Price 750 per litre for any flavour

1048766 Sales Volume 50-60 litres per day

Supply Chain Placement Information

1048766 Milk Local sourcing from Milk Vita (4050 litres per day)

1048766 Chocolates amp Flavours Belgium France Germany

1048766 Transportation Mainly air (They can afford it due to high margin)

1048766 Contribution of various materials Flavours (30) Milk (20) other parts are water and air

Promotional Materials

1048766 Materials used are near premises POS materials for promoting the parlour only

Table 23 Detail of Club Gelato

Evaluation of Entry into Ice cream Business for Bangladesh Limited 38

MoumlvenPick of Switzerland

Basic Company Information

1048766 Location Gulshan

1048766 Established in 2000

1048766 Seating Capacity 55

1048766 Owner Mr Arif Mahmud

1048766 Business Type Franchise of International MoumlvenPick

1048766 Storage Capacity in Shop 150 litres

Product Related Information

1048766 Product Imported MoumlvenPick ice creams coffee chicken sandwich and Frappe

1048766 Flavours Around 30 to 35 flavours available

1048766 Most selling Swiss Chocolate caramel Vanilla Dream Espresso Strawberry

1048766 Innovations New variants are communicated by their franchiser and they decide on flavours

that they want

1048766 Serve type Cup Cone Glasses Box for take away

Consumer Profile

1048766 Primary Teenagers and Young Adults (18-30) (70) amp Diplomats

1048766 Secondary Family consumers for eat out

1048766 Income Group High income customers tentatively from SEC A

1048766 Geographic Area Concentrated in Gulshan and nearby areas

1048766 Rush time Afternoon- Young Adult 10 to 11 pm Foreigners

1048766 the company also serves at parties and has freezers in known hotels where their ice creams

are served

Sales and Price Information

1048766 Sales BDT 35-40000 daily in summer

1048766 Price 640 per litre for any flavour

1048766 Sales Volume 55-60 litres per day

Supply Chain Placement Information

1048766 Transportation Imported finished goods by ship

1048766 Ship travel time 19 days

1048766 Port clearance 10 days

1048766 Safety Cushion Extra 10 days

Promotional Materials

1048766 Materials used are near premises POS materials for promoting the parlour only

Table 24 Detail of MoumlvenPick of Switzerland

Evaluation of Entry into Ice cream Business for Bangladesh Limited 39

Andersenrsquos of Denmark

Basic Company Information

1048766 Location Gulshan (2 others in Uttara Dhanmondi)

1048766 Established in 2001

1048766 Seating Capacity 48

1048766 Owner United Group

1048766 Business Type Franchise of Australian company Andersenrsquos of Denmark

1048766 Production Tongi Factory of United Group

1048766 Production capacity 2000 litres per day in factory

1048766 Storage Capacity in Shop 150 litres

Product Related Information

1048766 Product Danish parlour scoop ice cream and coffee

1048766 Flavours Around 30 to 35 flavours available

1048766 Most selling Strawberry Butter Scotch Green

1048766 Innovations New variants and ingredients are communicated by their franchiser and they

decide on flavours that they want

1048766 Serve type Cup Cone Glasses Box for take away

Consumer Profile

1048766 Primary Teenagers and Young Adults (18-30) (70) amp Diplomats

1048766 Secondary Family consumers for eat out

1048766 Income Group High income customers tentatively from SEC A

1048766 Geographic Area Concentrated in Gulshan and nearby areas

1048766 Rush time 8 to 10 pm

Sales and Price Information

1048766 Sales BDT 10-12000 daily in summer

1048766 Price 460 per litre for any flavour

1048766 Sales Volume 40-50 litres per day

Supply Chain Placement Information

1048766 Milk 2025 kg packs are imported

1048766 Chocolates amp Flavours Imported

1048766 Butte paper Local sourcing

1048766 Transportation Ship

Promotional Materials

1048766 Materials used are near premises POS materials for promoting the parlour only

Table 25 Detail of Andersenrsquos of Denmark

Evaluation of Entry into Ice cream Business for Bangladesh Limited 40

Gelateria Igloo

Basic Company Information

1048766 Location Banani Kemal Ataturk Avenue (Two others in GEC Mor Chittagong and Naya

Paltan)

1048766 Established in 2000

1048766 Seating Capacity 20

1048766 Production From Igloo factory in Shyampur Narayanganj

Product Related Information

1048766 Product Parlour scoop ice cream and coffee only

1048766 Flavours Around 30 flavours available

1048766 Most selling Vanilla Strawberry Chocolate Pistachio Butter Scotch Tutti Fruity

1048766 Serve type Cup Cone Glasses Box for take away

Consumer Profile

1048766 Primary Teenagers and Young Adults (18-30)

1048766 Secondary Family consumers for eat out

1048766 Income Group High income customers tentatively from SEC A and B

1048766 Geographic Area Diversified

1048766 Rush Time afternoon and evening

Sales and Price Information

1048766 Sales BDT 8000 to 10000 daily in summer Nearly one fourth in winter

1048766 Price Varies but 350 per litre of vanilla

Promotional Materials

1048766 POS materials at the premises

Table 26 Detail of Gelateria Igloo

52 Price Comparison of Common and Boutique Segments

Price ranges of both common format and boutique segment cannot exactly be pin pointed as

products do not follow common structure and variations occur with use of toppings mixing of

flavours and use of coatings However a price comparison has been made among the brands

based on their price of per litre of vanilla flavoured ice cream in the market It appears to be as

following

Company

Price Litre Vanilla

Club Gelato

750

MoumlvenPick

640

Andersenrsquos

460

Dolce Vita

440

Igloo

100

Kwality

100

Polar

100

Milk-Vita

90

Savoy

85

Table 27 Comparative Price Analysis

As it can be seen there is price gap within the range of BDT 100-400 Ice cream kiosks and

small scooping boutiques can operate within that range

Evaluation of Entry into Ice cream Business for Bangladesh Limited 41

60 CONSUMER ANALYSIS

61 Target Group of Ice cream

Who are the consumers of ice cream This question does not have a clear answer Ice cream is a

food for all It is the only food consumed by a human being at less than 0 degree centigrade

temperature and people of all ages feel indulged to have it However we can determine focus

target groups for both branded common format and artisan boutique ice cream Group

discussions and market visits were done to get insight into the consumers along side resources

form secondary sources Age based target group is common for both segments but variation

among the groups occur mainly based on SEC and DMFI classification

611 Geographic Group

Branded ice cream remains an urban product till date Geographically branded ice cream has

reached urban and semi urban areas up to Thana Head Quarter levels Ice cream has reached

areas where electricity is available Small artisan players are available in places where large

branded players have no distribution

612 Target Age Group

Age wise grouping of target consumers is as follows

1048766 Urban kids in the age group of 5-14

1048766 They mainly consume normal sticks cups cones innovative fillers and water ice creams

1048766 Urban youth in the age group of 15-24

1048766 They consume premium and extrusion sticks and cones

1048766 Urban mothers in the age group of 25-35

1048766 They determine the family purchases Even when the father purchases ice cream decision is

taken by them

Consumption pattern of various age groups are depicted in the following chart Ice cream

consumption pattern50203005 to 14 yrs15 to 24 yrs25 to 35 yrs

Figure 11 Target Group wise Consumption Pattern Evaluation of Entry into Ice cream Business

for Bangladesh Limited 42

613 Target SEC and DMFI Group

Common Format

SEC A and B is the target group for common format ice cream However with rapid increase in

price level over the years has made it a ldquohard to consumerdquo product for SEC B consumers who

belong to lower DMFI group

Boutique Format

Boutique formatrsquos higher margin and high price range makes it an exclusively SEC A ice cream

People belonging to upper and upper middle class have access to the mediocre boutiques and

only higher upper class can have premium ice creams like Club Gelato and MoumlvenPick

Another unique target group for boutique format are the foreigners who live in Bangladesh

These people tend to visit the parlours to have ice cream as dessert especially after dinner

62 Ice cream in Consumer Lifestyle

Figure 12 Ice cream in Consumer Life style

This simple overview of ice cream in consumer lifestyle was determined based on in-depth

research analysis of UBL and validated through qualitative group discussions by the author

However detail of in-depth research is provided in a later section of this chapter

Evaluation of Entry into Ice cream Business for Bangladesh Limited 43

63 Highlights of Purchase Habit of Ice cream

631 Common Habits across Target Groups

There are some common habits that were identified in earlier researches and group discussions

with consumers Common habits mean the consumer approach towards ice cream that is seen

across all target groups eg kids youth and adult purchasers These are outlined below

1048766 Ice cream is mainly seen as a dessert or a snack Impulse ice cream is seen as a quick snack

that is consumed when it is in sight Visibility plays a big role here Regarding family packs

people see it as a post-food dessert

1048766 Ice cream purchase is commonly a planned event When the contexts arise people generally

take a bit of time to decide whether or not to have ice cream or when they want to go to a

boutique they make due considerations regarding which boutique to visit

1048766 Ice cream purchase decision is taken based on favourite flavour People tend to try out new

variants and flavours when they first see it They compare the taste with earlier experience and

when they purchase later they choose the flavour they have liked most

1048766 For In-Home segment decision is mostly taken on the flavour Generally people come up with

different flavours of choice and most voted flavour is chosen

1048766 People become aware of new variants or flavours mainly through word-of-mouth

Advertisement (new launches special offers and festivals) in newspaper is another source of

awareness

1048766 People are currently indifferent towards the price level of premium flavours However some

feel that price of Choc-bar or water ice creams (lolly) is a bit much If less they would have

consumed more Some also feel that companies should come up with branded ice cream in the

price range of BDT 5-8

1048766 Ice cream is purchased from nearby shops If required brand and flavour is not available 2-3

shops will be visited and then available flavour will be selected even if the required one is not

found This is done mainly not to ruin the mood for ice cream

1048766 People are very open to try new brands and flavours especially if it comes from a credible

source They would try new flavours and if they are satisfied with the taste they would repeat

purchase

1048766 Regarding boutique visits people feel that boutiques need to have a proper environment

enough flavours and other snacks

1048766 While visiting boutique with family or companion they want variation in flavours so that

they would order different flavours and taste each otherrsquos ice cream It is seen as a sign of

togetherness

1048766 Frequency of ice cream purchase varies among people It depends on peer pressure collective

family decision summer heat and attitude towards ldquoice creamrdquo itself as a product Evaluation of

Entry into Ice cream Business for Bangladesh Limited 44

632 Habits of Kids

1048766 Kids choose ice cream flavours by the look of the product (generally pictures shown in POS

materials and carts) They love colour and designs of the products let it be a common format or a

boutique ice cream

1048766 Kids (when in house) would go with the housemaid to the nearby shop choose the flavour

they want (within range of the amount given to the maid) and buy it

1048766 When with parents they would take the product they like even if the price is lower than some

other product However mothers play a role in this decision They would want their children not

to choose too high priced a product or coloured products

633 Habits of Youth

1048766 Young people are the main consumer of impulse ice cream They also are one of the major

consumers in the boutique segment

1048766 Young people love to try out new products that come into the market Another side of the coin

is that they are not very loyal to a brand or a flavour and tend to switch a lot

1048766 Regarding boutique visits young people go to boutiques to have an ldquoice cream hang outrdquo with

peer groups They would stay there for a longer period of time while they have their ice cream

1048766 Some times young people make milk shakes and other ice cream based desserts

634 Habits of Mothers

1048766 Mothers worry about their childrenrsquos health and they prefer ldquovanillardquo type of brands

However when price constraint occurs they go for water ice creams for their children They try

to convince their kidrsquos purchase decision

1048766 Regarding family purchase motherrsquos decision is sometimes prioritized by the whole family

64 Barriers to Ice cream Consumption

641 Emotional Barriers

1048766 Overindulge (close to sinful)

1048766 Undisciplined (no control)

1048766 Childish (licking)

1048766 Artificial Image

642 Functional Barriers

1048766 People of SEC B feel that ice cream is an expensive dessert (If less expensive would consume

more often)

1048766 It leads to cold cough - especially in winter rainy season

1048766 It contains artificial additives preservatives

1048766 It is very high in calories that lead to fattening

Evaluation of Entry into Ice cream Business for Bangladesh Limited 45

1048766 It does not quench ldquothirstrdquo

1048766 Less convenient (portable immediate eat)

1048766 Messy Dripping

65 Research Findings

The highlights regarding purchase habits triggers and barriers of ice cream consumption provide

a glimpse into the consumer world of ice cream industry However UBL CMI conducted a

formal research exclusively on ice cream consumers to identify

1048766 Occasions of ice cream

1048766 Frequency of ice cream consumption

1048766 Expectations from ice cream occasions

1048766 Personalities that they desire from ice cream

651 Relevant Occasions in Daily Lives of Consumers

Research question regarding ldquousual occasions of life that occurred most frequently in day-to-day

lives of the respondentsrdquo generated the following replies

Occasion

of Respondents saying Yes

Watching TV

93

Normal Dinner At Home

91

Normal Lunch At Home

89

At Home While ReadingMusicSurfing

86

Informal Family Get Together

85

Out Of Home Hanging Out With Friends

84

Out Shopping

84

Mid-Afternoon Break At Home

83

At Home By Myself During The Day

82

Special Dinner At Home

82

Informal Dinner Out Of Home

82

Normal Lunch Out Of Home

82

Leisure Walk

79

Coming Home From WorkSchool

78

Special Dinner Out Of Home

78

Celebration

78

A Night In With Friends

77

At Home By Myself In The Evening

77

Special Lunch Out Of Home

76

Mid-Afternoon Break Out Of Home

75

Special Lunch At Home

73

Day out with Partner

72

Midmorning Break

70

At Breakfast

68

Family Day Out

68

During Work Or At School

65

Evaluation of Entry into Ice cream Business for Bangladesh Limited 46

Travelling ToFrom WorkSchool

65

At The Cinema

61

Special Event

56

Clubbing At A Party

50

Post GymSports

48

Table 28 Relevant Occasions in Consumersrsquo Lives

Respondents were then asked to mention ldquofrequency of occurrence of the identified occasionsrdquo

The identified replies are as follows Normal dinner at homenormal lunch at homeComing home

from workschoolTraveling tofrom workschoolDay out with Partner SpouseMid-afternoon

break at homeOut of home hanging out with friendsLeisure walkMid-afternoon break out of

homeA night in with friendsSpecial dinner at homeSpecial lunch out of homeFamily day

outSpecial eventPost gymsportsDaily2-3 Times A WeekWeekly2-3 Times A MonthOnce A

MonthEvery 2-3 MonthsLess OftenNever Figure 13 Frequency of Occurrence of Occasions

This shows that ldquoNormal dinner at home Watching TV Normal Lunch At Home At Home

While ReadingMusicSurfing Coming Home From WorkSchool During Work Or At School

Travelling ToFrom WorkSchool Midmorning Break Day Out With Partner Spouse At Home

By Myself During The Dayrdquo are the most frequent daily rituals of busy lives of consumers

652 Frequency of Ice cream Consumption

Respondents were asked to mention ldquoconsumption pattern of ice cream during the identified

occasionrdquo on a scale of 1-5 depicting frequencies like ldquo(5) always (4) most of the times (3)

about half of the times (2) sometimes (1) never do not knowrdquo The responses are depicted in

the following table

Evaluation of Entry into Ice cream Business for Bangladesh Limited 47

444474544655555566756665775967779991011101111101210111110101113111412131314161

011121411131216181519181518211817171719181718201721222130303434253437403741394

046383944464746453745414641374638504843414839373030292726232725222020201926202

21722221317Midmorning

breakWhile clubbing at aAt the cinemaSpecial eventNormal lunch out ofA night in with

friendsNormal dinner atInformal dinner out ofAt home by myselfAt home by myself inOut

shoppingSpecial lunch atDay out with SpouseWatching TVAlwaysmost of the timesAbout half

of the timesSometimesneverdo not know

Figure 14 Frequency of Ice cream Consumption

As it can be seen ldquoDay out with Spouse Special lunch at home Special dinner at home

Watching TV Family day out Celebrationrdquo are the occasions where most frequently ice cream is

consumed

653 Market Character Mapping Relevant Occasions vs Frequency of Consumption

If we plot frequency of consumption on the X-axis of a chart and relevance of occasion

occurrence on the Y-axis taking the above mentioned values as cut-off values we get four

quadrants in the chart depicting four market scenarios that any ice cream manufacturer in

Bangladesh market might encounter given the current market situation This market

segmentation is based on frequency of ice cream consumption in daily occasions of consumer

lives

The segments are

1048766 OPPORTUNITY MARKET High Relevant Occasions-Low Ice cream Frequency

1048766 QUESTION MARKET Less Relevant Occasions-Low Ice cream Frequency

1048766 HIGH FREQUENCY MARKET Relevant Occasions-High Ice cream Frequency

1048766 CAPTIVE MARKET Less Relevant Occasions-High Ice cream Frequency

The chart looks as follows Evaluation of Entry into Ice cream Business for Bangladesh Limited

48

Figure 15 Relevance of Occasion-Frequency of Consumption Mapping

As it can be seen from the above chart Bangladesh Market still lies in the Opportunity and

Question market zone with a pull towards High frequency and Captive Market zones This is

evident from market data as penetration of ice cream still remains at Thana headquarters levels

Also this explains the high market growth rate of 17 as market is yet under developed and

branded quality ice cream has yet not reached all levels of consumers especially rural level that

constitutes around 75 of Bangladeshi market

From the above analysis we can establish that target of ice cream manufacturers should be to

penetrate more into the Bangladeshi market to create higher frequency of ice cream

consumption The following chart shows the strategies to follow for ice cream manufacturers

Figure 16 Required Market Strategy for Bangladesh

Evaluation of Entry into Ice cream Business for Bangladesh Limited 49

As relevance of ice cream consumption occasions can hardly be controlled by marketers their

endeavour should be to create more ldquoemotional and functionalrdquo attachment to ice cream in less

frequent occasions through ldquomarket developmentrdquo strategy to earn share from overall food

expenditure of consumers and at the same time make them consume more ice cream in highly

relevant occasions through ldquopenetrationrdquo strategy

654 Consumersrsquo Emotional Requirements and Product Attributes

All consumers under these clusters also identify the emotional requirements and the significant

product attributes they seek from their current preferred and future desired ice creams These are

provided below

Cluster

Emotional Functional Requirement

Product Attributes

Enjoyment

Flavour Variety

1048766 Combination of different flavours

1048766 Combination of different textures

1048766 Very sweet

1048766 With wafer or biscuit

1048766 With chocolate

1048766 Of a well known brand

Socially Involved

Spoonable Rich

1048766 Very creamy

1048766 Only natural ingredients

1048766 No mess

Care

Size Creaminess

1048766 Big

1048766 Rich full taste

1048766 Smooth

1048766 Value for money

1048766 No mess

Unwind amp Escape

Economy

1048766 Crunchy

1048766 Economic

1048766 Of a well known brand

1048766 Nutritious

Balanced Convenience

Health Conscious

1048766 Of a well known brand

1048766 Nutritious

1048766 Milk based

1048766 Low sugar

1048766 Low carbohydrates

1048766 Filling

Active Self-Grooming

Fruit Vitamins

1048766 Healthy

1048766 Fruit based

1048766 Low fat

1048766 Liquid or drinkable

1048766 Nutritious

1048766 Of a well known brand

Confidence

Drinkable Light

1048766 Low calories

1048766 Light on the stomach

1048766 Chewy or gooey

1048766 Not so sweet

1048766 Natural appearance

Sensual

Appeal or image

1048766 No artificial additives

Evaluation of Entry into Ice cream Business for Bangladesh Limited 50

1048766 Natural appearance

1048766 Melting slowly

1048766 Attractive packaging

1048766 High quality ingredients

1048766 Of a well known brand

Table 29 Requirements amp Product Attributes Desired by Consumer Clusters

Of these findings we see that the identified highlighted barriers to ice cream consumption are

pretty evident among the consumers Mostly people want products of a reliable source or a well

known brand low calories quality ingredients value for money economic type

Evaluation of Entry into Ice cream Business for Bangladesh Limited 51

70 INDUSTRY ATTRACTIVENESS AND ENTRY PROSPECTS

71 Driving Forces of Growth

As identified in the earlier sections there are several driving forces behind the growth of ice-

cream industry in Bangladesh

712 Trade and Infrastructural Level

1048766 As a result of globalization newer varieties have been introduced to the local products Many

foreign companies are also coming as franchise so there has been increased competition and

these boutiques are setting higher standards for the local producers

1048766 The present market growth rate is 18-19 which is being influenced by larger players like

Igloo who are expanding their distribution nation wide with expansion of national electricity

grid

1048766 With entry of Modern Trade and recent organized business approach of retailers has made it

possible for ice cream manufacturers to penetrate into shops even without providing them with

branded freezers

1048766 Weather change has increased ldquosummerrdquo season in our country which has reduced negative

seasonal impact on ice cream

1048766 Large companies like Igloo have taken global learning of using carts as an effective tool of

availability and visibility for ice cream

1048766 New and improved technologies are being used in the production process This technological

advancement has improved quality increased speed of production and made the process more

cost effective

713 Consumer Level

1048766 Only a few years back rich people could afford the luxury of having ice-cream but now it has

become a common product for everybody Ice-cream companies are producing different products

with a wide price range for consumers of every class and status

1048766 Nowadays companies are doing promotional campaigns more frequently the customers get to

know about the product which makes it easier for them to buy the best one

1048766 The improved standard of life and more modernized lifestyle of people is an important reason

for the increased consumption thus growth of the ice-cream industry

Evaluation of Entry into Ice cream Business for Bangladesh Limited 52

72 Prospects of Entry

The ice-cream industry of Bangladesh is an attractive one for the investors because there is a

huge market but number of producers is very small The major reasons behind industry

attractiveness are as follows

1048766 The industryrsquos current growth potential is very high with opportunity for market development

1048766 The competition currently permits adequate profitability and the competitive forces are

becoming stronger with time

1048766 Boutique segment is at a very high growth stage but no operator is currently operating with a

mid price range of BDT 100-400 Ice cream kiosks and small scooping boutiques can operate

within that range

1048766 Current industry driving forces are favourable for the future industry profitability

1048766 Globally oriented consumers look for variety in ice cream that is currently not available

Latest innovations came in the market in 2002 People would welcome new variety and flavours

1048766 There is a gap in the market for balanced convenience through ice cream where consumers can

get nutritional benefits for ice cream Also emotional attachment to ice cream could further be

improvised in promotional campaigns

1048766 There is high scope for market penetration and development to increase frequency of ice

cream consumption

1048766 Level of risk or uncertainty is very low in ice-cream industry because the consumer market is

so huge any product with a standard quality and careful pricing will be able to make significant

profit

1048766 As for geographic reach of the industry 60 market is still in Dhaka There is scope of

expansion and a new entrant can easily capture market share within Dhaka using carts even if

they do not want nation wide cold chain distribution

1048766 The production process is very complex and capital requirements are also high So before

going into production any company should know about their capabilities and weaknesses and

then start the business or else they might suffer huge loss at a certain level

1048766 Unilever can acquire the required resource and use existing multi-national multi-cultural

expertise to enter the market in a grand way

1048766 With high probability of entry from DANONE with more products like the ISIS diabetic ice

cream Unilever should consider entering in this industry as soon as possible

Evaluation of Entry into Ice cream Business for Bangladesh Limited 53

80 ENTRY STRATEGY FOR UNILEVER

While describing the suggested entry strategy for UBL certain issues have been kept

confidential and some issues have been touched but not explained to keep consistency with UBL

confidentiality policy

81 Suggested Entry Areas for UBL

1048766 Boutique segment of the Bangladesh ice cream is only 5 of the branded market UBL needs

to pursue a larger scope to make the entry viable

1048766 UBL cannot fight with unbranded segment as global product quality mandate of Unilever does

not allow UBL to fight in low price-low quality segment

1048766 Recommend entry should be in the common format segment with both single and multiple

servings and in the boutique segment with a different brand name (if possible BEN amp JERRYrsquoS)

1048766 UBL should build up state-of-art modern factory for manufacturing and establish cold chain

facilities initially focusing on metro cities

1048766 Investment issues are required to be addressed for building factory and cold chain and capital

requirement needs to be identified for that purpose4

1048766 UBL may have boutiques for driving image selective top-end offering

1048766 Kiosks can be setup near universities and shopping malls

1048766 Boutiques should be concentrated in Dhaka and Chittagong

1048766 Ice cream for boutiques and kiosks would be produced in factory as institutional packs of 9-10

litres

82 Products

1048766 As a Brand Building country in global Unilever operating framework UBL is entitled only to

bring products developed by the Brand Development countries

1048766 Unilever should focus on serving products that have nutritional benefits (already available

globally) along with usual satisfactions of sensual pleasure functional attributes etc

1048766 Current existent players especially Igloo and Kwality have extensively copied global and

regionally available Unilever products eg Cornelli is same as Wallrsquos Cornetto Vinetta is similar

to Vienetta Mega is similar to Magnum etc UBL needs to differentiate these to consumers on

the ldquotaste the originalrdquo platform where global quality is focused regarding the products

1048766 UBL should also bring regionally famous brands like Moo or Max to create image

differentiation

1048766 Magnum or Moo should be used as premium end ice cream to generate more profit margin

Evaluation of Entry into Ice cream Business for Bangladesh Limited 54

83 Placement

1048766 Distribution focus should be in Dhaka for entry as Dhaka contributes more than 60 of total

ice cream sales in the country

1048766 Company may use carts as distribution method They serve as good source of visibility and

availability It would help in increasing impulse purchase

1048766 At least 1500 outlets in Dhaka and Chittagong needs to be actively served using dedicated

branded refrigerators to generate sales

1048766 50 carts should operate in Dhaka and Chittagong

84 Price

1048766 UBL products should be priced at par with Igloo pricing for the common format ice creams

1048766 UBL can bring in premium single-serve SKUS for the higher economic classes in the price

range of BDT 60-80

1048766 Smaller SKUs (small lolly stick) can be introduced in the price range of BDT 10-15

1048766 In the boutique segment UBL should price products above the semi-premium segment

(Gelateria Igloo Sub Zero or Andersenrsquos) but lower than that of Club Gelato or MoumlvenPick

85 Promotion

1048766 UBL would require strong marketing campaign (As high as 50 of sales) to have a grand

entry in the market

1048766 Presence in the television media would be of utmost importance More than 50 of

promotional expense should be made here initially Gradually it can be reduced

1048766 Newspaper would serve as the second most important option

1048766 Billboards should also be used

1048766 Activations (similar to Lux Channel i Super Star or Igloo Festival) should be done to generate

trial

86 Scope of Opportunity

Table 30 Value and Volume Based Scope of Opportunity for UBL

Value (BDT Cr)

Volume (Tons)

Market

131

7835

Common

121

7600

Boutique

98

235

Evaluation of Entry into Ice cream Business for Bangladesh Limited 55

861 Geographic Contribution

1048766 Dhaka (61)

1048766 Chittagong (19)

1048766 Sylhet (10)

862 UBL objectives

Common Format Ice Creams

1048766 Target 10 Market share in 1st year operation

1048766 Value BDT 11 Cr

1048766 Production capacity required 21 Tons day

1048766 Freezer Placement 1500 freezers

1048766 Cart operation At least 50 carts

Boutiques

1048766 Target Further develop the market

1048766 Focus Dhaka Chittagong and Sylhet Metro

1048766 Franchise At least 20 franchisee operations nation wide in divisional towns

1048766 Pricing Below imported parlours above common formats with around BDT 400 per Litre

87 Critical Success Factors

1048766 UBL is considered as a high profile company in Bangladesh and thus they cannot operate in

the market only with common products like choc-bars and cups They must have premium

products (these require extrusion line) also to carry their brand image Otherwise UBL would not

be able to charge usual premium over competition products

1048766 Launch of ice cream would require huge promotional and activation support in order to gain

customers from Igloo People want novelty regarding ice cream and UBL have to let them know

about their products and create hype

1048766 Cart should be used as a source of distribution Recent successes of Unilever companies like

Indonesia shows that carts can generate more sales and can be used as source of visibility in the

minds of both retail traders and consumers Carts can also provide incremental sales to the

company

1048766 UBL have to create a strong cold chain for ice cream (initially in Dhaka and Chittagong) to

ensure quality products for consumers

1048766 UBL have to build capacity very rapidly to meet consumer demand if the launch is successful

Evaluation of Entry into Ice cream Business for Bangladesh Limited 56

90 BUSINESS PROJECTION

91 Basic Assumptions

Business projection for ice cream business was made based on a conservative approach UBL

would require spending significantly on production capacity and factory dedicated to ice cream

Thus to analyse business possibilities of ice cream certain assumptions were made and collected

data were used These are

1048766 Production equipments and cabinets would cost approximately BDT 55 crores

1048766 Production equipments 45

1048766 Packaging Equipments 15

1048766 Storage Facility 20

1048766 Branded Freezers 10

1048766 Distribution Investment 10 (Distributors would also invest themselves)

1048766 Ice cream factory with a floor size of 20000 sqft would cost BDT 25 crores

1048766 Objective is to capture 10 market share in Dhaka and Chittagong in the first year

1048766 Business would grow by 50 in year 2 and 3 30 in year 4 and 25 in year 5

1048766 Weighted price per litre is BDT 170 according to volume share of single serve ice cream

multiple serve ice cream and boutique ice cream

1048766 Other financial assumptions were also made List of them are provided below but amount has

been removed for confidentiality issues

Assumptions

Trade Margin

Distributors Margin

DutyVAT Rate

Trade Terms Expense of NPS

Trade Terms Expense of NSV

Advertising ampPromotion of NPS

Indirects (Salaries Wages etc)

Trading Tax

Table 31 Assumptions for Business Projection

Evaluation of Entry into Ice cream Business for Bangladesh Limited 57

100 CONCLUSION

Ice cream has good prospect in Bangladesh It is still a growing market with opportunities for big

new entrants With the barriers of entry UBL needs to consider its priorities UBL being an HPC

company traditionally needs to acquire expertise in cold chain distribution and has to invest a lot

of money to rip the benefits of the industry However to initiate company can take regional

support and acquire resource expertise The company should enter the business as soon as

possible since there is potential threat from DANONE to introduce more ice creams after ISIS

diabetic ice cream and also with potential of the industry arch rival Nestlersquo might consider

entering into the industry too

Evaluation of Entry into Ice cream Business for Bangladesh Limited 58

References

Web References

1 wwwunilevercom

2 wwwunilevercombd

3 wwwhllcom

4 wwwunilevercompk

5 wwwthedailystarcom - Life Style Magazine

6 wwwreuterscouk

Evaluation of Entry into Ice cream Business for Bangladesh Limited 59

Page 15: Square Ice cream

Distribution details of all the companies are provided below However detail of Milk Vita is not

available as they are mainly milk producer and they have no dedicated ice cream cabinet for

retail stores and currently they are not distributing ice cream in Dhaka city

Company

Distribution Method

Frequency

No of Cabinets

No of Carts

Igloo

Distributor Cart

2 to 3 times a week

4000

100

Kwality

Distributor Cart

1 to 2 times a week

1050

20

Polar

Distributor Cart

1 to 2 times a week

800

50

Savoy

Company

1 to 2 times a fortnight

176

-

Milk-Vita

-

-

-

-

Table 13 Distribution Method of Market Players

Distribution Process Distribution process through both methods is described below

Retail Distribution The general distribution that is followed by companies is that distributor

sends large refrigerated trucks dedicated to specific territories These trucks are accompanied by

small refrigerated vans Main road side shops are served directly from the large truck and shops

that are inside small streets are served by the small vans

Order and delivery are done on the same day The strategy followed is that of replenishment If

the branded freezer of the company is empty they simply fill it up according to requirement of

different SKUs as the delivery people see fit However shopkeepers have to buy full cartons

(usually 24 pieces in a carton) of single serve ice cream they cannot buy in pieces

Evaluation of Entry into Ice cream Business for Bangladesh Limited 24

Among the retail shops there are about equal numbers of branded and unbranded freezers This

is a normal scene in Dhaka where all shopkeepers require freezer to keep other cold products

However basic distribution policy is that if a shop has branded cabinet of a company they

cannot keep competitor ice cream in that cabinet Thus penetration can be made possible in

shops where unbranded freezers are available

General branded freezer contract policy with Igloo and Polar is that traders have to pay BDT

5000 to take a freezer Maintenance of branded freezers is responsibility of the company but

electricity bill is paid by shopkeeper However Polar is not currently giving any new freezer

Kwality gave away their freezers for free however they ensured safety of their freezers by

checking background of the shopkeepers

Cart sellers Cart sellers collect required amount of ice cream from nearby distribution house or

company showroom (Igloo has one showroom in Panthapath) on a daily basis They also have to

buy cartons of products not pieces Kwality carts collect their ice cream from factory (Tejgaon)

or nearby distribution house Cart sellers contribute around BDT 3000 sales in a day and

generally sell at BDT 1-2 higher than set price of each product

The cart sellers generally keep at least a two-day stock so that they can meet sudden upsurge in

daily demand of ice cream or if they get the opportunity to sell at parties programs or any open

air event (Wedding at community centres or outside cultural programs at auditoriums) If cart

sellers need replenishment of stock they even take service more than once in a day either

revisiting showroom house or they call up company delivery people to serve them at their

location if there is opportunity for selling more ice cream

Policy regarding Damaged Ice cream All the ice cream producers have very good relationship

with the shopkeepers If the retailers have refrigeration problem company takes ice cream back

until the problem is fixed whether it is stored in branded freezer or not Also if any ice cream

gets damaged or there is bacterial formation company takes them back Usual return time varies

from 15-30 days For large sellers however they take less time

Payment Method for Ice cream Purchase All the companies give credit of around one month to

large volume contributing retail sellers and try to maintain good relationship with them This

trend is seen in all channels Also all the SMMTs and MTs are given credit of one month and

payment is made by cheque Other small shopkeepers have to purchase with cash However

according to shopkeepers Igloo is currently trying to cut down on credit sales as they believe

there is a consumer pull for their brand Companies like Polar and Kwality also give special

commission to large sellers Polar gives 5 commission on every bill

Evaluation of Entry into Ice cream Business for Bangladesh Limited 25

H Technology and Innovation

Technological advancement in the ice cream industry has been very rapid Starting with stick

mould and filler ice cream production the companies have come a long way Assessing the

consumer choice and demand the companies are introducing new products very often Improved

and new technology is used for faster production and better quality Igloo is trying to meet the

international standards and launching products such as Sundae Cornelli and Nuggets Other

companies are also introducing new flavours suitable for their target segments Igloo has both the

ISO and the HACCP certifications These were awarded in the year 2003 due to their relentless

pursuit of quality and innovation In September 1996 Igloo introduced the 3D Mould line and

straight line extrusion technology for the first time in the subcontinent Basically with Igloorsquos

pursuit all the modern technologies and quality innovations are available in the market

I Production Capacity

Current production capacity of the major players in the common format ice cream segment is

estimated to be as follows

Name

Capacity (Ltrs day)

Total Production (000 Ltrs)

Required Capacity (at 300 production days )

Estimated unutilized capacity (Ltrs day)

Igloo

22000

387433

12914

9086

Polar

6500

112513

3750

2750

Kwality

12100

204934

6831

5269

Savoy

1560

25985

866

694

Milk Vita

1330

26387

880

450

Table 14 Production Capacity of Current Market Players

From the table we can see that all the ice cream manufacturers are operating with unutilized

capacity However one point to be noted is that different ice cream SKUs require different

amount of item to be produced Exact machine production capacity at litre per day does not

represent the accurate scenario Nevertheless it can be safely assumed that all the manufacturers

have unused machine capacity at their premises Moreover the larger players like Polar and

Kwality have new technology available at their premises Kwality bought second hand machines

from Thailand but both Igloo and Polar bought theirrsquos from Italy and Denmark

J Products and Pricing

Products The products in the ice-cream market are differentiated A few firms dominate the

market but an endless variety of ice creams are offered to the consumers Igloo pioneers all

major innovations in the market The products that are available in the market can be classified

into single serving and multiple serving groups Which are then categorized based on functional

attributes designs These are

Single

Stick

Normal mould 3D mould extrusion

Evaluation of Entry into Ice cream Business for Bangladesh Limited 26

Cup and Sundae

Flat cup long cup

Cone

Normal cone (vanilla strawberry etc) premium cone (Ripple)

serving

Innovative Fillers

Snowball Animal shaped containers sandwich nuggets etc

Container

05 ltr 1 ltr and 2 ltr containers

Multiple serving

Family Pack

Assorted packs cakes shahi kulfi etc

Table 15 Ice cream Serve types

Among all the products available in the market most selling SKU for all the companies is Choc-

bar stick and highest selling flavour is Vanilla Following are the ranks of most selling SKUs and

flavours

SKU Name

Rank

Choc-bar (70 ml)

1

Vanilla Cup (100 ml)

2

Vanilla Box (05 and 1 Ltr)

3

Lemon Lolly (70 ml)

4

Normal Cone

5

Flavour

Rank

Vanilla

1

Chocolate

2

Strawberry

3

Ripple

4

Mango

5

Table 16 Rank of SKUs Table 17 Rank of Flavours

Choc-bar is one of the earliest vanilla based chocolate coated SKU that has dominated the

market strongly over the years Shopkeepers could not provide an exact percentage on SKU

based sales contribution Most of them ranked the SKUs and flavours according to sequence

shown in the above table Also according to newspapers and secondary sources Vanilla is the

most selling flavour with 60 sales contribution According to secondary sources percentage

sales contribution of various types of SKUs in the common format segment are as follows

Type of Ice cream

Value Share

Volume Share

Impulse dairy ice cream

514

443

Impulse water ice cream

112

138

Take-home dairy ice cream

374

419

Table 18 Volume Share of Different Serve Types

Impulse dairy ice cream provides more value share as price per litre is higher than take home

multiple serving ice creams Impulse water ice cream shows a similar trend as of take home ice

cream

Pricing Product pictures and price ranges of each category are provided below Evaluation of

Entry into Ice cream Business for Bangladesh Limited 27

Normal Premium Price Tk12 Tk20 Tk25 Cup amp Sundae Normal Cup Sundae Premium Cup

Price Tk20 Tk25 Cone Normal Premium PriceTk20 Tk25Innovative Fillers PriceLtr Tk100

Tk175 Container Normal Premium PriceLtrTk150 Tk 175 Tk 190 Family Packs Kulfi Mixed

Pack Cake Single ServingMultipleServingNormal Ice Fruit 3D Mould Premium Extrusion Price

Tk10 Tk15 Tk15 Tk20Stick Normal Cream

Figure 8 Serve Types and Pricing

As it can be seen from the above chart all impulse ice creams are priced within the range of

BDT 10 to 25 Other take home multiple servings are priced within the range of BDT 50 (05

Litres) to BDT 220 (2 Litres) Another noticeable factor in price is that there are both normal and

premium flavours in all types of ice creams

K Firms as Price Setters

The firms have capability to affect the market price to be low as profit margin is very high If

Igloo reduces the price of an item below the prevailing price level in order to increase its sales

its competitors will fear that their customers will go away from them to buy Igloo products To

retain their customers they will be forced to match the price cut of Igloo Historically this has

been proven to be true However due to price sensitivity companies cannot drastically increase

price even if they provide higher quality of product It was seen in 1997 when Igloo increased

price of 11 SKUs and faced drastic sales fall during that time It shows that the industry might

welcome overall industry price increase but not individual company price increase

L Promotion

The promotion scenario in the industry is not quite organized as of now Even proper data

regarding promotional expenditure is not available from research sources The reason being

there is not much consumer related activity seen in the market After Kwalityrsquos introduction in

the market in 1999 Igloo went on with massive Television promotion of their new products that

were available at that time

Evaluation of Entry into Ice cream Business for Bangladesh Limited 28

However in current times there is no TVC running from any company Companies promote their

launches mainly through billboards and newspaper promotions which is currently the most used

source of consumer promotion Some promotional activities that were done by the companies

over the years are listed below

Consumer Promotions

1 Larger players like Igloo and Kwality goes on with campaigns like ldquoGift on stickrdquo where

various prizesrsquo names are written on the sticks and consumers can get them

a Igloo ran a program on their launch of Macho variant where gift varied from cricket bat to

personal computer

b Igloo had a program in 2006 where gifts on sticks varied from Bangkok visit to sunglass

c Igloo ran one campaign in 2007 where gold bars were given on purchasing Choc-bar

d Kwality ran a similar program in 2008 where gifts varied from wrist watches to motorcycle

2 Some companies ran consumer TTS and gift programs where company products were given

free

a Igloo had a program in 2006 where Igloo butter was given free on purchasing Igloo ice cream

cake

b Kwality ran a program in 2008 where one SKU was given as gift with another SKU randomly

c ldquoCone Ice cream at your Homerdquo program was run by Igloo in 2002 where six cone biscuits

were given free with purchase of one litre ice cream

3 Media placement is another form of placement done by larger companies

a Igloo purchased ldquoGlimpse into World Cup Resultrdquo space in daily newspapers during World

Cup Football 2002

4 One interesting program is done by only Igloo in Bangladesh They did it in June 2006 The

program was ldquoIgloo Ice cream Festivalrdquo with main attractions of ldquoGet as much ice cream as you

want for BDT 200rdquo ldquoGet a Fantasy Kingdom Entry ticket with each Entry Couponrdquo ldquoLucky

Drawrdquo and ldquoCelebrity Addardquo

Trade Promotions

5 Trade promotions are mainly given to ldquoHighest retail purchasersrdquo and also based on time

bound trade schemes where various slabs of purchase amount are mentioned for different prizes

a Igloo takes their highest purchasers to visit countries like Singapore and Thailand

b Savoy has a purchase slab scheme where first prize is table fan

c Polar gives special sales commission to their highest purchasers (around 5)

Evaluation of Entry into Ice cream Business for Bangladesh Limited 29

M Players in the Common Format Segment

Branded common format ice cream segment is constituted of five players only Among them

Igloo is the largest player and Milk Vita is the smallest The following sections detail the basic

company detail of all the companies with special emphasis on Igloo the market leader

Igloo

The pioneering ice-cream company in Bangladesh started its operation in 1964 in Chittagong

under K Rahman amp Co Limited (KRC) with a small factory inside Coca Cola bottling factory of

KRC After the independence of Bangladesh in 1971 Igloo was taken over by the government of

Bangladesh Later in 1983 Abdul Monem Limited purchased the entire production setup of KRC

Limited including Coca-Cola bottling plant and Igloo ice-cream factory After taking full charge

of Igloo ice-cream by Abdul Monem Limited the manufacturing operations continued in

Chittagong till 1990 Although Dhaka fetched the maximum share of the total revenue the

distribution cost increased tremendously in the process of meeting the demand of Dhaka city To

cope with the distribution problem and handle Polar threat Abdul Monem Limited transferred

the factory to Dhaka changed the ice-cream packaging from the conventional paper to plastic

and expanded their market and distribution operation The new factory of Igloo was setup at

Shyampur Narayanganj and was nine kilometres away from the Motijheel office The company

apart from catering the capital city started to expand its operations in Comilla (1991) Khulna

(1992) and North Bengal (1993) These markets were served directly from Dhaka since the

storage facilities were not developed till then The company is now the market leader since 1997

with clear market share victory over others with sweeping 51 share It is to be noted that Igloo

is also a player in the boutique segment with three parlours (2 in Dhaka and 1 in Chittagong)

Product Range Igloo offers the widest choice of ice cream more than any other competitor in

the market Igloo is offering a total of fifty items including normal premium and novelty cup

stick and family pack items Igloo has thirty flavours more than anyone else in the industry and

is continuously launching new and innovative delicacies

Igloo ice-cream can be classified in six groups They are

Stick

Macho Choc-bar Mini Choc Clown Mega Shell n core Lolly

Cone

Cornelli 2 in one Cornelli classic

Cup

Shahi kulfi Vanilla Strawberry Mango Snow ball

Container

Vanilla Strawberry Mango Chocolate Coffee Diet Vanilla Tutti Frutti Ripple Pralin

Pistachio

Innovative

Nuggets Sandwich

Family

Ripple cake Party time Shahi Kulfi

Table 19 Products of Igloo

Single serve stick cups and cone items are easy to carry around and convenient to eat which

makes it most sold The core target segment of ice-cream is 6-24 years and this generation is

always on the Evaluation of Entry into Ice cream Business for Bangladesh Limited 30

move and thus prefers independent cone stick or cup items As Igloo initiated the concept of ice-

cream as a family product they offer some items to be enjoyed with the whole family

Quality and Innovation Igloo is committed to maintaining the highest quality standard through

its continuous RampD activities The major ingredients raw materials and packing materials are

procured from the best European sources Strict quality control is done at every stage of the

manufacturing process from procurement of material mixing material flow ice cream making

packaging storing (at main warehouse) distributing and market shelving by the Quality Control

Department Current supply chain for various materials of Igloo is as follows Australia (Milk

Powder) Denmark (Ingredients emulsifiers amp stabilizers) China amp UAE (Food grade sticks)

China Denmark Singapore amp Thailand (Food grade packing materials)

Figure 9 Igloo Supply Chain

Distribution Network Their distribution network is stretched all over the country with a long

fleet of refrigerated vans Firstly the ice cream products are stored at the central warehouse of

the factory and from there they are distributed through the haulage vehicle to the operational

centres located in Dhaka Chittagong Comilla Rajshahi Barisal Bogra Rangpur and Khulna

Strictest cold chain maintenance during the distribution and selling of the ice creams is ensured

Their distribution process is as follows Manufacture Stored at -24c Transported by Refrigerated

trucks at -Reaches amp Preserved in Eight regional stores Refrigerated vehicles (Distributors)Retail

outlets (Deep freezers)

Figure 10 Distribution Process of Igloo

Evaluation of Entry into Ice cream Business for Bangladesh Limited 31

Trolley Operation Igloo also operates through trolleys for extending its reach to consumers at

the furthest points The trolleys are operated near schools alleys streets parks etc and play

rhythmic music to attract the consumers These are very colourfully decorated with Igloo

umbrella and the puller wears specific uniforms Igloo was the first in introducing and operating

these trolleys in Bangladesh for any Fast Moving Consumer Goods (FMCG) Igloo has around

125 trolleys operating throughout the country Individual trolleys are provided with a regular

supply of igloo ice creams

Marketing The marketing commitment of Igloo is based on the relationship with its customers

and consumer by not only manufacturing the highest quality product but also delivering the

product by maintaining this quality To satisfy the ever-changing needs of the customer Igloo

has regularly launched new ice creams and introduced new flavours And this commitment has

positioned Igloo as the market-leading brand by gaining the consumers trust with the positioning

as ldquoA WORLD OF GREAT TASTErdquo

Facilities and Logistics at a glance As of 2009 following are the facilities and logistics enjoyed

by the company

Factory location

Dhaka

Production Lines

4

Packages

Stick Cup Family pack Others (Nuggets and sandwich)

Machine suppliers

1048766 Mark-Italy

1048766 Tetra Pak(Hoyer)-Denmark

1048766 Sabore Denmark

1048766 Hass- Austria

Machine models

1048766 Freemark 1100 Italy

1048766 FM 3000 FM 6000 Italy

1048766 SL600 Denmark

Cone baking

Hass- Austria

Chocolate making

Macentyre-UK

Coverage

Nationwide

Operational centre

10

Total market vehicles

30

Distribution channel

Directthrough appointed distributors

Outlet service

7500

Injected deep freezers

4000

Trolley operations

125

Warehouse no

8

Table 20 Igloo Facilities and Logistics

Kwality

Kwality is currently the second largest ice cream manufacturer of the country The mother

company for the Kwality brand is Sanowara Drinks amp Beverages Ltd a sister concern of

Sanowara Group The company is famous for powdered milk brands Red Cow and Diploma in

Bangladesh The drinks and beverage concern of Sanowara made an entry into the market in

1997 with ldquoYesrdquo brand drinking water and launched the ice cream brand in 1999 With heavy

communication and novelty products it Evaluation of Entry into Ice cream Business for

Bangladesh Limited 32

successfully removed Polar from the second place with a current market share of 27 The

company also operates in the boutique segment with two parlours in Dhaka and Chittagong

Kwality ice cream factory is situated in Chittagong with a floor space of 35000 sft and fully

automated machinery wrapping mix machinery equipments from Italy having capacity of

around 20000 litres of ice cream per shift The ice cream factory employs 140 people The

company is ISO 9001-2000 certified

Kwality was the first true competitor for Igloo products with some major innovation in product

design and communication but their quality is perceived to be lower in the minds of the

consumers and they do not have extrusion ice cream The product prices are also similar to that

of Igloo but they charge a bit lower than Igloo in premium multiple servings However during

market visits it was seen that shops that keep only Kwality or Igloo and Kwality both they can

sell Kwality too although the sales amount is lower than that of Igloo People who look for Igloo

shopkeepers give them that directly but if they get a chance and Kwality ice cream stock is high

they also push Kwality to dry the stock out This gives an indication that market is larger than

what the current players are capable of serving even in Dhaka

Kwality follows a similar distribution model like Igloo but distribution frequency is lower and

amount of cart sellers is limited to 25 and they operate only in Dhaka

Polar

Once a giant in the industry Dhaka Ice Cream Industries Ltd introduced the first hygienically

packed ice cream in Bangladesh in 1987 and the brand name Polar was thus born In the early

days the company started ice cream business with a wide range of products and a variety of

flavours in Dhaka city In 1988 the company started its distribution in the city of Chittagong

then Bogra and continued to cover more cities Presently Polar ice cream is available

throughout Bangladesh The company today trails in the market with 15 market share in the

common format segment Recently Polar has announced launch of ISIS diabetic ice cream with

support from DANONE to turn around in the market

The company has its head office as well as a modern large-scale industrial plant in Dhaka Polar

ice cream is made with Danish expertise using Danish equipment and technology The

production activities and quality control measures are supervised and managed by Danish

experts Polar offers a wide range of delicious flavours and tastes made by ingredients imported

from Europe

Dhaka Ice Cream at present has 3 cold stores in Dhaka Chittagong and Bogra in Bangladesh

From Dhaka cold store they distribute ice creams in Mymensingh Tangail Jamalpur Sherpur

Kishoreganj Netrakona Comilla Narsingdi Barisal Madaripur Agaeljhara Faridpur Magura

Chuadanga Jessore Satkhira Khulna Pirojpur and Sylhet through their distributors In case of

long distance delivery points the company uses auto cooling freezer van

Evaluation of Entry into Ice cream Business for Bangladesh Limited 33

In Dhaka city they distribute ice creams directly to retail stores in freezer vans Besides that

they have several distributors at different points of the city Distributors cover their individual

areas where company is not able to supply directly in their freezer vans Similar model is

followed by the company to distribute ice cream from their other cold storages through out the

country For storing and selling ice creams in retail stores the company like the other players

arranges a deep freezer with the Polar logo and canopy light box

In addition to this distribution the company also undertakes home delivery of ice creams for

special occasions

Savoy

Savoy Ice-cream brand is owned by Sena Kalyan Sangstha (SKS) Group of industries It started

its journey in March 1995 with a factory in Tejgaon Dhaka Yearly turnover is estimated at BDT

388 crores with a market share of roughly 35

The factory has been established with Sonali Bank finance at 6040 equity ratio The total

production capacity of the factory has been estimated at 2400 litres of Ice-cream per day Total

land area of the factory premise is 116 Bigha with 8000 sft area covered with a total project cost

of BDT 144 The factory employs 73 people

Product ranges of the company include all the basic designs and flavours of the industry

However the company has not been much of an innovator in the industry Their product quality

is substantially low than that of other players and they price their products at 10-15 lower than

the other competitors The company imports raw materials mainly from Europe The general raw

materials are Euro cream Skimmed Milk Powder Cocoa Powder and Flavour (Vanilla Mango

and Strawberry) Colour (Yellow Red Chocolate and Green) Ripple Sauce Cheney Fruit Palm

Kernel Oil Anhydrous Butter Oil (Ghee) and Sugar etc

Milk Vita

Milk Vita is one of the most famous brand names in Bangladesh for its liquid dairy milk Owned

by Bangladesh Milk Producersrsquo Co-operative Union Limited (BMPCUL) the company came in

the market with proper dairy milk ice cream in form of cups and choc-bar With a production

capacity of around 1600 litres per day the company is trailing in the market place with 3

market share

Although the Milk Vita Choc-bar was perceived to be extremely tasty by consumers they

probably could not do well due price competition Currently they do not even distribute ice

cream in Dhaka However their presence is seen in outskirts of Dhaka and other nearby towns

If the current market situation prevails Milk Vita would lose their remaining market share and

other companies would benefit especially Igloo However one of the advantages of Milk Vita

remains to be

Evaluation of Entry into Ice cream Business for Bangladesh Limited 34

their nation wide milk supply network They have skimmed milk powder production plant that

Igloo does not have Thus they can combat the seasonality of milk supply that Igloo with its

huge requirement of milk cannot

Strengths and Weaknesses of Competitors

Company

Strengths

Weaknesses

Igloo

1048766 Strong brand image

1048766 High product quality

1048766 Highest no of variety

1048766 Strong distribution network

1048766 Highest visibility

1048766 Strong promotion

1048766 High production capacity

1048766 Presence of extrusion ice cream

1048766 Items are generally a bit pricy

1048766 Igloo does not give free freezers like other companies

1048766 Reluctant in recent times regarding innovation

1048766 Local sourcing of liquid milk does not meet demand

1048766 Failure to use ERP technology slowing decision making

Kwality

1048766 Product variety

1048766 Strong promotion

1048766 Free freezer distributed

1048766 Presence in all price segments

1048766 High production capacity

1048766 Weak distribution

1048766 Lower exposure

1048766 low amount of carts in operation

Polar

1048766 Free freezer

1048766 Quality perceived to be high compared to Kwality

1048766 Discoloured freezers

1048766 Lower exposure

1048766 Low product variety

1048766 Unused capacity

Savoy

1048766 Price is lower

1048766 Discoloured freezers

1048766 Low product variety

1048766 Weak distribution

1048766 Small amount of freezers

1048766 Low production capacity

Milk Vita

1048766 Quality is good due to dairy cream

1048766 Brand leverage from Milk Vita milk

1048766 Low exposure

1048766 Low variety

Table 21 Strengths and Weaknesses of Competition

512 Market Characteristics of the Boutique Segment

With a small market of BDT 98 Cr and 567 share in the branded ice cream market the

boutique segment is currently an increasing segment in the ice cream industry Boutique

segmentrsquos history dates back to 1960s when Igloo launched boutiques in Dhaka to save

distribution cost and promote a culture of ldquoice cream eating outrdquo In later years boutiques lost

their glamour and retail common format segment picked up growth However with Dolce Vita in

the late lsquo80s craze for Italian Artisan ice cream was recreated in the market Although Dolce

Vita is failing in recent times emergence of MoumlvenPick and Club Gelato in 2000 has uplifted the

segment once again Current growth rate of the

Evaluation of Entry into Ice cream Business for Bangladesh Limited 35

segment can be estimated to be approx 20-22 (higher than the common format segment)

Following are the basic detail of all the major players in the segment with their estimated sales3

Players

Outlet

Sales (Cr Taka)

Share

Club Gelato

1

136

199

MoumlvenPick

1

119

174

Andersenrsquos

3

119

174

Gelateria Igloo

3

119

174

Sub Zero (Kwality)

2

051

75

Baskin Robbins

1

015

22

Dolce Vita

1

017

25

American Soft

1

009

12

Rainbow

1

009

12

Others (off site)

089

130

Total Market

682

Table 22 Players and Shares in Boutique Segment

A Detail of Operation

General operational procedure followed by all the operators is as follows

1048766 Operating method There is a variation in operational method among the large operators

1048766 Club Gelato uses kitchen at own premise where imported ingredients and local milk (daily

special service from Milk Vita) are used to make ice cream

1048766 MoumlvenPick directly imports ice cream from Switzerland

1048766 Andersenrsquos Gelateria Igloo and Sub Zero produce ice cream at their factory with a mix of

imported and local ingredients

1048766 Products Around 30-35 flavours of artisan dairy ice cream are served at the premises

1048766 Most sold flavours are Vanilla Ferrero Rocher Butterscotch Chocolate Caramel etc

1048766 Other Products Larger players also serve ice cream desserts (milk shakes ice cappuccino etc)

pastries and other desserts with normal coffee and tea facility at their premises

1048766 Boutiques fight ice cream seasonality with the other products sales during off-peak ice cream

seasons Usually ice cream and other products contribute at 6040 ratio in summer and during

winter and off-peak seasons the ratio reverses

1048766 Pricing Usually the prices of products in this segment are 3-4 times higher than that of the

common format segment

1048766 Prices do not vary with flavours Variation depends on serve style (Cone tub) and use of

toppings and other ingredients (Chocolate sauce nut fruits) etc

1048766 Usual margin charged is around 50-60 over production cost Similar margin is charged for

other products like coffee ice cappuccino etc

3 Yearly sales is estimated based on companyrsquos approximate daily sales collected during

interview

Evaluation of Entry into Ice cream Business for Bangladesh Limited 36

1048766 Target Group Most of the consumers belong to SEC A and higher SEC A with DMFI of at

least BDT 20000

1048766 Foreign delegates and resident foreigners also visit these boutiques

1048766 Main purposes of visits in the boutiques are

bull Youth hangout with friends and having ice cream and ice cream derivatives

bull Family Family night out or eat out at a restaurant and then having dessert

bull Foreigners Having dessert after dinner

1048766 Rush time at boutiques are Afternoon 2-4 pm and at night 9-11 pm

1048766 Offsite sales Most of the large operators also sell offsite They have small freezers for off-site

1048766 Club Gelato and MoumlvenPick serves ice cream at high society parties and programmes

1048766 MoumlvenPick also has kiosks in known hotels like Sheraton

1048766 Promotion No mass promotion is done by any of the companies Word of mouth is the most

important source of promotion Posters and banners outside the premise and occasional

newspaper advertisements are used to communicate special offers

1048766 Growth Drivers Market growth is driven by image innovation quality decoration of facility

environment and special offers

1048766 Club Gelato has the image of selling true Italian dairy ice cream with an excellent hangout

environment

1048766 MoumlvenPick imports ice cream directly from Switzerland and is perceived to be of high quality

1048766 Andersenrsquos operates with the image of ice cream from Denmark

1048766 Gelateria Igloo (from Igloo) and Sub Zero (from Kwality) could not establish the premium

artisan ice cream image

B Players in the Boutique Segment

There are very few players who have significant impact in the boutique segment Detailed

information of all the major boutique segment players is provided below

Evaluation of Entry into Ice cream Business for Bangladesh Limited 37

Club Gelato

Basic Company Information

1048766 Location Banani Road 11 (Planning for a second one in Dhanmondi)

1048766 Established in 2001

1048766 Seating Capacity 48

1048766 Area 1250 sft (including kitchen)

1048766 Owner Mr Jahangir Alam (Bangladesh)

1048766 Business Type Joint business partnership with Singapore

1048766 Staff 15 people (6 in the kitchen)

1048766 Production capacity 150 litres per day

Product Related Information

1048766 Product Italian style parlour scoop ice cream fruit juice coffee and pastries

1048766 Flavours Around 32 flavours available

1048766 Most selling Ferraro Rocher Vanilla Pistachio

1048766 Innovations New variants and ingredients are communicated by their Italian supplier and

Club Gelato decides what to take from them

1048766 Serve type Cup Cone Glasses Box for take away

Consumer Profile

1048766 Primary Teenagers and Young Adults (18-30) amp Diplomats

1048766 Secondary Family consumers for eat out

1048766 Income Group High income customers tentatively from SEC A and higher SEC A

1048766 Geographic Area Diversified

1048766 Rush time 8-10 pm

Sales and Price Information

1048766 Sales BDT 50000 (60 Ice cream 40 other desserts) daily in summer In winter however

other products sell more and thus they keep total sales at the same level

1048766 Price 750 per litre for any flavour

1048766 Sales Volume 50-60 litres per day

Supply Chain Placement Information

1048766 Milk Local sourcing from Milk Vita (4050 litres per day)

1048766 Chocolates amp Flavours Belgium France Germany

1048766 Transportation Mainly air (They can afford it due to high margin)

1048766 Contribution of various materials Flavours (30) Milk (20) other parts are water and air

Promotional Materials

1048766 Materials used are near premises POS materials for promoting the parlour only

Table 23 Detail of Club Gelato

Evaluation of Entry into Ice cream Business for Bangladesh Limited 38

MoumlvenPick of Switzerland

Basic Company Information

1048766 Location Gulshan

1048766 Established in 2000

1048766 Seating Capacity 55

1048766 Owner Mr Arif Mahmud

1048766 Business Type Franchise of International MoumlvenPick

1048766 Storage Capacity in Shop 150 litres

Product Related Information

1048766 Product Imported MoumlvenPick ice creams coffee chicken sandwich and Frappe

1048766 Flavours Around 30 to 35 flavours available

1048766 Most selling Swiss Chocolate caramel Vanilla Dream Espresso Strawberry

1048766 Innovations New variants are communicated by their franchiser and they decide on flavours

that they want

1048766 Serve type Cup Cone Glasses Box for take away

Consumer Profile

1048766 Primary Teenagers and Young Adults (18-30) (70) amp Diplomats

1048766 Secondary Family consumers for eat out

1048766 Income Group High income customers tentatively from SEC A

1048766 Geographic Area Concentrated in Gulshan and nearby areas

1048766 Rush time Afternoon- Young Adult 10 to 11 pm Foreigners

1048766 the company also serves at parties and has freezers in known hotels where their ice creams

are served

Sales and Price Information

1048766 Sales BDT 35-40000 daily in summer

1048766 Price 640 per litre for any flavour

1048766 Sales Volume 55-60 litres per day

Supply Chain Placement Information

1048766 Transportation Imported finished goods by ship

1048766 Ship travel time 19 days

1048766 Port clearance 10 days

1048766 Safety Cushion Extra 10 days

Promotional Materials

1048766 Materials used are near premises POS materials for promoting the parlour only

Table 24 Detail of MoumlvenPick of Switzerland

Evaluation of Entry into Ice cream Business for Bangladesh Limited 39

Andersenrsquos of Denmark

Basic Company Information

1048766 Location Gulshan (2 others in Uttara Dhanmondi)

1048766 Established in 2001

1048766 Seating Capacity 48

1048766 Owner United Group

1048766 Business Type Franchise of Australian company Andersenrsquos of Denmark

1048766 Production Tongi Factory of United Group

1048766 Production capacity 2000 litres per day in factory

1048766 Storage Capacity in Shop 150 litres

Product Related Information

1048766 Product Danish parlour scoop ice cream and coffee

1048766 Flavours Around 30 to 35 flavours available

1048766 Most selling Strawberry Butter Scotch Green

1048766 Innovations New variants and ingredients are communicated by their franchiser and they

decide on flavours that they want

1048766 Serve type Cup Cone Glasses Box for take away

Consumer Profile

1048766 Primary Teenagers and Young Adults (18-30) (70) amp Diplomats

1048766 Secondary Family consumers for eat out

1048766 Income Group High income customers tentatively from SEC A

1048766 Geographic Area Concentrated in Gulshan and nearby areas

1048766 Rush time 8 to 10 pm

Sales and Price Information

1048766 Sales BDT 10-12000 daily in summer

1048766 Price 460 per litre for any flavour

1048766 Sales Volume 40-50 litres per day

Supply Chain Placement Information

1048766 Milk 2025 kg packs are imported

1048766 Chocolates amp Flavours Imported

1048766 Butte paper Local sourcing

1048766 Transportation Ship

Promotional Materials

1048766 Materials used are near premises POS materials for promoting the parlour only

Table 25 Detail of Andersenrsquos of Denmark

Evaluation of Entry into Ice cream Business for Bangladesh Limited 40

Gelateria Igloo

Basic Company Information

1048766 Location Banani Kemal Ataturk Avenue (Two others in GEC Mor Chittagong and Naya

Paltan)

1048766 Established in 2000

1048766 Seating Capacity 20

1048766 Production From Igloo factory in Shyampur Narayanganj

Product Related Information

1048766 Product Parlour scoop ice cream and coffee only

1048766 Flavours Around 30 flavours available

1048766 Most selling Vanilla Strawberry Chocolate Pistachio Butter Scotch Tutti Fruity

1048766 Serve type Cup Cone Glasses Box for take away

Consumer Profile

1048766 Primary Teenagers and Young Adults (18-30)

1048766 Secondary Family consumers for eat out

1048766 Income Group High income customers tentatively from SEC A and B

1048766 Geographic Area Diversified

1048766 Rush Time afternoon and evening

Sales and Price Information

1048766 Sales BDT 8000 to 10000 daily in summer Nearly one fourth in winter

1048766 Price Varies but 350 per litre of vanilla

Promotional Materials

1048766 POS materials at the premises

Table 26 Detail of Gelateria Igloo

52 Price Comparison of Common and Boutique Segments

Price ranges of both common format and boutique segment cannot exactly be pin pointed as

products do not follow common structure and variations occur with use of toppings mixing of

flavours and use of coatings However a price comparison has been made among the brands

based on their price of per litre of vanilla flavoured ice cream in the market It appears to be as

following

Company

Price Litre Vanilla

Club Gelato

750

MoumlvenPick

640

Andersenrsquos

460

Dolce Vita

440

Igloo

100

Kwality

100

Polar

100

Milk-Vita

90

Savoy

85

Table 27 Comparative Price Analysis

As it can be seen there is price gap within the range of BDT 100-400 Ice cream kiosks and

small scooping boutiques can operate within that range

Evaluation of Entry into Ice cream Business for Bangladesh Limited 41

60 CONSUMER ANALYSIS

61 Target Group of Ice cream

Who are the consumers of ice cream This question does not have a clear answer Ice cream is a

food for all It is the only food consumed by a human being at less than 0 degree centigrade

temperature and people of all ages feel indulged to have it However we can determine focus

target groups for both branded common format and artisan boutique ice cream Group

discussions and market visits were done to get insight into the consumers along side resources

form secondary sources Age based target group is common for both segments but variation

among the groups occur mainly based on SEC and DMFI classification

611 Geographic Group

Branded ice cream remains an urban product till date Geographically branded ice cream has

reached urban and semi urban areas up to Thana Head Quarter levels Ice cream has reached

areas where electricity is available Small artisan players are available in places where large

branded players have no distribution

612 Target Age Group

Age wise grouping of target consumers is as follows

1048766 Urban kids in the age group of 5-14

1048766 They mainly consume normal sticks cups cones innovative fillers and water ice creams

1048766 Urban youth in the age group of 15-24

1048766 They consume premium and extrusion sticks and cones

1048766 Urban mothers in the age group of 25-35

1048766 They determine the family purchases Even when the father purchases ice cream decision is

taken by them

Consumption pattern of various age groups are depicted in the following chart Ice cream

consumption pattern50203005 to 14 yrs15 to 24 yrs25 to 35 yrs

Figure 11 Target Group wise Consumption Pattern Evaluation of Entry into Ice cream Business

for Bangladesh Limited 42

613 Target SEC and DMFI Group

Common Format

SEC A and B is the target group for common format ice cream However with rapid increase in

price level over the years has made it a ldquohard to consumerdquo product for SEC B consumers who

belong to lower DMFI group

Boutique Format

Boutique formatrsquos higher margin and high price range makes it an exclusively SEC A ice cream

People belonging to upper and upper middle class have access to the mediocre boutiques and

only higher upper class can have premium ice creams like Club Gelato and MoumlvenPick

Another unique target group for boutique format are the foreigners who live in Bangladesh

These people tend to visit the parlours to have ice cream as dessert especially after dinner

62 Ice cream in Consumer Lifestyle

Figure 12 Ice cream in Consumer Life style

This simple overview of ice cream in consumer lifestyle was determined based on in-depth

research analysis of UBL and validated through qualitative group discussions by the author

However detail of in-depth research is provided in a later section of this chapter

Evaluation of Entry into Ice cream Business for Bangladesh Limited 43

63 Highlights of Purchase Habit of Ice cream

631 Common Habits across Target Groups

There are some common habits that were identified in earlier researches and group discussions

with consumers Common habits mean the consumer approach towards ice cream that is seen

across all target groups eg kids youth and adult purchasers These are outlined below

1048766 Ice cream is mainly seen as a dessert or a snack Impulse ice cream is seen as a quick snack

that is consumed when it is in sight Visibility plays a big role here Regarding family packs

people see it as a post-food dessert

1048766 Ice cream purchase is commonly a planned event When the contexts arise people generally

take a bit of time to decide whether or not to have ice cream or when they want to go to a

boutique they make due considerations regarding which boutique to visit

1048766 Ice cream purchase decision is taken based on favourite flavour People tend to try out new

variants and flavours when they first see it They compare the taste with earlier experience and

when they purchase later they choose the flavour they have liked most

1048766 For In-Home segment decision is mostly taken on the flavour Generally people come up with

different flavours of choice and most voted flavour is chosen

1048766 People become aware of new variants or flavours mainly through word-of-mouth

Advertisement (new launches special offers and festivals) in newspaper is another source of

awareness

1048766 People are currently indifferent towards the price level of premium flavours However some

feel that price of Choc-bar or water ice creams (lolly) is a bit much If less they would have

consumed more Some also feel that companies should come up with branded ice cream in the

price range of BDT 5-8

1048766 Ice cream is purchased from nearby shops If required brand and flavour is not available 2-3

shops will be visited and then available flavour will be selected even if the required one is not

found This is done mainly not to ruin the mood for ice cream

1048766 People are very open to try new brands and flavours especially if it comes from a credible

source They would try new flavours and if they are satisfied with the taste they would repeat

purchase

1048766 Regarding boutique visits people feel that boutiques need to have a proper environment

enough flavours and other snacks

1048766 While visiting boutique with family or companion they want variation in flavours so that

they would order different flavours and taste each otherrsquos ice cream It is seen as a sign of

togetherness

1048766 Frequency of ice cream purchase varies among people It depends on peer pressure collective

family decision summer heat and attitude towards ldquoice creamrdquo itself as a product Evaluation of

Entry into Ice cream Business for Bangladesh Limited 44

632 Habits of Kids

1048766 Kids choose ice cream flavours by the look of the product (generally pictures shown in POS

materials and carts) They love colour and designs of the products let it be a common format or a

boutique ice cream

1048766 Kids (when in house) would go with the housemaid to the nearby shop choose the flavour

they want (within range of the amount given to the maid) and buy it

1048766 When with parents they would take the product they like even if the price is lower than some

other product However mothers play a role in this decision They would want their children not

to choose too high priced a product or coloured products

633 Habits of Youth

1048766 Young people are the main consumer of impulse ice cream They also are one of the major

consumers in the boutique segment

1048766 Young people love to try out new products that come into the market Another side of the coin

is that they are not very loyal to a brand or a flavour and tend to switch a lot

1048766 Regarding boutique visits young people go to boutiques to have an ldquoice cream hang outrdquo with

peer groups They would stay there for a longer period of time while they have their ice cream

1048766 Some times young people make milk shakes and other ice cream based desserts

634 Habits of Mothers

1048766 Mothers worry about their childrenrsquos health and they prefer ldquovanillardquo type of brands

However when price constraint occurs they go for water ice creams for their children They try

to convince their kidrsquos purchase decision

1048766 Regarding family purchase motherrsquos decision is sometimes prioritized by the whole family

64 Barriers to Ice cream Consumption

641 Emotional Barriers

1048766 Overindulge (close to sinful)

1048766 Undisciplined (no control)

1048766 Childish (licking)

1048766 Artificial Image

642 Functional Barriers

1048766 People of SEC B feel that ice cream is an expensive dessert (If less expensive would consume

more often)

1048766 It leads to cold cough - especially in winter rainy season

1048766 It contains artificial additives preservatives

1048766 It is very high in calories that lead to fattening

Evaluation of Entry into Ice cream Business for Bangladesh Limited 45

1048766 It does not quench ldquothirstrdquo

1048766 Less convenient (portable immediate eat)

1048766 Messy Dripping

65 Research Findings

The highlights regarding purchase habits triggers and barriers of ice cream consumption provide

a glimpse into the consumer world of ice cream industry However UBL CMI conducted a

formal research exclusively on ice cream consumers to identify

1048766 Occasions of ice cream

1048766 Frequency of ice cream consumption

1048766 Expectations from ice cream occasions

1048766 Personalities that they desire from ice cream

651 Relevant Occasions in Daily Lives of Consumers

Research question regarding ldquousual occasions of life that occurred most frequently in day-to-day

lives of the respondentsrdquo generated the following replies

Occasion

of Respondents saying Yes

Watching TV

93

Normal Dinner At Home

91

Normal Lunch At Home

89

At Home While ReadingMusicSurfing

86

Informal Family Get Together

85

Out Of Home Hanging Out With Friends

84

Out Shopping

84

Mid-Afternoon Break At Home

83

At Home By Myself During The Day

82

Special Dinner At Home

82

Informal Dinner Out Of Home

82

Normal Lunch Out Of Home

82

Leisure Walk

79

Coming Home From WorkSchool

78

Special Dinner Out Of Home

78

Celebration

78

A Night In With Friends

77

At Home By Myself In The Evening

77

Special Lunch Out Of Home

76

Mid-Afternoon Break Out Of Home

75

Special Lunch At Home

73

Day out with Partner

72

Midmorning Break

70

At Breakfast

68

Family Day Out

68

During Work Or At School

65

Evaluation of Entry into Ice cream Business for Bangladesh Limited 46

Travelling ToFrom WorkSchool

65

At The Cinema

61

Special Event

56

Clubbing At A Party

50

Post GymSports

48

Table 28 Relevant Occasions in Consumersrsquo Lives

Respondents were then asked to mention ldquofrequency of occurrence of the identified occasionsrdquo

The identified replies are as follows Normal dinner at homenormal lunch at homeComing home

from workschoolTraveling tofrom workschoolDay out with Partner SpouseMid-afternoon

break at homeOut of home hanging out with friendsLeisure walkMid-afternoon break out of

homeA night in with friendsSpecial dinner at homeSpecial lunch out of homeFamily day

outSpecial eventPost gymsportsDaily2-3 Times A WeekWeekly2-3 Times A MonthOnce A

MonthEvery 2-3 MonthsLess OftenNever Figure 13 Frequency of Occurrence of Occasions

This shows that ldquoNormal dinner at home Watching TV Normal Lunch At Home At Home

While ReadingMusicSurfing Coming Home From WorkSchool During Work Or At School

Travelling ToFrom WorkSchool Midmorning Break Day Out With Partner Spouse At Home

By Myself During The Dayrdquo are the most frequent daily rituals of busy lives of consumers

652 Frequency of Ice cream Consumption

Respondents were asked to mention ldquoconsumption pattern of ice cream during the identified

occasionrdquo on a scale of 1-5 depicting frequencies like ldquo(5) always (4) most of the times (3)

about half of the times (2) sometimes (1) never do not knowrdquo The responses are depicted in

the following table

Evaluation of Entry into Ice cream Business for Bangladesh Limited 47

444474544655555566756665775967779991011101111101210111110101113111412131314161

011121411131216181519181518211817171719181718201721222130303434253437403741394

046383944464746453745414641374638504843414839373030292726232725222020201926202

21722221317Midmorning

breakWhile clubbing at aAt the cinemaSpecial eventNormal lunch out ofA night in with

friendsNormal dinner atInformal dinner out ofAt home by myselfAt home by myself inOut

shoppingSpecial lunch atDay out with SpouseWatching TVAlwaysmost of the timesAbout half

of the timesSometimesneverdo not know

Figure 14 Frequency of Ice cream Consumption

As it can be seen ldquoDay out with Spouse Special lunch at home Special dinner at home

Watching TV Family day out Celebrationrdquo are the occasions where most frequently ice cream is

consumed

653 Market Character Mapping Relevant Occasions vs Frequency of Consumption

If we plot frequency of consumption on the X-axis of a chart and relevance of occasion

occurrence on the Y-axis taking the above mentioned values as cut-off values we get four

quadrants in the chart depicting four market scenarios that any ice cream manufacturer in

Bangladesh market might encounter given the current market situation This market

segmentation is based on frequency of ice cream consumption in daily occasions of consumer

lives

The segments are

1048766 OPPORTUNITY MARKET High Relevant Occasions-Low Ice cream Frequency

1048766 QUESTION MARKET Less Relevant Occasions-Low Ice cream Frequency

1048766 HIGH FREQUENCY MARKET Relevant Occasions-High Ice cream Frequency

1048766 CAPTIVE MARKET Less Relevant Occasions-High Ice cream Frequency

The chart looks as follows Evaluation of Entry into Ice cream Business for Bangladesh Limited

48

Figure 15 Relevance of Occasion-Frequency of Consumption Mapping

As it can be seen from the above chart Bangladesh Market still lies in the Opportunity and

Question market zone with a pull towards High frequency and Captive Market zones This is

evident from market data as penetration of ice cream still remains at Thana headquarters levels

Also this explains the high market growth rate of 17 as market is yet under developed and

branded quality ice cream has yet not reached all levels of consumers especially rural level that

constitutes around 75 of Bangladeshi market

From the above analysis we can establish that target of ice cream manufacturers should be to

penetrate more into the Bangladeshi market to create higher frequency of ice cream

consumption The following chart shows the strategies to follow for ice cream manufacturers

Figure 16 Required Market Strategy for Bangladesh

Evaluation of Entry into Ice cream Business for Bangladesh Limited 49

As relevance of ice cream consumption occasions can hardly be controlled by marketers their

endeavour should be to create more ldquoemotional and functionalrdquo attachment to ice cream in less

frequent occasions through ldquomarket developmentrdquo strategy to earn share from overall food

expenditure of consumers and at the same time make them consume more ice cream in highly

relevant occasions through ldquopenetrationrdquo strategy

654 Consumersrsquo Emotional Requirements and Product Attributes

All consumers under these clusters also identify the emotional requirements and the significant

product attributes they seek from their current preferred and future desired ice creams These are

provided below

Cluster

Emotional Functional Requirement

Product Attributes

Enjoyment

Flavour Variety

1048766 Combination of different flavours

1048766 Combination of different textures

1048766 Very sweet

1048766 With wafer or biscuit

1048766 With chocolate

1048766 Of a well known brand

Socially Involved

Spoonable Rich

1048766 Very creamy

1048766 Only natural ingredients

1048766 No mess

Care

Size Creaminess

1048766 Big

1048766 Rich full taste

1048766 Smooth

1048766 Value for money

1048766 No mess

Unwind amp Escape

Economy

1048766 Crunchy

1048766 Economic

1048766 Of a well known brand

1048766 Nutritious

Balanced Convenience

Health Conscious

1048766 Of a well known brand

1048766 Nutritious

1048766 Milk based

1048766 Low sugar

1048766 Low carbohydrates

1048766 Filling

Active Self-Grooming

Fruit Vitamins

1048766 Healthy

1048766 Fruit based

1048766 Low fat

1048766 Liquid or drinkable

1048766 Nutritious

1048766 Of a well known brand

Confidence

Drinkable Light

1048766 Low calories

1048766 Light on the stomach

1048766 Chewy or gooey

1048766 Not so sweet

1048766 Natural appearance

Sensual

Appeal or image

1048766 No artificial additives

Evaluation of Entry into Ice cream Business for Bangladesh Limited 50

1048766 Natural appearance

1048766 Melting slowly

1048766 Attractive packaging

1048766 High quality ingredients

1048766 Of a well known brand

Table 29 Requirements amp Product Attributes Desired by Consumer Clusters

Of these findings we see that the identified highlighted barriers to ice cream consumption are

pretty evident among the consumers Mostly people want products of a reliable source or a well

known brand low calories quality ingredients value for money economic type

Evaluation of Entry into Ice cream Business for Bangladesh Limited 51

70 INDUSTRY ATTRACTIVENESS AND ENTRY PROSPECTS

71 Driving Forces of Growth

As identified in the earlier sections there are several driving forces behind the growth of ice-

cream industry in Bangladesh

712 Trade and Infrastructural Level

1048766 As a result of globalization newer varieties have been introduced to the local products Many

foreign companies are also coming as franchise so there has been increased competition and

these boutiques are setting higher standards for the local producers

1048766 The present market growth rate is 18-19 which is being influenced by larger players like

Igloo who are expanding their distribution nation wide with expansion of national electricity

grid

1048766 With entry of Modern Trade and recent organized business approach of retailers has made it

possible for ice cream manufacturers to penetrate into shops even without providing them with

branded freezers

1048766 Weather change has increased ldquosummerrdquo season in our country which has reduced negative

seasonal impact on ice cream

1048766 Large companies like Igloo have taken global learning of using carts as an effective tool of

availability and visibility for ice cream

1048766 New and improved technologies are being used in the production process This technological

advancement has improved quality increased speed of production and made the process more

cost effective

713 Consumer Level

1048766 Only a few years back rich people could afford the luxury of having ice-cream but now it has

become a common product for everybody Ice-cream companies are producing different products

with a wide price range for consumers of every class and status

1048766 Nowadays companies are doing promotional campaigns more frequently the customers get to

know about the product which makes it easier for them to buy the best one

1048766 The improved standard of life and more modernized lifestyle of people is an important reason

for the increased consumption thus growth of the ice-cream industry

Evaluation of Entry into Ice cream Business for Bangladesh Limited 52

72 Prospects of Entry

The ice-cream industry of Bangladesh is an attractive one for the investors because there is a

huge market but number of producers is very small The major reasons behind industry

attractiveness are as follows

1048766 The industryrsquos current growth potential is very high with opportunity for market development

1048766 The competition currently permits adequate profitability and the competitive forces are

becoming stronger with time

1048766 Boutique segment is at a very high growth stage but no operator is currently operating with a

mid price range of BDT 100-400 Ice cream kiosks and small scooping boutiques can operate

within that range

1048766 Current industry driving forces are favourable for the future industry profitability

1048766 Globally oriented consumers look for variety in ice cream that is currently not available

Latest innovations came in the market in 2002 People would welcome new variety and flavours

1048766 There is a gap in the market for balanced convenience through ice cream where consumers can

get nutritional benefits for ice cream Also emotional attachment to ice cream could further be

improvised in promotional campaigns

1048766 There is high scope for market penetration and development to increase frequency of ice

cream consumption

1048766 Level of risk or uncertainty is very low in ice-cream industry because the consumer market is

so huge any product with a standard quality and careful pricing will be able to make significant

profit

1048766 As for geographic reach of the industry 60 market is still in Dhaka There is scope of

expansion and a new entrant can easily capture market share within Dhaka using carts even if

they do not want nation wide cold chain distribution

1048766 The production process is very complex and capital requirements are also high So before

going into production any company should know about their capabilities and weaknesses and

then start the business or else they might suffer huge loss at a certain level

1048766 Unilever can acquire the required resource and use existing multi-national multi-cultural

expertise to enter the market in a grand way

1048766 With high probability of entry from DANONE with more products like the ISIS diabetic ice

cream Unilever should consider entering in this industry as soon as possible

Evaluation of Entry into Ice cream Business for Bangladesh Limited 53

80 ENTRY STRATEGY FOR UNILEVER

While describing the suggested entry strategy for UBL certain issues have been kept

confidential and some issues have been touched but not explained to keep consistency with UBL

confidentiality policy

81 Suggested Entry Areas for UBL

1048766 Boutique segment of the Bangladesh ice cream is only 5 of the branded market UBL needs

to pursue a larger scope to make the entry viable

1048766 UBL cannot fight with unbranded segment as global product quality mandate of Unilever does

not allow UBL to fight in low price-low quality segment

1048766 Recommend entry should be in the common format segment with both single and multiple

servings and in the boutique segment with a different brand name (if possible BEN amp JERRYrsquoS)

1048766 UBL should build up state-of-art modern factory for manufacturing and establish cold chain

facilities initially focusing on metro cities

1048766 Investment issues are required to be addressed for building factory and cold chain and capital

requirement needs to be identified for that purpose4

1048766 UBL may have boutiques for driving image selective top-end offering

1048766 Kiosks can be setup near universities and shopping malls

1048766 Boutiques should be concentrated in Dhaka and Chittagong

1048766 Ice cream for boutiques and kiosks would be produced in factory as institutional packs of 9-10

litres

82 Products

1048766 As a Brand Building country in global Unilever operating framework UBL is entitled only to

bring products developed by the Brand Development countries

1048766 Unilever should focus on serving products that have nutritional benefits (already available

globally) along with usual satisfactions of sensual pleasure functional attributes etc

1048766 Current existent players especially Igloo and Kwality have extensively copied global and

regionally available Unilever products eg Cornelli is same as Wallrsquos Cornetto Vinetta is similar

to Vienetta Mega is similar to Magnum etc UBL needs to differentiate these to consumers on

the ldquotaste the originalrdquo platform where global quality is focused regarding the products

1048766 UBL should also bring regionally famous brands like Moo or Max to create image

differentiation

1048766 Magnum or Moo should be used as premium end ice cream to generate more profit margin

Evaluation of Entry into Ice cream Business for Bangladesh Limited 54

83 Placement

1048766 Distribution focus should be in Dhaka for entry as Dhaka contributes more than 60 of total

ice cream sales in the country

1048766 Company may use carts as distribution method They serve as good source of visibility and

availability It would help in increasing impulse purchase

1048766 At least 1500 outlets in Dhaka and Chittagong needs to be actively served using dedicated

branded refrigerators to generate sales

1048766 50 carts should operate in Dhaka and Chittagong

84 Price

1048766 UBL products should be priced at par with Igloo pricing for the common format ice creams

1048766 UBL can bring in premium single-serve SKUS for the higher economic classes in the price

range of BDT 60-80

1048766 Smaller SKUs (small lolly stick) can be introduced in the price range of BDT 10-15

1048766 In the boutique segment UBL should price products above the semi-premium segment

(Gelateria Igloo Sub Zero or Andersenrsquos) but lower than that of Club Gelato or MoumlvenPick

85 Promotion

1048766 UBL would require strong marketing campaign (As high as 50 of sales) to have a grand

entry in the market

1048766 Presence in the television media would be of utmost importance More than 50 of

promotional expense should be made here initially Gradually it can be reduced

1048766 Newspaper would serve as the second most important option

1048766 Billboards should also be used

1048766 Activations (similar to Lux Channel i Super Star or Igloo Festival) should be done to generate

trial

86 Scope of Opportunity

Table 30 Value and Volume Based Scope of Opportunity for UBL

Value (BDT Cr)

Volume (Tons)

Market

131

7835

Common

121

7600

Boutique

98

235

Evaluation of Entry into Ice cream Business for Bangladesh Limited 55

861 Geographic Contribution

1048766 Dhaka (61)

1048766 Chittagong (19)

1048766 Sylhet (10)

862 UBL objectives

Common Format Ice Creams

1048766 Target 10 Market share in 1st year operation

1048766 Value BDT 11 Cr

1048766 Production capacity required 21 Tons day

1048766 Freezer Placement 1500 freezers

1048766 Cart operation At least 50 carts

Boutiques

1048766 Target Further develop the market

1048766 Focus Dhaka Chittagong and Sylhet Metro

1048766 Franchise At least 20 franchisee operations nation wide in divisional towns

1048766 Pricing Below imported parlours above common formats with around BDT 400 per Litre

87 Critical Success Factors

1048766 UBL is considered as a high profile company in Bangladesh and thus they cannot operate in

the market only with common products like choc-bars and cups They must have premium

products (these require extrusion line) also to carry their brand image Otherwise UBL would not

be able to charge usual premium over competition products

1048766 Launch of ice cream would require huge promotional and activation support in order to gain

customers from Igloo People want novelty regarding ice cream and UBL have to let them know

about their products and create hype

1048766 Cart should be used as a source of distribution Recent successes of Unilever companies like

Indonesia shows that carts can generate more sales and can be used as source of visibility in the

minds of both retail traders and consumers Carts can also provide incremental sales to the

company

1048766 UBL have to create a strong cold chain for ice cream (initially in Dhaka and Chittagong) to

ensure quality products for consumers

1048766 UBL have to build capacity very rapidly to meet consumer demand if the launch is successful

Evaluation of Entry into Ice cream Business for Bangladesh Limited 56

90 BUSINESS PROJECTION

91 Basic Assumptions

Business projection for ice cream business was made based on a conservative approach UBL

would require spending significantly on production capacity and factory dedicated to ice cream

Thus to analyse business possibilities of ice cream certain assumptions were made and collected

data were used These are

1048766 Production equipments and cabinets would cost approximately BDT 55 crores

1048766 Production equipments 45

1048766 Packaging Equipments 15

1048766 Storage Facility 20

1048766 Branded Freezers 10

1048766 Distribution Investment 10 (Distributors would also invest themselves)

1048766 Ice cream factory with a floor size of 20000 sqft would cost BDT 25 crores

1048766 Objective is to capture 10 market share in Dhaka and Chittagong in the first year

1048766 Business would grow by 50 in year 2 and 3 30 in year 4 and 25 in year 5

1048766 Weighted price per litre is BDT 170 according to volume share of single serve ice cream

multiple serve ice cream and boutique ice cream

1048766 Other financial assumptions were also made List of them are provided below but amount has

been removed for confidentiality issues

Assumptions

Trade Margin

Distributors Margin

DutyVAT Rate

Trade Terms Expense of NPS

Trade Terms Expense of NSV

Advertising ampPromotion of NPS

Indirects (Salaries Wages etc)

Trading Tax

Table 31 Assumptions for Business Projection

Evaluation of Entry into Ice cream Business for Bangladesh Limited 57

100 CONCLUSION

Ice cream has good prospect in Bangladesh It is still a growing market with opportunities for big

new entrants With the barriers of entry UBL needs to consider its priorities UBL being an HPC

company traditionally needs to acquire expertise in cold chain distribution and has to invest a lot

of money to rip the benefits of the industry However to initiate company can take regional

support and acquire resource expertise The company should enter the business as soon as

possible since there is potential threat from DANONE to introduce more ice creams after ISIS

diabetic ice cream and also with potential of the industry arch rival Nestlersquo might consider

entering into the industry too

Evaluation of Entry into Ice cream Business for Bangladesh Limited 58

References

Web References

1 wwwunilevercom

2 wwwunilevercombd

3 wwwhllcom

4 wwwunilevercompk

5 wwwthedailystarcom - Life Style Magazine

6 wwwreuterscouk

Evaluation of Entry into Ice cream Business for Bangladesh Limited 59

Page 16: Square Ice cream

50

Savoy

Company

1 to 2 times a fortnight

176

-

Milk-Vita

-

-

-

-

Table 13 Distribution Method of Market Players

Distribution Process Distribution process through both methods is described below

Retail Distribution The general distribution that is followed by companies is that distributor

sends large refrigerated trucks dedicated to specific territories These trucks are accompanied by

small refrigerated vans Main road side shops are served directly from the large truck and shops

that are inside small streets are served by the small vans

Order and delivery are done on the same day The strategy followed is that of replenishment If

the branded freezer of the company is empty they simply fill it up according to requirement of

different SKUs as the delivery people see fit However shopkeepers have to buy full cartons

(usually 24 pieces in a carton) of single serve ice cream they cannot buy in pieces

Evaluation of Entry into Ice cream Business for Bangladesh Limited 24

Among the retail shops there are about equal numbers of branded and unbranded freezers This

is a normal scene in Dhaka where all shopkeepers require freezer to keep other cold products

However basic distribution policy is that if a shop has branded cabinet of a company they

cannot keep competitor ice cream in that cabinet Thus penetration can be made possible in

shops where unbranded freezers are available

General branded freezer contract policy with Igloo and Polar is that traders have to pay BDT

5000 to take a freezer Maintenance of branded freezers is responsibility of the company but

electricity bill is paid by shopkeeper However Polar is not currently giving any new freezer

Kwality gave away their freezers for free however they ensured safety of their freezers by

checking background of the shopkeepers

Cart sellers Cart sellers collect required amount of ice cream from nearby distribution house or

company showroom (Igloo has one showroom in Panthapath) on a daily basis They also have to

buy cartons of products not pieces Kwality carts collect their ice cream from factory (Tejgaon)

or nearby distribution house Cart sellers contribute around BDT 3000 sales in a day and

generally sell at BDT 1-2 higher than set price of each product

The cart sellers generally keep at least a two-day stock so that they can meet sudden upsurge in

daily demand of ice cream or if they get the opportunity to sell at parties programs or any open

air event (Wedding at community centres or outside cultural programs at auditoriums) If cart

sellers need replenishment of stock they even take service more than once in a day either

revisiting showroom house or they call up company delivery people to serve them at their

location if there is opportunity for selling more ice cream

Policy regarding Damaged Ice cream All the ice cream producers have very good relationship

with the shopkeepers If the retailers have refrigeration problem company takes ice cream back

until the problem is fixed whether it is stored in branded freezer or not Also if any ice cream

gets damaged or there is bacterial formation company takes them back Usual return time varies

from 15-30 days For large sellers however they take less time

Payment Method for Ice cream Purchase All the companies give credit of around one month to

large volume contributing retail sellers and try to maintain good relationship with them This

trend is seen in all channels Also all the SMMTs and MTs are given credit of one month and

payment is made by cheque Other small shopkeepers have to purchase with cash However

according to shopkeepers Igloo is currently trying to cut down on credit sales as they believe

there is a consumer pull for their brand Companies like Polar and Kwality also give special

commission to large sellers Polar gives 5 commission on every bill

Evaluation of Entry into Ice cream Business for Bangladesh Limited 25

H Technology and Innovation

Technological advancement in the ice cream industry has been very rapid Starting with stick

mould and filler ice cream production the companies have come a long way Assessing the

consumer choice and demand the companies are introducing new products very often Improved

and new technology is used for faster production and better quality Igloo is trying to meet the

international standards and launching products such as Sundae Cornelli and Nuggets Other

companies are also introducing new flavours suitable for their target segments Igloo has both the

ISO and the HACCP certifications These were awarded in the year 2003 due to their relentless

pursuit of quality and innovation In September 1996 Igloo introduced the 3D Mould line and

straight line extrusion technology for the first time in the subcontinent Basically with Igloorsquos

pursuit all the modern technologies and quality innovations are available in the market

I Production Capacity

Current production capacity of the major players in the common format ice cream segment is

estimated to be as follows

Name

Capacity (Ltrs day)

Total Production (000 Ltrs)

Required Capacity (at 300 production days )

Estimated unutilized capacity (Ltrs day)

Igloo

22000

387433

12914

9086

Polar

6500

112513

3750

2750

Kwality

12100

204934

6831

5269

Savoy

1560

25985

866

694

Milk Vita

1330

26387

880

450

Table 14 Production Capacity of Current Market Players

From the table we can see that all the ice cream manufacturers are operating with unutilized

capacity However one point to be noted is that different ice cream SKUs require different

amount of item to be produced Exact machine production capacity at litre per day does not

represent the accurate scenario Nevertheless it can be safely assumed that all the manufacturers

have unused machine capacity at their premises Moreover the larger players like Polar and

Kwality have new technology available at their premises Kwality bought second hand machines

from Thailand but both Igloo and Polar bought theirrsquos from Italy and Denmark

J Products and Pricing

Products The products in the ice-cream market are differentiated A few firms dominate the

market but an endless variety of ice creams are offered to the consumers Igloo pioneers all

major innovations in the market The products that are available in the market can be classified

into single serving and multiple serving groups Which are then categorized based on functional

attributes designs These are

Single

Stick

Normal mould 3D mould extrusion

Evaluation of Entry into Ice cream Business for Bangladesh Limited 26

Cup and Sundae

Flat cup long cup

Cone

Normal cone (vanilla strawberry etc) premium cone (Ripple)

serving

Innovative Fillers

Snowball Animal shaped containers sandwich nuggets etc

Container

05 ltr 1 ltr and 2 ltr containers

Multiple serving

Family Pack

Assorted packs cakes shahi kulfi etc

Table 15 Ice cream Serve types

Among all the products available in the market most selling SKU for all the companies is Choc-

bar stick and highest selling flavour is Vanilla Following are the ranks of most selling SKUs and

flavours

SKU Name

Rank

Choc-bar (70 ml)

1

Vanilla Cup (100 ml)

2

Vanilla Box (05 and 1 Ltr)

3

Lemon Lolly (70 ml)

4

Normal Cone

5

Flavour

Rank

Vanilla

1

Chocolate

2

Strawberry

3

Ripple

4

Mango

5

Table 16 Rank of SKUs Table 17 Rank of Flavours

Choc-bar is one of the earliest vanilla based chocolate coated SKU that has dominated the

market strongly over the years Shopkeepers could not provide an exact percentage on SKU

based sales contribution Most of them ranked the SKUs and flavours according to sequence

shown in the above table Also according to newspapers and secondary sources Vanilla is the

most selling flavour with 60 sales contribution According to secondary sources percentage

sales contribution of various types of SKUs in the common format segment are as follows

Type of Ice cream

Value Share

Volume Share

Impulse dairy ice cream

514

443

Impulse water ice cream

112

138

Take-home dairy ice cream

374

419

Table 18 Volume Share of Different Serve Types

Impulse dairy ice cream provides more value share as price per litre is higher than take home

multiple serving ice creams Impulse water ice cream shows a similar trend as of take home ice

cream

Pricing Product pictures and price ranges of each category are provided below Evaluation of

Entry into Ice cream Business for Bangladesh Limited 27

Normal Premium Price Tk12 Tk20 Tk25 Cup amp Sundae Normal Cup Sundae Premium Cup

Price Tk20 Tk25 Cone Normal Premium PriceTk20 Tk25Innovative Fillers PriceLtr Tk100

Tk175 Container Normal Premium PriceLtrTk150 Tk 175 Tk 190 Family Packs Kulfi Mixed

Pack Cake Single ServingMultipleServingNormal Ice Fruit 3D Mould Premium Extrusion Price

Tk10 Tk15 Tk15 Tk20Stick Normal Cream

Figure 8 Serve Types and Pricing

As it can be seen from the above chart all impulse ice creams are priced within the range of

BDT 10 to 25 Other take home multiple servings are priced within the range of BDT 50 (05

Litres) to BDT 220 (2 Litres) Another noticeable factor in price is that there are both normal and

premium flavours in all types of ice creams

K Firms as Price Setters

The firms have capability to affect the market price to be low as profit margin is very high If

Igloo reduces the price of an item below the prevailing price level in order to increase its sales

its competitors will fear that their customers will go away from them to buy Igloo products To

retain their customers they will be forced to match the price cut of Igloo Historically this has

been proven to be true However due to price sensitivity companies cannot drastically increase

price even if they provide higher quality of product It was seen in 1997 when Igloo increased

price of 11 SKUs and faced drastic sales fall during that time It shows that the industry might

welcome overall industry price increase but not individual company price increase

L Promotion

The promotion scenario in the industry is not quite organized as of now Even proper data

regarding promotional expenditure is not available from research sources The reason being

there is not much consumer related activity seen in the market After Kwalityrsquos introduction in

the market in 1999 Igloo went on with massive Television promotion of their new products that

were available at that time

Evaluation of Entry into Ice cream Business for Bangladesh Limited 28

However in current times there is no TVC running from any company Companies promote their

launches mainly through billboards and newspaper promotions which is currently the most used

source of consumer promotion Some promotional activities that were done by the companies

over the years are listed below

Consumer Promotions

1 Larger players like Igloo and Kwality goes on with campaigns like ldquoGift on stickrdquo where

various prizesrsquo names are written on the sticks and consumers can get them

a Igloo ran a program on their launch of Macho variant where gift varied from cricket bat to

personal computer

b Igloo had a program in 2006 where gifts on sticks varied from Bangkok visit to sunglass

c Igloo ran one campaign in 2007 where gold bars were given on purchasing Choc-bar

d Kwality ran a similar program in 2008 where gifts varied from wrist watches to motorcycle

2 Some companies ran consumer TTS and gift programs where company products were given

free

a Igloo had a program in 2006 where Igloo butter was given free on purchasing Igloo ice cream

cake

b Kwality ran a program in 2008 where one SKU was given as gift with another SKU randomly

c ldquoCone Ice cream at your Homerdquo program was run by Igloo in 2002 where six cone biscuits

were given free with purchase of one litre ice cream

3 Media placement is another form of placement done by larger companies

a Igloo purchased ldquoGlimpse into World Cup Resultrdquo space in daily newspapers during World

Cup Football 2002

4 One interesting program is done by only Igloo in Bangladesh They did it in June 2006 The

program was ldquoIgloo Ice cream Festivalrdquo with main attractions of ldquoGet as much ice cream as you

want for BDT 200rdquo ldquoGet a Fantasy Kingdom Entry ticket with each Entry Couponrdquo ldquoLucky

Drawrdquo and ldquoCelebrity Addardquo

Trade Promotions

5 Trade promotions are mainly given to ldquoHighest retail purchasersrdquo and also based on time

bound trade schemes where various slabs of purchase amount are mentioned for different prizes

a Igloo takes their highest purchasers to visit countries like Singapore and Thailand

b Savoy has a purchase slab scheme where first prize is table fan

c Polar gives special sales commission to their highest purchasers (around 5)

Evaluation of Entry into Ice cream Business for Bangladesh Limited 29

M Players in the Common Format Segment

Branded common format ice cream segment is constituted of five players only Among them

Igloo is the largest player and Milk Vita is the smallest The following sections detail the basic

company detail of all the companies with special emphasis on Igloo the market leader

Igloo

The pioneering ice-cream company in Bangladesh started its operation in 1964 in Chittagong

under K Rahman amp Co Limited (KRC) with a small factory inside Coca Cola bottling factory of

KRC After the independence of Bangladesh in 1971 Igloo was taken over by the government of

Bangladesh Later in 1983 Abdul Monem Limited purchased the entire production setup of KRC

Limited including Coca-Cola bottling plant and Igloo ice-cream factory After taking full charge

of Igloo ice-cream by Abdul Monem Limited the manufacturing operations continued in

Chittagong till 1990 Although Dhaka fetched the maximum share of the total revenue the

distribution cost increased tremendously in the process of meeting the demand of Dhaka city To

cope with the distribution problem and handle Polar threat Abdul Monem Limited transferred

the factory to Dhaka changed the ice-cream packaging from the conventional paper to plastic

and expanded their market and distribution operation The new factory of Igloo was setup at

Shyampur Narayanganj and was nine kilometres away from the Motijheel office The company

apart from catering the capital city started to expand its operations in Comilla (1991) Khulna

(1992) and North Bengal (1993) These markets were served directly from Dhaka since the

storage facilities were not developed till then The company is now the market leader since 1997

with clear market share victory over others with sweeping 51 share It is to be noted that Igloo

is also a player in the boutique segment with three parlours (2 in Dhaka and 1 in Chittagong)

Product Range Igloo offers the widest choice of ice cream more than any other competitor in

the market Igloo is offering a total of fifty items including normal premium and novelty cup

stick and family pack items Igloo has thirty flavours more than anyone else in the industry and

is continuously launching new and innovative delicacies

Igloo ice-cream can be classified in six groups They are

Stick

Macho Choc-bar Mini Choc Clown Mega Shell n core Lolly

Cone

Cornelli 2 in one Cornelli classic

Cup

Shahi kulfi Vanilla Strawberry Mango Snow ball

Container

Vanilla Strawberry Mango Chocolate Coffee Diet Vanilla Tutti Frutti Ripple Pralin

Pistachio

Innovative

Nuggets Sandwich

Family

Ripple cake Party time Shahi Kulfi

Table 19 Products of Igloo

Single serve stick cups and cone items are easy to carry around and convenient to eat which

makes it most sold The core target segment of ice-cream is 6-24 years and this generation is

always on the Evaluation of Entry into Ice cream Business for Bangladesh Limited 30

move and thus prefers independent cone stick or cup items As Igloo initiated the concept of ice-

cream as a family product they offer some items to be enjoyed with the whole family

Quality and Innovation Igloo is committed to maintaining the highest quality standard through

its continuous RampD activities The major ingredients raw materials and packing materials are

procured from the best European sources Strict quality control is done at every stage of the

manufacturing process from procurement of material mixing material flow ice cream making

packaging storing (at main warehouse) distributing and market shelving by the Quality Control

Department Current supply chain for various materials of Igloo is as follows Australia (Milk

Powder) Denmark (Ingredients emulsifiers amp stabilizers) China amp UAE (Food grade sticks)

China Denmark Singapore amp Thailand (Food grade packing materials)

Figure 9 Igloo Supply Chain

Distribution Network Their distribution network is stretched all over the country with a long

fleet of refrigerated vans Firstly the ice cream products are stored at the central warehouse of

the factory and from there they are distributed through the haulage vehicle to the operational

centres located in Dhaka Chittagong Comilla Rajshahi Barisal Bogra Rangpur and Khulna

Strictest cold chain maintenance during the distribution and selling of the ice creams is ensured

Their distribution process is as follows Manufacture Stored at -24c Transported by Refrigerated

trucks at -Reaches amp Preserved in Eight regional stores Refrigerated vehicles (Distributors)Retail

outlets (Deep freezers)

Figure 10 Distribution Process of Igloo

Evaluation of Entry into Ice cream Business for Bangladesh Limited 31

Trolley Operation Igloo also operates through trolleys for extending its reach to consumers at

the furthest points The trolleys are operated near schools alleys streets parks etc and play

rhythmic music to attract the consumers These are very colourfully decorated with Igloo

umbrella and the puller wears specific uniforms Igloo was the first in introducing and operating

these trolleys in Bangladesh for any Fast Moving Consumer Goods (FMCG) Igloo has around

125 trolleys operating throughout the country Individual trolleys are provided with a regular

supply of igloo ice creams

Marketing The marketing commitment of Igloo is based on the relationship with its customers

and consumer by not only manufacturing the highest quality product but also delivering the

product by maintaining this quality To satisfy the ever-changing needs of the customer Igloo

has regularly launched new ice creams and introduced new flavours And this commitment has

positioned Igloo as the market-leading brand by gaining the consumers trust with the positioning

as ldquoA WORLD OF GREAT TASTErdquo

Facilities and Logistics at a glance As of 2009 following are the facilities and logistics enjoyed

by the company

Factory location

Dhaka

Production Lines

4

Packages

Stick Cup Family pack Others (Nuggets and sandwich)

Machine suppliers

1048766 Mark-Italy

1048766 Tetra Pak(Hoyer)-Denmark

1048766 Sabore Denmark

1048766 Hass- Austria

Machine models

1048766 Freemark 1100 Italy

1048766 FM 3000 FM 6000 Italy

1048766 SL600 Denmark

Cone baking

Hass- Austria

Chocolate making

Macentyre-UK

Coverage

Nationwide

Operational centre

10

Total market vehicles

30

Distribution channel

Directthrough appointed distributors

Outlet service

7500

Injected deep freezers

4000

Trolley operations

125

Warehouse no

8

Table 20 Igloo Facilities and Logistics

Kwality

Kwality is currently the second largest ice cream manufacturer of the country The mother

company for the Kwality brand is Sanowara Drinks amp Beverages Ltd a sister concern of

Sanowara Group The company is famous for powdered milk brands Red Cow and Diploma in

Bangladesh The drinks and beverage concern of Sanowara made an entry into the market in

1997 with ldquoYesrdquo brand drinking water and launched the ice cream brand in 1999 With heavy

communication and novelty products it Evaluation of Entry into Ice cream Business for

Bangladesh Limited 32

successfully removed Polar from the second place with a current market share of 27 The

company also operates in the boutique segment with two parlours in Dhaka and Chittagong

Kwality ice cream factory is situated in Chittagong with a floor space of 35000 sft and fully

automated machinery wrapping mix machinery equipments from Italy having capacity of

around 20000 litres of ice cream per shift The ice cream factory employs 140 people The

company is ISO 9001-2000 certified

Kwality was the first true competitor for Igloo products with some major innovation in product

design and communication but their quality is perceived to be lower in the minds of the

consumers and they do not have extrusion ice cream The product prices are also similar to that

of Igloo but they charge a bit lower than Igloo in premium multiple servings However during

market visits it was seen that shops that keep only Kwality or Igloo and Kwality both they can

sell Kwality too although the sales amount is lower than that of Igloo People who look for Igloo

shopkeepers give them that directly but if they get a chance and Kwality ice cream stock is high

they also push Kwality to dry the stock out This gives an indication that market is larger than

what the current players are capable of serving even in Dhaka

Kwality follows a similar distribution model like Igloo but distribution frequency is lower and

amount of cart sellers is limited to 25 and they operate only in Dhaka

Polar

Once a giant in the industry Dhaka Ice Cream Industries Ltd introduced the first hygienically

packed ice cream in Bangladesh in 1987 and the brand name Polar was thus born In the early

days the company started ice cream business with a wide range of products and a variety of

flavours in Dhaka city In 1988 the company started its distribution in the city of Chittagong

then Bogra and continued to cover more cities Presently Polar ice cream is available

throughout Bangladesh The company today trails in the market with 15 market share in the

common format segment Recently Polar has announced launch of ISIS diabetic ice cream with

support from DANONE to turn around in the market

The company has its head office as well as a modern large-scale industrial plant in Dhaka Polar

ice cream is made with Danish expertise using Danish equipment and technology The

production activities and quality control measures are supervised and managed by Danish

experts Polar offers a wide range of delicious flavours and tastes made by ingredients imported

from Europe

Dhaka Ice Cream at present has 3 cold stores in Dhaka Chittagong and Bogra in Bangladesh

From Dhaka cold store they distribute ice creams in Mymensingh Tangail Jamalpur Sherpur

Kishoreganj Netrakona Comilla Narsingdi Barisal Madaripur Agaeljhara Faridpur Magura

Chuadanga Jessore Satkhira Khulna Pirojpur and Sylhet through their distributors In case of

long distance delivery points the company uses auto cooling freezer van

Evaluation of Entry into Ice cream Business for Bangladesh Limited 33

In Dhaka city they distribute ice creams directly to retail stores in freezer vans Besides that

they have several distributors at different points of the city Distributors cover their individual

areas where company is not able to supply directly in their freezer vans Similar model is

followed by the company to distribute ice cream from their other cold storages through out the

country For storing and selling ice creams in retail stores the company like the other players

arranges a deep freezer with the Polar logo and canopy light box

In addition to this distribution the company also undertakes home delivery of ice creams for

special occasions

Savoy

Savoy Ice-cream brand is owned by Sena Kalyan Sangstha (SKS) Group of industries It started

its journey in March 1995 with a factory in Tejgaon Dhaka Yearly turnover is estimated at BDT

388 crores with a market share of roughly 35

The factory has been established with Sonali Bank finance at 6040 equity ratio The total

production capacity of the factory has been estimated at 2400 litres of Ice-cream per day Total

land area of the factory premise is 116 Bigha with 8000 sft area covered with a total project cost

of BDT 144 The factory employs 73 people

Product ranges of the company include all the basic designs and flavours of the industry

However the company has not been much of an innovator in the industry Their product quality

is substantially low than that of other players and they price their products at 10-15 lower than

the other competitors The company imports raw materials mainly from Europe The general raw

materials are Euro cream Skimmed Milk Powder Cocoa Powder and Flavour (Vanilla Mango

and Strawberry) Colour (Yellow Red Chocolate and Green) Ripple Sauce Cheney Fruit Palm

Kernel Oil Anhydrous Butter Oil (Ghee) and Sugar etc

Milk Vita

Milk Vita is one of the most famous brand names in Bangladesh for its liquid dairy milk Owned

by Bangladesh Milk Producersrsquo Co-operative Union Limited (BMPCUL) the company came in

the market with proper dairy milk ice cream in form of cups and choc-bar With a production

capacity of around 1600 litres per day the company is trailing in the market place with 3

market share

Although the Milk Vita Choc-bar was perceived to be extremely tasty by consumers they

probably could not do well due price competition Currently they do not even distribute ice

cream in Dhaka However their presence is seen in outskirts of Dhaka and other nearby towns

If the current market situation prevails Milk Vita would lose their remaining market share and

other companies would benefit especially Igloo However one of the advantages of Milk Vita

remains to be

Evaluation of Entry into Ice cream Business for Bangladesh Limited 34

their nation wide milk supply network They have skimmed milk powder production plant that

Igloo does not have Thus they can combat the seasonality of milk supply that Igloo with its

huge requirement of milk cannot

Strengths and Weaknesses of Competitors

Company

Strengths

Weaknesses

Igloo

1048766 Strong brand image

1048766 High product quality

1048766 Highest no of variety

1048766 Strong distribution network

1048766 Highest visibility

1048766 Strong promotion

1048766 High production capacity

1048766 Presence of extrusion ice cream

1048766 Items are generally a bit pricy

1048766 Igloo does not give free freezers like other companies

1048766 Reluctant in recent times regarding innovation

1048766 Local sourcing of liquid milk does not meet demand

1048766 Failure to use ERP technology slowing decision making

Kwality

1048766 Product variety

1048766 Strong promotion

1048766 Free freezer distributed

1048766 Presence in all price segments

1048766 High production capacity

1048766 Weak distribution

1048766 Lower exposure

1048766 low amount of carts in operation

Polar

1048766 Free freezer

1048766 Quality perceived to be high compared to Kwality

1048766 Discoloured freezers

1048766 Lower exposure

1048766 Low product variety

1048766 Unused capacity

Savoy

1048766 Price is lower

1048766 Discoloured freezers

1048766 Low product variety

1048766 Weak distribution

1048766 Small amount of freezers

1048766 Low production capacity

Milk Vita

1048766 Quality is good due to dairy cream

1048766 Brand leverage from Milk Vita milk

1048766 Low exposure

1048766 Low variety

Table 21 Strengths and Weaknesses of Competition

512 Market Characteristics of the Boutique Segment

With a small market of BDT 98 Cr and 567 share in the branded ice cream market the

boutique segment is currently an increasing segment in the ice cream industry Boutique

segmentrsquos history dates back to 1960s when Igloo launched boutiques in Dhaka to save

distribution cost and promote a culture of ldquoice cream eating outrdquo In later years boutiques lost

their glamour and retail common format segment picked up growth However with Dolce Vita in

the late lsquo80s craze for Italian Artisan ice cream was recreated in the market Although Dolce

Vita is failing in recent times emergence of MoumlvenPick and Club Gelato in 2000 has uplifted the

segment once again Current growth rate of the

Evaluation of Entry into Ice cream Business for Bangladesh Limited 35

segment can be estimated to be approx 20-22 (higher than the common format segment)

Following are the basic detail of all the major players in the segment with their estimated sales3

Players

Outlet

Sales (Cr Taka)

Share

Club Gelato

1

136

199

MoumlvenPick

1

119

174

Andersenrsquos

3

119

174

Gelateria Igloo

3

119

174

Sub Zero (Kwality)

2

051

75

Baskin Robbins

1

015

22

Dolce Vita

1

017

25

American Soft

1

009

12

Rainbow

1

009

12

Others (off site)

089

130

Total Market

682

Table 22 Players and Shares in Boutique Segment

A Detail of Operation

General operational procedure followed by all the operators is as follows

1048766 Operating method There is a variation in operational method among the large operators

1048766 Club Gelato uses kitchen at own premise where imported ingredients and local milk (daily

special service from Milk Vita) are used to make ice cream

1048766 MoumlvenPick directly imports ice cream from Switzerland

1048766 Andersenrsquos Gelateria Igloo and Sub Zero produce ice cream at their factory with a mix of

imported and local ingredients

1048766 Products Around 30-35 flavours of artisan dairy ice cream are served at the premises

1048766 Most sold flavours are Vanilla Ferrero Rocher Butterscotch Chocolate Caramel etc

1048766 Other Products Larger players also serve ice cream desserts (milk shakes ice cappuccino etc)

pastries and other desserts with normal coffee and tea facility at their premises

1048766 Boutiques fight ice cream seasonality with the other products sales during off-peak ice cream

seasons Usually ice cream and other products contribute at 6040 ratio in summer and during

winter and off-peak seasons the ratio reverses

1048766 Pricing Usually the prices of products in this segment are 3-4 times higher than that of the

common format segment

1048766 Prices do not vary with flavours Variation depends on serve style (Cone tub) and use of

toppings and other ingredients (Chocolate sauce nut fruits) etc

1048766 Usual margin charged is around 50-60 over production cost Similar margin is charged for

other products like coffee ice cappuccino etc

3 Yearly sales is estimated based on companyrsquos approximate daily sales collected during

interview

Evaluation of Entry into Ice cream Business for Bangladesh Limited 36

1048766 Target Group Most of the consumers belong to SEC A and higher SEC A with DMFI of at

least BDT 20000

1048766 Foreign delegates and resident foreigners also visit these boutiques

1048766 Main purposes of visits in the boutiques are

bull Youth hangout with friends and having ice cream and ice cream derivatives

bull Family Family night out or eat out at a restaurant and then having dessert

bull Foreigners Having dessert after dinner

1048766 Rush time at boutiques are Afternoon 2-4 pm and at night 9-11 pm

1048766 Offsite sales Most of the large operators also sell offsite They have small freezers for off-site

1048766 Club Gelato and MoumlvenPick serves ice cream at high society parties and programmes

1048766 MoumlvenPick also has kiosks in known hotels like Sheraton

1048766 Promotion No mass promotion is done by any of the companies Word of mouth is the most

important source of promotion Posters and banners outside the premise and occasional

newspaper advertisements are used to communicate special offers

1048766 Growth Drivers Market growth is driven by image innovation quality decoration of facility

environment and special offers

1048766 Club Gelato has the image of selling true Italian dairy ice cream with an excellent hangout

environment

1048766 MoumlvenPick imports ice cream directly from Switzerland and is perceived to be of high quality

1048766 Andersenrsquos operates with the image of ice cream from Denmark

1048766 Gelateria Igloo (from Igloo) and Sub Zero (from Kwality) could not establish the premium

artisan ice cream image

B Players in the Boutique Segment

There are very few players who have significant impact in the boutique segment Detailed

information of all the major boutique segment players is provided below

Evaluation of Entry into Ice cream Business for Bangladesh Limited 37

Club Gelato

Basic Company Information

1048766 Location Banani Road 11 (Planning for a second one in Dhanmondi)

1048766 Established in 2001

1048766 Seating Capacity 48

1048766 Area 1250 sft (including kitchen)

1048766 Owner Mr Jahangir Alam (Bangladesh)

1048766 Business Type Joint business partnership with Singapore

1048766 Staff 15 people (6 in the kitchen)

1048766 Production capacity 150 litres per day

Product Related Information

1048766 Product Italian style parlour scoop ice cream fruit juice coffee and pastries

1048766 Flavours Around 32 flavours available

1048766 Most selling Ferraro Rocher Vanilla Pistachio

1048766 Innovations New variants and ingredients are communicated by their Italian supplier and

Club Gelato decides what to take from them

1048766 Serve type Cup Cone Glasses Box for take away

Consumer Profile

1048766 Primary Teenagers and Young Adults (18-30) amp Diplomats

1048766 Secondary Family consumers for eat out

1048766 Income Group High income customers tentatively from SEC A and higher SEC A

1048766 Geographic Area Diversified

1048766 Rush time 8-10 pm

Sales and Price Information

1048766 Sales BDT 50000 (60 Ice cream 40 other desserts) daily in summer In winter however

other products sell more and thus they keep total sales at the same level

1048766 Price 750 per litre for any flavour

1048766 Sales Volume 50-60 litres per day

Supply Chain Placement Information

1048766 Milk Local sourcing from Milk Vita (4050 litres per day)

1048766 Chocolates amp Flavours Belgium France Germany

1048766 Transportation Mainly air (They can afford it due to high margin)

1048766 Contribution of various materials Flavours (30) Milk (20) other parts are water and air

Promotional Materials

1048766 Materials used are near premises POS materials for promoting the parlour only

Table 23 Detail of Club Gelato

Evaluation of Entry into Ice cream Business for Bangladesh Limited 38

MoumlvenPick of Switzerland

Basic Company Information

1048766 Location Gulshan

1048766 Established in 2000

1048766 Seating Capacity 55

1048766 Owner Mr Arif Mahmud

1048766 Business Type Franchise of International MoumlvenPick

1048766 Storage Capacity in Shop 150 litres

Product Related Information

1048766 Product Imported MoumlvenPick ice creams coffee chicken sandwich and Frappe

1048766 Flavours Around 30 to 35 flavours available

1048766 Most selling Swiss Chocolate caramel Vanilla Dream Espresso Strawberry

1048766 Innovations New variants are communicated by their franchiser and they decide on flavours

that they want

1048766 Serve type Cup Cone Glasses Box for take away

Consumer Profile

1048766 Primary Teenagers and Young Adults (18-30) (70) amp Diplomats

1048766 Secondary Family consumers for eat out

1048766 Income Group High income customers tentatively from SEC A

1048766 Geographic Area Concentrated in Gulshan and nearby areas

1048766 Rush time Afternoon- Young Adult 10 to 11 pm Foreigners

1048766 the company also serves at parties and has freezers in known hotels where their ice creams

are served

Sales and Price Information

1048766 Sales BDT 35-40000 daily in summer

1048766 Price 640 per litre for any flavour

1048766 Sales Volume 55-60 litres per day

Supply Chain Placement Information

1048766 Transportation Imported finished goods by ship

1048766 Ship travel time 19 days

1048766 Port clearance 10 days

1048766 Safety Cushion Extra 10 days

Promotional Materials

1048766 Materials used are near premises POS materials for promoting the parlour only

Table 24 Detail of MoumlvenPick of Switzerland

Evaluation of Entry into Ice cream Business for Bangladesh Limited 39

Andersenrsquos of Denmark

Basic Company Information

1048766 Location Gulshan (2 others in Uttara Dhanmondi)

1048766 Established in 2001

1048766 Seating Capacity 48

1048766 Owner United Group

1048766 Business Type Franchise of Australian company Andersenrsquos of Denmark

1048766 Production Tongi Factory of United Group

1048766 Production capacity 2000 litres per day in factory

1048766 Storage Capacity in Shop 150 litres

Product Related Information

1048766 Product Danish parlour scoop ice cream and coffee

1048766 Flavours Around 30 to 35 flavours available

1048766 Most selling Strawberry Butter Scotch Green

1048766 Innovations New variants and ingredients are communicated by their franchiser and they

decide on flavours that they want

1048766 Serve type Cup Cone Glasses Box for take away

Consumer Profile

1048766 Primary Teenagers and Young Adults (18-30) (70) amp Diplomats

1048766 Secondary Family consumers for eat out

1048766 Income Group High income customers tentatively from SEC A

1048766 Geographic Area Concentrated in Gulshan and nearby areas

1048766 Rush time 8 to 10 pm

Sales and Price Information

1048766 Sales BDT 10-12000 daily in summer

1048766 Price 460 per litre for any flavour

1048766 Sales Volume 40-50 litres per day

Supply Chain Placement Information

1048766 Milk 2025 kg packs are imported

1048766 Chocolates amp Flavours Imported

1048766 Butte paper Local sourcing

1048766 Transportation Ship

Promotional Materials

1048766 Materials used are near premises POS materials for promoting the parlour only

Table 25 Detail of Andersenrsquos of Denmark

Evaluation of Entry into Ice cream Business for Bangladesh Limited 40

Gelateria Igloo

Basic Company Information

1048766 Location Banani Kemal Ataturk Avenue (Two others in GEC Mor Chittagong and Naya

Paltan)

1048766 Established in 2000

1048766 Seating Capacity 20

1048766 Production From Igloo factory in Shyampur Narayanganj

Product Related Information

1048766 Product Parlour scoop ice cream and coffee only

1048766 Flavours Around 30 flavours available

1048766 Most selling Vanilla Strawberry Chocolate Pistachio Butter Scotch Tutti Fruity

1048766 Serve type Cup Cone Glasses Box for take away

Consumer Profile

1048766 Primary Teenagers and Young Adults (18-30)

1048766 Secondary Family consumers for eat out

1048766 Income Group High income customers tentatively from SEC A and B

1048766 Geographic Area Diversified

1048766 Rush Time afternoon and evening

Sales and Price Information

1048766 Sales BDT 8000 to 10000 daily in summer Nearly one fourth in winter

1048766 Price Varies but 350 per litre of vanilla

Promotional Materials

1048766 POS materials at the premises

Table 26 Detail of Gelateria Igloo

52 Price Comparison of Common and Boutique Segments

Price ranges of both common format and boutique segment cannot exactly be pin pointed as

products do not follow common structure and variations occur with use of toppings mixing of

flavours and use of coatings However a price comparison has been made among the brands

based on their price of per litre of vanilla flavoured ice cream in the market It appears to be as

following

Company

Price Litre Vanilla

Club Gelato

750

MoumlvenPick

640

Andersenrsquos

460

Dolce Vita

440

Igloo

100

Kwality

100

Polar

100

Milk-Vita

90

Savoy

85

Table 27 Comparative Price Analysis

As it can be seen there is price gap within the range of BDT 100-400 Ice cream kiosks and

small scooping boutiques can operate within that range

Evaluation of Entry into Ice cream Business for Bangladesh Limited 41

60 CONSUMER ANALYSIS

61 Target Group of Ice cream

Who are the consumers of ice cream This question does not have a clear answer Ice cream is a

food for all It is the only food consumed by a human being at less than 0 degree centigrade

temperature and people of all ages feel indulged to have it However we can determine focus

target groups for both branded common format and artisan boutique ice cream Group

discussions and market visits were done to get insight into the consumers along side resources

form secondary sources Age based target group is common for both segments but variation

among the groups occur mainly based on SEC and DMFI classification

611 Geographic Group

Branded ice cream remains an urban product till date Geographically branded ice cream has

reached urban and semi urban areas up to Thana Head Quarter levels Ice cream has reached

areas where electricity is available Small artisan players are available in places where large

branded players have no distribution

612 Target Age Group

Age wise grouping of target consumers is as follows

1048766 Urban kids in the age group of 5-14

1048766 They mainly consume normal sticks cups cones innovative fillers and water ice creams

1048766 Urban youth in the age group of 15-24

1048766 They consume premium and extrusion sticks and cones

1048766 Urban mothers in the age group of 25-35

1048766 They determine the family purchases Even when the father purchases ice cream decision is

taken by them

Consumption pattern of various age groups are depicted in the following chart Ice cream

consumption pattern50203005 to 14 yrs15 to 24 yrs25 to 35 yrs

Figure 11 Target Group wise Consumption Pattern Evaluation of Entry into Ice cream Business

for Bangladesh Limited 42

613 Target SEC and DMFI Group

Common Format

SEC A and B is the target group for common format ice cream However with rapid increase in

price level over the years has made it a ldquohard to consumerdquo product for SEC B consumers who

belong to lower DMFI group

Boutique Format

Boutique formatrsquos higher margin and high price range makes it an exclusively SEC A ice cream

People belonging to upper and upper middle class have access to the mediocre boutiques and

only higher upper class can have premium ice creams like Club Gelato and MoumlvenPick

Another unique target group for boutique format are the foreigners who live in Bangladesh

These people tend to visit the parlours to have ice cream as dessert especially after dinner

62 Ice cream in Consumer Lifestyle

Figure 12 Ice cream in Consumer Life style

This simple overview of ice cream in consumer lifestyle was determined based on in-depth

research analysis of UBL and validated through qualitative group discussions by the author

However detail of in-depth research is provided in a later section of this chapter

Evaluation of Entry into Ice cream Business for Bangladesh Limited 43

63 Highlights of Purchase Habit of Ice cream

631 Common Habits across Target Groups

There are some common habits that were identified in earlier researches and group discussions

with consumers Common habits mean the consumer approach towards ice cream that is seen

across all target groups eg kids youth and adult purchasers These are outlined below

1048766 Ice cream is mainly seen as a dessert or a snack Impulse ice cream is seen as a quick snack

that is consumed when it is in sight Visibility plays a big role here Regarding family packs

people see it as a post-food dessert

1048766 Ice cream purchase is commonly a planned event When the contexts arise people generally

take a bit of time to decide whether or not to have ice cream or when they want to go to a

boutique they make due considerations regarding which boutique to visit

1048766 Ice cream purchase decision is taken based on favourite flavour People tend to try out new

variants and flavours when they first see it They compare the taste with earlier experience and

when they purchase later they choose the flavour they have liked most

1048766 For In-Home segment decision is mostly taken on the flavour Generally people come up with

different flavours of choice and most voted flavour is chosen

1048766 People become aware of new variants or flavours mainly through word-of-mouth

Advertisement (new launches special offers and festivals) in newspaper is another source of

awareness

1048766 People are currently indifferent towards the price level of premium flavours However some

feel that price of Choc-bar or water ice creams (lolly) is a bit much If less they would have

consumed more Some also feel that companies should come up with branded ice cream in the

price range of BDT 5-8

1048766 Ice cream is purchased from nearby shops If required brand and flavour is not available 2-3

shops will be visited and then available flavour will be selected even if the required one is not

found This is done mainly not to ruin the mood for ice cream

1048766 People are very open to try new brands and flavours especially if it comes from a credible

source They would try new flavours and if they are satisfied with the taste they would repeat

purchase

1048766 Regarding boutique visits people feel that boutiques need to have a proper environment

enough flavours and other snacks

1048766 While visiting boutique with family or companion they want variation in flavours so that

they would order different flavours and taste each otherrsquos ice cream It is seen as a sign of

togetherness

1048766 Frequency of ice cream purchase varies among people It depends on peer pressure collective

family decision summer heat and attitude towards ldquoice creamrdquo itself as a product Evaluation of

Entry into Ice cream Business for Bangladesh Limited 44

632 Habits of Kids

1048766 Kids choose ice cream flavours by the look of the product (generally pictures shown in POS

materials and carts) They love colour and designs of the products let it be a common format or a

boutique ice cream

1048766 Kids (when in house) would go with the housemaid to the nearby shop choose the flavour

they want (within range of the amount given to the maid) and buy it

1048766 When with parents they would take the product they like even if the price is lower than some

other product However mothers play a role in this decision They would want their children not

to choose too high priced a product or coloured products

633 Habits of Youth

1048766 Young people are the main consumer of impulse ice cream They also are one of the major

consumers in the boutique segment

1048766 Young people love to try out new products that come into the market Another side of the coin

is that they are not very loyal to a brand or a flavour and tend to switch a lot

1048766 Regarding boutique visits young people go to boutiques to have an ldquoice cream hang outrdquo with

peer groups They would stay there for a longer period of time while they have their ice cream

1048766 Some times young people make milk shakes and other ice cream based desserts

634 Habits of Mothers

1048766 Mothers worry about their childrenrsquos health and they prefer ldquovanillardquo type of brands

However when price constraint occurs they go for water ice creams for their children They try

to convince their kidrsquos purchase decision

1048766 Regarding family purchase motherrsquos decision is sometimes prioritized by the whole family

64 Barriers to Ice cream Consumption

641 Emotional Barriers

1048766 Overindulge (close to sinful)

1048766 Undisciplined (no control)

1048766 Childish (licking)

1048766 Artificial Image

642 Functional Barriers

1048766 People of SEC B feel that ice cream is an expensive dessert (If less expensive would consume

more often)

1048766 It leads to cold cough - especially in winter rainy season

1048766 It contains artificial additives preservatives

1048766 It is very high in calories that lead to fattening

Evaluation of Entry into Ice cream Business for Bangladesh Limited 45

1048766 It does not quench ldquothirstrdquo

1048766 Less convenient (portable immediate eat)

1048766 Messy Dripping

65 Research Findings

The highlights regarding purchase habits triggers and barriers of ice cream consumption provide

a glimpse into the consumer world of ice cream industry However UBL CMI conducted a

formal research exclusively on ice cream consumers to identify

1048766 Occasions of ice cream

1048766 Frequency of ice cream consumption

1048766 Expectations from ice cream occasions

1048766 Personalities that they desire from ice cream

651 Relevant Occasions in Daily Lives of Consumers

Research question regarding ldquousual occasions of life that occurred most frequently in day-to-day

lives of the respondentsrdquo generated the following replies

Occasion

of Respondents saying Yes

Watching TV

93

Normal Dinner At Home

91

Normal Lunch At Home

89

At Home While ReadingMusicSurfing

86

Informal Family Get Together

85

Out Of Home Hanging Out With Friends

84

Out Shopping

84

Mid-Afternoon Break At Home

83

At Home By Myself During The Day

82

Special Dinner At Home

82

Informal Dinner Out Of Home

82

Normal Lunch Out Of Home

82

Leisure Walk

79

Coming Home From WorkSchool

78

Special Dinner Out Of Home

78

Celebration

78

A Night In With Friends

77

At Home By Myself In The Evening

77

Special Lunch Out Of Home

76

Mid-Afternoon Break Out Of Home

75

Special Lunch At Home

73

Day out with Partner

72

Midmorning Break

70

At Breakfast

68

Family Day Out

68

During Work Or At School

65

Evaluation of Entry into Ice cream Business for Bangladesh Limited 46

Travelling ToFrom WorkSchool

65

At The Cinema

61

Special Event

56

Clubbing At A Party

50

Post GymSports

48

Table 28 Relevant Occasions in Consumersrsquo Lives

Respondents were then asked to mention ldquofrequency of occurrence of the identified occasionsrdquo

The identified replies are as follows Normal dinner at homenormal lunch at homeComing home

from workschoolTraveling tofrom workschoolDay out with Partner SpouseMid-afternoon

break at homeOut of home hanging out with friendsLeisure walkMid-afternoon break out of

homeA night in with friendsSpecial dinner at homeSpecial lunch out of homeFamily day

outSpecial eventPost gymsportsDaily2-3 Times A WeekWeekly2-3 Times A MonthOnce A

MonthEvery 2-3 MonthsLess OftenNever Figure 13 Frequency of Occurrence of Occasions

This shows that ldquoNormal dinner at home Watching TV Normal Lunch At Home At Home

While ReadingMusicSurfing Coming Home From WorkSchool During Work Or At School

Travelling ToFrom WorkSchool Midmorning Break Day Out With Partner Spouse At Home

By Myself During The Dayrdquo are the most frequent daily rituals of busy lives of consumers

652 Frequency of Ice cream Consumption

Respondents were asked to mention ldquoconsumption pattern of ice cream during the identified

occasionrdquo on a scale of 1-5 depicting frequencies like ldquo(5) always (4) most of the times (3)

about half of the times (2) sometimes (1) never do not knowrdquo The responses are depicted in

the following table

Evaluation of Entry into Ice cream Business for Bangladesh Limited 47

444474544655555566756665775967779991011101111101210111110101113111412131314161

011121411131216181519181518211817171719181718201721222130303434253437403741394

046383944464746453745414641374638504843414839373030292726232725222020201926202

21722221317Midmorning

breakWhile clubbing at aAt the cinemaSpecial eventNormal lunch out ofA night in with

friendsNormal dinner atInformal dinner out ofAt home by myselfAt home by myself inOut

shoppingSpecial lunch atDay out with SpouseWatching TVAlwaysmost of the timesAbout half

of the timesSometimesneverdo not know

Figure 14 Frequency of Ice cream Consumption

As it can be seen ldquoDay out with Spouse Special lunch at home Special dinner at home

Watching TV Family day out Celebrationrdquo are the occasions where most frequently ice cream is

consumed

653 Market Character Mapping Relevant Occasions vs Frequency of Consumption

If we plot frequency of consumption on the X-axis of a chart and relevance of occasion

occurrence on the Y-axis taking the above mentioned values as cut-off values we get four

quadrants in the chart depicting four market scenarios that any ice cream manufacturer in

Bangladesh market might encounter given the current market situation This market

segmentation is based on frequency of ice cream consumption in daily occasions of consumer

lives

The segments are

1048766 OPPORTUNITY MARKET High Relevant Occasions-Low Ice cream Frequency

1048766 QUESTION MARKET Less Relevant Occasions-Low Ice cream Frequency

1048766 HIGH FREQUENCY MARKET Relevant Occasions-High Ice cream Frequency

1048766 CAPTIVE MARKET Less Relevant Occasions-High Ice cream Frequency

The chart looks as follows Evaluation of Entry into Ice cream Business for Bangladesh Limited

48

Figure 15 Relevance of Occasion-Frequency of Consumption Mapping

As it can be seen from the above chart Bangladesh Market still lies in the Opportunity and

Question market zone with a pull towards High frequency and Captive Market zones This is

evident from market data as penetration of ice cream still remains at Thana headquarters levels

Also this explains the high market growth rate of 17 as market is yet under developed and

branded quality ice cream has yet not reached all levels of consumers especially rural level that

constitutes around 75 of Bangladeshi market

From the above analysis we can establish that target of ice cream manufacturers should be to

penetrate more into the Bangladeshi market to create higher frequency of ice cream

consumption The following chart shows the strategies to follow for ice cream manufacturers

Figure 16 Required Market Strategy for Bangladesh

Evaluation of Entry into Ice cream Business for Bangladesh Limited 49

As relevance of ice cream consumption occasions can hardly be controlled by marketers their

endeavour should be to create more ldquoemotional and functionalrdquo attachment to ice cream in less

frequent occasions through ldquomarket developmentrdquo strategy to earn share from overall food

expenditure of consumers and at the same time make them consume more ice cream in highly

relevant occasions through ldquopenetrationrdquo strategy

654 Consumersrsquo Emotional Requirements and Product Attributes

All consumers under these clusters also identify the emotional requirements and the significant

product attributes they seek from their current preferred and future desired ice creams These are

provided below

Cluster

Emotional Functional Requirement

Product Attributes

Enjoyment

Flavour Variety

1048766 Combination of different flavours

1048766 Combination of different textures

1048766 Very sweet

1048766 With wafer or biscuit

1048766 With chocolate

1048766 Of a well known brand

Socially Involved

Spoonable Rich

1048766 Very creamy

1048766 Only natural ingredients

1048766 No mess

Care

Size Creaminess

1048766 Big

1048766 Rich full taste

1048766 Smooth

1048766 Value for money

1048766 No mess

Unwind amp Escape

Economy

1048766 Crunchy

1048766 Economic

1048766 Of a well known brand

1048766 Nutritious

Balanced Convenience

Health Conscious

1048766 Of a well known brand

1048766 Nutritious

1048766 Milk based

1048766 Low sugar

1048766 Low carbohydrates

1048766 Filling

Active Self-Grooming

Fruit Vitamins

1048766 Healthy

1048766 Fruit based

1048766 Low fat

1048766 Liquid or drinkable

1048766 Nutritious

1048766 Of a well known brand

Confidence

Drinkable Light

1048766 Low calories

1048766 Light on the stomach

1048766 Chewy or gooey

1048766 Not so sweet

1048766 Natural appearance

Sensual

Appeal or image

1048766 No artificial additives

Evaluation of Entry into Ice cream Business for Bangladesh Limited 50

1048766 Natural appearance

1048766 Melting slowly

1048766 Attractive packaging

1048766 High quality ingredients

1048766 Of a well known brand

Table 29 Requirements amp Product Attributes Desired by Consumer Clusters

Of these findings we see that the identified highlighted barriers to ice cream consumption are

pretty evident among the consumers Mostly people want products of a reliable source or a well

known brand low calories quality ingredients value for money economic type

Evaluation of Entry into Ice cream Business for Bangladesh Limited 51

70 INDUSTRY ATTRACTIVENESS AND ENTRY PROSPECTS

71 Driving Forces of Growth

As identified in the earlier sections there are several driving forces behind the growth of ice-

cream industry in Bangladesh

712 Trade and Infrastructural Level

1048766 As a result of globalization newer varieties have been introduced to the local products Many

foreign companies are also coming as franchise so there has been increased competition and

these boutiques are setting higher standards for the local producers

1048766 The present market growth rate is 18-19 which is being influenced by larger players like

Igloo who are expanding their distribution nation wide with expansion of national electricity

grid

1048766 With entry of Modern Trade and recent organized business approach of retailers has made it

possible for ice cream manufacturers to penetrate into shops even without providing them with

branded freezers

1048766 Weather change has increased ldquosummerrdquo season in our country which has reduced negative

seasonal impact on ice cream

1048766 Large companies like Igloo have taken global learning of using carts as an effective tool of

availability and visibility for ice cream

1048766 New and improved technologies are being used in the production process This technological

advancement has improved quality increased speed of production and made the process more

cost effective

713 Consumer Level

1048766 Only a few years back rich people could afford the luxury of having ice-cream but now it has

become a common product for everybody Ice-cream companies are producing different products

with a wide price range for consumers of every class and status

1048766 Nowadays companies are doing promotional campaigns more frequently the customers get to

know about the product which makes it easier for them to buy the best one

1048766 The improved standard of life and more modernized lifestyle of people is an important reason

for the increased consumption thus growth of the ice-cream industry

Evaluation of Entry into Ice cream Business for Bangladesh Limited 52

72 Prospects of Entry

The ice-cream industry of Bangladesh is an attractive one for the investors because there is a

huge market but number of producers is very small The major reasons behind industry

attractiveness are as follows

1048766 The industryrsquos current growth potential is very high with opportunity for market development

1048766 The competition currently permits adequate profitability and the competitive forces are

becoming stronger with time

1048766 Boutique segment is at a very high growth stage but no operator is currently operating with a

mid price range of BDT 100-400 Ice cream kiosks and small scooping boutiques can operate

within that range

1048766 Current industry driving forces are favourable for the future industry profitability

1048766 Globally oriented consumers look for variety in ice cream that is currently not available

Latest innovations came in the market in 2002 People would welcome new variety and flavours

1048766 There is a gap in the market for balanced convenience through ice cream where consumers can

get nutritional benefits for ice cream Also emotional attachment to ice cream could further be

improvised in promotional campaigns

1048766 There is high scope for market penetration and development to increase frequency of ice

cream consumption

1048766 Level of risk or uncertainty is very low in ice-cream industry because the consumer market is

so huge any product with a standard quality and careful pricing will be able to make significant

profit

1048766 As for geographic reach of the industry 60 market is still in Dhaka There is scope of

expansion and a new entrant can easily capture market share within Dhaka using carts even if

they do not want nation wide cold chain distribution

1048766 The production process is very complex and capital requirements are also high So before

going into production any company should know about their capabilities and weaknesses and

then start the business or else they might suffer huge loss at a certain level

1048766 Unilever can acquire the required resource and use existing multi-national multi-cultural

expertise to enter the market in a grand way

1048766 With high probability of entry from DANONE with more products like the ISIS diabetic ice

cream Unilever should consider entering in this industry as soon as possible

Evaluation of Entry into Ice cream Business for Bangladesh Limited 53

80 ENTRY STRATEGY FOR UNILEVER

While describing the suggested entry strategy for UBL certain issues have been kept

confidential and some issues have been touched but not explained to keep consistency with UBL

confidentiality policy

81 Suggested Entry Areas for UBL

1048766 Boutique segment of the Bangladesh ice cream is only 5 of the branded market UBL needs

to pursue a larger scope to make the entry viable

1048766 UBL cannot fight with unbranded segment as global product quality mandate of Unilever does

not allow UBL to fight in low price-low quality segment

1048766 Recommend entry should be in the common format segment with both single and multiple

servings and in the boutique segment with a different brand name (if possible BEN amp JERRYrsquoS)

1048766 UBL should build up state-of-art modern factory for manufacturing and establish cold chain

facilities initially focusing on metro cities

1048766 Investment issues are required to be addressed for building factory and cold chain and capital

requirement needs to be identified for that purpose4

1048766 UBL may have boutiques for driving image selective top-end offering

1048766 Kiosks can be setup near universities and shopping malls

1048766 Boutiques should be concentrated in Dhaka and Chittagong

1048766 Ice cream for boutiques and kiosks would be produced in factory as institutional packs of 9-10

litres

82 Products

1048766 As a Brand Building country in global Unilever operating framework UBL is entitled only to

bring products developed by the Brand Development countries

1048766 Unilever should focus on serving products that have nutritional benefits (already available

globally) along with usual satisfactions of sensual pleasure functional attributes etc

1048766 Current existent players especially Igloo and Kwality have extensively copied global and

regionally available Unilever products eg Cornelli is same as Wallrsquos Cornetto Vinetta is similar

to Vienetta Mega is similar to Magnum etc UBL needs to differentiate these to consumers on

the ldquotaste the originalrdquo platform where global quality is focused regarding the products

1048766 UBL should also bring regionally famous brands like Moo or Max to create image

differentiation

1048766 Magnum or Moo should be used as premium end ice cream to generate more profit margin

Evaluation of Entry into Ice cream Business for Bangladesh Limited 54

83 Placement

1048766 Distribution focus should be in Dhaka for entry as Dhaka contributes more than 60 of total

ice cream sales in the country

1048766 Company may use carts as distribution method They serve as good source of visibility and

availability It would help in increasing impulse purchase

1048766 At least 1500 outlets in Dhaka and Chittagong needs to be actively served using dedicated

branded refrigerators to generate sales

1048766 50 carts should operate in Dhaka and Chittagong

84 Price

1048766 UBL products should be priced at par with Igloo pricing for the common format ice creams

1048766 UBL can bring in premium single-serve SKUS for the higher economic classes in the price

range of BDT 60-80

1048766 Smaller SKUs (small lolly stick) can be introduced in the price range of BDT 10-15

1048766 In the boutique segment UBL should price products above the semi-premium segment

(Gelateria Igloo Sub Zero or Andersenrsquos) but lower than that of Club Gelato or MoumlvenPick

85 Promotion

1048766 UBL would require strong marketing campaign (As high as 50 of sales) to have a grand

entry in the market

1048766 Presence in the television media would be of utmost importance More than 50 of

promotional expense should be made here initially Gradually it can be reduced

1048766 Newspaper would serve as the second most important option

1048766 Billboards should also be used

1048766 Activations (similar to Lux Channel i Super Star or Igloo Festival) should be done to generate

trial

86 Scope of Opportunity

Table 30 Value and Volume Based Scope of Opportunity for UBL

Value (BDT Cr)

Volume (Tons)

Market

131

7835

Common

121

7600

Boutique

98

235

Evaluation of Entry into Ice cream Business for Bangladesh Limited 55

861 Geographic Contribution

1048766 Dhaka (61)

1048766 Chittagong (19)

1048766 Sylhet (10)

862 UBL objectives

Common Format Ice Creams

1048766 Target 10 Market share in 1st year operation

1048766 Value BDT 11 Cr

1048766 Production capacity required 21 Tons day

1048766 Freezer Placement 1500 freezers

1048766 Cart operation At least 50 carts

Boutiques

1048766 Target Further develop the market

1048766 Focus Dhaka Chittagong and Sylhet Metro

1048766 Franchise At least 20 franchisee operations nation wide in divisional towns

1048766 Pricing Below imported parlours above common formats with around BDT 400 per Litre

87 Critical Success Factors

1048766 UBL is considered as a high profile company in Bangladesh and thus they cannot operate in

the market only with common products like choc-bars and cups They must have premium

products (these require extrusion line) also to carry their brand image Otherwise UBL would not

be able to charge usual premium over competition products

1048766 Launch of ice cream would require huge promotional and activation support in order to gain

customers from Igloo People want novelty regarding ice cream and UBL have to let them know

about their products and create hype

1048766 Cart should be used as a source of distribution Recent successes of Unilever companies like

Indonesia shows that carts can generate more sales and can be used as source of visibility in the

minds of both retail traders and consumers Carts can also provide incremental sales to the

company

1048766 UBL have to create a strong cold chain for ice cream (initially in Dhaka and Chittagong) to

ensure quality products for consumers

1048766 UBL have to build capacity very rapidly to meet consumer demand if the launch is successful

Evaluation of Entry into Ice cream Business for Bangladesh Limited 56

90 BUSINESS PROJECTION

91 Basic Assumptions

Business projection for ice cream business was made based on a conservative approach UBL

would require spending significantly on production capacity and factory dedicated to ice cream

Thus to analyse business possibilities of ice cream certain assumptions were made and collected

data were used These are

1048766 Production equipments and cabinets would cost approximately BDT 55 crores

1048766 Production equipments 45

1048766 Packaging Equipments 15

1048766 Storage Facility 20

1048766 Branded Freezers 10

1048766 Distribution Investment 10 (Distributors would also invest themselves)

1048766 Ice cream factory with a floor size of 20000 sqft would cost BDT 25 crores

1048766 Objective is to capture 10 market share in Dhaka and Chittagong in the first year

1048766 Business would grow by 50 in year 2 and 3 30 in year 4 and 25 in year 5

1048766 Weighted price per litre is BDT 170 according to volume share of single serve ice cream

multiple serve ice cream and boutique ice cream

1048766 Other financial assumptions were also made List of them are provided below but amount has

been removed for confidentiality issues

Assumptions

Trade Margin

Distributors Margin

DutyVAT Rate

Trade Terms Expense of NPS

Trade Terms Expense of NSV

Advertising ampPromotion of NPS

Indirects (Salaries Wages etc)

Trading Tax

Table 31 Assumptions for Business Projection

Evaluation of Entry into Ice cream Business for Bangladesh Limited 57

100 CONCLUSION

Ice cream has good prospect in Bangladesh It is still a growing market with opportunities for big

new entrants With the barriers of entry UBL needs to consider its priorities UBL being an HPC

company traditionally needs to acquire expertise in cold chain distribution and has to invest a lot

of money to rip the benefits of the industry However to initiate company can take regional

support and acquire resource expertise The company should enter the business as soon as

possible since there is potential threat from DANONE to introduce more ice creams after ISIS

diabetic ice cream and also with potential of the industry arch rival Nestlersquo might consider

entering into the industry too

Evaluation of Entry into Ice cream Business for Bangladesh Limited 58

References

Web References

1 wwwunilevercom

2 wwwunilevercombd

3 wwwhllcom

4 wwwunilevercompk

5 wwwthedailystarcom - Life Style Magazine

6 wwwreuterscouk

Evaluation of Entry into Ice cream Business for Bangladesh Limited 59

Page 17: Square Ice cream

Among the retail shops there are about equal numbers of branded and unbranded freezers This

is a normal scene in Dhaka where all shopkeepers require freezer to keep other cold products

However basic distribution policy is that if a shop has branded cabinet of a company they

cannot keep competitor ice cream in that cabinet Thus penetration can be made possible in

shops where unbranded freezers are available

General branded freezer contract policy with Igloo and Polar is that traders have to pay BDT

5000 to take a freezer Maintenance of branded freezers is responsibility of the company but

electricity bill is paid by shopkeeper However Polar is not currently giving any new freezer

Kwality gave away their freezers for free however they ensured safety of their freezers by

checking background of the shopkeepers

Cart sellers Cart sellers collect required amount of ice cream from nearby distribution house or

company showroom (Igloo has one showroom in Panthapath) on a daily basis They also have to

buy cartons of products not pieces Kwality carts collect their ice cream from factory (Tejgaon)

or nearby distribution house Cart sellers contribute around BDT 3000 sales in a day and

generally sell at BDT 1-2 higher than set price of each product

The cart sellers generally keep at least a two-day stock so that they can meet sudden upsurge in

daily demand of ice cream or if they get the opportunity to sell at parties programs or any open

air event (Wedding at community centres or outside cultural programs at auditoriums) If cart

sellers need replenishment of stock they even take service more than once in a day either

revisiting showroom house or they call up company delivery people to serve them at their

location if there is opportunity for selling more ice cream

Policy regarding Damaged Ice cream All the ice cream producers have very good relationship

with the shopkeepers If the retailers have refrigeration problem company takes ice cream back

until the problem is fixed whether it is stored in branded freezer or not Also if any ice cream

gets damaged or there is bacterial formation company takes them back Usual return time varies

from 15-30 days For large sellers however they take less time

Payment Method for Ice cream Purchase All the companies give credit of around one month to

large volume contributing retail sellers and try to maintain good relationship with them This

trend is seen in all channels Also all the SMMTs and MTs are given credit of one month and

payment is made by cheque Other small shopkeepers have to purchase with cash However

according to shopkeepers Igloo is currently trying to cut down on credit sales as they believe

there is a consumer pull for their brand Companies like Polar and Kwality also give special

commission to large sellers Polar gives 5 commission on every bill

Evaluation of Entry into Ice cream Business for Bangladesh Limited 25

H Technology and Innovation

Technological advancement in the ice cream industry has been very rapid Starting with stick

mould and filler ice cream production the companies have come a long way Assessing the

consumer choice and demand the companies are introducing new products very often Improved

and new technology is used for faster production and better quality Igloo is trying to meet the

international standards and launching products such as Sundae Cornelli and Nuggets Other

companies are also introducing new flavours suitable for their target segments Igloo has both the

ISO and the HACCP certifications These were awarded in the year 2003 due to their relentless

pursuit of quality and innovation In September 1996 Igloo introduced the 3D Mould line and

straight line extrusion technology for the first time in the subcontinent Basically with Igloorsquos

pursuit all the modern technologies and quality innovations are available in the market

I Production Capacity

Current production capacity of the major players in the common format ice cream segment is

estimated to be as follows

Name

Capacity (Ltrs day)

Total Production (000 Ltrs)

Required Capacity (at 300 production days )

Estimated unutilized capacity (Ltrs day)

Igloo

22000

387433

12914

9086

Polar

6500

112513

3750

2750

Kwality

12100

204934

6831

5269

Savoy

1560

25985

866

694

Milk Vita

1330

26387

880

450

Table 14 Production Capacity of Current Market Players

From the table we can see that all the ice cream manufacturers are operating with unutilized

capacity However one point to be noted is that different ice cream SKUs require different

amount of item to be produced Exact machine production capacity at litre per day does not

represent the accurate scenario Nevertheless it can be safely assumed that all the manufacturers

have unused machine capacity at their premises Moreover the larger players like Polar and

Kwality have new technology available at their premises Kwality bought second hand machines

from Thailand but both Igloo and Polar bought theirrsquos from Italy and Denmark

J Products and Pricing

Products The products in the ice-cream market are differentiated A few firms dominate the

market but an endless variety of ice creams are offered to the consumers Igloo pioneers all

major innovations in the market The products that are available in the market can be classified

into single serving and multiple serving groups Which are then categorized based on functional

attributes designs These are

Single

Stick

Normal mould 3D mould extrusion

Evaluation of Entry into Ice cream Business for Bangladesh Limited 26

Cup and Sundae

Flat cup long cup

Cone

Normal cone (vanilla strawberry etc) premium cone (Ripple)

serving

Innovative Fillers

Snowball Animal shaped containers sandwich nuggets etc

Container

05 ltr 1 ltr and 2 ltr containers

Multiple serving

Family Pack

Assorted packs cakes shahi kulfi etc

Table 15 Ice cream Serve types

Among all the products available in the market most selling SKU for all the companies is Choc-

bar stick and highest selling flavour is Vanilla Following are the ranks of most selling SKUs and

flavours

SKU Name

Rank

Choc-bar (70 ml)

1

Vanilla Cup (100 ml)

2

Vanilla Box (05 and 1 Ltr)

3

Lemon Lolly (70 ml)

4

Normal Cone

5

Flavour

Rank

Vanilla

1

Chocolate

2

Strawberry

3

Ripple

4

Mango

5

Table 16 Rank of SKUs Table 17 Rank of Flavours

Choc-bar is one of the earliest vanilla based chocolate coated SKU that has dominated the

market strongly over the years Shopkeepers could not provide an exact percentage on SKU

based sales contribution Most of them ranked the SKUs and flavours according to sequence

shown in the above table Also according to newspapers and secondary sources Vanilla is the

most selling flavour with 60 sales contribution According to secondary sources percentage

sales contribution of various types of SKUs in the common format segment are as follows

Type of Ice cream

Value Share

Volume Share

Impulse dairy ice cream

514

443

Impulse water ice cream

112

138

Take-home dairy ice cream

374

419

Table 18 Volume Share of Different Serve Types

Impulse dairy ice cream provides more value share as price per litre is higher than take home

multiple serving ice creams Impulse water ice cream shows a similar trend as of take home ice

cream

Pricing Product pictures and price ranges of each category are provided below Evaluation of

Entry into Ice cream Business for Bangladesh Limited 27

Normal Premium Price Tk12 Tk20 Tk25 Cup amp Sundae Normal Cup Sundae Premium Cup

Price Tk20 Tk25 Cone Normal Premium PriceTk20 Tk25Innovative Fillers PriceLtr Tk100

Tk175 Container Normal Premium PriceLtrTk150 Tk 175 Tk 190 Family Packs Kulfi Mixed

Pack Cake Single ServingMultipleServingNormal Ice Fruit 3D Mould Premium Extrusion Price

Tk10 Tk15 Tk15 Tk20Stick Normal Cream

Figure 8 Serve Types and Pricing

As it can be seen from the above chart all impulse ice creams are priced within the range of

BDT 10 to 25 Other take home multiple servings are priced within the range of BDT 50 (05

Litres) to BDT 220 (2 Litres) Another noticeable factor in price is that there are both normal and

premium flavours in all types of ice creams

K Firms as Price Setters

The firms have capability to affect the market price to be low as profit margin is very high If

Igloo reduces the price of an item below the prevailing price level in order to increase its sales

its competitors will fear that their customers will go away from them to buy Igloo products To

retain their customers they will be forced to match the price cut of Igloo Historically this has

been proven to be true However due to price sensitivity companies cannot drastically increase

price even if they provide higher quality of product It was seen in 1997 when Igloo increased

price of 11 SKUs and faced drastic sales fall during that time It shows that the industry might

welcome overall industry price increase but not individual company price increase

L Promotion

The promotion scenario in the industry is not quite organized as of now Even proper data

regarding promotional expenditure is not available from research sources The reason being

there is not much consumer related activity seen in the market After Kwalityrsquos introduction in

the market in 1999 Igloo went on with massive Television promotion of their new products that

were available at that time

Evaluation of Entry into Ice cream Business for Bangladesh Limited 28

However in current times there is no TVC running from any company Companies promote their

launches mainly through billboards and newspaper promotions which is currently the most used

source of consumer promotion Some promotional activities that were done by the companies

over the years are listed below

Consumer Promotions

1 Larger players like Igloo and Kwality goes on with campaigns like ldquoGift on stickrdquo where

various prizesrsquo names are written on the sticks and consumers can get them

a Igloo ran a program on their launch of Macho variant where gift varied from cricket bat to

personal computer

b Igloo had a program in 2006 where gifts on sticks varied from Bangkok visit to sunglass

c Igloo ran one campaign in 2007 where gold bars were given on purchasing Choc-bar

d Kwality ran a similar program in 2008 where gifts varied from wrist watches to motorcycle

2 Some companies ran consumer TTS and gift programs where company products were given

free

a Igloo had a program in 2006 where Igloo butter was given free on purchasing Igloo ice cream

cake

b Kwality ran a program in 2008 where one SKU was given as gift with another SKU randomly

c ldquoCone Ice cream at your Homerdquo program was run by Igloo in 2002 where six cone biscuits

were given free with purchase of one litre ice cream

3 Media placement is another form of placement done by larger companies

a Igloo purchased ldquoGlimpse into World Cup Resultrdquo space in daily newspapers during World

Cup Football 2002

4 One interesting program is done by only Igloo in Bangladesh They did it in June 2006 The

program was ldquoIgloo Ice cream Festivalrdquo with main attractions of ldquoGet as much ice cream as you

want for BDT 200rdquo ldquoGet a Fantasy Kingdom Entry ticket with each Entry Couponrdquo ldquoLucky

Drawrdquo and ldquoCelebrity Addardquo

Trade Promotions

5 Trade promotions are mainly given to ldquoHighest retail purchasersrdquo and also based on time

bound trade schemes where various slabs of purchase amount are mentioned for different prizes

a Igloo takes their highest purchasers to visit countries like Singapore and Thailand

b Savoy has a purchase slab scheme where first prize is table fan

c Polar gives special sales commission to their highest purchasers (around 5)

Evaluation of Entry into Ice cream Business for Bangladesh Limited 29

M Players in the Common Format Segment

Branded common format ice cream segment is constituted of five players only Among them

Igloo is the largest player and Milk Vita is the smallest The following sections detail the basic

company detail of all the companies with special emphasis on Igloo the market leader

Igloo

The pioneering ice-cream company in Bangladesh started its operation in 1964 in Chittagong

under K Rahman amp Co Limited (KRC) with a small factory inside Coca Cola bottling factory of

KRC After the independence of Bangladesh in 1971 Igloo was taken over by the government of

Bangladesh Later in 1983 Abdul Monem Limited purchased the entire production setup of KRC

Limited including Coca-Cola bottling plant and Igloo ice-cream factory After taking full charge

of Igloo ice-cream by Abdul Monem Limited the manufacturing operations continued in

Chittagong till 1990 Although Dhaka fetched the maximum share of the total revenue the

distribution cost increased tremendously in the process of meeting the demand of Dhaka city To

cope with the distribution problem and handle Polar threat Abdul Monem Limited transferred

the factory to Dhaka changed the ice-cream packaging from the conventional paper to plastic

and expanded their market and distribution operation The new factory of Igloo was setup at

Shyampur Narayanganj and was nine kilometres away from the Motijheel office The company

apart from catering the capital city started to expand its operations in Comilla (1991) Khulna

(1992) and North Bengal (1993) These markets were served directly from Dhaka since the

storage facilities were not developed till then The company is now the market leader since 1997

with clear market share victory over others with sweeping 51 share It is to be noted that Igloo

is also a player in the boutique segment with three parlours (2 in Dhaka and 1 in Chittagong)

Product Range Igloo offers the widest choice of ice cream more than any other competitor in

the market Igloo is offering a total of fifty items including normal premium and novelty cup

stick and family pack items Igloo has thirty flavours more than anyone else in the industry and

is continuously launching new and innovative delicacies

Igloo ice-cream can be classified in six groups They are

Stick

Macho Choc-bar Mini Choc Clown Mega Shell n core Lolly

Cone

Cornelli 2 in one Cornelli classic

Cup

Shahi kulfi Vanilla Strawberry Mango Snow ball

Container

Vanilla Strawberry Mango Chocolate Coffee Diet Vanilla Tutti Frutti Ripple Pralin

Pistachio

Innovative

Nuggets Sandwich

Family

Ripple cake Party time Shahi Kulfi

Table 19 Products of Igloo

Single serve stick cups and cone items are easy to carry around and convenient to eat which

makes it most sold The core target segment of ice-cream is 6-24 years and this generation is

always on the Evaluation of Entry into Ice cream Business for Bangladesh Limited 30

move and thus prefers independent cone stick or cup items As Igloo initiated the concept of ice-

cream as a family product they offer some items to be enjoyed with the whole family

Quality and Innovation Igloo is committed to maintaining the highest quality standard through

its continuous RampD activities The major ingredients raw materials and packing materials are

procured from the best European sources Strict quality control is done at every stage of the

manufacturing process from procurement of material mixing material flow ice cream making

packaging storing (at main warehouse) distributing and market shelving by the Quality Control

Department Current supply chain for various materials of Igloo is as follows Australia (Milk

Powder) Denmark (Ingredients emulsifiers amp stabilizers) China amp UAE (Food grade sticks)

China Denmark Singapore amp Thailand (Food grade packing materials)

Figure 9 Igloo Supply Chain

Distribution Network Their distribution network is stretched all over the country with a long

fleet of refrigerated vans Firstly the ice cream products are stored at the central warehouse of

the factory and from there they are distributed through the haulage vehicle to the operational

centres located in Dhaka Chittagong Comilla Rajshahi Barisal Bogra Rangpur and Khulna

Strictest cold chain maintenance during the distribution and selling of the ice creams is ensured

Their distribution process is as follows Manufacture Stored at -24c Transported by Refrigerated

trucks at -Reaches amp Preserved in Eight regional stores Refrigerated vehicles (Distributors)Retail

outlets (Deep freezers)

Figure 10 Distribution Process of Igloo

Evaluation of Entry into Ice cream Business for Bangladesh Limited 31

Trolley Operation Igloo also operates through trolleys for extending its reach to consumers at

the furthest points The trolleys are operated near schools alleys streets parks etc and play

rhythmic music to attract the consumers These are very colourfully decorated with Igloo

umbrella and the puller wears specific uniforms Igloo was the first in introducing and operating

these trolleys in Bangladesh for any Fast Moving Consumer Goods (FMCG) Igloo has around

125 trolleys operating throughout the country Individual trolleys are provided with a regular

supply of igloo ice creams

Marketing The marketing commitment of Igloo is based on the relationship with its customers

and consumer by not only manufacturing the highest quality product but also delivering the

product by maintaining this quality To satisfy the ever-changing needs of the customer Igloo

has regularly launched new ice creams and introduced new flavours And this commitment has

positioned Igloo as the market-leading brand by gaining the consumers trust with the positioning

as ldquoA WORLD OF GREAT TASTErdquo

Facilities and Logistics at a glance As of 2009 following are the facilities and logistics enjoyed

by the company

Factory location

Dhaka

Production Lines

4

Packages

Stick Cup Family pack Others (Nuggets and sandwich)

Machine suppliers

1048766 Mark-Italy

1048766 Tetra Pak(Hoyer)-Denmark

1048766 Sabore Denmark

1048766 Hass- Austria

Machine models

1048766 Freemark 1100 Italy

1048766 FM 3000 FM 6000 Italy

1048766 SL600 Denmark

Cone baking

Hass- Austria

Chocolate making

Macentyre-UK

Coverage

Nationwide

Operational centre

10

Total market vehicles

30

Distribution channel

Directthrough appointed distributors

Outlet service

7500

Injected deep freezers

4000

Trolley operations

125

Warehouse no

8

Table 20 Igloo Facilities and Logistics

Kwality

Kwality is currently the second largest ice cream manufacturer of the country The mother

company for the Kwality brand is Sanowara Drinks amp Beverages Ltd a sister concern of

Sanowara Group The company is famous for powdered milk brands Red Cow and Diploma in

Bangladesh The drinks and beverage concern of Sanowara made an entry into the market in

1997 with ldquoYesrdquo brand drinking water and launched the ice cream brand in 1999 With heavy

communication and novelty products it Evaluation of Entry into Ice cream Business for

Bangladesh Limited 32

successfully removed Polar from the second place with a current market share of 27 The

company also operates in the boutique segment with two parlours in Dhaka and Chittagong

Kwality ice cream factory is situated in Chittagong with a floor space of 35000 sft and fully

automated machinery wrapping mix machinery equipments from Italy having capacity of

around 20000 litres of ice cream per shift The ice cream factory employs 140 people The

company is ISO 9001-2000 certified

Kwality was the first true competitor for Igloo products with some major innovation in product

design and communication but their quality is perceived to be lower in the minds of the

consumers and they do not have extrusion ice cream The product prices are also similar to that

of Igloo but they charge a bit lower than Igloo in premium multiple servings However during

market visits it was seen that shops that keep only Kwality or Igloo and Kwality both they can

sell Kwality too although the sales amount is lower than that of Igloo People who look for Igloo

shopkeepers give them that directly but if they get a chance and Kwality ice cream stock is high

they also push Kwality to dry the stock out This gives an indication that market is larger than

what the current players are capable of serving even in Dhaka

Kwality follows a similar distribution model like Igloo but distribution frequency is lower and

amount of cart sellers is limited to 25 and they operate only in Dhaka

Polar

Once a giant in the industry Dhaka Ice Cream Industries Ltd introduced the first hygienically

packed ice cream in Bangladesh in 1987 and the brand name Polar was thus born In the early

days the company started ice cream business with a wide range of products and a variety of

flavours in Dhaka city In 1988 the company started its distribution in the city of Chittagong

then Bogra and continued to cover more cities Presently Polar ice cream is available

throughout Bangladesh The company today trails in the market with 15 market share in the

common format segment Recently Polar has announced launch of ISIS diabetic ice cream with

support from DANONE to turn around in the market

The company has its head office as well as a modern large-scale industrial plant in Dhaka Polar

ice cream is made with Danish expertise using Danish equipment and technology The

production activities and quality control measures are supervised and managed by Danish

experts Polar offers a wide range of delicious flavours and tastes made by ingredients imported

from Europe

Dhaka Ice Cream at present has 3 cold stores in Dhaka Chittagong and Bogra in Bangladesh

From Dhaka cold store they distribute ice creams in Mymensingh Tangail Jamalpur Sherpur

Kishoreganj Netrakona Comilla Narsingdi Barisal Madaripur Agaeljhara Faridpur Magura

Chuadanga Jessore Satkhira Khulna Pirojpur and Sylhet through their distributors In case of

long distance delivery points the company uses auto cooling freezer van

Evaluation of Entry into Ice cream Business for Bangladesh Limited 33

In Dhaka city they distribute ice creams directly to retail stores in freezer vans Besides that

they have several distributors at different points of the city Distributors cover their individual

areas where company is not able to supply directly in their freezer vans Similar model is

followed by the company to distribute ice cream from their other cold storages through out the

country For storing and selling ice creams in retail stores the company like the other players

arranges a deep freezer with the Polar logo and canopy light box

In addition to this distribution the company also undertakes home delivery of ice creams for

special occasions

Savoy

Savoy Ice-cream brand is owned by Sena Kalyan Sangstha (SKS) Group of industries It started

its journey in March 1995 with a factory in Tejgaon Dhaka Yearly turnover is estimated at BDT

388 crores with a market share of roughly 35

The factory has been established with Sonali Bank finance at 6040 equity ratio The total

production capacity of the factory has been estimated at 2400 litres of Ice-cream per day Total

land area of the factory premise is 116 Bigha with 8000 sft area covered with a total project cost

of BDT 144 The factory employs 73 people

Product ranges of the company include all the basic designs and flavours of the industry

However the company has not been much of an innovator in the industry Their product quality

is substantially low than that of other players and they price their products at 10-15 lower than

the other competitors The company imports raw materials mainly from Europe The general raw

materials are Euro cream Skimmed Milk Powder Cocoa Powder and Flavour (Vanilla Mango

and Strawberry) Colour (Yellow Red Chocolate and Green) Ripple Sauce Cheney Fruit Palm

Kernel Oil Anhydrous Butter Oil (Ghee) and Sugar etc

Milk Vita

Milk Vita is one of the most famous brand names in Bangladesh for its liquid dairy milk Owned

by Bangladesh Milk Producersrsquo Co-operative Union Limited (BMPCUL) the company came in

the market with proper dairy milk ice cream in form of cups and choc-bar With a production

capacity of around 1600 litres per day the company is trailing in the market place with 3

market share

Although the Milk Vita Choc-bar was perceived to be extremely tasty by consumers they

probably could not do well due price competition Currently they do not even distribute ice

cream in Dhaka However their presence is seen in outskirts of Dhaka and other nearby towns

If the current market situation prevails Milk Vita would lose their remaining market share and

other companies would benefit especially Igloo However one of the advantages of Milk Vita

remains to be

Evaluation of Entry into Ice cream Business for Bangladesh Limited 34

their nation wide milk supply network They have skimmed milk powder production plant that

Igloo does not have Thus they can combat the seasonality of milk supply that Igloo with its

huge requirement of milk cannot

Strengths and Weaknesses of Competitors

Company

Strengths

Weaknesses

Igloo

1048766 Strong brand image

1048766 High product quality

1048766 Highest no of variety

1048766 Strong distribution network

1048766 Highest visibility

1048766 Strong promotion

1048766 High production capacity

1048766 Presence of extrusion ice cream

1048766 Items are generally a bit pricy

1048766 Igloo does not give free freezers like other companies

1048766 Reluctant in recent times regarding innovation

1048766 Local sourcing of liquid milk does not meet demand

1048766 Failure to use ERP technology slowing decision making

Kwality

1048766 Product variety

1048766 Strong promotion

1048766 Free freezer distributed

1048766 Presence in all price segments

1048766 High production capacity

1048766 Weak distribution

1048766 Lower exposure

1048766 low amount of carts in operation

Polar

1048766 Free freezer

1048766 Quality perceived to be high compared to Kwality

1048766 Discoloured freezers

1048766 Lower exposure

1048766 Low product variety

1048766 Unused capacity

Savoy

1048766 Price is lower

1048766 Discoloured freezers

1048766 Low product variety

1048766 Weak distribution

1048766 Small amount of freezers

1048766 Low production capacity

Milk Vita

1048766 Quality is good due to dairy cream

1048766 Brand leverage from Milk Vita milk

1048766 Low exposure

1048766 Low variety

Table 21 Strengths and Weaknesses of Competition

512 Market Characteristics of the Boutique Segment

With a small market of BDT 98 Cr and 567 share in the branded ice cream market the

boutique segment is currently an increasing segment in the ice cream industry Boutique

segmentrsquos history dates back to 1960s when Igloo launched boutiques in Dhaka to save

distribution cost and promote a culture of ldquoice cream eating outrdquo In later years boutiques lost

their glamour and retail common format segment picked up growth However with Dolce Vita in

the late lsquo80s craze for Italian Artisan ice cream was recreated in the market Although Dolce

Vita is failing in recent times emergence of MoumlvenPick and Club Gelato in 2000 has uplifted the

segment once again Current growth rate of the

Evaluation of Entry into Ice cream Business for Bangladesh Limited 35

segment can be estimated to be approx 20-22 (higher than the common format segment)

Following are the basic detail of all the major players in the segment with their estimated sales3

Players

Outlet

Sales (Cr Taka)

Share

Club Gelato

1

136

199

MoumlvenPick

1

119

174

Andersenrsquos

3

119

174

Gelateria Igloo

3

119

174

Sub Zero (Kwality)

2

051

75

Baskin Robbins

1

015

22

Dolce Vita

1

017

25

American Soft

1

009

12

Rainbow

1

009

12

Others (off site)

089

130

Total Market

682

Table 22 Players and Shares in Boutique Segment

A Detail of Operation

General operational procedure followed by all the operators is as follows

1048766 Operating method There is a variation in operational method among the large operators

1048766 Club Gelato uses kitchen at own premise where imported ingredients and local milk (daily

special service from Milk Vita) are used to make ice cream

1048766 MoumlvenPick directly imports ice cream from Switzerland

1048766 Andersenrsquos Gelateria Igloo and Sub Zero produce ice cream at their factory with a mix of

imported and local ingredients

1048766 Products Around 30-35 flavours of artisan dairy ice cream are served at the premises

1048766 Most sold flavours are Vanilla Ferrero Rocher Butterscotch Chocolate Caramel etc

1048766 Other Products Larger players also serve ice cream desserts (milk shakes ice cappuccino etc)

pastries and other desserts with normal coffee and tea facility at their premises

1048766 Boutiques fight ice cream seasonality with the other products sales during off-peak ice cream

seasons Usually ice cream and other products contribute at 6040 ratio in summer and during

winter and off-peak seasons the ratio reverses

1048766 Pricing Usually the prices of products in this segment are 3-4 times higher than that of the

common format segment

1048766 Prices do not vary with flavours Variation depends on serve style (Cone tub) and use of

toppings and other ingredients (Chocolate sauce nut fruits) etc

1048766 Usual margin charged is around 50-60 over production cost Similar margin is charged for

other products like coffee ice cappuccino etc

3 Yearly sales is estimated based on companyrsquos approximate daily sales collected during

interview

Evaluation of Entry into Ice cream Business for Bangladesh Limited 36

1048766 Target Group Most of the consumers belong to SEC A and higher SEC A with DMFI of at

least BDT 20000

1048766 Foreign delegates and resident foreigners also visit these boutiques

1048766 Main purposes of visits in the boutiques are

bull Youth hangout with friends and having ice cream and ice cream derivatives

bull Family Family night out or eat out at a restaurant and then having dessert

bull Foreigners Having dessert after dinner

1048766 Rush time at boutiques are Afternoon 2-4 pm and at night 9-11 pm

1048766 Offsite sales Most of the large operators also sell offsite They have small freezers for off-site

1048766 Club Gelato and MoumlvenPick serves ice cream at high society parties and programmes

1048766 MoumlvenPick also has kiosks in known hotels like Sheraton

1048766 Promotion No mass promotion is done by any of the companies Word of mouth is the most

important source of promotion Posters and banners outside the premise and occasional

newspaper advertisements are used to communicate special offers

1048766 Growth Drivers Market growth is driven by image innovation quality decoration of facility

environment and special offers

1048766 Club Gelato has the image of selling true Italian dairy ice cream with an excellent hangout

environment

1048766 MoumlvenPick imports ice cream directly from Switzerland and is perceived to be of high quality

1048766 Andersenrsquos operates with the image of ice cream from Denmark

1048766 Gelateria Igloo (from Igloo) and Sub Zero (from Kwality) could not establish the premium

artisan ice cream image

B Players in the Boutique Segment

There are very few players who have significant impact in the boutique segment Detailed

information of all the major boutique segment players is provided below

Evaluation of Entry into Ice cream Business for Bangladesh Limited 37

Club Gelato

Basic Company Information

1048766 Location Banani Road 11 (Planning for a second one in Dhanmondi)

1048766 Established in 2001

1048766 Seating Capacity 48

1048766 Area 1250 sft (including kitchen)

1048766 Owner Mr Jahangir Alam (Bangladesh)

1048766 Business Type Joint business partnership with Singapore

1048766 Staff 15 people (6 in the kitchen)

1048766 Production capacity 150 litres per day

Product Related Information

1048766 Product Italian style parlour scoop ice cream fruit juice coffee and pastries

1048766 Flavours Around 32 flavours available

1048766 Most selling Ferraro Rocher Vanilla Pistachio

1048766 Innovations New variants and ingredients are communicated by their Italian supplier and

Club Gelato decides what to take from them

1048766 Serve type Cup Cone Glasses Box for take away

Consumer Profile

1048766 Primary Teenagers and Young Adults (18-30) amp Diplomats

1048766 Secondary Family consumers for eat out

1048766 Income Group High income customers tentatively from SEC A and higher SEC A

1048766 Geographic Area Diversified

1048766 Rush time 8-10 pm

Sales and Price Information

1048766 Sales BDT 50000 (60 Ice cream 40 other desserts) daily in summer In winter however

other products sell more and thus they keep total sales at the same level

1048766 Price 750 per litre for any flavour

1048766 Sales Volume 50-60 litres per day

Supply Chain Placement Information

1048766 Milk Local sourcing from Milk Vita (4050 litres per day)

1048766 Chocolates amp Flavours Belgium France Germany

1048766 Transportation Mainly air (They can afford it due to high margin)

1048766 Contribution of various materials Flavours (30) Milk (20) other parts are water and air

Promotional Materials

1048766 Materials used are near premises POS materials for promoting the parlour only

Table 23 Detail of Club Gelato

Evaluation of Entry into Ice cream Business for Bangladesh Limited 38

MoumlvenPick of Switzerland

Basic Company Information

1048766 Location Gulshan

1048766 Established in 2000

1048766 Seating Capacity 55

1048766 Owner Mr Arif Mahmud

1048766 Business Type Franchise of International MoumlvenPick

1048766 Storage Capacity in Shop 150 litres

Product Related Information

1048766 Product Imported MoumlvenPick ice creams coffee chicken sandwich and Frappe

1048766 Flavours Around 30 to 35 flavours available

1048766 Most selling Swiss Chocolate caramel Vanilla Dream Espresso Strawberry

1048766 Innovations New variants are communicated by their franchiser and they decide on flavours

that they want

1048766 Serve type Cup Cone Glasses Box for take away

Consumer Profile

1048766 Primary Teenagers and Young Adults (18-30) (70) amp Diplomats

1048766 Secondary Family consumers for eat out

1048766 Income Group High income customers tentatively from SEC A

1048766 Geographic Area Concentrated in Gulshan and nearby areas

1048766 Rush time Afternoon- Young Adult 10 to 11 pm Foreigners

1048766 the company also serves at parties and has freezers in known hotels where their ice creams

are served

Sales and Price Information

1048766 Sales BDT 35-40000 daily in summer

1048766 Price 640 per litre for any flavour

1048766 Sales Volume 55-60 litres per day

Supply Chain Placement Information

1048766 Transportation Imported finished goods by ship

1048766 Ship travel time 19 days

1048766 Port clearance 10 days

1048766 Safety Cushion Extra 10 days

Promotional Materials

1048766 Materials used are near premises POS materials for promoting the parlour only

Table 24 Detail of MoumlvenPick of Switzerland

Evaluation of Entry into Ice cream Business for Bangladesh Limited 39

Andersenrsquos of Denmark

Basic Company Information

1048766 Location Gulshan (2 others in Uttara Dhanmondi)

1048766 Established in 2001

1048766 Seating Capacity 48

1048766 Owner United Group

1048766 Business Type Franchise of Australian company Andersenrsquos of Denmark

1048766 Production Tongi Factory of United Group

1048766 Production capacity 2000 litres per day in factory

1048766 Storage Capacity in Shop 150 litres

Product Related Information

1048766 Product Danish parlour scoop ice cream and coffee

1048766 Flavours Around 30 to 35 flavours available

1048766 Most selling Strawberry Butter Scotch Green

1048766 Innovations New variants and ingredients are communicated by their franchiser and they

decide on flavours that they want

1048766 Serve type Cup Cone Glasses Box for take away

Consumer Profile

1048766 Primary Teenagers and Young Adults (18-30) (70) amp Diplomats

1048766 Secondary Family consumers for eat out

1048766 Income Group High income customers tentatively from SEC A

1048766 Geographic Area Concentrated in Gulshan and nearby areas

1048766 Rush time 8 to 10 pm

Sales and Price Information

1048766 Sales BDT 10-12000 daily in summer

1048766 Price 460 per litre for any flavour

1048766 Sales Volume 40-50 litres per day

Supply Chain Placement Information

1048766 Milk 2025 kg packs are imported

1048766 Chocolates amp Flavours Imported

1048766 Butte paper Local sourcing

1048766 Transportation Ship

Promotional Materials

1048766 Materials used are near premises POS materials for promoting the parlour only

Table 25 Detail of Andersenrsquos of Denmark

Evaluation of Entry into Ice cream Business for Bangladesh Limited 40

Gelateria Igloo

Basic Company Information

1048766 Location Banani Kemal Ataturk Avenue (Two others in GEC Mor Chittagong and Naya

Paltan)

1048766 Established in 2000

1048766 Seating Capacity 20

1048766 Production From Igloo factory in Shyampur Narayanganj

Product Related Information

1048766 Product Parlour scoop ice cream and coffee only

1048766 Flavours Around 30 flavours available

1048766 Most selling Vanilla Strawberry Chocolate Pistachio Butter Scotch Tutti Fruity

1048766 Serve type Cup Cone Glasses Box for take away

Consumer Profile

1048766 Primary Teenagers and Young Adults (18-30)

1048766 Secondary Family consumers for eat out

1048766 Income Group High income customers tentatively from SEC A and B

1048766 Geographic Area Diversified

1048766 Rush Time afternoon and evening

Sales and Price Information

1048766 Sales BDT 8000 to 10000 daily in summer Nearly one fourth in winter

1048766 Price Varies but 350 per litre of vanilla

Promotional Materials

1048766 POS materials at the premises

Table 26 Detail of Gelateria Igloo

52 Price Comparison of Common and Boutique Segments

Price ranges of both common format and boutique segment cannot exactly be pin pointed as

products do not follow common structure and variations occur with use of toppings mixing of

flavours and use of coatings However a price comparison has been made among the brands

based on their price of per litre of vanilla flavoured ice cream in the market It appears to be as

following

Company

Price Litre Vanilla

Club Gelato

750

MoumlvenPick

640

Andersenrsquos

460

Dolce Vita

440

Igloo

100

Kwality

100

Polar

100

Milk-Vita

90

Savoy

85

Table 27 Comparative Price Analysis

As it can be seen there is price gap within the range of BDT 100-400 Ice cream kiosks and

small scooping boutiques can operate within that range

Evaluation of Entry into Ice cream Business for Bangladesh Limited 41

60 CONSUMER ANALYSIS

61 Target Group of Ice cream

Who are the consumers of ice cream This question does not have a clear answer Ice cream is a

food for all It is the only food consumed by a human being at less than 0 degree centigrade

temperature and people of all ages feel indulged to have it However we can determine focus

target groups for both branded common format and artisan boutique ice cream Group

discussions and market visits were done to get insight into the consumers along side resources

form secondary sources Age based target group is common for both segments but variation

among the groups occur mainly based on SEC and DMFI classification

611 Geographic Group

Branded ice cream remains an urban product till date Geographically branded ice cream has

reached urban and semi urban areas up to Thana Head Quarter levels Ice cream has reached

areas where electricity is available Small artisan players are available in places where large

branded players have no distribution

612 Target Age Group

Age wise grouping of target consumers is as follows

1048766 Urban kids in the age group of 5-14

1048766 They mainly consume normal sticks cups cones innovative fillers and water ice creams

1048766 Urban youth in the age group of 15-24

1048766 They consume premium and extrusion sticks and cones

1048766 Urban mothers in the age group of 25-35

1048766 They determine the family purchases Even when the father purchases ice cream decision is

taken by them

Consumption pattern of various age groups are depicted in the following chart Ice cream

consumption pattern50203005 to 14 yrs15 to 24 yrs25 to 35 yrs

Figure 11 Target Group wise Consumption Pattern Evaluation of Entry into Ice cream Business

for Bangladesh Limited 42

613 Target SEC and DMFI Group

Common Format

SEC A and B is the target group for common format ice cream However with rapid increase in

price level over the years has made it a ldquohard to consumerdquo product for SEC B consumers who

belong to lower DMFI group

Boutique Format

Boutique formatrsquos higher margin and high price range makes it an exclusively SEC A ice cream

People belonging to upper and upper middle class have access to the mediocre boutiques and

only higher upper class can have premium ice creams like Club Gelato and MoumlvenPick

Another unique target group for boutique format are the foreigners who live in Bangladesh

These people tend to visit the parlours to have ice cream as dessert especially after dinner

62 Ice cream in Consumer Lifestyle

Figure 12 Ice cream in Consumer Life style

This simple overview of ice cream in consumer lifestyle was determined based on in-depth

research analysis of UBL and validated through qualitative group discussions by the author

However detail of in-depth research is provided in a later section of this chapter

Evaluation of Entry into Ice cream Business for Bangladesh Limited 43

63 Highlights of Purchase Habit of Ice cream

631 Common Habits across Target Groups

There are some common habits that were identified in earlier researches and group discussions

with consumers Common habits mean the consumer approach towards ice cream that is seen

across all target groups eg kids youth and adult purchasers These are outlined below

1048766 Ice cream is mainly seen as a dessert or a snack Impulse ice cream is seen as a quick snack

that is consumed when it is in sight Visibility plays a big role here Regarding family packs

people see it as a post-food dessert

1048766 Ice cream purchase is commonly a planned event When the contexts arise people generally

take a bit of time to decide whether or not to have ice cream or when they want to go to a

boutique they make due considerations regarding which boutique to visit

1048766 Ice cream purchase decision is taken based on favourite flavour People tend to try out new

variants and flavours when they first see it They compare the taste with earlier experience and

when they purchase later they choose the flavour they have liked most

1048766 For In-Home segment decision is mostly taken on the flavour Generally people come up with

different flavours of choice and most voted flavour is chosen

1048766 People become aware of new variants or flavours mainly through word-of-mouth

Advertisement (new launches special offers and festivals) in newspaper is another source of

awareness

1048766 People are currently indifferent towards the price level of premium flavours However some

feel that price of Choc-bar or water ice creams (lolly) is a bit much If less they would have

consumed more Some also feel that companies should come up with branded ice cream in the

price range of BDT 5-8

1048766 Ice cream is purchased from nearby shops If required brand and flavour is not available 2-3

shops will be visited and then available flavour will be selected even if the required one is not

found This is done mainly not to ruin the mood for ice cream

1048766 People are very open to try new brands and flavours especially if it comes from a credible

source They would try new flavours and if they are satisfied with the taste they would repeat

purchase

1048766 Regarding boutique visits people feel that boutiques need to have a proper environment

enough flavours and other snacks

1048766 While visiting boutique with family or companion they want variation in flavours so that

they would order different flavours and taste each otherrsquos ice cream It is seen as a sign of

togetherness

1048766 Frequency of ice cream purchase varies among people It depends on peer pressure collective

family decision summer heat and attitude towards ldquoice creamrdquo itself as a product Evaluation of

Entry into Ice cream Business for Bangladesh Limited 44

632 Habits of Kids

1048766 Kids choose ice cream flavours by the look of the product (generally pictures shown in POS

materials and carts) They love colour and designs of the products let it be a common format or a

boutique ice cream

1048766 Kids (when in house) would go with the housemaid to the nearby shop choose the flavour

they want (within range of the amount given to the maid) and buy it

1048766 When with parents they would take the product they like even if the price is lower than some

other product However mothers play a role in this decision They would want their children not

to choose too high priced a product or coloured products

633 Habits of Youth

1048766 Young people are the main consumer of impulse ice cream They also are one of the major

consumers in the boutique segment

1048766 Young people love to try out new products that come into the market Another side of the coin

is that they are not very loyal to a brand or a flavour and tend to switch a lot

1048766 Regarding boutique visits young people go to boutiques to have an ldquoice cream hang outrdquo with

peer groups They would stay there for a longer period of time while they have their ice cream

1048766 Some times young people make milk shakes and other ice cream based desserts

634 Habits of Mothers

1048766 Mothers worry about their childrenrsquos health and they prefer ldquovanillardquo type of brands

However when price constraint occurs they go for water ice creams for their children They try

to convince their kidrsquos purchase decision

1048766 Regarding family purchase motherrsquos decision is sometimes prioritized by the whole family

64 Barriers to Ice cream Consumption

641 Emotional Barriers

1048766 Overindulge (close to sinful)

1048766 Undisciplined (no control)

1048766 Childish (licking)

1048766 Artificial Image

642 Functional Barriers

1048766 People of SEC B feel that ice cream is an expensive dessert (If less expensive would consume

more often)

1048766 It leads to cold cough - especially in winter rainy season

1048766 It contains artificial additives preservatives

1048766 It is very high in calories that lead to fattening

Evaluation of Entry into Ice cream Business for Bangladesh Limited 45

1048766 It does not quench ldquothirstrdquo

1048766 Less convenient (portable immediate eat)

1048766 Messy Dripping

65 Research Findings

The highlights regarding purchase habits triggers and barriers of ice cream consumption provide

a glimpse into the consumer world of ice cream industry However UBL CMI conducted a

formal research exclusively on ice cream consumers to identify

1048766 Occasions of ice cream

1048766 Frequency of ice cream consumption

1048766 Expectations from ice cream occasions

1048766 Personalities that they desire from ice cream

651 Relevant Occasions in Daily Lives of Consumers

Research question regarding ldquousual occasions of life that occurred most frequently in day-to-day

lives of the respondentsrdquo generated the following replies

Occasion

of Respondents saying Yes

Watching TV

93

Normal Dinner At Home

91

Normal Lunch At Home

89

At Home While ReadingMusicSurfing

86

Informal Family Get Together

85

Out Of Home Hanging Out With Friends

84

Out Shopping

84

Mid-Afternoon Break At Home

83

At Home By Myself During The Day

82

Special Dinner At Home

82

Informal Dinner Out Of Home

82

Normal Lunch Out Of Home

82

Leisure Walk

79

Coming Home From WorkSchool

78

Special Dinner Out Of Home

78

Celebration

78

A Night In With Friends

77

At Home By Myself In The Evening

77

Special Lunch Out Of Home

76

Mid-Afternoon Break Out Of Home

75

Special Lunch At Home

73

Day out with Partner

72

Midmorning Break

70

At Breakfast

68

Family Day Out

68

During Work Or At School

65

Evaluation of Entry into Ice cream Business for Bangladesh Limited 46

Travelling ToFrom WorkSchool

65

At The Cinema

61

Special Event

56

Clubbing At A Party

50

Post GymSports

48

Table 28 Relevant Occasions in Consumersrsquo Lives

Respondents were then asked to mention ldquofrequency of occurrence of the identified occasionsrdquo

The identified replies are as follows Normal dinner at homenormal lunch at homeComing home

from workschoolTraveling tofrom workschoolDay out with Partner SpouseMid-afternoon

break at homeOut of home hanging out with friendsLeisure walkMid-afternoon break out of

homeA night in with friendsSpecial dinner at homeSpecial lunch out of homeFamily day

outSpecial eventPost gymsportsDaily2-3 Times A WeekWeekly2-3 Times A MonthOnce A

MonthEvery 2-3 MonthsLess OftenNever Figure 13 Frequency of Occurrence of Occasions

This shows that ldquoNormal dinner at home Watching TV Normal Lunch At Home At Home

While ReadingMusicSurfing Coming Home From WorkSchool During Work Or At School

Travelling ToFrom WorkSchool Midmorning Break Day Out With Partner Spouse At Home

By Myself During The Dayrdquo are the most frequent daily rituals of busy lives of consumers

652 Frequency of Ice cream Consumption

Respondents were asked to mention ldquoconsumption pattern of ice cream during the identified

occasionrdquo on a scale of 1-5 depicting frequencies like ldquo(5) always (4) most of the times (3)

about half of the times (2) sometimes (1) never do not knowrdquo The responses are depicted in

the following table

Evaluation of Entry into Ice cream Business for Bangladesh Limited 47

444474544655555566756665775967779991011101111101210111110101113111412131314161

011121411131216181519181518211817171719181718201721222130303434253437403741394

046383944464746453745414641374638504843414839373030292726232725222020201926202

21722221317Midmorning

breakWhile clubbing at aAt the cinemaSpecial eventNormal lunch out ofA night in with

friendsNormal dinner atInformal dinner out ofAt home by myselfAt home by myself inOut

shoppingSpecial lunch atDay out with SpouseWatching TVAlwaysmost of the timesAbout half

of the timesSometimesneverdo not know

Figure 14 Frequency of Ice cream Consumption

As it can be seen ldquoDay out with Spouse Special lunch at home Special dinner at home

Watching TV Family day out Celebrationrdquo are the occasions where most frequently ice cream is

consumed

653 Market Character Mapping Relevant Occasions vs Frequency of Consumption

If we plot frequency of consumption on the X-axis of a chart and relevance of occasion

occurrence on the Y-axis taking the above mentioned values as cut-off values we get four

quadrants in the chart depicting four market scenarios that any ice cream manufacturer in

Bangladesh market might encounter given the current market situation This market

segmentation is based on frequency of ice cream consumption in daily occasions of consumer

lives

The segments are

1048766 OPPORTUNITY MARKET High Relevant Occasions-Low Ice cream Frequency

1048766 QUESTION MARKET Less Relevant Occasions-Low Ice cream Frequency

1048766 HIGH FREQUENCY MARKET Relevant Occasions-High Ice cream Frequency

1048766 CAPTIVE MARKET Less Relevant Occasions-High Ice cream Frequency

The chart looks as follows Evaluation of Entry into Ice cream Business for Bangladesh Limited

48

Figure 15 Relevance of Occasion-Frequency of Consumption Mapping

As it can be seen from the above chart Bangladesh Market still lies in the Opportunity and

Question market zone with a pull towards High frequency and Captive Market zones This is

evident from market data as penetration of ice cream still remains at Thana headquarters levels

Also this explains the high market growth rate of 17 as market is yet under developed and

branded quality ice cream has yet not reached all levels of consumers especially rural level that

constitutes around 75 of Bangladeshi market

From the above analysis we can establish that target of ice cream manufacturers should be to

penetrate more into the Bangladeshi market to create higher frequency of ice cream

consumption The following chart shows the strategies to follow for ice cream manufacturers

Figure 16 Required Market Strategy for Bangladesh

Evaluation of Entry into Ice cream Business for Bangladesh Limited 49

As relevance of ice cream consumption occasions can hardly be controlled by marketers their

endeavour should be to create more ldquoemotional and functionalrdquo attachment to ice cream in less

frequent occasions through ldquomarket developmentrdquo strategy to earn share from overall food

expenditure of consumers and at the same time make them consume more ice cream in highly

relevant occasions through ldquopenetrationrdquo strategy

654 Consumersrsquo Emotional Requirements and Product Attributes

All consumers under these clusters also identify the emotional requirements and the significant

product attributes they seek from their current preferred and future desired ice creams These are

provided below

Cluster

Emotional Functional Requirement

Product Attributes

Enjoyment

Flavour Variety

1048766 Combination of different flavours

1048766 Combination of different textures

1048766 Very sweet

1048766 With wafer or biscuit

1048766 With chocolate

1048766 Of a well known brand

Socially Involved

Spoonable Rich

1048766 Very creamy

1048766 Only natural ingredients

1048766 No mess

Care

Size Creaminess

1048766 Big

1048766 Rich full taste

1048766 Smooth

1048766 Value for money

1048766 No mess

Unwind amp Escape

Economy

1048766 Crunchy

1048766 Economic

1048766 Of a well known brand

1048766 Nutritious

Balanced Convenience

Health Conscious

1048766 Of a well known brand

1048766 Nutritious

1048766 Milk based

1048766 Low sugar

1048766 Low carbohydrates

1048766 Filling

Active Self-Grooming

Fruit Vitamins

1048766 Healthy

1048766 Fruit based

1048766 Low fat

1048766 Liquid or drinkable

1048766 Nutritious

1048766 Of a well known brand

Confidence

Drinkable Light

1048766 Low calories

1048766 Light on the stomach

1048766 Chewy or gooey

1048766 Not so sweet

1048766 Natural appearance

Sensual

Appeal or image

1048766 No artificial additives

Evaluation of Entry into Ice cream Business for Bangladesh Limited 50

1048766 Natural appearance

1048766 Melting slowly

1048766 Attractive packaging

1048766 High quality ingredients

1048766 Of a well known brand

Table 29 Requirements amp Product Attributes Desired by Consumer Clusters

Of these findings we see that the identified highlighted barriers to ice cream consumption are

pretty evident among the consumers Mostly people want products of a reliable source or a well

known brand low calories quality ingredients value for money economic type

Evaluation of Entry into Ice cream Business for Bangladesh Limited 51

70 INDUSTRY ATTRACTIVENESS AND ENTRY PROSPECTS

71 Driving Forces of Growth

As identified in the earlier sections there are several driving forces behind the growth of ice-

cream industry in Bangladesh

712 Trade and Infrastructural Level

1048766 As a result of globalization newer varieties have been introduced to the local products Many

foreign companies are also coming as franchise so there has been increased competition and

these boutiques are setting higher standards for the local producers

1048766 The present market growth rate is 18-19 which is being influenced by larger players like

Igloo who are expanding their distribution nation wide with expansion of national electricity

grid

1048766 With entry of Modern Trade and recent organized business approach of retailers has made it

possible for ice cream manufacturers to penetrate into shops even without providing them with

branded freezers

1048766 Weather change has increased ldquosummerrdquo season in our country which has reduced negative

seasonal impact on ice cream

1048766 Large companies like Igloo have taken global learning of using carts as an effective tool of

availability and visibility for ice cream

1048766 New and improved technologies are being used in the production process This technological

advancement has improved quality increased speed of production and made the process more

cost effective

713 Consumer Level

1048766 Only a few years back rich people could afford the luxury of having ice-cream but now it has

become a common product for everybody Ice-cream companies are producing different products

with a wide price range for consumers of every class and status

1048766 Nowadays companies are doing promotional campaigns more frequently the customers get to

know about the product which makes it easier for them to buy the best one

1048766 The improved standard of life and more modernized lifestyle of people is an important reason

for the increased consumption thus growth of the ice-cream industry

Evaluation of Entry into Ice cream Business for Bangladesh Limited 52

72 Prospects of Entry

The ice-cream industry of Bangladesh is an attractive one for the investors because there is a

huge market but number of producers is very small The major reasons behind industry

attractiveness are as follows

1048766 The industryrsquos current growth potential is very high with opportunity for market development

1048766 The competition currently permits adequate profitability and the competitive forces are

becoming stronger with time

1048766 Boutique segment is at a very high growth stage but no operator is currently operating with a

mid price range of BDT 100-400 Ice cream kiosks and small scooping boutiques can operate

within that range

1048766 Current industry driving forces are favourable for the future industry profitability

1048766 Globally oriented consumers look for variety in ice cream that is currently not available

Latest innovations came in the market in 2002 People would welcome new variety and flavours

1048766 There is a gap in the market for balanced convenience through ice cream where consumers can

get nutritional benefits for ice cream Also emotional attachment to ice cream could further be

improvised in promotional campaigns

1048766 There is high scope for market penetration and development to increase frequency of ice

cream consumption

1048766 Level of risk or uncertainty is very low in ice-cream industry because the consumer market is

so huge any product with a standard quality and careful pricing will be able to make significant

profit

1048766 As for geographic reach of the industry 60 market is still in Dhaka There is scope of

expansion and a new entrant can easily capture market share within Dhaka using carts even if

they do not want nation wide cold chain distribution

1048766 The production process is very complex and capital requirements are also high So before

going into production any company should know about their capabilities and weaknesses and

then start the business or else they might suffer huge loss at a certain level

1048766 Unilever can acquire the required resource and use existing multi-national multi-cultural

expertise to enter the market in a grand way

1048766 With high probability of entry from DANONE with more products like the ISIS diabetic ice

cream Unilever should consider entering in this industry as soon as possible

Evaluation of Entry into Ice cream Business for Bangladesh Limited 53

80 ENTRY STRATEGY FOR UNILEVER

While describing the suggested entry strategy for UBL certain issues have been kept

confidential and some issues have been touched but not explained to keep consistency with UBL

confidentiality policy

81 Suggested Entry Areas for UBL

1048766 Boutique segment of the Bangladesh ice cream is only 5 of the branded market UBL needs

to pursue a larger scope to make the entry viable

1048766 UBL cannot fight with unbranded segment as global product quality mandate of Unilever does

not allow UBL to fight in low price-low quality segment

1048766 Recommend entry should be in the common format segment with both single and multiple

servings and in the boutique segment with a different brand name (if possible BEN amp JERRYrsquoS)

1048766 UBL should build up state-of-art modern factory for manufacturing and establish cold chain

facilities initially focusing on metro cities

1048766 Investment issues are required to be addressed for building factory and cold chain and capital

requirement needs to be identified for that purpose4

1048766 UBL may have boutiques for driving image selective top-end offering

1048766 Kiosks can be setup near universities and shopping malls

1048766 Boutiques should be concentrated in Dhaka and Chittagong

1048766 Ice cream for boutiques and kiosks would be produced in factory as institutional packs of 9-10

litres

82 Products

1048766 As a Brand Building country in global Unilever operating framework UBL is entitled only to

bring products developed by the Brand Development countries

1048766 Unilever should focus on serving products that have nutritional benefits (already available

globally) along with usual satisfactions of sensual pleasure functional attributes etc

1048766 Current existent players especially Igloo and Kwality have extensively copied global and

regionally available Unilever products eg Cornelli is same as Wallrsquos Cornetto Vinetta is similar

to Vienetta Mega is similar to Magnum etc UBL needs to differentiate these to consumers on

the ldquotaste the originalrdquo platform where global quality is focused regarding the products

1048766 UBL should also bring regionally famous brands like Moo or Max to create image

differentiation

1048766 Magnum or Moo should be used as premium end ice cream to generate more profit margin

Evaluation of Entry into Ice cream Business for Bangladesh Limited 54

83 Placement

1048766 Distribution focus should be in Dhaka for entry as Dhaka contributes more than 60 of total

ice cream sales in the country

1048766 Company may use carts as distribution method They serve as good source of visibility and

availability It would help in increasing impulse purchase

1048766 At least 1500 outlets in Dhaka and Chittagong needs to be actively served using dedicated

branded refrigerators to generate sales

1048766 50 carts should operate in Dhaka and Chittagong

84 Price

1048766 UBL products should be priced at par with Igloo pricing for the common format ice creams

1048766 UBL can bring in premium single-serve SKUS for the higher economic classes in the price

range of BDT 60-80

1048766 Smaller SKUs (small lolly stick) can be introduced in the price range of BDT 10-15

1048766 In the boutique segment UBL should price products above the semi-premium segment

(Gelateria Igloo Sub Zero or Andersenrsquos) but lower than that of Club Gelato or MoumlvenPick

85 Promotion

1048766 UBL would require strong marketing campaign (As high as 50 of sales) to have a grand

entry in the market

1048766 Presence in the television media would be of utmost importance More than 50 of

promotional expense should be made here initially Gradually it can be reduced

1048766 Newspaper would serve as the second most important option

1048766 Billboards should also be used

1048766 Activations (similar to Lux Channel i Super Star or Igloo Festival) should be done to generate

trial

86 Scope of Opportunity

Table 30 Value and Volume Based Scope of Opportunity for UBL

Value (BDT Cr)

Volume (Tons)

Market

131

7835

Common

121

7600

Boutique

98

235

Evaluation of Entry into Ice cream Business for Bangladesh Limited 55

861 Geographic Contribution

1048766 Dhaka (61)

1048766 Chittagong (19)

1048766 Sylhet (10)

862 UBL objectives

Common Format Ice Creams

1048766 Target 10 Market share in 1st year operation

1048766 Value BDT 11 Cr

1048766 Production capacity required 21 Tons day

1048766 Freezer Placement 1500 freezers

1048766 Cart operation At least 50 carts

Boutiques

1048766 Target Further develop the market

1048766 Focus Dhaka Chittagong and Sylhet Metro

1048766 Franchise At least 20 franchisee operations nation wide in divisional towns

1048766 Pricing Below imported parlours above common formats with around BDT 400 per Litre

87 Critical Success Factors

1048766 UBL is considered as a high profile company in Bangladesh and thus they cannot operate in

the market only with common products like choc-bars and cups They must have premium

products (these require extrusion line) also to carry their brand image Otherwise UBL would not

be able to charge usual premium over competition products

1048766 Launch of ice cream would require huge promotional and activation support in order to gain

customers from Igloo People want novelty regarding ice cream and UBL have to let them know

about their products and create hype

1048766 Cart should be used as a source of distribution Recent successes of Unilever companies like

Indonesia shows that carts can generate more sales and can be used as source of visibility in the

minds of both retail traders and consumers Carts can also provide incremental sales to the

company

1048766 UBL have to create a strong cold chain for ice cream (initially in Dhaka and Chittagong) to

ensure quality products for consumers

1048766 UBL have to build capacity very rapidly to meet consumer demand if the launch is successful

Evaluation of Entry into Ice cream Business for Bangladesh Limited 56

90 BUSINESS PROJECTION

91 Basic Assumptions

Business projection for ice cream business was made based on a conservative approach UBL

would require spending significantly on production capacity and factory dedicated to ice cream

Thus to analyse business possibilities of ice cream certain assumptions were made and collected

data were used These are

1048766 Production equipments and cabinets would cost approximately BDT 55 crores

1048766 Production equipments 45

1048766 Packaging Equipments 15

1048766 Storage Facility 20

1048766 Branded Freezers 10

1048766 Distribution Investment 10 (Distributors would also invest themselves)

1048766 Ice cream factory with a floor size of 20000 sqft would cost BDT 25 crores

1048766 Objective is to capture 10 market share in Dhaka and Chittagong in the first year

1048766 Business would grow by 50 in year 2 and 3 30 in year 4 and 25 in year 5

1048766 Weighted price per litre is BDT 170 according to volume share of single serve ice cream

multiple serve ice cream and boutique ice cream

1048766 Other financial assumptions were also made List of them are provided below but amount has

been removed for confidentiality issues

Assumptions

Trade Margin

Distributors Margin

DutyVAT Rate

Trade Terms Expense of NPS

Trade Terms Expense of NSV

Advertising ampPromotion of NPS

Indirects (Salaries Wages etc)

Trading Tax

Table 31 Assumptions for Business Projection

Evaluation of Entry into Ice cream Business for Bangladesh Limited 57

100 CONCLUSION

Ice cream has good prospect in Bangladesh It is still a growing market with opportunities for big

new entrants With the barriers of entry UBL needs to consider its priorities UBL being an HPC

company traditionally needs to acquire expertise in cold chain distribution and has to invest a lot

of money to rip the benefits of the industry However to initiate company can take regional

support and acquire resource expertise The company should enter the business as soon as

possible since there is potential threat from DANONE to introduce more ice creams after ISIS

diabetic ice cream and also with potential of the industry arch rival Nestlersquo might consider

entering into the industry too

Evaluation of Entry into Ice cream Business for Bangladesh Limited 58

References

Web References

1 wwwunilevercom

2 wwwunilevercombd

3 wwwhllcom

4 wwwunilevercompk

5 wwwthedailystarcom - Life Style Magazine

6 wwwreuterscouk

Evaluation of Entry into Ice cream Business for Bangladesh Limited 59

Page 18: Square Ice cream

payment is made by cheque Other small shopkeepers have to purchase with cash However

according to shopkeepers Igloo is currently trying to cut down on credit sales as they believe

there is a consumer pull for their brand Companies like Polar and Kwality also give special

commission to large sellers Polar gives 5 commission on every bill

Evaluation of Entry into Ice cream Business for Bangladesh Limited 25

H Technology and Innovation

Technological advancement in the ice cream industry has been very rapid Starting with stick

mould and filler ice cream production the companies have come a long way Assessing the

consumer choice and demand the companies are introducing new products very often Improved

and new technology is used for faster production and better quality Igloo is trying to meet the

international standards and launching products such as Sundae Cornelli and Nuggets Other

companies are also introducing new flavours suitable for their target segments Igloo has both the

ISO and the HACCP certifications These were awarded in the year 2003 due to their relentless

pursuit of quality and innovation In September 1996 Igloo introduced the 3D Mould line and

straight line extrusion technology for the first time in the subcontinent Basically with Igloorsquos

pursuit all the modern technologies and quality innovations are available in the market

I Production Capacity

Current production capacity of the major players in the common format ice cream segment is

estimated to be as follows

Name

Capacity (Ltrs day)

Total Production (000 Ltrs)

Required Capacity (at 300 production days )

Estimated unutilized capacity (Ltrs day)

Igloo

22000

387433

12914

9086

Polar

6500

112513

3750

2750

Kwality

12100

204934

6831

5269

Savoy

1560

25985

866

694

Milk Vita

1330

26387

880

450

Table 14 Production Capacity of Current Market Players

From the table we can see that all the ice cream manufacturers are operating with unutilized

capacity However one point to be noted is that different ice cream SKUs require different

amount of item to be produced Exact machine production capacity at litre per day does not

represent the accurate scenario Nevertheless it can be safely assumed that all the manufacturers

have unused machine capacity at their premises Moreover the larger players like Polar and

Kwality have new technology available at their premises Kwality bought second hand machines

from Thailand but both Igloo and Polar bought theirrsquos from Italy and Denmark

J Products and Pricing

Products The products in the ice-cream market are differentiated A few firms dominate the

market but an endless variety of ice creams are offered to the consumers Igloo pioneers all

major innovations in the market The products that are available in the market can be classified

into single serving and multiple serving groups Which are then categorized based on functional

attributes designs These are

Single

Stick

Normal mould 3D mould extrusion

Evaluation of Entry into Ice cream Business for Bangladesh Limited 26

Cup and Sundae

Flat cup long cup

Cone

Normal cone (vanilla strawberry etc) premium cone (Ripple)

serving

Innovative Fillers

Snowball Animal shaped containers sandwich nuggets etc

Container

05 ltr 1 ltr and 2 ltr containers

Multiple serving

Family Pack

Assorted packs cakes shahi kulfi etc

Table 15 Ice cream Serve types

Among all the products available in the market most selling SKU for all the companies is Choc-

bar stick and highest selling flavour is Vanilla Following are the ranks of most selling SKUs and

flavours

SKU Name

Rank

Choc-bar (70 ml)

1

Vanilla Cup (100 ml)

2

Vanilla Box (05 and 1 Ltr)

3

Lemon Lolly (70 ml)

4

Normal Cone

5

Flavour

Rank

Vanilla

1

Chocolate

2

Strawberry

3

Ripple

4

Mango

5

Table 16 Rank of SKUs Table 17 Rank of Flavours

Choc-bar is one of the earliest vanilla based chocolate coated SKU that has dominated the

market strongly over the years Shopkeepers could not provide an exact percentage on SKU

based sales contribution Most of them ranked the SKUs and flavours according to sequence

shown in the above table Also according to newspapers and secondary sources Vanilla is the

most selling flavour with 60 sales contribution According to secondary sources percentage

sales contribution of various types of SKUs in the common format segment are as follows

Type of Ice cream

Value Share

Volume Share

Impulse dairy ice cream

514

443

Impulse water ice cream

112

138

Take-home dairy ice cream

374

419

Table 18 Volume Share of Different Serve Types

Impulse dairy ice cream provides more value share as price per litre is higher than take home

multiple serving ice creams Impulse water ice cream shows a similar trend as of take home ice

cream

Pricing Product pictures and price ranges of each category are provided below Evaluation of

Entry into Ice cream Business for Bangladesh Limited 27

Normal Premium Price Tk12 Tk20 Tk25 Cup amp Sundae Normal Cup Sundae Premium Cup

Price Tk20 Tk25 Cone Normal Premium PriceTk20 Tk25Innovative Fillers PriceLtr Tk100

Tk175 Container Normal Premium PriceLtrTk150 Tk 175 Tk 190 Family Packs Kulfi Mixed

Pack Cake Single ServingMultipleServingNormal Ice Fruit 3D Mould Premium Extrusion Price

Tk10 Tk15 Tk15 Tk20Stick Normal Cream

Figure 8 Serve Types and Pricing

As it can be seen from the above chart all impulse ice creams are priced within the range of

BDT 10 to 25 Other take home multiple servings are priced within the range of BDT 50 (05

Litres) to BDT 220 (2 Litres) Another noticeable factor in price is that there are both normal and

premium flavours in all types of ice creams

K Firms as Price Setters

The firms have capability to affect the market price to be low as profit margin is very high If

Igloo reduces the price of an item below the prevailing price level in order to increase its sales

its competitors will fear that their customers will go away from them to buy Igloo products To

retain their customers they will be forced to match the price cut of Igloo Historically this has

been proven to be true However due to price sensitivity companies cannot drastically increase

price even if they provide higher quality of product It was seen in 1997 when Igloo increased

price of 11 SKUs and faced drastic sales fall during that time It shows that the industry might

welcome overall industry price increase but not individual company price increase

L Promotion

The promotion scenario in the industry is not quite organized as of now Even proper data

regarding promotional expenditure is not available from research sources The reason being

there is not much consumer related activity seen in the market After Kwalityrsquos introduction in

the market in 1999 Igloo went on with massive Television promotion of their new products that

were available at that time

Evaluation of Entry into Ice cream Business for Bangladesh Limited 28

However in current times there is no TVC running from any company Companies promote their

launches mainly through billboards and newspaper promotions which is currently the most used

source of consumer promotion Some promotional activities that were done by the companies

over the years are listed below

Consumer Promotions

1 Larger players like Igloo and Kwality goes on with campaigns like ldquoGift on stickrdquo where

various prizesrsquo names are written on the sticks and consumers can get them

a Igloo ran a program on their launch of Macho variant where gift varied from cricket bat to

personal computer

b Igloo had a program in 2006 where gifts on sticks varied from Bangkok visit to sunglass

c Igloo ran one campaign in 2007 where gold bars were given on purchasing Choc-bar

d Kwality ran a similar program in 2008 where gifts varied from wrist watches to motorcycle

2 Some companies ran consumer TTS and gift programs where company products were given

free

a Igloo had a program in 2006 where Igloo butter was given free on purchasing Igloo ice cream

cake

b Kwality ran a program in 2008 where one SKU was given as gift with another SKU randomly

c ldquoCone Ice cream at your Homerdquo program was run by Igloo in 2002 where six cone biscuits

were given free with purchase of one litre ice cream

3 Media placement is another form of placement done by larger companies

a Igloo purchased ldquoGlimpse into World Cup Resultrdquo space in daily newspapers during World

Cup Football 2002

4 One interesting program is done by only Igloo in Bangladesh They did it in June 2006 The

program was ldquoIgloo Ice cream Festivalrdquo with main attractions of ldquoGet as much ice cream as you

want for BDT 200rdquo ldquoGet a Fantasy Kingdom Entry ticket with each Entry Couponrdquo ldquoLucky

Drawrdquo and ldquoCelebrity Addardquo

Trade Promotions

5 Trade promotions are mainly given to ldquoHighest retail purchasersrdquo and also based on time

bound trade schemes where various slabs of purchase amount are mentioned for different prizes

a Igloo takes their highest purchasers to visit countries like Singapore and Thailand

b Savoy has a purchase slab scheme where first prize is table fan

c Polar gives special sales commission to their highest purchasers (around 5)

Evaluation of Entry into Ice cream Business for Bangladesh Limited 29

M Players in the Common Format Segment

Branded common format ice cream segment is constituted of five players only Among them

Igloo is the largest player and Milk Vita is the smallest The following sections detail the basic

company detail of all the companies with special emphasis on Igloo the market leader

Igloo

The pioneering ice-cream company in Bangladesh started its operation in 1964 in Chittagong

under K Rahman amp Co Limited (KRC) with a small factory inside Coca Cola bottling factory of

KRC After the independence of Bangladesh in 1971 Igloo was taken over by the government of

Bangladesh Later in 1983 Abdul Monem Limited purchased the entire production setup of KRC

Limited including Coca-Cola bottling plant and Igloo ice-cream factory After taking full charge

of Igloo ice-cream by Abdul Monem Limited the manufacturing operations continued in

Chittagong till 1990 Although Dhaka fetched the maximum share of the total revenue the

distribution cost increased tremendously in the process of meeting the demand of Dhaka city To

cope with the distribution problem and handle Polar threat Abdul Monem Limited transferred

the factory to Dhaka changed the ice-cream packaging from the conventional paper to plastic

and expanded their market and distribution operation The new factory of Igloo was setup at

Shyampur Narayanganj and was nine kilometres away from the Motijheel office The company

apart from catering the capital city started to expand its operations in Comilla (1991) Khulna

(1992) and North Bengal (1993) These markets were served directly from Dhaka since the

storage facilities were not developed till then The company is now the market leader since 1997

with clear market share victory over others with sweeping 51 share It is to be noted that Igloo

is also a player in the boutique segment with three parlours (2 in Dhaka and 1 in Chittagong)

Product Range Igloo offers the widest choice of ice cream more than any other competitor in

the market Igloo is offering a total of fifty items including normal premium and novelty cup

stick and family pack items Igloo has thirty flavours more than anyone else in the industry and

is continuously launching new and innovative delicacies

Igloo ice-cream can be classified in six groups They are

Stick

Macho Choc-bar Mini Choc Clown Mega Shell n core Lolly

Cone

Cornelli 2 in one Cornelli classic

Cup

Shahi kulfi Vanilla Strawberry Mango Snow ball

Container

Vanilla Strawberry Mango Chocolate Coffee Diet Vanilla Tutti Frutti Ripple Pralin

Pistachio

Innovative

Nuggets Sandwich

Family

Ripple cake Party time Shahi Kulfi

Table 19 Products of Igloo

Single serve stick cups and cone items are easy to carry around and convenient to eat which

makes it most sold The core target segment of ice-cream is 6-24 years and this generation is

always on the Evaluation of Entry into Ice cream Business for Bangladesh Limited 30

move and thus prefers independent cone stick or cup items As Igloo initiated the concept of ice-

cream as a family product they offer some items to be enjoyed with the whole family

Quality and Innovation Igloo is committed to maintaining the highest quality standard through

its continuous RampD activities The major ingredients raw materials and packing materials are

procured from the best European sources Strict quality control is done at every stage of the

manufacturing process from procurement of material mixing material flow ice cream making

packaging storing (at main warehouse) distributing and market shelving by the Quality Control

Department Current supply chain for various materials of Igloo is as follows Australia (Milk

Powder) Denmark (Ingredients emulsifiers amp stabilizers) China amp UAE (Food grade sticks)

China Denmark Singapore amp Thailand (Food grade packing materials)

Figure 9 Igloo Supply Chain

Distribution Network Their distribution network is stretched all over the country with a long

fleet of refrigerated vans Firstly the ice cream products are stored at the central warehouse of

the factory and from there they are distributed through the haulage vehicle to the operational

centres located in Dhaka Chittagong Comilla Rajshahi Barisal Bogra Rangpur and Khulna

Strictest cold chain maintenance during the distribution and selling of the ice creams is ensured

Their distribution process is as follows Manufacture Stored at -24c Transported by Refrigerated

trucks at -Reaches amp Preserved in Eight regional stores Refrigerated vehicles (Distributors)Retail

outlets (Deep freezers)

Figure 10 Distribution Process of Igloo

Evaluation of Entry into Ice cream Business for Bangladesh Limited 31

Trolley Operation Igloo also operates through trolleys for extending its reach to consumers at

the furthest points The trolleys are operated near schools alleys streets parks etc and play

rhythmic music to attract the consumers These are very colourfully decorated with Igloo

umbrella and the puller wears specific uniforms Igloo was the first in introducing and operating

these trolleys in Bangladesh for any Fast Moving Consumer Goods (FMCG) Igloo has around

125 trolleys operating throughout the country Individual trolleys are provided with a regular

supply of igloo ice creams

Marketing The marketing commitment of Igloo is based on the relationship with its customers

and consumer by not only manufacturing the highest quality product but also delivering the

product by maintaining this quality To satisfy the ever-changing needs of the customer Igloo

has regularly launched new ice creams and introduced new flavours And this commitment has

positioned Igloo as the market-leading brand by gaining the consumers trust with the positioning

as ldquoA WORLD OF GREAT TASTErdquo

Facilities and Logistics at a glance As of 2009 following are the facilities and logistics enjoyed

by the company

Factory location

Dhaka

Production Lines

4

Packages

Stick Cup Family pack Others (Nuggets and sandwich)

Machine suppliers

1048766 Mark-Italy

1048766 Tetra Pak(Hoyer)-Denmark

1048766 Sabore Denmark

1048766 Hass- Austria

Machine models

1048766 Freemark 1100 Italy

1048766 FM 3000 FM 6000 Italy

1048766 SL600 Denmark

Cone baking

Hass- Austria

Chocolate making

Macentyre-UK

Coverage

Nationwide

Operational centre

10

Total market vehicles

30

Distribution channel

Directthrough appointed distributors

Outlet service

7500

Injected deep freezers

4000

Trolley operations

125

Warehouse no

8

Table 20 Igloo Facilities and Logistics

Kwality

Kwality is currently the second largest ice cream manufacturer of the country The mother

company for the Kwality brand is Sanowara Drinks amp Beverages Ltd a sister concern of

Sanowara Group The company is famous for powdered milk brands Red Cow and Diploma in

Bangladesh The drinks and beverage concern of Sanowara made an entry into the market in

1997 with ldquoYesrdquo brand drinking water and launched the ice cream brand in 1999 With heavy

communication and novelty products it Evaluation of Entry into Ice cream Business for

Bangladesh Limited 32

successfully removed Polar from the second place with a current market share of 27 The

company also operates in the boutique segment with two parlours in Dhaka and Chittagong

Kwality ice cream factory is situated in Chittagong with a floor space of 35000 sft and fully

automated machinery wrapping mix machinery equipments from Italy having capacity of

around 20000 litres of ice cream per shift The ice cream factory employs 140 people The

company is ISO 9001-2000 certified

Kwality was the first true competitor for Igloo products with some major innovation in product

design and communication but their quality is perceived to be lower in the minds of the

consumers and they do not have extrusion ice cream The product prices are also similar to that

of Igloo but they charge a bit lower than Igloo in premium multiple servings However during

market visits it was seen that shops that keep only Kwality or Igloo and Kwality both they can

sell Kwality too although the sales amount is lower than that of Igloo People who look for Igloo

shopkeepers give them that directly but if they get a chance and Kwality ice cream stock is high

they also push Kwality to dry the stock out This gives an indication that market is larger than

what the current players are capable of serving even in Dhaka

Kwality follows a similar distribution model like Igloo but distribution frequency is lower and

amount of cart sellers is limited to 25 and they operate only in Dhaka

Polar

Once a giant in the industry Dhaka Ice Cream Industries Ltd introduced the first hygienically

packed ice cream in Bangladesh in 1987 and the brand name Polar was thus born In the early

days the company started ice cream business with a wide range of products and a variety of

flavours in Dhaka city In 1988 the company started its distribution in the city of Chittagong

then Bogra and continued to cover more cities Presently Polar ice cream is available

throughout Bangladesh The company today trails in the market with 15 market share in the

common format segment Recently Polar has announced launch of ISIS diabetic ice cream with

support from DANONE to turn around in the market

The company has its head office as well as a modern large-scale industrial plant in Dhaka Polar

ice cream is made with Danish expertise using Danish equipment and technology The

production activities and quality control measures are supervised and managed by Danish

experts Polar offers a wide range of delicious flavours and tastes made by ingredients imported

from Europe

Dhaka Ice Cream at present has 3 cold stores in Dhaka Chittagong and Bogra in Bangladesh

From Dhaka cold store they distribute ice creams in Mymensingh Tangail Jamalpur Sherpur

Kishoreganj Netrakona Comilla Narsingdi Barisal Madaripur Agaeljhara Faridpur Magura

Chuadanga Jessore Satkhira Khulna Pirojpur and Sylhet through their distributors In case of

long distance delivery points the company uses auto cooling freezer van

Evaluation of Entry into Ice cream Business for Bangladesh Limited 33

In Dhaka city they distribute ice creams directly to retail stores in freezer vans Besides that

they have several distributors at different points of the city Distributors cover their individual

areas where company is not able to supply directly in their freezer vans Similar model is

followed by the company to distribute ice cream from their other cold storages through out the

country For storing and selling ice creams in retail stores the company like the other players

arranges a deep freezer with the Polar logo and canopy light box

In addition to this distribution the company also undertakes home delivery of ice creams for

special occasions

Savoy

Savoy Ice-cream brand is owned by Sena Kalyan Sangstha (SKS) Group of industries It started

its journey in March 1995 with a factory in Tejgaon Dhaka Yearly turnover is estimated at BDT

388 crores with a market share of roughly 35

The factory has been established with Sonali Bank finance at 6040 equity ratio The total

production capacity of the factory has been estimated at 2400 litres of Ice-cream per day Total

land area of the factory premise is 116 Bigha with 8000 sft area covered with a total project cost

of BDT 144 The factory employs 73 people

Product ranges of the company include all the basic designs and flavours of the industry

However the company has not been much of an innovator in the industry Their product quality

is substantially low than that of other players and they price their products at 10-15 lower than

the other competitors The company imports raw materials mainly from Europe The general raw

materials are Euro cream Skimmed Milk Powder Cocoa Powder and Flavour (Vanilla Mango

and Strawberry) Colour (Yellow Red Chocolate and Green) Ripple Sauce Cheney Fruit Palm

Kernel Oil Anhydrous Butter Oil (Ghee) and Sugar etc

Milk Vita

Milk Vita is one of the most famous brand names in Bangladesh for its liquid dairy milk Owned

by Bangladesh Milk Producersrsquo Co-operative Union Limited (BMPCUL) the company came in

the market with proper dairy milk ice cream in form of cups and choc-bar With a production

capacity of around 1600 litres per day the company is trailing in the market place with 3

market share

Although the Milk Vita Choc-bar was perceived to be extremely tasty by consumers they

probably could not do well due price competition Currently they do not even distribute ice

cream in Dhaka However their presence is seen in outskirts of Dhaka and other nearby towns

If the current market situation prevails Milk Vita would lose their remaining market share and

other companies would benefit especially Igloo However one of the advantages of Milk Vita

remains to be

Evaluation of Entry into Ice cream Business for Bangladesh Limited 34

their nation wide milk supply network They have skimmed milk powder production plant that

Igloo does not have Thus they can combat the seasonality of milk supply that Igloo with its

huge requirement of milk cannot

Strengths and Weaknesses of Competitors

Company

Strengths

Weaknesses

Igloo

1048766 Strong brand image

1048766 High product quality

1048766 Highest no of variety

1048766 Strong distribution network

1048766 Highest visibility

1048766 Strong promotion

1048766 High production capacity

1048766 Presence of extrusion ice cream

1048766 Items are generally a bit pricy

1048766 Igloo does not give free freezers like other companies

1048766 Reluctant in recent times regarding innovation

1048766 Local sourcing of liquid milk does not meet demand

1048766 Failure to use ERP technology slowing decision making

Kwality

1048766 Product variety

1048766 Strong promotion

1048766 Free freezer distributed

1048766 Presence in all price segments

1048766 High production capacity

1048766 Weak distribution

1048766 Lower exposure

1048766 low amount of carts in operation

Polar

1048766 Free freezer

1048766 Quality perceived to be high compared to Kwality

1048766 Discoloured freezers

1048766 Lower exposure

1048766 Low product variety

1048766 Unused capacity

Savoy

1048766 Price is lower

1048766 Discoloured freezers

1048766 Low product variety

1048766 Weak distribution

1048766 Small amount of freezers

1048766 Low production capacity

Milk Vita

1048766 Quality is good due to dairy cream

1048766 Brand leverage from Milk Vita milk

1048766 Low exposure

1048766 Low variety

Table 21 Strengths and Weaknesses of Competition

512 Market Characteristics of the Boutique Segment

With a small market of BDT 98 Cr and 567 share in the branded ice cream market the

boutique segment is currently an increasing segment in the ice cream industry Boutique

segmentrsquos history dates back to 1960s when Igloo launched boutiques in Dhaka to save

distribution cost and promote a culture of ldquoice cream eating outrdquo In later years boutiques lost

their glamour and retail common format segment picked up growth However with Dolce Vita in

the late lsquo80s craze for Italian Artisan ice cream was recreated in the market Although Dolce

Vita is failing in recent times emergence of MoumlvenPick and Club Gelato in 2000 has uplifted the

segment once again Current growth rate of the

Evaluation of Entry into Ice cream Business for Bangladesh Limited 35

segment can be estimated to be approx 20-22 (higher than the common format segment)

Following are the basic detail of all the major players in the segment with their estimated sales3

Players

Outlet

Sales (Cr Taka)

Share

Club Gelato

1

136

199

MoumlvenPick

1

119

174

Andersenrsquos

3

119

174

Gelateria Igloo

3

119

174

Sub Zero (Kwality)

2

051

75

Baskin Robbins

1

015

22

Dolce Vita

1

017

25

American Soft

1

009

12

Rainbow

1

009

12

Others (off site)

089

130

Total Market

682

Table 22 Players and Shares in Boutique Segment

A Detail of Operation

General operational procedure followed by all the operators is as follows

1048766 Operating method There is a variation in operational method among the large operators

1048766 Club Gelato uses kitchen at own premise where imported ingredients and local milk (daily

special service from Milk Vita) are used to make ice cream

1048766 MoumlvenPick directly imports ice cream from Switzerland

1048766 Andersenrsquos Gelateria Igloo and Sub Zero produce ice cream at their factory with a mix of

imported and local ingredients

1048766 Products Around 30-35 flavours of artisan dairy ice cream are served at the premises

1048766 Most sold flavours are Vanilla Ferrero Rocher Butterscotch Chocolate Caramel etc

1048766 Other Products Larger players also serve ice cream desserts (milk shakes ice cappuccino etc)

pastries and other desserts with normal coffee and tea facility at their premises

1048766 Boutiques fight ice cream seasonality with the other products sales during off-peak ice cream

seasons Usually ice cream and other products contribute at 6040 ratio in summer and during

winter and off-peak seasons the ratio reverses

1048766 Pricing Usually the prices of products in this segment are 3-4 times higher than that of the

common format segment

1048766 Prices do not vary with flavours Variation depends on serve style (Cone tub) and use of

toppings and other ingredients (Chocolate sauce nut fruits) etc

1048766 Usual margin charged is around 50-60 over production cost Similar margin is charged for

other products like coffee ice cappuccino etc

3 Yearly sales is estimated based on companyrsquos approximate daily sales collected during

interview

Evaluation of Entry into Ice cream Business for Bangladesh Limited 36

1048766 Target Group Most of the consumers belong to SEC A and higher SEC A with DMFI of at

least BDT 20000

1048766 Foreign delegates and resident foreigners also visit these boutiques

1048766 Main purposes of visits in the boutiques are

bull Youth hangout with friends and having ice cream and ice cream derivatives

bull Family Family night out or eat out at a restaurant and then having dessert

bull Foreigners Having dessert after dinner

1048766 Rush time at boutiques are Afternoon 2-4 pm and at night 9-11 pm

1048766 Offsite sales Most of the large operators also sell offsite They have small freezers for off-site

1048766 Club Gelato and MoumlvenPick serves ice cream at high society parties and programmes

1048766 MoumlvenPick also has kiosks in known hotels like Sheraton

1048766 Promotion No mass promotion is done by any of the companies Word of mouth is the most

important source of promotion Posters and banners outside the premise and occasional

newspaper advertisements are used to communicate special offers

1048766 Growth Drivers Market growth is driven by image innovation quality decoration of facility

environment and special offers

1048766 Club Gelato has the image of selling true Italian dairy ice cream with an excellent hangout

environment

1048766 MoumlvenPick imports ice cream directly from Switzerland and is perceived to be of high quality

1048766 Andersenrsquos operates with the image of ice cream from Denmark

1048766 Gelateria Igloo (from Igloo) and Sub Zero (from Kwality) could not establish the premium

artisan ice cream image

B Players in the Boutique Segment

There are very few players who have significant impact in the boutique segment Detailed

information of all the major boutique segment players is provided below

Evaluation of Entry into Ice cream Business for Bangladesh Limited 37

Club Gelato

Basic Company Information

1048766 Location Banani Road 11 (Planning for a second one in Dhanmondi)

1048766 Established in 2001

1048766 Seating Capacity 48

1048766 Area 1250 sft (including kitchen)

1048766 Owner Mr Jahangir Alam (Bangladesh)

1048766 Business Type Joint business partnership with Singapore

1048766 Staff 15 people (6 in the kitchen)

1048766 Production capacity 150 litres per day

Product Related Information

1048766 Product Italian style parlour scoop ice cream fruit juice coffee and pastries

1048766 Flavours Around 32 flavours available

1048766 Most selling Ferraro Rocher Vanilla Pistachio

1048766 Innovations New variants and ingredients are communicated by their Italian supplier and

Club Gelato decides what to take from them

1048766 Serve type Cup Cone Glasses Box for take away

Consumer Profile

1048766 Primary Teenagers and Young Adults (18-30) amp Diplomats

1048766 Secondary Family consumers for eat out

1048766 Income Group High income customers tentatively from SEC A and higher SEC A

1048766 Geographic Area Diversified

1048766 Rush time 8-10 pm

Sales and Price Information

1048766 Sales BDT 50000 (60 Ice cream 40 other desserts) daily in summer In winter however

other products sell more and thus they keep total sales at the same level

1048766 Price 750 per litre for any flavour

1048766 Sales Volume 50-60 litres per day

Supply Chain Placement Information

1048766 Milk Local sourcing from Milk Vita (4050 litres per day)

1048766 Chocolates amp Flavours Belgium France Germany

1048766 Transportation Mainly air (They can afford it due to high margin)

1048766 Contribution of various materials Flavours (30) Milk (20) other parts are water and air

Promotional Materials

1048766 Materials used are near premises POS materials for promoting the parlour only

Table 23 Detail of Club Gelato

Evaluation of Entry into Ice cream Business for Bangladesh Limited 38

MoumlvenPick of Switzerland

Basic Company Information

1048766 Location Gulshan

1048766 Established in 2000

1048766 Seating Capacity 55

1048766 Owner Mr Arif Mahmud

1048766 Business Type Franchise of International MoumlvenPick

1048766 Storage Capacity in Shop 150 litres

Product Related Information

1048766 Product Imported MoumlvenPick ice creams coffee chicken sandwich and Frappe

1048766 Flavours Around 30 to 35 flavours available

1048766 Most selling Swiss Chocolate caramel Vanilla Dream Espresso Strawberry

1048766 Innovations New variants are communicated by their franchiser and they decide on flavours

that they want

1048766 Serve type Cup Cone Glasses Box for take away

Consumer Profile

1048766 Primary Teenagers and Young Adults (18-30) (70) amp Diplomats

1048766 Secondary Family consumers for eat out

1048766 Income Group High income customers tentatively from SEC A

1048766 Geographic Area Concentrated in Gulshan and nearby areas

1048766 Rush time Afternoon- Young Adult 10 to 11 pm Foreigners

1048766 the company also serves at parties and has freezers in known hotels where their ice creams

are served

Sales and Price Information

1048766 Sales BDT 35-40000 daily in summer

1048766 Price 640 per litre for any flavour

1048766 Sales Volume 55-60 litres per day

Supply Chain Placement Information

1048766 Transportation Imported finished goods by ship

1048766 Ship travel time 19 days

1048766 Port clearance 10 days

1048766 Safety Cushion Extra 10 days

Promotional Materials

1048766 Materials used are near premises POS materials for promoting the parlour only

Table 24 Detail of MoumlvenPick of Switzerland

Evaluation of Entry into Ice cream Business for Bangladesh Limited 39

Andersenrsquos of Denmark

Basic Company Information

1048766 Location Gulshan (2 others in Uttara Dhanmondi)

1048766 Established in 2001

1048766 Seating Capacity 48

1048766 Owner United Group

1048766 Business Type Franchise of Australian company Andersenrsquos of Denmark

1048766 Production Tongi Factory of United Group

1048766 Production capacity 2000 litres per day in factory

1048766 Storage Capacity in Shop 150 litres

Product Related Information

1048766 Product Danish parlour scoop ice cream and coffee

1048766 Flavours Around 30 to 35 flavours available

1048766 Most selling Strawberry Butter Scotch Green

1048766 Innovations New variants and ingredients are communicated by their franchiser and they

decide on flavours that they want

1048766 Serve type Cup Cone Glasses Box for take away

Consumer Profile

1048766 Primary Teenagers and Young Adults (18-30) (70) amp Diplomats

1048766 Secondary Family consumers for eat out

1048766 Income Group High income customers tentatively from SEC A

1048766 Geographic Area Concentrated in Gulshan and nearby areas

1048766 Rush time 8 to 10 pm

Sales and Price Information

1048766 Sales BDT 10-12000 daily in summer

1048766 Price 460 per litre for any flavour

1048766 Sales Volume 40-50 litres per day

Supply Chain Placement Information

1048766 Milk 2025 kg packs are imported

1048766 Chocolates amp Flavours Imported

1048766 Butte paper Local sourcing

1048766 Transportation Ship

Promotional Materials

1048766 Materials used are near premises POS materials for promoting the parlour only

Table 25 Detail of Andersenrsquos of Denmark

Evaluation of Entry into Ice cream Business for Bangladesh Limited 40

Gelateria Igloo

Basic Company Information

1048766 Location Banani Kemal Ataturk Avenue (Two others in GEC Mor Chittagong and Naya

Paltan)

1048766 Established in 2000

1048766 Seating Capacity 20

1048766 Production From Igloo factory in Shyampur Narayanganj

Product Related Information

1048766 Product Parlour scoop ice cream and coffee only

1048766 Flavours Around 30 flavours available

1048766 Most selling Vanilla Strawberry Chocolate Pistachio Butter Scotch Tutti Fruity

1048766 Serve type Cup Cone Glasses Box for take away

Consumer Profile

1048766 Primary Teenagers and Young Adults (18-30)

1048766 Secondary Family consumers for eat out

1048766 Income Group High income customers tentatively from SEC A and B

1048766 Geographic Area Diversified

1048766 Rush Time afternoon and evening

Sales and Price Information

1048766 Sales BDT 8000 to 10000 daily in summer Nearly one fourth in winter

1048766 Price Varies but 350 per litre of vanilla

Promotional Materials

1048766 POS materials at the premises

Table 26 Detail of Gelateria Igloo

52 Price Comparison of Common and Boutique Segments

Price ranges of both common format and boutique segment cannot exactly be pin pointed as

products do not follow common structure and variations occur with use of toppings mixing of

flavours and use of coatings However a price comparison has been made among the brands

based on their price of per litre of vanilla flavoured ice cream in the market It appears to be as

following

Company

Price Litre Vanilla

Club Gelato

750

MoumlvenPick

640

Andersenrsquos

460

Dolce Vita

440

Igloo

100

Kwality

100

Polar

100

Milk-Vita

90

Savoy

85

Table 27 Comparative Price Analysis

As it can be seen there is price gap within the range of BDT 100-400 Ice cream kiosks and

small scooping boutiques can operate within that range

Evaluation of Entry into Ice cream Business for Bangladesh Limited 41

60 CONSUMER ANALYSIS

61 Target Group of Ice cream

Who are the consumers of ice cream This question does not have a clear answer Ice cream is a

food for all It is the only food consumed by a human being at less than 0 degree centigrade

temperature and people of all ages feel indulged to have it However we can determine focus

target groups for both branded common format and artisan boutique ice cream Group

discussions and market visits were done to get insight into the consumers along side resources

form secondary sources Age based target group is common for both segments but variation

among the groups occur mainly based on SEC and DMFI classification

611 Geographic Group

Branded ice cream remains an urban product till date Geographically branded ice cream has

reached urban and semi urban areas up to Thana Head Quarter levels Ice cream has reached

areas where electricity is available Small artisan players are available in places where large

branded players have no distribution

612 Target Age Group

Age wise grouping of target consumers is as follows

1048766 Urban kids in the age group of 5-14

1048766 They mainly consume normal sticks cups cones innovative fillers and water ice creams

1048766 Urban youth in the age group of 15-24

1048766 They consume premium and extrusion sticks and cones

1048766 Urban mothers in the age group of 25-35

1048766 They determine the family purchases Even when the father purchases ice cream decision is

taken by them

Consumption pattern of various age groups are depicted in the following chart Ice cream

consumption pattern50203005 to 14 yrs15 to 24 yrs25 to 35 yrs

Figure 11 Target Group wise Consumption Pattern Evaluation of Entry into Ice cream Business

for Bangladesh Limited 42

613 Target SEC and DMFI Group

Common Format

SEC A and B is the target group for common format ice cream However with rapid increase in

price level over the years has made it a ldquohard to consumerdquo product for SEC B consumers who

belong to lower DMFI group

Boutique Format

Boutique formatrsquos higher margin and high price range makes it an exclusively SEC A ice cream

People belonging to upper and upper middle class have access to the mediocre boutiques and

only higher upper class can have premium ice creams like Club Gelato and MoumlvenPick

Another unique target group for boutique format are the foreigners who live in Bangladesh

These people tend to visit the parlours to have ice cream as dessert especially after dinner

62 Ice cream in Consumer Lifestyle

Figure 12 Ice cream in Consumer Life style

This simple overview of ice cream in consumer lifestyle was determined based on in-depth

research analysis of UBL and validated through qualitative group discussions by the author

However detail of in-depth research is provided in a later section of this chapter

Evaluation of Entry into Ice cream Business for Bangladesh Limited 43

63 Highlights of Purchase Habit of Ice cream

631 Common Habits across Target Groups

There are some common habits that were identified in earlier researches and group discussions

with consumers Common habits mean the consumer approach towards ice cream that is seen

across all target groups eg kids youth and adult purchasers These are outlined below

1048766 Ice cream is mainly seen as a dessert or a snack Impulse ice cream is seen as a quick snack

that is consumed when it is in sight Visibility plays a big role here Regarding family packs

people see it as a post-food dessert

1048766 Ice cream purchase is commonly a planned event When the contexts arise people generally

take a bit of time to decide whether or not to have ice cream or when they want to go to a

boutique they make due considerations regarding which boutique to visit

1048766 Ice cream purchase decision is taken based on favourite flavour People tend to try out new

variants and flavours when they first see it They compare the taste with earlier experience and

when they purchase later they choose the flavour they have liked most

1048766 For In-Home segment decision is mostly taken on the flavour Generally people come up with

different flavours of choice and most voted flavour is chosen

1048766 People become aware of new variants or flavours mainly through word-of-mouth

Advertisement (new launches special offers and festivals) in newspaper is another source of

awareness

1048766 People are currently indifferent towards the price level of premium flavours However some

feel that price of Choc-bar or water ice creams (lolly) is a bit much If less they would have

consumed more Some also feel that companies should come up with branded ice cream in the

price range of BDT 5-8

1048766 Ice cream is purchased from nearby shops If required brand and flavour is not available 2-3

shops will be visited and then available flavour will be selected even if the required one is not

found This is done mainly not to ruin the mood for ice cream

1048766 People are very open to try new brands and flavours especially if it comes from a credible

source They would try new flavours and if they are satisfied with the taste they would repeat

purchase

1048766 Regarding boutique visits people feel that boutiques need to have a proper environment

enough flavours and other snacks

1048766 While visiting boutique with family or companion they want variation in flavours so that

they would order different flavours and taste each otherrsquos ice cream It is seen as a sign of

togetherness

1048766 Frequency of ice cream purchase varies among people It depends on peer pressure collective

family decision summer heat and attitude towards ldquoice creamrdquo itself as a product Evaluation of

Entry into Ice cream Business for Bangladesh Limited 44

632 Habits of Kids

1048766 Kids choose ice cream flavours by the look of the product (generally pictures shown in POS

materials and carts) They love colour and designs of the products let it be a common format or a

boutique ice cream

1048766 Kids (when in house) would go with the housemaid to the nearby shop choose the flavour

they want (within range of the amount given to the maid) and buy it

1048766 When with parents they would take the product they like even if the price is lower than some

other product However mothers play a role in this decision They would want their children not

to choose too high priced a product or coloured products

633 Habits of Youth

1048766 Young people are the main consumer of impulse ice cream They also are one of the major

consumers in the boutique segment

1048766 Young people love to try out new products that come into the market Another side of the coin

is that they are not very loyal to a brand or a flavour and tend to switch a lot

1048766 Regarding boutique visits young people go to boutiques to have an ldquoice cream hang outrdquo with

peer groups They would stay there for a longer period of time while they have their ice cream

1048766 Some times young people make milk shakes and other ice cream based desserts

634 Habits of Mothers

1048766 Mothers worry about their childrenrsquos health and they prefer ldquovanillardquo type of brands

However when price constraint occurs they go for water ice creams for their children They try

to convince their kidrsquos purchase decision

1048766 Regarding family purchase motherrsquos decision is sometimes prioritized by the whole family

64 Barriers to Ice cream Consumption

641 Emotional Barriers

1048766 Overindulge (close to sinful)

1048766 Undisciplined (no control)

1048766 Childish (licking)

1048766 Artificial Image

642 Functional Barriers

1048766 People of SEC B feel that ice cream is an expensive dessert (If less expensive would consume

more often)

1048766 It leads to cold cough - especially in winter rainy season

1048766 It contains artificial additives preservatives

1048766 It is very high in calories that lead to fattening

Evaluation of Entry into Ice cream Business for Bangladesh Limited 45

1048766 It does not quench ldquothirstrdquo

1048766 Less convenient (portable immediate eat)

1048766 Messy Dripping

65 Research Findings

The highlights regarding purchase habits triggers and barriers of ice cream consumption provide

a glimpse into the consumer world of ice cream industry However UBL CMI conducted a

formal research exclusively on ice cream consumers to identify

1048766 Occasions of ice cream

1048766 Frequency of ice cream consumption

1048766 Expectations from ice cream occasions

1048766 Personalities that they desire from ice cream

651 Relevant Occasions in Daily Lives of Consumers

Research question regarding ldquousual occasions of life that occurred most frequently in day-to-day

lives of the respondentsrdquo generated the following replies

Occasion

of Respondents saying Yes

Watching TV

93

Normal Dinner At Home

91

Normal Lunch At Home

89

At Home While ReadingMusicSurfing

86

Informal Family Get Together

85

Out Of Home Hanging Out With Friends

84

Out Shopping

84

Mid-Afternoon Break At Home

83

At Home By Myself During The Day

82

Special Dinner At Home

82

Informal Dinner Out Of Home

82

Normal Lunch Out Of Home

82

Leisure Walk

79

Coming Home From WorkSchool

78

Special Dinner Out Of Home

78

Celebration

78

A Night In With Friends

77

At Home By Myself In The Evening

77

Special Lunch Out Of Home

76

Mid-Afternoon Break Out Of Home

75

Special Lunch At Home

73

Day out with Partner

72

Midmorning Break

70

At Breakfast

68

Family Day Out

68

During Work Or At School

65

Evaluation of Entry into Ice cream Business for Bangladesh Limited 46

Travelling ToFrom WorkSchool

65

At The Cinema

61

Special Event

56

Clubbing At A Party

50

Post GymSports

48

Table 28 Relevant Occasions in Consumersrsquo Lives

Respondents were then asked to mention ldquofrequency of occurrence of the identified occasionsrdquo

The identified replies are as follows Normal dinner at homenormal lunch at homeComing home

from workschoolTraveling tofrom workschoolDay out with Partner SpouseMid-afternoon

break at homeOut of home hanging out with friendsLeisure walkMid-afternoon break out of

homeA night in with friendsSpecial dinner at homeSpecial lunch out of homeFamily day

outSpecial eventPost gymsportsDaily2-3 Times A WeekWeekly2-3 Times A MonthOnce A

MonthEvery 2-3 MonthsLess OftenNever Figure 13 Frequency of Occurrence of Occasions

This shows that ldquoNormal dinner at home Watching TV Normal Lunch At Home At Home

While ReadingMusicSurfing Coming Home From WorkSchool During Work Or At School

Travelling ToFrom WorkSchool Midmorning Break Day Out With Partner Spouse At Home

By Myself During The Dayrdquo are the most frequent daily rituals of busy lives of consumers

652 Frequency of Ice cream Consumption

Respondents were asked to mention ldquoconsumption pattern of ice cream during the identified

occasionrdquo on a scale of 1-5 depicting frequencies like ldquo(5) always (4) most of the times (3)

about half of the times (2) sometimes (1) never do not knowrdquo The responses are depicted in

the following table

Evaluation of Entry into Ice cream Business for Bangladesh Limited 47

444474544655555566756665775967779991011101111101210111110101113111412131314161

011121411131216181519181518211817171719181718201721222130303434253437403741394

046383944464746453745414641374638504843414839373030292726232725222020201926202

21722221317Midmorning

breakWhile clubbing at aAt the cinemaSpecial eventNormal lunch out ofA night in with

friendsNormal dinner atInformal dinner out ofAt home by myselfAt home by myself inOut

shoppingSpecial lunch atDay out with SpouseWatching TVAlwaysmost of the timesAbout half

of the timesSometimesneverdo not know

Figure 14 Frequency of Ice cream Consumption

As it can be seen ldquoDay out with Spouse Special lunch at home Special dinner at home

Watching TV Family day out Celebrationrdquo are the occasions where most frequently ice cream is

consumed

653 Market Character Mapping Relevant Occasions vs Frequency of Consumption

If we plot frequency of consumption on the X-axis of a chart and relevance of occasion

occurrence on the Y-axis taking the above mentioned values as cut-off values we get four

quadrants in the chart depicting four market scenarios that any ice cream manufacturer in

Bangladesh market might encounter given the current market situation This market

segmentation is based on frequency of ice cream consumption in daily occasions of consumer

lives

The segments are

1048766 OPPORTUNITY MARKET High Relevant Occasions-Low Ice cream Frequency

1048766 QUESTION MARKET Less Relevant Occasions-Low Ice cream Frequency

1048766 HIGH FREQUENCY MARKET Relevant Occasions-High Ice cream Frequency

1048766 CAPTIVE MARKET Less Relevant Occasions-High Ice cream Frequency

The chart looks as follows Evaluation of Entry into Ice cream Business for Bangladesh Limited

48

Figure 15 Relevance of Occasion-Frequency of Consumption Mapping

As it can be seen from the above chart Bangladesh Market still lies in the Opportunity and

Question market zone with a pull towards High frequency and Captive Market zones This is

evident from market data as penetration of ice cream still remains at Thana headquarters levels

Also this explains the high market growth rate of 17 as market is yet under developed and

branded quality ice cream has yet not reached all levels of consumers especially rural level that

constitutes around 75 of Bangladeshi market

From the above analysis we can establish that target of ice cream manufacturers should be to

penetrate more into the Bangladeshi market to create higher frequency of ice cream

consumption The following chart shows the strategies to follow for ice cream manufacturers

Figure 16 Required Market Strategy for Bangladesh

Evaluation of Entry into Ice cream Business for Bangladesh Limited 49

As relevance of ice cream consumption occasions can hardly be controlled by marketers their

endeavour should be to create more ldquoemotional and functionalrdquo attachment to ice cream in less

frequent occasions through ldquomarket developmentrdquo strategy to earn share from overall food

expenditure of consumers and at the same time make them consume more ice cream in highly

relevant occasions through ldquopenetrationrdquo strategy

654 Consumersrsquo Emotional Requirements and Product Attributes

All consumers under these clusters also identify the emotional requirements and the significant

product attributes they seek from their current preferred and future desired ice creams These are

provided below

Cluster

Emotional Functional Requirement

Product Attributes

Enjoyment

Flavour Variety

1048766 Combination of different flavours

1048766 Combination of different textures

1048766 Very sweet

1048766 With wafer or biscuit

1048766 With chocolate

1048766 Of a well known brand

Socially Involved

Spoonable Rich

1048766 Very creamy

1048766 Only natural ingredients

1048766 No mess

Care

Size Creaminess

1048766 Big

1048766 Rich full taste

1048766 Smooth

1048766 Value for money

1048766 No mess

Unwind amp Escape

Economy

1048766 Crunchy

1048766 Economic

1048766 Of a well known brand

1048766 Nutritious

Balanced Convenience

Health Conscious

1048766 Of a well known brand

1048766 Nutritious

1048766 Milk based

1048766 Low sugar

1048766 Low carbohydrates

1048766 Filling

Active Self-Grooming

Fruit Vitamins

1048766 Healthy

1048766 Fruit based

1048766 Low fat

1048766 Liquid or drinkable

1048766 Nutritious

1048766 Of a well known brand

Confidence

Drinkable Light

1048766 Low calories

1048766 Light on the stomach

1048766 Chewy or gooey

1048766 Not so sweet

1048766 Natural appearance

Sensual

Appeal or image

1048766 No artificial additives

Evaluation of Entry into Ice cream Business for Bangladesh Limited 50

1048766 Natural appearance

1048766 Melting slowly

1048766 Attractive packaging

1048766 High quality ingredients

1048766 Of a well known brand

Table 29 Requirements amp Product Attributes Desired by Consumer Clusters

Of these findings we see that the identified highlighted barriers to ice cream consumption are

pretty evident among the consumers Mostly people want products of a reliable source or a well

known brand low calories quality ingredients value for money economic type

Evaluation of Entry into Ice cream Business for Bangladesh Limited 51

70 INDUSTRY ATTRACTIVENESS AND ENTRY PROSPECTS

71 Driving Forces of Growth

As identified in the earlier sections there are several driving forces behind the growth of ice-

cream industry in Bangladesh

712 Trade and Infrastructural Level

1048766 As a result of globalization newer varieties have been introduced to the local products Many

foreign companies are also coming as franchise so there has been increased competition and

these boutiques are setting higher standards for the local producers

1048766 The present market growth rate is 18-19 which is being influenced by larger players like

Igloo who are expanding their distribution nation wide with expansion of national electricity

grid

1048766 With entry of Modern Trade and recent organized business approach of retailers has made it

possible for ice cream manufacturers to penetrate into shops even without providing them with

branded freezers

1048766 Weather change has increased ldquosummerrdquo season in our country which has reduced negative

seasonal impact on ice cream

1048766 Large companies like Igloo have taken global learning of using carts as an effective tool of

availability and visibility for ice cream

1048766 New and improved technologies are being used in the production process This technological

advancement has improved quality increased speed of production and made the process more

cost effective

713 Consumer Level

1048766 Only a few years back rich people could afford the luxury of having ice-cream but now it has

become a common product for everybody Ice-cream companies are producing different products

with a wide price range for consumers of every class and status

1048766 Nowadays companies are doing promotional campaigns more frequently the customers get to

know about the product which makes it easier for them to buy the best one

1048766 The improved standard of life and more modernized lifestyle of people is an important reason

for the increased consumption thus growth of the ice-cream industry

Evaluation of Entry into Ice cream Business for Bangladesh Limited 52

72 Prospects of Entry

The ice-cream industry of Bangladesh is an attractive one for the investors because there is a

huge market but number of producers is very small The major reasons behind industry

attractiveness are as follows

1048766 The industryrsquos current growth potential is very high with opportunity for market development

1048766 The competition currently permits adequate profitability and the competitive forces are

becoming stronger with time

1048766 Boutique segment is at a very high growth stage but no operator is currently operating with a

mid price range of BDT 100-400 Ice cream kiosks and small scooping boutiques can operate

within that range

1048766 Current industry driving forces are favourable for the future industry profitability

1048766 Globally oriented consumers look for variety in ice cream that is currently not available

Latest innovations came in the market in 2002 People would welcome new variety and flavours

1048766 There is a gap in the market for balanced convenience through ice cream where consumers can

get nutritional benefits for ice cream Also emotional attachment to ice cream could further be

improvised in promotional campaigns

1048766 There is high scope for market penetration and development to increase frequency of ice

cream consumption

1048766 Level of risk or uncertainty is very low in ice-cream industry because the consumer market is

so huge any product with a standard quality and careful pricing will be able to make significant

profit

1048766 As for geographic reach of the industry 60 market is still in Dhaka There is scope of

expansion and a new entrant can easily capture market share within Dhaka using carts even if

they do not want nation wide cold chain distribution

1048766 The production process is very complex and capital requirements are also high So before

going into production any company should know about their capabilities and weaknesses and

then start the business or else they might suffer huge loss at a certain level

1048766 Unilever can acquire the required resource and use existing multi-national multi-cultural

expertise to enter the market in a grand way

1048766 With high probability of entry from DANONE with more products like the ISIS diabetic ice

cream Unilever should consider entering in this industry as soon as possible

Evaluation of Entry into Ice cream Business for Bangladesh Limited 53

80 ENTRY STRATEGY FOR UNILEVER

While describing the suggested entry strategy for UBL certain issues have been kept

confidential and some issues have been touched but not explained to keep consistency with UBL

confidentiality policy

81 Suggested Entry Areas for UBL

1048766 Boutique segment of the Bangladesh ice cream is only 5 of the branded market UBL needs

to pursue a larger scope to make the entry viable

1048766 UBL cannot fight with unbranded segment as global product quality mandate of Unilever does

not allow UBL to fight in low price-low quality segment

1048766 Recommend entry should be in the common format segment with both single and multiple

servings and in the boutique segment with a different brand name (if possible BEN amp JERRYrsquoS)

1048766 UBL should build up state-of-art modern factory for manufacturing and establish cold chain

facilities initially focusing on metro cities

1048766 Investment issues are required to be addressed for building factory and cold chain and capital

requirement needs to be identified for that purpose4

1048766 UBL may have boutiques for driving image selective top-end offering

1048766 Kiosks can be setup near universities and shopping malls

1048766 Boutiques should be concentrated in Dhaka and Chittagong

1048766 Ice cream for boutiques and kiosks would be produced in factory as institutional packs of 9-10

litres

82 Products

1048766 As a Brand Building country in global Unilever operating framework UBL is entitled only to

bring products developed by the Brand Development countries

1048766 Unilever should focus on serving products that have nutritional benefits (already available

globally) along with usual satisfactions of sensual pleasure functional attributes etc

1048766 Current existent players especially Igloo and Kwality have extensively copied global and

regionally available Unilever products eg Cornelli is same as Wallrsquos Cornetto Vinetta is similar

to Vienetta Mega is similar to Magnum etc UBL needs to differentiate these to consumers on

the ldquotaste the originalrdquo platform where global quality is focused regarding the products

1048766 UBL should also bring regionally famous brands like Moo or Max to create image

differentiation

1048766 Magnum or Moo should be used as premium end ice cream to generate more profit margin

Evaluation of Entry into Ice cream Business for Bangladesh Limited 54

83 Placement

1048766 Distribution focus should be in Dhaka for entry as Dhaka contributes more than 60 of total

ice cream sales in the country

1048766 Company may use carts as distribution method They serve as good source of visibility and

availability It would help in increasing impulse purchase

1048766 At least 1500 outlets in Dhaka and Chittagong needs to be actively served using dedicated

branded refrigerators to generate sales

1048766 50 carts should operate in Dhaka and Chittagong

84 Price

1048766 UBL products should be priced at par with Igloo pricing for the common format ice creams

1048766 UBL can bring in premium single-serve SKUS for the higher economic classes in the price

range of BDT 60-80

1048766 Smaller SKUs (small lolly stick) can be introduced in the price range of BDT 10-15

1048766 In the boutique segment UBL should price products above the semi-premium segment

(Gelateria Igloo Sub Zero or Andersenrsquos) but lower than that of Club Gelato or MoumlvenPick

85 Promotion

1048766 UBL would require strong marketing campaign (As high as 50 of sales) to have a grand

entry in the market

1048766 Presence in the television media would be of utmost importance More than 50 of

promotional expense should be made here initially Gradually it can be reduced

1048766 Newspaper would serve as the second most important option

1048766 Billboards should also be used

1048766 Activations (similar to Lux Channel i Super Star or Igloo Festival) should be done to generate

trial

86 Scope of Opportunity

Table 30 Value and Volume Based Scope of Opportunity for UBL

Value (BDT Cr)

Volume (Tons)

Market

131

7835

Common

121

7600

Boutique

98

235

Evaluation of Entry into Ice cream Business for Bangladesh Limited 55

861 Geographic Contribution

1048766 Dhaka (61)

1048766 Chittagong (19)

1048766 Sylhet (10)

862 UBL objectives

Common Format Ice Creams

1048766 Target 10 Market share in 1st year operation

1048766 Value BDT 11 Cr

1048766 Production capacity required 21 Tons day

1048766 Freezer Placement 1500 freezers

1048766 Cart operation At least 50 carts

Boutiques

1048766 Target Further develop the market

1048766 Focus Dhaka Chittagong and Sylhet Metro

1048766 Franchise At least 20 franchisee operations nation wide in divisional towns

1048766 Pricing Below imported parlours above common formats with around BDT 400 per Litre

87 Critical Success Factors

1048766 UBL is considered as a high profile company in Bangladesh and thus they cannot operate in

the market only with common products like choc-bars and cups They must have premium

products (these require extrusion line) also to carry their brand image Otherwise UBL would not

be able to charge usual premium over competition products

1048766 Launch of ice cream would require huge promotional and activation support in order to gain

customers from Igloo People want novelty regarding ice cream and UBL have to let them know

about their products and create hype

1048766 Cart should be used as a source of distribution Recent successes of Unilever companies like

Indonesia shows that carts can generate more sales and can be used as source of visibility in the

minds of both retail traders and consumers Carts can also provide incremental sales to the

company

1048766 UBL have to create a strong cold chain for ice cream (initially in Dhaka and Chittagong) to

ensure quality products for consumers

1048766 UBL have to build capacity very rapidly to meet consumer demand if the launch is successful

Evaluation of Entry into Ice cream Business for Bangladesh Limited 56

90 BUSINESS PROJECTION

91 Basic Assumptions

Business projection for ice cream business was made based on a conservative approach UBL

would require spending significantly on production capacity and factory dedicated to ice cream

Thus to analyse business possibilities of ice cream certain assumptions were made and collected

data were used These are

1048766 Production equipments and cabinets would cost approximately BDT 55 crores

1048766 Production equipments 45

1048766 Packaging Equipments 15

1048766 Storage Facility 20

1048766 Branded Freezers 10

1048766 Distribution Investment 10 (Distributors would also invest themselves)

1048766 Ice cream factory with a floor size of 20000 sqft would cost BDT 25 crores

1048766 Objective is to capture 10 market share in Dhaka and Chittagong in the first year

1048766 Business would grow by 50 in year 2 and 3 30 in year 4 and 25 in year 5

1048766 Weighted price per litre is BDT 170 according to volume share of single serve ice cream

multiple serve ice cream and boutique ice cream

1048766 Other financial assumptions were also made List of them are provided below but amount has

been removed for confidentiality issues

Assumptions

Trade Margin

Distributors Margin

DutyVAT Rate

Trade Terms Expense of NPS

Trade Terms Expense of NSV

Advertising ampPromotion of NPS

Indirects (Salaries Wages etc)

Trading Tax

Table 31 Assumptions for Business Projection

Evaluation of Entry into Ice cream Business for Bangladesh Limited 57

100 CONCLUSION

Ice cream has good prospect in Bangladesh It is still a growing market with opportunities for big

new entrants With the barriers of entry UBL needs to consider its priorities UBL being an HPC

company traditionally needs to acquire expertise in cold chain distribution and has to invest a lot

of money to rip the benefits of the industry However to initiate company can take regional

support and acquire resource expertise The company should enter the business as soon as

possible since there is potential threat from DANONE to introduce more ice creams after ISIS

diabetic ice cream and also with potential of the industry arch rival Nestlersquo might consider

entering into the industry too

Evaluation of Entry into Ice cream Business for Bangladesh Limited 58

References

Web References

1 wwwunilevercom

2 wwwunilevercombd

3 wwwhllcom

4 wwwunilevercompk

5 wwwthedailystarcom - Life Style Magazine

6 wwwreuterscouk

Evaluation of Entry into Ice cream Business for Bangladesh Limited 59

Page 19: Square Ice cream

22000

387433

12914

9086

Polar

6500

112513

3750

2750

Kwality

12100

204934

6831

5269

Savoy

1560

25985

866

694

Milk Vita

1330

26387

880

450

Table 14 Production Capacity of Current Market Players

From the table we can see that all the ice cream manufacturers are operating with unutilized

capacity However one point to be noted is that different ice cream SKUs require different

amount of item to be produced Exact machine production capacity at litre per day does not

represent the accurate scenario Nevertheless it can be safely assumed that all the manufacturers

have unused machine capacity at their premises Moreover the larger players like Polar and

Kwality have new technology available at their premises Kwality bought second hand machines

from Thailand but both Igloo and Polar bought theirrsquos from Italy and Denmark

J Products and Pricing

Products The products in the ice-cream market are differentiated A few firms dominate the

market but an endless variety of ice creams are offered to the consumers Igloo pioneers all

major innovations in the market The products that are available in the market can be classified

into single serving and multiple serving groups Which are then categorized based on functional

attributes designs These are

Single

Stick

Normal mould 3D mould extrusion

Evaluation of Entry into Ice cream Business for Bangladesh Limited 26

Cup and Sundae

Flat cup long cup

Cone

Normal cone (vanilla strawberry etc) premium cone (Ripple)

serving

Innovative Fillers

Snowball Animal shaped containers sandwich nuggets etc

Container

05 ltr 1 ltr and 2 ltr containers

Multiple serving

Family Pack

Assorted packs cakes shahi kulfi etc

Table 15 Ice cream Serve types

Among all the products available in the market most selling SKU for all the companies is Choc-

bar stick and highest selling flavour is Vanilla Following are the ranks of most selling SKUs and

flavours

SKU Name

Rank

Choc-bar (70 ml)

1

Vanilla Cup (100 ml)

2

Vanilla Box (05 and 1 Ltr)

3

Lemon Lolly (70 ml)

4

Normal Cone

5

Flavour

Rank

Vanilla

1

Chocolate

2

Strawberry

3

Ripple

4

Mango

5

Table 16 Rank of SKUs Table 17 Rank of Flavours

Choc-bar is one of the earliest vanilla based chocolate coated SKU that has dominated the

market strongly over the years Shopkeepers could not provide an exact percentage on SKU

based sales contribution Most of them ranked the SKUs and flavours according to sequence

shown in the above table Also according to newspapers and secondary sources Vanilla is the

most selling flavour with 60 sales contribution According to secondary sources percentage

sales contribution of various types of SKUs in the common format segment are as follows

Type of Ice cream

Value Share

Volume Share

Impulse dairy ice cream

514

443

Impulse water ice cream

112

138

Take-home dairy ice cream

374

419

Table 18 Volume Share of Different Serve Types

Impulse dairy ice cream provides more value share as price per litre is higher than take home

multiple serving ice creams Impulse water ice cream shows a similar trend as of take home ice

cream

Pricing Product pictures and price ranges of each category are provided below Evaluation of

Entry into Ice cream Business for Bangladesh Limited 27

Normal Premium Price Tk12 Tk20 Tk25 Cup amp Sundae Normal Cup Sundae Premium Cup

Price Tk20 Tk25 Cone Normal Premium PriceTk20 Tk25Innovative Fillers PriceLtr Tk100

Tk175 Container Normal Premium PriceLtrTk150 Tk 175 Tk 190 Family Packs Kulfi Mixed

Pack Cake Single ServingMultipleServingNormal Ice Fruit 3D Mould Premium Extrusion Price

Tk10 Tk15 Tk15 Tk20Stick Normal Cream

Figure 8 Serve Types and Pricing

As it can be seen from the above chart all impulse ice creams are priced within the range of

BDT 10 to 25 Other take home multiple servings are priced within the range of BDT 50 (05

Litres) to BDT 220 (2 Litres) Another noticeable factor in price is that there are both normal and

premium flavours in all types of ice creams

K Firms as Price Setters

The firms have capability to affect the market price to be low as profit margin is very high If

Igloo reduces the price of an item below the prevailing price level in order to increase its sales

its competitors will fear that their customers will go away from them to buy Igloo products To

retain their customers they will be forced to match the price cut of Igloo Historically this has

been proven to be true However due to price sensitivity companies cannot drastically increase

price even if they provide higher quality of product It was seen in 1997 when Igloo increased

price of 11 SKUs and faced drastic sales fall during that time It shows that the industry might

welcome overall industry price increase but not individual company price increase

L Promotion

The promotion scenario in the industry is not quite organized as of now Even proper data

regarding promotional expenditure is not available from research sources The reason being

there is not much consumer related activity seen in the market After Kwalityrsquos introduction in

the market in 1999 Igloo went on with massive Television promotion of their new products that

were available at that time

Evaluation of Entry into Ice cream Business for Bangladesh Limited 28

However in current times there is no TVC running from any company Companies promote their

launches mainly through billboards and newspaper promotions which is currently the most used

source of consumer promotion Some promotional activities that were done by the companies

over the years are listed below

Consumer Promotions

1 Larger players like Igloo and Kwality goes on with campaigns like ldquoGift on stickrdquo where

various prizesrsquo names are written on the sticks and consumers can get them

a Igloo ran a program on their launch of Macho variant where gift varied from cricket bat to

personal computer

b Igloo had a program in 2006 where gifts on sticks varied from Bangkok visit to sunglass

c Igloo ran one campaign in 2007 where gold bars were given on purchasing Choc-bar

d Kwality ran a similar program in 2008 where gifts varied from wrist watches to motorcycle

2 Some companies ran consumer TTS and gift programs where company products were given

free

a Igloo had a program in 2006 where Igloo butter was given free on purchasing Igloo ice cream

cake

b Kwality ran a program in 2008 where one SKU was given as gift with another SKU randomly

c ldquoCone Ice cream at your Homerdquo program was run by Igloo in 2002 where six cone biscuits

were given free with purchase of one litre ice cream

3 Media placement is another form of placement done by larger companies

a Igloo purchased ldquoGlimpse into World Cup Resultrdquo space in daily newspapers during World

Cup Football 2002

4 One interesting program is done by only Igloo in Bangladesh They did it in June 2006 The

program was ldquoIgloo Ice cream Festivalrdquo with main attractions of ldquoGet as much ice cream as you

want for BDT 200rdquo ldquoGet a Fantasy Kingdom Entry ticket with each Entry Couponrdquo ldquoLucky

Drawrdquo and ldquoCelebrity Addardquo

Trade Promotions

5 Trade promotions are mainly given to ldquoHighest retail purchasersrdquo and also based on time

bound trade schemes where various slabs of purchase amount are mentioned for different prizes

a Igloo takes their highest purchasers to visit countries like Singapore and Thailand

b Savoy has a purchase slab scheme where first prize is table fan

c Polar gives special sales commission to their highest purchasers (around 5)

Evaluation of Entry into Ice cream Business for Bangladesh Limited 29

M Players in the Common Format Segment

Branded common format ice cream segment is constituted of five players only Among them

Igloo is the largest player and Milk Vita is the smallest The following sections detail the basic

company detail of all the companies with special emphasis on Igloo the market leader

Igloo

The pioneering ice-cream company in Bangladesh started its operation in 1964 in Chittagong

under K Rahman amp Co Limited (KRC) with a small factory inside Coca Cola bottling factory of

KRC After the independence of Bangladesh in 1971 Igloo was taken over by the government of

Bangladesh Later in 1983 Abdul Monem Limited purchased the entire production setup of KRC

Limited including Coca-Cola bottling plant and Igloo ice-cream factory After taking full charge

of Igloo ice-cream by Abdul Monem Limited the manufacturing operations continued in

Chittagong till 1990 Although Dhaka fetched the maximum share of the total revenue the

distribution cost increased tremendously in the process of meeting the demand of Dhaka city To

cope with the distribution problem and handle Polar threat Abdul Monem Limited transferred

the factory to Dhaka changed the ice-cream packaging from the conventional paper to plastic

and expanded their market and distribution operation The new factory of Igloo was setup at

Shyampur Narayanganj and was nine kilometres away from the Motijheel office The company

apart from catering the capital city started to expand its operations in Comilla (1991) Khulna

(1992) and North Bengal (1993) These markets were served directly from Dhaka since the

storage facilities were not developed till then The company is now the market leader since 1997

with clear market share victory over others with sweeping 51 share It is to be noted that Igloo

is also a player in the boutique segment with three parlours (2 in Dhaka and 1 in Chittagong)

Product Range Igloo offers the widest choice of ice cream more than any other competitor in

the market Igloo is offering a total of fifty items including normal premium and novelty cup

stick and family pack items Igloo has thirty flavours more than anyone else in the industry and

is continuously launching new and innovative delicacies

Igloo ice-cream can be classified in six groups They are

Stick

Macho Choc-bar Mini Choc Clown Mega Shell n core Lolly

Cone

Cornelli 2 in one Cornelli classic

Cup

Shahi kulfi Vanilla Strawberry Mango Snow ball

Container

Vanilla Strawberry Mango Chocolate Coffee Diet Vanilla Tutti Frutti Ripple Pralin

Pistachio

Innovative

Nuggets Sandwich

Family

Ripple cake Party time Shahi Kulfi

Table 19 Products of Igloo

Single serve stick cups and cone items are easy to carry around and convenient to eat which

makes it most sold The core target segment of ice-cream is 6-24 years and this generation is

always on the Evaluation of Entry into Ice cream Business for Bangladesh Limited 30

move and thus prefers independent cone stick or cup items As Igloo initiated the concept of ice-

cream as a family product they offer some items to be enjoyed with the whole family

Quality and Innovation Igloo is committed to maintaining the highest quality standard through

its continuous RampD activities The major ingredients raw materials and packing materials are

procured from the best European sources Strict quality control is done at every stage of the

manufacturing process from procurement of material mixing material flow ice cream making

packaging storing (at main warehouse) distributing and market shelving by the Quality Control

Department Current supply chain for various materials of Igloo is as follows Australia (Milk

Powder) Denmark (Ingredients emulsifiers amp stabilizers) China amp UAE (Food grade sticks)

China Denmark Singapore amp Thailand (Food grade packing materials)

Figure 9 Igloo Supply Chain

Distribution Network Their distribution network is stretched all over the country with a long

fleet of refrigerated vans Firstly the ice cream products are stored at the central warehouse of

the factory and from there they are distributed through the haulage vehicle to the operational

centres located in Dhaka Chittagong Comilla Rajshahi Barisal Bogra Rangpur and Khulna

Strictest cold chain maintenance during the distribution and selling of the ice creams is ensured

Their distribution process is as follows Manufacture Stored at -24c Transported by Refrigerated

trucks at -Reaches amp Preserved in Eight regional stores Refrigerated vehicles (Distributors)Retail

outlets (Deep freezers)

Figure 10 Distribution Process of Igloo

Evaluation of Entry into Ice cream Business for Bangladesh Limited 31

Trolley Operation Igloo also operates through trolleys for extending its reach to consumers at

the furthest points The trolleys are operated near schools alleys streets parks etc and play

rhythmic music to attract the consumers These are very colourfully decorated with Igloo

umbrella and the puller wears specific uniforms Igloo was the first in introducing and operating

these trolleys in Bangladesh for any Fast Moving Consumer Goods (FMCG) Igloo has around

125 trolleys operating throughout the country Individual trolleys are provided with a regular

supply of igloo ice creams

Marketing The marketing commitment of Igloo is based on the relationship with its customers

and consumer by not only manufacturing the highest quality product but also delivering the

product by maintaining this quality To satisfy the ever-changing needs of the customer Igloo

has regularly launched new ice creams and introduced new flavours And this commitment has

positioned Igloo as the market-leading brand by gaining the consumers trust with the positioning

as ldquoA WORLD OF GREAT TASTErdquo

Facilities and Logistics at a glance As of 2009 following are the facilities and logistics enjoyed

by the company

Factory location

Dhaka

Production Lines

4

Packages

Stick Cup Family pack Others (Nuggets and sandwich)

Machine suppliers

1048766 Mark-Italy

1048766 Tetra Pak(Hoyer)-Denmark

1048766 Sabore Denmark

1048766 Hass- Austria

Machine models

1048766 Freemark 1100 Italy

1048766 FM 3000 FM 6000 Italy

1048766 SL600 Denmark

Cone baking

Hass- Austria

Chocolate making

Macentyre-UK

Coverage

Nationwide

Operational centre

10

Total market vehicles

30

Distribution channel

Directthrough appointed distributors

Outlet service

7500

Injected deep freezers

4000

Trolley operations

125

Warehouse no

8

Table 20 Igloo Facilities and Logistics

Kwality

Kwality is currently the second largest ice cream manufacturer of the country The mother

company for the Kwality brand is Sanowara Drinks amp Beverages Ltd a sister concern of

Sanowara Group The company is famous for powdered milk brands Red Cow and Diploma in

Bangladesh The drinks and beverage concern of Sanowara made an entry into the market in

1997 with ldquoYesrdquo brand drinking water and launched the ice cream brand in 1999 With heavy

communication and novelty products it Evaluation of Entry into Ice cream Business for

Bangladesh Limited 32

successfully removed Polar from the second place with a current market share of 27 The

company also operates in the boutique segment with two parlours in Dhaka and Chittagong

Kwality ice cream factory is situated in Chittagong with a floor space of 35000 sft and fully

automated machinery wrapping mix machinery equipments from Italy having capacity of

around 20000 litres of ice cream per shift The ice cream factory employs 140 people The

company is ISO 9001-2000 certified

Kwality was the first true competitor for Igloo products with some major innovation in product

design and communication but their quality is perceived to be lower in the minds of the

consumers and they do not have extrusion ice cream The product prices are also similar to that

of Igloo but they charge a bit lower than Igloo in premium multiple servings However during

market visits it was seen that shops that keep only Kwality or Igloo and Kwality both they can

sell Kwality too although the sales amount is lower than that of Igloo People who look for Igloo

shopkeepers give them that directly but if they get a chance and Kwality ice cream stock is high

they also push Kwality to dry the stock out This gives an indication that market is larger than

what the current players are capable of serving even in Dhaka

Kwality follows a similar distribution model like Igloo but distribution frequency is lower and

amount of cart sellers is limited to 25 and they operate only in Dhaka

Polar

Once a giant in the industry Dhaka Ice Cream Industries Ltd introduced the first hygienically

packed ice cream in Bangladesh in 1987 and the brand name Polar was thus born In the early

days the company started ice cream business with a wide range of products and a variety of

flavours in Dhaka city In 1988 the company started its distribution in the city of Chittagong

then Bogra and continued to cover more cities Presently Polar ice cream is available

throughout Bangladesh The company today trails in the market with 15 market share in the

common format segment Recently Polar has announced launch of ISIS diabetic ice cream with

support from DANONE to turn around in the market

The company has its head office as well as a modern large-scale industrial plant in Dhaka Polar

ice cream is made with Danish expertise using Danish equipment and technology The

production activities and quality control measures are supervised and managed by Danish

experts Polar offers a wide range of delicious flavours and tastes made by ingredients imported

from Europe

Dhaka Ice Cream at present has 3 cold stores in Dhaka Chittagong and Bogra in Bangladesh

From Dhaka cold store they distribute ice creams in Mymensingh Tangail Jamalpur Sherpur

Kishoreganj Netrakona Comilla Narsingdi Barisal Madaripur Agaeljhara Faridpur Magura

Chuadanga Jessore Satkhira Khulna Pirojpur and Sylhet through their distributors In case of

long distance delivery points the company uses auto cooling freezer van

Evaluation of Entry into Ice cream Business for Bangladesh Limited 33

In Dhaka city they distribute ice creams directly to retail stores in freezer vans Besides that

they have several distributors at different points of the city Distributors cover their individual

areas where company is not able to supply directly in their freezer vans Similar model is

followed by the company to distribute ice cream from their other cold storages through out the

country For storing and selling ice creams in retail stores the company like the other players

arranges a deep freezer with the Polar logo and canopy light box

In addition to this distribution the company also undertakes home delivery of ice creams for

special occasions

Savoy

Savoy Ice-cream brand is owned by Sena Kalyan Sangstha (SKS) Group of industries It started

its journey in March 1995 with a factory in Tejgaon Dhaka Yearly turnover is estimated at BDT

388 crores with a market share of roughly 35

The factory has been established with Sonali Bank finance at 6040 equity ratio The total

production capacity of the factory has been estimated at 2400 litres of Ice-cream per day Total

land area of the factory premise is 116 Bigha with 8000 sft area covered with a total project cost

of BDT 144 The factory employs 73 people

Product ranges of the company include all the basic designs and flavours of the industry

However the company has not been much of an innovator in the industry Their product quality

is substantially low than that of other players and they price their products at 10-15 lower than

the other competitors The company imports raw materials mainly from Europe The general raw

materials are Euro cream Skimmed Milk Powder Cocoa Powder and Flavour (Vanilla Mango

and Strawberry) Colour (Yellow Red Chocolate and Green) Ripple Sauce Cheney Fruit Palm

Kernel Oil Anhydrous Butter Oil (Ghee) and Sugar etc

Milk Vita

Milk Vita is one of the most famous brand names in Bangladesh for its liquid dairy milk Owned

by Bangladesh Milk Producersrsquo Co-operative Union Limited (BMPCUL) the company came in

the market with proper dairy milk ice cream in form of cups and choc-bar With a production

capacity of around 1600 litres per day the company is trailing in the market place with 3

market share

Although the Milk Vita Choc-bar was perceived to be extremely tasty by consumers they

probably could not do well due price competition Currently they do not even distribute ice

cream in Dhaka However their presence is seen in outskirts of Dhaka and other nearby towns

If the current market situation prevails Milk Vita would lose their remaining market share and

other companies would benefit especially Igloo However one of the advantages of Milk Vita

remains to be

Evaluation of Entry into Ice cream Business for Bangladesh Limited 34

their nation wide milk supply network They have skimmed milk powder production plant that

Igloo does not have Thus they can combat the seasonality of milk supply that Igloo with its

huge requirement of milk cannot

Strengths and Weaknesses of Competitors

Company

Strengths

Weaknesses

Igloo

1048766 Strong brand image

1048766 High product quality

1048766 Highest no of variety

1048766 Strong distribution network

1048766 Highest visibility

1048766 Strong promotion

1048766 High production capacity

1048766 Presence of extrusion ice cream

1048766 Items are generally a bit pricy

1048766 Igloo does not give free freezers like other companies

1048766 Reluctant in recent times regarding innovation

1048766 Local sourcing of liquid milk does not meet demand

1048766 Failure to use ERP technology slowing decision making

Kwality

1048766 Product variety

1048766 Strong promotion

1048766 Free freezer distributed

1048766 Presence in all price segments

1048766 High production capacity

1048766 Weak distribution

1048766 Lower exposure

1048766 low amount of carts in operation

Polar

1048766 Free freezer

1048766 Quality perceived to be high compared to Kwality

1048766 Discoloured freezers

1048766 Lower exposure

1048766 Low product variety

1048766 Unused capacity

Savoy

1048766 Price is lower

1048766 Discoloured freezers

1048766 Low product variety

1048766 Weak distribution

1048766 Small amount of freezers

1048766 Low production capacity

Milk Vita

1048766 Quality is good due to dairy cream

1048766 Brand leverage from Milk Vita milk

1048766 Low exposure

1048766 Low variety

Table 21 Strengths and Weaknesses of Competition

512 Market Characteristics of the Boutique Segment

With a small market of BDT 98 Cr and 567 share in the branded ice cream market the

boutique segment is currently an increasing segment in the ice cream industry Boutique

segmentrsquos history dates back to 1960s when Igloo launched boutiques in Dhaka to save

distribution cost and promote a culture of ldquoice cream eating outrdquo In later years boutiques lost

their glamour and retail common format segment picked up growth However with Dolce Vita in

the late lsquo80s craze for Italian Artisan ice cream was recreated in the market Although Dolce

Vita is failing in recent times emergence of MoumlvenPick and Club Gelato in 2000 has uplifted the

segment once again Current growth rate of the

Evaluation of Entry into Ice cream Business for Bangladesh Limited 35

segment can be estimated to be approx 20-22 (higher than the common format segment)

Following are the basic detail of all the major players in the segment with their estimated sales3

Players

Outlet

Sales (Cr Taka)

Share

Club Gelato

1

136

199

MoumlvenPick

1

119

174

Andersenrsquos

3

119

174

Gelateria Igloo

3

119

174

Sub Zero (Kwality)

2

051

75

Baskin Robbins

1

015

22

Dolce Vita

1

017

25

American Soft

1

009

12

Rainbow

1

009

12

Others (off site)

089

130

Total Market

682

Table 22 Players and Shares in Boutique Segment

A Detail of Operation

General operational procedure followed by all the operators is as follows

1048766 Operating method There is a variation in operational method among the large operators

1048766 Club Gelato uses kitchen at own premise where imported ingredients and local milk (daily

special service from Milk Vita) are used to make ice cream

1048766 MoumlvenPick directly imports ice cream from Switzerland

1048766 Andersenrsquos Gelateria Igloo and Sub Zero produce ice cream at their factory with a mix of

imported and local ingredients

1048766 Products Around 30-35 flavours of artisan dairy ice cream are served at the premises

1048766 Most sold flavours are Vanilla Ferrero Rocher Butterscotch Chocolate Caramel etc

1048766 Other Products Larger players also serve ice cream desserts (milk shakes ice cappuccino etc)

pastries and other desserts with normal coffee and tea facility at their premises

1048766 Boutiques fight ice cream seasonality with the other products sales during off-peak ice cream

seasons Usually ice cream and other products contribute at 6040 ratio in summer and during

winter and off-peak seasons the ratio reverses

1048766 Pricing Usually the prices of products in this segment are 3-4 times higher than that of the

common format segment

1048766 Prices do not vary with flavours Variation depends on serve style (Cone tub) and use of

toppings and other ingredients (Chocolate sauce nut fruits) etc

1048766 Usual margin charged is around 50-60 over production cost Similar margin is charged for

other products like coffee ice cappuccino etc

3 Yearly sales is estimated based on companyrsquos approximate daily sales collected during

interview

Evaluation of Entry into Ice cream Business for Bangladesh Limited 36

1048766 Target Group Most of the consumers belong to SEC A and higher SEC A with DMFI of at

least BDT 20000

1048766 Foreign delegates and resident foreigners also visit these boutiques

1048766 Main purposes of visits in the boutiques are

bull Youth hangout with friends and having ice cream and ice cream derivatives

bull Family Family night out or eat out at a restaurant and then having dessert

bull Foreigners Having dessert after dinner

1048766 Rush time at boutiques are Afternoon 2-4 pm and at night 9-11 pm

1048766 Offsite sales Most of the large operators also sell offsite They have small freezers for off-site

1048766 Club Gelato and MoumlvenPick serves ice cream at high society parties and programmes

1048766 MoumlvenPick also has kiosks in known hotels like Sheraton

1048766 Promotion No mass promotion is done by any of the companies Word of mouth is the most

important source of promotion Posters and banners outside the premise and occasional

newspaper advertisements are used to communicate special offers

1048766 Growth Drivers Market growth is driven by image innovation quality decoration of facility

environment and special offers

1048766 Club Gelato has the image of selling true Italian dairy ice cream with an excellent hangout

environment

1048766 MoumlvenPick imports ice cream directly from Switzerland and is perceived to be of high quality

1048766 Andersenrsquos operates with the image of ice cream from Denmark

1048766 Gelateria Igloo (from Igloo) and Sub Zero (from Kwality) could not establish the premium

artisan ice cream image

B Players in the Boutique Segment

There are very few players who have significant impact in the boutique segment Detailed

information of all the major boutique segment players is provided below

Evaluation of Entry into Ice cream Business for Bangladesh Limited 37

Club Gelato

Basic Company Information

1048766 Location Banani Road 11 (Planning for a second one in Dhanmondi)

1048766 Established in 2001

1048766 Seating Capacity 48

1048766 Area 1250 sft (including kitchen)

1048766 Owner Mr Jahangir Alam (Bangladesh)

1048766 Business Type Joint business partnership with Singapore

1048766 Staff 15 people (6 in the kitchen)

1048766 Production capacity 150 litres per day

Product Related Information

1048766 Product Italian style parlour scoop ice cream fruit juice coffee and pastries

1048766 Flavours Around 32 flavours available

1048766 Most selling Ferraro Rocher Vanilla Pistachio

1048766 Innovations New variants and ingredients are communicated by their Italian supplier and

Club Gelato decides what to take from them

1048766 Serve type Cup Cone Glasses Box for take away

Consumer Profile

1048766 Primary Teenagers and Young Adults (18-30) amp Diplomats

1048766 Secondary Family consumers for eat out

1048766 Income Group High income customers tentatively from SEC A and higher SEC A

1048766 Geographic Area Diversified

1048766 Rush time 8-10 pm

Sales and Price Information

1048766 Sales BDT 50000 (60 Ice cream 40 other desserts) daily in summer In winter however

other products sell more and thus they keep total sales at the same level

1048766 Price 750 per litre for any flavour

1048766 Sales Volume 50-60 litres per day

Supply Chain Placement Information

1048766 Milk Local sourcing from Milk Vita (4050 litres per day)

1048766 Chocolates amp Flavours Belgium France Germany

1048766 Transportation Mainly air (They can afford it due to high margin)

1048766 Contribution of various materials Flavours (30) Milk (20) other parts are water and air

Promotional Materials

1048766 Materials used are near premises POS materials for promoting the parlour only

Table 23 Detail of Club Gelato

Evaluation of Entry into Ice cream Business for Bangladesh Limited 38

MoumlvenPick of Switzerland

Basic Company Information

1048766 Location Gulshan

1048766 Established in 2000

1048766 Seating Capacity 55

1048766 Owner Mr Arif Mahmud

1048766 Business Type Franchise of International MoumlvenPick

1048766 Storage Capacity in Shop 150 litres

Product Related Information

1048766 Product Imported MoumlvenPick ice creams coffee chicken sandwich and Frappe

1048766 Flavours Around 30 to 35 flavours available

1048766 Most selling Swiss Chocolate caramel Vanilla Dream Espresso Strawberry

1048766 Innovations New variants are communicated by their franchiser and they decide on flavours

that they want

1048766 Serve type Cup Cone Glasses Box for take away

Consumer Profile

1048766 Primary Teenagers and Young Adults (18-30) (70) amp Diplomats

1048766 Secondary Family consumers for eat out

1048766 Income Group High income customers tentatively from SEC A

1048766 Geographic Area Concentrated in Gulshan and nearby areas

1048766 Rush time Afternoon- Young Adult 10 to 11 pm Foreigners

1048766 the company also serves at parties and has freezers in known hotels where their ice creams

are served

Sales and Price Information

1048766 Sales BDT 35-40000 daily in summer

1048766 Price 640 per litre for any flavour

1048766 Sales Volume 55-60 litres per day

Supply Chain Placement Information

1048766 Transportation Imported finished goods by ship

1048766 Ship travel time 19 days

1048766 Port clearance 10 days

1048766 Safety Cushion Extra 10 days

Promotional Materials

1048766 Materials used are near premises POS materials for promoting the parlour only

Table 24 Detail of MoumlvenPick of Switzerland

Evaluation of Entry into Ice cream Business for Bangladesh Limited 39

Andersenrsquos of Denmark

Basic Company Information

1048766 Location Gulshan (2 others in Uttara Dhanmondi)

1048766 Established in 2001

1048766 Seating Capacity 48

1048766 Owner United Group

1048766 Business Type Franchise of Australian company Andersenrsquos of Denmark

1048766 Production Tongi Factory of United Group

1048766 Production capacity 2000 litres per day in factory

1048766 Storage Capacity in Shop 150 litres

Product Related Information

1048766 Product Danish parlour scoop ice cream and coffee

1048766 Flavours Around 30 to 35 flavours available

1048766 Most selling Strawberry Butter Scotch Green

1048766 Innovations New variants and ingredients are communicated by their franchiser and they

decide on flavours that they want

1048766 Serve type Cup Cone Glasses Box for take away

Consumer Profile

1048766 Primary Teenagers and Young Adults (18-30) (70) amp Diplomats

1048766 Secondary Family consumers for eat out

1048766 Income Group High income customers tentatively from SEC A

1048766 Geographic Area Concentrated in Gulshan and nearby areas

1048766 Rush time 8 to 10 pm

Sales and Price Information

1048766 Sales BDT 10-12000 daily in summer

1048766 Price 460 per litre for any flavour

1048766 Sales Volume 40-50 litres per day

Supply Chain Placement Information

1048766 Milk 2025 kg packs are imported

1048766 Chocolates amp Flavours Imported

1048766 Butte paper Local sourcing

1048766 Transportation Ship

Promotional Materials

1048766 Materials used are near premises POS materials for promoting the parlour only

Table 25 Detail of Andersenrsquos of Denmark

Evaluation of Entry into Ice cream Business for Bangladesh Limited 40

Gelateria Igloo

Basic Company Information

1048766 Location Banani Kemal Ataturk Avenue (Two others in GEC Mor Chittagong and Naya

Paltan)

1048766 Established in 2000

1048766 Seating Capacity 20

1048766 Production From Igloo factory in Shyampur Narayanganj

Product Related Information

1048766 Product Parlour scoop ice cream and coffee only

1048766 Flavours Around 30 flavours available

1048766 Most selling Vanilla Strawberry Chocolate Pistachio Butter Scotch Tutti Fruity

1048766 Serve type Cup Cone Glasses Box for take away

Consumer Profile

1048766 Primary Teenagers and Young Adults (18-30)

1048766 Secondary Family consumers for eat out

1048766 Income Group High income customers tentatively from SEC A and B

1048766 Geographic Area Diversified

1048766 Rush Time afternoon and evening

Sales and Price Information

1048766 Sales BDT 8000 to 10000 daily in summer Nearly one fourth in winter

1048766 Price Varies but 350 per litre of vanilla

Promotional Materials

1048766 POS materials at the premises

Table 26 Detail of Gelateria Igloo

52 Price Comparison of Common and Boutique Segments

Price ranges of both common format and boutique segment cannot exactly be pin pointed as

products do not follow common structure and variations occur with use of toppings mixing of

flavours and use of coatings However a price comparison has been made among the brands

based on their price of per litre of vanilla flavoured ice cream in the market It appears to be as

following

Company

Price Litre Vanilla

Club Gelato

750

MoumlvenPick

640

Andersenrsquos

460

Dolce Vita

440

Igloo

100

Kwality

100

Polar

100

Milk-Vita

90

Savoy

85

Table 27 Comparative Price Analysis

As it can be seen there is price gap within the range of BDT 100-400 Ice cream kiosks and

small scooping boutiques can operate within that range

Evaluation of Entry into Ice cream Business for Bangladesh Limited 41

60 CONSUMER ANALYSIS

61 Target Group of Ice cream

Who are the consumers of ice cream This question does not have a clear answer Ice cream is a

food for all It is the only food consumed by a human being at less than 0 degree centigrade

temperature and people of all ages feel indulged to have it However we can determine focus

target groups for both branded common format and artisan boutique ice cream Group

discussions and market visits were done to get insight into the consumers along side resources

form secondary sources Age based target group is common for both segments but variation

among the groups occur mainly based on SEC and DMFI classification

611 Geographic Group

Branded ice cream remains an urban product till date Geographically branded ice cream has

reached urban and semi urban areas up to Thana Head Quarter levels Ice cream has reached

areas where electricity is available Small artisan players are available in places where large

branded players have no distribution

612 Target Age Group

Age wise grouping of target consumers is as follows

1048766 Urban kids in the age group of 5-14

1048766 They mainly consume normal sticks cups cones innovative fillers and water ice creams

1048766 Urban youth in the age group of 15-24

1048766 They consume premium and extrusion sticks and cones

1048766 Urban mothers in the age group of 25-35

1048766 They determine the family purchases Even when the father purchases ice cream decision is

taken by them

Consumption pattern of various age groups are depicted in the following chart Ice cream

consumption pattern50203005 to 14 yrs15 to 24 yrs25 to 35 yrs

Figure 11 Target Group wise Consumption Pattern Evaluation of Entry into Ice cream Business

for Bangladesh Limited 42

613 Target SEC and DMFI Group

Common Format

SEC A and B is the target group for common format ice cream However with rapid increase in

price level over the years has made it a ldquohard to consumerdquo product for SEC B consumers who

belong to lower DMFI group

Boutique Format

Boutique formatrsquos higher margin and high price range makes it an exclusively SEC A ice cream

People belonging to upper and upper middle class have access to the mediocre boutiques and

only higher upper class can have premium ice creams like Club Gelato and MoumlvenPick

Another unique target group for boutique format are the foreigners who live in Bangladesh

These people tend to visit the parlours to have ice cream as dessert especially after dinner

62 Ice cream in Consumer Lifestyle

Figure 12 Ice cream in Consumer Life style

This simple overview of ice cream in consumer lifestyle was determined based on in-depth

research analysis of UBL and validated through qualitative group discussions by the author

However detail of in-depth research is provided in a later section of this chapter

Evaluation of Entry into Ice cream Business for Bangladesh Limited 43

63 Highlights of Purchase Habit of Ice cream

631 Common Habits across Target Groups

There are some common habits that were identified in earlier researches and group discussions

with consumers Common habits mean the consumer approach towards ice cream that is seen

across all target groups eg kids youth and adult purchasers These are outlined below

1048766 Ice cream is mainly seen as a dessert or a snack Impulse ice cream is seen as a quick snack

that is consumed when it is in sight Visibility plays a big role here Regarding family packs

people see it as a post-food dessert

1048766 Ice cream purchase is commonly a planned event When the contexts arise people generally

take a bit of time to decide whether or not to have ice cream or when they want to go to a

boutique they make due considerations regarding which boutique to visit

1048766 Ice cream purchase decision is taken based on favourite flavour People tend to try out new

variants and flavours when they first see it They compare the taste with earlier experience and

when they purchase later they choose the flavour they have liked most

1048766 For In-Home segment decision is mostly taken on the flavour Generally people come up with

different flavours of choice and most voted flavour is chosen

1048766 People become aware of new variants or flavours mainly through word-of-mouth

Advertisement (new launches special offers and festivals) in newspaper is another source of

awareness

1048766 People are currently indifferent towards the price level of premium flavours However some

feel that price of Choc-bar or water ice creams (lolly) is a bit much If less they would have

consumed more Some also feel that companies should come up with branded ice cream in the

price range of BDT 5-8

1048766 Ice cream is purchased from nearby shops If required brand and flavour is not available 2-3

shops will be visited and then available flavour will be selected even if the required one is not

found This is done mainly not to ruin the mood for ice cream

1048766 People are very open to try new brands and flavours especially if it comes from a credible

source They would try new flavours and if they are satisfied with the taste they would repeat

purchase

1048766 Regarding boutique visits people feel that boutiques need to have a proper environment

enough flavours and other snacks

1048766 While visiting boutique with family or companion they want variation in flavours so that

they would order different flavours and taste each otherrsquos ice cream It is seen as a sign of

togetherness

1048766 Frequency of ice cream purchase varies among people It depends on peer pressure collective

family decision summer heat and attitude towards ldquoice creamrdquo itself as a product Evaluation of

Entry into Ice cream Business for Bangladesh Limited 44

632 Habits of Kids

1048766 Kids choose ice cream flavours by the look of the product (generally pictures shown in POS

materials and carts) They love colour and designs of the products let it be a common format or a

boutique ice cream

1048766 Kids (when in house) would go with the housemaid to the nearby shop choose the flavour

they want (within range of the amount given to the maid) and buy it

1048766 When with parents they would take the product they like even if the price is lower than some

other product However mothers play a role in this decision They would want their children not

to choose too high priced a product or coloured products

633 Habits of Youth

1048766 Young people are the main consumer of impulse ice cream They also are one of the major

consumers in the boutique segment

1048766 Young people love to try out new products that come into the market Another side of the coin

is that they are not very loyal to a brand or a flavour and tend to switch a lot

1048766 Regarding boutique visits young people go to boutiques to have an ldquoice cream hang outrdquo with

peer groups They would stay there for a longer period of time while they have their ice cream

1048766 Some times young people make milk shakes and other ice cream based desserts

634 Habits of Mothers

1048766 Mothers worry about their childrenrsquos health and they prefer ldquovanillardquo type of brands

However when price constraint occurs they go for water ice creams for their children They try

to convince their kidrsquos purchase decision

1048766 Regarding family purchase motherrsquos decision is sometimes prioritized by the whole family

64 Barriers to Ice cream Consumption

641 Emotional Barriers

1048766 Overindulge (close to sinful)

1048766 Undisciplined (no control)

1048766 Childish (licking)

1048766 Artificial Image

642 Functional Barriers

1048766 People of SEC B feel that ice cream is an expensive dessert (If less expensive would consume

more often)

1048766 It leads to cold cough - especially in winter rainy season

1048766 It contains artificial additives preservatives

1048766 It is very high in calories that lead to fattening

Evaluation of Entry into Ice cream Business for Bangladesh Limited 45

1048766 It does not quench ldquothirstrdquo

1048766 Less convenient (portable immediate eat)

1048766 Messy Dripping

65 Research Findings

The highlights regarding purchase habits triggers and barriers of ice cream consumption provide

a glimpse into the consumer world of ice cream industry However UBL CMI conducted a

formal research exclusively on ice cream consumers to identify

1048766 Occasions of ice cream

1048766 Frequency of ice cream consumption

1048766 Expectations from ice cream occasions

1048766 Personalities that they desire from ice cream

651 Relevant Occasions in Daily Lives of Consumers

Research question regarding ldquousual occasions of life that occurred most frequently in day-to-day

lives of the respondentsrdquo generated the following replies

Occasion

of Respondents saying Yes

Watching TV

93

Normal Dinner At Home

91

Normal Lunch At Home

89

At Home While ReadingMusicSurfing

86

Informal Family Get Together

85

Out Of Home Hanging Out With Friends

84

Out Shopping

84

Mid-Afternoon Break At Home

83

At Home By Myself During The Day

82

Special Dinner At Home

82

Informal Dinner Out Of Home

82

Normal Lunch Out Of Home

82

Leisure Walk

79

Coming Home From WorkSchool

78

Special Dinner Out Of Home

78

Celebration

78

A Night In With Friends

77

At Home By Myself In The Evening

77

Special Lunch Out Of Home

76

Mid-Afternoon Break Out Of Home

75

Special Lunch At Home

73

Day out with Partner

72

Midmorning Break

70

At Breakfast

68

Family Day Out

68

During Work Or At School

65

Evaluation of Entry into Ice cream Business for Bangladesh Limited 46

Travelling ToFrom WorkSchool

65

At The Cinema

61

Special Event

56

Clubbing At A Party

50

Post GymSports

48

Table 28 Relevant Occasions in Consumersrsquo Lives

Respondents were then asked to mention ldquofrequency of occurrence of the identified occasionsrdquo

The identified replies are as follows Normal dinner at homenormal lunch at homeComing home

from workschoolTraveling tofrom workschoolDay out with Partner SpouseMid-afternoon

break at homeOut of home hanging out with friendsLeisure walkMid-afternoon break out of

homeA night in with friendsSpecial dinner at homeSpecial lunch out of homeFamily day

outSpecial eventPost gymsportsDaily2-3 Times A WeekWeekly2-3 Times A MonthOnce A

MonthEvery 2-3 MonthsLess OftenNever Figure 13 Frequency of Occurrence of Occasions

This shows that ldquoNormal dinner at home Watching TV Normal Lunch At Home At Home

While ReadingMusicSurfing Coming Home From WorkSchool During Work Or At School

Travelling ToFrom WorkSchool Midmorning Break Day Out With Partner Spouse At Home

By Myself During The Dayrdquo are the most frequent daily rituals of busy lives of consumers

652 Frequency of Ice cream Consumption

Respondents were asked to mention ldquoconsumption pattern of ice cream during the identified

occasionrdquo on a scale of 1-5 depicting frequencies like ldquo(5) always (4) most of the times (3)

about half of the times (2) sometimes (1) never do not knowrdquo The responses are depicted in

the following table

Evaluation of Entry into Ice cream Business for Bangladesh Limited 47

444474544655555566756665775967779991011101111101210111110101113111412131314161

011121411131216181519181518211817171719181718201721222130303434253437403741394

046383944464746453745414641374638504843414839373030292726232725222020201926202

21722221317Midmorning

breakWhile clubbing at aAt the cinemaSpecial eventNormal lunch out ofA night in with

friendsNormal dinner atInformal dinner out ofAt home by myselfAt home by myself inOut

shoppingSpecial lunch atDay out with SpouseWatching TVAlwaysmost of the timesAbout half

of the timesSometimesneverdo not know

Figure 14 Frequency of Ice cream Consumption

As it can be seen ldquoDay out with Spouse Special lunch at home Special dinner at home

Watching TV Family day out Celebrationrdquo are the occasions where most frequently ice cream is

consumed

653 Market Character Mapping Relevant Occasions vs Frequency of Consumption

If we plot frequency of consumption on the X-axis of a chart and relevance of occasion

occurrence on the Y-axis taking the above mentioned values as cut-off values we get four

quadrants in the chart depicting four market scenarios that any ice cream manufacturer in

Bangladesh market might encounter given the current market situation This market

segmentation is based on frequency of ice cream consumption in daily occasions of consumer

lives

The segments are

1048766 OPPORTUNITY MARKET High Relevant Occasions-Low Ice cream Frequency

1048766 QUESTION MARKET Less Relevant Occasions-Low Ice cream Frequency

1048766 HIGH FREQUENCY MARKET Relevant Occasions-High Ice cream Frequency

1048766 CAPTIVE MARKET Less Relevant Occasions-High Ice cream Frequency

The chart looks as follows Evaluation of Entry into Ice cream Business for Bangladesh Limited

48

Figure 15 Relevance of Occasion-Frequency of Consumption Mapping

As it can be seen from the above chart Bangladesh Market still lies in the Opportunity and

Question market zone with a pull towards High frequency and Captive Market zones This is

evident from market data as penetration of ice cream still remains at Thana headquarters levels

Also this explains the high market growth rate of 17 as market is yet under developed and

branded quality ice cream has yet not reached all levels of consumers especially rural level that

constitutes around 75 of Bangladeshi market

From the above analysis we can establish that target of ice cream manufacturers should be to

penetrate more into the Bangladeshi market to create higher frequency of ice cream

consumption The following chart shows the strategies to follow for ice cream manufacturers

Figure 16 Required Market Strategy for Bangladesh

Evaluation of Entry into Ice cream Business for Bangladesh Limited 49

As relevance of ice cream consumption occasions can hardly be controlled by marketers their

endeavour should be to create more ldquoemotional and functionalrdquo attachment to ice cream in less

frequent occasions through ldquomarket developmentrdquo strategy to earn share from overall food

expenditure of consumers and at the same time make them consume more ice cream in highly

relevant occasions through ldquopenetrationrdquo strategy

654 Consumersrsquo Emotional Requirements and Product Attributes

All consumers under these clusters also identify the emotional requirements and the significant

product attributes they seek from their current preferred and future desired ice creams These are

provided below

Cluster

Emotional Functional Requirement

Product Attributes

Enjoyment

Flavour Variety

1048766 Combination of different flavours

1048766 Combination of different textures

1048766 Very sweet

1048766 With wafer or biscuit

1048766 With chocolate

1048766 Of a well known brand

Socially Involved

Spoonable Rich

1048766 Very creamy

1048766 Only natural ingredients

1048766 No mess

Care

Size Creaminess

1048766 Big

1048766 Rich full taste

1048766 Smooth

1048766 Value for money

1048766 No mess

Unwind amp Escape

Economy

1048766 Crunchy

1048766 Economic

1048766 Of a well known brand

1048766 Nutritious

Balanced Convenience

Health Conscious

1048766 Of a well known brand

1048766 Nutritious

1048766 Milk based

1048766 Low sugar

1048766 Low carbohydrates

1048766 Filling

Active Self-Grooming

Fruit Vitamins

1048766 Healthy

1048766 Fruit based

1048766 Low fat

1048766 Liquid or drinkable

1048766 Nutritious

1048766 Of a well known brand

Confidence

Drinkable Light

1048766 Low calories

1048766 Light on the stomach

1048766 Chewy or gooey

1048766 Not so sweet

1048766 Natural appearance

Sensual

Appeal or image

1048766 No artificial additives

Evaluation of Entry into Ice cream Business for Bangladesh Limited 50

1048766 Natural appearance

1048766 Melting slowly

1048766 Attractive packaging

1048766 High quality ingredients

1048766 Of a well known brand

Table 29 Requirements amp Product Attributes Desired by Consumer Clusters

Of these findings we see that the identified highlighted barriers to ice cream consumption are

pretty evident among the consumers Mostly people want products of a reliable source or a well

known brand low calories quality ingredients value for money economic type

Evaluation of Entry into Ice cream Business for Bangladesh Limited 51

70 INDUSTRY ATTRACTIVENESS AND ENTRY PROSPECTS

71 Driving Forces of Growth

As identified in the earlier sections there are several driving forces behind the growth of ice-

cream industry in Bangladesh

712 Trade and Infrastructural Level

1048766 As a result of globalization newer varieties have been introduced to the local products Many

foreign companies are also coming as franchise so there has been increased competition and

these boutiques are setting higher standards for the local producers

1048766 The present market growth rate is 18-19 which is being influenced by larger players like

Igloo who are expanding their distribution nation wide with expansion of national electricity

grid

1048766 With entry of Modern Trade and recent organized business approach of retailers has made it

possible for ice cream manufacturers to penetrate into shops even without providing them with

branded freezers

1048766 Weather change has increased ldquosummerrdquo season in our country which has reduced negative

seasonal impact on ice cream

1048766 Large companies like Igloo have taken global learning of using carts as an effective tool of

availability and visibility for ice cream

1048766 New and improved technologies are being used in the production process This technological

advancement has improved quality increased speed of production and made the process more

cost effective

713 Consumer Level

1048766 Only a few years back rich people could afford the luxury of having ice-cream but now it has

become a common product for everybody Ice-cream companies are producing different products

with a wide price range for consumers of every class and status

1048766 Nowadays companies are doing promotional campaigns more frequently the customers get to

know about the product which makes it easier for them to buy the best one

1048766 The improved standard of life and more modernized lifestyle of people is an important reason

for the increased consumption thus growth of the ice-cream industry

Evaluation of Entry into Ice cream Business for Bangladesh Limited 52

72 Prospects of Entry

The ice-cream industry of Bangladesh is an attractive one for the investors because there is a

huge market but number of producers is very small The major reasons behind industry

attractiveness are as follows

1048766 The industryrsquos current growth potential is very high with opportunity for market development

1048766 The competition currently permits adequate profitability and the competitive forces are

becoming stronger with time

1048766 Boutique segment is at a very high growth stage but no operator is currently operating with a

mid price range of BDT 100-400 Ice cream kiosks and small scooping boutiques can operate

within that range

1048766 Current industry driving forces are favourable for the future industry profitability

1048766 Globally oriented consumers look for variety in ice cream that is currently not available

Latest innovations came in the market in 2002 People would welcome new variety and flavours

1048766 There is a gap in the market for balanced convenience through ice cream where consumers can

get nutritional benefits for ice cream Also emotional attachment to ice cream could further be

improvised in promotional campaigns

1048766 There is high scope for market penetration and development to increase frequency of ice

cream consumption

1048766 Level of risk or uncertainty is very low in ice-cream industry because the consumer market is

so huge any product with a standard quality and careful pricing will be able to make significant

profit

1048766 As for geographic reach of the industry 60 market is still in Dhaka There is scope of

expansion and a new entrant can easily capture market share within Dhaka using carts even if

they do not want nation wide cold chain distribution

1048766 The production process is very complex and capital requirements are also high So before

going into production any company should know about their capabilities and weaknesses and

then start the business or else they might suffer huge loss at a certain level

1048766 Unilever can acquire the required resource and use existing multi-national multi-cultural

expertise to enter the market in a grand way

1048766 With high probability of entry from DANONE with more products like the ISIS diabetic ice

cream Unilever should consider entering in this industry as soon as possible

Evaluation of Entry into Ice cream Business for Bangladesh Limited 53

80 ENTRY STRATEGY FOR UNILEVER

While describing the suggested entry strategy for UBL certain issues have been kept

confidential and some issues have been touched but not explained to keep consistency with UBL

confidentiality policy

81 Suggested Entry Areas for UBL

1048766 Boutique segment of the Bangladesh ice cream is only 5 of the branded market UBL needs

to pursue a larger scope to make the entry viable

1048766 UBL cannot fight with unbranded segment as global product quality mandate of Unilever does

not allow UBL to fight in low price-low quality segment

1048766 Recommend entry should be in the common format segment with both single and multiple

servings and in the boutique segment with a different brand name (if possible BEN amp JERRYrsquoS)

1048766 UBL should build up state-of-art modern factory for manufacturing and establish cold chain

facilities initially focusing on metro cities

1048766 Investment issues are required to be addressed for building factory and cold chain and capital

requirement needs to be identified for that purpose4

1048766 UBL may have boutiques for driving image selective top-end offering

1048766 Kiosks can be setup near universities and shopping malls

1048766 Boutiques should be concentrated in Dhaka and Chittagong

1048766 Ice cream for boutiques and kiosks would be produced in factory as institutional packs of 9-10

litres

82 Products

1048766 As a Brand Building country in global Unilever operating framework UBL is entitled only to

bring products developed by the Brand Development countries

1048766 Unilever should focus on serving products that have nutritional benefits (already available

globally) along with usual satisfactions of sensual pleasure functional attributes etc

1048766 Current existent players especially Igloo and Kwality have extensively copied global and

regionally available Unilever products eg Cornelli is same as Wallrsquos Cornetto Vinetta is similar

to Vienetta Mega is similar to Magnum etc UBL needs to differentiate these to consumers on

the ldquotaste the originalrdquo platform where global quality is focused regarding the products

1048766 UBL should also bring regionally famous brands like Moo or Max to create image

differentiation

1048766 Magnum or Moo should be used as premium end ice cream to generate more profit margin

Evaluation of Entry into Ice cream Business for Bangladesh Limited 54

83 Placement

1048766 Distribution focus should be in Dhaka for entry as Dhaka contributes more than 60 of total

ice cream sales in the country

1048766 Company may use carts as distribution method They serve as good source of visibility and

availability It would help in increasing impulse purchase

1048766 At least 1500 outlets in Dhaka and Chittagong needs to be actively served using dedicated

branded refrigerators to generate sales

1048766 50 carts should operate in Dhaka and Chittagong

84 Price

1048766 UBL products should be priced at par with Igloo pricing for the common format ice creams

1048766 UBL can bring in premium single-serve SKUS for the higher economic classes in the price

range of BDT 60-80

1048766 Smaller SKUs (small lolly stick) can be introduced in the price range of BDT 10-15

1048766 In the boutique segment UBL should price products above the semi-premium segment

(Gelateria Igloo Sub Zero or Andersenrsquos) but lower than that of Club Gelato or MoumlvenPick

85 Promotion

1048766 UBL would require strong marketing campaign (As high as 50 of sales) to have a grand

entry in the market

1048766 Presence in the television media would be of utmost importance More than 50 of

promotional expense should be made here initially Gradually it can be reduced

1048766 Newspaper would serve as the second most important option

1048766 Billboards should also be used

1048766 Activations (similar to Lux Channel i Super Star or Igloo Festival) should be done to generate

trial

86 Scope of Opportunity

Table 30 Value and Volume Based Scope of Opportunity for UBL

Value (BDT Cr)

Volume (Tons)

Market

131

7835

Common

121

7600

Boutique

98

235

Evaluation of Entry into Ice cream Business for Bangladesh Limited 55

861 Geographic Contribution

1048766 Dhaka (61)

1048766 Chittagong (19)

1048766 Sylhet (10)

862 UBL objectives

Common Format Ice Creams

1048766 Target 10 Market share in 1st year operation

1048766 Value BDT 11 Cr

1048766 Production capacity required 21 Tons day

1048766 Freezer Placement 1500 freezers

1048766 Cart operation At least 50 carts

Boutiques

1048766 Target Further develop the market

1048766 Focus Dhaka Chittagong and Sylhet Metro

1048766 Franchise At least 20 franchisee operations nation wide in divisional towns

1048766 Pricing Below imported parlours above common formats with around BDT 400 per Litre

87 Critical Success Factors

1048766 UBL is considered as a high profile company in Bangladesh and thus they cannot operate in

the market only with common products like choc-bars and cups They must have premium

products (these require extrusion line) also to carry their brand image Otherwise UBL would not

be able to charge usual premium over competition products

1048766 Launch of ice cream would require huge promotional and activation support in order to gain

customers from Igloo People want novelty regarding ice cream and UBL have to let them know

about their products and create hype

1048766 Cart should be used as a source of distribution Recent successes of Unilever companies like

Indonesia shows that carts can generate more sales and can be used as source of visibility in the

minds of both retail traders and consumers Carts can also provide incremental sales to the

company

1048766 UBL have to create a strong cold chain for ice cream (initially in Dhaka and Chittagong) to

ensure quality products for consumers

1048766 UBL have to build capacity very rapidly to meet consumer demand if the launch is successful

Evaluation of Entry into Ice cream Business for Bangladesh Limited 56

90 BUSINESS PROJECTION

91 Basic Assumptions

Business projection for ice cream business was made based on a conservative approach UBL

would require spending significantly on production capacity and factory dedicated to ice cream

Thus to analyse business possibilities of ice cream certain assumptions were made and collected

data were used These are

1048766 Production equipments and cabinets would cost approximately BDT 55 crores

1048766 Production equipments 45

1048766 Packaging Equipments 15

1048766 Storage Facility 20

1048766 Branded Freezers 10

1048766 Distribution Investment 10 (Distributors would also invest themselves)

1048766 Ice cream factory with a floor size of 20000 sqft would cost BDT 25 crores

1048766 Objective is to capture 10 market share in Dhaka and Chittagong in the first year

1048766 Business would grow by 50 in year 2 and 3 30 in year 4 and 25 in year 5

1048766 Weighted price per litre is BDT 170 according to volume share of single serve ice cream

multiple serve ice cream and boutique ice cream

1048766 Other financial assumptions were also made List of them are provided below but amount has

been removed for confidentiality issues

Assumptions

Trade Margin

Distributors Margin

DutyVAT Rate

Trade Terms Expense of NPS

Trade Terms Expense of NSV

Advertising ampPromotion of NPS

Indirects (Salaries Wages etc)

Trading Tax

Table 31 Assumptions for Business Projection

Evaluation of Entry into Ice cream Business for Bangladesh Limited 57

100 CONCLUSION

Ice cream has good prospect in Bangladesh It is still a growing market with opportunities for big

new entrants With the barriers of entry UBL needs to consider its priorities UBL being an HPC

company traditionally needs to acquire expertise in cold chain distribution and has to invest a lot

of money to rip the benefits of the industry However to initiate company can take regional

support and acquire resource expertise The company should enter the business as soon as

possible since there is potential threat from DANONE to introduce more ice creams after ISIS

diabetic ice cream and also with potential of the industry arch rival Nestlersquo might consider

entering into the industry too

Evaluation of Entry into Ice cream Business for Bangladesh Limited 58

References

Web References

1 wwwunilevercom

2 wwwunilevercombd

3 wwwhllcom

4 wwwunilevercompk

5 wwwthedailystarcom - Life Style Magazine

6 wwwreuterscouk

Evaluation of Entry into Ice cream Business for Bangladesh Limited 59

Page 20: Square Ice cream

26387

880

450

Table 14 Production Capacity of Current Market Players

From the table we can see that all the ice cream manufacturers are operating with unutilized

capacity However one point to be noted is that different ice cream SKUs require different

amount of item to be produced Exact machine production capacity at litre per day does not

represent the accurate scenario Nevertheless it can be safely assumed that all the manufacturers

have unused machine capacity at their premises Moreover the larger players like Polar and

Kwality have new technology available at their premises Kwality bought second hand machines

from Thailand but both Igloo and Polar bought theirrsquos from Italy and Denmark

J Products and Pricing

Products The products in the ice-cream market are differentiated A few firms dominate the

market but an endless variety of ice creams are offered to the consumers Igloo pioneers all

major innovations in the market The products that are available in the market can be classified

into single serving and multiple serving groups Which are then categorized based on functional

attributes designs These are

Single

Stick

Normal mould 3D mould extrusion

Evaluation of Entry into Ice cream Business for Bangladesh Limited 26

Cup and Sundae

Flat cup long cup

Cone

Normal cone (vanilla strawberry etc) premium cone (Ripple)

serving

Innovative Fillers

Snowball Animal shaped containers sandwich nuggets etc

Container

05 ltr 1 ltr and 2 ltr containers

Multiple serving

Family Pack

Assorted packs cakes shahi kulfi etc

Table 15 Ice cream Serve types

Among all the products available in the market most selling SKU for all the companies is Choc-

bar stick and highest selling flavour is Vanilla Following are the ranks of most selling SKUs and

flavours

SKU Name

Rank

Choc-bar (70 ml)

1

Vanilla Cup (100 ml)

2

Vanilla Box (05 and 1 Ltr)

3

Lemon Lolly (70 ml)

4

Normal Cone

5

Flavour

Rank

Vanilla

1

Chocolate

2

Strawberry

3

Ripple

4

Mango

5

Table 16 Rank of SKUs Table 17 Rank of Flavours

Choc-bar is one of the earliest vanilla based chocolate coated SKU that has dominated the

market strongly over the years Shopkeepers could not provide an exact percentage on SKU

based sales contribution Most of them ranked the SKUs and flavours according to sequence

shown in the above table Also according to newspapers and secondary sources Vanilla is the

most selling flavour with 60 sales contribution According to secondary sources percentage

sales contribution of various types of SKUs in the common format segment are as follows

Type of Ice cream

Value Share

Volume Share

Impulse dairy ice cream

514

443

Impulse water ice cream

112

138

Take-home dairy ice cream

374

419

Table 18 Volume Share of Different Serve Types

Impulse dairy ice cream provides more value share as price per litre is higher than take home

multiple serving ice creams Impulse water ice cream shows a similar trend as of take home ice

cream

Pricing Product pictures and price ranges of each category are provided below Evaluation of

Entry into Ice cream Business for Bangladesh Limited 27

Normal Premium Price Tk12 Tk20 Tk25 Cup amp Sundae Normal Cup Sundae Premium Cup

Price Tk20 Tk25 Cone Normal Premium PriceTk20 Tk25Innovative Fillers PriceLtr Tk100

Tk175 Container Normal Premium PriceLtrTk150 Tk 175 Tk 190 Family Packs Kulfi Mixed

Pack Cake Single ServingMultipleServingNormal Ice Fruit 3D Mould Premium Extrusion Price

Tk10 Tk15 Tk15 Tk20Stick Normal Cream

Figure 8 Serve Types and Pricing

As it can be seen from the above chart all impulse ice creams are priced within the range of

BDT 10 to 25 Other take home multiple servings are priced within the range of BDT 50 (05

Litres) to BDT 220 (2 Litres) Another noticeable factor in price is that there are both normal and

premium flavours in all types of ice creams

K Firms as Price Setters

The firms have capability to affect the market price to be low as profit margin is very high If

Igloo reduces the price of an item below the prevailing price level in order to increase its sales

its competitors will fear that their customers will go away from them to buy Igloo products To

retain their customers they will be forced to match the price cut of Igloo Historically this has

been proven to be true However due to price sensitivity companies cannot drastically increase

price even if they provide higher quality of product It was seen in 1997 when Igloo increased

price of 11 SKUs and faced drastic sales fall during that time It shows that the industry might

welcome overall industry price increase but not individual company price increase

L Promotion

The promotion scenario in the industry is not quite organized as of now Even proper data

regarding promotional expenditure is not available from research sources The reason being

there is not much consumer related activity seen in the market After Kwalityrsquos introduction in

the market in 1999 Igloo went on with massive Television promotion of their new products that

were available at that time

Evaluation of Entry into Ice cream Business for Bangladesh Limited 28

However in current times there is no TVC running from any company Companies promote their

launches mainly through billboards and newspaper promotions which is currently the most used

source of consumer promotion Some promotional activities that were done by the companies

over the years are listed below

Consumer Promotions

1 Larger players like Igloo and Kwality goes on with campaigns like ldquoGift on stickrdquo where

various prizesrsquo names are written on the sticks and consumers can get them

a Igloo ran a program on their launch of Macho variant where gift varied from cricket bat to

personal computer

b Igloo had a program in 2006 where gifts on sticks varied from Bangkok visit to sunglass

c Igloo ran one campaign in 2007 where gold bars were given on purchasing Choc-bar

d Kwality ran a similar program in 2008 where gifts varied from wrist watches to motorcycle

2 Some companies ran consumer TTS and gift programs where company products were given

free

a Igloo had a program in 2006 where Igloo butter was given free on purchasing Igloo ice cream

cake

b Kwality ran a program in 2008 where one SKU was given as gift with another SKU randomly

c ldquoCone Ice cream at your Homerdquo program was run by Igloo in 2002 where six cone biscuits

were given free with purchase of one litre ice cream

3 Media placement is another form of placement done by larger companies

a Igloo purchased ldquoGlimpse into World Cup Resultrdquo space in daily newspapers during World

Cup Football 2002

4 One interesting program is done by only Igloo in Bangladesh They did it in June 2006 The

program was ldquoIgloo Ice cream Festivalrdquo with main attractions of ldquoGet as much ice cream as you

want for BDT 200rdquo ldquoGet a Fantasy Kingdom Entry ticket with each Entry Couponrdquo ldquoLucky

Drawrdquo and ldquoCelebrity Addardquo

Trade Promotions

5 Trade promotions are mainly given to ldquoHighest retail purchasersrdquo and also based on time

bound trade schemes where various slabs of purchase amount are mentioned for different prizes

a Igloo takes their highest purchasers to visit countries like Singapore and Thailand

b Savoy has a purchase slab scheme where first prize is table fan

c Polar gives special sales commission to their highest purchasers (around 5)

Evaluation of Entry into Ice cream Business for Bangladesh Limited 29

M Players in the Common Format Segment

Branded common format ice cream segment is constituted of five players only Among them

Igloo is the largest player and Milk Vita is the smallest The following sections detail the basic

company detail of all the companies with special emphasis on Igloo the market leader

Igloo

The pioneering ice-cream company in Bangladesh started its operation in 1964 in Chittagong

under K Rahman amp Co Limited (KRC) with a small factory inside Coca Cola bottling factory of

KRC After the independence of Bangladesh in 1971 Igloo was taken over by the government of

Bangladesh Later in 1983 Abdul Monem Limited purchased the entire production setup of KRC

Limited including Coca-Cola bottling plant and Igloo ice-cream factory After taking full charge

of Igloo ice-cream by Abdul Monem Limited the manufacturing operations continued in

Chittagong till 1990 Although Dhaka fetched the maximum share of the total revenue the

distribution cost increased tremendously in the process of meeting the demand of Dhaka city To

cope with the distribution problem and handle Polar threat Abdul Monem Limited transferred

the factory to Dhaka changed the ice-cream packaging from the conventional paper to plastic

and expanded their market and distribution operation The new factory of Igloo was setup at

Shyampur Narayanganj and was nine kilometres away from the Motijheel office The company

apart from catering the capital city started to expand its operations in Comilla (1991) Khulna

(1992) and North Bengal (1993) These markets were served directly from Dhaka since the

storage facilities were not developed till then The company is now the market leader since 1997

with clear market share victory over others with sweeping 51 share It is to be noted that Igloo

is also a player in the boutique segment with three parlours (2 in Dhaka and 1 in Chittagong)

Product Range Igloo offers the widest choice of ice cream more than any other competitor in

the market Igloo is offering a total of fifty items including normal premium and novelty cup

stick and family pack items Igloo has thirty flavours more than anyone else in the industry and

is continuously launching new and innovative delicacies

Igloo ice-cream can be classified in six groups They are

Stick

Macho Choc-bar Mini Choc Clown Mega Shell n core Lolly

Cone

Cornelli 2 in one Cornelli classic

Cup

Shahi kulfi Vanilla Strawberry Mango Snow ball

Container

Vanilla Strawberry Mango Chocolate Coffee Diet Vanilla Tutti Frutti Ripple Pralin

Pistachio

Innovative

Nuggets Sandwich

Family

Ripple cake Party time Shahi Kulfi

Table 19 Products of Igloo

Single serve stick cups and cone items are easy to carry around and convenient to eat which

makes it most sold The core target segment of ice-cream is 6-24 years and this generation is

always on the Evaluation of Entry into Ice cream Business for Bangladesh Limited 30

move and thus prefers independent cone stick or cup items As Igloo initiated the concept of ice-

cream as a family product they offer some items to be enjoyed with the whole family

Quality and Innovation Igloo is committed to maintaining the highest quality standard through

its continuous RampD activities The major ingredients raw materials and packing materials are

procured from the best European sources Strict quality control is done at every stage of the

manufacturing process from procurement of material mixing material flow ice cream making

packaging storing (at main warehouse) distributing and market shelving by the Quality Control

Department Current supply chain for various materials of Igloo is as follows Australia (Milk

Powder) Denmark (Ingredients emulsifiers amp stabilizers) China amp UAE (Food grade sticks)

China Denmark Singapore amp Thailand (Food grade packing materials)

Figure 9 Igloo Supply Chain

Distribution Network Their distribution network is stretched all over the country with a long

fleet of refrigerated vans Firstly the ice cream products are stored at the central warehouse of

the factory and from there they are distributed through the haulage vehicle to the operational

centres located in Dhaka Chittagong Comilla Rajshahi Barisal Bogra Rangpur and Khulna

Strictest cold chain maintenance during the distribution and selling of the ice creams is ensured

Their distribution process is as follows Manufacture Stored at -24c Transported by Refrigerated

trucks at -Reaches amp Preserved in Eight regional stores Refrigerated vehicles (Distributors)Retail

outlets (Deep freezers)

Figure 10 Distribution Process of Igloo

Evaluation of Entry into Ice cream Business for Bangladesh Limited 31

Trolley Operation Igloo also operates through trolleys for extending its reach to consumers at

the furthest points The trolleys are operated near schools alleys streets parks etc and play

rhythmic music to attract the consumers These are very colourfully decorated with Igloo

umbrella and the puller wears specific uniforms Igloo was the first in introducing and operating

these trolleys in Bangladesh for any Fast Moving Consumer Goods (FMCG) Igloo has around

125 trolleys operating throughout the country Individual trolleys are provided with a regular

supply of igloo ice creams

Marketing The marketing commitment of Igloo is based on the relationship with its customers

and consumer by not only manufacturing the highest quality product but also delivering the

product by maintaining this quality To satisfy the ever-changing needs of the customer Igloo

has regularly launched new ice creams and introduced new flavours And this commitment has

positioned Igloo as the market-leading brand by gaining the consumers trust with the positioning

as ldquoA WORLD OF GREAT TASTErdquo

Facilities and Logistics at a glance As of 2009 following are the facilities and logistics enjoyed

by the company

Factory location

Dhaka

Production Lines

4

Packages

Stick Cup Family pack Others (Nuggets and sandwich)

Machine suppliers

1048766 Mark-Italy

1048766 Tetra Pak(Hoyer)-Denmark

1048766 Sabore Denmark

1048766 Hass- Austria

Machine models

1048766 Freemark 1100 Italy

1048766 FM 3000 FM 6000 Italy

1048766 SL600 Denmark

Cone baking

Hass- Austria

Chocolate making

Macentyre-UK

Coverage

Nationwide

Operational centre

10

Total market vehicles

30

Distribution channel

Directthrough appointed distributors

Outlet service

7500

Injected deep freezers

4000

Trolley operations

125

Warehouse no

8

Table 20 Igloo Facilities and Logistics

Kwality

Kwality is currently the second largest ice cream manufacturer of the country The mother

company for the Kwality brand is Sanowara Drinks amp Beverages Ltd a sister concern of

Sanowara Group The company is famous for powdered milk brands Red Cow and Diploma in

Bangladesh The drinks and beverage concern of Sanowara made an entry into the market in

1997 with ldquoYesrdquo brand drinking water and launched the ice cream brand in 1999 With heavy

communication and novelty products it Evaluation of Entry into Ice cream Business for

Bangladesh Limited 32

successfully removed Polar from the second place with a current market share of 27 The

company also operates in the boutique segment with two parlours in Dhaka and Chittagong

Kwality ice cream factory is situated in Chittagong with a floor space of 35000 sft and fully

automated machinery wrapping mix machinery equipments from Italy having capacity of

around 20000 litres of ice cream per shift The ice cream factory employs 140 people The

company is ISO 9001-2000 certified

Kwality was the first true competitor for Igloo products with some major innovation in product

design and communication but their quality is perceived to be lower in the minds of the

consumers and they do not have extrusion ice cream The product prices are also similar to that

of Igloo but they charge a bit lower than Igloo in premium multiple servings However during

market visits it was seen that shops that keep only Kwality or Igloo and Kwality both they can

sell Kwality too although the sales amount is lower than that of Igloo People who look for Igloo

shopkeepers give them that directly but if they get a chance and Kwality ice cream stock is high

they also push Kwality to dry the stock out This gives an indication that market is larger than

what the current players are capable of serving even in Dhaka

Kwality follows a similar distribution model like Igloo but distribution frequency is lower and

amount of cart sellers is limited to 25 and they operate only in Dhaka

Polar

Once a giant in the industry Dhaka Ice Cream Industries Ltd introduced the first hygienically

packed ice cream in Bangladesh in 1987 and the brand name Polar was thus born In the early

days the company started ice cream business with a wide range of products and a variety of

flavours in Dhaka city In 1988 the company started its distribution in the city of Chittagong

then Bogra and continued to cover more cities Presently Polar ice cream is available

throughout Bangladesh The company today trails in the market with 15 market share in the

common format segment Recently Polar has announced launch of ISIS diabetic ice cream with

support from DANONE to turn around in the market

The company has its head office as well as a modern large-scale industrial plant in Dhaka Polar

ice cream is made with Danish expertise using Danish equipment and technology The

production activities and quality control measures are supervised and managed by Danish

experts Polar offers a wide range of delicious flavours and tastes made by ingredients imported

from Europe

Dhaka Ice Cream at present has 3 cold stores in Dhaka Chittagong and Bogra in Bangladesh

From Dhaka cold store they distribute ice creams in Mymensingh Tangail Jamalpur Sherpur

Kishoreganj Netrakona Comilla Narsingdi Barisal Madaripur Agaeljhara Faridpur Magura

Chuadanga Jessore Satkhira Khulna Pirojpur and Sylhet through their distributors In case of

long distance delivery points the company uses auto cooling freezer van

Evaluation of Entry into Ice cream Business for Bangladesh Limited 33

In Dhaka city they distribute ice creams directly to retail stores in freezer vans Besides that

they have several distributors at different points of the city Distributors cover their individual

areas where company is not able to supply directly in their freezer vans Similar model is

followed by the company to distribute ice cream from their other cold storages through out the

country For storing and selling ice creams in retail stores the company like the other players

arranges a deep freezer with the Polar logo and canopy light box

In addition to this distribution the company also undertakes home delivery of ice creams for

special occasions

Savoy

Savoy Ice-cream brand is owned by Sena Kalyan Sangstha (SKS) Group of industries It started

its journey in March 1995 with a factory in Tejgaon Dhaka Yearly turnover is estimated at BDT

388 crores with a market share of roughly 35

The factory has been established with Sonali Bank finance at 6040 equity ratio The total

production capacity of the factory has been estimated at 2400 litres of Ice-cream per day Total

land area of the factory premise is 116 Bigha with 8000 sft area covered with a total project cost

of BDT 144 The factory employs 73 people

Product ranges of the company include all the basic designs and flavours of the industry

However the company has not been much of an innovator in the industry Their product quality

is substantially low than that of other players and they price their products at 10-15 lower than

the other competitors The company imports raw materials mainly from Europe The general raw

materials are Euro cream Skimmed Milk Powder Cocoa Powder and Flavour (Vanilla Mango

and Strawberry) Colour (Yellow Red Chocolate and Green) Ripple Sauce Cheney Fruit Palm

Kernel Oil Anhydrous Butter Oil (Ghee) and Sugar etc

Milk Vita

Milk Vita is one of the most famous brand names in Bangladesh for its liquid dairy milk Owned

by Bangladesh Milk Producersrsquo Co-operative Union Limited (BMPCUL) the company came in

the market with proper dairy milk ice cream in form of cups and choc-bar With a production

capacity of around 1600 litres per day the company is trailing in the market place with 3

market share

Although the Milk Vita Choc-bar was perceived to be extremely tasty by consumers they

probably could not do well due price competition Currently they do not even distribute ice

cream in Dhaka However their presence is seen in outskirts of Dhaka and other nearby towns

If the current market situation prevails Milk Vita would lose their remaining market share and

other companies would benefit especially Igloo However one of the advantages of Milk Vita

remains to be

Evaluation of Entry into Ice cream Business for Bangladesh Limited 34

their nation wide milk supply network They have skimmed milk powder production plant that

Igloo does not have Thus they can combat the seasonality of milk supply that Igloo with its

huge requirement of milk cannot

Strengths and Weaknesses of Competitors

Company

Strengths

Weaknesses

Igloo

1048766 Strong brand image

1048766 High product quality

1048766 Highest no of variety

1048766 Strong distribution network

1048766 Highest visibility

1048766 Strong promotion

1048766 High production capacity

1048766 Presence of extrusion ice cream

1048766 Items are generally a bit pricy

1048766 Igloo does not give free freezers like other companies

1048766 Reluctant in recent times regarding innovation

1048766 Local sourcing of liquid milk does not meet demand

1048766 Failure to use ERP technology slowing decision making

Kwality

1048766 Product variety

1048766 Strong promotion

1048766 Free freezer distributed

1048766 Presence in all price segments

1048766 High production capacity

1048766 Weak distribution

1048766 Lower exposure

1048766 low amount of carts in operation

Polar

1048766 Free freezer

1048766 Quality perceived to be high compared to Kwality

1048766 Discoloured freezers

1048766 Lower exposure

1048766 Low product variety

1048766 Unused capacity

Savoy

1048766 Price is lower

1048766 Discoloured freezers

1048766 Low product variety

1048766 Weak distribution

1048766 Small amount of freezers

1048766 Low production capacity

Milk Vita

1048766 Quality is good due to dairy cream

1048766 Brand leverage from Milk Vita milk

1048766 Low exposure

1048766 Low variety

Table 21 Strengths and Weaknesses of Competition

512 Market Characteristics of the Boutique Segment

With a small market of BDT 98 Cr and 567 share in the branded ice cream market the

boutique segment is currently an increasing segment in the ice cream industry Boutique

segmentrsquos history dates back to 1960s when Igloo launched boutiques in Dhaka to save

distribution cost and promote a culture of ldquoice cream eating outrdquo In later years boutiques lost

their glamour and retail common format segment picked up growth However with Dolce Vita in

the late lsquo80s craze for Italian Artisan ice cream was recreated in the market Although Dolce

Vita is failing in recent times emergence of MoumlvenPick and Club Gelato in 2000 has uplifted the

segment once again Current growth rate of the

Evaluation of Entry into Ice cream Business for Bangladesh Limited 35

segment can be estimated to be approx 20-22 (higher than the common format segment)

Following are the basic detail of all the major players in the segment with their estimated sales3

Players

Outlet

Sales (Cr Taka)

Share

Club Gelato

1

136

199

MoumlvenPick

1

119

174

Andersenrsquos

3

119

174

Gelateria Igloo

3

119

174

Sub Zero (Kwality)

2

051

75

Baskin Robbins

1

015

22

Dolce Vita

1

017

25

American Soft

1

009

12

Rainbow

1

009

12

Others (off site)

089

130

Total Market

682

Table 22 Players and Shares in Boutique Segment

A Detail of Operation

General operational procedure followed by all the operators is as follows

1048766 Operating method There is a variation in operational method among the large operators

1048766 Club Gelato uses kitchen at own premise where imported ingredients and local milk (daily

special service from Milk Vita) are used to make ice cream

1048766 MoumlvenPick directly imports ice cream from Switzerland

1048766 Andersenrsquos Gelateria Igloo and Sub Zero produce ice cream at their factory with a mix of

imported and local ingredients

1048766 Products Around 30-35 flavours of artisan dairy ice cream are served at the premises

1048766 Most sold flavours are Vanilla Ferrero Rocher Butterscotch Chocolate Caramel etc

1048766 Other Products Larger players also serve ice cream desserts (milk shakes ice cappuccino etc)

pastries and other desserts with normal coffee and tea facility at their premises

1048766 Boutiques fight ice cream seasonality with the other products sales during off-peak ice cream

seasons Usually ice cream and other products contribute at 6040 ratio in summer and during

winter and off-peak seasons the ratio reverses

1048766 Pricing Usually the prices of products in this segment are 3-4 times higher than that of the

common format segment

1048766 Prices do not vary with flavours Variation depends on serve style (Cone tub) and use of

toppings and other ingredients (Chocolate sauce nut fruits) etc

1048766 Usual margin charged is around 50-60 over production cost Similar margin is charged for

other products like coffee ice cappuccino etc

3 Yearly sales is estimated based on companyrsquos approximate daily sales collected during

interview

Evaluation of Entry into Ice cream Business for Bangladesh Limited 36

1048766 Target Group Most of the consumers belong to SEC A and higher SEC A with DMFI of at

least BDT 20000

1048766 Foreign delegates and resident foreigners also visit these boutiques

1048766 Main purposes of visits in the boutiques are

bull Youth hangout with friends and having ice cream and ice cream derivatives

bull Family Family night out or eat out at a restaurant and then having dessert

bull Foreigners Having dessert after dinner

1048766 Rush time at boutiques are Afternoon 2-4 pm and at night 9-11 pm

1048766 Offsite sales Most of the large operators also sell offsite They have small freezers for off-site

1048766 Club Gelato and MoumlvenPick serves ice cream at high society parties and programmes

1048766 MoumlvenPick also has kiosks in known hotels like Sheraton

1048766 Promotion No mass promotion is done by any of the companies Word of mouth is the most

important source of promotion Posters and banners outside the premise and occasional

newspaper advertisements are used to communicate special offers

1048766 Growth Drivers Market growth is driven by image innovation quality decoration of facility

environment and special offers

1048766 Club Gelato has the image of selling true Italian dairy ice cream with an excellent hangout

environment

1048766 MoumlvenPick imports ice cream directly from Switzerland and is perceived to be of high quality

1048766 Andersenrsquos operates with the image of ice cream from Denmark

1048766 Gelateria Igloo (from Igloo) and Sub Zero (from Kwality) could not establish the premium

artisan ice cream image

B Players in the Boutique Segment

There are very few players who have significant impact in the boutique segment Detailed

information of all the major boutique segment players is provided below

Evaluation of Entry into Ice cream Business for Bangladesh Limited 37

Club Gelato

Basic Company Information

1048766 Location Banani Road 11 (Planning for a second one in Dhanmondi)

1048766 Established in 2001

1048766 Seating Capacity 48

1048766 Area 1250 sft (including kitchen)

1048766 Owner Mr Jahangir Alam (Bangladesh)

1048766 Business Type Joint business partnership with Singapore

1048766 Staff 15 people (6 in the kitchen)

1048766 Production capacity 150 litres per day

Product Related Information

1048766 Product Italian style parlour scoop ice cream fruit juice coffee and pastries

1048766 Flavours Around 32 flavours available

1048766 Most selling Ferraro Rocher Vanilla Pistachio

1048766 Innovations New variants and ingredients are communicated by their Italian supplier and

Club Gelato decides what to take from them

1048766 Serve type Cup Cone Glasses Box for take away

Consumer Profile

1048766 Primary Teenagers and Young Adults (18-30) amp Diplomats

1048766 Secondary Family consumers for eat out

1048766 Income Group High income customers tentatively from SEC A and higher SEC A

1048766 Geographic Area Diversified

1048766 Rush time 8-10 pm

Sales and Price Information

1048766 Sales BDT 50000 (60 Ice cream 40 other desserts) daily in summer In winter however

other products sell more and thus they keep total sales at the same level

1048766 Price 750 per litre for any flavour

1048766 Sales Volume 50-60 litres per day

Supply Chain Placement Information

1048766 Milk Local sourcing from Milk Vita (4050 litres per day)

1048766 Chocolates amp Flavours Belgium France Germany

1048766 Transportation Mainly air (They can afford it due to high margin)

1048766 Contribution of various materials Flavours (30) Milk (20) other parts are water and air

Promotional Materials

1048766 Materials used are near premises POS materials for promoting the parlour only

Table 23 Detail of Club Gelato

Evaluation of Entry into Ice cream Business for Bangladesh Limited 38

MoumlvenPick of Switzerland

Basic Company Information

1048766 Location Gulshan

1048766 Established in 2000

1048766 Seating Capacity 55

1048766 Owner Mr Arif Mahmud

1048766 Business Type Franchise of International MoumlvenPick

1048766 Storage Capacity in Shop 150 litres

Product Related Information

1048766 Product Imported MoumlvenPick ice creams coffee chicken sandwich and Frappe

1048766 Flavours Around 30 to 35 flavours available

1048766 Most selling Swiss Chocolate caramel Vanilla Dream Espresso Strawberry

1048766 Innovations New variants are communicated by their franchiser and they decide on flavours

that they want

1048766 Serve type Cup Cone Glasses Box for take away

Consumer Profile

1048766 Primary Teenagers and Young Adults (18-30) (70) amp Diplomats

1048766 Secondary Family consumers for eat out

1048766 Income Group High income customers tentatively from SEC A

1048766 Geographic Area Concentrated in Gulshan and nearby areas

1048766 Rush time Afternoon- Young Adult 10 to 11 pm Foreigners

1048766 the company also serves at parties and has freezers in known hotels where their ice creams

are served

Sales and Price Information

1048766 Sales BDT 35-40000 daily in summer

1048766 Price 640 per litre for any flavour

1048766 Sales Volume 55-60 litres per day

Supply Chain Placement Information

1048766 Transportation Imported finished goods by ship

1048766 Ship travel time 19 days

1048766 Port clearance 10 days

1048766 Safety Cushion Extra 10 days

Promotional Materials

1048766 Materials used are near premises POS materials for promoting the parlour only

Table 24 Detail of MoumlvenPick of Switzerland

Evaluation of Entry into Ice cream Business for Bangladesh Limited 39

Andersenrsquos of Denmark

Basic Company Information

1048766 Location Gulshan (2 others in Uttara Dhanmondi)

1048766 Established in 2001

1048766 Seating Capacity 48

1048766 Owner United Group

1048766 Business Type Franchise of Australian company Andersenrsquos of Denmark

1048766 Production Tongi Factory of United Group

1048766 Production capacity 2000 litres per day in factory

1048766 Storage Capacity in Shop 150 litres

Product Related Information

1048766 Product Danish parlour scoop ice cream and coffee

1048766 Flavours Around 30 to 35 flavours available

1048766 Most selling Strawberry Butter Scotch Green

1048766 Innovations New variants and ingredients are communicated by their franchiser and they

decide on flavours that they want

1048766 Serve type Cup Cone Glasses Box for take away

Consumer Profile

1048766 Primary Teenagers and Young Adults (18-30) (70) amp Diplomats

1048766 Secondary Family consumers for eat out

1048766 Income Group High income customers tentatively from SEC A

1048766 Geographic Area Concentrated in Gulshan and nearby areas

1048766 Rush time 8 to 10 pm

Sales and Price Information

1048766 Sales BDT 10-12000 daily in summer

1048766 Price 460 per litre for any flavour

1048766 Sales Volume 40-50 litres per day

Supply Chain Placement Information

1048766 Milk 2025 kg packs are imported

1048766 Chocolates amp Flavours Imported

1048766 Butte paper Local sourcing

1048766 Transportation Ship

Promotional Materials

1048766 Materials used are near premises POS materials for promoting the parlour only

Table 25 Detail of Andersenrsquos of Denmark

Evaluation of Entry into Ice cream Business for Bangladesh Limited 40

Gelateria Igloo

Basic Company Information

1048766 Location Banani Kemal Ataturk Avenue (Two others in GEC Mor Chittagong and Naya

Paltan)

1048766 Established in 2000

1048766 Seating Capacity 20

1048766 Production From Igloo factory in Shyampur Narayanganj

Product Related Information

1048766 Product Parlour scoop ice cream and coffee only

1048766 Flavours Around 30 flavours available

1048766 Most selling Vanilla Strawberry Chocolate Pistachio Butter Scotch Tutti Fruity

1048766 Serve type Cup Cone Glasses Box for take away

Consumer Profile

1048766 Primary Teenagers and Young Adults (18-30)

1048766 Secondary Family consumers for eat out

1048766 Income Group High income customers tentatively from SEC A and B

1048766 Geographic Area Diversified

1048766 Rush Time afternoon and evening

Sales and Price Information

1048766 Sales BDT 8000 to 10000 daily in summer Nearly one fourth in winter

1048766 Price Varies but 350 per litre of vanilla

Promotional Materials

1048766 POS materials at the premises

Table 26 Detail of Gelateria Igloo

52 Price Comparison of Common and Boutique Segments

Price ranges of both common format and boutique segment cannot exactly be pin pointed as

products do not follow common structure and variations occur with use of toppings mixing of

flavours and use of coatings However a price comparison has been made among the brands

based on their price of per litre of vanilla flavoured ice cream in the market It appears to be as

following

Company

Price Litre Vanilla

Club Gelato

750

MoumlvenPick

640

Andersenrsquos

460

Dolce Vita

440

Igloo

100

Kwality

100

Polar

100

Milk-Vita

90

Savoy

85

Table 27 Comparative Price Analysis

As it can be seen there is price gap within the range of BDT 100-400 Ice cream kiosks and

small scooping boutiques can operate within that range

Evaluation of Entry into Ice cream Business for Bangladesh Limited 41

60 CONSUMER ANALYSIS

61 Target Group of Ice cream

Who are the consumers of ice cream This question does not have a clear answer Ice cream is a

food for all It is the only food consumed by a human being at less than 0 degree centigrade

temperature and people of all ages feel indulged to have it However we can determine focus

target groups for both branded common format and artisan boutique ice cream Group

discussions and market visits were done to get insight into the consumers along side resources

form secondary sources Age based target group is common for both segments but variation

among the groups occur mainly based on SEC and DMFI classification

611 Geographic Group

Branded ice cream remains an urban product till date Geographically branded ice cream has

reached urban and semi urban areas up to Thana Head Quarter levels Ice cream has reached

areas where electricity is available Small artisan players are available in places where large

branded players have no distribution

612 Target Age Group

Age wise grouping of target consumers is as follows

1048766 Urban kids in the age group of 5-14

1048766 They mainly consume normal sticks cups cones innovative fillers and water ice creams

1048766 Urban youth in the age group of 15-24

1048766 They consume premium and extrusion sticks and cones

1048766 Urban mothers in the age group of 25-35

1048766 They determine the family purchases Even when the father purchases ice cream decision is

taken by them

Consumption pattern of various age groups are depicted in the following chart Ice cream

consumption pattern50203005 to 14 yrs15 to 24 yrs25 to 35 yrs

Figure 11 Target Group wise Consumption Pattern Evaluation of Entry into Ice cream Business

for Bangladesh Limited 42

613 Target SEC and DMFI Group

Common Format

SEC A and B is the target group for common format ice cream However with rapid increase in

price level over the years has made it a ldquohard to consumerdquo product for SEC B consumers who

belong to lower DMFI group

Boutique Format

Boutique formatrsquos higher margin and high price range makes it an exclusively SEC A ice cream

People belonging to upper and upper middle class have access to the mediocre boutiques and

only higher upper class can have premium ice creams like Club Gelato and MoumlvenPick

Another unique target group for boutique format are the foreigners who live in Bangladesh

These people tend to visit the parlours to have ice cream as dessert especially after dinner

62 Ice cream in Consumer Lifestyle

Figure 12 Ice cream in Consumer Life style

This simple overview of ice cream in consumer lifestyle was determined based on in-depth

research analysis of UBL and validated through qualitative group discussions by the author

However detail of in-depth research is provided in a later section of this chapter

Evaluation of Entry into Ice cream Business for Bangladesh Limited 43

63 Highlights of Purchase Habit of Ice cream

631 Common Habits across Target Groups

There are some common habits that were identified in earlier researches and group discussions

with consumers Common habits mean the consumer approach towards ice cream that is seen

across all target groups eg kids youth and adult purchasers These are outlined below

1048766 Ice cream is mainly seen as a dessert or a snack Impulse ice cream is seen as a quick snack

that is consumed when it is in sight Visibility plays a big role here Regarding family packs

people see it as a post-food dessert

1048766 Ice cream purchase is commonly a planned event When the contexts arise people generally

take a bit of time to decide whether or not to have ice cream or when they want to go to a

boutique they make due considerations regarding which boutique to visit

1048766 Ice cream purchase decision is taken based on favourite flavour People tend to try out new

variants and flavours when they first see it They compare the taste with earlier experience and

when they purchase later they choose the flavour they have liked most

1048766 For In-Home segment decision is mostly taken on the flavour Generally people come up with

different flavours of choice and most voted flavour is chosen

1048766 People become aware of new variants or flavours mainly through word-of-mouth

Advertisement (new launches special offers and festivals) in newspaper is another source of

awareness

1048766 People are currently indifferent towards the price level of premium flavours However some

feel that price of Choc-bar or water ice creams (lolly) is a bit much If less they would have

consumed more Some also feel that companies should come up with branded ice cream in the

price range of BDT 5-8

1048766 Ice cream is purchased from nearby shops If required brand and flavour is not available 2-3

shops will be visited and then available flavour will be selected even if the required one is not

found This is done mainly not to ruin the mood for ice cream

1048766 People are very open to try new brands and flavours especially if it comes from a credible

source They would try new flavours and if they are satisfied with the taste they would repeat

purchase

1048766 Regarding boutique visits people feel that boutiques need to have a proper environment

enough flavours and other snacks

1048766 While visiting boutique with family or companion they want variation in flavours so that

they would order different flavours and taste each otherrsquos ice cream It is seen as a sign of

togetherness

1048766 Frequency of ice cream purchase varies among people It depends on peer pressure collective

family decision summer heat and attitude towards ldquoice creamrdquo itself as a product Evaluation of

Entry into Ice cream Business for Bangladesh Limited 44

632 Habits of Kids

1048766 Kids choose ice cream flavours by the look of the product (generally pictures shown in POS

materials and carts) They love colour and designs of the products let it be a common format or a

boutique ice cream

1048766 Kids (when in house) would go with the housemaid to the nearby shop choose the flavour

they want (within range of the amount given to the maid) and buy it

1048766 When with parents they would take the product they like even if the price is lower than some

other product However mothers play a role in this decision They would want their children not

to choose too high priced a product or coloured products

633 Habits of Youth

1048766 Young people are the main consumer of impulse ice cream They also are one of the major

consumers in the boutique segment

1048766 Young people love to try out new products that come into the market Another side of the coin

is that they are not very loyal to a brand or a flavour and tend to switch a lot

1048766 Regarding boutique visits young people go to boutiques to have an ldquoice cream hang outrdquo with

peer groups They would stay there for a longer period of time while they have their ice cream

1048766 Some times young people make milk shakes and other ice cream based desserts

634 Habits of Mothers

1048766 Mothers worry about their childrenrsquos health and they prefer ldquovanillardquo type of brands

However when price constraint occurs they go for water ice creams for their children They try

to convince their kidrsquos purchase decision

1048766 Regarding family purchase motherrsquos decision is sometimes prioritized by the whole family

64 Barriers to Ice cream Consumption

641 Emotional Barriers

1048766 Overindulge (close to sinful)

1048766 Undisciplined (no control)

1048766 Childish (licking)

1048766 Artificial Image

642 Functional Barriers

1048766 People of SEC B feel that ice cream is an expensive dessert (If less expensive would consume

more often)

1048766 It leads to cold cough - especially in winter rainy season

1048766 It contains artificial additives preservatives

1048766 It is very high in calories that lead to fattening

Evaluation of Entry into Ice cream Business for Bangladesh Limited 45

1048766 It does not quench ldquothirstrdquo

1048766 Less convenient (portable immediate eat)

1048766 Messy Dripping

65 Research Findings

The highlights regarding purchase habits triggers and barriers of ice cream consumption provide

a glimpse into the consumer world of ice cream industry However UBL CMI conducted a

formal research exclusively on ice cream consumers to identify

1048766 Occasions of ice cream

1048766 Frequency of ice cream consumption

1048766 Expectations from ice cream occasions

1048766 Personalities that they desire from ice cream

651 Relevant Occasions in Daily Lives of Consumers

Research question regarding ldquousual occasions of life that occurred most frequently in day-to-day

lives of the respondentsrdquo generated the following replies

Occasion

of Respondents saying Yes

Watching TV

93

Normal Dinner At Home

91

Normal Lunch At Home

89

At Home While ReadingMusicSurfing

86

Informal Family Get Together

85

Out Of Home Hanging Out With Friends

84

Out Shopping

84

Mid-Afternoon Break At Home

83

At Home By Myself During The Day

82

Special Dinner At Home

82

Informal Dinner Out Of Home

82

Normal Lunch Out Of Home

82

Leisure Walk

79

Coming Home From WorkSchool

78

Special Dinner Out Of Home

78

Celebration

78

A Night In With Friends

77

At Home By Myself In The Evening

77

Special Lunch Out Of Home

76

Mid-Afternoon Break Out Of Home

75

Special Lunch At Home

73

Day out with Partner

72

Midmorning Break

70

At Breakfast

68

Family Day Out

68

During Work Or At School

65

Evaluation of Entry into Ice cream Business for Bangladesh Limited 46

Travelling ToFrom WorkSchool

65

At The Cinema

61

Special Event

56

Clubbing At A Party

50

Post GymSports

48

Table 28 Relevant Occasions in Consumersrsquo Lives

Respondents were then asked to mention ldquofrequency of occurrence of the identified occasionsrdquo

The identified replies are as follows Normal dinner at homenormal lunch at homeComing home

from workschoolTraveling tofrom workschoolDay out with Partner SpouseMid-afternoon

break at homeOut of home hanging out with friendsLeisure walkMid-afternoon break out of

homeA night in with friendsSpecial dinner at homeSpecial lunch out of homeFamily day

outSpecial eventPost gymsportsDaily2-3 Times A WeekWeekly2-3 Times A MonthOnce A

MonthEvery 2-3 MonthsLess OftenNever Figure 13 Frequency of Occurrence of Occasions

This shows that ldquoNormal dinner at home Watching TV Normal Lunch At Home At Home

While ReadingMusicSurfing Coming Home From WorkSchool During Work Or At School

Travelling ToFrom WorkSchool Midmorning Break Day Out With Partner Spouse At Home

By Myself During The Dayrdquo are the most frequent daily rituals of busy lives of consumers

652 Frequency of Ice cream Consumption

Respondents were asked to mention ldquoconsumption pattern of ice cream during the identified

occasionrdquo on a scale of 1-5 depicting frequencies like ldquo(5) always (4) most of the times (3)

about half of the times (2) sometimes (1) never do not knowrdquo The responses are depicted in

the following table

Evaluation of Entry into Ice cream Business for Bangladesh Limited 47

444474544655555566756665775967779991011101111101210111110101113111412131314161

011121411131216181519181518211817171719181718201721222130303434253437403741394

046383944464746453745414641374638504843414839373030292726232725222020201926202

21722221317Midmorning

breakWhile clubbing at aAt the cinemaSpecial eventNormal lunch out ofA night in with

friendsNormal dinner atInformal dinner out ofAt home by myselfAt home by myself inOut

shoppingSpecial lunch atDay out with SpouseWatching TVAlwaysmost of the timesAbout half

of the timesSometimesneverdo not know

Figure 14 Frequency of Ice cream Consumption

As it can be seen ldquoDay out with Spouse Special lunch at home Special dinner at home

Watching TV Family day out Celebrationrdquo are the occasions where most frequently ice cream is

consumed

653 Market Character Mapping Relevant Occasions vs Frequency of Consumption

If we plot frequency of consumption on the X-axis of a chart and relevance of occasion

occurrence on the Y-axis taking the above mentioned values as cut-off values we get four

quadrants in the chart depicting four market scenarios that any ice cream manufacturer in

Bangladesh market might encounter given the current market situation This market

segmentation is based on frequency of ice cream consumption in daily occasions of consumer

lives

The segments are

1048766 OPPORTUNITY MARKET High Relevant Occasions-Low Ice cream Frequency

1048766 QUESTION MARKET Less Relevant Occasions-Low Ice cream Frequency

1048766 HIGH FREQUENCY MARKET Relevant Occasions-High Ice cream Frequency

1048766 CAPTIVE MARKET Less Relevant Occasions-High Ice cream Frequency

The chart looks as follows Evaluation of Entry into Ice cream Business for Bangladesh Limited

48

Figure 15 Relevance of Occasion-Frequency of Consumption Mapping

As it can be seen from the above chart Bangladesh Market still lies in the Opportunity and

Question market zone with a pull towards High frequency and Captive Market zones This is

evident from market data as penetration of ice cream still remains at Thana headquarters levels

Also this explains the high market growth rate of 17 as market is yet under developed and

branded quality ice cream has yet not reached all levels of consumers especially rural level that

constitutes around 75 of Bangladeshi market

From the above analysis we can establish that target of ice cream manufacturers should be to

penetrate more into the Bangladeshi market to create higher frequency of ice cream

consumption The following chart shows the strategies to follow for ice cream manufacturers

Figure 16 Required Market Strategy for Bangladesh

Evaluation of Entry into Ice cream Business for Bangladesh Limited 49

As relevance of ice cream consumption occasions can hardly be controlled by marketers their

endeavour should be to create more ldquoemotional and functionalrdquo attachment to ice cream in less

frequent occasions through ldquomarket developmentrdquo strategy to earn share from overall food

expenditure of consumers and at the same time make them consume more ice cream in highly

relevant occasions through ldquopenetrationrdquo strategy

654 Consumersrsquo Emotional Requirements and Product Attributes

All consumers under these clusters also identify the emotional requirements and the significant

product attributes they seek from their current preferred and future desired ice creams These are

provided below

Cluster

Emotional Functional Requirement

Product Attributes

Enjoyment

Flavour Variety

1048766 Combination of different flavours

1048766 Combination of different textures

1048766 Very sweet

1048766 With wafer or biscuit

1048766 With chocolate

1048766 Of a well known brand

Socially Involved

Spoonable Rich

1048766 Very creamy

1048766 Only natural ingredients

1048766 No mess

Care

Size Creaminess

1048766 Big

1048766 Rich full taste

1048766 Smooth

1048766 Value for money

1048766 No mess

Unwind amp Escape

Economy

1048766 Crunchy

1048766 Economic

1048766 Of a well known brand

1048766 Nutritious

Balanced Convenience

Health Conscious

1048766 Of a well known brand

1048766 Nutritious

1048766 Milk based

1048766 Low sugar

1048766 Low carbohydrates

1048766 Filling

Active Self-Grooming

Fruit Vitamins

1048766 Healthy

1048766 Fruit based

1048766 Low fat

1048766 Liquid or drinkable

1048766 Nutritious

1048766 Of a well known brand

Confidence

Drinkable Light

1048766 Low calories

1048766 Light on the stomach

1048766 Chewy or gooey

1048766 Not so sweet

1048766 Natural appearance

Sensual

Appeal or image

1048766 No artificial additives

Evaluation of Entry into Ice cream Business for Bangladesh Limited 50

1048766 Natural appearance

1048766 Melting slowly

1048766 Attractive packaging

1048766 High quality ingredients

1048766 Of a well known brand

Table 29 Requirements amp Product Attributes Desired by Consumer Clusters

Of these findings we see that the identified highlighted barriers to ice cream consumption are

pretty evident among the consumers Mostly people want products of a reliable source or a well

known brand low calories quality ingredients value for money economic type

Evaluation of Entry into Ice cream Business for Bangladesh Limited 51

70 INDUSTRY ATTRACTIVENESS AND ENTRY PROSPECTS

71 Driving Forces of Growth

As identified in the earlier sections there are several driving forces behind the growth of ice-

cream industry in Bangladesh

712 Trade and Infrastructural Level

1048766 As a result of globalization newer varieties have been introduced to the local products Many

foreign companies are also coming as franchise so there has been increased competition and

these boutiques are setting higher standards for the local producers

1048766 The present market growth rate is 18-19 which is being influenced by larger players like

Igloo who are expanding their distribution nation wide with expansion of national electricity

grid

1048766 With entry of Modern Trade and recent organized business approach of retailers has made it

possible for ice cream manufacturers to penetrate into shops even without providing them with

branded freezers

1048766 Weather change has increased ldquosummerrdquo season in our country which has reduced negative

seasonal impact on ice cream

1048766 Large companies like Igloo have taken global learning of using carts as an effective tool of

availability and visibility for ice cream

1048766 New and improved technologies are being used in the production process This technological

advancement has improved quality increased speed of production and made the process more

cost effective

713 Consumer Level

1048766 Only a few years back rich people could afford the luxury of having ice-cream but now it has

become a common product for everybody Ice-cream companies are producing different products

with a wide price range for consumers of every class and status

1048766 Nowadays companies are doing promotional campaigns more frequently the customers get to

know about the product which makes it easier for them to buy the best one

1048766 The improved standard of life and more modernized lifestyle of people is an important reason

for the increased consumption thus growth of the ice-cream industry

Evaluation of Entry into Ice cream Business for Bangladesh Limited 52

72 Prospects of Entry

The ice-cream industry of Bangladesh is an attractive one for the investors because there is a

huge market but number of producers is very small The major reasons behind industry

attractiveness are as follows

1048766 The industryrsquos current growth potential is very high with opportunity for market development

1048766 The competition currently permits adequate profitability and the competitive forces are

becoming stronger with time

1048766 Boutique segment is at a very high growth stage but no operator is currently operating with a

mid price range of BDT 100-400 Ice cream kiosks and small scooping boutiques can operate

within that range

1048766 Current industry driving forces are favourable for the future industry profitability

1048766 Globally oriented consumers look for variety in ice cream that is currently not available

Latest innovations came in the market in 2002 People would welcome new variety and flavours

1048766 There is a gap in the market for balanced convenience through ice cream where consumers can

get nutritional benefits for ice cream Also emotional attachment to ice cream could further be

improvised in promotional campaigns

1048766 There is high scope for market penetration and development to increase frequency of ice

cream consumption

1048766 Level of risk or uncertainty is very low in ice-cream industry because the consumer market is

so huge any product with a standard quality and careful pricing will be able to make significant

profit

1048766 As for geographic reach of the industry 60 market is still in Dhaka There is scope of

expansion and a new entrant can easily capture market share within Dhaka using carts even if

they do not want nation wide cold chain distribution

1048766 The production process is very complex and capital requirements are also high So before

going into production any company should know about their capabilities and weaknesses and

then start the business or else they might suffer huge loss at a certain level

1048766 Unilever can acquire the required resource and use existing multi-national multi-cultural

expertise to enter the market in a grand way

1048766 With high probability of entry from DANONE with more products like the ISIS diabetic ice

cream Unilever should consider entering in this industry as soon as possible

Evaluation of Entry into Ice cream Business for Bangladesh Limited 53

80 ENTRY STRATEGY FOR UNILEVER

While describing the suggested entry strategy for UBL certain issues have been kept

confidential and some issues have been touched but not explained to keep consistency with UBL

confidentiality policy

81 Suggested Entry Areas for UBL

1048766 Boutique segment of the Bangladesh ice cream is only 5 of the branded market UBL needs

to pursue a larger scope to make the entry viable

1048766 UBL cannot fight with unbranded segment as global product quality mandate of Unilever does

not allow UBL to fight in low price-low quality segment

1048766 Recommend entry should be in the common format segment with both single and multiple

servings and in the boutique segment with a different brand name (if possible BEN amp JERRYrsquoS)

1048766 UBL should build up state-of-art modern factory for manufacturing and establish cold chain

facilities initially focusing on metro cities

1048766 Investment issues are required to be addressed for building factory and cold chain and capital

requirement needs to be identified for that purpose4

1048766 UBL may have boutiques for driving image selective top-end offering

1048766 Kiosks can be setup near universities and shopping malls

1048766 Boutiques should be concentrated in Dhaka and Chittagong

1048766 Ice cream for boutiques and kiosks would be produced in factory as institutional packs of 9-10

litres

82 Products

1048766 As a Brand Building country in global Unilever operating framework UBL is entitled only to

bring products developed by the Brand Development countries

1048766 Unilever should focus on serving products that have nutritional benefits (already available

globally) along with usual satisfactions of sensual pleasure functional attributes etc

1048766 Current existent players especially Igloo and Kwality have extensively copied global and

regionally available Unilever products eg Cornelli is same as Wallrsquos Cornetto Vinetta is similar

to Vienetta Mega is similar to Magnum etc UBL needs to differentiate these to consumers on

the ldquotaste the originalrdquo platform where global quality is focused regarding the products

1048766 UBL should also bring regionally famous brands like Moo or Max to create image

differentiation

1048766 Magnum or Moo should be used as premium end ice cream to generate more profit margin

Evaluation of Entry into Ice cream Business for Bangladesh Limited 54

83 Placement

1048766 Distribution focus should be in Dhaka for entry as Dhaka contributes more than 60 of total

ice cream sales in the country

1048766 Company may use carts as distribution method They serve as good source of visibility and

availability It would help in increasing impulse purchase

1048766 At least 1500 outlets in Dhaka and Chittagong needs to be actively served using dedicated

branded refrigerators to generate sales

1048766 50 carts should operate in Dhaka and Chittagong

84 Price

1048766 UBL products should be priced at par with Igloo pricing for the common format ice creams

1048766 UBL can bring in premium single-serve SKUS for the higher economic classes in the price

range of BDT 60-80

1048766 Smaller SKUs (small lolly stick) can be introduced in the price range of BDT 10-15

1048766 In the boutique segment UBL should price products above the semi-premium segment

(Gelateria Igloo Sub Zero or Andersenrsquos) but lower than that of Club Gelato or MoumlvenPick

85 Promotion

1048766 UBL would require strong marketing campaign (As high as 50 of sales) to have a grand

entry in the market

1048766 Presence in the television media would be of utmost importance More than 50 of

promotional expense should be made here initially Gradually it can be reduced

1048766 Newspaper would serve as the second most important option

1048766 Billboards should also be used

1048766 Activations (similar to Lux Channel i Super Star or Igloo Festival) should be done to generate

trial

86 Scope of Opportunity

Table 30 Value and Volume Based Scope of Opportunity for UBL

Value (BDT Cr)

Volume (Tons)

Market

131

7835

Common

121

7600

Boutique

98

235

Evaluation of Entry into Ice cream Business for Bangladesh Limited 55

861 Geographic Contribution

1048766 Dhaka (61)

1048766 Chittagong (19)

1048766 Sylhet (10)

862 UBL objectives

Common Format Ice Creams

1048766 Target 10 Market share in 1st year operation

1048766 Value BDT 11 Cr

1048766 Production capacity required 21 Tons day

1048766 Freezer Placement 1500 freezers

1048766 Cart operation At least 50 carts

Boutiques

1048766 Target Further develop the market

1048766 Focus Dhaka Chittagong and Sylhet Metro

1048766 Franchise At least 20 franchisee operations nation wide in divisional towns

1048766 Pricing Below imported parlours above common formats with around BDT 400 per Litre

87 Critical Success Factors

1048766 UBL is considered as a high profile company in Bangladesh and thus they cannot operate in

the market only with common products like choc-bars and cups They must have premium

products (these require extrusion line) also to carry their brand image Otherwise UBL would not

be able to charge usual premium over competition products

1048766 Launch of ice cream would require huge promotional and activation support in order to gain

customers from Igloo People want novelty regarding ice cream and UBL have to let them know

about their products and create hype

1048766 Cart should be used as a source of distribution Recent successes of Unilever companies like

Indonesia shows that carts can generate more sales and can be used as source of visibility in the

minds of both retail traders and consumers Carts can also provide incremental sales to the

company

1048766 UBL have to create a strong cold chain for ice cream (initially in Dhaka and Chittagong) to

ensure quality products for consumers

1048766 UBL have to build capacity very rapidly to meet consumer demand if the launch is successful

Evaluation of Entry into Ice cream Business for Bangladesh Limited 56

90 BUSINESS PROJECTION

91 Basic Assumptions

Business projection for ice cream business was made based on a conservative approach UBL

would require spending significantly on production capacity and factory dedicated to ice cream

Thus to analyse business possibilities of ice cream certain assumptions were made and collected

data were used These are

1048766 Production equipments and cabinets would cost approximately BDT 55 crores

1048766 Production equipments 45

1048766 Packaging Equipments 15

1048766 Storage Facility 20

1048766 Branded Freezers 10

1048766 Distribution Investment 10 (Distributors would also invest themselves)

1048766 Ice cream factory with a floor size of 20000 sqft would cost BDT 25 crores

1048766 Objective is to capture 10 market share in Dhaka and Chittagong in the first year

1048766 Business would grow by 50 in year 2 and 3 30 in year 4 and 25 in year 5

1048766 Weighted price per litre is BDT 170 according to volume share of single serve ice cream

multiple serve ice cream and boutique ice cream

1048766 Other financial assumptions were also made List of them are provided below but amount has

been removed for confidentiality issues

Assumptions

Trade Margin

Distributors Margin

DutyVAT Rate

Trade Terms Expense of NPS

Trade Terms Expense of NSV

Advertising ampPromotion of NPS

Indirects (Salaries Wages etc)

Trading Tax

Table 31 Assumptions for Business Projection

Evaluation of Entry into Ice cream Business for Bangladesh Limited 57

100 CONCLUSION

Ice cream has good prospect in Bangladesh It is still a growing market with opportunities for big

new entrants With the barriers of entry UBL needs to consider its priorities UBL being an HPC

company traditionally needs to acquire expertise in cold chain distribution and has to invest a lot

of money to rip the benefits of the industry However to initiate company can take regional

support and acquire resource expertise The company should enter the business as soon as

possible since there is potential threat from DANONE to introduce more ice creams after ISIS

diabetic ice cream and also with potential of the industry arch rival Nestlersquo might consider

entering into the industry too

Evaluation of Entry into Ice cream Business for Bangladesh Limited 58

References

Web References

1 wwwunilevercom

2 wwwunilevercombd

3 wwwhllcom

4 wwwunilevercompk

5 wwwthedailystarcom - Life Style Magazine

6 wwwreuterscouk

Evaluation of Entry into Ice cream Business for Bangladesh Limited 59

Page 21: Square Ice cream

Normal cone (vanilla strawberry etc) premium cone (Ripple)

serving

Innovative Fillers

Snowball Animal shaped containers sandwich nuggets etc

Container

05 ltr 1 ltr and 2 ltr containers

Multiple serving

Family Pack

Assorted packs cakes shahi kulfi etc

Table 15 Ice cream Serve types

Among all the products available in the market most selling SKU for all the companies is Choc-

bar stick and highest selling flavour is Vanilla Following are the ranks of most selling SKUs and

flavours

SKU Name

Rank

Choc-bar (70 ml)

1

Vanilla Cup (100 ml)

2

Vanilla Box (05 and 1 Ltr)

3

Lemon Lolly (70 ml)

4

Normal Cone

5

Flavour

Rank

Vanilla

1

Chocolate

2

Strawberry

3

Ripple

4

Mango

5

Table 16 Rank of SKUs Table 17 Rank of Flavours

Choc-bar is one of the earliest vanilla based chocolate coated SKU that has dominated the

market strongly over the years Shopkeepers could not provide an exact percentage on SKU

based sales contribution Most of them ranked the SKUs and flavours according to sequence

shown in the above table Also according to newspapers and secondary sources Vanilla is the

most selling flavour with 60 sales contribution According to secondary sources percentage

sales contribution of various types of SKUs in the common format segment are as follows

Type of Ice cream

Value Share

Volume Share

Impulse dairy ice cream

514

443

Impulse water ice cream

112

138

Take-home dairy ice cream

374

419

Table 18 Volume Share of Different Serve Types

Impulse dairy ice cream provides more value share as price per litre is higher than take home

multiple serving ice creams Impulse water ice cream shows a similar trend as of take home ice

cream

Pricing Product pictures and price ranges of each category are provided below Evaluation of

Entry into Ice cream Business for Bangladesh Limited 27

Normal Premium Price Tk12 Tk20 Tk25 Cup amp Sundae Normal Cup Sundae Premium Cup

Price Tk20 Tk25 Cone Normal Premium PriceTk20 Tk25Innovative Fillers PriceLtr Tk100

Tk175 Container Normal Premium PriceLtrTk150 Tk 175 Tk 190 Family Packs Kulfi Mixed

Pack Cake Single ServingMultipleServingNormal Ice Fruit 3D Mould Premium Extrusion Price

Tk10 Tk15 Tk15 Tk20Stick Normal Cream

Figure 8 Serve Types and Pricing

As it can be seen from the above chart all impulse ice creams are priced within the range of

BDT 10 to 25 Other take home multiple servings are priced within the range of BDT 50 (05

Litres) to BDT 220 (2 Litres) Another noticeable factor in price is that there are both normal and

premium flavours in all types of ice creams

K Firms as Price Setters

The firms have capability to affect the market price to be low as profit margin is very high If

Igloo reduces the price of an item below the prevailing price level in order to increase its sales

its competitors will fear that their customers will go away from them to buy Igloo products To

retain their customers they will be forced to match the price cut of Igloo Historically this has

been proven to be true However due to price sensitivity companies cannot drastically increase

price even if they provide higher quality of product It was seen in 1997 when Igloo increased

price of 11 SKUs and faced drastic sales fall during that time It shows that the industry might

welcome overall industry price increase but not individual company price increase

L Promotion

The promotion scenario in the industry is not quite organized as of now Even proper data

regarding promotional expenditure is not available from research sources The reason being

there is not much consumer related activity seen in the market After Kwalityrsquos introduction in

the market in 1999 Igloo went on with massive Television promotion of their new products that

were available at that time

Evaluation of Entry into Ice cream Business for Bangladesh Limited 28

However in current times there is no TVC running from any company Companies promote their

launches mainly through billboards and newspaper promotions which is currently the most used

source of consumer promotion Some promotional activities that were done by the companies

over the years are listed below

Consumer Promotions

1 Larger players like Igloo and Kwality goes on with campaigns like ldquoGift on stickrdquo where

various prizesrsquo names are written on the sticks and consumers can get them

a Igloo ran a program on their launch of Macho variant where gift varied from cricket bat to

personal computer

b Igloo had a program in 2006 where gifts on sticks varied from Bangkok visit to sunglass

c Igloo ran one campaign in 2007 where gold bars were given on purchasing Choc-bar

d Kwality ran a similar program in 2008 where gifts varied from wrist watches to motorcycle

2 Some companies ran consumer TTS and gift programs where company products were given

free

a Igloo had a program in 2006 where Igloo butter was given free on purchasing Igloo ice cream

cake

b Kwality ran a program in 2008 where one SKU was given as gift with another SKU randomly

c ldquoCone Ice cream at your Homerdquo program was run by Igloo in 2002 where six cone biscuits

were given free with purchase of one litre ice cream

3 Media placement is another form of placement done by larger companies

a Igloo purchased ldquoGlimpse into World Cup Resultrdquo space in daily newspapers during World

Cup Football 2002

4 One interesting program is done by only Igloo in Bangladesh They did it in June 2006 The

program was ldquoIgloo Ice cream Festivalrdquo with main attractions of ldquoGet as much ice cream as you

want for BDT 200rdquo ldquoGet a Fantasy Kingdom Entry ticket with each Entry Couponrdquo ldquoLucky

Drawrdquo and ldquoCelebrity Addardquo

Trade Promotions

5 Trade promotions are mainly given to ldquoHighest retail purchasersrdquo and also based on time

bound trade schemes where various slabs of purchase amount are mentioned for different prizes

a Igloo takes their highest purchasers to visit countries like Singapore and Thailand

b Savoy has a purchase slab scheme where first prize is table fan

c Polar gives special sales commission to their highest purchasers (around 5)

Evaluation of Entry into Ice cream Business for Bangladesh Limited 29

M Players in the Common Format Segment

Branded common format ice cream segment is constituted of five players only Among them

Igloo is the largest player and Milk Vita is the smallest The following sections detail the basic

company detail of all the companies with special emphasis on Igloo the market leader

Igloo

The pioneering ice-cream company in Bangladesh started its operation in 1964 in Chittagong

under K Rahman amp Co Limited (KRC) with a small factory inside Coca Cola bottling factory of

KRC After the independence of Bangladesh in 1971 Igloo was taken over by the government of

Bangladesh Later in 1983 Abdul Monem Limited purchased the entire production setup of KRC

Limited including Coca-Cola bottling plant and Igloo ice-cream factory After taking full charge

of Igloo ice-cream by Abdul Monem Limited the manufacturing operations continued in

Chittagong till 1990 Although Dhaka fetched the maximum share of the total revenue the

distribution cost increased tremendously in the process of meeting the demand of Dhaka city To

cope with the distribution problem and handle Polar threat Abdul Monem Limited transferred

the factory to Dhaka changed the ice-cream packaging from the conventional paper to plastic

and expanded their market and distribution operation The new factory of Igloo was setup at

Shyampur Narayanganj and was nine kilometres away from the Motijheel office The company

apart from catering the capital city started to expand its operations in Comilla (1991) Khulna

(1992) and North Bengal (1993) These markets were served directly from Dhaka since the

storage facilities were not developed till then The company is now the market leader since 1997

with clear market share victory over others with sweeping 51 share It is to be noted that Igloo

is also a player in the boutique segment with three parlours (2 in Dhaka and 1 in Chittagong)

Product Range Igloo offers the widest choice of ice cream more than any other competitor in

the market Igloo is offering a total of fifty items including normal premium and novelty cup

stick and family pack items Igloo has thirty flavours more than anyone else in the industry and

is continuously launching new and innovative delicacies

Igloo ice-cream can be classified in six groups They are

Stick

Macho Choc-bar Mini Choc Clown Mega Shell n core Lolly

Cone

Cornelli 2 in one Cornelli classic

Cup

Shahi kulfi Vanilla Strawberry Mango Snow ball

Container

Vanilla Strawberry Mango Chocolate Coffee Diet Vanilla Tutti Frutti Ripple Pralin

Pistachio

Innovative

Nuggets Sandwich

Family

Ripple cake Party time Shahi Kulfi

Table 19 Products of Igloo

Single serve stick cups and cone items are easy to carry around and convenient to eat which

makes it most sold The core target segment of ice-cream is 6-24 years and this generation is

always on the Evaluation of Entry into Ice cream Business for Bangladesh Limited 30

move and thus prefers independent cone stick or cup items As Igloo initiated the concept of ice-

cream as a family product they offer some items to be enjoyed with the whole family

Quality and Innovation Igloo is committed to maintaining the highest quality standard through

its continuous RampD activities The major ingredients raw materials and packing materials are

procured from the best European sources Strict quality control is done at every stage of the

manufacturing process from procurement of material mixing material flow ice cream making

packaging storing (at main warehouse) distributing and market shelving by the Quality Control

Department Current supply chain for various materials of Igloo is as follows Australia (Milk

Powder) Denmark (Ingredients emulsifiers amp stabilizers) China amp UAE (Food grade sticks)

China Denmark Singapore amp Thailand (Food grade packing materials)

Figure 9 Igloo Supply Chain

Distribution Network Their distribution network is stretched all over the country with a long

fleet of refrigerated vans Firstly the ice cream products are stored at the central warehouse of

the factory and from there they are distributed through the haulage vehicle to the operational

centres located in Dhaka Chittagong Comilla Rajshahi Barisal Bogra Rangpur and Khulna

Strictest cold chain maintenance during the distribution and selling of the ice creams is ensured

Their distribution process is as follows Manufacture Stored at -24c Transported by Refrigerated

trucks at -Reaches amp Preserved in Eight regional stores Refrigerated vehicles (Distributors)Retail

outlets (Deep freezers)

Figure 10 Distribution Process of Igloo

Evaluation of Entry into Ice cream Business for Bangladesh Limited 31

Trolley Operation Igloo also operates through trolleys for extending its reach to consumers at

the furthest points The trolleys are operated near schools alleys streets parks etc and play

rhythmic music to attract the consumers These are very colourfully decorated with Igloo

umbrella and the puller wears specific uniforms Igloo was the first in introducing and operating

these trolleys in Bangladesh for any Fast Moving Consumer Goods (FMCG) Igloo has around

125 trolleys operating throughout the country Individual trolleys are provided with a regular

supply of igloo ice creams

Marketing The marketing commitment of Igloo is based on the relationship with its customers

and consumer by not only manufacturing the highest quality product but also delivering the

product by maintaining this quality To satisfy the ever-changing needs of the customer Igloo

has regularly launched new ice creams and introduced new flavours And this commitment has

positioned Igloo as the market-leading brand by gaining the consumers trust with the positioning

as ldquoA WORLD OF GREAT TASTErdquo

Facilities and Logistics at a glance As of 2009 following are the facilities and logistics enjoyed

by the company

Factory location

Dhaka

Production Lines

4

Packages

Stick Cup Family pack Others (Nuggets and sandwich)

Machine suppliers

1048766 Mark-Italy

1048766 Tetra Pak(Hoyer)-Denmark

1048766 Sabore Denmark

1048766 Hass- Austria

Machine models

1048766 Freemark 1100 Italy

1048766 FM 3000 FM 6000 Italy

1048766 SL600 Denmark

Cone baking

Hass- Austria

Chocolate making

Macentyre-UK

Coverage

Nationwide

Operational centre

10

Total market vehicles

30

Distribution channel

Directthrough appointed distributors

Outlet service

7500

Injected deep freezers

4000

Trolley operations

125

Warehouse no

8

Table 20 Igloo Facilities and Logistics

Kwality

Kwality is currently the second largest ice cream manufacturer of the country The mother

company for the Kwality brand is Sanowara Drinks amp Beverages Ltd a sister concern of

Sanowara Group The company is famous for powdered milk brands Red Cow and Diploma in

Bangladesh The drinks and beverage concern of Sanowara made an entry into the market in

1997 with ldquoYesrdquo brand drinking water and launched the ice cream brand in 1999 With heavy

communication and novelty products it Evaluation of Entry into Ice cream Business for

Bangladesh Limited 32

successfully removed Polar from the second place with a current market share of 27 The

company also operates in the boutique segment with two parlours in Dhaka and Chittagong

Kwality ice cream factory is situated in Chittagong with a floor space of 35000 sft and fully

automated machinery wrapping mix machinery equipments from Italy having capacity of

around 20000 litres of ice cream per shift The ice cream factory employs 140 people The

company is ISO 9001-2000 certified

Kwality was the first true competitor for Igloo products with some major innovation in product

design and communication but their quality is perceived to be lower in the minds of the

consumers and they do not have extrusion ice cream The product prices are also similar to that

of Igloo but they charge a bit lower than Igloo in premium multiple servings However during

market visits it was seen that shops that keep only Kwality or Igloo and Kwality both they can

sell Kwality too although the sales amount is lower than that of Igloo People who look for Igloo

shopkeepers give them that directly but if they get a chance and Kwality ice cream stock is high

they also push Kwality to dry the stock out This gives an indication that market is larger than

what the current players are capable of serving even in Dhaka

Kwality follows a similar distribution model like Igloo but distribution frequency is lower and

amount of cart sellers is limited to 25 and they operate only in Dhaka

Polar

Once a giant in the industry Dhaka Ice Cream Industries Ltd introduced the first hygienically

packed ice cream in Bangladesh in 1987 and the brand name Polar was thus born In the early

days the company started ice cream business with a wide range of products and a variety of

flavours in Dhaka city In 1988 the company started its distribution in the city of Chittagong

then Bogra and continued to cover more cities Presently Polar ice cream is available

throughout Bangladesh The company today trails in the market with 15 market share in the

common format segment Recently Polar has announced launch of ISIS diabetic ice cream with

support from DANONE to turn around in the market

The company has its head office as well as a modern large-scale industrial plant in Dhaka Polar

ice cream is made with Danish expertise using Danish equipment and technology The

production activities and quality control measures are supervised and managed by Danish

experts Polar offers a wide range of delicious flavours and tastes made by ingredients imported

from Europe

Dhaka Ice Cream at present has 3 cold stores in Dhaka Chittagong and Bogra in Bangladesh

From Dhaka cold store they distribute ice creams in Mymensingh Tangail Jamalpur Sherpur

Kishoreganj Netrakona Comilla Narsingdi Barisal Madaripur Agaeljhara Faridpur Magura

Chuadanga Jessore Satkhira Khulna Pirojpur and Sylhet through their distributors In case of

long distance delivery points the company uses auto cooling freezer van

Evaluation of Entry into Ice cream Business for Bangladesh Limited 33

In Dhaka city they distribute ice creams directly to retail stores in freezer vans Besides that

they have several distributors at different points of the city Distributors cover their individual

areas where company is not able to supply directly in their freezer vans Similar model is

followed by the company to distribute ice cream from their other cold storages through out the

country For storing and selling ice creams in retail stores the company like the other players

arranges a deep freezer with the Polar logo and canopy light box

In addition to this distribution the company also undertakes home delivery of ice creams for

special occasions

Savoy

Savoy Ice-cream brand is owned by Sena Kalyan Sangstha (SKS) Group of industries It started

its journey in March 1995 with a factory in Tejgaon Dhaka Yearly turnover is estimated at BDT

388 crores with a market share of roughly 35

The factory has been established with Sonali Bank finance at 6040 equity ratio The total

production capacity of the factory has been estimated at 2400 litres of Ice-cream per day Total

land area of the factory premise is 116 Bigha with 8000 sft area covered with a total project cost

of BDT 144 The factory employs 73 people

Product ranges of the company include all the basic designs and flavours of the industry

However the company has not been much of an innovator in the industry Their product quality

is substantially low than that of other players and they price their products at 10-15 lower than

the other competitors The company imports raw materials mainly from Europe The general raw

materials are Euro cream Skimmed Milk Powder Cocoa Powder and Flavour (Vanilla Mango

and Strawberry) Colour (Yellow Red Chocolate and Green) Ripple Sauce Cheney Fruit Palm

Kernel Oil Anhydrous Butter Oil (Ghee) and Sugar etc

Milk Vita

Milk Vita is one of the most famous brand names in Bangladesh for its liquid dairy milk Owned

by Bangladesh Milk Producersrsquo Co-operative Union Limited (BMPCUL) the company came in

the market with proper dairy milk ice cream in form of cups and choc-bar With a production

capacity of around 1600 litres per day the company is trailing in the market place with 3

market share

Although the Milk Vita Choc-bar was perceived to be extremely tasty by consumers they

probably could not do well due price competition Currently they do not even distribute ice

cream in Dhaka However their presence is seen in outskirts of Dhaka and other nearby towns

If the current market situation prevails Milk Vita would lose their remaining market share and

other companies would benefit especially Igloo However one of the advantages of Milk Vita

remains to be

Evaluation of Entry into Ice cream Business for Bangladesh Limited 34

their nation wide milk supply network They have skimmed milk powder production plant that

Igloo does not have Thus they can combat the seasonality of milk supply that Igloo with its

huge requirement of milk cannot

Strengths and Weaknesses of Competitors

Company

Strengths

Weaknesses

Igloo

1048766 Strong brand image

1048766 High product quality

1048766 Highest no of variety

1048766 Strong distribution network

1048766 Highest visibility

1048766 Strong promotion

1048766 High production capacity

1048766 Presence of extrusion ice cream

1048766 Items are generally a bit pricy

1048766 Igloo does not give free freezers like other companies

1048766 Reluctant in recent times regarding innovation

1048766 Local sourcing of liquid milk does not meet demand

1048766 Failure to use ERP technology slowing decision making

Kwality

1048766 Product variety

1048766 Strong promotion

1048766 Free freezer distributed

1048766 Presence in all price segments

1048766 High production capacity

1048766 Weak distribution

1048766 Lower exposure

1048766 low amount of carts in operation

Polar

1048766 Free freezer

1048766 Quality perceived to be high compared to Kwality

1048766 Discoloured freezers

1048766 Lower exposure

1048766 Low product variety

1048766 Unused capacity

Savoy

1048766 Price is lower

1048766 Discoloured freezers

1048766 Low product variety

1048766 Weak distribution

1048766 Small amount of freezers

1048766 Low production capacity

Milk Vita

1048766 Quality is good due to dairy cream

1048766 Brand leverage from Milk Vita milk

1048766 Low exposure

1048766 Low variety

Table 21 Strengths and Weaknesses of Competition

512 Market Characteristics of the Boutique Segment

With a small market of BDT 98 Cr and 567 share in the branded ice cream market the

boutique segment is currently an increasing segment in the ice cream industry Boutique

segmentrsquos history dates back to 1960s when Igloo launched boutiques in Dhaka to save

distribution cost and promote a culture of ldquoice cream eating outrdquo In later years boutiques lost

their glamour and retail common format segment picked up growth However with Dolce Vita in

the late lsquo80s craze for Italian Artisan ice cream was recreated in the market Although Dolce

Vita is failing in recent times emergence of MoumlvenPick and Club Gelato in 2000 has uplifted the

segment once again Current growth rate of the

Evaluation of Entry into Ice cream Business for Bangladesh Limited 35

segment can be estimated to be approx 20-22 (higher than the common format segment)

Following are the basic detail of all the major players in the segment with their estimated sales3

Players

Outlet

Sales (Cr Taka)

Share

Club Gelato

1

136

199

MoumlvenPick

1

119

174

Andersenrsquos

3

119

174

Gelateria Igloo

3

119

174

Sub Zero (Kwality)

2

051

75

Baskin Robbins

1

015

22

Dolce Vita

1

017

25

American Soft

1

009

12

Rainbow

1

009

12

Others (off site)

089

130

Total Market

682

Table 22 Players and Shares in Boutique Segment

A Detail of Operation

General operational procedure followed by all the operators is as follows

1048766 Operating method There is a variation in operational method among the large operators

1048766 Club Gelato uses kitchen at own premise where imported ingredients and local milk (daily

special service from Milk Vita) are used to make ice cream

1048766 MoumlvenPick directly imports ice cream from Switzerland

1048766 Andersenrsquos Gelateria Igloo and Sub Zero produce ice cream at their factory with a mix of

imported and local ingredients

1048766 Products Around 30-35 flavours of artisan dairy ice cream are served at the premises

1048766 Most sold flavours are Vanilla Ferrero Rocher Butterscotch Chocolate Caramel etc

1048766 Other Products Larger players also serve ice cream desserts (milk shakes ice cappuccino etc)

pastries and other desserts with normal coffee and tea facility at their premises

1048766 Boutiques fight ice cream seasonality with the other products sales during off-peak ice cream

seasons Usually ice cream and other products contribute at 6040 ratio in summer and during

winter and off-peak seasons the ratio reverses

1048766 Pricing Usually the prices of products in this segment are 3-4 times higher than that of the

common format segment

1048766 Prices do not vary with flavours Variation depends on serve style (Cone tub) and use of

toppings and other ingredients (Chocolate sauce nut fruits) etc

1048766 Usual margin charged is around 50-60 over production cost Similar margin is charged for

other products like coffee ice cappuccino etc

3 Yearly sales is estimated based on companyrsquos approximate daily sales collected during

interview

Evaluation of Entry into Ice cream Business for Bangladesh Limited 36

1048766 Target Group Most of the consumers belong to SEC A and higher SEC A with DMFI of at

least BDT 20000

1048766 Foreign delegates and resident foreigners also visit these boutiques

1048766 Main purposes of visits in the boutiques are

bull Youth hangout with friends and having ice cream and ice cream derivatives

bull Family Family night out or eat out at a restaurant and then having dessert

bull Foreigners Having dessert after dinner

1048766 Rush time at boutiques are Afternoon 2-4 pm and at night 9-11 pm

1048766 Offsite sales Most of the large operators also sell offsite They have small freezers for off-site

1048766 Club Gelato and MoumlvenPick serves ice cream at high society parties and programmes

1048766 MoumlvenPick also has kiosks in known hotels like Sheraton

1048766 Promotion No mass promotion is done by any of the companies Word of mouth is the most

important source of promotion Posters and banners outside the premise and occasional

newspaper advertisements are used to communicate special offers

1048766 Growth Drivers Market growth is driven by image innovation quality decoration of facility

environment and special offers

1048766 Club Gelato has the image of selling true Italian dairy ice cream with an excellent hangout

environment

1048766 MoumlvenPick imports ice cream directly from Switzerland and is perceived to be of high quality

1048766 Andersenrsquos operates with the image of ice cream from Denmark

1048766 Gelateria Igloo (from Igloo) and Sub Zero (from Kwality) could not establish the premium

artisan ice cream image

B Players in the Boutique Segment

There are very few players who have significant impact in the boutique segment Detailed

information of all the major boutique segment players is provided below

Evaluation of Entry into Ice cream Business for Bangladesh Limited 37

Club Gelato

Basic Company Information

1048766 Location Banani Road 11 (Planning for a second one in Dhanmondi)

1048766 Established in 2001

1048766 Seating Capacity 48

1048766 Area 1250 sft (including kitchen)

1048766 Owner Mr Jahangir Alam (Bangladesh)

1048766 Business Type Joint business partnership with Singapore

1048766 Staff 15 people (6 in the kitchen)

1048766 Production capacity 150 litres per day

Product Related Information

1048766 Product Italian style parlour scoop ice cream fruit juice coffee and pastries

1048766 Flavours Around 32 flavours available

1048766 Most selling Ferraro Rocher Vanilla Pistachio

1048766 Innovations New variants and ingredients are communicated by their Italian supplier and

Club Gelato decides what to take from them

1048766 Serve type Cup Cone Glasses Box for take away

Consumer Profile

1048766 Primary Teenagers and Young Adults (18-30) amp Diplomats

1048766 Secondary Family consumers for eat out

1048766 Income Group High income customers tentatively from SEC A and higher SEC A

1048766 Geographic Area Diversified

1048766 Rush time 8-10 pm

Sales and Price Information

1048766 Sales BDT 50000 (60 Ice cream 40 other desserts) daily in summer In winter however

other products sell more and thus they keep total sales at the same level

1048766 Price 750 per litre for any flavour

1048766 Sales Volume 50-60 litres per day

Supply Chain Placement Information

1048766 Milk Local sourcing from Milk Vita (4050 litres per day)

1048766 Chocolates amp Flavours Belgium France Germany

1048766 Transportation Mainly air (They can afford it due to high margin)

1048766 Contribution of various materials Flavours (30) Milk (20) other parts are water and air

Promotional Materials

1048766 Materials used are near premises POS materials for promoting the parlour only

Table 23 Detail of Club Gelato

Evaluation of Entry into Ice cream Business for Bangladesh Limited 38

MoumlvenPick of Switzerland

Basic Company Information

1048766 Location Gulshan

1048766 Established in 2000

1048766 Seating Capacity 55

1048766 Owner Mr Arif Mahmud

1048766 Business Type Franchise of International MoumlvenPick

1048766 Storage Capacity in Shop 150 litres

Product Related Information

1048766 Product Imported MoumlvenPick ice creams coffee chicken sandwich and Frappe

1048766 Flavours Around 30 to 35 flavours available

1048766 Most selling Swiss Chocolate caramel Vanilla Dream Espresso Strawberry

1048766 Innovations New variants are communicated by their franchiser and they decide on flavours

that they want

1048766 Serve type Cup Cone Glasses Box for take away

Consumer Profile

1048766 Primary Teenagers and Young Adults (18-30) (70) amp Diplomats

1048766 Secondary Family consumers for eat out

1048766 Income Group High income customers tentatively from SEC A

1048766 Geographic Area Concentrated in Gulshan and nearby areas

1048766 Rush time Afternoon- Young Adult 10 to 11 pm Foreigners

1048766 the company also serves at parties and has freezers in known hotels where their ice creams

are served

Sales and Price Information

1048766 Sales BDT 35-40000 daily in summer

1048766 Price 640 per litre for any flavour

1048766 Sales Volume 55-60 litres per day

Supply Chain Placement Information

1048766 Transportation Imported finished goods by ship

1048766 Ship travel time 19 days

1048766 Port clearance 10 days

1048766 Safety Cushion Extra 10 days

Promotional Materials

1048766 Materials used are near premises POS materials for promoting the parlour only

Table 24 Detail of MoumlvenPick of Switzerland

Evaluation of Entry into Ice cream Business for Bangladesh Limited 39

Andersenrsquos of Denmark

Basic Company Information

1048766 Location Gulshan (2 others in Uttara Dhanmondi)

1048766 Established in 2001

1048766 Seating Capacity 48

1048766 Owner United Group

1048766 Business Type Franchise of Australian company Andersenrsquos of Denmark

1048766 Production Tongi Factory of United Group

1048766 Production capacity 2000 litres per day in factory

1048766 Storage Capacity in Shop 150 litres

Product Related Information

1048766 Product Danish parlour scoop ice cream and coffee

1048766 Flavours Around 30 to 35 flavours available

1048766 Most selling Strawberry Butter Scotch Green

1048766 Innovations New variants and ingredients are communicated by their franchiser and they

decide on flavours that they want

1048766 Serve type Cup Cone Glasses Box for take away

Consumer Profile

1048766 Primary Teenagers and Young Adults (18-30) (70) amp Diplomats

1048766 Secondary Family consumers for eat out

1048766 Income Group High income customers tentatively from SEC A

1048766 Geographic Area Concentrated in Gulshan and nearby areas

1048766 Rush time 8 to 10 pm

Sales and Price Information

1048766 Sales BDT 10-12000 daily in summer

1048766 Price 460 per litre for any flavour

1048766 Sales Volume 40-50 litres per day

Supply Chain Placement Information

1048766 Milk 2025 kg packs are imported

1048766 Chocolates amp Flavours Imported

1048766 Butte paper Local sourcing

1048766 Transportation Ship

Promotional Materials

1048766 Materials used are near premises POS materials for promoting the parlour only

Table 25 Detail of Andersenrsquos of Denmark

Evaluation of Entry into Ice cream Business for Bangladesh Limited 40

Gelateria Igloo

Basic Company Information

1048766 Location Banani Kemal Ataturk Avenue (Two others in GEC Mor Chittagong and Naya

Paltan)

1048766 Established in 2000

1048766 Seating Capacity 20

1048766 Production From Igloo factory in Shyampur Narayanganj

Product Related Information

1048766 Product Parlour scoop ice cream and coffee only

1048766 Flavours Around 30 flavours available

1048766 Most selling Vanilla Strawberry Chocolate Pistachio Butter Scotch Tutti Fruity

1048766 Serve type Cup Cone Glasses Box for take away

Consumer Profile

1048766 Primary Teenagers and Young Adults (18-30)

1048766 Secondary Family consumers for eat out

1048766 Income Group High income customers tentatively from SEC A and B

1048766 Geographic Area Diversified

1048766 Rush Time afternoon and evening

Sales and Price Information

1048766 Sales BDT 8000 to 10000 daily in summer Nearly one fourth in winter

1048766 Price Varies but 350 per litre of vanilla

Promotional Materials

1048766 POS materials at the premises

Table 26 Detail of Gelateria Igloo

52 Price Comparison of Common and Boutique Segments

Price ranges of both common format and boutique segment cannot exactly be pin pointed as

products do not follow common structure and variations occur with use of toppings mixing of

flavours and use of coatings However a price comparison has been made among the brands

based on their price of per litre of vanilla flavoured ice cream in the market It appears to be as

following

Company

Price Litre Vanilla

Club Gelato

750

MoumlvenPick

640

Andersenrsquos

460

Dolce Vita

440

Igloo

100

Kwality

100

Polar

100

Milk-Vita

90

Savoy

85

Table 27 Comparative Price Analysis

As it can be seen there is price gap within the range of BDT 100-400 Ice cream kiosks and

small scooping boutiques can operate within that range

Evaluation of Entry into Ice cream Business for Bangladesh Limited 41

60 CONSUMER ANALYSIS

61 Target Group of Ice cream

Who are the consumers of ice cream This question does not have a clear answer Ice cream is a

food for all It is the only food consumed by a human being at less than 0 degree centigrade

temperature and people of all ages feel indulged to have it However we can determine focus

target groups for both branded common format and artisan boutique ice cream Group

discussions and market visits were done to get insight into the consumers along side resources

form secondary sources Age based target group is common for both segments but variation

among the groups occur mainly based on SEC and DMFI classification

611 Geographic Group

Branded ice cream remains an urban product till date Geographically branded ice cream has

reached urban and semi urban areas up to Thana Head Quarter levels Ice cream has reached

areas where electricity is available Small artisan players are available in places where large

branded players have no distribution

612 Target Age Group

Age wise grouping of target consumers is as follows

1048766 Urban kids in the age group of 5-14

1048766 They mainly consume normal sticks cups cones innovative fillers and water ice creams

1048766 Urban youth in the age group of 15-24

1048766 They consume premium and extrusion sticks and cones

1048766 Urban mothers in the age group of 25-35

1048766 They determine the family purchases Even when the father purchases ice cream decision is

taken by them

Consumption pattern of various age groups are depicted in the following chart Ice cream

consumption pattern50203005 to 14 yrs15 to 24 yrs25 to 35 yrs

Figure 11 Target Group wise Consumption Pattern Evaluation of Entry into Ice cream Business

for Bangladesh Limited 42

613 Target SEC and DMFI Group

Common Format

SEC A and B is the target group for common format ice cream However with rapid increase in

price level over the years has made it a ldquohard to consumerdquo product for SEC B consumers who

belong to lower DMFI group

Boutique Format

Boutique formatrsquos higher margin and high price range makes it an exclusively SEC A ice cream

People belonging to upper and upper middle class have access to the mediocre boutiques and

only higher upper class can have premium ice creams like Club Gelato and MoumlvenPick

Another unique target group for boutique format are the foreigners who live in Bangladesh

These people tend to visit the parlours to have ice cream as dessert especially after dinner

62 Ice cream in Consumer Lifestyle

Figure 12 Ice cream in Consumer Life style

This simple overview of ice cream in consumer lifestyle was determined based on in-depth

research analysis of UBL and validated through qualitative group discussions by the author

However detail of in-depth research is provided in a later section of this chapter

Evaluation of Entry into Ice cream Business for Bangladesh Limited 43

63 Highlights of Purchase Habit of Ice cream

631 Common Habits across Target Groups

There are some common habits that were identified in earlier researches and group discussions

with consumers Common habits mean the consumer approach towards ice cream that is seen

across all target groups eg kids youth and adult purchasers These are outlined below

1048766 Ice cream is mainly seen as a dessert or a snack Impulse ice cream is seen as a quick snack

that is consumed when it is in sight Visibility plays a big role here Regarding family packs

people see it as a post-food dessert

1048766 Ice cream purchase is commonly a planned event When the contexts arise people generally

take a bit of time to decide whether or not to have ice cream or when they want to go to a

boutique they make due considerations regarding which boutique to visit

1048766 Ice cream purchase decision is taken based on favourite flavour People tend to try out new

variants and flavours when they first see it They compare the taste with earlier experience and

when they purchase later they choose the flavour they have liked most

1048766 For In-Home segment decision is mostly taken on the flavour Generally people come up with

different flavours of choice and most voted flavour is chosen

1048766 People become aware of new variants or flavours mainly through word-of-mouth

Advertisement (new launches special offers and festivals) in newspaper is another source of

awareness

1048766 People are currently indifferent towards the price level of premium flavours However some

feel that price of Choc-bar or water ice creams (lolly) is a bit much If less they would have

consumed more Some also feel that companies should come up with branded ice cream in the

price range of BDT 5-8

1048766 Ice cream is purchased from nearby shops If required brand and flavour is not available 2-3

shops will be visited and then available flavour will be selected even if the required one is not

found This is done mainly not to ruin the mood for ice cream

1048766 People are very open to try new brands and flavours especially if it comes from a credible

source They would try new flavours and if they are satisfied with the taste they would repeat

purchase

1048766 Regarding boutique visits people feel that boutiques need to have a proper environment

enough flavours and other snacks

1048766 While visiting boutique with family or companion they want variation in flavours so that

they would order different flavours and taste each otherrsquos ice cream It is seen as a sign of

togetherness

1048766 Frequency of ice cream purchase varies among people It depends on peer pressure collective

family decision summer heat and attitude towards ldquoice creamrdquo itself as a product Evaluation of

Entry into Ice cream Business for Bangladesh Limited 44

632 Habits of Kids

1048766 Kids choose ice cream flavours by the look of the product (generally pictures shown in POS

materials and carts) They love colour and designs of the products let it be a common format or a

boutique ice cream

1048766 Kids (when in house) would go with the housemaid to the nearby shop choose the flavour

they want (within range of the amount given to the maid) and buy it

1048766 When with parents they would take the product they like even if the price is lower than some

other product However mothers play a role in this decision They would want their children not

to choose too high priced a product or coloured products

633 Habits of Youth

1048766 Young people are the main consumer of impulse ice cream They also are one of the major

consumers in the boutique segment

1048766 Young people love to try out new products that come into the market Another side of the coin

is that they are not very loyal to a brand or a flavour and tend to switch a lot

1048766 Regarding boutique visits young people go to boutiques to have an ldquoice cream hang outrdquo with

peer groups They would stay there for a longer period of time while they have their ice cream

1048766 Some times young people make milk shakes and other ice cream based desserts

634 Habits of Mothers

1048766 Mothers worry about their childrenrsquos health and they prefer ldquovanillardquo type of brands

However when price constraint occurs they go for water ice creams for their children They try

to convince their kidrsquos purchase decision

1048766 Regarding family purchase motherrsquos decision is sometimes prioritized by the whole family

64 Barriers to Ice cream Consumption

641 Emotional Barriers

1048766 Overindulge (close to sinful)

1048766 Undisciplined (no control)

1048766 Childish (licking)

1048766 Artificial Image

642 Functional Barriers

1048766 People of SEC B feel that ice cream is an expensive dessert (If less expensive would consume

more often)

1048766 It leads to cold cough - especially in winter rainy season

1048766 It contains artificial additives preservatives

1048766 It is very high in calories that lead to fattening

Evaluation of Entry into Ice cream Business for Bangladesh Limited 45

1048766 It does not quench ldquothirstrdquo

1048766 Less convenient (portable immediate eat)

1048766 Messy Dripping

65 Research Findings

The highlights regarding purchase habits triggers and barriers of ice cream consumption provide

a glimpse into the consumer world of ice cream industry However UBL CMI conducted a

formal research exclusively on ice cream consumers to identify

1048766 Occasions of ice cream

1048766 Frequency of ice cream consumption

1048766 Expectations from ice cream occasions

1048766 Personalities that they desire from ice cream

651 Relevant Occasions in Daily Lives of Consumers

Research question regarding ldquousual occasions of life that occurred most frequently in day-to-day

lives of the respondentsrdquo generated the following replies

Occasion

of Respondents saying Yes

Watching TV

93

Normal Dinner At Home

91

Normal Lunch At Home

89

At Home While ReadingMusicSurfing

86

Informal Family Get Together

85

Out Of Home Hanging Out With Friends

84

Out Shopping

84

Mid-Afternoon Break At Home

83

At Home By Myself During The Day

82

Special Dinner At Home

82

Informal Dinner Out Of Home

82

Normal Lunch Out Of Home

82

Leisure Walk

79

Coming Home From WorkSchool

78

Special Dinner Out Of Home

78

Celebration

78

A Night In With Friends

77

At Home By Myself In The Evening

77

Special Lunch Out Of Home

76

Mid-Afternoon Break Out Of Home

75

Special Lunch At Home

73

Day out with Partner

72

Midmorning Break

70

At Breakfast

68

Family Day Out

68

During Work Or At School

65

Evaluation of Entry into Ice cream Business for Bangladesh Limited 46

Travelling ToFrom WorkSchool

65

At The Cinema

61

Special Event

56

Clubbing At A Party

50

Post GymSports

48

Table 28 Relevant Occasions in Consumersrsquo Lives

Respondents were then asked to mention ldquofrequency of occurrence of the identified occasionsrdquo

The identified replies are as follows Normal dinner at homenormal lunch at homeComing home

from workschoolTraveling tofrom workschoolDay out with Partner SpouseMid-afternoon

break at homeOut of home hanging out with friendsLeisure walkMid-afternoon break out of

homeA night in with friendsSpecial dinner at homeSpecial lunch out of homeFamily day

outSpecial eventPost gymsportsDaily2-3 Times A WeekWeekly2-3 Times A MonthOnce A

MonthEvery 2-3 MonthsLess OftenNever Figure 13 Frequency of Occurrence of Occasions

This shows that ldquoNormal dinner at home Watching TV Normal Lunch At Home At Home

While ReadingMusicSurfing Coming Home From WorkSchool During Work Or At School

Travelling ToFrom WorkSchool Midmorning Break Day Out With Partner Spouse At Home

By Myself During The Dayrdquo are the most frequent daily rituals of busy lives of consumers

652 Frequency of Ice cream Consumption

Respondents were asked to mention ldquoconsumption pattern of ice cream during the identified

occasionrdquo on a scale of 1-5 depicting frequencies like ldquo(5) always (4) most of the times (3)

about half of the times (2) sometimes (1) never do not knowrdquo The responses are depicted in

the following table

Evaluation of Entry into Ice cream Business for Bangladesh Limited 47

444474544655555566756665775967779991011101111101210111110101113111412131314161

011121411131216181519181518211817171719181718201721222130303434253437403741394

046383944464746453745414641374638504843414839373030292726232725222020201926202

21722221317Midmorning

breakWhile clubbing at aAt the cinemaSpecial eventNormal lunch out ofA night in with

friendsNormal dinner atInformal dinner out ofAt home by myselfAt home by myself inOut

shoppingSpecial lunch atDay out with SpouseWatching TVAlwaysmost of the timesAbout half

of the timesSometimesneverdo not know

Figure 14 Frequency of Ice cream Consumption

As it can be seen ldquoDay out with Spouse Special lunch at home Special dinner at home

Watching TV Family day out Celebrationrdquo are the occasions where most frequently ice cream is

consumed

653 Market Character Mapping Relevant Occasions vs Frequency of Consumption

If we plot frequency of consumption on the X-axis of a chart and relevance of occasion

occurrence on the Y-axis taking the above mentioned values as cut-off values we get four

quadrants in the chart depicting four market scenarios that any ice cream manufacturer in

Bangladesh market might encounter given the current market situation This market

segmentation is based on frequency of ice cream consumption in daily occasions of consumer

lives

The segments are

1048766 OPPORTUNITY MARKET High Relevant Occasions-Low Ice cream Frequency

1048766 QUESTION MARKET Less Relevant Occasions-Low Ice cream Frequency

1048766 HIGH FREQUENCY MARKET Relevant Occasions-High Ice cream Frequency

1048766 CAPTIVE MARKET Less Relevant Occasions-High Ice cream Frequency

The chart looks as follows Evaluation of Entry into Ice cream Business for Bangladesh Limited

48

Figure 15 Relevance of Occasion-Frequency of Consumption Mapping

As it can be seen from the above chart Bangladesh Market still lies in the Opportunity and

Question market zone with a pull towards High frequency and Captive Market zones This is

evident from market data as penetration of ice cream still remains at Thana headquarters levels

Also this explains the high market growth rate of 17 as market is yet under developed and

branded quality ice cream has yet not reached all levels of consumers especially rural level that

constitutes around 75 of Bangladeshi market

From the above analysis we can establish that target of ice cream manufacturers should be to

penetrate more into the Bangladeshi market to create higher frequency of ice cream

consumption The following chart shows the strategies to follow for ice cream manufacturers

Figure 16 Required Market Strategy for Bangladesh

Evaluation of Entry into Ice cream Business for Bangladesh Limited 49

As relevance of ice cream consumption occasions can hardly be controlled by marketers their

endeavour should be to create more ldquoemotional and functionalrdquo attachment to ice cream in less

frequent occasions through ldquomarket developmentrdquo strategy to earn share from overall food

expenditure of consumers and at the same time make them consume more ice cream in highly

relevant occasions through ldquopenetrationrdquo strategy

654 Consumersrsquo Emotional Requirements and Product Attributes

All consumers under these clusters also identify the emotional requirements and the significant

product attributes they seek from their current preferred and future desired ice creams These are

provided below

Cluster

Emotional Functional Requirement

Product Attributes

Enjoyment

Flavour Variety

1048766 Combination of different flavours

1048766 Combination of different textures

1048766 Very sweet

1048766 With wafer or biscuit

1048766 With chocolate

1048766 Of a well known brand

Socially Involved

Spoonable Rich

1048766 Very creamy

1048766 Only natural ingredients

1048766 No mess

Care

Size Creaminess

1048766 Big

1048766 Rich full taste

1048766 Smooth

1048766 Value for money

1048766 No mess

Unwind amp Escape

Economy

1048766 Crunchy

1048766 Economic

1048766 Of a well known brand

1048766 Nutritious

Balanced Convenience

Health Conscious

1048766 Of a well known brand

1048766 Nutritious

1048766 Milk based

1048766 Low sugar

1048766 Low carbohydrates

1048766 Filling

Active Self-Grooming

Fruit Vitamins

1048766 Healthy

1048766 Fruit based

1048766 Low fat

1048766 Liquid or drinkable

1048766 Nutritious

1048766 Of a well known brand

Confidence

Drinkable Light

1048766 Low calories

1048766 Light on the stomach

1048766 Chewy or gooey

1048766 Not so sweet

1048766 Natural appearance

Sensual

Appeal or image

1048766 No artificial additives

Evaluation of Entry into Ice cream Business for Bangladesh Limited 50

1048766 Natural appearance

1048766 Melting slowly

1048766 Attractive packaging

1048766 High quality ingredients

1048766 Of a well known brand

Table 29 Requirements amp Product Attributes Desired by Consumer Clusters

Of these findings we see that the identified highlighted barriers to ice cream consumption are

pretty evident among the consumers Mostly people want products of a reliable source or a well

known brand low calories quality ingredients value for money economic type

Evaluation of Entry into Ice cream Business for Bangladesh Limited 51

70 INDUSTRY ATTRACTIVENESS AND ENTRY PROSPECTS

71 Driving Forces of Growth

As identified in the earlier sections there are several driving forces behind the growth of ice-

cream industry in Bangladesh

712 Trade and Infrastructural Level

1048766 As a result of globalization newer varieties have been introduced to the local products Many

foreign companies are also coming as franchise so there has been increased competition and

these boutiques are setting higher standards for the local producers

1048766 The present market growth rate is 18-19 which is being influenced by larger players like

Igloo who are expanding their distribution nation wide with expansion of national electricity

grid

1048766 With entry of Modern Trade and recent organized business approach of retailers has made it

possible for ice cream manufacturers to penetrate into shops even without providing them with

branded freezers

1048766 Weather change has increased ldquosummerrdquo season in our country which has reduced negative

seasonal impact on ice cream

1048766 Large companies like Igloo have taken global learning of using carts as an effective tool of

availability and visibility for ice cream

1048766 New and improved technologies are being used in the production process This technological

advancement has improved quality increased speed of production and made the process more

cost effective

713 Consumer Level

1048766 Only a few years back rich people could afford the luxury of having ice-cream but now it has

become a common product for everybody Ice-cream companies are producing different products

with a wide price range for consumers of every class and status

1048766 Nowadays companies are doing promotional campaigns more frequently the customers get to

know about the product which makes it easier for them to buy the best one

1048766 The improved standard of life and more modernized lifestyle of people is an important reason

for the increased consumption thus growth of the ice-cream industry

Evaluation of Entry into Ice cream Business for Bangladesh Limited 52

72 Prospects of Entry

The ice-cream industry of Bangladesh is an attractive one for the investors because there is a

huge market but number of producers is very small The major reasons behind industry

attractiveness are as follows

1048766 The industryrsquos current growth potential is very high with opportunity for market development

1048766 The competition currently permits adequate profitability and the competitive forces are

becoming stronger with time

1048766 Boutique segment is at a very high growth stage but no operator is currently operating with a

mid price range of BDT 100-400 Ice cream kiosks and small scooping boutiques can operate

within that range

1048766 Current industry driving forces are favourable for the future industry profitability

1048766 Globally oriented consumers look for variety in ice cream that is currently not available

Latest innovations came in the market in 2002 People would welcome new variety and flavours

1048766 There is a gap in the market for balanced convenience through ice cream where consumers can

get nutritional benefits for ice cream Also emotional attachment to ice cream could further be

improvised in promotional campaigns

1048766 There is high scope for market penetration and development to increase frequency of ice

cream consumption

1048766 Level of risk or uncertainty is very low in ice-cream industry because the consumer market is

so huge any product with a standard quality and careful pricing will be able to make significant

profit

1048766 As for geographic reach of the industry 60 market is still in Dhaka There is scope of

expansion and a new entrant can easily capture market share within Dhaka using carts even if

they do not want nation wide cold chain distribution

1048766 The production process is very complex and capital requirements are also high So before

going into production any company should know about their capabilities and weaknesses and

then start the business or else they might suffer huge loss at a certain level

1048766 Unilever can acquire the required resource and use existing multi-national multi-cultural

expertise to enter the market in a grand way

1048766 With high probability of entry from DANONE with more products like the ISIS diabetic ice

cream Unilever should consider entering in this industry as soon as possible

Evaluation of Entry into Ice cream Business for Bangladesh Limited 53

80 ENTRY STRATEGY FOR UNILEVER

While describing the suggested entry strategy for UBL certain issues have been kept

confidential and some issues have been touched but not explained to keep consistency with UBL

confidentiality policy

81 Suggested Entry Areas for UBL

1048766 Boutique segment of the Bangladesh ice cream is only 5 of the branded market UBL needs

to pursue a larger scope to make the entry viable

1048766 UBL cannot fight with unbranded segment as global product quality mandate of Unilever does

not allow UBL to fight in low price-low quality segment

1048766 Recommend entry should be in the common format segment with both single and multiple

servings and in the boutique segment with a different brand name (if possible BEN amp JERRYrsquoS)

1048766 UBL should build up state-of-art modern factory for manufacturing and establish cold chain

facilities initially focusing on metro cities

1048766 Investment issues are required to be addressed for building factory and cold chain and capital

requirement needs to be identified for that purpose4

1048766 UBL may have boutiques for driving image selective top-end offering

1048766 Kiosks can be setup near universities and shopping malls

1048766 Boutiques should be concentrated in Dhaka and Chittagong

1048766 Ice cream for boutiques and kiosks would be produced in factory as institutional packs of 9-10

litres

82 Products

1048766 As a Brand Building country in global Unilever operating framework UBL is entitled only to

bring products developed by the Brand Development countries

1048766 Unilever should focus on serving products that have nutritional benefits (already available

globally) along with usual satisfactions of sensual pleasure functional attributes etc

1048766 Current existent players especially Igloo and Kwality have extensively copied global and

regionally available Unilever products eg Cornelli is same as Wallrsquos Cornetto Vinetta is similar

to Vienetta Mega is similar to Magnum etc UBL needs to differentiate these to consumers on

the ldquotaste the originalrdquo platform where global quality is focused regarding the products

1048766 UBL should also bring regionally famous brands like Moo or Max to create image

differentiation

1048766 Magnum or Moo should be used as premium end ice cream to generate more profit margin

Evaluation of Entry into Ice cream Business for Bangladesh Limited 54

83 Placement

1048766 Distribution focus should be in Dhaka for entry as Dhaka contributes more than 60 of total

ice cream sales in the country

1048766 Company may use carts as distribution method They serve as good source of visibility and

availability It would help in increasing impulse purchase

1048766 At least 1500 outlets in Dhaka and Chittagong needs to be actively served using dedicated

branded refrigerators to generate sales

1048766 50 carts should operate in Dhaka and Chittagong

84 Price

1048766 UBL products should be priced at par with Igloo pricing for the common format ice creams

1048766 UBL can bring in premium single-serve SKUS for the higher economic classes in the price

range of BDT 60-80

1048766 Smaller SKUs (small lolly stick) can be introduced in the price range of BDT 10-15

1048766 In the boutique segment UBL should price products above the semi-premium segment

(Gelateria Igloo Sub Zero or Andersenrsquos) but lower than that of Club Gelato or MoumlvenPick

85 Promotion

1048766 UBL would require strong marketing campaign (As high as 50 of sales) to have a grand

entry in the market

1048766 Presence in the television media would be of utmost importance More than 50 of

promotional expense should be made here initially Gradually it can be reduced

1048766 Newspaper would serve as the second most important option

1048766 Billboards should also be used

1048766 Activations (similar to Lux Channel i Super Star or Igloo Festival) should be done to generate

trial

86 Scope of Opportunity

Table 30 Value and Volume Based Scope of Opportunity for UBL

Value (BDT Cr)

Volume (Tons)

Market

131

7835

Common

121

7600

Boutique

98

235

Evaluation of Entry into Ice cream Business for Bangladesh Limited 55

861 Geographic Contribution

1048766 Dhaka (61)

1048766 Chittagong (19)

1048766 Sylhet (10)

862 UBL objectives

Common Format Ice Creams

1048766 Target 10 Market share in 1st year operation

1048766 Value BDT 11 Cr

1048766 Production capacity required 21 Tons day

1048766 Freezer Placement 1500 freezers

1048766 Cart operation At least 50 carts

Boutiques

1048766 Target Further develop the market

1048766 Focus Dhaka Chittagong and Sylhet Metro

1048766 Franchise At least 20 franchisee operations nation wide in divisional towns

1048766 Pricing Below imported parlours above common formats with around BDT 400 per Litre

87 Critical Success Factors

1048766 UBL is considered as a high profile company in Bangladesh and thus they cannot operate in

the market only with common products like choc-bars and cups They must have premium

products (these require extrusion line) also to carry their brand image Otherwise UBL would not

be able to charge usual premium over competition products

1048766 Launch of ice cream would require huge promotional and activation support in order to gain

customers from Igloo People want novelty regarding ice cream and UBL have to let them know

about their products and create hype

1048766 Cart should be used as a source of distribution Recent successes of Unilever companies like

Indonesia shows that carts can generate more sales and can be used as source of visibility in the

minds of both retail traders and consumers Carts can also provide incremental sales to the

company

1048766 UBL have to create a strong cold chain for ice cream (initially in Dhaka and Chittagong) to

ensure quality products for consumers

1048766 UBL have to build capacity very rapidly to meet consumer demand if the launch is successful

Evaluation of Entry into Ice cream Business for Bangladesh Limited 56

90 BUSINESS PROJECTION

91 Basic Assumptions

Business projection for ice cream business was made based on a conservative approach UBL

would require spending significantly on production capacity and factory dedicated to ice cream

Thus to analyse business possibilities of ice cream certain assumptions were made and collected

data were used These are

1048766 Production equipments and cabinets would cost approximately BDT 55 crores

1048766 Production equipments 45

1048766 Packaging Equipments 15

1048766 Storage Facility 20

1048766 Branded Freezers 10

1048766 Distribution Investment 10 (Distributors would also invest themselves)

1048766 Ice cream factory with a floor size of 20000 sqft would cost BDT 25 crores

1048766 Objective is to capture 10 market share in Dhaka and Chittagong in the first year

1048766 Business would grow by 50 in year 2 and 3 30 in year 4 and 25 in year 5

1048766 Weighted price per litre is BDT 170 according to volume share of single serve ice cream

multiple serve ice cream and boutique ice cream

1048766 Other financial assumptions were also made List of them are provided below but amount has

been removed for confidentiality issues

Assumptions

Trade Margin

Distributors Margin

DutyVAT Rate

Trade Terms Expense of NPS

Trade Terms Expense of NSV

Advertising ampPromotion of NPS

Indirects (Salaries Wages etc)

Trading Tax

Table 31 Assumptions for Business Projection

Evaluation of Entry into Ice cream Business for Bangladesh Limited 57

100 CONCLUSION

Ice cream has good prospect in Bangladesh It is still a growing market with opportunities for big

new entrants With the barriers of entry UBL needs to consider its priorities UBL being an HPC

company traditionally needs to acquire expertise in cold chain distribution and has to invest a lot

of money to rip the benefits of the industry However to initiate company can take regional

support and acquire resource expertise The company should enter the business as soon as

possible since there is potential threat from DANONE to introduce more ice creams after ISIS

diabetic ice cream and also with potential of the industry arch rival Nestlersquo might consider

entering into the industry too

Evaluation of Entry into Ice cream Business for Bangladesh Limited 58

References

Web References

1 wwwunilevercom

2 wwwunilevercombd

3 wwwhllcom

4 wwwunilevercompk

5 wwwthedailystarcom - Life Style Magazine

6 wwwreuterscouk

Evaluation of Entry into Ice cream Business for Bangladesh Limited 59

Page 22: Square Ice cream

4

Normal Cone

5

Flavour

Rank

Vanilla

1

Chocolate

2

Strawberry

3

Ripple

4

Mango

5

Table 16 Rank of SKUs Table 17 Rank of Flavours

Choc-bar is one of the earliest vanilla based chocolate coated SKU that has dominated the

market strongly over the years Shopkeepers could not provide an exact percentage on SKU

based sales contribution Most of them ranked the SKUs and flavours according to sequence

shown in the above table Also according to newspapers and secondary sources Vanilla is the

most selling flavour with 60 sales contribution According to secondary sources percentage

sales contribution of various types of SKUs in the common format segment are as follows

Type of Ice cream

Value Share

Volume Share

Impulse dairy ice cream

514

443

Impulse water ice cream

112

138

Take-home dairy ice cream

374

419

Table 18 Volume Share of Different Serve Types

Impulse dairy ice cream provides more value share as price per litre is higher than take home

multiple serving ice creams Impulse water ice cream shows a similar trend as of take home ice

cream

Pricing Product pictures and price ranges of each category are provided below Evaluation of

Entry into Ice cream Business for Bangladesh Limited 27

Normal Premium Price Tk12 Tk20 Tk25 Cup amp Sundae Normal Cup Sundae Premium Cup

Price Tk20 Tk25 Cone Normal Premium PriceTk20 Tk25Innovative Fillers PriceLtr Tk100

Tk175 Container Normal Premium PriceLtrTk150 Tk 175 Tk 190 Family Packs Kulfi Mixed

Pack Cake Single ServingMultipleServingNormal Ice Fruit 3D Mould Premium Extrusion Price

Tk10 Tk15 Tk15 Tk20Stick Normal Cream

Figure 8 Serve Types and Pricing

As it can be seen from the above chart all impulse ice creams are priced within the range of

BDT 10 to 25 Other take home multiple servings are priced within the range of BDT 50 (05

Litres) to BDT 220 (2 Litres) Another noticeable factor in price is that there are both normal and

premium flavours in all types of ice creams

K Firms as Price Setters

The firms have capability to affect the market price to be low as profit margin is very high If

Igloo reduces the price of an item below the prevailing price level in order to increase its sales

its competitors will fear that their customers will go away from them to buy Igloo products To

retain their customers they will be forced to match the price cut of Igloo Historically this has

been proven to be true However due to price sensitivity companies cannot drastically increase

price even if they provide higher quality of product It was seen in 1997 when Igloo increased

price of 11 SKUs and faced drastic sales fall during that time It shows that the industry might

welcome overall industry price increase but not individual company price increase

L Promotion

The promotion scenario in the industry is not quite organized as of now Even proper data

regarding promotional expenditure is not available from research sources The reason being

there is not much consumer related activity seen in the market After Kwalityrsquos introduction in

the market in 1999 Igloo went on with massive Television promotion of their new products that

were available at that time

Evaluation of Entry into Ice cream Business for Bangladesh Limited 28

However in current times there is no TVC running from any company Companies promote their

launches mainly through billboards and newspaper promotions which is currently the most used

source of consumer promotion Some promotional activities that were done by the companies

over the years are listed below

Consumer Promotions

1 Larger players like Igloo and Kwality goes on with campaigns like ldquoGift on stickrdquo where

various prizesrsquo names are written on the sticks and consumers can get them

a Igloo ran a program on their launch of Macho variant where gift varied from cricket bat to

personal computer

b Igloo had a program in 2006 where gifts on sticks varied from Bangkok visit to sunglass

c Igloo ran one campaign in 2007 where gold bars were given on purchasing Choc-bar

d Kwality ran a similar program in 2008 where gifts varied from wrist watches to motorcycle

2 Some companies ran consumer TTS and gift programs where company products were given

free

a Igloo had a program in 2006 where Igloo butter was given free on purchasing Igloo ice cream

cake

b Kwality ran a program in 2008 where one SKU was given as gift with another SKU randomly

c ldquoCone Ice cream at your Homerdquo program was run by Igloo in 2002 where six cone biscuits

were given free with purchase of one litre ice cream

3 Media placement is another form of placement done by larger companies

a Igloo purchased ldquoGlimpse into World Cup Resultrdquo space in daily newspapers during World

Cup Football 2002

4 One interesting program is done by only Igloo in Bangladesh They did it in June 2006 The

program was ldquoIgloo Ice cream Festivalrdquo with main attractions of ldquoGet as much ice cream as you

want for BDT 200rdquo ldquoGet a Fantasy Kingdom Entry ticket with each Entry Couponrdquo ldquoLucky

Drawrdquo and ldquoCelebrity Addardquo

Trade Promotions

5 Trade promotions are mainly given to ldquoHighest retail purchasersrdquo and also based on time

bound trade schemes where various slabs of purchase amount are mentioned for different prizes

a Igloo takes their highest purchasers to visit countries like Singapore and Thailand

b Savoy has a purchase slab scheme where first prize is table fan

c Polar gives special sales commission to their highest purchasers (around 5)

Evaluation of Entry into Ice cream Business for Bangladesh Limited 29

M Players in the Common Format Segment

Branded common format ice cream segment is constituted of five players only Among them

Igloo is the largest player and Milk Vita is the smallest The following sections detail the basic

company detail of all the companies with special emphasis on Igloo the market leader

Igloo

The pioneering ice-cream company in Bangladesh started its operation in 1964 in Chittagong

under K Rahman amp Co Limited (KRC) with a small factory inside Coca Cola bottling factory of

KRC After the independence of Bangladesh in 1971 Igloo was taken over by the government of

Bangladesh Later in 1983 Abdul Monem Limited purchased the entire production setup of KRC

Limited including Coca-Cola bottling plant and Igloo ice-cream factory After taking full charge

of Igloo ice-cream by Abdul Monem Limited the manufacturing operations continued in

Chittagong till 1990 Although Dhaka fetched the maximum share of the total revenue the

distribution cost increased tremendously in the process of meeting the demand of Dhaka city To

cope with the distribution problem and handle Polar threat Abdul Monem Limited transferred

the factory to Dhaka changed the ice-cream packaging from the conventional paper to plastic

and expanded their market and distribution operation The new factory of Igloo was setup at

Shyampur Narayanganj and was nine kilometres away from the Motijheel office The company

apart from catering the capital city started to expand its operations in Comilla (1991) Khulna

(1992) and North Bengal (1993) These markets were served directly from Dhaka since the

storage facilities were not developed till then The company is now the market leader since 1997

with clear market share victory over others with sweeping 51 share It is to be noted that Igloo

is also a player in the boutique segment with three parlours (2 in Dhaka and 1 in Chittagong)

Product Range Igloo offers the widest choice of ice cream more than any other competitor in

the market Igloo is offering a total of fifty items including normal premium and novelty cup

stick and family pack items Igloo has thirty flavours more than anyone else in the industry and

is continuously launching new and innovative delicacies

Igloo ice-cream can be classified in six groups They are

Stick

Macho Choc-bar Mini Choc Clown Mega Shell n core Lolly

Cone

Cornelli 2 in one Cornelli classic

Cup

Shahi kulfi Vanilla Strawberry Mango Snow ball

Container

Vanilla Strawberry Mango Chocolate Coffee Diet Vanilla Tutti Frutti Ripple Pralin

Pistachio

Innovative

Nuggets Sandwich

Family

Ripple cake Party time Shahi Kulfi

Table 19 Products of Igloo

Single serve stick cups and cone items are easy to carry around and convenient to eat which

makes it most sold The core target segment of ice-cream is 6-24 years and this generation is

always on the Evaluation of Entry into Ice cream Business for Bangladesh Limited 30

move and thus prefers independent cone stick or cup items As Igloo initiated the concept of ice-

cream as a family product they offer some items to be enjoyed with the whole family

Quality and Innovation Igloo is committed to maintaining the highest quality standard through

its continuous RampD activities The major ingredients raw materials and packing materials are

procured from the best European sources Strict quality control is done at every stage of the

manufacturing process from procurement of material mixing material flow ice cream making

packaging storing (at main warehouse) distributing and market shelving by the Quality Control

Department Current supply chain for various materials of Igloo is as follows Australia (Milk

Powder) Denmark (Ingredients emulsifiers amp stabilizers) China amp UAE (Food grade sticks)

China Denmark Singapore amp Thailand (Food grade packing materials)

Figure 9 Igloo Supply Chain

Distribution Network Their distribution network is stretched all over the country with a long

fleet of refrigerated vans Firstly the ice cream products are stored at the central warehouse of

the factory and from there they are distributed through the haulage vehicle to the operational

centres located in Dhaka Chittagong Comilla Rajshahi Barisal Bogra Rangpur and Khulna

Strictest cold chain maintenance during the distribution and selling of the ice creams is ensured

Their distribution process is as follows Manufacture Stored at -24c Transported by Refrigerated

trucks at -Reaches amp Preserved in Eight regional stores Refrigerated vehicles (Distributors)Retail

outlets (Deep freezers)

Figure 10 Distribution Process of Igloo

Evaluation of Entry into Ice cream Business for Bangladesh Limited 31

Trolley Operation Igloo also operates through trolleys for extending its reach to consumers at

the furthest points The trolleys are operated near schools alleys streets parks etc and play

rhythmic music to attract the consumers These are very colourfully decorated with Igloo

umbrella and the puller wears specific uniforms Igloo was the first in introducing and operating

these trolleys in Bangladesh for any Fast Moving Consumer Goods (FMCG) Igloo has around

125 trolleys operating throughout the country Individual trolleys are provided with a regular

supply of igloo ice creams

Marketing The marketing commitment of Igloo is based on the relationship with its customers

and consumer by not only manufacturing the highest quality product but also delivering the

product by maintaining this quality To satisfy the ever-changing needs of the customer Igloo

has regularly launched new ice creams and introduced new flavours And this commitment has

positioned Igloo as the market-leading brand by gaining the consumers trust with the positioning

as ldquoA WORLD OF GREAT TASTErdquo

Facilities and Logistics at a glance As of 2009 following are the facilities and logistics enjoyed

by the company

Factory location

Dhaka

Production Lines

4

Packages

Stick Cup Family pack Others (Nuggets and sandwich)

Machine suppliers

1048766 Mark-Italy

1048766 Tetra Pak(Hoyer)-Denmark

1048766 Sabore Denmark

1048766 Hass- Austria

Machine models

1048766 Freemark 1100 Italy

1048766 FM 3000 FM 6000 Italy

1048766 SL600 Denmark

Cone baking

Hass- Austria

Chocolate making

Macentyre-UK

Coverage

Nationwide

Operational centre

10

Total market vehicles

30

Distribution channel

Directthrough appointed distributors

Outlet service

7500

Injected deep freezers

4000

Trolley operations

125

Warehouse no

8

Table 20 Igloo Facilities and Logistics

Kwality

Kwality is currently the second largest ice cream manufacturer of the country The mother

company for the Kwality brand is Sanowara Drinks amp Beverages Ltd a sister concern of

Sanowara Group The company is famous for powdered milk brands Red Cow and Diploma in

Bangladesh The drinks and beverage concern of Sanowara made an entry into the market in

1997 with ldquoYesrdquo brand drinking water and launched the ice cream brand in 1999 With heavy

communication and novelty products it Evaluation of Entry into Ice cream Business for

Bangladesh Limited 32

successfully removed Polar from the second place with a current market share of 27 The

company also operates in the boutique segment with two parlours in Dhaka and Chittagong

Kwality ice cream factory is situated in Chittagong with a floor space of 35000 sft and fully

automated machinery wrapping mix machinery equipments from Italy having capacity of

around 20000 litres of ice cream per shift The ice cream factory employs 140 people The

company is ISO 9001-2000 certified

Kwality was the first true competitor for Igloo products with some major innovation in product

design and communication but their quality is perceived to be lower in the minds of the

consumers and they do not have extrusion ice cream The product prices are also similar to that

of Igloo but they charge a bit lower than Igloo in premium multiple servings However during

market visits it was seen that shops that keep only Kwality or Igloo and Kwality both they can

sell Kwality too although the sales amount is lower than that of Igloo People who look for Igloo

shopkeepers give them that directly but if they get a chance and Kwality ice cream stock is high

they also push Kwality to dry the stock out This gives an indication that market is larger than

what the current players are capable of serving even in Dhaka

Kwality follows a similar distribution model like Igloo but distribution frequency is lower and

amount of cart sellers is limited to 25 and they operate only in Dhaka

Polar

Once a giant in the industry Dhaka Ice Cream Industries Ltd introduced the first hygienically

packed ice cream in Bangladesh in 1987 and the brand name Polar was thus born In the early

days the company started ice cream business with a wide range of products and a variety of

flavours in Dhaka city In 1988 the company started its distribution in the city of Chittagong

then Bogra and continued to cover more cities Presently Polar ice cream is available

throughout Bangladesh The company today trails in the market with 15 market share in the

common format segment Recently Polar has announced launch of ISIS diabetic ice cream with

support from DANONE to turn around in the market

The company has its head office as well as a modern large-scale industrial plant in Dhaka Polar

ice cream is made with Danish expertise using Danish equipment and technology The

production activities and quality control measures are supervised and managed by Danish

experts Polar offers a wide range of delicious flavours and tastes made by ingredients imported

from Europe

Dhaka Ice Cream at present has 3 cold stores in Dhaka Chittagong and Bogra in Bangladesh

From Dhaka cold store they distribute ice creams in Mymensingh Tangail Jamalpur Sherpur

Kishoreganj Netrakona Comilla Narsingdi Barisal Madaripur Agaeljhara Faridpur Magura

Chuadanga Jessore Satkhira Khulna Pirojpur and Sylhet through their distributors In case of

long distance delivery points the company uses auto cooling freezer van

Evaluation of Entry into Ice cream Business for Bangladesh Limited 33

In Dhaka city they distribute ice creams directly to retail stores in freezer vans Besides that

they have several distributors at different points of the city Distributors cover their individual

areas where company is not able to supply directly in their freezer vans Similar model is

followed by the company to distribute ice cream from their other cold storages through out the

country For storing and selling ice creams in retail stores the company like the other players

arranges a deep freezer with the Polar logo and canopy light box

In addition to this distribution the company also undertakes home delivery of ice creams for

special occasions

Savoy

Savoy Ice-cream brand is owned by Sena Kalyan Sangstha (SKS) Group of industries It started

its journey in March 1995 with a factory in Tejgaon Dhaka Yearly turnover is estimated at BDT

388 crores with a market share of roughly 35

The factory has been established with Sonali Bank finance at 6040 equity ratio The total

production capacity of the factory has been estimated at 2400 litres of Ice-cream per day Total

land area of the factory premise is 116 Bigha with 8000 sft area covered with a total project cost

of BDT 144 The factory employs 73 people

Product ranges of the company include all the basic designs and flavours of the industry

However the company has not been much of an innovator in the industry Their product quality

is substantially low than that of other players and they price their products at 10-15 lower than

the other competitors The company imports raw materials mainly from Europe The general raw

materials are Euro cream Skimmed Milk Powder Cocoa Powder and Flavour (Vanilla Mango

and Strawberry) Colour (Yellow Red Chocolate and Green) Ripple Sauce Cheney Fruit Palm

Kernel Oil Anhydrous Butter Oil (Ghee) and Sugar etc

Milk Vita

Milk Vita is one of the most famous brand names in Bangladesh for its liquid dairy milk Owned

by Bangladesh Milk Producersrsquo Co-operative Union Limited (BMPCUL) the company came in

the market with proper dairy milk ice cream in form of cups and choc-bar With a production

capacity of around 1600 litres per day the company is trailing in the market place with 3

market share

Although the Milk Vita Choc-bar was perceived to be extremely tasty by consumers they

probably could not do well due price competition Currently they do not even distribute ice

cream in Dhaka However their presence is seen in outskirts of Dhaka and other nearby towns

If the current market situation prevails Milk Vita would lose their remaining market share and

other companies would benefit especially Igloo However one of the advantages of Milk Vita

remains to be

Evaluation of Entry into Ice cream Business for Bangladesh Limited 34

their nation wide milk supply network They have skimmed milk powder production plant that

Igloo does not have Thus they can combat the seasonality of milk supply that Igloo with its

huge requirement of milk cannot

Strengths and Weaknesses of Competitors

Company

Strengths

Weaknesses

Igloo

1048766 Strong brand image

1048766 High product quality

1048766 Highest no of variety

1048766 Strong distribution network

1048766 Highest visibility

1048766 Strong promotion

1048766 High production capacity

1048766 Presence of extrusion ice cream

1048766 Items are generally a bit pricy

1048766 Igloo does not give free freezers like other companies

1048766 Reluctant in recent times regarding innovation

1048766 Local sourcing of liquid milk does not meet demand

1048766 Failure to use ERP technology slowing decision making

Kwality

1048766 Product variety

1048766 Strong promotion

1048766 Free freezer distributed

1048766 Presence in all price segments

1048766 High production capacity

1048766 Weak distribution

1048766 Lower exposure

1048766 low amount of carts in operation

Polar

1048766 Free freezer

1048766 Quality perceived to be high compared to Kwality

1048766 Discoloured freezers

1048766 Lower exposure

1048766 Low product variety

1048766 Unused capacity

Savoy

1048766 Price is lower

1048766 Discoloured freezers

1048766 Low product variety

1048766 Weak distribution

1048766 Small amount of freezers

1048766 Low production capacity

Milk Vita

1048766 Quality is good due to dairy cream

1048766 Brand leverage from Milk Vita milk

1048766 Low exposure

1048766 Low variety

Table 21 Strengths and Weaknesses of Competition

512 Market Characteristics of the Boutique Segment

With a small market of BDT 98 Cr and 567 share in the branded ice cream market the

boutique segment is currently an increasing segment in the ice cream industry Boutique

segmentrsquos history dates back to 1960s when Igloo launched boutiques in Dhaka to save

distribution cost and promote a culture of ldquoice cream eating outrdquo In later years boutiques lost

their glamour and retail common format segment picked up growth However with Dolce Vita in

the late lsquo80s craze for Italian Artisan ice cream was recreated in the market Although Dolce

Vita is failing in recent times emergence of MoumlvenPick and Club Gelato in 2000 has uplifted the

segment once again Current growth rate of the

Evaluation of Entry into Ice cream Business for Bangladesh Limited 35

segment can be estimated to be approx 20-22 (higher than the common format segment)

Following are the basic detail of all the major players in the segment with their estimated sales3

Players

Outlet

Sales (Cr Taka)

Share

Club Gelato

1

136

199

MoumlvenPick

1

119

174

Andersenrsquos

3

119

174

Gelateria Igloo

3

119

174

Sub Zero (Kwality)

2

051

75

Baskin Robbins

1

015

22

Dolce Vita

1

017

25

American Soft

1

009

12

Rainbow

1

009

12

Others (off site)

089

130

Total Market

682

Table 22 Players and Shares in Boutique Segment

A Detail of Operation

General operational procedure followed by all the operators is as follows

1048766 Operating method There is a variation in operational method among the large operators

1048766 Club Gelato uses kitchen at own premise where imported ingredients and local milk (daily

special service from Milk Vita) are used to make ice cream

1048766 MoumlvenPick directly imports ice cream from Switzerland

1048766 Andersenrsquos Gelateria Igloo and Sub Zero produce ice cream at their factory with a mix of

imported and local ingredients

1048766 Products Around 30-35 flavours of artisan dairy ice cream are served at the premises

1048766 Most sold flavours are Vanilla Ferrero Rocher Butterscotch Chocolate Caramel etc

1048766 Other Products Larger players also serve ice cream desserts (milk shakes ice cappuccino etc)

pastries and other desserts with normal coffee and tea facility at their premises

1048766 Boutiques fight ice cream seasonality with the other products sales during off-peak ice cream

seasons Usually ice cream and other products contribute at 6040 ratio in summer and during

winter and off-peak seasons the ratio reverses

1048766 Pricing Usually the prices of products in this segment are 3-4 times higher than that of the

common format segment

1048766 Prices do not vary with flavours Variation depends on serve style (Cone tub) and use of

toppings and other ingredients (Chocolate sauce nut fruits) etc

1048766 Usual margin charged is around 50-60 over production cost Similar margin is charged for

other products like coffee ice cappuccino etc

3 Yearly sales is estimated based on companyrsquos approximate daily sales collected during

interview

Evaluation of Entry into Ice cream Business for Bangladesh Limited 36

1048766 Target Group Most of the consumers belong to SEC A and higher SEC A with DMFI of at

least BDT 20000

1048766 Foreign delegates and resident foreigners also visit these boutiques

1048766 Main purposes of visits in the boutiques are

bull Youth hangout with friends and having ice cream and ice cream derivatives

bull Family Family night out or eat out at a restaurant and then having dessert

bull Foreigners Having dessert after dinner

1048766 Rush time at boutiques are Afternoon 2-4 pm and at night 9-11 pm

1048766 Offsite sales Most of the large operators also sell offsite They have small freezers for off-site

1048766 Club Gelato and MoumlvenPick serves ice cream at high society parties and programmes

1048766 MoumlvenPick also has kiosks in known hotels like Sheraton

1048766 Promotion No mass promotion is done by any of the companies Word of mouth is the most

important source of promotion Posters and banners outside the premise and occasional

newspaper advertisements are used to communicate special offers

1048766 Growth Drivers Market growth is driven by image innovation quality decoration of facility

environment and special offers

1048766 Club Gelato has the image of selling true Italian dairy ice cream with an excellent hangout

environment

1048766 MoumlvenPick imports ice cream directly from Switzerland and is perceived to be of high quality

1048766 Andersenrsquos operates with the image of ice cream from Denmark

1048766 Gelateria Igloo (from Igloo) and Sub Zero (from Kwality) could not establish the premium

artisan ice cream image

B Players in the Boutique Segment

There are very few players who have significant impact in the boutique segment Detailed

information of all the major boutique segment players is provided below

Evaluation of Entry into Ice cream Business for Bangladesh Limited 37

Club Gelato

Basic Company Information

1048766 Location Banani Road 11 (Planning for a second one in Dhanmondi)

1048766 Established in 2001

1048766 Seating Capacity 48

1048766 Area 1250 sft (including kitchen)

1048766 Owner Mr Jahangir Alam (Bangladesh)

1048766 Business Type Joint business partnership with Singapore

1048766 Staff 15 people (6 in the kitchen)

1048766 Production capacity 150 litres per day

Product Related Information

1048766 Product Italian style parlour scoop ice cream fruit juice coffee and pastries

1048766 Flavours Around 32 flavours available

1048766 Most selling Ferraro Rocher Vanilla Pistachio

1048766 Innovations New variants and ingredients are communicated by their Italian supplier and

Club Gelato decides what to take from them

1048766 Serve type Cup Cone Glasses Box for take away

Consumer Profile

1048766 Primary Teenagers and Young Adults (18-30) amp Diplomats

1048766 Secondary Family consumers for eat out

1048766 Income Group High income customers tentatively from SEC A and higher SEC A

1048766 Geographic Area Diversified

1048766 Rush time 8-10 pm

Sales and Price Information

1048766 Sales BDT 50000 (60 Ice cream 40 other desserts) daily in summer In winter however

other products sell more and thus they keep total sales at the same level

1048766 Price 750 per litre for any flavour

1048766 Sales Volume 50-60 litres per day

Supply Chain Placement Information

1048766 Milk Local sourcing from Milk Vita (4050 litres per day)

1048766 Chocolates amp Flavours Belgium France Germany

1048766 Transportation Mainly air (They can afford it due to high margin)

1048766 Contribution of various materials Flavours (30) Milk (20) other parts are water and air

Promotional Materials

1048766 Materials used are near premises POS materials for promoting the parlour only

Table 23 Detail of Club Gelato

Evaluation of Entry into Ice cream Business for Bangladesh Limited 38

MoumlvenPick of Switzerland

Basic Company Information

1048766 Location Gulshan

1048766 Established in 2000

1048766 Seating Capacity 55

1048766 Owner Mr Arif Mahmud

1048766 Business Type Franchise of International MoumlvenPick

1048766 Storage Capacity in Shop 150 litres

Product Related Information

1048766 Product Imported MoumlvenPick ice creams coffee chicken sandwich and Frappe

1048766 Flavours Around 30 to 35 flavours available

1048766 Most selling Swiss Chocolate caramel Vanilla Dream Espresso Strawberry

1048766 Innovations New variants are communicated by their franchiser and they decide on flavours

that they want

1048766 Serve type Cup Cone Glasses Box for take away

Consumer Profile

1048766 Primary Teenagers and Young Adults (18-30) (70) amp Diplomats

1048766 Secondary Family consumers for eat out

1048766 Income Group High income customers tentatively from SEC A

1048766 Geographic Area Concentrated in Gulshan and nearby areas

1048766 Rush time Afternoon- Young Adult 10 to 11 pm Foreigners

1048766 the company also serves at parties and has freezers in known hotels where their ice creams

are served

Sales and Price Information

1048766 Sales BDT 35-40000 daily in summer

1048766 Price 640 per litre for any flavour

1048766 Sales Volume 55-60 litres per day

Supply Chain Placement Information

1048766 Transportation Imported finished goods by ship

1048766 Ship travel time 19 days

1048766 Port clearance 10 days

1048766 Safety Cushion Extra 10 days

Promotional Materials

1048766 Materials used are near premises POS materials for promoting the parlour only

Table 24 Detail of MoumlvenPick of Switzerland

Evaluation of Entry into Ice cream Business for Bangladesh Limited 39

Andersenrsquos of Denmark

Basic Company Information

1048766 Location Gulshan (2 others in Uttara Dhanmondi)

1048766 Established in 2001

1048766 Seating Capacity 48

1048766 Owner United Group

1048766 Business Type Franchise of Australian company Andersenrsquos of Denmark

1048766 Production Tongi Factory of United Group

1048766 Production capacity 2000 litres per day in factory

1048766 Storage Capacity in Shop 150 litres

Product Related Information

1048766 Product Danish parlour scoop ice cream and coffee

1048766 Flavours Around 30 to 35 flavours available

1048766 Most selling Strawberry Butter Scotch Green

1048766 Innovations New variants and ingredients are communicated by their franchiser and they

decide on flavours that they want

1048766 Serve type Cup Cone Glasses Box for take away

Consumer Profile

1048766 Primary Teenagers and Young Adults (18-30) (70) amp Diplomats

1048766 Secondary Family consumers for eat out

1048766 Income Group High income customers tentatively from SEC A

1048766 Geographic Area Concentrated in Gulshan and nearby areas

1048766 Rush time 8 to 10 pm

Sales and Price Information

1048766 Sales BDT 10-12000 daily in summer

1048766 Price 460 per litre for any flavour

1048766 Sales Volume 40-50 litres per day

Supply Chain Placement Information

1048766 Milk 2025 kg packs are imported

1048766 Chocolates amp Flavours Imported

1048766 Butte paper Local sourcing

1048766 Transportation Ship

Promotional Materials

1048766 Materials used are near premises POS materials for promoting the parlour only

Table 25 Detail of Andersenrsquos of Denmark

Evaluation of Entry into Ice cream Business for Bangladesh Limited 40

Gelateria Igloo

Basic Company Information

1048766 Location Banani Kemal Ataturk Avenue (Two others in GEC Mor Chittagong and Naya

Paltan)

1048766 Established in 2000

1048766 Seating Capacity 20

1048766 Production From Igloo factory in Shyampur Narayanganj

Product Related Information

1048766 Product Parlour scoop ice cream and coffee only

1048766 Flavours Around 30 flavours available

1048766 Most selling Vanilla Strawberry Chocolate Pistachio Butter Scotch Tutti Fruity

1048766 Serve type Cup Cone Glasses Box for take away

Consumer Profile

1048766 Primary Teenagers and Young Adults (18-30)

1048766 Secondary Family consumers for eat out

1048766 Income Group High income customers tentatively from SEC A and B

1048766 Geographic Area Diversified

1048766 Rush Time afternoon and evening

Sales and Price Information

1048766 Sales BDT 8000 to 10000 daily in summer Nearly one fourth in winter

1048766 Price Varies but 350 per litre of vanilla

Promotional Materials

1048766 POS materials at the premises

Table 26 Detail of Gelateria Igloo

52 Price Comparison of Common and Boutique Segments

Price ranges of both common format and boutique segment cannot exactly be pin pointed as

products do not follow common structure and variations occur with use of toppings mixing of

flavours and use of coatings However a price comparison has been made among the brands

based on their price of per litre of vanilla flavoured ice cream in the market It appears to be as

following

Company

Price Litre Vanilla

Club Gelato

750

MoumlvenPick

640

Andersenrsquos

460

Dolce Vita

440

Igloo

100

Kwality

100

Polar

100

Milk-Vita

90

Savoy

85

Table 27 Comparative Price Analysis

As it can be seen there is price gap within the range of BDT 100-400 Ice cream kiosks and

small scooping boutiques can operate within that range

Evaluation of Entry into Ice cream Business for Bangladesh Limited 41

60 CONSUMER ANALYSIS

61 Target Group of Ice cream

Who are the consumers of ice cream This question does not have a clear answer Ice cream is a

food for all It is the only food consumed by a human being at less than 0 degree centigrade

temperature and people of all ages feel indulged to have it However we can determine focus

target groups for both branded common format and artisan boutique ice cream Group

discussions and market visits were done to get insight into the consumers along side resources

form secondary sources Age based target group is common for both segments but variation

among the groups occur mainly based on SEC and DMFI classification

611 Geographic Group

Branded ice cream remains an urban product till date Geographically branded ice cream has

reached urban and semi urban areas up to Thana Head Quarter levels Ice cream has reached

areas where electricity is available Small artisan players are available in places where large

branded players have no distribution

612 Target Age Group

Age wise grouping of target consumers is as follows

1048766 Urban kids in the age group of 5-14

1048766 They mainly consume normal sticks cups cones innovative fillers and water ice creams

1048766 Urban youth in the age group of 15-24

1048766 They consume premium and extrusion sticks and cones

1048766 Urban mothers in the age group of 25-35

1048766 They determine the family purchases Even when the father purchases ice cream decision is

taken by them

Consumption pattern of various age groups are depicted in the following chart Ice cream

consumption pattern50203005 to 14 yrs15 to 24 yrs25 to 35 yrs

Figure 11 Target Group wise Consumption Pattern Evaluation of Entry into Ice cream Business

for Bangladesh Limited 42

613 Target SEC and DMFI Group

Common Format

SEC A and B is the target group for common format ice cream However with rapid increase in

price level over the years has made it a ldquohard to consumerdquo product for SEC B consumers who

belong to lower DMFI group

Boutique Format

Boutique formatrsquos higher margin and high price range makes it an exclusively SEC A ice cream

People belonging to upper and upper middle class have access to the mediocre boutiques and

only higher upper class can have premium ice creams like Club Gelato and MoumlvenPick

Another unique target group for boutique format are the foreigners who live in Bangladesh

These people tend to visit the parlours to have ice cream as dessert especially after dinner

62 Ice cream in Consumer Lifestyle

Figure 12 Ice cream in Consumer Life style

This simple overview of ice cream in consumer lifestyle was determined based on in-depth

research analysis of UBL and validated through qualitative group discussions by the author

However detail of in-depth research is provided in a later section of this chapter

Evaluation of Entry into Ice cream Business for Bangladesh Limited 43

63 Highlights of Purchase Habit of Ice cream

631 Common Habits across Target Groups

There are some common habits that were identified in earlier researches and group discussions

with consumers Common habits mean the consumer approach towards ice cream that is seen

across all target groups eg kids youth and adult purchasers These are outlined below

1048766 Ice cream is mainly seen as a dessert or a snack Impulse ice cream is seen as a quick snack

that is consumed when it is in sight Visibility plays a big role here Regarding family packs

people see it as a post-food dessert

1048766 Ice cream purchase is commonly a planned event When the contexts arise people generally

take a bit of time to decide whether or not to have ice cream or when they want to go to a

boutique they make due considerations regarding which boutique to visit

1048766 Ice cream purchase decision is taken based on favourite flavour People tend to try out new

variants and flavours when they first see it They compare the taste with earlier experience and

when they purchase later they choose the flavour they have liked most

1048766 For In-Home segment decision is mostly taken on the flavour Generally people come up with

different flavours of choice and most voted flavour is chosen

1048766 People become aware of new variants or flavours mainly through word-of-mouth

Advertisement (new launches special offers and festivals) in newspaper is another source of

awareness

1048766 People are currently indifferent towards the price level of premium flavours However some

feel that price of Choc-bar or water ice creams (lolly) is a bit much If less they would have

consumed more Some also feel that companies should come up with branded ice cream in the

price range of BDT 5-8

1048766 Ice cream is purchased from nearby shops If required brand and flavour is not available 2-3

shops will be visited and then available flavour will be selected even if the required one is not

found This is done mainly not to ruin the mood for ice cream

1048766 People are very open to try new brands and flavours especially if it comes from a credible

source They would try new flavours and if they are satisfied with the taste they would repeat

purchase

1048766 Regarding boutique visits people feel that boutiques need to have a proper environment

enough flavours and other snacks

1048766 While visiting boutique with family or companion they want variation in flavours so that

they would order different flavours and taste each otherrsquos ice cream It is seen as a sign of

togetherness

1048766 Frequency of ice cream purchase varies among people It depends on peer pressure collective

family decision summer heat and attitude towards ldquoice creamrdquo itself as a product Evaluation of

Entry into Ice cream Business for Bangladesh Limited 44

632 Habits of Kids

1048766 Kids choose ice cream flavours by the look of the product (generally pictures shown in POS

materials and carts) They love colour and designs of the products let it be a common format or a

boutique ice cream

1048766 Kids (when in house) would go with the housemaid to the nearby shop choose the flavour

they want (within range of the amount given to the maid) and buy it

1048766 When with parents they would take the product they like even if the price is lower than some

other product However mothers play a role in this decision They would want their children not

to choose too high priced a product or coloured products

633 Habits of Youth

1048766 Young people are the main consumer of impulse ice cream They also are one of the major

consumers in the boutique segment

1048766 Young people love to try out new products that come into the market Another side of the coin

is that they are not very loyal to a brand or a flavour and tend to switch a lot

1048766 Regarding boutique visits young people go to boutiques to have an ldquoice cream hang outrdquo with

peer groups They would stay there for a longer period of time while they have their ice cream

1048766 Some times young people make milk shakes and other ice cream based desserts

634 Habits of Mothers

1048766 Mothers worry about their childrenrsquos health and they prefer ldquovanillardquo type of brands

However when price constraint occurs they go for water ice creams for their children They try

to convince their kidrsquos purchase decision

1048766 Regarding family purchase motherrsquos decision is sometimes prioritized by the whole family

64 Barriers to Ice cream Consumption

641 Emotional Barriers

1048766 Overindulge (close to sinful)

1048766 Undisciplined (no control)

1048766 Childish (licking)

1048766 Artificial Image

642 Functional Barriers

1048766 People of SEC B feel that ice cream is an expensive dessert (If less expensive would consume

more often)

1048766 It leads to cold cough - especially in winter rainy season

1048766 It contains artificial additives preservatives

1048766 It is very high in calories that lead to fattening

Evaluation of Entry into Ice cream Business for Bangladesh Limited 45

1048766 It does not quench ldquothirstrdquo

1048766 Less convenient (portable immediate eat)

1048766 Messy Dripping

65 Research Findings

The highlights regarding purchase habits triggers and barriers of ice cream consumption provide

a glimpse into the consumer world of ice cream industry However UBL CMI conducted a

formal research exclusively on ice cream consumers to identify

1048766 Occasions of ice cream

1048766 Frequency of ice cream consumption

1048766 Expectations from ice cream occasions

1048766 Personalities that they desire from ice cream

651 Relevant Occasions in Daily Lives of Consumers

Research question regarding ldquousual occasions of life that occurred most frequently in day-to-day

lives of the respondentsrdquo generated the following replies

Occasion

of Respondents saying Yes

Watching TV

93

Normal Dinner At Home

91

Normal Lunch At Home

89

At Home While ReadingMusicSurfing

86

Informal Family Get Together

85

Out Of Home Hanging Out With Friends

84

Out Shopping

84

Mid-Afternoon Break At Home

83

At Home By Myself During The Day

82

Special Dinner At Home

82

Informal Dinner Out Of Home

82

Normal Lunch Out Of Home

82

Leisure Walk

79

Coming Home From WorkSchool

78

Special Dinner Out Of Home

78

Celebration

78

A Night In With Friends

77

At Home By Myself In The Evening

77

Special Lunch Out Of Home

76

Mid-Afternoon Break Out Of Home

75

Special Lunch At Home

73

Day out with Partner

72

Midmorning Break

70

At Breakfast

68

Family Day Out

68

During Work Or At School

65

Evaluation of Entry into Ice cream Business for Bangladesh Limited 46

Travelling ToFrom WorkSchool

65

At The Cinema

61

Special Event

56

Clubbing At A Party

50

Post GymSports

48

Table 28 Relevant Occasions in Consumersrsquo Lives

Respondents were then asked to mention ldquofrequency of occurrence of the identified occasionsrdquo

The identified replies are as follows Normal dinner at homenormal lunch at homeComing home

from workschoolTraveling tofrom workschoolDay out with Partner SpouseMid-afternoon

break at homeOut of home hanging out with friendsLeisure walkMid-afternoon break out of

homeA night in with friendsSpecial dinner at homeSpecial lunch out of homeFamily day

outSpecial eventPost gymsportsDaily2-3 Times A WeekWeekly2-3 Times A MonthOnce A

MonthEvery 2-3 MonthsLess OftenNever Figure 13 Frequency of Occurrence of Occasions

This shows that ldquoNormal dinner at home Watching TV Normal Lunch At Home At Home

While ReadingMusicSurfing Coming Home From WorkSchool During Work Or At School

Travelling ToFrom WorkSchool Midmorning Break Day Out With Partner Spouse At Home

By Myself During The Dayrdquo are the most frequent daily rituals of busy lives of consumers

652 Frequency of Ice cream Consumption

Respondents were asked to mention ldquoconsumption pattern of ice cream during the identified

occasionrdquo on a scale of 1-5 depicting frequencies like ldquo(5) always (4) most of the times (3)

about half of the times (2) sometimes (1) never do not knowrdquo The responses are depicted in

the following table

Evaluation of Entry into Ice cream Business for Bangladesh Limited 47

444474544655555566756665775967779991011101111101210111110101113111412131314161

011121411131216181519181518211817171719181718201721222130303434253437403741394

046383944464746453745414641374638504843414839373030292726232725222020201926202

21722221317Midmorning

breakWhile clubbing at aAt the cinemaSpecial eventNormal lunch out ofA night in with

friendsNormal dinner atInformal dinner out ofAt home by myselfAt home by myself inOut

shoppingSpecial lunch atDay out with SpouseWatching TVAlwaysmost of the timesAbout half

of the timesSometimesneverdo not know

Figure 14 Frequency of Ice cream Consumption

As it can be seen ldquoDay out with Spouse Special lunch at home Special dinner at home

Watching TV Family day out Celebrationrdquo are the occasions where most frequently ice cream is

consumed

653 Market Character Mapping Relevant Occasions vs Frequency of Consumption

If we plot frequency of consumption on the X-axis of a chart and relevance of occasion

occurrence on the Y-axis taking the above mentioned values as cut-off values we get four

quadrants in the chart depicting four market scenarios that any ice cream manufacturer in

Bangladesh market might encounter given the current market situation This market

segmentation is based on frequency of ice cream consumption in daily occasions of consumer

lives

The segments are

1048766 OPPORTUNITY MARKET High Relevant Occasions-Low Ice cream Frequency

1048766 QUESTION MARKET Less Relevant Occasions-Low Ice cream Frequency

1048766 HIGH FREQUENCY MARKET Relevant Occasions-High Ice cream Frequency

1048766 CAPTIVE MARKET Less Relevant Occasions-High Ice cream Frequency

The chart looks as follows Evaluation of Entry into Ice cream Business for Bangladesh Limited

48

Figure 15 Relevance of Occasion-Frequency of Consumption Mapping

As it can be seen from the above chart Bangladesh Market still lies in the Opportunity and

Question market zone with a pull towards High frequency and Captive Market zones This is

evident from market data as penetration of ice cream still remains at Thana headquarters levels

Also this explains the high market growth rate of 17 as market is yet under developed and

branded quality ice cream has yet not reached all levels of consumers especially rural level that

constitutes around 75 of Bangladeshi market

From the above analysis we can establish that target of ice cream manufacturers should be to

penetrate more into the Bangladeshi market to create higher frequency of ice cream

consumption The following chart shows the strategies to follow for ice cream manufacturers

Figure 16 Required Market Strategy for Bangladesh

Evaluation of Entry into Ice cream Business for Bangladesh Limited 49

As relevance of ice cream consumption occasions can hardly be controlled by marketers their

endeavour should be to create more ldquoemotional and functionalrdquo attachment to ice cream in less

frequent occasions through ldquomarket developmentrdquo strategy to earn share from overall food

expenditure of consumers and at the same time make them consume more ice cream in highly

relevant occasions through ldquopenetrationrdquo strategy

654 Consumersrsquo Emotional Requirements and Product Attributes

All consumers under these clusters also identify the emotional requirements and the significant

product attributes they seek from their current preferred and future desired ice creams These are

provided below

Cluster

Emotional Functional Requirement

Product Attributes

Enjoyment

Flavour Variety

1048766 Combination of different flavours

1048766 Combination of different textures

1048766 Very sweet

1048766 With wafer or biscuit

1048766 With chocolate

1048766 Of a well known brand

Socially Involved

Spoonable Rich

1048766 Very creamy

1048766 Only natural ingredients

1048766 No mess

Care

Size Creaminess

1048766 Big

1048766 Rich full taste

1048766 Smooth

1048766 Value for money

1048766 No mess

Unwind amp Escape

Economy

1048766 Crunchy

1048766 Economic

1048766 Of a well known brand

1048766 Nutritious

Balanced Convenience

Health Conscious

1048766 Of a well known brand

1048766 Nutritious

1048766 Milk based

1048766 Low sugar

1048766 Low carbohydrates

1048766 Filling

Active Self-Grooming

Fruit Vitamins

1048766 Healthy

1048766 Fruit based

1048766 Low fat

1048766 Liquid or drinkable

1048766 Nutritious

1048766 Of a well known brand

Confidence

Drinkable Light

1048766 Low calories

1048766 Light on the stomach

1048766 Chewy or gooey

1048766 Not so sweet

1048766 Natural appearance

Sensual

Appeal or image

1048766 No artificial additives

Evaluation of Entry into Ice cream Business for Bangladesh Limited 50

1048766 Natural appearance

1048766 Melting slowly

1048766 Attractive packaging

1048766 High quality ingredients

1048766 Of a well known brand

Table 29 Requirements amp Product Attributes Desired by Consumer Clusters

Of these findings we see that the identified highlighted barriers to ice cream consumption are

pretty evident among the consumers Mostly people want products of a reliable source or a well

known brand low calories quality ingredients value for money economic type

Evaluation of Entry into Ice cream Business for Bangladesh Limited 51

70 INDUSTRY ATTRACTIVENESS AND ENTRY PROSPECTS

71 Driving Forces of Growth

As identified in the earlier sections there are several driving forces behind the growth of ice-

cream industry in Bangladesh

712 Trade and Infrastructural Level

1048766 As a result of globalization newer varieties have been introduced to the local products Many

foreign companies are also coming as franchise so there has been increased competition and

these boutiques are setting higher standards for the local producers

1048766 The present market growth rate is 18-19 which is being influenced by larger players like

Igloo who are expanding their distribution nation wide with expansion of national electricity

grid

1048766 With entry of Modern Trade and recent organized business approach of retailers has made it

possible for ice cream manufacturers to penetrate into shops even without providing them with

branded freezers

1048766 Weather change has increased ldquosummerrdquo season in our country which has reduced negative

seasonal impact on ice cream

1048766 Large companies like Igloo have taken global learning of using carts as an effective tool of

availability and visibility for ice cream

1048766 New and improved technologies are being used in the production process This technological

advancement has improved quality increased speed of production and made the process more

cost effective

713 Consumer Level

1048766 Only a few years back rich people could afford the luxury of having ice-cream but now it has

become a common product for everybody Ice-cream companies are producing different products

with a wide price range for consumers of every class and status

1048766 Nowadays companies are doing promotional campaigns more frequently the customers get to

know about the product which makes it easier for them to buy the best one

1048766 The improved standard of life and more modernized lifestyle of people is an important reason

for the increased consumption thus growth of the ice-cream industry

Evaluation of Entry into Ice cream Business for Bangladesh Limited 52

72 Prospects of Entry

The ice-cream industry of Bangladesh is an attractive one for the investors because there is a

huge market but number of producers is very small The major reasons behind industry

attractiveness are as follows

1048766 The industryrsquos current growth potential is very high with opportunity for market development

1048766 The competition currently permits adequate profitability and the competitive forces are

becoming stronger with time

1048766 Boutique segment is at a very high growth stage but no operator is currently operating with a

mid price range of BDT 100-400 Ice cream kiosks and small scooping boutiques can operate

within that range

1048766 Current industry driving forces are favourable for the future industry profitability

1048766 Globally oriented consumers look for variety in ice cream that is currently not available

Latest innovations came in the market in 2002 People would welcome new variety and flavours

1048766 There is a gap in the market for balanced convenience through ice cream where consumers can

get nutritional benefits for ice cream Also emotional attachment to ice cream could further be

improvised in promotional campaigns

1048766 There is high scope for market penetration and development to increase frequency of ice

cream consumption

1048766 Level of risk or uncertainty is very low in ice-cream industry because the consumer market is

so huge any product with a standard quality and careful pricing will be able to make significant

profit

1048766 As for geographic reach of the industry 60 market is still in Dhaka There is scope of

expansion and a new entrant can easily capture market share within Dhaka using carts even if

they do not want nation wide cold chain distribution

1048766 The production process is very complex and capital requirements are also high So before

going into production any company should know about their capabilities and weaknesses and

then start the business or else they might suffer huge loss at a certain level

1048766 Unilever can acquire the required resource and use existing multi-national multi-cultural

expertise to enter the market in a grand way

1048766 With high probability of entry from DANONE with more products like the ISIS diabetic ice

cream Unilever should consider entering in this industry as soon as possible

Evaluation of Entry into Ice cream Business for Bangladesh Limited 53

80 ENTRY STRATEGY FOR UNILEVER

While describing the suggested entry strategy for UBL certain issues have been kept

confidential and some issues have been touched but not explained to keep consistency with UBL

confidentiality policy

81 Suggested Entry Areas for UBL

1048766 Boutique segment of the Bangladesh ice cream is only 5 of the branded market UBL needs

to pursue a larger scope to make the entry viable

1048766 UBL cannot fight with unbranded segment as global product quality mandate of Unilever does

not allow UBL to fight in low price-low quality segment

1048766 Recommend entry should be in the common format segment with both single and multiple

servings and in the boutique segment with a different brand name (if possible BEN amp JERRYrsquoS)

1048766 UBL should build up state-of-art modern factory for manufacturing and establish cold chain

facilities initially focusing on metro cities

1048766 Investment issues are required to be addressed for building factory and cold chain and capital

requirement needs to be identified for that purpose4

1048766 UBL may have boutiques for driving image selective top-end offering

1048766 Kiosks can be setup near universities and shopping malls

1048766 Boutiques should be concentrated in Dhaka and Chittagong

1048766 Ice cream for boutiques and kiosks would be produced in factory as institutional packs of 9-10

litres

82 Products

1048766 As a Brand Building country in global Unilever operating framework UBL is entitled only to

bring products developed by the Brand Development countries

1048766 Unilever should focus on serving products that have nutritional benefits (already available

globally) along with usual satisfactions of sensual pleasure functional attributes etc

1048766 Current existent players especially Igloo and Kwality have extensively copied global and

regionally available Unilever products eg Cornelli is same as Wallrsquos Cornetto Vinetta is similar

to Vienetta Mega is similar to Magnum etc UBL needs to differentiate these to consumers on

the ldquotaste the originalrdquo platform where global quality is focused regarding the products

1048766 UBL should also bring regionally famous brands like Moo or Max to create image

differentiation

1048766 Magnum or Moo should be used as premium end ice cream to generate more profit margin

Evaluation of Entry into Ice cream Business for Bangladesh Limited 54

83 Placement

1048766 Distribution focus should be in Dhaka for entry as Dhaka contributes more than 60 of total

ice cream sales in the country

1048766 Company may use carts as distribution method They serve as good source of visibility and

availability It would help in increasing impulse purchase

1048766 At least 1500 outlets in Dhaka and Chittagong needs to be actively served using dedicated

branded refrigerators to generate sales

1048766 50 carts should operate in Dhaka and Chittagong

84 Price

1048766 UBL products should be priced at par with Igloo pricing for the common format ice creams

1048766 UBL can bring in premium single-serve SKUS for the higher economic classes in the price

range of BDT 60-80

1048766 Smaller SKUs (small lolly stick) can be introduced in the price range of BDT 10-15

1048766 In the boutique segment UBL should price products above the semi-premium segment

(Gelateria Igloo Sub Zero or Andersenrsquos) but lower than that of Club Gelato or MoumlvenPick

85 Promotion

1048766 UBL would require strong marketing campaign (As high as 50 of sales) to have a grand

entry in the market

1048766 Presence in the television media would be of utmost importance More than 50 of

promotional expense should be made here initially Gradually it can be reduced

1048766 Newspaper would serve as the second most important option

1048766 Billboards should also be used

1048766 Activations (similar to Lux Channel i Super Star or Igloo Festival) should be done to generate

trial

86 Scope of Opportunity

Table 30 Value and Volume Based Scope of Opportunity for UBL

Value (BDT Cr)

Volume (Tons)

Market

131

7835

Common

121

7600

Boutique

98

235

Evaluation of Entry into Ice cream Business for Bangladesh Limited 55

861 Geographic Contribution

1048766 Dhaka (61)

1048766 Chittagong (19)

1048766 Sylhet (10)

862 UBL objectives

Common Format Ice Creams

1048766 Target 10 Market share in 1st year operation

1048766 Value BDT 11 Cr

1048766 Production capacity required 21 Tons day

1048766 Freezer Placement 1500 freezers

1048766 Cart operation At least 50 carts

Boutiques

1048766 Target Further develop the market

1048766 Focus Dhaka Chittagong and Sylhet Metro

1048766 Franchise At least 20 franchisee operations nation wide in divisional towns

1048766 Pricing Below imported parlours above common formats with around BDT 400 per Litre

87 Critical Success Factors

1048766 UBL is considered as a high profile company in Bangladesh and thus they cannot operate in

the market only with common products like choc-bars and cups They must have premium

products (these require extrusion line) also to carry their brand image Otherwise UBL would not

be able to charge usual premium over competition products

1048766 Launch of ice cream would require huge promotional and activation support in order to gain

customers from Igloo People want novelty regarding ice cream and UBL have to let them know

about their products and create hype

1048766 Cart should be used as a source of distribution Recent successes of Unilever companies like

Indonesia shows that carts can generate more sales and can be used as source of visibility in the

minds of both retail traders and consumers Carts can also provide incremental sales to the

company

1048766 UBL have to create a strong cold chain for ice cream (initially in Dhaka and Chittagong) to

ensure quality products for consumers

1048766 UBL have to build capacity very rapidly to meet consumer demand if the launch is successful

Evaluation of Entry into Ice cream Business for Bangladesh Limited 56

90 BUSINESS PROJECTION

91 Basic Assumptions

Business projection for ice cream business was made based on a conservative approach UBL

would require spending significantly on production capacity and factory dedicated to ice cream

Thus to analyse business possibilities of ice cream certain assumptions were made and collected

data were used These are

1048766 Production equipments and cabinets would cost approximately BDT 55 crores

1048766 Production equipments 45

1048766 Packaging Equipments 15

1048766 Storage Facility 20

1048766 Branded Freezers 10

1048766 Distribution Investment 10 (Distributors would also invest themselves)

1048766 Ice cream factory with a floor size of 20000 sqft would cost BDT 25 crores

1048766 Objective is to capture 10 market share in Dhaka and Chittagong in the first year

1048766 Business would grow by 50 in year 2 and 3 30 in year 4 and 25 in year 5

1048766 Weighted price per litre is BDT 170 according to volume share of single serve ice cream

multiple serve ice cream and boutique ice cream

1048766 Other financial assumptions were also made List of them are provided below but amount has

been removed for confidentiality issues

Assumptions

Trade Margin

Distributors Margin

DutyVAT Rate

Trade Terms Expense of NPS

Trade Terms Expense of NSV

Advertising ampPromotion of NPS

Indirects (Salaries Wages etc)

Trading Tax

Table 31 Assumptions for Business Projection

Evaluation of Entry into Ice cream Business for Bangladesh Limited 57

100 CONCLUSION

Ice cream has good prospect in Bangladesh It is still a growing market with opportunities for big

new entrants With the barriers of entry UBL needs to consider its priorities UBL being an HPC

company traditionally needs to acquire expertise in cold chain distribution and has to invest a lot

of money to rip the benefits of the industry However to initiate company can take regional

support and acquire resource expertise The company should enter the business as soon as

possible since there is potential threat from DANONE to introduce more ice creams after ISIS

diabetic ice cream and also with potential of the industry arch rival Nestlersquo might consider

entering into the industry too

Evaluation of Entry into Ice cream Business for Bangladesh Limited 58

References

Web References

1 wwwunilevercom

2 wwwunilevercombd

3 wwwhllcom

4 wwwunilevercompk

5 wwwthedailystarcom - Life Style Magazine

6 wwwreuterscouk

Evaluation of Entry into Ice cream Business for Bangladesh Limited 59

Page 23: Square Ice cream

Value Share

Volume Share

Impulse dairy ice cream

514

443

Impulse water ice cream

112

138

Take-home dairy ice cream

374

419

Table 18 Volume Share of Different Serve Types

Impulse dairy ice cream provides more value share as price per litre is higher than take home

multiple serving ice creams Impulse water ice cream shows a similar trend as of take home ice

cream

Pricing Product pictures and price ranges of each category are provided below Evaluation of

Entry into Ice cream Business for Bangladesh Limited 27

Normal Premium Price Tk12 Tk20 Tk25 Cup amp Sundae Normal Cup Sundae Premium Cup

Price Tk20 Tk25 Cone Normal Premium PriceTk20 Tk25Innovative Fillers PriceLtr Tk100

Tk175 Container Normal Premium PriceLtrTk150 Tk 175 Tk 190 Family Packs Kulfi Mixed

Pack Cake Single ServingMultipleServingNormal Ice Fruit 3D Mould Premium Extrusion Price

Tk10 Tk15 Tk15 Tk20Stick Normal Cream

Figure 8 Serve Types and Pricing

As it can be seen from the above chart all impulse ice creams are priced within the range of

BDT 10 to 25 Other take home multiple servings are priced within the range of BDT 50 (05

Litres) to BDT 220 (2 Litres) Another noticeable factor in price is that there are both normal and

premium flavours in all types of ice creams

K Firms as Price Setters

The firms have capability to affect the market price to be low as profit margin is very high If

Igloo reduces the price of an item below the prevailing price level in order to increase its sales

its competitors will fear that their customers will go away from them to buy Igloo products To

retain their customers they will be forced to match the price cut of Igloo Historically this has

been proven to be true However due to price sensitivity companies cannot drastically increase

price even if they provide higher quality of product It was seen in 1997 when Igloo increased

price of 11 SKUs and faced drastic sales fall during that time It shows that the industry might

welcome overall industry price increase but not individual company price increase

L Promotion

The promotion scenario in the industry is not quite organized as of now Even proper data

regarding promotional expenditure is not available from research sources The reason being

there is not much consumer related activity seen in the market After Kwalityrsquos introduction in

the market in 1999 Igloo went on with massive Television promotion of their new products that

were available at that time

Evaluation of Entry into Ice cream Business for Bangladesh Limited 28

However in current times there is no TVC running from any company Companies promote their

launches mainly through billboards and newspaper promotions which is currently the most used

source of consumer promotion Some promotional activities that were done by the companies

over the years are listed below

Consumer Promotions

1 Larger players like Igloo and Kwality goes on with campaigns like ldquoGift on stickrdquo where

various prizesrsquo names are written on the sticks and consumers can get them

a Igloo ran a program on their launch of Macho variant where gift varied from cricket bat to

personal computer

b Igloo had a program in 2006 where gifts on sticks varied from Bangkok visit to sunglass

c Igloo ran one campaign in 2007 where gold bars were given on purchasing Choc-bar

d Kwality ran a similar program in 2008 where gifts varied from wrist watches to motorcycle

2 Some companies ran consumer TTS and gift programs where company products were given

free

a Igloo had a program in 2006 where Igloo butter was given free on purchasing Igloo ice cream

cake

b Kwality ran a program in 2008 where one SKU was given as gift with another SKU randomly

c ldquoCone Ice cream at your Homerdquo program was run by Igloo in 2002 where six cone biscuits

were given free with purchase of one litre ice cream

3 Media placement is another form of placement done by larger companies

a Igloo purchased ldquoGlimpse into World Cup Resultrdquo space in daily newspapers during World

Cup Football 2002

4 One interesting program is done by only Igloo in Bangladesh They did it in June 2006 The

program was ldquoIgloo Ice cream Festivalrdquo with main attractions of ldquoGet as much ice cream as you

want for BDT 200rdquo ldquoGet a Fantasy Kingdom Entry ticket with each Entry Couponrdquo ldquoLucky

Drawrdquo and ldquoCelebrity Addardquo

Trade Promotions

5 Trade promotions are mainly given to ldquoHighest retail purchasersrdquo and also based on time

bound trade schemes where various slabs of purchase amount are mentioned for different prizes

a Igloo takes their highest purchasers to visit countries like Singapore and Thailand

b Savoy has a purchase slab scheme where first prize is table fan

c Polar gives special sales commission to their highest purchasers (around 5)

Evaluation of Entry into Ice cream Business for Bangladesh Limited 29

M Players in the Common Format Segment

Branded common format ice cream segment is constituted of five players only Among them

Igloo is the largest player and Milk Vita is the smallest The following sections detail the basic

company detail of all the companies with special emphasis on Igloo the market leader

Igloo

The pioneering ice-cream company in Bangladesh started its operation in 1964 in Chittagong

under K Rahman amp Co Limited (KRC) with a small factory inside Coca Cola bottling factory of

KRC After the independence of Bangladesh in 1971 Igloo was taken over by the government of

Bangladesh Later in 1983 Abdul Monem Limited purchased the entire production setup of KRC

Limited including Coca-Cola bottling plant and Igloo ice-cream factory After taking full charge

of Igloo ice-cream by Abdul Monem Limited the manufacturing operations continued in

Chittagong till 1990 Although Dhaka fetched the maximum share of the total revenue the

distribution cost increased tremendously in the process of meeting the demand of Dhaka city To

cope with the distribution problem and handle Polar threat Abdul Monem Limited transferred

the factory to Dhaka changed the ice-cream packaging from the conventional paper to plastic

and expanded their market and distribution operation The new factory of Igloo was setup at

Shyampur Narayanganj and was nine kilometres away from the Motijheel office The company

apart from catering the capital city started to expand its operations in Comilla (1991) Khulna

(1992) and North Bengal (1993) These markets were served directly from Dhaka since the

storage facilities were not developed till then The company is now the market leader since 1997

with clear market share victory over others with sweeping 51 share It is to be noted that Igloo

is also a player in the boutique segment with three parlours (2 in Dhaka and 1 in Chittagong)

Product Range Igloo offers the widest choice of ice cream more than any other competitor in

the market Igloo is offering a total of fifty items including normal premium and novelty cup

stick and family pack items Igloo has thirty flavours more than anyone else in the industry and

is continuously launching new and innovative delicacies

Igloo ice-cream can be classified in six groups They are

Stick

Macho Choc-bar Mini Choc Clown Mega Shell n core Lolly

Cone

Cornelli 2 in one Cornelli classic

Cup

Shahi kulfi Vanilla Strawberry Mango Snow ball

Container

Vanilla Strawberry Mango Chocolate Coffee Diet Vanilla Tutti Frutti Ripple Pralin

Pistachio

Innovative

Nuggets Sandwich

Family

Ripple cake Party time Shahi Kulfi

Table 19 Products of Igloo

Single serve stick cups and cone items are easy to carry around and convenient to eat which

makes it most sold The core target segment of ice-cream is 6-24 years and this generation is

always on the Evaluation of Entry into Ice cream Business for Bangladesh Limited 30

move and thus prefers independent cone stick or cup items As Igloo initiated the concept of ice-

cream as a family product they offer some items to be enjoyed with the whole family

Quality and Innovation Igloo is committed to maintaining the highest quality standard through

its continuous RampD activities The major ingredients raw materials and packing materials are

procured from the best European sources Strict quality control is done at every stage of the

manufacturing process from procurement of material mixing material flow ice cream making

packaging storing (at main warehouse) distributing and market shelving by the Quality Control

Department Current supply chain for various materials of Igloo is as follows Australia (Milk

Powder) Denmark (Ingredients emulsifiers amp stabilizers) China amp UAE (Food grade sticks)

China Denmark Singapore amp Thailand (Food grade packing materials)

Figure 9 Igloo Supply Chain

Distribution Network Their distribution network is stretched all over the country with a long

fleet of refrigerated vans Firstly the ice cream products are stored at the central warehouse of

the factory and from there they are distributed through the haulage vehicle to the operational

centres located in Dhaka Chittagong Comilla Rajshahi Barisal Bogra Rangpur and Khulna

Strictest cold chain maintenance during the distribution and selling of the ice creams is ensured

Their distribution process is as follows Manufacture Stored at -24c Transported by Refrigerated

trucks at -Reaches amp Preserved in Eight regional stores Refrigerated vehicles (Distributors)Retail

outlets (Deep freezers)

Figure 10 Distribution Process of Igloo

Evaluation of Entry into Ice cream Business for Bangladesh Limited 31

Trolley Operation Igloo also operates through trolleys for extending its reach to consumers at

the furthest points The trolleys are operated near schools alleys streets parks etc and play

rhythmic music to attract the consumers These are very colourfully decorated with Igloo

umbrella and the puller wears specific uniforms Igloo was the first in introducing and operating

these trolleys in Bangladesh for any Fast Moving Consumer Goods (FMCG) Igloo has around

125 trolleys operating throughout the country Individual trolleys are provided with a regular

supply of igloo ice creams

Marketing The marketing commitment of Igloo is based on the relationship with its customers

and consumer by not only manufacturing the highest quality product but also delivering the

product by maintaining this quality To satisfy the ever-changing needs of the customer Igloo

has regularly launched new ice creams and introduced new flavours And this commitment has

positioned Igloo as the market-leading brand by gaining the consumers trust with the positioning

as ldquoA WORLD OF GREAT TASTErdquo

Facilities and Logistics at a glance As of 2009 following are the facilities and logistics enjoyed

by the company

Factory location

Dhaka

Production Lines

4

Packages

Stick Cup Family pack Others (Nuggets and sandwich)

Machine suppliers

1048766 Mark-Italy

1048766 Tetra Pak(Hoyer)-Denmark

1048766 Sabore Denmark

1048766 Hass- Austria

Machine models

1048766 Freemark 1100 Italy

1048766 FM 3000 FM 6000 Italy

1048766 SL600 Denmark

Cone baking

Hass- Austria

Chocolate making

Macentyre-UK

Coverage

Nationwide

Operational centre

10

Total market vehicles

30

Distribution channel

Directthrough appointed distributors

Outlet service

7500

Injected deep freezers

4000

Trolley operations

125

Warehouse no

8

Table 20 Igloo Facilities and Logistics

Kwality

Kwality is currently the second largest ice cream manufacturer of the country The mother

company for the Kwality brand is Sanowara Drinks amp Beverages Ltd a sister concern of

Sanowara Group The company is famous for powdered milk brands Red Cow and Diploma in

Bangladesh The drinks and beverage concern of Sanowara made an entry into the market in

1997 with ldquoYesrdquo brand drinking water and launched the ice cream brand in 1999 With heavy

communication and novelty products it Evaluation of Entry into Ice cream Business for

Bangladesh Limited 32

successfully removed Polar from the second place with a current market share of 27 The

company also operates in the boutique segment with two parlours in Dhaka and Chittagong

Kwality ice cream factory is situated in Chittagong with a floor space of 35000 sft and fully

automated machinery wrapping mix machinery equipments from Italy having capacity of

around 20000 litres of ice cream per shift The ice cream factory employs 140 people The

company is ISO 9001-2000 certified

Kwality was the first true competitor for Igloo products with some major innovation in product

design and communication but their quality is perceived to be lower in the minds of the

consumers and they do not have extrusion ice cream The product prices are also similar to that

of Igloo but they charge a bit lower than Igloo in premium multiple servings However during

market visits it was seen that shops that keep only Kwality or Igloo and Kwality both they can

sell Kwality too although the sales amount is lower than that of Igloo People who look for Igloo

shopkeepers give them that directly but if they get a chance and Kwality ice cream stock is high

they also push Kwality to dry the stock out This gives an indication that market is larger than

what the current players are capable of serving even in Dhaka

Kwality follows a similar distribution model like Igloo but distribution frequency is lower and

amount of cart sellers is limited to 25 and they operate only in Dhaka

Polar

Once a giant in the industry Dhaka Ice Cream Industries Ltd introduced the first hygienically

packed ice cream in Bangladesh in 1987 and the brand name Polar was thus born In the early

days the company started ice cream business with a wide range of products and a variety of

flavours in Dhaka city In 1988 the company started its distribution in the city of Chittagong

then Bogra and continued to cover more cities Presently Polar ice cream is available

throughout Bangladesh The company today trails in the market with 15 market share in the

common format segment Recently Polar has announced launch of ISIS diabetic ice cream with

support from DANONE to turn around in the market

The company has its head office as well as a modern large-scale industrial plant in Dhaka Polar

ice cream is made with Danish expertise using Danish equipment and technology The

production activities and quality control measures are supervised and managed by Danish

experts Polar offers a wide range of delicious flavours and tastes made by ingredients imported

from Europe

Dhaka Ice Cream at present has 3 cold stores in Dhaka Chittagong and Bogra in Bangladesh

From Dhaka cold store they distribute ice creams in Mymensingh Tangail Jamalpur Sherpur

Kishoreganj Netrakona Comilla Narsingdi Barisal Madaripur Agaeljhara Faridpur Magura

Chuadanga Jessore Satkhira Khulna Pirojpur and Sylhet through their distributors In case of

long distance delivery points the company uses auto cooling freezer van

Evaluation of Entry into Ice cream Business for Bangladesh Limited 33

In Dhaka city they distribute ice creams directly to retail stores in freezer vans Besides that

they have several distributors at different points of the city Distributors cover their individual

areas where company is not able to supply directly in their freezer vans Similar model is

followed by the company to distribute ice cream from their other cold storages through out the

country For storing and selling ice creams in retail stores the company like the other players

arranges a deep freezer with the Polar logo and canopy light box

In addition to this distribution the company also undertakes home delivery of ice creams for

special occasions

Savoy

Savoy Ice-cream brand is owned by Sena Kalyan Sangstha (SKS) Group of industries It started

its journey in March 1995 with a factory in Tejgaon Dhaka Yearly turnover is estimated at BDT

388 crores with a market share of roughly 35

The factory has been established with Sonali Bank finance at 6040 equity ratio The total

production capacity of the factory has been estimated at 2400 litres of Ice-cream per day Total

land area of the factory premise is 116 Bigha with 8000 sft area covered with a total project cost

of BDT 144 The factory employs 73 people

Product ranges of the company include all the basic designs and flavours of the industry

However the company has not been much of an innovator in the industry Their product quality

is substantially low than that of other players and they price their products at 10-15 lower than

the other competitors The company imports raw materials mainly from Europe The general raw

materials are Euro cream Skimmed Milk Powder Cocoa Powder and Flavour (Vanilla Mango

and Strawberry) Colour (Yellow Red Chocolate and Green) Ripple Sauce Cheney Fruit Palm

Kernel Oil Anhydrous Butter Oil (Ghee) and Sugar etc

Milk Vita

Milk Vita is one of the most famous brand names in Bangladesh for its liquid dairy milk Owned

by Bangladesh Milk Producersrsquo Co-operative Union Limited (BMPCUL) the company came in

the market with proper dairy milk ice cream in form of cups and choc-bar With a production

capacity of around 1600 litres per day the company is trailing in the market place with 3

market share

Although the Milk Vita Choc-bar was perceived to be extremely tasty by consumers they

probably could not do well due price competition Currently they do not even distribute ice

cream in Dhaka However their presence is seen in outskirts of Dhaka and other nearby towns

If the current market situation prevails Milk Vita would lose their remaining market share and

other companies would benefit especially Igloo However one of the advantages of Milk Vita

remains to be

Evaluation of Entry into Ice cream Business for Bangladesh Limited 34

their nation wide milk supply network They have skimmed milk powder production plant that

Igloo does not have Thus they can combat the seasonality of milk supply that Igloo with its

huge requirement of milk cannot

Strengths and Weaknesses of Competitors

Company

Strengths

Weaknesses

Igloo

1048766 Strong brand image

1048766 High product quality

1048766 Highest no of variety

1048766 Strong distribution network

1048766 Highest visibility

1048766 Strong promotion

1048766 High production capacity

1048766 Presence of extrusion ice cream

1048766 Items are generally a bit pricy

1048766 Igloo does not give free freezers like other companies

1048766 Reluctant in recent times regarding innovation

1048766 Local sourcing of liquid milk does not meet demand

1048766 Failure to use ERP technology slowing decision making

Kwality

1048766 Product variety

1048766 Strong promotion

1048766 Free freezer distributed

1048766 Presence in all price segments

1048766 High production capacity

1048766 Weak distribution

1048766 Lower exposure

1048766 low amount of carts in operation

Polar

1048766 Free freezer

1048766 Quality perceived to be high compared to Kwality

1048766 Discoloured freezers

1048766 Lower exposure

1048766 Low product variety

1048766 Unused capacity

Savoy

1048766 Price is lower

1048766 Discoloured freezers

1048766 Low product variety

1048766 Weak distribution

1048766 Small amount of freezers

1048766 Low production capacity

Milk Vita

1048766 Quality is good due to dairy cream

1048766 Brand leverage from Milk Vita milk

1048766 Low exposure

1048766 Low variety

Table 21 Strengths and Weaknesses of Competition

512 Market Characteristics of the Boutique Segment

With a small market of BDT 98 Cr and 567 share in the branded ice cream market the

boutique segment is currently an increasing segment in the ice cream industry Boutique

segmentrsquos history dates back to 1960s when Igloo launched boutiques in Dhaka to save

distribution cost and promote a culture of ldquoice cream eating outrdquo In later years boutiques lost

their glamour and retail common format segment picked up growth However with Dolce Vita in

the late lsquo80s craze for Italian Artisan ice cream was recreated in the market Although Dolce

Vita is failing in recent times emergence of MoumlvenPick and Club Gelato in 2000 has uplifted the

segment once again Current growth rate of the

Evaluation of Entry into Ice cream Business for Bangladesh Limited 35

segment can be estimated to be approx 20-22 (higher than the common format segment)

Following are the basic detail of all the major players in the segment with their estimated sales3

Players

Outlet

Sales (Cr Taka)

Share

Club Gelato

1

136

199

MoumlvenPick

1

119

174

Andersenrsquos

3

119

174

Gelateria Igloo

3

119

174

Sub Zero (Kwality)

2

051

75

Baskin Robbins

1

015

22

Dolce Vita

1

017

25

American Soft

1

009

12

Rainbow

1

009

12

Others (off site)

089

130

Total Market

682

Table 22 Players and Shares in Boutique Segment

A Detail of Operation

General operational procedure followed by all the operators is as follows

1048766 Operating method There is a variation in operational method among the large operators

1048766 Club Gelato uses kitchen at own premise where imported ingredients and local milk (daily

special service from Milk Vita) are used to make ice cream

1048766 MoumlvenPick directly imports ice cream from Switzerland

1048766 Andersenrsquos Gelateria Igloo and Sub Zero produce ice cream at their factory with a mix of

imported and local ingredients

1048766 Products Around 30-35 flavours of artisan dairy ice cream are served at the premises

1048766 Most sold flavours are Vanilla Ferrero Rocher Butterscotch Chocolate Caramel etc

1048766 Other Products Larger players also serve ice cream desserts (milk shakes ice cappuccino etc)

pastries and other desserts with normal coffee and tea facility at their premises

1048766 Boutiques fight ice cream seasonality with the other products sales during off-peak ice cream

seasons Usually ice cream and other products contribute at 6040 ratio in summer and during

winter and off-peak seasons the ratio reverses

1048766 Pricing Usually the prices of products in this segment are 3-4 times higher than that of the

common format segment

1048766 Prices do not vary with flavours Variation depends on serve style (Cone tub) and use of

toppings and other ingredients (Chocolate sauce nut fruits) etc

1048766 Usual margin charged is around 50-60 over production cost Similar margin is charged for

other products like coffee ice cappuccino etc

3 Yearly sales is estimated based on companyrsquos approximate daily sales collected during

interview

Evaluation of Entry into Ice cream Business for Bangladesh Limited 36

1048766 Target Group Most of the consumers belong to SEC A and higher SEC A with DMFI of at

least BDT 20000

1048766 Foreign delegates and resident foreigners also visit these boutiques

1048766 Main purposes of visits in the boutiques are

bull Youth hangout with friends and having ice cream and ice cream derivatives

bull Family Family night out or eat out at a restaurant and then having dessert

bull Foreigners Having dessert after dinner

1048766 Rush time at boutiques are Afternoon 2-4 pm and at night 9-11 pm

1048766 Offsite sales Most of the large operators also sell offsite They have small freezers for off-site

1048766 Club Gelato and MoumlvenPick serves ice cream at high society parties and programmes

1048766 MoumlvenPick also has kiosks in known hotels like Sheraton

1048766 Promotion No mass promotion is done by any of the companies Word of mouth is the most

important source of promotion Posters and banners outside the premise and occasional

newspaper advertisements are used to communicate special offers

1048766 Growth Drivers Market growth is driven by image innovation quality decoration of facility

environment and special offers

1048766 Club Gelato has the image of selling true Italian dairy ice cream with an excellent hangout

environment

1048766 MoumlvenPick imports ice cream directly from Switzerland and is perceived to be of high quality

1048766 Andersenrsquos operates with the image of ice cream from Denmark

1048766 Gelateria Igloo (from Igloo) and Sub Zero (from Kwality) could not establish the premium

artisan ice cream image

B Players in the Boutique Segment

There are very few players who have significant impact in the boutique segment Detailed

information of all the major boutique segment players is provided below

Evaluation of Entry into Ice cream Business for Bangladesh Limited 37

Club Gelato

Basic Company Information

1048766 Location Banani Road 11 (Planning for a second one in Dhanmondi)

1048766 Established in 2001

1048766 Seating Capacity 48

1048766 Area 1250 sft (including kitchen)

1048766 Owner Mr Jahangir Alam (Bangladesh)

1048766 Business Type Joint business partnership with Singapore

1048766 Staff 15 people (6 in the kitchen)

1048766 Production capacity 150 litres per day

Product Related Information

1048766 Product Italian style parlour scoop ice cream fruit juice coffee and pastries

1048766 Flavours Around 32 flavours available

1048766 Most selling Ferraro Rocher Vanilla Pistachio

1048766 Innovations New variants and ingredients are communicated by their Italian supplier and

Club Gelato decides what to take from them

1048766 Serve type Cup Cone Glasses Box for take away

Consumer Profile

1048766 Primary Teenagers and Young Adults (18-30) amp Diplomats

1048766 Secondary Family consumers for eat out

1048766 Income Group High income customers tentatively from SEC A and higher SEC A

1048766 Geographic Area Diversified

1048766 Rush time 8-10 pm

Sales and Price Information

1048766 Sales BDT 50000 (60 Ice cream 40 other desserts) daily in summer In winter however

other products sell more and thus they keep total sales at the same level

1048766 Price 750 per litre for any flavour

1048766 Sales Volume 50-60 litres per day

Supply Chain Placement Information

1048766 Milk Local sourcing from Milk Vita (4050 litres per day)

1048766 Chocolates amp Flavours Belgium France Germany

1048766 Transportation Mainly air (They can afford it due to high margin)

1048766 Contribution of various materials Flavours (30) Milk (20) other parts are water and air

Promotional Materials

1048766 Materials used are near premises POS materials for promoting the parlour only

Table 23 Detail of Club Gelato

Evaluation of Entry into Ice cream Business for Bangladesh Limited 38

MoumlvenPick of Switzerland

Basic Company Information

1048766 Location Gulshan

1048766 Established in 2000

1048766 Seating Capacity 55

1048766 Owner Mr Arif Mahmud

1048766 Business Type Franchise of International MoumlvenPick

1048766 Storage Capacity in Shop 150 litres

Product Related Information

1048766 Product Imported MoumlvenPick ice creams coffee chicken sandwich and Frappe

1048766 Flavours Around 30 to 35 flavours available

1048766 Most selling Swiss Chocolate caramel Vanilla Dream Espresso Strawberry

1048766 Innovations New variants are communicated by their franchiser and they decide on flavours

that they want

1048766 Serve type Cup Cone Glasses Box for take away

Consumer Profile

1048766 Primary Teenagers and Young Adults (18-30) (70) amp Diplomats

1048766 Secondary Family consumers for eat out

1048766 Income Group High income customers tentatively from SEC A

1048766 Geographic Area Concentrated in Gulshan and nearby areas

1048766 Rush time Afternoon- Young Adult 10 to 11 pm Foreigners

1048766 the company also serves at parties and has freezers in known hotels where their ice creams

are served

Sales and Price Information

1048766 Sales BDT 35-40000 daily in summer

1048766 Price 640 per litre for any flavour

1048766 Sales Volume 55-60 litres per day

Supply Chain Placement Information

1048766 Transportation Imported finished goods by ship

1048766 Ship travel time 19 days

1048766 Port clearance 10 days

1048766 Safety Cushion Extra 10 days

Promotional Materials

1048766 Materials used are near premises POS materials for promoting the parlour only

Table 24 Detail of MoumlvenPick of Switzerland

Evaluation of Entry into Ice cream Business for Bangladesh Limited 39

Andersenrsquos of Denmark

Basic Company Information

1048766 Location Gulshan (2 others in Uttara Dhanmondi)

1048766 Established in 2001

1048766 Seating Capacity 48

1048766 Owner United Group

1048766 Business Type Franchise of Australian company Andersenrsquos of Denmark

1048766 Production Tongi Factory of United Group

1048766 Production capacity 2000 litres per day in factory

1048766 Storage Capacity in Shop 150 litres

Product Related Information

1048766 Product Danish parlour scoop ice cream and coffee

1048766 Flavours Around 30 to 35 flavours available

1048766 Most selling Strawberry Butter Scotch Green

1048766 Innovations New variants and ingredients are communicated by their franchiser and they

decide on flavours that they want

1048766 Serve type Cup Cone Glasses Box for take away

Consumer Profile

1048766 Primary Teenagers and Young Adults (18-30) (70) amp Diplomats

1048766 Secondary Family consumers for eat out

1048766 Income Group High income customers tentatively from SEC A

1048766 Geographic Area Concentrated in Gulshan and nearby areas

1048766 Rush time 8 to 10 pm

Sales and Price Information

1048766 Sales BDT 10-12000 daily in summer

1048766 Price 460 per litre for any flavour

1048766 Sales Volume 40-50 litres per day

Supply Chain Placement Information

1048766 Milk 2025 kg packs are imported

1048766 Chocolates amp Flavours Imported

1048766 Butte paper Local sourcing

1048766 Transportation Ship

Promotional Materials

1048766 Materials used are near premises POS materials for promoting the parlour only

Table 25 Detail of Andersenrsquos of Denmark

Evaluation of Entry into Ice cream Business for Bangladesh Limited 40

Gelateria Igloo

Basic Company Information

1048766 Location Banani Kemal Ataturk Avenue (Two others in GEC Mor Chittagong and Naya

Paltan)

1048766 Established in 2000

1048766 Seating Capacity 20

1048766 Production From Igloo factory in Shyampur Narayanganj

Product Related Information

1048766 Product Parlour scoop ice cream and coffee only

1048766 Flavours Around 30 flavours available

1048766 Most selling Vanilla Strawberry Chocolate Pistachio Butter Scotch Tutti Fruity

1048766 Serve type Cup Cone Glasses Box for take away

Consumer Profile

1048766 Primary Teenagers and Young Adults (18-30)

1048766 Secondary Family consumers for eat out

1048766 Income Group High income customers tentatively from SEC A and B

1048766 Geographic Area Diversified

1048766 Rush Time afternoon and evening

Sales and Price Information

1048766 Sales BDT 8000 to 10000 daily in summer Nearly one fourth in winter

1048766 Price Varies but 350 per litre of vanilla

Promotional Materials

1048766 POS materials at the premises

Table 26 Detail of Gelateria Igloo

52 Price Comparison of Common and Boutique Segments

Price ranges of both common format and boutique segment cannot exactly be pin pointed as

products do not follow common structure and variations occur with use of toppings mixing of

flavours and use of coatings However a price comparison has been made among the brands

based on their price of per litre of vanilla flavoured ice cream in the market It appears to be as

following

Company

Price Litre Vanilla

Club Gelato

750

MoumlvenPick

640

Andersenrsquos

460

Dolce Vita

440

Igloo

100

Kwality

100

Polar

100

Milk-Vita

90

Savoy

85

Table 27 Comparative Price Analysis

As it can be seen there is price gap within the range of BDT 100-400 Ice cream kiosks and

small scooping boutiques can operate within that range

Evaluation of Entry into Ice cream Business for Bangladesh Limited 41

60 CONSUMER ANALYSIS

61 Target Group of Ice cream

Who are the consumers of ice cream This question does not have a clear answer Ice cream is a

food for all It is the only food consumed by a human being at less than 0 degree centigrade

temperature and people of all ages feel indulged to have it However we can determine focus

target groups for both branded common format and artisan boutique ice cream Group

discussions and market visits were done to get insight into the consumers along side resources

form secondary sources Age based target group is common for both segments but variation

among the groups occur mainly based on SEC and DMFI classification

611 Geographic Group

Branded ice cream remains an urban product till date Geographically branded ice cream has

reached urban and semi urban areas up to Thana Head Quarter levels Ice cream has reached

areas where electricity is available Small artisan players are available in places where large

branded players have no distribution

612 Target Age Group

Age wise grouping of target consumers is as follows

1048766 Urban kids in the age group of 5-14

1048766 They mainly consume normal sticks cups cones innovative fillers and water ice creams

1048766 Urban youth in the age group of 15-24

1048766 They consume premium and extrusion sticks and cones

1048766 Urban mothers in the age group of 25-35

1048766 They determine the family purchases Even when the father purchases ice cream decision is

taken by them

Consumption pattern of various age groups are depicted in the following chart Ice cream

consumption pattern50203005 to 14 yrs15 to 24 yrs25 to 35 yrs

Figure 11 Target Group wise Consumption Pattern Evaluation of Entry into Ice cream Business

for Bangladesh Limited 42

613 Target SEC and DMFI Group

Common Format

SEC A and B is the target group for common format ice cream However with rapid increase in

price level over the years has made it a ldquohard to consumerdquo product for SEC B consumers who

belong to lower DMFI group

Boutique Format

Boutique formatrsquos higher margin and high price range makes it an exclusively SEC A ice cream

People belonging to upper and upper middle class have access to the mediocre boutiques and

only higher upper class can have premium ice creams like Club Gelato and MoumlvenPick

Another unique target group for boutique format are the foreigners who live in Bangladesh

These people tend to visit the parlours to have ice cream as dessert especially after dinner

62 Ice cream in Consumer Lifestyle

Figure 12 Ice cream in Consumer Life style

This simple overview of ice cream in consumer lifestyle was determined based on in-depth

research analysis of UBL and validated through qualitative group discussions by the author

However detail of in-depth research is provided in a later section of this chapter

Evaluation of Entry into Ice cream Business for Bangladesh Limited 43

63 Highlights of Purchase Habit of Ice cream

631 Common Habits across Target Groups

There are some common habits that were identified in earlier researches and group discussions

with consumers Common habits mean the consumer approach towards ice cream that is seen

across all target groups eg kids youth and adult purchasers These are outlined below

1048766 Ice cream is mainly seen as a dessert or a snack Impulse ice cream is seen as a quick snack

that is consumed when it is in sight Visibility plays a big role here Regarding family packs

people see it as a post-food dessert

1048766 Ice cream purchase is commonly a planned event When the contexts arise people generally

take a bit of time to decide whether or not to have ice cream or when they want to go to a

boutique they make due considerations regarding which boutique to visit

1048766 Ice cream purchase decision is taken based on favourite flavour People tend to try out new

variants and flavours when they first see it They compare the taste with earlier experience and

when they purchase later they choose the flavour they have liked most

1048766 For In-Home segment decision is mostly taken on the flavour Generally people come up with

different flavours of choice and most voted flavour is chosen

1048766 People become aware of new variants or flavours mainly through word-of-mouth

Advertisement (new launches special offers and festivals) in newspaper is another source of

awareness

1048766 People are currently indifferent towards the price level of premium flavours However some

feel that price of Choc-bar or water ice creams (lolly) is a bit much If less they would have

consumed more Some also feel that companies should come up with branded ice cream in the

price range of BDT 5-8

1048766 Ice cream is purchased from nearby shops If required brand and flavour is not available 2-3

shops will be visited and then available flavour will be selected even if the required one is not

found This is done mainly not to ruin the mood for ice cream

1048766 People are very open to try new brands and flavours especially if it comes from a credible

source They would try new flavours and if they are satisfied with the taste they would repeat

purchase

1048766 Regarding boutique visits people feel that boutiques need to have a proper environment

enough flavours and other snacks

1048766 While visiting boutique with family or companion they want variation in flavours so that

they would order different flavours and taste each otherrsquos ice cream It is seen as a sign of

togetherness

1048766 Frequency of ice cream purchase varies among people It depends on peer pressure collective

family decision summer heat and attitude towards ldquoice creamrdquo itself as a product Evaluation of

Entry into Ice cream Business for Bangladesh Limited 44

632 Habits of Kids

1048766 Kids choose ice cream flavours by the look of the product (generally pictures shown in POS

materials and carts) They love colour and designs of the products let it be a common format or a

boutique ice cream

1048766 Kids (when in house) would go with the housemaid to the nearby shop choose the flavour

they want (within range of the amount given to the maid) and buy it

1048766 When with parents they would take the product they like even if the price is lower than some

other product However mothers play a role in this decision They would want their children not

to choose too high priced a product or coloured products

633 Habits of Youth

1048766 Young people are the main consumer of impulse ice cream They also are one of the major

consumers in the boutique segment

1048766 Young people love to try out new products that come into the market Another side of the coin

is that they are not very loyal to a brand or a flavour and tend to switch a lot

1048766 Regarding boutique visits young people go to boutiques to have an ldquoice cream hang outrdquo with

peer groups They would stay there for a longer period of time while they have their ice cream

1048766 Some times young people make milk shakes and other ice cream based desserts

634 Habits of Mothers

1048766 Mothers worry about their childrenrsquos health and they prefer ldquovanillardquo type of brands

However when price constraint occurs they go for water ice creams for their children They try

to convince their kidrsquos purchase decision

1048766 Regarding family purchase motherrsquos decision is sometimes prioritized by the whole family

64 Barriers to Ice cream Consumption

641 Emotional Barriers

1048766 Overindulge (close to sinful)

1048766 Undisciplined (no control)

1048766 Childish (licking)

1048766 Artificial Image

642 Functional Barriers

1048766 People of SEC B feel that ice cream is an expensive dessert (If less expensive would consume

more often)

1048766 It leads to cold cough - especially in winter rainy season

1048766 It contains artificial additives preservatives

1048766 It is very high in calories that lead to fattening

Evaluation of Entry into Ice cream Business for Bangladesh Limited 45

1048766 It does not quench ldquothirstrdquo

1048766 Less convenient (portable immediate eat)

1048766 Messy Dripping

65 Research Findings

The highlights regarding purchase habits triggers and barriers of ice cream consumption provide

a glimpse into the consumer world of ice cream industry However UBL CMI conducted a

formal research exclusively on ice cream consumers to identify

1048766 Occasions of ice cream

1048766 Frequency of ice cream consumption

1048766 Expectations from ice cream occasions

1048766 Personalities that they desire from ice cream

651 Relevant Occasions in Daily Lives of Consumers

Research question regarding ldquousual occasions of life that occurred most frequently in day-to-day

lives of the respondentsrdquo generated the following replies

Occasion

of Respondents saying Yes

Watching TV

93

Normal Dinner At Home

91

Normal Lunch At Home

89

At Home While ReadingMusicSurfing

86

Informal Family Get Together

85

Out Of Home Hanging Out With Friends

84

Out Shopping

84

Mid-Afternoon Break At Home

83

At Home By Myself During The Day

82

Special Dinner At Home

82

Informal Dinner Out Of Home

82

Normal Lunch Out Of Home

82

Leisure Walk

79

Coming Home From WorkSchool

78

Special Dinner Out Of Home

78

Celebration

78

A Night In With Friends

77

At Home By Myself In The Evening

77

Special Lunch Out Of Home

76

Mid-Afternoon Break Out Of Home

75

Special Lunch At Home

73

Day out with Partner

72

Midmorning Break

70

At Breakfast

68

Family Day Out

68

During Work Or At School

65

Evaluation of Entry into Ice cream Business for Bangladesh Limited 46

Travelling ToFrom WorkSchool

65

At The Cinema

61

Special Event

56

Clubbing At A Party

50

Post GymSports

48

Table 28 Relevant Occasions in Consumersrsquo Lives

Respondents were then asked to mention ldquofrequency of occurrence of the identified occasionsrdquo

The identified replies are as follows Normal dinner at homenormal lunch at homeComing home

from workschoolTraveling tofrom workschoolDay out with Partner SpouseMid-afternoon

break at homeOut of home hanging out with friendsLeisure walkMid-afternoon break out of

homeA night in with friendsSpecial dinner at homeSpecial lunch out of homeFamily day

outSpecial eventPost gymsportsDaily2-3 Times A WeekWeekly2-3 Times A MonthOnce A

MonthEvery 2-3 MonthsLess OftenNever Figure 13 Frequency of Occurrence of Occasions

This shows that ldquoNormal dinner at home Watching TV Normal Lunch At Home At Home

While ReadingMusicSurfing Coming Home From WorkSchool During Work Or At School

Travelling ToFrom WorkSchool Midmorning Break Day Out With Partner Spouse At Home

By Myself During The Dayrdquo are the most frequent daily rituals of busy lives of consumers

652 Frequency of Ice cream Consumption

Respondents were asked to mention ldquoconsumption pattern of ice cream during the identified

occasionrdquo on a scale of 1-5 depicting frequencies like ldquo(5) always (4) most of the times (3)

about half of the times (2) sometimes (1) never do not knowrdquo The responses are depicted in

the following table

Evaluation of Entry into Ice cream Business for Bangladesh Limited 47

444474544655555566756665775967779991011101111101210111110101113111412131314161

011121411131216181519181518211817171719181718201721222130303434253437403741394

046383944464746453745414641374638504843414839373030292726232725222020201926202

21722221317Midmorning

breakWhile clubbing at aAt the cinemaSpecial eventNormal lunch out ofA night in with

friendsNormal dinner atInformal dinner out ofAt home by myselfAt home by myself inOut

shoppingSpecial lunch atDay out with SpouseWatching TVAlwaysmost of the timesAbout half

of the timesSometimesneverdo not know

Figure 14 Frequency of Ice cream Consumption

As it can be seen ldquoDay out with Spouse Special lunch at home Special dinner at home

Watching TV Family day out Celebrationrdquo are the occasions where most frequently ice cream is

consumed

653 Market Character Mapping Relevant Occasions vs Frequency of Consumption

If we plot frequency of consumption on the X-axis of a chart and relevance of occasion

occurrence on the Y-axis taking the above mentioned values as cut-off values we get four

quadrants in the chart depicting four market scenarios that any ice cream manufacturer in

Bangladesh market might encounter given the current market situation This market

segmentation is based on frequency of ice cream consumption in daily occasions of consumer

lives

The segments are

1048766 OPPORTUNITY MARKET High Relevant Occasions-Low Ice cream Frequency

1048766 QUESTION MARKET Less Relevant Occasions-Low Ice cream Frequency

1048766 HIGH FREQUENCY MARKET Relevant Occasions-High Ice cream Frequency

1048766 CAPTIVE MARKET Less Relevant Occasions-High Ice cream Frequency

The chart looks as follows Evaluation of Entry into Ice cream Business for Bangladesh Limited

48

Figure 15 Relevance of Occasion-Frequency of Consumption Mapping

As it can be seen from the above chart Bangladesh Market still lies in the Opportunity and

Question market zone with a pull towards High frequency and Captive Market zones This is

evident from market data as penetration of ice cream still remains at Thana headquarters levels

Also this explains the high market growth rate of 17 as market is yet under developed and

branded quality ice cream has yet not reached all levels of consumers especially rural level that

constitutes around 75 of Bangladeshi market

From the above analysis we can establish that target of ice cream manufacturers should be to

penetrate more into the Bangladeshi market to create higher frequency of ice cream

consumption The following chart shows the strategies to follow for ice cream manufacturers

Figure 16 Required Market Strategy for Bangladesh

Evaluation of Entry into Ice cream Business for Bangladesh Limited 49

As relevance of ice cream consumption occasions can hardly be controlled by marketers their

endeavour should be to create more ldquoemotional and functionalrdquo attachment to ice cream in less

frequent occasions through ldquomarket developmentrdquo strategy to earn share from overall food

expenditure of consumers and at the same time make them consume more ice cream in highly

relevant occasions through ldquopenetrationrdquo strategy

654 Consumersrsquo Emotional Requirements and Product Attributes

All consumers under these clusters also identify the emotional requirements and the significant

product attributes they seek from their current preferred and future desired ice creams These are

provided below

Cluster

Emotional Functional Requirement

Product Attributes

Enjoyment

Flavour Variety

1048766 Combination of different flavours

1048766 Combination of different textures

1048766 Very sweet

1048766 With wafer or biscuit

1048766 With chocolate

1048766 Of a well known brand

Socially Involved

Spoonable Rich

1048766 Very creamy

1048766 Only natural ingredients

1048766 No mess

Care

Size Creaminess

1048766 Big

1048766 Rich full taste

1048766 Smooth

1048766 Value for money

1048766 No mess

Unwind amp Escape

Economy

1048766 Crunchy

1048766 Economic

1048766 Of a well known brand

1048766 Nutritious

Balanced Convenience

Health Conscious

1048766 Of a well known brand

1048766 Nutritious

1048766 Milk based

1048766 Low sugar

1048766 Low carbohydrates

1048766 Filling

Active Self-Grooming

Fruit Vitamins

1048766 Healthy

1048766 Fruit based

1048766 Low fat

1048766 Liquid or drinkable

1048766 Nutritious

1048766 Of a well known brand

Confidence

Drinkable Light

1048766 Low calories

1048766 Light on the stomach

1048766 Chewy or gooey

1048766 Not so sweet

1048766 Natural appearance

Sensual

Appeal or image

1048766 No artificial additives

Evaluation of Entry into Ice cream Business for Bangladesh Limited 50

1048766 Natural appearance

1048766 Melting slowly

1048766 Attractive packaging

1048766 High quality ingredients

1048766 Of a well known brand

Table 29 Requirements amp Product Attributes Desired by Consumer Clusters

Of these findings we see that the identified highlighted barriers to ice cream consumption are

pretty evident among the consumers Mostly people want products of a reliable source or a well

known brand low calories quality ingredients value for money economic type

Evaluation of Entry into Ice cream Business for Bangladesh Limited 51

70 INDUSTRY ATTRACTIVENESS AND ENTRY PROSPECTS

71 Driving Forces of Growth

As identified in the earlier sections there are several driving forces behind the growth of ice-

cream industry in Bangladesh

712 Trade and Infrastructural Level

1048766 As a result of globalization newer varieties have been introduced to the local products Many

foreign companies are also coming as franchise so there has been increased competition and

these boutiques are setting higher standards for the local producers

1048766 The present market growth rate is 18-19 which is being influenced by larger players like

Igloo who are expanding their distribution nation wide with expansion of national electricity

grid

1048766 With entry of Modern Trade and recent organized business approach of retailers has made it

possible for ice cream manufacturers to penetrate into shops even without providing them with

branded freezers

1048766 Weather change has increased ldquosummerrdquo season in our country which has reduced negative

seasonal impact on ice cream

1048766 Large companies like Igloo have taken global learning of using carts as an effective tool of

availability and visibility for ice cream

1048766 New and improved technologies are being used in the production process This technological

advancement has improved quality increased speed of production and made the process more

cost effective

713 Consumer Level

1048766 Only a few years back rich people could afford the luxury of having ice-cream but now it has

become a common product for everybody Ice-cream companies are producing different products

with a wide price range for consumers of every class and status

1048766 Nowadays companies are doing promotional campaigns more frequently the customers get to

know about the product which makes it easier for them to buy the best one

1048766 The improved standard of life and more modernized lifestyle of people is an important reason

for the increased consumption thus growth of the ice-cream industry

Evaluation of Entry into Ice cream Business for Bangladesh Limited 52

72 Prospects of Entry

The ice-cream industry of Bangladesh is an attractive one for the investors because there is a

huge market but number of producers is very small The major reasons behind industry

attractiveness are as follows

1048766 The industryrsquos current growth potential is very high with opportunity for market development

1048766 The competition currently permits adequate profitability and the competitive forces are

becoming stronger with time

1048766 Boutique segment is at a very high growth stage but no operator is currently operating with a

mid price range of BDT 100-400 Ice cream kiosks and small scooping boutiques can operate

within that range

1048766 Current industry driving forces are favourable for the future industry profitability

1048766 Globally oriented consumers look for variety in ice cream that is currently not available

Latest innovations came in the market in 2002 People would welcome new variety and flavours

1048766 There is a gap in the market for balanced convenience through ice cream where consumers can

get nutritional benefits for ice cream Also emotional attachment to ice cream could further be

improvised in promotional campaigns

1048766 There is high scope for market penetration and development to increase frequency of ice

cream consumption

1048766 Level of risk or uncertainty is very low in ice-cream industry because the consumer market is

so huge any product with a standard quality and careful pricing will be able to make significant

profit

1048766 As for geographic reach of the industry 60 market is still in Dhaka There is scope of

expansion and a new entrant can easily capture market share within Dhaka using carts even if

they do not want nation wide cold chain distribution

1048766 The production process is very complex and capital requirements are also high So before

going into production any company should know about their capabilities and weaknesses and

then start the business or else they might suffer huge loss at a certain level

1048766 Unilever can acquire the required resource and use existing multi-national multi-cultural

expertise to enter the market in a grand way

1048766 With high probability of entry from DANONE with more products like the ISIS diabetic ice

cream Unilever should consider entering in this industry as soon as possible

Evaluation of Entry into Ice cream Business for Bangladesh Limited 53

80 ENTRY STRATEGY FOR UNILEVER

While describing the suggested entry strategy for UBL certain issues have been kept

confidential and some issues have been touched but not explained to keep consistency with UBL

confidentiality policy

81 Suggested Entry Areas for UBL

1048766 Boutique segment of the Bangladesh ice cream is only 5 of the branded market UBL needs

to pursue a larger scope to make the entry viable

1048766 UBL cannot fight with unbranded segment as global product quality mandate of Unilever does

not allow UBL to fight in low price-low quality segment

1048766 Recommend entry should be in the common format segment with both single and multiple

servings and in the boutique segment with a different brand name (if possible BEN amp JERRYrsquoS)

1048766 UBL should build up state-of-art modern factory for manufacturing and establish cold chain

facilities initially focusing on metro cities

1048766 Investment issues are required to be addressed for building factory and cold chain and capital

requirement needs to be identified for that purpose4

1048766 UBL may have boutiques for driving image selective top-end offering

1048766 Kiosks can be setup near universities and shopping malls

1048766 Boutiques should be concentrated in Dhaka and Chittagong

1048766 Ice cream for boutiques and kiosks would be produced in factory as institutional packs of 9-10

litres

82 Products

1048766 As a Brand Building country in global Unilever operating framework UBL is entitled only to

bring products developed by the Brand Development countries

1048766 Unilever should focus on serving products that have nutritional benefits (already available

globally) along with usual satisfactions of sensual pleasure functional attributes etc

1048766 Current existent players especially Igloo and Kwality have extensively copied global and

regionally available Unilever products eg Cornelli is same as Wallrsquos Cornetto Vinetta is similar

to Vienetta Mega is similar to Magnum etc UBL needs to differentiate these to consumers on

the ldquotaste the originalrdquo platform where global quality is focused regarding the products

1048766 UBL should also bring regionally famous brands like Moo or Max to create image

differentiation

1048766 Magnum or Moo should be used as premium end ice cream to generate more profit margin

Evaluation of Entry into Ice cream Business for Bangladesh Limited 54

83 Placement

1048766 Distribution focus should be in Dhaka for entry as Dhaka contributes more than 60 of total

ice cream sales in the country

1048766 Company may use carts as distribution method They serve as good source of visibility and

availability It would help in increasing impulse purchase

1048766 At least 1500 outlets in Dhaka and Chittagong needs to be actively served using dedicated

branded refrigerators to generate sales

1048766 50 carts should operate in Dhaka and Chittagong

84 Price

1048766 UBL products should be priced at par with Igloo pricing for the common format ice creams

1048766 UBL can bring in premium single-serve SKUS for the higher economic classes in the price

range of BDT 60-80

1048766 Smaller SKUs (small lolly stick) can be introduced in the price range of BDT 10-15

1048766 In the boutique segment UBL should price products above the semi-premium segment

(Gelateria Igloo Sub Zero or Andersenrsquos) but lower than that of Club Gelato or MoumlvenPick

85 Promotion

1048766 UBL would require strong marketing campaign (As high as 50 of sales) to have a grand

entry in the market

1048766 Presence in the television media would be of utmost importance More than 50 of

promotional expense should be made here initially Gradually it can be reduced

1048766 Newspaper would serve as the second most important option

1048766 Billboards should also be used

1048766 Activations (similar to Lux Channel i Super Star or Igloo Festival) should be done to generate

trial

86 Scope of Opportunity

Table 30 Value and Volume Based Scope of Opportunity for UBL

Value (BDT Cr)

Volume (Tons)

Market

131

7835

Common

121

7600

Boutique

98

235

Evaluation of Entry into Ice cream Business for Bangladesh Limited 55

861 Geographic Contribution

1048766 Dhaka (61)

1048766 Chittagong (19)

1048766 Sylhet (10)

862 UBL objectives

Common Format Ice Creams

1048766 Target 10 Market share in 1st year operation

1048766 Value BDT 11 Cr

1048766 Production capacity required 21 Tons day

1048766 Freezer Placement 1500 freezers

1048766 Cart operation At least 50 carts

Boutiques

1048766 Target Further develop the market

1048766 Focus Dhaka Chittagong and Sylhet Metro

1048766 Franchise At least 20 franchisee operations nation wide in divisional towns

1048766 Pricing Below imported parlours above common formats with around BDT 400 per Litre

87 Critical Success Factors

1048766 UBL is considered as a high profile company in Bangladesh and thus they cannot operate in

the market only with common products like choc-bars and cups They must have premium

products (these require extrusion line) also to carry their brand image Otherwise UBL would not

be able to charge usual premium over competition products

1048766 Launch of ice cream would require huge promotional and activation support in order to gain

customers from Igloo People want novelty regarding ice cream and UBL have to let them know

about their products and create hype

1048766 Cart should be used as a source of distribution Recent successes of Unilever companies like

Indonesia shows that carts can generate more sales and can be used as source of visibility in the

minds of both retail traders and consumers Carts can also provide incremental sales to the

company

1048766 UBL have to create a strong cold chain for ice cream (initially in Dhaka and Chittagong) to

ensure quality products for consumers

1048766 UBL have to build capacity very rapidly to meet consumer demand if the launch is successful

Evaluation of Entry into Ice cream Business for Bangladesh Limited 56

90 BUSINESS PROJECTION

91 Basic Assumptions

Business projection for ice cream business was made based on a conservative approach UBL

would require spending significantly on production capacity and factory dedicated to ice cream

Thus to analyse business possibilities of ice cream certain assumptions were made and collected

data were used These are

1048766 Production equipments and cabinets would cost approximately BDT 55 crores

1048766 Production equipments 45

1048766 Packaging Equipments 15

1048766 Storage Facility 20

1048766 Branded Freezers 10

1048766 Distribution Investment 10 (Distributors would also invest themselves)

1048766 Ice cream factory with a floor size of 20000 sqft would cost BDT 25 crores

1048766 Objective is to capture 10 market share in Dhaka and Chittagong in the first year

1048766 Business would grow by 50 in year 2 and 3 30 in year 4 and 25 in year 5

1048766 Weighted price per litre is BDT 170 according to volume share of single serve ice cream

multiple serve ice cream and boutique ice cream

1048766 Other financial assumptions were also made List of them are provided below but amount has

been removed for confidentiality issues

Assumptions

Trade Margin

Distributors Margin

DutyVAT Rate

Trade Terms Expense of NPS

Trade Terms Expense of NSV

Advertising ampPromotion of NPS

Indirects (Salaries Wages etc)

Trading Tax

Table 31 Assumptions for Business Projection

Evaluation of Entry into Ice cream Business for Bangladesh Limited 57

100 CONCLUSION

Ice cream has good prospect in Bangladesh It is still a growing market with opportunities for big

new entrants With the barriers of entry UBL needs to consider its priorities UBL being an HPC

company traditionally needs to acquire expertise in cold chain distribution and has to invest a lot

of money to rip the benefits of the industry However to initiate company can take regional

support and acquire resource expertise The company should enter the business as soon as

possible since there is potential threat from DANONE to introduce more ice creams after ISIS

diabetic ice cream and also with potential of the industry arch rival Nestlersquo might consider

entering into the industry too

Evaluation of Entry into Ice cream Business for Bangladesh Limited 58

References

Web References

1 wwwunilevercom

2 wwwunilevercombd

3 wwwhllcom

4 wwwunilevercompk

5 wwwthedailystarcom - Life Style Magazine

6 wwwreuterscouk

Evaluation of Entry into Ice cream Business for Bangladesh Limited 59

Page 24: Square Ice cream

As it can be seen from the above chart all impulse ice creams are priced within the range of

BDT 10 to 25 Other take home multiple servings are priced within the range of BDT 50 (05

Litres) to BDT 220 (2 Litres) Another noticeable factor in price is that there are both normal and

premium flavours in all types of ice creams

K Firms as Price Setters

The firms have capability to affect the market price to be low as profit margin is very high If

Igloo reduces the price of an item below the prevailing price level in order to increase its sales

its competitors will fear that their customers will go away from them to buy Igloo products To

retain their customers they will be forced to match the price cut of Igloo Historically this has

been proven to be true However due to price sensitivity companies cannot drastically increase

price even if they provide higher quality of product It was seen in 1997 when Igloo increased

price of 11 SKUs and faced drastic sales fall during that time It shows that the industry might

welcome overall industry price increase but not individual company price increase

L Promotion

The promotion scenario in the industry is not quite organized as of now Even proper data

regarding promotional expenditure is not available from research sources The reason being

there is not much consumer related activity seen in the market After Kwalityrsquos introduction in

the market in 1999 Igloo went on with massive Television promotion of their new products that

were available at that time

Evaluation of Entry into Ice cream Business for Bangladesh Limited 28

However in current times there is no TVC running from any company Companies promote their

launches mainly through billboards and newspaper promotions which is currently the most used

source of consumer promotion Some promotional activities that were done by the companies

over the years are listed below

Consumer Promotions

1 Larger players like Igloo and Kwality goes on with campaigns like ldquoGift on stickrdquo where

various prizesrsquo names are written on the sticks and consumers can get them

a Igloo ran a program on their launch of Macho variant where gift varied from cricket bat to

personal computer

b Igloo had a program in 2006 where gifts on sticks varied from Bangkok visit to sunglass

c Igloo ran one campaign in 2007 where gold bars were given on purchasing Choc-bar

d Kwality ran a similar program in 2008 where gifts varied from wrist watches to motorcycle

2 Some companies ran consumer TTS and gift programs where company products were given

free

a Igloo had a program in 2006 where Igloo butter was given free on purchasing Igloo ice cream

cake

b Kwality ran a program in 2008 where one SKU was given as gift with another SKU randomly

c ldquoCone Ice cream at your Homerdquo program was run by Igloo in 2002 where six cone biscuits

were given free with purchase of one litre ice cream

3 Media placement is another form of placement done by larger companies

a Igloo purchased ldquoGlimpse into World Cup Resultrdquo space in daily newspapers during World

Cup Football 2002

4 One interesting program is done by only Igloo in Bangladesh They did it in June 2006 The

program was ldquoIgloo Ice cream Festivalrdquo with main attractions of ldquoGet as much ice cream as you

want for BDT 200rdquo ldquoGet a Fantasy Kingdom Entry ticket with each Entry Couponrdquo ldquoLucky

Drawrdquo and ldquoCelebrity Addardquo

Trade Promotions

5 Trade promotions are mainly given to ldquoHighest retail purchasersrdquo and also based on time

bound trade schemes where various slabs of purchase amount are mentioned for different prizes

a Igloo takes their highest purchasers to visit countries like Singapore and Thailand

b Savoy has a purchase slab scheme where first prize is table fan

c Polar gives special sales commission to their highest purchasers (around 5)

Evaluation of Entry into Ice cream Business for Bangladesh Limited 29

M Players in the Common Format Segment

Branded common format ice cream segment is constituted of five players only Among them

Igloo is the largest player and Milk Vita is the smallest The following sections detail the basic

company detail of all the companies with special emphasis on Igloo the market leader

Igloo

The pioneering ice-cream company in Bangladesh started its operation in 1964 in Chittagong

under K Rahman amp Co Limited (KRC) with a small factory inside Coca Cola bottling factory of

KRC After the independence of Bangladesh in 1971 Igloo was taken over by the government of

Bangladesh Later in 1983 Abdul Monem Limited purchased the entire production setup of KRC

Limited including Coca-Cola bottling plant and Igloo ice-cream factory After taking full charge

of Igloo ice-cream by Abdul Monem Limited the manufacturing operations continued in

Chittagong till 1990 Although Dhaka fetched the maximum share of the total revenue the

distribution cost increased tremendously in the process of meeting the demand of Dhaka city To

cope with the distribution problem and handle Polar threat Abdul Monem Limited transferred

the factory to Dhaka changed the ice-cream packaging from the conventional paper to plastic

and expanded their market and distribution operation The new factory of Igloo was setup at

Shyampur Narayanganj and was nine kilometres away from the Motijheel office The company

apart from catering the capital city started to expand its operations in Comilla (1991) Khulna

(1992) and North Bengal (1993) These markets were served directly from Dhaka since the

storage facilities were not developed till then The company is now the market leader since 1997

with clear market share victory over others with sweeping 51 share It is to be noted that Igloo

is also a player in the boutique segment with three parlours (2 in Dhaka and 1 in Chittagong)

Product Range Igloo offers the widest choice of ice cream more than any other competitor in

the market Igloo is offering a total of fifty items including normal premium and novelty cup

stick and family pack items Igloo has thirty flavours more than anyone else in the industry and

is continuously launching new and innovative delicacies

Igloo ice-cream can be classified in six groups They are

Stick

Macho Choc-bar Mini Choc Clown Mega Shell n core Lolly

Cone

Cornelli 2 in one Cornelli classic

Cup

Shahi kulfi Vanilla Strawberry Mango Snow ball

Container

Vanilla Strawberry Mango Chocolate Coffee Diet Vanilla Tutti Frutti Ripple Pralin

Pistachio

Innovative

Nuggets Sandwich

Family

Ripple cake Party time Shahi Kulfi

Table 19 Products of Igloo

Single serve stick cups and cone items are easy to carry around and convenient to eat which

makes it most sold The core target segment of ice-cream is 6-24 years and this generation is

always on the Evaluation of Entry into Ice cream Business for Bangladesh Limited 30

move and thus prefers independent cone stick or cup items As Igloo initiated the concept of ice-

cream as a family product they offer some items to be enjoyed with the whole family

Quality and Innovation Igloo is committed to maintaining the highest quality standard through

its continuous RampD activities The major ingredients raw materials and packing materials are

procured from the best European sources Strict quality control is done at every stage of the

manufacturing process from procurement of material mixing material flow ice cream making

packaging storing (at main warehouse) distributing and market shelving by the Quality Control

Department Current supply chain for various materials of Igloo is as follows Australia (Milk

Powder) Denmark (Ingredients emulsifiers amp stabilizers) China amp UAE (Food grade sticks)

China Denmark Singapore amp Thailand (Food grade packing materials)

Figure 9 Igloo Supply Chain

Distribution Network Their distribution network is stretched all over the country with a long

fleet of refrigerated vans Firstly the ice cream products are stored at the central warehouse of

the factory and from there they are distributed through the haulage vehicle to the operational

centres located in Dhaka Chittagong Comilla Rajshahi Barisal Bogra Rangpur and Khulna

Strictest cold chain maintenance during the distribution and selling of the ice creams is ensured

Their distribution process is as follows Manufacture Stored at -24c Transported by Refrigerated

trucks at -Reaches amp Preserved in Eight regional stores Refrigerated vehicles (Distributors)Retail

outlets (Deep freezers)

Figure 10 Distribution Process of Igloo

Evaluation of Entry into Ice cream Business for Bangladesh Limited 31

Trolley Operation Igloo also operates through trolleys for extending its reach to consumers at

the furthest points The trolleys are operated near schools alleys streets parks etc and play

rhythmic music to attract the consumers These are very colourfully decorated with Igloo

umbrella and the puller wears specific uniforms Igloo was the first in introducing and operating

these trolleys in Bangladesh for any Fast Moving Consumer Goods (FMCG) Igloo has around

125 trolleys operating throughout the country Individual trolleys are provided with a regular

supply of igloo ice creams

Marketing The marketing commitment of Igloo is based on the relationship with its customers

and consumer by not only manufacturing the highest quality product but also delivering the

product by maintaining this quality To satisfy the ever-changing needs of the customer Igloo

has regularly launched new ice creams and introduced new flavours And this commitment has

positioned Igloo as the market-leading brand by gaining the consumers trust with the positioning

as ldquoA WORLD OF GREAT TASTErdquo

Facilities and Logistics at a glance As of 2009 following are the facilities and logistics enjoyed

by the company

Factory location

Dhaka

Production Lines

4

Packages

Stick Cup Family pack Others (Nuggets and sandwich)

Machine suppliers

1048766 Mark-Italy

1048766 Tetra Pak(Hoyer)-Denmark

1048766 Sabore Denmark

1048766 Hass- Austria

Machine models

1048766 Freemark 1100 Italy

1048766 FM 3000 FM 6000 Italy

1048766 SL600 Denmark

Cone baking

Hass- Austria

Chocolate making

Macentyre-UK

Coverage

Nationwide

Operational centre

10

Total market vehicles

30

Distribution channel

Directthrough appointed distributors

Outlet service

7500

Injected deep freezers

4000

Trolley operations

125

Warehouse no

8

Table 20 Igloo Facilities and Logistics

Kwality

Kwality is currently the second largest ice cream manufacturer of the country The mother

company for the Kwality brand is Sanowara Drinks amp Beverages Ltd a sister concern of

Sanowara Group The company is famous for powdered milk brands Red Cow and Diploma in

Bangladesh The drinks and beverage concern of Sanowara made an entry into the market in

1997 with ldquoYesrdquo brand drinking water and launched the ice cream brand in 1999 With heavy

communication and novelty products it Evaluation of Entry into Ice cream Business for

Bangladesh Limited 32

successfully removed Polar from the second place with a current market share of 27 The

company also operates in the boutique segment with two parlours in Dhaka and Chittagong

Kwality ice cream factory is situated in Chittagong with a floor space of 35000 sft and fully

automated machinery wrapping mix machinery equipments from Italy having capacity of

around 20000 litres of ice cream per shift The ice cream factory employs 140 people The

company is ISO 9001-2000 certified

Kwality was the first true competitor for Igloo products with some major innovation in product

design and communication but their quality is perceived to be lower in the minds of the

consumers and they do not have extrusion ice cream The product prices are also similar to that

of Igloo but they charge a bit lower than Igloo in premium multiple servings However during

market visits it was seen that shops that keep only Kwality or Igloo and Kwality both they can

sell Kwality too although the sales amount is lower than that of Igloo People who look for Igloo

shopkeepers give them that directly but if they get a chance and Kwality ice cream stock is high

they also push Kwality to dry the stock out This gives an indication that market is larger than

what the current players are capable of serving even in Dhaka

Kwality follows a similar distribution model like Igloo but distribution frequency is lower and

amount of cart sellers is limited to 25 and they operate only in Dhaka

Polar

Once a giant in the industry Dhaka Ice Cream Industries Ltd introduced the first hygienically

packed ice cream in Bangladesh in 1987 and the brand name Polar was thus born In the early

days the company started ice cream business with a wide range of products and a variety of

flavours in Dhaka city In 1988 the company started its distribution in the city of Chittagong

then Bogra and continued to cover more cities Presently Polar ice cream is available

throughout Bangladesh The company today trails in the market with 15 market share in the

common format segment Recently Polar has announced launch of ISIS diabetic ice cream with

support from DANONE to turn around in the market

The company has its head office as well as a modern large-scale industrial plant in Dhaka Polar

ice cream is made with Danish expertise using Danish equipment and technology The

production activities and quality control measures are supervised and managed by Danish

experts Polar offers a wide range of delicious flavours and tastes made by ingredients imported

from Europe

Dhaka Ice Cream at present has 3 cold stores in Dhaka Chittagong and Bogra in Bangladesh

From Dhaka cold store they distribute ice creams in Mymensingh Tangail Jamalpur Sherpur

Kishoreganj Netrakona Comilla Narsingdi Barisal Madaripur Agaeljhara Faridpur Magura

Chuadanga Jessore Satkhira Khulna Pirojpur and Sylhet through their distributors In case of

long distance delivery points the company uses auto cooling freezer van

Evaluation of Entry into Ice cream Business for Bangladesh Limited 33

In Dhaka city they distribute ice creams directly to retail stores in freezer vans Besides that

they have several distributors at different points of the city Distributors cover their individual

areas where company is not able to supply directly in their freezer vans Similar model is

followed by the company to distribute ice cream from their other cold storages through out the

country For storing and selling ice creams in retail stores the company like the other players

arranges a deep freezer with the Polar logo and canopy light box

In addition to this distribution the company also undertakes home delivery of ice creams for

special occasions

Savoy

Savoy Ice-cream brand is owned by Sena Kalyan Sangstha (SKS) Group of industries It started

its journey in March 1995 with a factory in Tejgaon Dhaka Yearly turnover is estimated at BDT

388 crores with a market share of roughly 35

The factory has been established with Sonali Bank finance at 6040 equity ratio The total

production capacity of the factory has been estimated at 2400 litres of Ice-cream per day Total

land area of the factory premise is 116 Bigha with 8000 sft area covered with a total project cost

of BDT 144 The factory employs 73 people

Product ranges of the company include all the basic designs and flavours of the industry

However the company has not been much of an innovator in the industry Their product quality

is substantially low than that of other players and they price their products at 10-15 lower than

the other competitors The company imports raw materials mainly from Europe The general raw

materials are Euro cream Skimmed Milk Powder Cocoa Powder and Flavour (Vanilla Mango

and Strawberry) Colour (Yellow Red Chocolate and Green) Ripple Sauce Cheney Fruit Palm

Kernel Oil Anhydrous Butter Oil (Ghee) and Sugar etc

Milk Vita

Milk Vita is one of the most famous brand names in Bangladesh for its liquid dairy milk Owned

by Bangladesh Milk Producersrsquo Co-operative Union Limited (BMPCUL) the company came in

the market with proper dairy milk ice cream in form of cups and choc-bar With a production

capacity of around 1600 litres per day the company is trailing in the market place with 3

market share

Although the Milk Vita Choc-bar was perceived to be extremely tasty by consumers they

probably could not do well due price competition Currently they do not even distribute ice

cream in Dhaka However their presence is seen in outskirts of Dhaka and other nearby towns

If the current market situation prevails Milk Vita would lose their remaining market share and

other companies would benefit especially Igloo However one of the advantages of Milk Vita

remains to be

Evaluation of Entry into Ice cream Business for Bangladesh Limited 34

their nation wide milk supply network They have skimmed milk powder production plant that

Igloo does not have Thus they can combat the seasonality of milk supply that Igloo with its

huge requirement of milk cannot

Strengths and Weaknesses of Competitors

Company

Strengths

Weaknesses

Igloo

1048766 Strong brand image

1048766 High product quality

1048766 Highest no of variety

1048766 Strong distribution network

1048766 Highest visibility

1048766 Strong promotion

1048766 High production capacity

1048766 Presence of extrusion ice cream

1048766 Items are generally a bit pricy

1048766 Igloo does not give free freezers like other companies

1048766 Reluctant in recent times regarding innovation

1048766 Local sourcing of liquid milk does not meet demand

1048766 Failure to use ERP technology slowing decision making

Kwality

1048766 Product variety

1048766 Strong promotion

1048766 Free freezer distributed

1048766 Presence in all price segments

1048766 High production capacity

1048766 Weak distribution

1048766 Lower exposure

1048766 low amount of carts in operation

Polar

1048766 Free freezer

1048766 Quality perceived to be high compared to Kwality

1048766 Discoloured freezers

1048766 Lower exposure

1048766 Low product variety

1048766 Unused capacity

Savoy

1048766 Price is lower

1048766 Discoloured freezers

1048766 Low product variety

1048766 Weak distribution

1048766 Small amount of freezers

1048766 Low production capacity

Milk Vita

1048766 Quality is good due to dairy cream

1048766 Brand leverage from Milk Vita milk

1048766 Low exposure

1048766 Low variety

Table 21 Strengths and Weaknesses of Competition

512 Market Characteristics of the Boutique Segment

With a small market of BDT 98 Cr and 567 share in the branded ice cream market the

boutique segment is currently an increasing segment in the ice cream industry Boutique

segmentrsquos history dates back to 1960s when Igloo launched boutiques in Dhaka to save

distribution cost and promote a culture of ldquoice cream eating outrdquo In later years boutiques lost

their glamour and retail common format segment picked up growth However with Dolce Vita in

the late lsquo80s craze for Italian Artisan ice cream was recreated in the market Although Dolce

Vita is failing in recent times emergence of MoumlvenPick and Club Gelato in 2000 has uplifted the

segment once again Current growth rate of the

Evaluation of Entry into Ice cream Business for Bangladesh Limited 35

segment can be estimated to be approx 20-22 (higher than the common format segment)

Following are the basic detail of all the major players in the segment with their estimated sales3

Players

Outlet

Sales (Cr Taka)

Share

Club Gelato

1

136

199

MoumlvenPick

1

119

174

Andersenrsquos

3

119

174

Gelateria Igloo

3

119

174

Sub Zero (Kwality)

2

051

75

Baskin Robbins

1

015

22

Dolce Vita

1

017

25

American Soft

1

009

12

Rainbow

1

009

12

Others (off site)

089

130

Total Market

682

Table 22 Players and Shares in Boutique Segment

A Detail of Operation

General operational procedure followed by all the operators is as follows

1048766 Operating method There is a variation in operational method among the large operators

1048766 Club Gelato uses kitchen at own premise where imported ingredients and local milk (daily

special service from Milk Vita) are used to make ice cream

1048766 MoumlvenPick directly imports ice cream from Switzerland

1048766 Andersenrsquos Gelateria Igloo and Sub Zero produce ice cream at their factory with a mix of

imported and local ingredients

1048766 Products Around 30-35 flavours of artisan dairy ice cream are served at the premises

1048766 Most sold flavours are Vanilla Ferrero Rocher Butterscotch Chocolate Caramel etc

1048766 Other Products Larger players also serve ice cream desserts (milk shakes ice cappuccino etc)

pastries and other desserts with normal coffee and tea facility at their premises

1048766 Boutiques fight ice cream seasonality with the other products sales during off-peak ice cream

seasons Usually ice cream and other products contribute at 6040 ratio in summer and during

winter and off-peak seasons the ratio reverses

1048766 Pricing Usually the prices of products in this segment are 3-4 times higher than that of the

common format segment

1048766 Prices do not vary with flavours Variation depends on serve style (Cone tub) and use of

toppings and other ingredients (Chocolate sauce nut fruits) etc

1048766 Usual margin charged is around 50-60 over production cost Similar margin is charged for

other products like coffee ice cappuccino etc

3 Yearly sales is estimated based on companyrsquos approximate daily sales collected during

interview

Evaluation of Entry into Ice cream Business for Bangladesh Limited 36

1048766 Target Group Most of the consumers belong to SEC A and higher SEC A with DMFI of at

least BDT 20000

1048766 Foreign delegates and resident foreigners also visit these boutiques

1048766 Main purposes of visits in the boutiques are

bull Youth hangout with friends and having ice cream and ice cream derivatives

bull Family Family night out or eat out at a restaurant and then having dessert

bull Foreigners Having dessert after dinner

1048766 Rush time at boutiques are Afternoon 2-4 pm and at night 9-11 pm

1048766 Offsite sales Most of the large operators also sell offsite They have small freezers for off-site

1048766 Club Gelato and MoumlvenPick serves ice cream at high society parties and programmes

1048766 MoumlvenPick also has kiosks in known hotels like Sheraton

1048766 Promotion No mass promotion is done by any of the companies Word of mouth is the most

important source of promotion Posters and banners outside the premise and occasional

newspaper advertisements are used to communicate special offers

1048766 Growth Drivers Market growth is driven by image innovation quality decoration of facility

environment and special offers

1048766 Club Gelato has the image of selling true Italian dairy ice cream with an excellent hangout

environment

1048766 MoumlvenPick imports ice cream directly from Switzerland and is perceived to be of high quality

1048766 Andersenrsquos operates with the image of ice cream from Denmark

1048766 Gelateria Igloo (from Igloo) and Sub Zero (from Kwality) could not establish the premium

artisan ice cream image

B Players in the Boutique Segment

There are very few players who have significant impact in the boutique segment Detailed

information of all the major boutique segment players is provided below

Evaluation of Entry into Ice cream Business for Bangladesh Limited 37

Club Gelato

Basic Company Information

1048766 Location Banani Road 11 (Planning for a second one in Dhanmondi)

1048766 Established in 2001

1048766 Seating Capacity 48

1048766 Area 1250 sft (including kitchen)

1048766 Owner Mr Jahangir Alam (Bangladesh)

1048766 Business Type Joint business partnership with Singapore

1048766 Staff 15 people (6 in the kitchen)

1048766 Production capacity 150 litres per day

Product Related Information

1048766 Product Italian style parlour scoop ice cream fruit juice coffee and pastries

1048766 Flavours Around 32 flavours available

1048766 Most selling Ferraro Rocher Vanilla Pistachio

1048766 Innovations New variants and ingredients are communicated by their Italian supplier and

Club Gelato decides what to take from them

1048766 Serve type Cup Cone Glasses Box for take away

Consumer Profile

1048766 Primary Teenagers and Young Adults (18-30) amp Diplomats

1048766 Secondary Family consumers for eat out

1048766 Income Group High income customers tentatively from SEC A and higher SEC A

1048766 Geographic Area Diversified

1048766 Rush time 8-10 pm

Sales and Price Information

1048766 Sales BDT 50000 (60 Ice cream 40 other desserts) daily in summer In winter however

other products sell more and thus they keep total sales at the same level

1048766 Price 750 per litre for any flavour

1048766 Sales Volume 50-60 litres per day

Supply Chain Placement Information

1048766 Milk Local sourcing from Milk Vita (4050 litres per day)

1048766 Chocolates amp Flavours Belgium France Germany

1048766 Transportation Mainly air (They can afford it due to high margin)

1048766 Contribution of various materials Flavours (30) Milk (20) other parts are water and air

Promotional Materials

1048766 Materials used are near premises POS materials for promoting the parlour only

Table 23 Detail of Club Gelato

Evaluation of Entry into Ice cream Business for Bangladesh Limited 38

MoumlvenPick of Switzerland

Basic Company Information

1048766 Location Gulshan

1048766 Established in 2000

1048766 Seating Capacity 55

1048766 Owner Mr Arif Mahmud

1048766 Business Type Franchise of International MoumlvenPick

1048766 Storage Capacity in Shop 150 litres

Product Related Information

1048766 Product Imported MoumlvenPick ice creams coffee chicken sandwich and Frappe

1048766 Flavours Around 30 to 35 flavours available

1048766 Most selling Swiss Chocolate caramel Vanilla Dream Espresso Strawberry

1048766 Innovations New variants are communicated by their franchiser and they decide on flavours

that they want

1048766 Serve type Cup Cone Glasses Box for take away

Consumer Profile

1048766 Primary Teenagers and Young Adults (18-30) (70) amp Diplomats

1048766 Secondary Family consumers for eat out

1048766 Income Group High income customers tentatively from SEC A

1048766 Geographic Area Concentrated in Gulshan and nearby areas

1048766 Rush time Afternoon- Young Adult 10 to 11 pm Foreigners

1048766 the company also serves at parties and has freezers in known hotels where their ice creams

are served

Sales and Price Information

1048766 Sales BDT 35-40000 daily in summer

1048766 Price 640 per litre for any flavour

1048766 Sales Volume 55-60 litres per day

Supply Chain Placement Information

1048766 Transportation Imported finished goods by ship

1048766 Ship travel time 19 days

1048766 Port clearance 10 days

1048766 Safety Cushion Extra 10 days

Promotional Materials

1048766 Materials used are near premises POS materials for promoting the parlour only

Table 24 Detail of MoumlvenPick of Switzerland

Evaluation of Entry into Ice cream Business for Bangladesh Limited 39

Andersenrsquos of Denmark

Basic Company Information

1048766 Location Gulshan (2 others in Uttara Dhanmondi)

1048766 Established in 2001

1048766 Seating Capacity 48

1048766 Owner United Group

1048766 Business Type Franchise of Australian company Andersenrsquos of Denmark

1048766 Production Tongi Factory of United Group

1048766 Production capacity 2000 litres per day in factory

1048766 Storage Capacity in Shop 150 litres

Product Related Information

1048766 Product Danish parlour scoop ice cream and coffee

1048766 Flavours Around 30 to 35 flavours available

1048766 Most selling Strawberry Butter Scotch Green

1048766 Innovations New variants and ingredients are communicated by their franchiser and they

decide on flavours that they want

1048766 Serve type Cup Cone Glasses Box for take away

Consumer Profile

1048766 Primary Teenagers and Young Adults (18-30) (70) amp Diplomats

1048766 Secondary Family consumers for eat out

1048766 Income Group High income customers tentatively from SEC A

1048766 Geographic Area Concentrated in Gulshan and nearby areas

1048766 Rush time 8 to 10 pm

Sales and Price Information

1048766 Sales BDT 10-12000 daily in summer

1048766 Price 460 per litre for any flavour

1048766 Sales Volume 40-50 litres per day

Supply Chain Placement Information

1048766 Milk 2025 kg packs are imported

1048766 Chocolates amp Flavours Imported

1048766 Butte paper Local sourcing

1048766 Transportation Ship

Promotional Materials

1048766 Materials used are near premises POS materials for promoting the parlour only

Table 25 Detail of Andersenrsquos of Denmark

Evaluation of Entry into Ice cream Business for Bangladesh Limited 40

Gelateria Igloo

Basic Company Information

1048766 Location Banani Kemal Ataturk Avenue (Two others in GEC Mor Chittagong and Naya

Paltan)

1048766 Established in 2000

1048766 Seating Capacity 20

1048766 Production From Igloo factory in Shyampur Narayanganj

Product Related Information

1048766 Product Parlour scoop ice cream and coffee only

1048766 Flavours Around 30 flavours available

1048766 Most selling Vanilla Strawberry Chocolate Pistachio Butter Scotch Tutti Fruity

1048766 Serve type Cup Cone Glasses Box for take away

Consumer Profile

1048766 Primary Teenagers and Young Adults (18-30)

1048766 Secondary Family consumers for eat out

1048766 Income Group High income customers tentatively from SEC A and B

1048766 Geographic Area Diversified

1048766 Rush Time afternoon and evening

Sales and Price Information

1048766 Sales BDT 8000 to 10000 daily in summer Nearly one fourth in winter

1048766 Price Varies but 350 per litre of vanilla

Promotional Materials

1048766 POS materials at the premises

Table 26 Detail of Gelateria Igloo

52 Price Comparison of Common and Boutique Segments

Price ranges of both common format and boutique segment cannot exactly be pin pointed as

products do not follow common structure and variations occur with use of toppings mixing of

flavours and use of coatings However a price comparison has been made among the brands

based on their price of per litre of vanilla flavoured ice cream in the market It appears to be as

following

Company

Price Litre Vanilla

Club Gelato

750

MoumlvenPick

640

Andersenrsquos

460

Dolce Vita

440

Igloo

100

Kwality

100

Polar

100

Milk-Vita

90

Savoy

85

Table 27 Comparative Price Analysis

As it can be seen there is price gap within the range of BDT 100-400 Ice cream kiosks and

small scooping boutiques can operate within that range

Evaluation of Entry into Ice cream Business for Bangladesh Limited 41

60 CONSUMER ANALYSIS

61 Target Group of Ice cream

Who are the consumers of ice cream This question does not have a clear answer Ice cream is a

food for all It is the only food consumed by a human being at less than 0 degree centigrade

temperature and people of all ages feel indulged to have it However we can determine focus

target groups for both branded common format and artisan boutique ice cream Group

discussions and market visits were done to get insight into the consumers along side resources

form secondary sources Age based target group is common for both segments but variation

among the groups occur mainly based on SEC and DMFI classification

611 Geographic Group

Branded ice cream remains an urban product till date Geographically branded ice cream has

reached urban and semi urban areas up to Thana Head Quarter levels Ice cream has reached

areas where electricity is available Small artisan players are available in places where large

branded players have no distribution

612 Target Age Group

Age wise grouping of target consumers is as follows

1048766 Urban kids in the age group of 5-14

1048766 They mainly consume normal sticks cups cones innovative fillers and water ice creams

1048766 Urban youth in the age group of 15-24

1048766 They consume premium and extrusion sticks and cones

1048766 Urban mothers in the age group of 25-35

1048766 They determine the family purchases Even when the father purchases ice cream decision is

taken by them

Consumption pattern of various age groups are depicted in the following chart Ice cream

consumption pattern50203005 to 14 yrs15 to 24 yrs25 to 35 yrs

Figure 11 Target Group wise Consumption Pattern Evaluation of Entry into Ice cream Business

for Bangladesh Limited 42

613 Target SEC and DMFI Group

Common Format

SEC A and B is the target group for common format ice cream However with rapid increase in

price level over the years has made it a ldquohard to consumerdquo product for SEC B consumers who

belong to lower DMFI group

Boutique Format

Boutique formatrsquos higher margin and high price range makes it an exclusively SEC A ice cream

People belonging to upper and upper middle class have access to the mediocre boutiques and

only higher upper class can have premium ice creams like Club Gelato and MoumlvenPick

Another unique target group for boutique format are the foreigners who live in Bangladesh

These people tend to visit the parlours to have ice cream as dessert especially after dinner

62 Ice cream in Consumer Lifestyle

Figure 12 Ice cream in Consumer Life style

This simple overview of ice cream in consumer lifestyle was determined based on in-depth

research analysis of UBL and validated through qualitative group discussions by the author

However detail of in-depth research is provided in a later section of this chapter

Evaluation of Entry into Ice cream Business for Bangladesh Limited 43

63 Highlights of Purchase Habit of Ice cream

631 Common Habits across Target Groups

There are some common habits that were identified in earlier researches and group discussions

with consumers Common habits mean the consumer approach towards ice cream that is seen

across all target groups eg kids youth and adult purchasers These are outlined below

1048766 Ice cream is mainly seen as a dessert or a snack Impulse ice cream is seen as a quick snack

that is consumed when it is in sight Visibility plays a big role here Regarding family packs

people see it as a post-food dessert

1048766 Ice cream purchase is commonly a planned event When the contexts arise people generally

take a bit of time to decide whether or not to have ice cream or when they want to go to a

boutique they make due considerations regarding which boutique to visit

1048766 Ice cream purchase decision is taken based on favourite flavour People tend to try out new

variants and flavours when they first see it They compare the taste with earlier experience and

when they purchase later they choose the flavour they have liked most

1048766 For In-Home segment decision is mostly taken on the flavour Generally people come up with

different flavours of choice and most voted flavour is chosen

1048766 People become aware of new variants or flavours mainly through word-of-mouth

Advertisement (new launches special offers and festivals) in newspaper is another source of

awareness

1048766 People are currently indifferent towards the price level of premium flavours However some

feel that price of Choc-bar or water ice creams (lolly) is a bit much If less they would have

consumed more Some also feel that companies should come up with branded ice cream in the

price range of BDT 5-8

1048766 Ice cream is purchased from nearby shops If required brand and flavour is not available 2-3

shops will be visited and then available flavour will be selected even if the required one is not

found This is done mainly not to ruin the mood for ice cream

1048766 People are very open to try new brands and flavours especially if it comes from a credible

source They would try new flavours and if they are satisfied with the taste they would repeat

purchase

1048766 Regarding boutique visits people feel that boutiques need to have a proper environment

enough flavours and other snacks

1048766 While visiting boutique with family or companion they want variation in flavours so that

they would order different flavours and taste each otherrsquos ice cream It is seen as a sign of

togetherness

1048766 Frequency of ice cream purchase varies among people It depends on peer pressure collective

family decision summer heat and attitude towards ldquoice creamrdquo itself as a product Evaluation of

Entry into Ice cream Business for Bangladesh Limited 44

632 Habits of Kids

1048766 Kids choose ice cream flavours by the look of the product (generally pictures shown in POS

materials and carts) They love colour and designs of the products let it be a common format or a

boutique ice cream

1048766 Kids (when in house) would go with the housemaid to the nearby shop choose the flavour

they want (within range of the amount given to the maid) and buy it

1048766 When with parents they would take the product they like even if the price is lower than some

other product However mothers play a role in this decision They would want their children not

to choose too high priced a product or coloured products

633 Habits of Youth

1048766 Young people are the main consumer of impulse ice cream They also are one of the major

consumers in the boutique segment

1048766 Young people love to try out new products that come into the market Another side of the coin

is that they are not very loyal to a brand or a flavour and tend to switch a lot

1048766 Regarding boutique visits young people go to boutiques to have an ldquoice cream hang outrdquo with

peer groups They would stay there for a longer period of time while they have their ice cream

1048766 Some times young people make milk shakes and other ice cream based desserts

634 Habits of Mothers

1048766 Mothers worry about their childrenrsquos health and they prefer ldquovanillardquo type of brands

However when price constraint occurs they go for water ice creams for their children They try

to convince their kidrsquos purchase decision

1048766 Regarding family purchase motherrsquos decision is sometimes prioritized by the whole family

64 Barriers to Ice cream Consumption

641 Emotional Barriers

1048766 Overindulge (close to sinful)

1048766 Undisciplined (no control)

1048766 Childish (licking)

1048766 Artificial Image

642 Functional Barriers

1048766 People of SEC B feel that ice cream is an expensive dessert (If less expensive would consume

more often)

1048766 It leads to cold cough - especially in winter rainy season

1048766 It contains artificial additives preservatives

1048766 It is very high in calories that lead to fattening

Evaluation of Entry into Ice cream Business for Bangladesh Limited 45

1048766 It does not quench ldquothirstrdquo

1048766 Less convenient (portable immediate eat)

1048766 Messy Dripping

65 Research Findings

The highlights regarding purchase habits triggers and barriers of ice cream consumption provide

a glimpse into the consumer world of ice cream industry However UBL CMI conducted a

formal research exclusively on ice cream consumers to identify

1048766 Occasions of ice cream

1048766 Frequency of ice cream consumption

1048766 Expectations from ice cream occasions

1048766 Personalities that they desire from ice cream

651 Relevant Occasions in Daily Lives of Consumers

Research question regarding ldquousual occasions of life that occurred most frequently in day-to-day

lives of the respondentsrdquo generated the following replies

Occasion

of Respondents saying Yes

Watching TV

93

Normal Dinner At Home

91

Normal Lunch At Home

89

At Home While ReadingMusicSurfing

86

Informal Family Get Together

85

Out Of Home Hanging Out With Friends

84

Out Shopping

84

Mid-Afternoon Break At Home

83

At Home By Myself During The Day

82

Special Dinner At Home

82

Informal Dinner Out Of Home

82

Normal Lunch Out Of Home

82

Leisure Walk

79

Coming Home From WorkSchool

78

Special Dinner Out Of Home

78

Celebration

78

A Night In With Friends

77

At Home By Myself In The Evening

77

Special Lunch Out Of Home

76

Mid-Afternoon Break Out Of Home

75

Special Lunch At Home

73

Day out with Partner

72

Midmorning Break

70

At Breakfast

68

Family Day Out

68

During Work Or At School

65

Evaluation of Entry into Ice cream Business for Bangladesh Limited 46

Travelling ToFrom WorkSchool

65

At The Cinema

61

Special Event

56

Clubbing At A Party

50

Post GymSports

48

Table 28 Relevant Occasions in Consumersrsquo Lives

Respondents were then asked to mention ldquofrequency of occurrence of the identified occasionsrdquo

The identified replies are as follows Normal dinner at homenormal lunch at homeComing home

from workschoolTraveling tofrom workschoolDay out with Partner SpouseMid-afternoon

break at homeOut of home hanging out with friendsLeisure walkMid-afternoon break out of

homeA night in with friendsSpecial dinner at homeSpecial lunch out of homeFamily day

outSpecial eventPost gymsportsDaily2-3 Times A WeekWeekly2-3 Times A MonthOnce A

MonthEvery 2-3 MonthsLess OftenNever Figure 13 Frequency of Occurrence of Occasions

This shows that ldquoNormal dinner at home Watching TV Normal Lunch At Home At Home

While ReadingMusicSurfing Coming Home From WorkSchool During Work Or At School

Travelling ToFrom WorkSchool Midmorning Break Day Out With Partner Spouse At Home

By Myself During The Dayrdquo are the most frequent daily rituals of busy lives of consumers

652 Frequency of Ice cream Consumption

Respondents were asked to mention ldquoconsumption pattern of ice cream during the identified

occasionrdquo on a scale of 1-5 depicting frequencies like ldquo(5) always (4) most of the times (3)

about half of the times (2) sometimes (1) never do not knowrdquo The responses are depicted in

the following table

Evaluation of Entry into Ice cream Business for Bangladesh Limited 47

444474544655555566756665775967779991011101111101210111110101113111412131314161

011121411131216181519181518211817171719181718201721222130303434253437403741394

046383944464746453745414641374638504843414839373030292726232725222020201926202

21722221317Midmorning

breakWhile clubbing at aAt the cinemaSpecial eventNormal lunch out ofA night in with

friendsNormal dinner atInformal dinner out ofAt home by myselfAt home by myself inOut

shoppingSpecial lunch atDay out with SpouseWatching TVAlwaysmost of the timesAbout half

of the timesSometimesneverdo not know

Figure 14 Frequency of Ice cream Consumption

As it can be seen ldquoDay out with Spouse Special lunch at home Special dinner at home

Watching TV Family day out Celebrationrdquo are the occasions where most frequently ice cream is

consumed

653 Market Character Mapping Relevant Occasions vs Frequency of Consumption

If we plot frequency of consumption on the X-axis of a chart and relevance of occasion

occurrence on the Y-axis taking the above mentioned values as cut-off values we get four

quadrants in the chart depicting four market scenarios that any ice cream manufacturer in

Bangladesh market might encounter given the current market situation This market

segmentation is based on frequency of ice cream consumption in daily occasions of consumer

lives

The segments are

1048766 OPPORTUNITY MARKET High Relevant Occasions-Low Ice cream Frequency

1048766 QUESTION MARKET Less Relevant Occasions-Low Ice cream Frequency

1048766 HIGH FREQUENCY MARKET Relevant Occasions-High Ice cream Frequency

1048766 CAPTIVE MARKET Less Relevant Occasions-High Ice cream Frequency

The chart looks as follows Evaluation of Entry into Ice cream Business for Bangladesh Limited

48

Figure 15 Relevance of Occasion-Frequency of Consumption Mapping

As it can be seen from the above chart Bangladesh Market still lies in the Opportunity and

Question market zone with a pull towards High frequency and Captive Market zones This is

evident from market data as penetration of ice cream still remains at Thana headquarters levels

Also this explains the high market growth rate of 17 as market is yet under developed and

branded quality ice cream has yet not reached all levels of consumers especially rural level that

constitutes around 75 of Bangladeshi market

From the above analysis we can establish that target of ice cream manufacturers should be to

penetrate more into the Bangladeshi market to create higher frequency of ice cream

consumption The following chart shows the strategies to follow for ice cream manufacturers

Figure 16 Required Market Strategy for Bangladesh

Evaluation of Entry into Ice cream Business for Bangladesh Limited 49

As relevance of ice cream consumption occasions can hardly be controlled by marketers their

endeavour should be to create more ldquoemotional and functionalrdquo attachment to ice cream in less

frequent occasions through ldquomarket developmentrdquo strategy to earn share from overall food

expenditure of consumers and at the same time make them consume more ice cream in highly

relevant occasions through ldquopenetrationrdquo strategy

654 Consumersrsquo Emotional Requirements and Product Attributes

All consumers under these clusters also identify the emotional requirements and the significant

product attributes they seek from their current preferred and future desired ice creams These are

provided below

Cluster

Emotional Functional Requirement

Product Attributes

Enjoyment

Flavour Variety

1048766 Combination of different flavours

1048766 Combination of different textures

1048766 Very sweet

1048766 With wafer or biscuit

1048766 With chocolate

1048766 Of a well known brand

Socially Involved

Spoonable Rich

1048766 Very creamy

1048766 Only natural ingredients

1048766 No mess

Care

Size Creaminess

1048766 Big

1048766 Rich full taste

1048766 Smooth

1048766 Value for money

1048766 No mess

Unwind amp Escape

Economy

1048766 Crunchy

1048766 Economic

1048766 Of a well known brand

1048766 Nutritious

Balanced Convenience

Health Conscious

1048766 Of a well known brand

1048766 Nutritious

1048766 Milk based

1048766 Low sugar

1048766 Low carbohydrates

1048766 Filling

Active Self-Grooming

Fruit Vitamins

1048766 Healthy

1048766 Fruit based

1048766 Low fat

1048766 Liquid or drinkable

1048766 Nutritious

1048766 Of a well known brand

Confidence

Drinkable Light

1048766 Low calories

1048766 Light on the stomach

1048766 Chewy or gooey

1048766 Not so sweet

1048766 Natural appearance

Sensual

Appeal or image

1048766 No artificial additives

Evaluation of Entry into Ice cream Business for Bangladesh Limited 50

1048766 Natural appearance

1048766 Melting slowly

1048766 Attractive packaging

1048766 High quality ingredients

1048766 Of a well known brand

Table 29 Requirements amp Product Attributes Desired by Consumer Clusters

Of these findings we see that the identified highlighted barriers to ice cream consumption are

pretty evident among the consumers Mostly people want products of a reliable source or a well

known brand low calories quality ingredients value for money economic type

Evaluation of Entry into Ice cream Business for Bangladesh Limited 51

70 INDUSTRY ATTRACTIVENESS AND ENTRY PROSPECTS

71 Driving Forces of Growth

As identified in the earlier sections there are several driving forces behind the growth of ice-

cream industry in Bangladesh

712 Trade and Infrastructural Level

1048766 As a result of globalization newer varieties have been introduced to the local products Many

foreign companies are also coming as franchise so there has been increased competition and

these boutiques are setting higher standards for the local producers

1048766 The present market growth rate is 18-19 which is being influenced by larger players like

Igloo who are expanding their distribution nation wide with expansion of national electricity

grid

1048766 With entry of Modern Trade and recent organized business approach of retailers has made it

possible for ice cream manufacturers to penetrate into shops even without providing them with

branded freezers

1048766 Weather change has increased ldquosummerrdquo season in our country which has reduced negative

seasonal impact on ice cream

1048766 Large companies like Igloo have taken global learning of using carts as an effective tool of

availability and visibility for ice cream

1048766 New and improved technologies are being used in the production process This technological

advancement has improved quality increased speed of production and made the process more

cost effective

713 Consumer Level

1048766 Only a few years back rich people could afford the luxury of having ice-cream but now it has

become a common product for everybody Ice-cream companies are producing different products

with a wide price range for consumers of every class and status

1048766 Nowadays companies are doing promotional campaigns more frequently the customers get to

know about the product which makes it easier for them to buy the best one

1048766 The improved standard of life and more modernized lifestyle of people is an important reason

for the increased consumption thus growth of the ice-cream industry

Evaluation of Entry into Ice cream Business for Bangladesh Limited 52

72 Prospects of Entry

The ice-cream industry of Bangladesh is an attractive one for the investors because there is a

huge market but number of producers is very small The major reasons behind industry

attractiveness are as follows

1048766 The industryrsquos current growth potential is very high with opportunity for market development

1048766 The competition currently permits adequate profitability and the competitive forces are

becoming stronger with time

1048766 Boutique segment is at a very high growth stage but no operator is currently operating with a

mid price range of BDT 100-400 Ice cream kiosks and small scooping boutiques can operate

within that range

1048766 Current industry driving forces are favourable for the future industry profitability

1048766 Globally oriented consumers look for variety in ice cream that is currently not available

Latest innovations came in the market in 2002 People would welcome new variety and flavours

1048766 There is a gap in the market for balanced convenience through ice cream where consumers can

get nutritional benefits for ice cream Also emotional attachment to ice cream could further be

improvised in promotional campaigns

1048766 There is high scope for market penetration and development to increase frequency of ice

cream consumption

1048766 Level of risk or uncertainty is very low in ice-cream industry because the consumer market is

so huge any product with a standard quality and careful pricing will be able to make significant

profit

1048766 As for geographic reach of the industry 60 market is still in Dhaka There is scope of

expansion and a new entrant can easily capture market share within Dhaka using carts even if

they do not want nation wide cold chain distribution

1048766 The production process is very complex and capital requirements are also high So before

going into production any company should know about their capabilities and weaknesses and

then start the business or else they might suffer huge loss at a certain level

1048766 Unilever can acquire the required resource and use existing multi-national multi-cultural

expertise to enter the market in a grand way

1048766 With high probability of entry from DANONE with more products like the ISIS diabetic ice

cream Unilever should consider entering in this industry as soon as possible

Evaluation of Entry into Ice cream Business for Bangladesh Limited 53

80 ENTRY STRATEGY FOR UNILEVER

While describing the suggested entry strategy for UBL certain issues have been kept

confidential and some issues have been touched but not explained to keep consistency with UBL

confidentiality policy

81 Suggested Entry Areas for UBL

1048766 Boutique segment of the Bangladesh ice cream is only 5 of the branded market UBL needs

to pursue a larger scope to make the entry viable

1048766 UBL cannot fight with unbranded segment as global product quality mandate of Unilever does

not allow UBL to fight in low price-low quality segment

1048766 Recommend entry should be in the common format segment with both single and multiple

servings and in the boutique segment with a different brand name (if possible BEN amp JERRYrsquoS)

1048766 UBL should build up state-of-art modern factory for manufacturing and establish cold chain

facilities initially focusing on metro cities

1048766 Investment issues are required to be addressed for building factory and cold chain and capital

requirement needs to be identified for that purpose4

1048766 UBL may have boutiques for driving image selective top-end offering

1048766 Kiosks can be setup near universities and shopping malls

1048766 Boutiques should be concentrated in Dhaka and Chittagong

1048766 Ice cream for boutiques and kiosks would be produced in factory as institutional packs of 9-10

litres

82 Products

1048766 As a Brand Building country in global Unilever operating framework UBL is entitled only to

bring products developed by the Brand Development countries

1048766 Unilever should focus on serving products that have nutritional benefits (already available

globally) along with usual satisfactions of sensual pleasure functional attributes etc

1048766 Current existent players especially Igloo and Kwality have extensively copied global and

regionally available Unilever products eg Cornelli is same as Wallrsquos Cornetto Vinetta is similar

to Vienetta Mega is similar to Magnum etc UBL needs to differentiate these to consumers on

the ldquotaste the originalrdquo platform where global quality is focused regarding the products

1048766 UBL should also bring regionally famous brands like Moo or Max to create image

differentiation

1048766 Magnum or Moo should be used as premium end ice cream to generate more profit margin

Evaluation of Entry into Ice cream Business for Bangladesh Limited 54

83 Placement

1048766 Distribution focus should be in Dhaka for entry as Dhaka contributes more than 60 of total

ice cream sales in the country

1048766 Company may use carts as distribution method They serve as good source of visibility and

availability It would help in increasing impulse purchase

1048766 At least 1500 outlets in Dhaka and Chittagong needs to be actively served using dedicated

branded refrigerators to generate sales

1048766 50 carts should operate in Dhaka and Chittagong

84 Price

1048766 UBL products should be priced at par with Igloo pricing for the common format ice creams

1048766 UBL can bring in premium single-serve SKUS for the higher economic classes in the price

range of BDT 60-80

1048766 Smaller SKUs (small lolly stick) can be introduced in the price range of BDT 10-15

1048766 In the boutique segment UBL should price products above the semi-premium segment

(Gelateria Igloo Sub Zero or Andersenrsquos) but lower than that of Club Gelato or MoumlvenPick

85 Promotion

1048766 UBL would require strong marketing campaign (As high as 50 of sales) to have a grand

entry in the market

1048766 Presence in the television media would be of utmost importance More than 50 of

promotional expense should be made here initially Gradually it can be reduced

1048766 Newspaper would serve as the second most important option

1048766 Billboards should also be used

1048766 Activations (similar to Lux Channel i Super Star or Igloo Festival) should be done to generate

trial

86 Scope of Opportunity

Table 30 Value and Volume Based Scope of Opportunity for UBL

Value (BDT Cr)

Volume (Tons)

Market

131

7835

Common

121

7600

Boutique

98

235

Evaluation of Entry into Ice cream Business for Bangladesh Limited 55

861 Geographic Contribution

1048766 Dhaka (61)

1048766 Chittagong (19)

1048766 Sylhet (10)

862 UBL objectives

Common Format Ice Creams

1048766 Target 10 Market share in 1st year operation

1048766 Value BDT 11 Cr

1048766 Production capacity required 21 Tons day

1048766 Freezer Placement 1500 freezers

1048766 Cart operation At least 50 carts

Boutiques

1048766 Target Further develop the market

1048766 Focus Dhaka Chittagong and Sylhet Metro

1048766 Franchise At least 20 franchisee operations nation wide in divisional towns

1048766 Pricing Below imported parlours above common formats with around BDT 400 per Litre

87 Critical Success Factors

1048766 UBL is considered as a high profile company in Bangladesh and thus they cannot operate in

the market only with common products like choc-bars and cups They must have premium

products (these require extrusion line) also to carry their brand image Otherwise UBL would not

be able to charge usual premium over competition products

1048766 Launch of ice cream would require huge promotional and activation support in order to gain

customers from Igloo People want novelty regarding ice cream and UBL have to let them know

about their products and create hype

1048766 Cart should be used as a source of distribution Recent successes of Unilever companies like

Indonesia shows that carts can generate more sales and can be used as source of visibility in the

minds of both retail traders and consumers Carts can also provide incremental sales to the

company

1048766 UBL have to create a strong cold chain for ice cream (initially in Dhaka and Chittagong) to

ensure quality products for consumers

1048766 UBL have to build capacity very rapidly to meet consumer demand if the launch is successful

Evaluation of Entry into Ice cream Business for Bangladesh Limited 56

90 BUSINESS PROJECTION

91 Basic Assumptions

Business projection for ice cream business was made based on a conservative approach UBL

would require spending significantly on production capacity and factory dedicated to ice cream

Thus to analyse business possibilities of ice cream certain assumptions were made and collected

data were used These are

1048766 Production equipments and cabinets would cost approximately BDT 55 crores

1048766 Production equipments 45

1048766 Packaging Equipments 15

1048766 Storage Facility 20

1048766 Branded Freezers 10

1048766 Distribution Investment 10 (Distributors would also invest themselves)

1048766 Ice cream factory with a floor size of 20000 sqft would cost BDT 25 crores

1048766 Objective is to capture 10 market share in Dhaka and Chittagong in the first year

1048766 Business would grow by 50 in year 2 and 3 30 in year 4 and 25 in year 5

1048766 Weighted price per litre is BDT 170 according to volume share of single serve ice cream

multiple serve ice cream and boutique ice cream

1048766 Other financial assumptions were also made List of them are provided below but amount has

been removed for confidentiality issues

Assumptions

Trade Margin

Distributors Margin

DutyVAT Rate

Trade Terms Expense of NPS

Trade Terms Expense of NSV

Advertising ampPromotion of NPS

Indirects (Salaries Wages etc)

Trading Tax

Table 31 Assumptions for Business Projection

Evaluation of Entry into Ice cream Business for Bangladesh Limited 57

100 CONCLUSION

Ice cream has good prospect in Bangladesh It is still a growing market with opportunities for big

new entrants With the barriers of entry UBL needs to consider its priorities UBL being an HPC

company traditionally needs to acquire expertise in cold chain distribution and has to invest a lot

of money to rip the benefits of the industry However to initiate company can take regional

support and acquire resource expertise The company should enter the business as soon as

possible since there is potential threat from DANONE to introduce more ice creams after ISIS

diabetic ice cream and also with potential of the industry arch rival Nestlersquo might consider

entering into the industry too

Evaluation of Entry into Ice cream Business for Bangladesh Limited 58

References

Web References

1 wwwunilevercom

2 wwwunilevercombd

3 wwwhllcom

4 wwwunilevercompk

5 wwwthedailystarcom - Life Style Magazine

6 wwwreuterscouk

Evaluation of Entry into Ice cream Business for Bangladesh Limited 59

Page 25: Square Ice cream

a Igloo ran a program on their launch of Macho variant where gift varied from cricket bat to

personal computer

b Igloo had a program in 2006 where gifts on sticks varied from Bangkok visit to sunglass

c Igloo ran one campaign in 2007 where gold bars were given on purchasing Choc-bar

d Kwality ran a similar program in 2008 where gifts varied from wrist watches to motorcycle

2 Some companies ran consumer TTS and gift programs where company products were given

free

a Igloo had a program in 2006 where Igloo butter was given free on purchasing Igloo ice cream

cake

b Kwality ran a program in 2008 where one SKU was given as gift with another SKU randomly

c ldquoCone Ice cream at your Homerdquo program was run by Igloo in 2002 where six cone biscuits

were given free with purchase of one litre ice cream

3 Media placement is another form of placement done by larger companies

a Igloo purchased ldquoGlimpse into World Cup Resultrdquo space in daily newspapers during World

Cup Football 2002

4 One interesting program is done by only Igloo in Bangladesh They did it in June 2006 The

program was ldquoIgloo Ice cream Festivalrdquo with main attractions of ldquoGet as much ice cream as you

want for BDT 200rdquo ldquoGet a Fantasy Kingdom Entry ticket with each Entry Couponrdquo ldquoLucky

Drawrdquo and ldquoCelebrity Addardquo

Trade Promotions

5 Trade promotions are mainly given to ldquoHighest retail purchasersrdquo and also based on time

bound trade schemes where various slabs of purchase amount are mentioned for different prizes

a Igloo takes their highest purchasers to visit countries like Singapore and Thailand

b Savoy has a purchase slab scheme where first prize is table fan

c Polar gives special sales commission to their highest purchasers (around 5)

Evaluation of Entry into Ice cream Business for Bangladesh Limited 29

M Players in the Common Format Segment

Branded common format ice cream segment is constituted of five players only Among them

Igloo is the largest player and Milk Vita is the smallest The following sections detail the basic

company detail of all the companies with special emphasis on Igloo the market leader

Igloo

The pioneering ice-cream company in Bangladesh started its operation in 1964 in Chittagong

under K Rahman amp Co Limited (KRC) with a small factory inside Coca Cola bottling factory of

KRC After the independence of Bangladesh in 1971 Igloo was taken over by the government of

Bangladesh Later in 1983 Abdul Monem Limited purchased the entire production setup of KRC

Limited including Coca-Cola bottling plant and Igloo ice-cream factory After taking full charge

of Igloo ice-cream by Abdul Monem Limited the manufacturing operations continued in

Chittagong till 1990 Although Dhaka fetched the maximum share of the total revenue the

distribution cost increased tremendously in the process of meeting the demand of Dhaka city To

cope with the distribution problem and handle Polar threat Abdul Monem Limited transferred

the factory to Dhaka changed the ice-cream packaging from the conventional paper to plastic

and expanded their market and distribution operation The new factory of Igloo was setup at

Shyampur Narayanganj and was nine kilometres away from the Motijheel office The company

apart from catering the capital city started to expand its operations in Comilla (1991) Khulna

(1992) and North Bengal (1993) These markets were served directly from Dhaka since the

storage facilities were not developed till then The company is now the market leader since 1997

with clear market share victory over others with sweeping 51 share It is to be noted that Igloo

is also a player in the boutique segment with three parlours (2 in Dhaka and 1 in Chittagong)

Product Range Igloo offers the widest choice of ice cream more than any other competitor in

the market Igloo is offering a total of fifty items including normal premium and novelty cup

stick and family pack items Igloo has thirty flavours more than anyone else in the industry and

is continuously launching new and innovative delicacies

Igloo ice-cream can be classified in six groups They are

Stick

Macho Choc-bar Mini Choc Clown Mega Shell n core Lolly

Cone

Cornelli 2 in one Cornelli classic

Cup

Shahi kulfi Vanilla Strawberry Mango Snow ball

Container

Vanilla Strawberry Mango Chocolate Coffee Diet Vanilla Tutti Frutti Ripple Pralin

Pistachio

Innovative

Nuggets Sandwich

Family

Ripple cake Party time Shahi Kulfi

Table 19 Products of Igloo

Single serve stick cups and cone items are easy to carry around and convenient to eat which

makes it most sold The core target segment of ice-cream is 6-24 years and this generation is

always on the Evaluation of Entry into Ice cream Business for Bangladesh Limited 30

move and thus prefers independent cone stick or cup items As Igloo initiated the concept of ice-

cream as a family product they offer some items to be enjoyed with the whole family

Quality and Innovation Igloo is committed to maintaining the highest quality standard through

its continuous RampD activities The major ingredients raw materials and packing materials are

procured from the best European sources Strict quality control is done at every stage of the

manufacturing process from procurement of material mixing material flow ice cream making

packaging storing (at main warehouse) distributing and market shelving by the Quality Control

Department Current supply chain for various materials of Igloo is as follows Australia (Milk

Powder) Denmark (Ingredients emulsifiers amp stabilizers) China amp UAE (Food grade sticks)

China Denmark Singapore amp Thailand (Food grade packing materials)

Figure 9 Igloo Supply Chain

Distribution Network Their distribution network is stretched all over the country with a long

fleet of refrigerated vans Firstly the ice cream products are stored at the central warehouse of

the factory and from there they are distributed through the haulage vehicle to the operational

centres located in Dhaka Chittagong Comilla Rajshahi Barisal Bogra Rangpur and Khulna

Strictest cold chain maintenance during the distribution and selling of the ice creams is ensured

Their distribution process is as follows Manufacture Stored at -24c Transported by Refrigerated

trucks at -Reaches amp Preserved in Eight regional stores Refrigerated vehicles (Distributors)Retail

outlets (Deep freezers)

Figure 10 Distribution Process of Igloo

Evaluation of Entry into Ice cream Business for Bangladesh Limited 31

Trolley Operation Igloo also operates through trolleys for extending its reach to consumers at

the furthest points The trolleys are operated near schools alleys streets parks etc and play

rhythmic music to attract the consumers These are very colourfully decorated with Igloo

umbrella and the puller wears specific uniforms Igloo was the first in introducing and operating

these trolleys in Bangladesh for any Fast Moving Consumer Goods (FMCG) Igloo has around

125 trolleys operating throughout the country Individual trolleys are provided with a regular

supply of igloo ice creams

Marketing The marketing commitment of Igloo is based on the relationship with its customers

and consumer by not only manufacturing the highest quality product but also delivering the

product by maintaining this quality To satisfy the ever-changing needs of the customer Igloo

has regularly launched new ice creams and introduced new flavours And this commitment has

positioned Igloo as the market-leading brand by gaining the consumers trust with the positioning

as ldquoA WORLD OF GREAT TASTErdquo

Facilities and Logistics at a glance As of 2009 following are the facilities and logistics enjoyed

by the company

Factory location

Dhaka

Production Lines

4

Packages

Stick Cup Family pack Others (Nuggets and sandwich)

Machine suppliers

1048766 Mark-Italy

1048766 Tetra Pak(Hoyer)-Denmark

1048766 Sabore Denmark

1048766 Hass- Austria

Machine models

1048766 Freemark 1100 Italy

1048766 FM 3000 FM 6000 Italy

1048766 SL600 Denmark

Cone baking

Hass- Austria

Chocolate making

Macentyre-UK

Coverage

Nationwide

Operational centre

10

Total market vehicles

30

Distribution channel

Directthrough appointed distributors

Outlet service

7500

Injected deep freezers

4000

Trolley operations

125

Warehouse no

8

Table 20 Igloo Facilities and Logistics

Kwality

Kwality is currently the second largest ice cream manufacturer of the country The mother

company for the Kwality brand is Sanowara Drinks amp Beverages Ltd a sister concern of

Sanowara Group The company is famous for powdered milk brands Red Cow and Diploma in

Bangladesh The drinks and beverage concern of Sanowara made an entry into the market in

1997 with ldquoYesrdquo brand drinking water and launched the ice cream brand in 1999 With heavy

communication and novelty products it Evaluation of Entry into Ice cream Business for

Bangladesh Limited 32

successfully removed Polar from the second place with a current market share of 27 The

company also operates in the boutique segment with two parlours in Dhaka and Chittagong

Kwality ice cream factory is situated in Chittagong with a floor space of 35000 sft and fully

automated machinery wrapping mix machinery equipments from Italy having capacity of

around 20000 litres of ice cream per shift The ice cream factory employs 140 people The

company is ISO 9001-2000 certified

Kwality was the first true competitor for Igloo products with some major innovation in product

design and communication but their quality is perceived to be lower in the minds of the

consumers and they do not have extrusion ice cream The product prices are also similar to that

of Igloo but they charge a bit lower than Igloo in premium multiple servings However during

market visits it was seen that shops that keep only Kwality or Igloo and Kwality both they can

sell Kwality too although the sales amount is lower than that of Igloo People who look for Igloo

shopkeepers give them that directly but if they get a chance and Kwality ice cream stock is high

they also push Kwality to dry the stock out This gives an indication that market is larger than

what the current players are capable of serving even in Dhaka

Kwality follows a similar distribution model like Igloo but distribution frequency is lower and

amount of cart sellers is limited to 25 and they operate only in Dhaka

Polar

Once a giant in the industry Dhaka Ice Cream Industries Ltd introduced the first hygienically

packed ice cream in Bangladesh in 1987 and the brand name Polar was thus born In the early

days the company started ice cream business with a wide range of products and a variety of

flavours in Dhaka city In 1988 the company started its distribution in the city of Chittagong

then Bogra and continued to cover more cities Presently Polar ice cream is available

throughout Bangladesh The company today trails in the market with 15 market share in the

common format segment Recently Polar has announced launch of ISIS diabetic ice cream with

support from DANONE to turn around in the market

The company has its head office as well as a modern large-scale industrial plant in Dhaka Polar

ice cream is made with Danish expertise using Danish equipment and technology The

production activities and quality control measures are supervised and managed by Danish

experts Polar offers a wide range of delicious flavours and tastes made by ingredients imported

from Europe

Dhaka Ice Cream at present has 3 cold stores in Dhaka Chittagong and Bogra in Bangladesh

From Dhaka cold store they distribute ice creams in Mymensingh Tangail Jamalpur Sherpur

Kishoreganj Netrakona Comilla Narsingdi Barisal Madaripur Agaeljhara Faridpur Magura

Chuadanga Jessore Satkhira Khulna Pirojpur and Sylhet through their distributors In case of

long distance delivery points the company uses auto cooling freezer van

Evaluation of Entry into Ice cream Business for Bangladesh Limited 33

In Dhaka city they distribute ice creams directly to retail stores in freezer vans Besides that

they have several distributors at different points of the city Distributors cover their individual

areas where company is not able to supply directly in their freezer vans Similar model is

followed by the company to distribute ice cream from their other cold storages through out the

country For storing and selling ice creams in retail stores the company like the other players

arranges a deep freezer with the Polar logo and canopy light box

In addition to this distribution the company also undertakes home delivery of ice creams for

special occasions

Savoy

Savoy Ice-cream brand is owned by Sena Kalyan Sangstha (SKS) Group of industries It started

its journey in March 1995 with a factory in Tejgaon Dhaka Yearly turnover is estimated at BDT

388 crores with a market share of roughly 35

The factory has been established with Sonali Bank finance at 6040 equity ratio The total

production capacity of the factory has been estimated at 2400 litres of Ice-cream per day Total

land area of the factory premise is 116 Bigha with 8000 sft area covered with a total project cost

of BDT 144 The factory employs 73 people

Product ranges of the company include all the basic designs and flavours of the industry

However the company has not been much of an innovator in the industry Their product quality

is substantially low than that of other players and they price their products at 10-15 lower than

the other competitors The company imports raw materials mainly from Europe The general raw

materials are Euro cream Skimmed Milk Powder Cocoa Powder and Flavour (Vanilla Mango

and Strawberry) Colour (Yellow Red Chocolate and Green) Ripple Sauce Cheney Fruit Palm

Kernel Oil Anhydrous Butter Oil (Ghee) and Sugar etc

Milk Vita

Milk Vita is one of the most famous brand names in Bangladesh for its liquid dairy milk Owned

by Bangladesh Milk Producersrsquo Co-operative Union Limited (BMPCUL) the company came in

the market with proper dairy milk ice cream in form of cups and choc-bar With a production

capacity of around 1600 litres per day the company is trailing in the market place with 3

market share

Although the Milk Vita Choc-bar was perceived to be extremely tasty by consumers they

probably could not do well due price competition Currently they do not even distribute ice

cream in Dhaka However their presence is seen in outskirts of Dhaka and other nearby towns

If the current market situation prevails Milk Vita would lose their remaining market share and

other companies would benefit especially Igloo However one of the advantages of Milk Vita

remains to be

Evaluation of Entry into Ice cream Business for Bangladesh Limited 34

their nation wide milk supply network They have skimmed milk powder production plant that

Igloo does not have Thus they can combat the seasonality of milk supply that Igloo with its

huge requirement of milk cannot

Strengths and Weaknesses of Competitors

Company

Strengths

Weaknesses

Igloo

1048766 Strong brand image

1048766 High product quality

1048766 Highest no of variety

1048766 Strong distribution network

1048766 Highest visibility

1048766 Strong promotion

1048766 High production capacity

1048766 Presence of extrusion ice cream

1048766 Items are generally a bit pricy

1048766 Igloo does not give free freezers like other companies

1048766 Reluctant in recent times regarding innovation

1048766 Local sourcing of liquid milk does not meet demand

1048766 Failure to use ERP technology slowing decision making

Kwality

1048766 Product variety

1048766 Strong promotion

1048766 Free freezer distributed

1048766 Presence in all price segments

1048766 High production capacity

1048766 Weak distribution

1048766 Lower exposure

1048766 low amount of carts in operation

Polar

1048766 Free freezer

1048766 Quality perceived to be high compared to Kwality

1048766 Discoloured freezers

1048766 Lower exposure

1048766 Low product variety

1048766 Unused capacity

Savoy

1048766 Price is lower

1048766 Discoloured freezers

1048766 Low product variety

1048766 Weak distribution

1048766 Small amount of freezers

1048766 Low production capacity

Milk Vita

1048766 Quality is good due to dairy cream

1048766 Brand leverage from Milk Vita milk

1048766 Low exposure

1048766 Low variety

Table 21 Strengths and Weaknesses of Competition

512 Market Characteristics of the Boutique Segment

With a small market of BDT 98 Cr and 567 share in the branded ice cream market the

boutique segment is currently an increasing segment in the ice cream industry Boutique

segmentrsquos history dates back to 1960s when Igloo launched boutiques in Dhaka to save

distribution cost and promote a culture of ldquoice cream eating outrdquo In later years boutiques lost

their glamour and retail common format segment picked up growth However with Dolce Vita in

the late lsquo80s craze for Italian Artisan ice cream was recreated in the market Although Dolce

Vita is failing in recent times emergence of MoumlvenPick and Club Gelato in 2000 has uplifted the

segment once again Current growth rate of the

Evaluation of Entry into Ice cream Business for Bangladesh Limited 35

segment can be estimated to be approx 20-22 (higher than the common format segment)

Following are the basic detail of all the major players in the segment with their estimated sales3

Players

Outlet

Sales (Cr Taka)

Share

Club Gelato

1

136

199

MoumlvenPick

1

119

174

Andersenrsquos

3

119

174

Gelateria Igloo

3

119

174

Sub Zero (Kwality)

2

051

75

Baskin Robbins

1

015

22

Dolce Vita

1

017

25

American Soft

1

009

12

Rainbow

1

009

12

Others (off site)

089

130

Total Market

682

Table 22 Players and Shares in Boutique Segment

A Detail of Operation

General operational procedure followed by all the operators is as follows

1048766 Operating method There is a variation in operational method among the large operators

1048766 Club Gelato uses kitchen at own premise where imported ingredients and local milk (daily

special service from Milk Vita) are used to make ice cream

1048766 MoumlvenPick directly imports ice cream from Switzerland

1048766 Andersenrsquos Gelateria Igloo and Sub Zero produce ice cream at their factory with a mix of

imported and local ingredients

1048766 Products Around 30-35 flavours of artisan dairy ice cream are served at the premises

1048766 Most sold flavours are Vanilla Ferrero Rocher Butterscotch Chocolate Caramel etc

1048766 Other Products Larger players also serve ice cream desserts (milk shakes ice cappuccino etc)

pastries and other desserts with normal coffee and tea facility at their premises

1048766 Boutiques fight ice cream seasonality with the other products sales during off-peak ice cream

seasons Usually ice cream and other products contribute at 6040 ratio in summer and during

winter and off-peak seasons the ratio reverses

1048766 Pricing Usually the prices of products in this segment are 3-4 times higher than that of the

common format segment

1048766 Prices do not vary with flavours Variation depends on serve style (Cone tub) and use of

toppings and other ingredients (Chocolate sauce nut fruits) etc

1048766 Usual margin charged is around 50-60 over production cost Similar margin is charged for

other products like coffee ice cappuccino etc

3 Yearly sales is estimated based on companyrsquos approximate daily sales collected during

interview

Evaluation of Entry into Ice cream Business for Bangladesh Limited 36

1048766 Target Group Most of the consumers belong to SEC A and higher SEC A with DMFI of at

least BDT 20000

1048766 Foreign delegates and resident foreigners also visit these boutiques

1048766 Main purposes of visits in the boutiques are

bull Youth hangout with friends and having ice cream and ice cream derivatives

bull Family Family night out or eat out at a restaurant and then having dessert

bull Foreigners Having dessert after dinner

1048766 Rush time at boutiques are Afternoon 2-4 pm and at night 9-11 pm

1048766 Offsite sales Most of the large operators also sell offsite They have small freezers for off-site

1048766 Club Gelato and MoumlvenPick serves ice cream at high society parties and programmes

1048766 MoumlvenPick also has kiosks in known hotels like Sheraton

1048766 Promotion No mass promotion is done by any of the companies Word of mouth is the most

important source of promotion Posters and banners outside the premise and occasional

newspaper advertisements are used to communicate special offers

1048766 Growth Drivers Market growth is driven by image innovation quality decoration of facility

environment and special offers

1048766 Club Gelato has the image of selling true Italian dairy ice cream with an excellent hangout

environment

1048766 MoumlvenPick imports ice cream directly from Switzerland and is perceived to be of high quality

1048766 Andersenrsquos operates with the image of ice cream from Denmark

1048766 Gelateria Igloo (from Igloo) and Sub Zero (from Kwality) could not establish the premium

artisan ice cream image

B Players in the Boutique Segment

There are very few players who have significant impact in the boutique segment Detailed

information of all the major boutique segment players is provided below

Evaluation of Entry into Ice cream Business for Bangladesh Limited 37

Club Gelato

Basic Company Information

1048766 Location Banani Road 11 (Planning for a second one in Dhanmondi)

1048766 Established in 2001

1048766 Seating Capacity 48

1048766 Area 1250 sft (including kitchen)

1048766 Owner Mr Jahangir Alam (Bangladesh)

1048766 Business Type Joint business partnership with Singapore

1048766 Staff 15 people (6 in the kitchen)

1048766 Production capacity 150 litres per day

Product Related Information

1048766 Product Italian style parlour scoop ice cream fruit juice coffee and pastries

1048766 Flavours Around 32 flavours available

1048766 Most selling Ferraro Rocher Vanilla Pistachio

1048766 Innovations New variants and ingredients are communicated by their Italian supplier and

Club Gelato decides what to take from them

1048766 Serve type Cup Cone Glasses Box for take away

Consumer Profile

1048766 Primary Teenagers and Young Adults (18-30) amp Diplomats

1048766 Secondary Family consumers for eat out

1048766 Income Group High income customers tentatively from SEC A and higher SEC A

1048766 Geographic Area Diversified

1048766 Rush time 8-10 pm

Sales and Price Information

1048766 Sales BDT 50000 (60 Ice cream 40 other desserts) daily in summer In winter however

other products sell more and thus they keep total sales at the same level

1048766 Price 750 per litre for any flavour

1048766 Sales Volume 50-60 litres per day

Supply Chain Placement Information

1048766 Milk Local sourcing from Milk Vita (4050 litres per day)

1048766 Chocolates amp Flavours Belgium France Germany

1048766 Transportation Mainly air (They can afford it due to high margin)

1048766 Contribution of various materials Flavours (30) Milk (20) other parts are water and air

Promotional Materials

1048766 Materials used are near premises POS materials for promoting the parlour only

Table 23 Detail of Club Gelato

Evaluation of Entry into Ice cream Business for Bangladesh Limited 38

MoumlvenPick of Switzerland

Basic Company Information

1048766 Location Gulshan

1048766 Established in 2000

1048766 Seating Capacity 55

1048766 Owner Mr Arif Mahmud

1048766 Business Type Franchise of International MoumlvenPick

1048766 Storage Capacity in Shop 150 litres

Product Related Information

1048766 Product Imported MoumlvenPick ice creams coffee chicken sandwich and Frappe

1048766 Flavours Around 30 to 35 flavours available

1048766 Most selling Swiss Chocolate caramel Vanilla Dream Espresso Strawberry

1048766 Innovations New variants are communicated by their franchiser and they decide on flavours

that they want

1048766 Serve type Cup Cone Glasses Box for take away

Consumer Profile

1048766 Primary Teenagers and Young Adults (18-30) (70) amp Diplomats

1048766 Secondary Family consumers for eat out

1048766 Income Group High income customers tentatively from SEC A

1048766 Geographic Area Concentrated in Gulshan and nearby areas

1048766 Rush time Afternoon- Young Adult 10 to 11 pm Foreigners

1048766 the company also serves at parties and has freezers in known hotels where their ice creams

are served

Sales and Price Information

1048766 Sales BDT 35-40000 daily in summer

1048766 Price 640 per litre for any flavour

1048766 Sales Volume 55-60 litres per day

Supply Chain Placement Information

1048766 Transportation Imported finished goods by ship

1048766 Ship travel time 19 days

1048766 Port clearance 10 days

1048766 Safety Cushion Extra 10 days

Promotional Materials

1048766 Materials used are near premises POS materials for promoting the parlour only

Table 24 Detail of MoumlvenPick of Switzerland

Evaluation of Entry into Ice cream Business for Bangladesh Limited 39

Andersenrsquos of Denmark

Basic Company Information

1048766 Location Gulshan (2 others in Uttara Dhanmondi)

1048766 Established in 2001

1048766 Seating Capacity 48

1048766 Owner United Group

1048766 Business Type Franchise of Australian company Andersenrsquos of Denmark

1048766 Production Tongi Factory of United Group

1048766 Production capacity 2000 litres per day in factory

1048766 Storage Capacity in Shop 150 litres

Product Related Information

1048766 Product Danish parlour scoop ice cream and coffee

1048766 Flavours Around 30 to 35 flavours available

1048766 Most selling Strawberry Butter Scotch Green

1048766 Innovations New variants and ingredients are communicated by their franchiser and they

decide on flavours that they want

1048766 Serve type Cup Cone Glasses Box for take away

Consumer Profile

1048766 Primary Teenagers and Young Adults (18-30) (70) amp Diplomats

1048766 Secondary Family consumers for eat out

1048766 Income Group High income customers tentatively from SEC A

1048766 Geographic Area Concentrated in Gulshan and nearby areas

1048766 Rush time 8 to 10 pm

Sales and Price Information

1048766 Sales BDT 10-12000 daily in summer

1048766 Price 460 per litre for any flavour

1048766 Sales Volume 40-50 litres per day

Supply Chain Placement Information

1048766 Milk 2025 kg packs are imported

1048766 Chocolates amp Flavours Imported

1048766 Butte paper Local sourcing

1048766 Transportation Ship

Promotional Materials

1048766 Materials used are near premises POS materials for promoting the parlour only

Table 25 Detail of Andersenrsquos of Denmark

Evaluation of Entry into Ice cream Business for Bangladesh Limited 40

Gelateria Igloo

Basic Company Information

1048766 Location Banani Kemal Ataturk Avenue (Two others in GEC Mor Chittagong and Naya

Paltan)

1048766 Established in 2000

1048766 Seating Capacity 20

1048766 Production From Igloo factory in Shyampur Narayanganj

Product Related Information

1048766 Product Parlour scoop ice cream and coffee only

1048766 Flavours Around 30 flavours available

1048766 Most selling Vanilla Strawberry Chocolate Pistachio Butter Scotch Tutti Fruity

1048766 Serve type Cup Cone Glasses Box for take away

Consumer Profile

1048766 Primary Teenagers and Young Adults (18-30)

1048766 Secondary Family consumers for eat out

1048766 Income Group High income customers tentatively from SEC A and B

1048766 Geographic Area Diversified

1048766 Rush Time afternoon and evening

Sales and Price Information

1048766 Sales BDT 8000 to 10000 daily in summer Nearly one fourth in winter

1048766 Price Varies but 350 per litre of vanilla

Promotional Materials

1048766 POS materials at the premises

Table 26 Detail of Gelateria Igloo

52 Price Comparison of Common and Boutique Segments

Price ranges of both common format and boutique segment cannot exactly be pin pointed as

products do not follow common structure and variations occur with use of toppings mixing of

flavours and use of coatings However a price comparison has been made among the brands

based on their price of per litre of vanilla flavoured ice cream in the market It appears to be as

following

Company

Price Litre Vanilla

Club Gelato

750

MoumlvenPick

640

Andersenrsquos

460

Dolce Vita

440

Igloo

100

Kwality

100

Polar

100

Milk-Vita

90

Savoy

85

Table 27 Comparative Price Analysis

As it can be seen there is price gap within the range of BDT 100-400 Ice cream kiosks and

small scooping boutiques can operate within that range

Evaluation of Entry into Ice cream Business for Bangladesh Limited 41

60 CONSUMER ANALYSIS

61 Target Group of Ice cream

Who are the consumers of ice cream This question does not have a clear answer Ice cream is a

food for all It is the only food consumed by a human being at less than 0 degree centigrade

temperature and people of all ages feel indulged to have it However we can determine focus

target groups for both branded common format and artisan boutique ice cream Group

discussions and market visits were done to get insight into the consumers along side resources

form secondary sources Age based target group is common for both segments but variation

among the groups occur mainly based on SEC and DMFI classification

611 Geographic Group

Branded ice cream remains an urban product till date Geographically branded ice cream has

reached urban and semi urban areas up to Thana Head Quarter levels Ice cream has reached

areas where electricity is available Small artisan players are available in places where large

branded players have no distribution

612 Target Age Group

Age wise grouping of target consumers is as follows

1048766 Urban kids in the age group of 5-14

1048766 They mainly consume normal sticks cups cones innovative fillers and water ice creams

1048766 Urban youth in the age group of 15-24

1048766 They consume premium and extrusion sticks and cones

1048766 Urban mothers in the age group of 25-35

1048766 They determine the family purchases Even when the father purchases ice cream decision is

taken by them

Consumption pattern of various age groups are depicted in the following chart Ice cream

consumption pattern50203005 to 14 yrs15 to 24 yrs25 to 35 yrs

Figure 11 Target Group wise Consumption Pattern Evaluation of Entry into Ice cream Business

for Bangladesh Limited 42

613 Target SEC and DMFI Group

Common Format

SEC A and B is the target group for common format ice cream However with rapid increase in

price level over the years has made it a ldquohard to consumerdquo product for SEC B consumers who

belong to lower DMFI group

Boutique Format

Boutique formatrsquos higher margin and high price range makes it an exclusively SEC A ice cream

People belonging to upper and upper middle class have access to the mediocre boutiques and

only higher upper class can have premium ice creams like Club Gelato and MoumlvenPick

Another unique target group for boutique format are the foreigners who live in Bangladesh

These people tend to visit the parlours to have ice cream as dessert especially after dinner

62 Ice cream in Consumer Lifestyle

Figure 12 Ice cream in Consumer Life style

This simple overview of ice cream in consumer lifestyle was determined based on in-depth

research analysis of UBL and validated through qualitative group discussions by the author

However detail of in-depth research is provided in a later section of this chapter

Evaluation of Entry into Ice cream Business for Bangladesh Limited 43

63 Highlights of Purchase Habit of Ice cream

631 Common Habits across Target Groups

There are some common habits that were identified in earlier researches and group discussions

with consumers Common habits mean the consumer approach towards ice cream that is seen

across all target groups eg kids youth and adult purchasers These are outlined below

1048766 Ice cream is mainly seen as a dessert or a snack Impulse ice cream is seen as a quick snack

that is consumed when it is in sight Visibility plays a big role here Regarding family packs

people see it as a post-food dessert

1048766 Ice cream purchase is commonly a planned event When the contexts arise people generally

take a bit of time to decide whether or not to have ice cream or when they want to go to a

boutique they make due considerations regarding which boutique to visit

1048766 Ice cream purchase decision is taken based on favourite flavour People tend to try out new

variants and flavours when they first see it They compare the taste with earlier experience and

when they purchase later they choose the flavour they have liked most

1048766 For In-Home segment decision is mostly taken on the flavour Generally people come up with

different flavours of choice and most voted flavour is chosen

1048766 People become aware of new variants or flavours mainly through word-of-mouth

Advertisement (new launches special offers and festivals) in newspaper is another source of

awareness

1048766 People are currently indifferent towards the price level of premium flavours However some

feel that price of Choc-bar or water ice creams (lolly) is a bit much If less they would have

consumed more Some also feel that companies should come up with branded ice cream in the

price range of BDT 5-8

1048766 Ice cream is purchased from nearby shops If required brand and flavour is not available 2-3

shops will be visited and then available flavour will be selected even if the required one is not

found This is done mainly not to ruin the mood for ice cream

1048766 People are very open to try new brands and flavours especially if it comes from a credible

source They would try new flavours and if they are satisfied with the taste they would repeat

purchase

1048766 Regarding boutique visits people feel that boutiques need to have a proper environment

enough flavours and other snacks

1048766 While visiting boutique with family or companion they want variation in flavours so that

they would order different flavours and taste each otherrsquos ice cream It is seen as a sign of

togetherness

1048766 Frequency of ice cream purchase varies among people It depends on peer pressure collective

family decision summer heat and attitude towards ldquoice creamrdquo itself as a product Evaluation of

Entry into Ice cream Business for Bangladesh Limited 44

632 Habits of Kids

1048766 Kids choose ice cream flavours by the look of the product (generally pictures shown in POS

materials and carts) They love colour and designs of the products let it be a common format or a

boutique ice cream

1048766 Kids (when in house) would go with the housemaid to the nearby shop choose the flavour

they want (within range of the amount given to the maid) and buy it

1048766 When with parents they would take the product they like even if the price is lower than some

other product However mothers play a role in this decision They would want their children not

to choose too high priced a product or coloured products

633 Habits of Youth

1048766 Young people are the main consumer of impulse ice cream They also are one of the major

consumers in the boutique segment

1048766 Young people love to try out new products that come into the market Another side of the coin

is that they are not very loyal to a brand or a flavour and tend to switch a lot

1048766 Regarding boutique visits young people go to boutiques to have an ldquoice cream hang outrdquo with

peer groups They would stay there for a longer period of time while they have their ice cream

1048766 Some times young people make milk shakes and other ice cream based desserts

634 Habits of Mothers

1048766 Mothers worry about their childrenrsquos health and they prefer ldquovanillardquo type of brands

However when price constraint occurs they go for water ice creams for their children They try

to convince their kidrsquos purchase decision

1048766 Regarding family purchase motherrsquos decision is sometimes prioritized by the whole family

64 Barriers to Ice cream Consumption

641 Emotional Barriers

1048766 Overindulge (close to sinful)

1048766 Undisciplined (no control)

1048766 Childish (licking)

1048766 Artificial Image

642 Functional Barriers

1048766 People of SEC B feel that ice cream is an expensive dessert (If less expensive would consume

more often)

1048766 It leads to cold cough - especially in winter rainy season

1048766 It contains artificial additives preservatives

1048766 It is very high in calories that lead to fattening

Evaluation of Entry into Ice cream Business for Bangladesh Limited 45

1048766 It does not quench ldquothirstrdquo

1048766 Less convenient (portable immediate eat)

1048766 Messy Dripping

65 Research Findings

The highlights regarding purchase habits triggers and barriers of ice cream consumption provide

a glimpse into the consumer world of ice cream industry However UBL CMI conducted a

formal research exclusively on ice cream consumers to identify

1048766 Occasions of ice cream

1048766 Frequency of ice cream consumption

1048766 Expectations from ice cream occasions

1048766 Personalities that they desire from ice cream

651 Relevant Occasions in Daily Lives of Consumers

Research question regarding ldquousual occasions of life that occurred most frequently in day-to-day

lives of the respondentsrdquo generated the following replies

Occasion

of Respondents saying Yes

Watching TV

93

Normal Dinner At Home

91

Normal Lunch At Home

89

At Home While ReadingMusicSurfing

86

Informal Family Get Together

85

Out Of Home Hanging Out With Friends

84

Out Shopping

84

Mid-Afternoon Break At Home

83

At Home By Myself During The Day

82

Special Dinner At Home

82

Informal Dinner Out Of Home

82

Normal Lunch Out Of Home

82

Leisure Walk

79

Coming Home From WorkSchool

78

Special Dinner Out Of Home

78

Celebration

78

A Night In With Friends

77

At Home By Myself In The Evening

77

Special Lunch Out Of Home

76

Mid-Afternoon Break Out Of Home

75

Special Lunch At Home

73

Day out with Partner

72

Midmorning Break

70

At Breakfast

68

Family Day Out

68

During Work Or At School

65

Evaluation of Entry into Ice cream Business for Bangladesh Limited 46

Travelling ToFrom WorkSchool

65

At The Cinema

61

Special Event

56

Clubbing At A Party

50

Post GymSports

48

Table 28 Relevant Occasions in Consumersrsquo Lives

Respondents were then asked to mention ldquofrequency of occurrence of the identified occasionsrdquo

The identified replies are as follows Normal dinner at homenormal lunch at homeComing home

from workschoolTraveling tofrom workschoolDay out with Partner SpouseMid-afternoon

break at homeOut of home hanging out with friendsLeisure walkMid-afternoon break out of

homeA night in with friendsSpecial dinner at homeSpecial lunch out of homeFamily day

outSpecial eventPost gymsportsDaily2-3 Times A WeekWeekly2-3 Times A MonthOnce A

MonthEvery 2-3 MonthsLess OftenNever Figure 13 Frequency of Occurrence of Occasions

This shows that ldquoNormal dinner at home Watching TV Normal Lunch At Home At Home

While ReadingMusicSurfing Coming Home From WorkSchool During Work Or At School

Travelling ToFrom WorkSchool Midmorning Break Day Out With Partner Spouse At Home

By Myself During The Dayrdquo are the most frequent daily rituals of busy lives of consumers

652 Frequency of Ice cream Consumption

Respondents were asked to mention ldquoconsumption pattern of ice cream during the identified

occasionrdquo on a scale of 1-5 depicting frequencies like ldquo(5) always (4) most of the times (3)

about half of the times (2) sometimes (1) never do not knowrdquo The responses are depicted in

the following table

Evaluation of Entry into Ice cream Business for Bangladesh Limited 47

444474544655555566756665775967779991011101111101210111110101113111412131314161

011121411131216181519181518211817171719181718201721222130303434253437403741394

046383944464746453745414641374638504843414839373030292726232725222020201926202

21722221317Midmorning

breakWhile clubbing at aAt the cinemaSpecial eventNormal lunch out ofA night in with

friendsNormal dinner atInformal dinner out ofAt home by myselfAt home by myself inOut

shoppingSpecial lunch atDay out with SpouseWatching TVAlwaysmost of the timesAbout half

of the timesSometimesneverdo not know

Figure 14 Frequency of Ice cream Consumption

As it can be seen ldquoDay out with Spouse Special lunch at home Special dinner at home

Watching TV Family day out Celebrationrdquo are the occasions where most frequently ice cream is

consumed

653 Market Character Mapping Relevant Occasions vs Frequency of Consumption

If we plot frequency of consumption on the X-axis of a chart and relevance of occasion

occurrence on the Y-axis taking the above mentioned values as cut-off values we get four

quadrants in the chart depicting four market scenarios that any ice cream manufacturer in

Bangladesh market might encounter given the current market situation This market

segmentation is based on frequency of ice cream consumption in daily occasions of consumer

lives

The segments are

1048766 OPPORTUNITY MARKET High Relevant Occasions-Low Ice cream Frequency

1048766 QUESTION MARKET Less Relevant Occasions-Low Ice cream Frequency

1048766 HIGH FREQUENCY MARKET Relevant Occasions-High Ice cream Frequency

1048766 CAPTIVE MARKET Less Relevant Occasions-High Ice cream Frequency

The chart looks as follows Evaluation of Entry into Ice cream Business for Bangladesh Limited

48

Figure 15 Relevance of Occasion-Frequency of Consumption Mapping

As it can be seen from the above chart Bangladesh Market still lies in the Opportunity and

Question market zone with a pull towards High frequency and Captive Market zones This is

evident from market data as penetration of ice cream still remains at Thana headquarters levels

Also this explains the high market growth rate of 17 as market is yet under developed and

branded quality ice cream has yet not reached all levels of consumers especially rural level that

constitutes around 75 of Bangladeshi market

From the above analysis we can establish that target of ice cream manufacturers should be to

penetrate more into the Bangladeshi market to create higher frequency of ice cream

consumption The following chart shows the strategies to follow for ice cream manufacturers

Figure 16 Required Market Strategy for Bangladesh

Evaluation of Entry into Ice cream Business for Bangladesh Limited 49

As relevance of ice cream consumption occasions can hardly be controlled by marketers their

endeavour should be to create more ldquoemotional and functionalrdquo attachment to ice cream in less

frequent occasions through ldquomarket developmentrdquo strategy to earn share from overall food

expenditure of consumers and at the same time make them consume more ice cream in highly

relevant occasions through ldquopenetrationrdquo strategy

654 Consumersrsquo Emotional Requirements and Product Attributes

All consumers under these clusters also identify the emotional requirements and the significant

product attributes they seek from their current preferred and future desired ice creams These are

provided below

Cluster

Emotional Functional Requirement

Product Attributes

Enjoyment

Flavour Variety

1048766 Combination of different flavours

1048766 Combination of different textures

1048766 Very sweet

1048766 With wafer or biscuit

1048766 With chocolate

1048766 Of a well known brand

Socially Involved

Spoonable Rich

1048766 Very creamy

1048766 Only natural ingredients

1048766 No mess

Care

Size Creaminess

1048766 Big

1048766 Rich full taste

1048766 Smooth

1048766 Value for money

1048766 No mess

Unwind amp Escape

Economy

1048766 Crunchy

1048766 Economic

1048766 Of a well known brand

1048766 Nutritious

Balanced Convenience

Health Conscious

1048766 Of a well known brand

1048766 Nutritious

1048766 Milk based

1048766 Low sugar

1048766 Low carbohydrates

1048766 Filling

Active Self-Grooming

Fruit Vitamins

1048766 Healthy

1048766 Fruit based

1048766 Low fat

1048766 Liquid or drinkable

1048766 Nutritious

1048766 Of a well known brand

Confidence

Drinkable Light

1048766 Low calories

1048766 Light on the stomach

1048766 Chewy or gooey

1048766 Not so sweet

1048766 Natural appearance

Sensual

Appeal or image

1048766 No artificial additives

Evaluation of Entry into Ice cream Business for Bangladesh Limited 50

1048766 Natural appearance

1048766 Melting slowly

1048766 Attractive packaging

1048766 High quality ingredients

1048766 Of a well known brand

Table 29 Requirements amp Product Attributes Desired by Consumer Clusters

Of these findings we see that the identified highlighted barriers to ice cream consumption are

pretty evident among the consumers Mostly people want products of a reliable source or a well

known brand low calories quality ingredients value for money economic type

Evaluation of Entry into Ice cream Business for Bangladesh Limited 51

70 INDUSTRY ATTRACTIVENESS AND ENTRY PROSPECTS

71 Driving Forces of Growth

As identified in the earlier sections there are several driving forces behind the growth of ice-

cream industry in Bangladesh

712 Trade and Infrastructural Level

1048766 As a result of globalization newer varieties have been introduced to the local products Many

foreign companies are also coming as franchise so there has been increased competition and

these boutiques are setting higher standards for the local producers

1048766 The present market growth rate is 18-19 which is being influenced by larger players like

Igloo who are expanding their distribution nation wide with expansion of national electricity

grid

1048766 With entry of Modern Trade and recent organized business approach of retailers has made it

possible for ice cream manufacturers to penetrate into shops even without providing them with

branded freezers

1048766 Weather change has increased ldquosummerrdquo season in our country which has reduced negative

seasonal impact on ice cream

1048766 Large companies like Igloo have taken global learning of using carts as an effective tool of

availability and visibility for ice cream

1048766 New and improved technologies are being used in the production process This technological

advancement has improved quality increased speed of production and made the process more

cost effective

713 Consumer Level

1048766 Only a few years back rich people could afford the luxury of having ice-cream but now it has

become a common product for everybody Ice-cream companies are producing different products

with a wide price range for consumers of every class and status

1048766 Nowadays companies are doing promotional campaigns more frequently the customers get to

know about the product which makes it easier for them to buy the best one

1048766 The improved standard of life and more modernized lifestyle of people is an important reason

for the increased consumption thus growth of the ice-cream industry

Evaluation of Entry into Ice cream Business for Bangladesh Limited 52

72 Prospects of Entry

The ice-cream industry of Bangladesh is an attractive one for the investors because there is a

huge market but number of producers is very small The major reasons behind industry

attractiveness are as follows

1048766 The industryrsquos current growth potential is very high with opportunity for market development

1048766 The competition currently permits adequate profitability and the competitive forces are

becoming stronger with time

1048766 Boutique segment is at a very high growth stage but no operator is currently operating with a

mid price range of BDT 100-400 Ice cream kiosks and small scooping boutiques can operate

within that range

1048766 Current industry driving forces are favourable for the future industry profitability

1048766 Globally oriented consumers look for variety in ice cream that is currently not available

Latest innovations came in the market in 2002 People would welcome new variety and flavours

1048766 There is a gap in the market for balanced convenience through ice cream where consumers can

get nutritional benefits for ice cream Also emotional attachment to ice cream could further be

improvised in promotional campaigns

1048766 There is high scope for market penetration and development to increase frequency of ice

cream consumption

1048766 Level of risk or uncertainty is very low in ice-cream industry because the consumer market is

so huge any product with a standard quality and careful pricing will be able to make significant

profit

1048766 As for geographic reach of the industry 60 market is still in Dhaka There is scope of

expansion and a new entrant can easily capture market share within Dhaka using carts even if

they do not want nation wide cold chain distribution

1048766 The production process is very complex and capital requirements are also high So before

going into production any company should know about their capabilities and weaknesses and

then start the business or else they might suffer huge loss at a certain level

1048766 Unilever can acquire the required resource and use existing multi-national multi-cultural

expertise to enter the market in a grand way

1048766 With high probability of entry from DANONE with more products like the ISIS diabetic ice

cream Unilever should consider entering in this industry as soon as possible

Evaluation of Entry into Ice cream Business for Bangladesh Limited 53

80 ENTRY STRATEGY FOR UNILEVER

While describing the suggested entry strategy for UBL certain issues have been kept

confidential and some issues have been touched but not explained to keep consistency with UBL

confidentiality policy

81 Suggested Entry Areas for UBL

1048766 Boutique segment of the Bangladesh ice cream is only 5 of the branded market UBL needs

to pursue a larger scope to make the entry viable

1048766 UBL cannot fight with unbranded segment as global product quality mandate of Unilever does

not allow UBL to fight in low price-low quality segment

1048766 Recommend entry should be in the common format segment with both single and multiple

servings and in the boutique segment with a different brand name (if possible BEN amp JERRYrsquoS)

1048766 UBL should build up state-of-art modern factory for manufacturing and establish cold chain

facilities initially focusing on metro cities

1048766 Investment issues are required to be addressed for building factory and cold chain and capital

requirement needs to be identified for that purpose4

1048766 UBL may have boutiques for driving image selective top-end offering

1048766 Kiosks can be setup near universities and shopping malls

1048766 Boutiques should be concentrated in Dhaka and Chittagong

1048766 Ice cream for boutiques and kiosks would be produced in factory as institutional packs of 9-10

litres

82 Products

1048766 As a Brand Building country in global Unilever operating framework UBL is entitled only to

bring products developed by the Brand Development countries

1048766 Unilever should focus on serving products that have nutritional benefits (already available

globally) along with usual satisfactions of sensual pleasure functional attributes etc

1048766 Current existent players especially Igloo and Kwality have extensively copied global and

regionally available Unilever products eg Cornelli is same as Wallrsquos Cornetto Vinetta is similar

to Vienetta Mega is similar to Magnum etc UBL needs to differentiate these to consumers on

the ldquotaste the originalrdquo platform where global quality is focused regarding the products

1048766 UBL should also bring regionally famous brands like Moo or Max to create image

differentiation

1048766 Magnum or Moo should be used as premium end ice cream to generate more profit margin

Evaluation of Entry into Ice cream Business for Bangladesh Limited 54

83 Placement

1048766 Distribution focus should be in Dhaka for entry as Dhaka contributes more than 60 of total

ice cream sales in the country

1048766 Company may use carts as distribution method They serve as good source of visibility and

availability It would help in increasing impulse purchase

1048766 At least 1500 outlets in Dhaka and Chittagong needs to be actively served using dedicated

branded refrigerators to generate sales

1048766 50 carts should operate in Dhaka and Chittagong

84 Price

1048766 UBL products should be priced at par with Igloo pricing for the common format ice creams

1048766 UBL can bring in premium single-serve SKUS for the higher economic classes in the price

range of BDT 60-80

1048766 Smaller SKUs (small lolly stick) can be introduced in the price range of BDT 10-15

1048766 In the boutique segment UBL should price products above the semi-premium segment

(Gelateria Igloo Sub Zero or Andersenrsquos) but lower than that of Club Gelato or MoumlvenPick

85 Promotion

1048766 UBL would require strong marketing campaign (As high as 50 of sales) to have a grand

entry in the market

1048766 Presence in the television media would be of utmost importance More than 50 of

promotional expense should be made here initially Gradually it can be reduced

1048766 Newspaper would serve as the second most important option

1048766 Billboards should also be used

1048766 Activations (similar to Lux Channel i Super Star or Igloo Festival) should be done to generate

trial

86 Scope of Opportunity

Table 30 Value and Volume Based Scope of Opportunity for UBL

Value (BDT Cr)

Volume (Tons)

Market

131

7835

Common

121

7600

Boutique

98

235

Evaluation of Entry into Ice cream Business for Bangladesh Limited 55

861 Geographic Contribution

1048766 Dhaka (61)

1048766 Chittagong (19)

1048766 Sylhet (10)

862 UBL objectives

Common Format Ice Creams

1048766 Target 10 Market share in 1st year operation

1048766 Value BDT 11 Cr

1048766 Production capacity required 21 Tons day

1048766 Freezer Placement 1500 freezers

1048766 Cart operation At least 50 carts

Boutiques

1048766 Target Further develop the market

1048766 Focus Dhaka Chittagong and Sylhet Metro

1048766 Franchise At least 20 franchisee operations nation wide in divisional towns

1048766 Pricing Below imported parlours above common formats with around BDT 400 per Litre

87 Critical Success Factors

1048766 UBL is considered as a high profile company in Bangladesh and thus they cannot operate in

the market only with common products like choc-bars and cups They must have premium

products (these require extrusion line) also to carry their brand image Otherwise UBL would not

be able to charge usual premium over competition products

1048766 Launch of ice cream would require huge promotional and activation support in order to gain

customers from Igloo People want novelty regarding ice cream and UBL have to let them know

about their products and create hype

1048766 Cart should be used as a source of distribution Recent successes of Unilever companies like

Indonesia shows that carts can generate more sales and can be used as source of visibility in the

minds of both retail traders and consumers Carts can also provide incremental sales to the

company

1048766 UBL have to create a strong cold chain for ice cream (initially in Dhaka and Chittagong) to

ensure quality products for consumers

1048766 UBL have to build capacity very rapidly to meet consumer demand if the launch is successful

Evaluation of Entry into Ice cream Business for Bangladesh Limited 56

90 BUSINESS PROJECTION

91 Basic Assumptions

Business projection for ice cream business was made based on a conservative approach UBL

would require spending significantly on production capacity and factory dedicated to ice cream

Thus to analyse business possibilities of ice cream certain assumptions were made and collected

data were used These are

1048766 Production equipments and cabinets would cost approximately BDT 55 crores

1048766 Production equipments 45

1048766 Packaging Equipments 15

1048766 Storage Facility 20

1048766 Branded Freezers 10

1048766 Distribution Investment 10 (Distributors would also invest themselves)

1048766 Ice cream factory with a floor size of 20000 sqft would cost BDT 25 crores

1048766 Objective is to capture 10 market share in Dhaka and Chittagong in the first year

1048766 Business would grow by 50 in year 2 and 3 30 in year 4 and 25 in year 5

1048766 Weighted price per litre is BDT 170 according to volume share of single serve ice cream

multiple serve ice cream and boutique ice cream

1048766 Other financial assumptions were also made List of them are provided below but amount has

been removed for confidentiality issues

Assumptions

Trade Margin

Distributors Margin

DutyVAT Rate

Trade Terms Expense of NPS

Trade Terms Expense of NSV

Advertising ampPromotion of NPS

Indirects (Salaries Wages etc)

Trading Tax

Table 31 Assumptions for Business Projection

Evaluation of Entry into Ice cream Business for Bangladesh Limited 57

100 CONCLUSION

Ice cream has good prospect in Bangladesh It is still a growing market with opportunities for big

new entrants With the barriers of entry UBL needs to consider its priorities UBL being an HPC

company traditionally needs to acquire expertise in cold chain distribution and has to invest a lot

of money to rip the benefits of the industry However to initiate company can take regional

support and acquire resource expertise The company should enter the business as soon as

possible since there is potential threat from DANONE to introduce more ice creams after ISIS

diabetic ice cream and also with potential of the industry arch rival Nestlersquo might consider

entering into the industry too

Evaluation of Entry into Ice cream Business for Bangladesh Limited 58

References

Web References

1 wwwunilevercom

2 wwwunilevercombd

3 wwwhllcom

4 wwwunilevercompk

5 wwwthedailystarcom - Life Style Magazine

6 wwwreuterscouk

Evaluation of Entry into Ice cream Business for Bangladesh Limited 59

Page 26: Square Ice cream

c Polar gives special sales commission to their highest purchasers (around 5)

Evaluation of Entry into Ice cream Business for Bangladesh Limited 29

M Players in the Common Format Segment

Branded common format ice cream segment is constituted of five players only Among them

Igloo is the largest player and Milk Vita is the smallest The following sections detail the basic

company detail of all the companies with special emphasis on Igloo the market leader

Igloo

The pioneering ice-cream company in Bangladesh started its operation in 1964 in Chittagong

under K Rahman amp Co Limited (KRC) with a small factory inside Coca Cola bottling factory of

KRC After the independence of Bangladesh in 1971 Igloo was taken over by the government of

Bangladesh Later in 1983 Abdul Monem Limited purchased the entire production setup of KRC

Limited including Coca-Cola bottling plant and Igloo ice-cream factory After taking full charge

of Igloo ice-cream by Abdul Monem Limited the manufacturing operations continued in

Chittagong till 1990 Although Dhaka fetched the maximum share of the total revenue the

distribution cost increased tremendously in the process of meeting the demand of Dhaka city To

cope with the distribution problem and handle Polar threat Abdul Monem Limited transferred

the factory to Dhaka changed the ice-cream packaging from the conventional paper to plastic

and expanded their market and distribution operation The new factory of Igloo was setup at

Shyampur Narayanganj and was nine kilometres away from the Motijheel office The company

apart from catering the capital city started to expand its operations in Comilla (1991) Khulna

(1992) and North Bengal (1993) These markets were served directly from Dhaka since the

storage facilities were not developed till then The company is now the market leader since 1997

with clear market share victory over others with sweeping 51 share It is to be noted that Igloo

is also a player in the boutique segment with three parlours (2 in Dhaka and 1 in Chittagong)

Product Range Igloo offers the widest choice of ice cream more than any other competitor in

the market Igloo is offering a total of fifty items including normal premium and novelty cup

stick and family pack items Igloo has thirty flavours more than anyone else in the industry and

is continuously launching new and innovative delicacies

Igloo ice-cream can be classified in six groups They are

Stick

Macho Choc-bar Mini Choc Clown Mega Shell n core Lolly

Cone

Cornelli 2 in one Cornelli classic

Cup

Shahi kulfi Vanilla Strawberry Mango Snow ball

Container

Vanilla Strawberry Mango Chocolate Coffee Diet Vanilla Tutti Frutti Ripple Pralin

Pistachio

Innovative

Nuggets Sandwich

Family

Ripple cake Party time Shahi Kulfi

Table 19 Products of Igloo

Single serve stick cups and cone items are easy to carry around and convenient to eat which

makes it most sold The core target segment of ice-cream is 6-24 years and this generation is

always on the Evaluation of Entry into Ice cream Business for Bangladesh Limited 30

move and thus prefers independent cone stick or cup items As Igloo initiated the concept of ice-

cream as a family product they offer some items to be enjoyed with the whole family

Quality and Innovation Igloo is committed to maintaining the highest quality standard through

its continuous RampD activities The major ingredients raw materials and packing materials are

procured from the best European sources Strict quality control is done at every stage of the

manufacturing process from procurement of material mixing material flow ice cream making

packaging storing (at main warehouse) distributing and market shelving by the Quality Control

Department Current supply chain for various materials of Igloo is as follows Australia (Milk

Powder) Denmark (Ingredients emulsifiers amp stabilizers) China amp UAE (Food grade sticks)

China Denmark Singapore amp Thailand (Food grade packing materials)

Figure 9 Igloo Supply Chain

Distribution Network Their distribution network is stretched all over the country with a long

fleet of refrigerated vans Firstly the ice cream products are stored at the central warehouse of

the factory and from there they are distributed through the haulage vehicle to the operational

centres located in Dhaka Chittagong Comilla Rajshahi Barisal Bogra Rangpur and Khulna

Strictest cold chain maintenance during the distribution and selling of the ice creams is ensured

Their distribution process is as follows Manufacture Stored at -24c Transported by Refrigerated

trucks at -Reaches amp Preserved in Eight regional stores Refrigerated vehicles (Distributors)Retail

outlets (Deep freezers)

Figure 10 Distribution Process of Igloo

Evaluation of Entry into Ice cream Business for Bangladesh Limited 31

Trolley Operation Igloo also operates through trolleys for extending its reach to consumers at

the furthest points The trolleys are operated near schools alleys streets parks etc and play

rhythmic music to attract the consumers These are very colourfully decorated with Igloo

umbrella and the puller wears specific uniforms Igloo was the first in introducing and operating

these trolleys in Bangladesh for any Fast Moving Consumer Goods (FMCG) Igloo has around

125 trolleys operating throughout the country Individual trolleys are provided with a regular

supply of igloo ice creams

Marketing The marketing commitment of Igloo is based on the relationship with its customers

and consumer by not only manufacturing the highest quality product but also delivering the

product by maintaining this quality To satisfy the ever-changing needs of the customer Igloo

has regularly launched new ice creams and introduced new flavours And this commitment has

positioned Igloo as the market-leading brand by gaining the consumers trust with the positioning

as ldquoA WORLD OF GREAT TASTErdquo

Facilities and Logistics at a glance As of 2009 following are the facilities and logistics enjoyed

by the company

Factory location

Dhaka

Production Lines

4

Packages

Stick Cup Family pack Others (Nuggets and sandwich)

Machine suppliers

1048766 Mark-Italy

1048766 Tetra Pak(Hoyer)-Denmark

1048766 Sabore Denmark

1048766 Hass- Austria

Machine models

1048766 Freemark 1100 Italy

1048766 FM 3000 FM 6000 Italy

1048766 SL600 Denmark

Cone baking

Hass- Austria

Chocolate making

Macentyre-UK

Coverage

Nationwide

Operational centre

10

Total market vehicles

30

Distribution channel

Directthrough appointed distributors

Outlet service

7500

Injected deep freezers

4000

Trolley operations

125

Warehouse no

8

Table 20 Igloo Facilities and Logistics

Kwality

Kwality is currently the second largest ice cream manufacturer of the country The mother

company for the Kwality brand is Sanowara Drinks amp Beverages Ltd a sister concern of

Sanowara Group The company is famous for powdered milk brands Red Cow and Diploma in

Bangladesh The drinks and beverage concern of Sanowara made an entry into the market in

1997 with ldquoYesrdquo brand drinking water and launched the ice cream brand in 1999 With heavy

communication and novelty products it Evaluation of Entry into Ice cream Business for

Bangladesh Limited 32

successfully removed Polar from the second place with a current market share of 27 The

company also operates in the boutique segment with two parlours in Dhaka and Chittagong

Kwality ice cream factory is situated in Chittagong with a floor space of 35000 sft and fully

automated machinery wrapping mix machinery equipments from Italy having capacity of

around 20000 litres of ice cream per shift The ice cream factory employs 140 people The

company is ISO 9001-2000 certified

Kwality was the first true competitor for Igloo products with some major innovation in product

design and communication but their quality is perceived to be lower in the minds of the

consumers and they do not have extrusion ice cream The product prices are also similar to that

of Igloo but they charge a bit lower than Igloo in premium multiple servings However during

market visits it was seen that shops that keep only Kwality or Igloo and Kwality both they can

sell Kwality too although the sales amount is lower than that of Igloo People who look for Igloo

shopkeepers give them that directly but if they get a chance and Kwality ice cream stock is high

they also push Kwality to dry the stock out This gives an indication that market is larger than

what the current players are capable of serving even in Dhaka

Kwality follows a similar distribution model like Igloo but distribution frequency is lower and

amount of cart sellers is limited to 25 and they operate only in Dhaka

Polar

Once a giant in the industry Dhaka Ice Cream Industries Ltd introduced the first hygienically

packed ice cream in Bangladesh in 1987 and the brand name Polar was thus born In the early

days the company started ice cream business with a wide range of products and a variety of

flavours in Dhaka city In 1988 the company started its distribution in the city of Chittagong

then Bogra and continued to cover more cities Presently Polar ice cream is available

throughout Bangladesh The company today trails in the market with 15 market share in the

common format segment Recently Polar has announced launch of ISIS diabetic ice cream with

support from DANONE to turn around in the market

The company has its head office as well as a modern large-scale industrial plant in Dhaka Polar

ice cream is made with Danish expertise using Danish equipment and technology The

production activities and quality control measures are supervised and managed by Danish

experts Polar offers a wide range of delicious flavours and tastes made by ingredients imported

from Europe

Dhaka Ice Cream at present has 3 cold stores in Dhaka Chittagong and Bogra in Bangladesh

From Dhaka cold store they distribute ice creams in Mymensingh Tangail Jamalpur Sherpur

Kishoreganj Netrakona Comilla Narsingdi Barisal Madaripur Agaeljhara Faridpur Magura

Chuadanga Jessore Satkhira Khulna Pirojpur and Sylhet through their distributors In case of

long distance delivery points the company uses auto cooling freezer van

Evaluation of Entry into Ice cream Business for Bangladesh Limited 33

In Dhaka city they distribute ice creams directly to retail stores in freezer vans Besides that

they have several distributors at different points of the city Distributors cover their individual

areas where company is not able to supply directly in their freezer vans Similar model is

followed by the company to distribute ice cream from their other cold storages through out the

country For storing and selling ice creams in retail stores the company like the other players

arranges a deep freezer with the Polar logo and canopy light box

In addition to this distribution the company also undertakes home delivery of ice creams for

special occasions

Savoy

Savoy Ice-cream brand is owned by Sena Kalyan Sangstha (SKS) Group of industries It started

its journey in March 1995 with a factory in Tejgaon Dhaka Yearly turnover is estimated at BDT

388 crores with a market share of roughly 35

The factory has been established with Sonali Bank finance at 6040 equity ratio The total

production capacity of the factory has been estimated at 2400 litres of Ice-cream per day Total

land area of the factory premise is 116 Bigha with 8000 sft area covered with a total project cost

of BDT 144 The factory employs 73 people

Product ranges of the company include all the basic designs and flavours of the industry

However the company has not been much of an innovator in the industry Their product quality

is substantially low than that of other players and they price their products at 10-15 lower than

the other competitors The company imports raw materials mainly from Europe The general raw

materials are Euro cream Skimmed Milk Powder Cocoa Powder and Flavour (Vanilla Mango

and Strawberry) Colour (Yellow Red Chocolate and Green) Ripple Sauce Cheney Fruit Palm

Kernel Oil Anhydrous Butter Oil (Ghee) and Sugar etc

Milk Vita

Milk Vita is one of the most famous brand names in Bangladesh for its liquid dairy milk Owned

by Bangladesh Milk Producersrsquo Co-operative Union Limited (BMPCUL) the company came in

the market with proper dairy milk ice cream in form of cups and choc-bar With a production

capacity of around 1600 litres per day the company is trailing in the market place with 3

market share

Although the Milk Vita Choc-bar was perceived to be extremely tasty by consumers they

probably could not do well due price competition Currently they do not even distribute ice

cream in Dhaka However their presence is seen in outskirts of Dhaka and other nearby towns

If the current market situation prevails Milk Vita would lose their remaining market share and

other companies would benefit especially Igloo However one of the advantages of Milk Vita

remains to be

Evaluation of Entry into Ice cream Business for Bangladesh Limited 34

their nation wide milk supply network They have skimmed milk powder production plant that

Igloo does not have Thus they can combat the seasonality of milk supply that Igloo with its

huge requirement of milk cannot

Strengths and Weaknesses of Competitors

Company

Strengths

Weaknesses

Igloo

1048766 Strong brand image

1048766 High product quality

1048766 Highest no of variety

1048766 Strong distribution network

1048766 Highest visibility

1048766 Strong promotion

1048766 High production capacity

1048766 Presence of extrusion ice cream

1048766 Items are generally a bit pricy

1048766 Igloo does not give free freezers like other companies

1048766 Reluctant in recent times regarding innovation

1048766 Local sourcing of liquid milk does not meet demand

1048766 Failure to use ERP technology slowing decision making

Kwality

1048766 Product variety

1048766 Strong promotion

1048766 Free freezer distributed

1048766 Presence in all price segments

1048766 High production capacity

1048766 Weak distribution

1048766 Lower exposure

1048766 low amount of carts in operation

Polar

1048766 Free freezer

1048766 Quality perceived to be high compared to Kwality

1048766 Discoloured freezers

1048766 Lower exposure

1048766 Low product variety

1048766 Unused capacity

Savoy

1048766 Price is lower

1048766 Discoloured freezers

1048766 Low product variety

1048766 Weak distribution

1048766 Small amount of freezers

1048766 Low production capacity

Milk Vita

1048766 Quality is good due to dairy cream

1048766 Brand leverage from Milk Vita milk

1048766 Low exposure

1048766 Low variety

Table 21 Strengths and Weaknesses of Competition

512 Market Characteristics of the Boutique Segment

With a small market of BDT 98 Cr and 567 share in the branded ice cream market the

boutique segment is currently an increasing segment in the ice cream industry Boutique

segmentrsquos history dates back to 1960s when Igloo launched boutiques in Dhaka to save

distribution cost and promote a culture of ldquoice cream eating outrdquo In later years boutiques lost

their glamour and retail common format segment picked up growth However with Dolce Vita in

the late lsquo80s craze for Italian Artisan ice cream was recreated in the market Although Dolce

Vita is failing in recent times emergence of MoumlvenPick and Club Gelato in 2000 has uplifted the

segment once again Current growth rate of the

Evaluation of Entry into Ice cream Business for Bangladesh Limited 35

segment can be estimated to be approx 20-22 (higher than the common format segment)

Following are the basic detail of all the major players in the segment with their estimated sales3

Players

Outlet

Sales (Cr Taka)

Share

Club Gelato

1

136

199

MoumlvenPick

1

119

174

Andersenrsquos

3

119

174

Gelateria Igloo

3

119

174

Sub Zero (Kwality)

2

051

75

Baskin Robbins

1

015

22

Dolce Vita

1

017

25

American Soft

1

009

12

Rainbow

1

009

12

Others (off site)

089

130

Total Market

682

Table 22 Players and Shares in Boutique Segment

A Detail of Operation

General operational procedure followed by all the operators is as follows

1048766 Operating method There is a variation in operational method among the large operators

1048766 Club Gelato uses kitchen at own premise where imported ingredients and local milk (daily

special service from Milk Vita) are used to make ice cream

1048766 MoumlvenPick directly imports ice cream from Switzerland

1048766 Andersenrsquos Gelateria Igloo and Sub Zero produce ice cream at their factory with a mix of

imported and local ingredients

1048766 Products Around 30-35 flavours of artisan dairy ice cream are served at the premises

1048766 Most sold flavours are Vanilla Ferrero Rocher Butterscotch Chocolate Caramel etc

1048766 Other Products Larger players also serve ice cream desserts (milk shakes ice cappuccino etc)

pastries and other desserts with normal coffee and tea facility at their premises

1048766 Boutiques fight ice cream seasonality with the other products sales during off-peak ice cream

seasons Usually ice cream and other products contribute at 6040 ratio in summer and during

winter and off-peak seasons the ratio reverses

1048766 Pricing Usually the prices of products in this segment are 3-4 times higher than that of the

common format segment

1048766 Prices do not vary with flavours Variation depends on serve style (Cone tub) and use of

toppings and other ingredients (Chocolate sauce nut fruits) etc

1048766 Usual margin charged is around 50-60 over production cost Similar margin is charged for

other products like coffee ice cappuccino etc

3 Yearly sales is estimated based on companyrsquos approximate daily sales collected during

interview

Evaluation of Entry into Ice cream Business for Bangladesh Limited 36

1048766 Target Group Most of the consumers belong to SEC A and higher SEC A with DMFI of at

least BDT 20000

1048766 Foreign delegates and resident foreigners also visit these boutiques

1048766 Main purposes of visits in the boutiques are

bull Youth hangout with friends and having ice cream and ice cream derivatives

bull Family Family night out or eat out at a restaurant and then having dessert

bull Foreigners Having dessert after dinner

1048766 Rush time at boutiques are Afternoon 2-4 pm and at night 9-11 pm

1048766 Offsite sales Most of the large operators also sell offsite They have small freezers for off-site

1048766 Club Gelato and MoumlvenPick serves ice cream at high society parties and programmes

1048766 MoumlvenPick also has kiosks in known hotels like Sheraton

1048766 Promotion No mass promotion is done by any of the companies Word of mouth is the most

important source of promotion Posters and banners outside the premise and occasional

newspaper advertisements are used to communicate special offers

1048766 Growth Drivers Market growth is driven by image innovation quality decoration of facility

environment and special offers

1048766 Club Gelato has the image of selling true Italian dairy ice cream with an excellent hangout

environment

1048766 MoumlvenPick imports ice cream directly from Switzerland and is perceived to be of high quality

1048766 Andersenrsquos operates with the image of ice cream from Denmark

1048766 Gelateria Igloo (from Igloo) and Sub Zero (from Kwality) could not establish the premium

artisan ice cream image

B Players in the Boutique Segment

There are very few players who have significant impact in the boutique segment Detailed

information of all the major boutique segment players is provided below

Evaluation of Entry into Ice cream Business for Bangladesh Limited 37

Club Gelato

Basic Company Information

1048766 Location Banani Road 11 (Planning for a second one in Dhanmondi)

1048766 Established in 2001

1048766 Seating Capacity 48

1048766 Area 1250 sft (including kitchen)

1048766 Owner Mr Jahangir Alam (Bangladesh)

1048766 Business Type Joint business partnership with Singapore

1048766 Staff 15 people (6 in the kitchen)

1048766 Production capacity 150 litres per day

Product Related Information

1048766 Product Italian style parlour scoop ice cream fruit juice coffee and pastries

1048766 Flavours Around 32 flavours available

1048766 Most selling Ferraro Rocher Vanilla Pistachio

1048766 Innovations New variants and ingredients are communicated by their Italian supplier and

Club Gelato decides what to take from them

1048766 Serve type Cup Cone Glasses Box for take away

Consumer Profile

1048766 Primary Teenagers and Young Adults (18-30) amp Diplomats

1048766 Secondary Family consumers for eat out

1048766 Income Group High income customers tentatively from SEC A and higher SEC A

1048766 Geographic Area Diversified

1048766 Rush time 8-10 pm

Sales and Price Information

1048766 Sales BDT 50000 (60 Ice cream 40 other desserts) daily in summer In winter however

other products sell more and thus they keep total sales at the same level

1048766 Price 750 per litre for any flavour

1048766 Sales Volume 50-60 litres per day

Supply Chain Placement Information

1048766 Milk Local sourcing from Milk Vita (4050 litres per day)

1048766 Chocolates amp Flavours Belgium France Germany

1048766 Transportation Mainly air (They can afford it due to high margin)

1048766 Contribution of various materials Flavours (30) Milk (20) other parts are water and air

Promotional Materials

1048766 Materials used are near premises POS materials for promoting the parlour only

Table 23 Detail of Club Gelato

Evaluation of Entry into Ice cream Business for Bangladesh Limited 38

MoumlvenPick of Switzerland

Basic Company Information

1048766 Location Gulshan

1048766 Established in 2000

1048766 Seating Capacity 55

1048766 Owner Mr Arif Mahmud

1048766 Business Type Franchise of International MoumlvenPick

1048766 Storage Capacity in Shop 150 litres

Product Related Information

1048766 Product Imported MoumlvenPick ice creams coffee chicken sandwich and Frappe

1048766 Flavours Around 30 to 35 flavours available

1048766 Most selling Swiss Chocolate caramel Vanilla Dream Espresso Strawberry

1048766 Innovations New variants are communicated by their franchiser and they decide on flavours

that they want

1048766 Serve type Cup Cone Glasses Box for take away

Consumer Profile

1048766 Primary Teenagers and Young Adults (18-30) (70) amp Diplomats

1048766 Secondary Family consumers for eat out

1048766 Income Group High income customers tentatively from SEC A

1048766 Geographic Area Concentrated in Gulshan and nearby areas

1048766 Rush time Afternoon- Young Adult 10 to 11 pm Foreigners

1048766 the company also serves at parties and has freezers in known hotels where their ice creams

are served

Sales and Price Information

1048766 Sales BDT 35-40000 daily in summer

1048766 Price 640 per litre for any flavour

1048766 Sales Volume 55-60 litres per day

Supply Chain Placement Information

1048766 Transportation Imported finished goods by ship

1048766 Ship travel time 19 days

1048766 Port clearance 10 days

1048766 Safety Cushion Extra 10 days

Promotional Materials

1048766 Materials used are near premises POS materials for promoting the parlour only

Table 24 Detail of MoumlvenPick of Switzerland

Evaluation of Entry into Ice cream Business for Bangladesh Limited 39

Andersenrsquos of Denmark

Basic Company Information

1048766 Location Gulshan (2 others in Uttara Dhanmondi)

1048766 Established in 2001

1048766 Seating Capacity 48

1048766 Owner United Group

1048766 Business Type Franchise of Australian company Andersenrsquos of Denmark

1048766 Production Tongi Factory of United Group

1048766 Production capacity 2000 litres per day in factory

1048766 Storage Capacity in Shop 150 litres

Product Related Information

1048766 Product Danish parlour scoop ice cream and coffee

1048766 Flavours Around 30 to 35 flavours available

1048766 Most selling Strawberry Butter Scotch Green

1048766 Innovations New variants and ingredients are communicated by their franchiser and they

decide on flavours that they want

1048766 Serve type Cup Cone Glasses Box for take away

Consumer Profile

1048766 Primary Teenagers and Young Adults (18-30) (70) amp Diplomats

1048766 Secondary Family consumers for eat out

1048766 Income Group High income customers tentatively from SEC A

1048766 Geographic Area Concentrated in Gulshan and nearby areas

1048766 Rush time 8 to 10 pm

Sales and Price Information

1048766 Sales BDT 10-12000 daily in summer

1048766 Price 460 per litre for any flavour

1048766 Sales Volume 40-50 litres per day

Supply Chain Placement Information

1048766 Milk 2025 kg packs are imported

1048766 Chocolates amp Flavours Imported

1048766 Butte paper Local sourcing

1048766 Transportation Ship

Promotional Materials

1048766 Materials used are near premises POS materials for promoting the parlour only

Table 25 Detail of Andersenrsquos of Denmark

Evaluation of Entry into Ice cream Business for Bangladesh Limited 40

Gelateria Igloo

Basic Company Information

1048766 Location Banani Kemal Ataturk Avenue (Two others in GEC Mor Chittagong and Naya

Paltan)

1048766 Established in 2000

1048766 Seating Capacity 20

1048766 Production From Igloo factory in Shyampur Narayanganj

Product Related Information

1048766 Product Parlour scoop ice cream and coffee only

1048766 Flavours Around 30 flavours available

1048766 Most selling Vanilla Strawberry Chocolate Pistachio Butter Scotch Tutti Fruity

1048766 Serve type Cup Cone Glasses Box for take away

Consumer Profile

1048766 Primary Teenagers and Young Adults (18-30)

1048766 Secondary Family consumers for eat out

1048766 Income Group High income customers tentatively from SEC A and B

1048766 Geographic Area Diversified

1048766 Rush Time afternoon and evening

Sales and Price Information

1048766 Sales BDT 8000 to 10000 daily in summer Nearly one fourth in winter

1048766 Price Varies but 350 per litre of vanilla

Promotional Materials

1048766 POS materials at the premises

Table 26 Detail of Gelateria Igloo

52 Price Comparison of Common and Boutique Segments

Price ranges of both common format and boutique segment cannot exactly be pin pointed as

products do not follow common structure and variations occur with use of toppings mixing of

flavours and use of coatings However a price comparison has been made among the brands

based on their price of per litre of vanilla flavoured ice cream in the market It appears to be as

following

Company

Price Litre Vanilla

Club Gelato

750

MoumlvenPick

640

Andersenrsquos

460

Dolce Vita

440

Igloo

100

Kwality

100

Polar

100

Milk-Vita

90

Savoy

85

Table 27 Comparative Price Analysis

As it can be seen there is price gap within the range of BDT 100-400 Ice cream kiosks and

small scooping boutiques can operate within that range

Evaluation of Entry into Ice cream Business for Bangladesh Limited 41

60 CONSUMER ANALYSIS

61 Target Group of Ice cream

Who are the consumers of ice cream This question does not have a clear answer Ice cream is a

food for all It is the only food consumed by a human being at less than 0 degree centigrade

temperature and people of all ages feel indulged to have it However we can determine focus

target groups for both branded common format and artisan boutique ice cream Group

discussions and market visits were done to get insight into the consumers along side resources

form secondary sources Age based target group is common for both segments but variation

among the groups occur mainly based on SEC and DMFI classification

611 Geographic Group

Branded ice cream remains an urban product till date Geographically branded ice cream has

reached urban and semi urban areas up to Thana Head Quarter levels Ice cream has reached

areas where electricity is available Small artisan players are available in places where large

branded players have no distribution

612 Target Age Group

Age wise grouping of target consumers is as follows

1048766 Urban kids in the age group of 5-14

1048766 They mainly consume normal sticks cups cones innovative fillers and water ice creams

1048766 Urban youth in the age group of 15-24

1048766 They consume premium and extrusion sticks and cones

1048766 Urban mothers in the age group of 25-35

1048766 They determine the family purchases Even when the father purchases ice cream decision is

taken by them

Consumption pattern of various age groups are depicted in the following chart Ice cream

consumption pattern50203005 to 14 yrs15 to 24 yrs25 to 35 yrs

Figure 11 Target Group wise Consumption Pattern Evaluation of Entry into Ice cream Business

for Bangladesh Limited 42

613 Target SEC and DMFI Group

Common Format

SEC A and B is the target group for common format ice cream However with rapid increase in

price level over the years has made it a ldquohard to consumerdquo product for SEC B consumers who

belong to lower DMFI group

Boutique Format

Boutique formatrsquos higher margin and high price range makes it an exclusively SEC A ice cream

People belonging to upper and upper middle class have access to the mediocre boutiques and

only higher upper class can have premium ice creams like Club Gelato and MoumlvenPick

Another unique target group for boutique format are the foreigners who live in Bangladesh

These people tend to visit the parlours to have ice cream as dessert especially after dinner

62 Ice cream in Consumer Lifestyle

Figure 12 Ice cream in Consumer Life style

This simple overview of ice cream in consumer lifestyle was determined based on in-depth

research analysis of UBL and validated through qualitative group discussions by the author

However detail of in-depth research is provided in a later section of this chapter

Evaluation of Entry into Ice cream Business for Bangladesh Limited 43

63 Highlights of Purchase Habit of Ice cream

631 Common Habits across Target Groups

There are some common habits that were identified in earlier researches and group discussions

with consumers Common habits mean the consumer approach towards ice cream that is seen

across all target groups eg kids youth and adult purchasers These are outlined below

1048766 Ice cream is mainly seen as a dessert or a snack Impulse ice cream is seen as a quick snack

that is consumed when it is in sight Visibility plays a big role here Regarding family packs

people see it as a post-food dessert

1048766 Ice cream purchase is commonly a planned event When the contexts arise people generally

take a bit of time to decide whether or not to have ice cream or when they want to go to a

boutique they make due considerations regarding which boutique to visit

1048766 Ice cream purchase decision is taken based on favourite flavour People tend to try out new

variants and flavours when they first see it They compare the taste with earlier experience and

when they purchase later they choose the flavour they have liked most

1048766 For In-Home segment decision is mostly taken on the flavour Generally people come up with

different flavours of choice and most voted flavour is chosen

1048766 People become aware of new variants or flavours mainly through word-of-mouth

Advertisement (new launches special offers and festivals) in newspaper is another source of

awareness

1048766 People are currently indifferent towards the price level of premium flavours However some

feel that price of Choc-bar or water ice creams (lolly) is a bit much If less they would have

consumed more Some also feel that companies should come up with branded ice cream in the

price range of BDT 5-8

1048766 Ice cream is purchased from nearby shops If required brand and flavour is not available 2-3

shops will be visited and then available flavour will be selected even if the required one is not

found This is done mainly not to ruin the mood for ice cream

1048766 People are very open to try new brands and flavours especially if it comes from a credible

source They would try new flavours and if they are satisfied with the taste they would repeat

purchase

1048766 Regarding boutique visits people feel that boutiques need to have a proper environment

enough flavours and other snacks

1048766 While visiting boutique with family or companion they want variation in flavours so that

they would order different flavours and taste each otherrsquos ice cream It is seen as a sign of

togetherness

1048766 Frequency of ice cream purchase varies among people It depends on peer pressure collective

family decision summer heat and attitude towards ldquoice creamrdquo itself as a product Evaluation of

Entry into Ice cream Business for Bangladesh Limited 44

632 Habits of Kids

1048766 Kids choose ice cream flavours by the look of the product (generally pictures shown in POS

materials and carts) They love colour and designs of the products let it be a common format or a

boutique ice cream

1048766 Kids (when in house) would go with the housemaid to the nearby shop choose the flavour

they want (within range of the amount given to the maid) and buy it

1048766 When with parents they would take the product they like even if the price is lower than some

other product However mothers play a role in this decision They would want their children not

to choose too high priced a product or coloured products

633 Habits of Youth

1048766 Young people are the main consumer of impulse ice cream They also are one of the major

consumers in the boutique segment

1048766 Young people love to try out new products that come into the market Another side of the coin

is that they are not very loyal to a brand or a flavour and tend to switch a lot

1048766 Regarding boutique visits young people go to boutiques to have an ldquoice cream hang outrdquo with

peer groups They would stay there for a longer period of time while they have their ice cream

1048766 Some times young people make milk shakes and other ice cream based desserts

634 Habits of Mothers

1048766 Mothers worry about their childrenrsquos health and they prefer ldquovanillardquo type of brands

However when price constraint occurs they go for water ice creams for their children They try

to convince their kidrsquos purchase decision

1048766 Regarding family purchase motherrsquos decision is sometimes prioritized by the whole family

64 Barriers to Ice cream Consumption

641 Emotional Barriers

1048766 Overindulge (close to sinful)

1048766 Undisciplined (no control)

1048766 Childish (licking)

1048766 Artificial Image

642 Functional Barriers

1048766 People of SEC B feel that ice cream is an expensive dessert (If less expensive would consume

more often)

1048766 It leads to cold cough - especially in winter rainy season

1048766 It contains artificial additives preservatives

1048766 It is very high in calories that lead to fattening

Evaluation of Entry into Ice cream Business for Bangladesh Limited 45

1048766 It does not quench ldquothirstrdquo

1048766 Less convenient (portable immediate eat)

1048766 Messy Dripping

65 Research Findings

The highlights regarding purchase habits triggers and barriers of ice cream consumption provide

a glimpse into the consumer world of ice cream industry However UBL CMI conducted a

formal research exclusively on ice cream consumers to identify

1048766 Occasions of ice cream

1048766 Frequency of ice cream consumption

1048766 Expectations from ice cream occasions

1048766 Personalities that they desire from ice cream

651 Relevant Occasions in Daily Lives of Consumers

Research question regarding ldquousual occasions of life that occurred most frequently in day-to-day

lives of the respondentsrdquo generated the following replies

Occasion

of Respondents saying Yes

Watching TV

93

Normal Dinner At Home

91

Normal Lunch At Home

89

At Home While ReadingMusicSurfing

86

Informal Family Get Together

85

Out Of Home Hanging Out With Friends

84

Out Shopping

84

Mid-Afternoon Break At Home

83

At Home By Myself During The Day

82

Special Dinner At Home

82

Informal Dinner Out Of Home

82

Normal Lunch Out Of Home

82

Leisure Walk

79

Coming Home From WorkSchool

78

Special Dinner Out Of Home

78

Celebration

78

A Night In With Friends

77

At Home By Myself In The Evening

77

Special Lunch Out Of Home

76

Mid-Afternoon Break Out Of Home

75

Special Lunch At Home

73

Day out with Partner

72

Midmorning Break

70

At Breakfast

68

Family Day Out

68

During Work Or At School

65

Evaluation of Entry into Ice cream Business for Bangladesh Limited 46

Travelling ToFrom WorkSchool

65

At The Cinema

61

Special Event

56

Clubbing At A Party

50

Post GymSports

48

Table 28 Relevant Occasions in Consumersrsquo Lives

Respondents were then asked to mention ldquofrequency of occurrence of the identified occasionsrdquo

The identified replies are as follows Normal dinner at homenormal lunch at homeComing home

from workschoolTraveling tofrom workschoolDay out with Partner SpouseMid-afternoon

break at homeOut of home hanging out with friendsLeisure walkMid-afternoon break out of

homeA night in with friendsSpecial dinner at homeSpecial lunch out of homeFamily day

outSpecial eventPost gymsportsDaily2-3 Times A WeekWeekly2-3 Times A MonthOnce A

MonthEvery 2-3 MonthsLess OftenNever Figure 13 Frequency of Occurrence of Occasions

This shows that ldquoNormal dinner at home Watching TV Normal Lunch At Home At Home

While ReadingMusicSurfing Coming Home From WorkSchool During Work Or At School

Travelling ToFrom WorkSchool Midmorning Break Day Out With Partner Spouse At Home

By Myself During The Dayrdquo are the most frequent daily rituals of busy lives of consumers

652 Frequency of Ice cream Consumption

Respondents were asked to mention ldquoconsumption pattern of ice cream during the identified

occasionrdquo on a scale of 1-5 depicting frequencies like ldquo(5) always (4) most of the times (3)

about half of the times (2) sometimes (1) never do not knowrdquo The responses are depicted in

the following table

Evaluation of Entry into Ice cream Business for Bangladesh Limited 47

444474544655555566756665775967779991011101111101210111110101113111412131314161

011121411131216181519181518211817171719181718201721222130303434253437403741394

046383944464746453745414641374638504843414839373030292726232725222020201926202

21722221317Midmorning

breakWhile clubbing at aAt the cinemaSpecial eventNormal lunch out ofA night in with

friendsNormal dinner atInformal dinner out ofAt home by myselfAt home by myself inOut

shoppingSpecial lunch atDay out with SpouseWatching TVAlwaysmost of the timesAbout half

of the timesSometimesneverdo not know

Figure 14 Frequency of Ice cream Consumption

As it can be seen ldquoDay out with Spouse Special lunch at home Special dinner at home

Watching TV Family day out Celebrationrdquo are the occasions where most frequently ice cream is

consumed

653 Market Character Mapping Relevant Occasions vs Frequency of Consumption

If we plot frequency of consumption on the X-axis of a chart and relevance of occasion

occurrence on the Y-axis taking the above mentioned values as cut-off values we get four

quadrants in the chart depicting four market scenarios that any ice cream manufacturer in

Bangladesh market might encounter given the current market situation This market

segmentation is based on frequency of ice cream consumption in daily occasions of consumer

lives

The segments are

1048766 OPPORTUNITY MARKET High Relevant Occasions-Low Ice cream Frequency

1048766 QUESTION MARKET Less Relevant Occasions-Low Ice cream Frequency

1048766 HIGH FREQUENCY MARKET Relevant Occasions-High Ice cream Frequency

1048766 CAPTIVE MARKET Less Relevant Occasions-High Ice cream Frequency

The chart looks as follows Evaluation of Entry into Ice cream Business for Bangladesh Limited

48

Figure 15 Relevance of Occasion-Frequency of Consumption Mapping

As it can be seen from the above chart Bangladesh Market still lies in the Opportunity and

Question market zone with a pull towards High frequency and Captive Market zones This is

evident from market data as penetration of ice cream still remains at Thana headquarters levels

Also this explains the high market growth rate of 17 as market is yet under developed and

branded quality ice cream has yet not reached all levels of consumers especially rural level that

constitutes around 75 of Bangladeshi market

From the above analysis we can establish that target of ice cream manufacturers should be to

penetrate more into the Bangladeshi market to create higher frequency of ice cream

consumption The following chart shows the strategies to follow for ice cream manufacturers

Figure 16 Required Market Strategy for Bangladesh

Evaluation of Entry into Ice cream Business for Bangladesh Limited 49

As relevance of ice cream consumption occasions can hardly be controlled by marketers their

endeavour should be to create more ldquoemotional and functionalrdquo attachment to ice cream in less

frequent occasions through ldquomarket developmentrdquo strategy to earn share from overall food

expenditure of consumers and at the same time make them consume more ice cream in highly

relevant occasions through ldquopenetrationrdquo strategy

654 Consumersrsquo Emotional Requirements and Product Attributes

All consumers under these clusters also identify the emotional requirements and the significant

product attributes they seek from their current preferred and future desired ice creams These are

provided below

Cluster

Emotional Functional Requirement

Product Attributes

Enjoyment

Flavour Variety

1048766 Combination of different flavours

1048766 Combination of different textures

1048766 Very sweet

1048766 With wafer or biscuit

1048766 With chocolate

1048766 Of a well known brand

Socially Involved

Spoonable Rich

1048766 Very creamy

1048766 Only natural ingredients

1048766 No mess

Care

Size Creaminess

1048766 Big

1048766 Rich full taste

1048766 Smooth

1048766 Value for money

1048766 No mess

Unwind amp Escape

Economy

1048766 Crunchy

1048766 Economic

1048766 Of a well known brand

1048766 Nutritious

Balanced Convenience

Health Conscious

1048766 Of a well known brand

1048766 Nutritious

1048766 Milk based

1048766 Low sugar

1048766 Low carbohydrates

1048766 Filling

Active Self-Grooming

Fruit Vitamins

1048766 Healthy

1048766 Fruit based

1048766 Low fat

1048766 Liquid or drinkable

1048766 Nutritious

1048766 Of a well known brand

Confidence

Drinkable Light

1048766 Low calories

1048766 Light on the stomach

1048766 Chewy or gooey

1048766 Not so sweet

1048766 Natural appearance

Sensual

Appeal or image

1048766 No artificial additives

Evaluation of Entry into Ice cream Business for Bangladesh Limited 50

1048766 Natural appearance

1048766 Melting slowly

1048766 Attractive packaging

1048766 High quality ingredients

1048766 Of a well known brand

Table 29 Requirements amp Product Attributes Desired by Consumer Clusters

Of these findings we see that the identified highlighted barriers to ice cream consumption are

pretty evident among the consumers Mostly people want products of a reliable source or a well

known brand low calories quality ingredients value for money economic type

Evaluation of Entry into Ice cream Business for Bangladesh Limited 51

70 INDUSTRY ATTRACTIVENESS AND ENTRY PROSPECTS

71 Driving Forces of Growth

As identified in the earlier sections there are several driving forces behind the growth of ice-

cream industry in Bangladesh

712 Trade and Infrastructural Level

1048766 As a result of globalization newer varieties have been introduced to the local products Many

foreign companies are also coming as franchise so there has been increased competition and

these boutiques are setting higher standards for the local producers

1048766 The present market growth rate is 18-19 which is being influenced by larger players like

Igloo who are expanding their distribution nation wide with expansion of national electricity

grid

1048766 With entry of Modern Trade and recent organized business approach of retailers has made it

possible for ice cream manufacturers to penetrate into shops even without providing them with

branded freezers

1048766 Weather change has increased ldquosummerrdquo season in our country which has reduced negative

seasonal impact on ice cream

1048766 Large companies like Igloo have taken global learning of using carts as an effective tool of

availability and visibility for ice cream

1048766 New and improved technologies are being used in the production process This technological

advancement has improved quality increased speed of production and made the process more

cost effective

713 Consumer Level

1048766 Only a few years back rich people could afford the luxury of having ice-cream but now it has

become a common product for everybody Ice-cream companies are producing different products

with a wide price range for consumers of every class and status

1048766 Nowadays companies are doing promotional campaigns more frequently the customers get to

know about the product which makes it easier for them to buy the best one

1048766 The improved standard of life and more modernized lifestyle of people is an important reason

for the increased consumption thus growth of the ice-cream industry

Evaluation of Entry into Ice cream Business for Bangladesh Limited 52

72 Prospects of Entry

The ice-cream industry of Bangladesh is an attractive one for the investors because there is a

huge market but number of producers is very small The major reasons behind industry

attractiveness are as follows

1048766 The industryrsquos current growth potential is very high with opportunity for market development

1048766 The competition currently permits adequate profitability and the competitive forces are

becoming stronger with time

1048766 Boutique segment is at a very high growth stage but no operator is currently operating with a

mid price range of BDT 100-400 Ice cream kiosks and small scooping boutiques can operate

within that range

1048766 Current industry driving forces are favourable for the future industry profitability

1048766 Globally oriented consumers look for variety in ice cream that is currently not available

Latest innovations came in the market in 2002 People would welcome new variety and flavours

1048766 There is a gap in the market for balanced convenience through ice cream where consumers can

get nutritional benefits for ice cream Also emotional attachment to ice cream could further be

improvised in promotional campaigns

1048766 There is high scope for market penetration and development to increase frequency of ice

cream consumption

1048766 Level of risk or uncertainty is very low in ice-cream industry because the consumer market is

so huge any product with a standard quality and careful pricing will be able to make significant

profit

1048766 As for geographic reach of the industry 60 market is still in Dhaka There is scope of

expansion and a new entrant can easily capture market share within Dhaka using carts even if

they do not want nation wide cold chain distribution

1048766 The production process is very complex and capital requirements are also high So before

going into production any company should know about their capabilities and weaknesses and

then start the business or else they might suffer huge loss at a certain level

1048766 Unilever can acquire the required resource and use existing multi-national multi-cultural

expertise to enter the market in a grand way

1048766 With high probability of entry from DANONE with more products like the ISIS diabetic ice

cream Unilever should consider entering in this industry as soon as possible

Evaluation of Entry into Ice cream Business for Bangladesh Limited 53

80 ENTRY STRATEGY FOR UNILEVER

While describing the suggested entry strategy for UBL certain issues have been kept

confidential and some issues have been touched but not explained to keep consistency with UBL

confidentiality policy

81 Suggested Entry Areas for UBL

1048766 Boutique segment of the Bangladesh ice cream is only 5 of the branded market UBL needs

to pursue a larger scope to make the entry viable

1048766 UBL cannot fight with unbranded segment as global product quality mandate of Unilever does

not allow UBL to fight in low price-low quality segment

1048766 Recommend entry should be in the common format segment with both single and multiple

servings and in the boutique segment with a different brand name (if possible BEN amp JERRYrsquoS)

1048766 UBL should build up state-of-art modern factory for manufacturing and establish cold chain

facilities initially focusing on metro cities

1048766 Investment issues are required to be addressed for building factory and cold chain and capital

requirement needs to be identified for that purpose4

1048766 UBL may have boutiques for driving image selective top-end offering

1048766 Kiosks can be setup near universities and shopping malls

1048766 Boutiques should be concentrated in Dhaka and Chittagong

1048766 Ice cream for boutiques and kiosks would be produced in factory as institutional packs of 9-10

litres

82 Products

1048766 As a Brand Building country in global Unilever operating framework UBL is entitled only to

bring products developed by the Brand Development countries

1048766 Unilever should focus on serving products that have nutritional benefits (already available

globally) along with usual satisfactions of sensual pleasure functional attributes etc

1048766 Current existent players especially Igloo and Kwality have extensively copied global and

regionally available Unilever products eg Cornelli is same as Wallrsquos Cornetto Vinetta is similar

to Vienetta Mega is similar to Magnum etc UBL needs to differentiate these to consumers on

the ldquotaste the originalrdquo platform where global quality is focused regarding the products

1048766 UBL should also bring regionally famous brands like Moo or Max to create image

differentiation

1048766 Magnum or Moo should be used as premium end ice cream to generate more profit margin

Evaluation of Entry into Ice cream Business for Bangladesh Limited 54

83 Placement

1048766 Distribution focus should be in Dhaka for entry as Dhaka contributes more than 60 of total

ice cream sales in the country

1048766 Company may use carts as distribution method They serve as good source of visibility and

availability It would help in increasing impulse purchase

1048766 At least 1500 outlets in Dhaka and Chittagong needs to be actively served using dedicated

branded refrigerators to generate sales

1048766 50 carts should operate in Dhaka and Chittagong

84 Price

1048766 UBL products should be priced at par with Igloo pricing for the common format ice creams

1048766 UBL can bring in premium single-serve SKUS for the higher economic classes in the price

range of BDT 60-80

1048766 Smaller SKUs (small lolly stick) can be introduced in the price range of BDT 10-15

1048766 In the boutique segment UBL should price products above the semi-premium segment

(Gelateria Igloo Sub Zero or Andersenrsquos) but lower than that of Club Gelato or MoumlvenPick

85 Promotion

1048766 UBL would require strong marketing campaign (As high as 50 of sales) to have a grand

entry in the market

1048766 Presence in the television media would be of utmost importance More than 50 of

promotional expense should be made here initially Gradually it can be reduced

1048766 Newspaper would serve as the second most important option

1048766 Billboards should also be used

1048766 Activations (similar to Lux Channel i Super Star or Igloo Festival) should be done to generate

trial

86 Scope of Opportunity

Table 30 Value and Volume Based Scope of Opportunity for UBL

Value (BDT Cr)

Volume (Tons)

Market

131

7835

Common

121

7600

Boutique

98

235

Evaluation of Entry into Ice cream Business for Bangladesh Limited 55

861 Geographic Contribution

1048766 Dhaka (61)

1048766 Chittagong (19)

1048766 Sylhet (10)

862 UBL objectives

Common Format Ice Creams

1048766 Target 10 Market share in 1st year operation

1048766 Value BDT 11 Cr

1048766 Production capacity required 21 Tons day

1048766 Freezer Placement 1500 freezers

1048766 Cart operation At least 50 carts

Boutiques

1048766 Target Further develop the market

1048766 Focus Dhaka Chittagong and Sylhet Metro

1048766 Franchise At least 20 franchisee operations nation wide in divisional towns

1048766 Pricing Below imported parlours above common formats with around BDT 400 per Litre

87 Critical Success Factors

1048766 UBL is considered as a high profile company in Bangladesh and thus they cannot operate in

the market only with common products like choc-bars and cups They must have premium

products (these require extrusion line) also to carry their brand image Otherwise UBL would not

be able to charge usual premium over competition products

1048766 Launch of ice cream would require huge promotional and activation support in order to gain

customers from Igloo People want novelty regarding ice cream and UBL have to let them know

about their products and create hype

1048766 Cart should be used as a source of distribution Recent successes of Unilever companies like

Indonesia shows that carts can generate more sales and can be used as source of visibility in the

minds of both retail traders and consumers Carts can also provide incremental sales to the

company

1048766 UBL have to create a strong cold chain for ice cream (initially in Dhaka and Chittagong) to

ensure quality products for consumers

1048766 UBL have to build capacity very rapidly to meet consumer demand if the launch is successful

Evaluation of Entry into Ice cream Business for Bangladesh Limited 56

90 BUSINESS PROJECTION

91 Basic Assumptions

Business projection for ice cream business was made based on a conservative approach UBL

would require spending significantly on production capacity and factory dedicated to ice cream

Thus to analyse business possibilities of ice cream certain assumptions were made and collected

data were used These are

1048766 Production equipments and cabinets would cost approximately BDT 55 crores

1048766 Production equipments 45

1048766 Packaging Equipments 15

1048766 Storage Facility 20

1048766 Branded Freezers 10

1048766 Distribution Investment 10 (Distributors would also invest themselves)

1048766 Ice cream factory with a floor size of 20000 sqft would cost BDT 25 crores

1048766 Objective is to capture 10 market share in Dhaka and Chittagong in the first year

1048766 Business would grow by 50 in year 2 and 3 30 in year 4 and 25 in year 5

1048766 Weighted price per litre is BDT 170 according to volume share of single serve ice cream

multiple serve ice cream and boutique ice cream

1048766 Other financial assumptions were also made List of them are provided below but amount has

been removed for confidentiality issues

Assumptions

Trade Margin

Distributors Margin

DutyVAT Rate

Trade Terms Expense of NPS

Trade Terms Expense of NSV

Advertising ampPromotion of NPS

Indirects (Salaries Wages etc)

Trading Tax

Table 31 Assumptions for Business Projection

Evaluation of Entry into Ice cream Business for Bangladesh Limited 57

100 CONCLUSION

Ice cream has good prospect in Bangladesh It is still a growing market with opportunities for big

new entrants With the barriers of entry UBL needs to consider its priorities UBL being an HPC

company traditionally needs to acquire expertise in cold chain distribution and has to invest a lot

of money to rip the benefits of the industry However to initiate company can take regional

support and acquire resource expertise The company should enter the business as soon as

possible since there is potential threat from DANONE to introduce more ice creams after ISIS

diabetic ice cream and also with potential of the industry arch rival Nestlersquo might consider

entering into the industry too

Evaluation of Entry into Ice cream Business for Bangladesh Limited 58

References

Web References

1 wwwunilevercom

2 wwwunilevercombd

3 wwwhllcom

4 wwwunilevercompk

5 wwwthedailystarcom - Life Style Magazine

6 wwwreuterscouk

Evaluation of Entry into Ice cream Business for Bangladesh Limited 59

Page 27: Square Ice cream

Igloo ice-cream can be classified in six groups They are

Stick

Macho Choc-bar Mini Choc Clown Mega Shell n core Lolly

Cone

Cornelli 2 in one Cornelli classic

Cup

Shahi kulfi Vanilla Strawberry Mango Snow ball

Container

Vanilla Strawberry Mango Chocolate Coffee Diet Vanilla Tutti Frutti Ripple Pralin

Pistachio

Innovative

Nuggets Sandwich

Family

Ripple cake Party time Shahi Kulfi

Table 19 Products of Igloo

Single serve stick cups and cone items are easy to carry around and convenient to eat which

makes it most sold The core target segment of ice-cream is 6-24 years and this generation is

always on the Evaluation of Entry into Ice cream Business for Bangladesh Limited 30

move and thus prefers independent cone stick or cup items As Igloo initiated the concept of ice-

cream as a family product they offer some items to be enjoyed with the whole family

Quality and Innovation Igloo is committed to maintaining the highest quality standard through

its continuous RampD activities The major ingredients raw materials and packing materials are

procured from the best European sources Strict quality control is done at every stage of the

manufacturing process from procurement of material mixing material flow ice cream making

packaging storing (at main warehouse) distributing and market shelving by the Quality Control

Department Current supply chain for various materials of Igloo is as follows Australia (Milk

Powder) Denmark (Ingredients emulsifiers amp stabilizers) China amp UAE (Food grade sticks)

China Denmark Singapore amp Thailand (Food grade packing materials)

Figure 9 Igloo Supply Chain

Distribution Network Their distribution network is stretched all over the country with a long

fleet of refrigerated vans Firstly the ice cream products are stored at the central warehouse of

the factory and from there they are distributed through the haulage vehicle to the operational

centres located in Dhaka Chittagong Comilla Rajshahi Barisal Bogra Rangpur and Khulna

Strictest cold chain maintenance during the distribution and selling of the ice creams is ensured

Their distribution process is as follows Manufacture Stored at -24c Transported by Refrigerated

trucks at -Reaches amp Preserved in Eight regional stores Refrigerated vehicles (Distributors)Retail

outlets (Deep freezers)

Figure 10 Distribution Process of Igloo

Evaluation of Entry into Ice cream Business for Bangladesh Limited 31

Trolley Operation Igloo also operates through trolleys for extending its reach to consumers at

the furthest points The trolleys are operated near schools alleys streets parks etc and play

rhythmic music to attract the consumers These are very colourfully decorated with Igloo

umbrella and the puller wears specific uniforms Igloo was the first in introducing and operating

these trolleys in Bangladesh for any Fast Moving Consumer Goods (FMCG) Igloo has around

125 trolleys operating throughout the country Individual trolleys are provided with a regular

supply of igloo ice creams

Marketing The marketing commitment of Igloo is based on the relationship with its customers

and consumer by not only manufacturing the highest quality product but also delivering the

product by maintaining this quality To satisfy the ever-changing needs of the customer Igloo

has regularly launched new ice creams and introduced new flavours And this commitment has

positioned Igloo as the market-leading brand by gaining the consumers trust with the positioning

as ldquoA WORLD OF GREAT TASTErdquo

Facilities and Logistics at a glance As of 2009 following are the facilities and logistics enjoyed

by the company

Factory location

Dhaka

Production Lines

4

Packages

Stick Cup Family pack Others (Nuggets and sandwich)

Machine suppliers

1048766 Mark-Italy

1048766 Tetra Pak(Hoyer)-Denmark

1048766 Sabore Denmark

1048766 Hass- Austria

Machine models

1048766 Freemark 1100 Italy

1048766 FM 3000 FM 6000 Italy

1048766 SL600 Denmark

Cone baking

Hass- Austria

Chocolate making

Macentyre-UK

Coverage

Nationwide

Operational centre

10

Total market vehicles

30

Distribution channel

Directthrough appointed distributors

Outlet service

7500

Injected deep freezers

4000

Trolley operations

125

Warehouse no

8

Table 20 Igloo Facilities and Logistics

Kwality

Kwality is currently the second largest ice cream manufacturer of the country The mother

company for the Kwality brand is Sanowara Drinks amp Beverages Ltd a sister concern of

Sanowara Group The company is famous for powdered milk brands Red Cow and Diploma in

Bangladesh The drinks and beverage concern of Sanowara made an entry into the market in

1997 with ldquoYesrdquo brand drinking water and launched the ice cream brand in 1999 With heavy

communication and novelty products it Evaluation of Entry into Ice cream Business for

Bangladesh Limited 32

successfully removed Polar from the second place with a current market share of 27 The

company also operates in the boutique segment with two parlours in Dhaka and Chittagong

Kwality ice cream factory is situated in Chittagong with a floor space of 35000 sft and fully

automated machinery wrapping mix machinery equipments from Italy having capacity of

around 20000 litres of ice cream per shift The ice cream factory employs 140 people The

company is ISO 9001-2000 certified

Kwality was the first true competitor for Igloo products with some major innovation in product

design and communication but their quality is perceived to be lower in the minds of the

consumers and they do not have extrusion ice cream The product prices are also similar to that

of Igloo but they charge a bit lower than Igloo in premium multiple servings However during

market visits it was seen that shops that keep only Kwality or Igloo and Kwality both they can

sell Kwality too although the sales amount is lower than that of Igloo People who look for Igloo

shopkeepers give them that directly but if they get a chance and Kwality ice cream stock is high

they also push Kwality to dry the stock out This gives an indication that market is larger than

what the current players are capable of serving even in Dhaka

Kwality follows a similar distribution model like Igloo but distribution frequency is lower and

amount of cart sellers is limited to 25 and they operate only in Dhaka

Polar

Once a giant in the industry Dhaka Ice Cream Industries Ltd introduced the first hygienically

packed ice cream in Bangladesh in 1987 and the brand name Polar was thus born In the early

days the company started ice cream business with a wide range of products and a variety of

flavours in Dhaka city In 1988 the company started its distribution in the city of Chittagong

then Bogra and continued to cover more cities Presently Polar ice cream is available

throughout Bangladesh The company today trails in the market with 15 market share in the

common format segment Recently Polar has announced launch of ISIS diabetic ice cream with

support from DANONE to turn around in the market

The company has its head office as well as a modern large-scale industrial plant in Dhaka Polar

ice cream is made with Danish expertise using Danish equipment and technology The

production activities and quality control measures are supervised and managed by Danish

experts Polar offers a wide range of delicious flavours and tastes made by ingredients imported

from Europe

Dhaka Ice Cream at present has 3 cold stores in Dhaka Chittagong and Bogra in Bangladesh

From Dhaka cold store they distribute ice creams in Mymensingh Tangail Jamalpur Sherpur

Kishoreganj Netrakona Comilla Narsingdi Barisal Madaripur Agaeljhara Faridpur Magura

Chuadanga Jessore Satkhira Khulna Pirojpur and Sylhet through their distributors In case of

long distance delivery points the company uses auto cooling freezer van

Evaluation of Entry into Ice cream Business for Bangladesh Limited 33

In Dhaka city they distribute ice creams directly to retail stores in freezer vans Besides that

they have several distributors at different points of the city Distributors cover their individual

areas where company is not able to supply directly in their freezer vans Similar model is

followed by the company to distribute ice cream from their other cold storages through out the

country For storing and selling ice creams in retail stores the company like the other players

arranges a deep freezer with the Polar logo and canopy light box

In addition to this distribution the company also undertakes home delivery of ice creams for

special occasions

Savoy

Savoy Ice-cream brand is owned by Sena Kalyan Sangstha (SKS) Group of industries It started

its journey in March 1995 with a factory in Tejgaon Dhaka Yearly turnover is estimated at BDT

388 crores with a market share of roughly 35

The factory has been established with Sonali Bank finance at 6040 equity ratio The total

production capacity of the factory has been estimated at 2400 litres of Ice-cream per day Total

land area of the factory premise is 116 Bigha with 8000 sft area covered with a total project cost

of BDT 144 The factory employs 73 people

Product ranges of the company include all the basic designs and flavours of the industry

However the company has not been much of an innovator in the industry Their product quality

is substantially low than that of other players and they price their products at 10-15 lower than

the other competitors The company imports raw materials mainly from Europe The general raw

materials are Euro cream Skimmed Milk Powder Cocoa Powder and Flavour (Vanilla Mango

and Strawberry) Colour (Yellow Red Chocolate and Green) Ripple Sauce Cheney Fruit Palm

Kernel Oil Anhydrous Butter Oil (Ghee) and Sugar etc

Milk Vita

Milk Vita is one of the most famous brand names in Bangladesh for its liquid dairy milk Owned

by Bangladesh Milk Producersrsquo Co-operative Union Limited (BMPCUL) the company came in

the market with proper dairy milk ice cream in form of cups and choc-bar With a production

capacity of around 1600 litres per day the company is trailing in the market place with 3

market share

Although the Milk Vita Choc-bar was perceived to be extremely tasty by consumers they

probably could not do well due price competition Currently they do not even distribute ice

cream in Dhaka However their presence is seen in outskirts of Dhaka and other nearby towns

If the current market situation prevails Milk Vita would lose their remaining market share and

other companies would benefit especially Igloo However one of the advantages of Milk Vita

remains to be

Evaluation of Entry into Ice cream Business for Bangladesh Limited 34

their nation wide milk supply network They have skimmed milk powder production plant that

Igloo does not have Thus they can combat the seasonality of milk supply that Igloo with its

huge requirement of milk cannot

Strengths and Weaknesses of Competitors

Company

Strengths

Weaknesses

Igloo

1048766 Strong brand image

1048766 High product quality

1048766 Highest no of variety

1048766 Strong distribution network

1048766 Highest visibility

1048766 Strong promotion

1048766 High production capacity

1048766 Presence of extrusion ice cream

1048766 Items are generally a bit pricy

1048766 Igloo does not give free freezers like other companies

1048766 Reluctant in recent times regarding innovation

1048766 Local sourcing of liquid milk does not meet demand

1048766 Failure to use ERP technology slowing decision making

Kwality

1048766 Product variety

1048766 Strong promotion

1048766 Free freezer distributed

1048766 Presence in all price segments

1048766 High production capacity

1048766 Weak distribution

1048766 Lower exposure

1048766 low amount of carts in operation

Polar

1048766 Free freezer

1048766 Quality perceived to be high compared to Kwality

1048766 Discoloured freezers

1048766 Lower exposure

1048766 Low product variety

1048766 Unused capacity

Savoy

1048766 Price is lower

1048766 Discoloured freezers

1048766 Low product variety

1048766 Weak distribution

1048766 Small amount of freezers

1048766 Low production capacity

Milk Vita

1048766 Quality is good due to dairy cream

1048766 Brand leverage from Milk Vita milk

1048766 Low exposure

1048766 Low variety

Table 21 Strengths and Weaknesses of Competition

512 Market Characteristics of the Boutique Segment

With a small market of BDT 98 Cr and 567 share in the branded ice cream market the

boutique segment is currently an increasing segment in the ice cream industry Boutique

segmentrsquos history dates back to 1960s when Igloo launched boutiques in Dhaka to save

distribution cost and promote a culture of ldquoice cream eating outrdquo In later years boutiques lost

their glamour and retail common format segment picked up growth However with Dolce Vita in

the late lsquo80s craze for Italian Artisan ice cream was recreated in the market Although Dolce

Vita is failing in recent times emergence of MoumlvenPick and Club Gelato in 2000 has uplifted the

segment once again Current growth rate of the

Evaluation of Entry into Ice cream Business for Bangladesh Limited 35

segment can be estimated to be approx 20-22 (higher than the common format segment)

Following are the basic detail of all the major players in the segment with their estimated sales3

Players

Outlet

Sales (Cr Taka)

Share

Club Gelato

1

136

199

MoumlvenPick

1

119

174

Andersenrsquos

3

119

174

Gelateria Igloo

3

119

174

Sub Zero (Kwality)

2

051

75

Baskin Robbins

1

015

22

Dolce Vita

1

017

25

American Soft

1

009

12

Rainbow

1

009

12

Others (off site)

089

130

Total Market

682

Table 22 Players and Shares in Boutique Segment

A Detail of Operation

General operational procedure followed by all the operators is as follows

1048766 Operating method There is a variation in operational method among the large operators

1048766 Club Gelato uses kitchen at own premise where imported ingredients and local milk (daily

special service from Milk Vita) are used to make ice cream

1048766 MoumlvenPick directly imports ice cream from Switzerland

1048766 Andersenrsquos Gelateria Igloo and Sub Zero produce ice cream at their factory with a mix of

imported and local ingredients

1048766 Products Around 30-35 flavours of artisan dairy ice cream are served at the premises

1048766 Most sold flavours are Vanilla Ferrero Rocher Butterscotch Chocolate Caramel etc

1048766 Other Products Larger players also serve ice cream desserts (milk shakes ice cappuccino etc)

pastries and other desserts with normal coffee and tea facility at their premises

1048766 Boutiques fight ice cream seasonality with the other products sales during off-peak ice cream

seasons Usually ice cream and other products contribute at 6040 ratio in summer and during

winter and off-peak seasons the ratio reverses

1048766 Pricing Usually the prices of products in this segment are 3-4 times higher than that of the

common format segment

1048766 Prices do not vary with flavours Variation depends on serve style (Cone tub) and use of

toppings and other ingredients (Chocolate sauce nut fruits) etc

1048766 Usual margin charged is around 50-60 over production cost Similar margin is charged for

other products like coffee ice cappuccino etc

3 Yearly sales is estimated based on companyrsquos approximate daily sales collected during

interview

Evaluation of Entry into Ice cream Business for Bangladesh Limited 36

1048766 Target Group Most of the consumers belong to SEC A and higher SEC A with DMFI of at

least BDT 20000

1048766 Foreign delegates and resident foreigners also visit these boutiques

1048766 Main purposes of visits in the boutiques are

bull Youth hangout with friends and having ice cream and ice cream derivatives

bull Family Family night out or eat out at a restaurant and then having dessert

bull Foreigners Having dessert after dinner

1048766 Rush time at boutiques are Afternoon 2-4 pm and at night 9-11 pm

1048766 Offsite sales Most of the large operators also sell offsite They have small freezers for off-site

1048766 Club Gelato and MoumlvenPick serves ice cream at high society parties and programmes

1048766 MoumlvenPick also has kiosks in known hotels like Sheraton

1048766 Promotion No mass promotion is done by any of the companies Word of mouth is the most

important source of promotion Posters and banners outside the premise and occasional

newspaper advertisements are used to communicate special offers

1048766 Growth Drivers Market growth is driven by image innovation quality decoration of facility

environment and special offers

1048766 Club Gelato has the image of selling true Italian dairy ice cream with an excellent hangout

environment

1048766 MoumlvenPick imports ice cream directly from Switzerland and is perceived to be of high quality

1048766 Andersenrsquos operates with the image of ice cream from Denmark

1048766 Gelateria Igloo (from Igloo) and Sub Zero (from Kwality) could not establish the premium

artisan ice cream image

B Players in the Boutique Segment

There are very few players who have significant impact in the boutique segment Detailed

information of all the major boutique segment players is provided below

Evaluation of Entry into Ice cream Business for Bangladesh Limited 37

Club Gelato

Basic Company Information

1048766 Location Banani Road 11 (Planning for a second one in Dhanmondi)

1048766 Established in 2001

1048766 Seating Capacity 48

1048766 Area 1250 sft (including kitchen)

1048766 Owner Mr Jahangir Alam (Bangladesh)

1048766 Business Type Joint business partnership with Singapore

1048766 Staff 15 people (6 in the kitchen)

1048766 Production capacity 150 litres per day

Product Related Information

1048766 Product Italian style parlour scoop ice cream fruit juice coffee and pastries

1048766 Flavours Around 32 flavours available

1048766 Most selling Ferraro Rocher Vanilla Pistachio

1048766 Innovations New variants and ingredients are communicated by their Italian supplier and

Club Gelato decides what to take from them

1048766 Serve type Cup Cone Glasses Box for take away

Consumer Profile

1048766 Primary Teenagers and Young Adults (18-30) amp Diplomats

1048766 Secondary Family consumers for eat out

1048766 Income Group High income customers tentatively from SEC A and higher SEC A

1048766 Geographic Area Diversified

1048766 Rush time 8-10 pm

Sales and Price Information

1048766 Sales BDT 50000 (60 Ice cream 40 other desserts) daily in summer In winter however

other products sell more and thus they keep total sales at the same level

1048766 Price 750 per litre for any flavour

1048766 Sales Volume 50-60 litres per day

Supply Chain Placement Information

1048766 Milk Local sourcing from Milk Vita (4050 litres per day)

1048766 Chocolates amp Flavours Belgium France Germany

1048766 Transportation Mainly air (They can afford it due to high margin)

1048766 Contribution of various materials Flavours (30) Milk (20) other parts are water and air

Promotional Materials

1048766 Materials used are near premises POS materials for promoting the parlour only

Table 23 Detail of Club Gelato

Evaluation of Entry into Ice cream Business for Bangladesh Limited 38

MoumlvenPick of Switzerland

Basic Company Information

1048766 Location Gulshan

1048766 Established in 2000

1048766 Seating Capacity 55

1048766 Owner Mr Arif Mahmud

1048766 Business Type Franchise of International MoumlvenPick

1048766 Storage Capacity in Shop 150 litres

Product Related Information

1048766 Product Imported MoumlvenPick ice creams coffee chicken sandwich and Frappe

1048766 Flavours Around 30 to 35 flavours available

1048766 Most selling Swiss Chocolate caramel Vanilla Dream Espresso Strawberry

1048766 Innovations New variants are communicated by their franchiser and they decide on flavours

that they want

1048766 Serve type Cup Cone Glasses Box for take away

Consumer Profile

1048766 Primary Teenagers and Young Adults (18-30) (70) amp Diplomats

1048766 Secondary Family consumers for eat out

1048766 Income Group High income customers tentatively from SEC A

1048766 Geographic Area Concentrated in Gulshan and nearby areas

1048766 Rush time Afternoon- Young Adult 10 to 11 pm Foreigners

1048766 the company also serves at parties and has freezers in known hotels where their ice creams

are served

Sales and Price Information

1048766 Sales BDT 35-40000 daily in summer

1048766 Price 640 per litre for any flavour

1048766 Sales Volume 55-60 litres per day

Supply Chain Placement Information

1048766 Transportation Imported finished goods by ship

1048766 Ship travel time 19 days

1048766 Port clearance 10 days

1048766 Safety Cushion Extra 10 days

Promotional Materials

1048766 Materials used are near premises POS materials for promoting the parlour only

Table 24 Detail of MoumlvenPick of Switzerland

Evaluation of Entry into Ice cream Business for Bangladesh Limited 39

Andersenrsquos of Denmark

Basic Company Information

1048766 Location Gulshan (2 others in Uttara Dhanmondi)

1048766 Established in 2001

1048766 Seating Capacity 48

1048766 Owner United Group

1048766 Business Type Franchise of Australian company Andersenrsquos of Denmark

1048766 Production Tongi Factory of United Group

1048766 Production capacity 2000 litres per day in factory

1048766 Storage Capacity in Shop 150 litres

Product Related Information

1048766 Product Danish parlour scoop ice cream and coffee

1048766 Flavours Around 30 to 35 flavours available

1048766 Most selling Strawberry Butter Scotch Green

1048766 Innovations New variants and ingredients are communicated by their franchiser and they

decide on flavours that they want

1048766 Serve type Cup Cone Glasses Box for take away

Consumer Profile

1048766 Primary Teenagers and Young Adults (18-30) (70) amp Diplomats

1048766 Secondary Family consumers for eat out

1048766 Income Group High income customers tentatively from SEC A

1048766 Geographic Area Concentrated in Gulshan and nearby areas

1048766 Rush time 8 to 10 pm

Sales and Price Information

1048766 Sales BDT 10-12000 daily in summer

1048766 Price 460 per litre for any flavour

1048766 Sales Volume 40-50 litres per day

Supply Chain Placement Information

1048766 Milk 2025 kg packs are imported

1048766 Chocolates amp Flavours Imported

1048766 Butte paper Local sourcing

1048766 Transportation Ship

Promotional Materials

1048766 Materials used are near premises POS materials for promoting the parlour only

Table 25 Detail of Andersenrsquos of Denmark

Evaluation of Entry into Ice cream Business for Bangladesh Limited 40

Gelateria Igloo

Basic Company Information

1048766 Location Banani Kemal Ataturk Avenue (Two others in GEC Mor Chittagong and Naya

Paltan)

1048766 Established in 2000

1048766 Seating Capacity 20

1048766 Production From Igloo factory in Shyampur Narayanganj

Product Related Information

1048766 Product Parlour scoop ice cream and coffee only

1048766 Flavours Around 30 flavours available

1048766 Most selling Vanilla Strawberry Chocolate Pistachio Butter Scotch Tutti Fruity

1048766 Serve type Cup Cone Glasses Box for take away

Consumer Profile

1048766 Primary Teenagers and Young Adults (18-30)

1048766 Secondary Family consumers for eat out

1048766 Income Group High income customers tentatively from SEC A and B

1048766 Geographic Area Diversified

1048766 Rush Time afternoon and evening

Sales and Price Information

1048766 Sales BDT 8000 to 10000 daily in summer Nearly one fourth in winter

1048766 Price Varies but 350 per litre of vanilla

Promotional Materials

1048766 POS materials at the premises

Table 26 Detail of Gelateria Igloo

52 Price Comparison of Common and Boutique Segments

Price ranges of both common format and boutique segment cannot exactly be pin pointed as

products do not follow common structure and variations occur with use of toppings mixing of

flavours and use of coatings However a price comparison has been made among the brands

based on their price of per litre of vanilla flavoured ice cream in the market It appears to be as

following

Company

Price Litre Vanilla

Club Gelato

750

MoumlvenPick

640

Andersenrsquos

460

Dolce Vita

440

Igloo

100

Kwality

100

Polar

100

Milk-Vita

90

Savoy

85

Table 27 Comparative Price Analysis

As it can be seen there is price gap within the range of BDT 100-400 Ice cream kiosks and

small scooping boutiques can operate within that range

Evaluation of Entry into Ice cream Business for Bangladesh Limited 41

60 CONSUMER ANALYSIS

61 Target Group of Ice cream

Who are the consumers of ice cream This question does not have a clear answer Ice cream is a

food for all It is the only food consumed by a human being at less than 0 degree centigrade

temperature and people of all ages feel indulged to have it However we can determine focus

target groups for both branded common format and artisan boutique ice cream Group

discussions and market visits were done to get insight into the consumers along side resources

form secondary sources Age based target group is common for both segments but variation

among the groups occur mainly based on SEC and DMFI classification

611 Geographic Group

Branded ice cream remains an urban product till date Geographically branded ice cream has

reached urban and semi urban areas up to Thana Head Quarter levels Ice cream has reached

areas where electricity is available Small artisan players are available in places where large

branded players have no distribution

612 Target Age Group

Age wise grouping of target consumers is as follows

1048766 Urban kids in the age group of 5-14

1048766 They mainly consume normal sticks cups cones innovative fillers and water ice creams

1048766 Urban youth in the age group of 15-24

1048766 They consume premium and extrusion sticks and cones

1048766 Urban mothers in the age group of 25-35

1048766 They determine the family purchases Even when the father purchases ice cream decision is

taken by them

Consumption pattern of various age groups are depicted in the following chart Ice cream

consumption pattern50203005 to 14 yrs15 to 24 yrs25 to 35 yrs

Figure 11 Target Group wise Consumption Pattern Evaluation of Entry into Ice cream Business

for Bangladesh Limited 42

613 Target SEC and DMFI Group

Common Format

SEC A and B is the target group for common format ice cream However with rapid increase in

price level over the years has made it a ldquohard to consumerdquo product for SEC B consumers who

belong to lower DMFI group

Boutique Format

Boutique formatrsquos higher margin and high price range makes it an exclusively SEC A ice cream

People belonging to upper and upper middle class have access to the mediocre boutiques and

only higher upper class can have premium ice creams like Club Gelato and MoumlvenPick

Another unique target group for boutique format are the foreigners who live in Bangladesh

These people tend to visit the parlours to have ice cream as dessert especially after dinner

62 Ice cream in Consumer Lifestyle

Figure 12 Ice cream in Consumer Life style

This simple overview of ice cream in consumer lifestyle was determined based on in-depth

research analysis of UBL and validated through qualitative group discussions by the author

However detail of in-depth research is provided in a later section of this chapter

Evaluation of Entry into Ice cream Business for Bangladesh Limited 43

63 Highlights of Purchase Habit of Ice cream

631 Common Habits across Target Groups

There are some common habits that were identified in earlier researches and group discussions

with consumers Common habits mean the consumer approach towards ice cream that is seen

across all target groups eg kids youth and adult purchasers These are outlined below

1048766 Ice cream is mainly seen as a dessert or a snack Impulse ice cream is seen as a quick snack

that is consumed when it is in sight Visibility plays a big role here Regarding family packs

people see it as a post-food dessert

1048766 Ice cream purchase is commonly a planned event When the contexts arise people generally

take a bit of time to decide whether or not to have ice cream or when they want to go to a

boutique they make due considerations regarding which boutique to visit

1048766 Ice cream purchase decision is taken based on favourite flavour People tend to try out new

variants and flavours when they first see it They compare the taste with earlier experience and

when they purchase later they choose the flavour they have liked most

1048766 For In-Home segment decision is mostly taken on the flavour Generally people come up with

different flavours of choice and most voted flavour is chosen

1048766 People become aware of new variants or flavours mainly through word-of-mouth

Advertisement (new launches special offers and festivals) in newspaper is another source of

awareness

1048766 People are currently indifferent towards the price level of premium flavours However some

feel that price of Choc-bar or water ice creams (lolly) is a bit much If less they would have

consumed more Some also feel that companies should come up with branded ice cream in the

price range of BDT 5-8

1048766 Ice cream is purchased from nearby shops If required brand and flavour is not available 2-3

shops will be visited and then available flavour will be selected even if the required one is not

found This is done mainly not to ruin the mood for ice cream

1048766 People are very open to try new brands and flavours especially if it comes from a credible

source They would try new flavours and if they are satisfied with the taste they would repeat

purchase

1048766 Regarding boutique visits people feel that boutiques need to have a proper environment

enough flavours and other snacks

1048766 While visiting boutique with family or companion they want variation in flavours so that

they would order different flavours and taste each otherrsquos ice cream It is seen as a sign of

togetherness

1048766 Frequency of ice cream purchase varies among people It depends on peer pressure collective

family decision summer heat and attitude towards ldquoice creamrdquo itself as a product Evaluation of

Entry into Ice cream Business for Bangladesh Limited 44

632 Habits of Kids

1048766 Kids choose ice cream flavours by the look of the product (generally pictures shown in POS

materials and carts) They love colour and designs of the products let it be a common format or a

boutique ice cream

1048766 Kids (when in house) would go with the housemaid to the nearby shop choose the flavour

they want (within range of the amount given to the maid) and buy it

1048766 When with parents they would take the product they like even if the price is lower than some

other product However mothers play a role in this decision They would want their children not

to choose too high priced a product or coloured products

633 Habits of Youth

1048766 Young people are the main consumer of impulse ice cream They also are one of the major

consumers in the boutique segment

1048766 Young people love to try out new products that come into the market Another side of the coin

is that they are not very loyal to a brand or a flavour and tend to switch a lot

1048766 Regarding boutique visits young people go to boutiques to have an ldquoice cream hang outrdquo with

peer groups They would stay there for a longer period of time while they have their ice cream

1048766 Some times young people make milk shakes and other ice cream based desserts

634 Habits of Mothers

1048766 Mothers worry about their childrenrsquos health and they prefer ldquovanillardquo type of brands

However when price constraint occurs they go for water ice creams for their children They try

to convince their kidrsquos purchase decision

1048766 Regarding family purchase motherrsquos decision is sometimes prioritized by the whole family

64 Barriers to Ice cream Consumption

641 Emotional Barriers

1048766 Overindulge (close to sinful)

1048766 Undisciplined (no control)

1048766 Childish (licking)

1048766 Artificial Image

642 Functional Barriers

1048766 People of SEC B feel that ice cream is an expensive dessert (If less expensive would consume

more often)

1048766 It leads to cold cough - especially in winter rainy season

1048766 It contains artificial additives preservatives

1048766 It is very high in calories that lead to fattening

Evaluation of Entry into Ice cream Business for Bangladesh Limited 45

1048766 It does not quench ldquothirstrdquo

1048766 Less convenient (portable immediate eat)

1048766 Messy Dripping

65 Research Findings

The highlights regarding purchase habits triggers and barriers of ice cream consumption provide

a glimpse into the consumer world of ice cream industry However UBL CMI conducted a

formal research exclusively on ice cream consumers to identify

1048766 Occasions of ice cream

1048766 Frequency of ice cream consumption

1048766 Expectations from ice cream occasions

1048766 Personalities that they desire from ice cream

651 Relevant Occasions in Daily Lives of Consumers

Research question regarding ldquousual occasions of life that occurred most frequently in day-to-day

lives of the respondentsrdquo generated the following replies

Occasion

of Respondents saying Yes

Watching TV

93

Normal Dinner At Home

91

Normal Lunch At Home

89

At Home While ReadingMusicSurfing

86

Informal Family Get Together

85

Out Of Home Hanging Out With Friends

84

Out Shopping

84

Mid-Afternoon Break At Home

83

At Home By Myself During The Day

82

Special Dinner At Home

82

Informal Dinner Out Of Home

82

Normal Lunch Out Of Home

82

Leisure Walk

79

Coming Home From WorkSchool

78

Special Dinner Out Of Home

78

Celebration

78

A Night In With Friends

77

At Home By Myself In The Evening

77

Special Lunch Out Of Home

76

Mid-Afternoon Break Out Of Home

75

Special Lunch At Home

73

Day out with Partner

72

Midmorning Break

70

At Breakfast

68

Family Day Out

68

During Work Or At School

65

Evaluation of Entry into Ice cream Business for Bangladesh Limited 46

Travelling ToFrom WorkSchool

65

At The Cinema

61

Special Event

56

Clubbing At A Party

50

Post GymSports

48

Table 28 Relevant Occasions in Consumersrsquo Lives

Respondents were then asked to mention ldquofrequency of occurrence of the identified occasionsrdquo

The identified replies are as follows Normal dinner at homenormal lunch at homeComing home

from workschoolTraveling tofrom workschoolDay out with Partner SpouseMid-afternoon

break at homeOut of home hanging out with friendsLeisure walkMid-afternoon break out of

homeA night in with friendsSpecial dinner at homeSpecial lunch out of homeFamily day

outSpecial eventPost gymsportsDaily2-3 Times A WeekWeekly2-3 Times A MonthOnce A

MonthEvery 2-3 MonthsLess OftenNever Figure 13 Frequency of Occurrence of Occasions

This shows that ldquoNormal dinner at home Watching TV Normal Lunch At Home At Home

While ReadingMusicSurfing Coming Home From WorkSchool During Work Or At School

Travelling ToFrom WorkSchool Midmorning Break Day Out With Partner Spouse At Home

By Myself During The Dayrdquo are the most frequent daily rituals of busy lives of consumers

652 Frequency of Ice cream Consumption

Respondents were asked to mention ldquoconsumption pattern of ice cream during the identified

occasionrdquo on a scale of 1-5 depicting frequencies like ldquo(5) always (4) most of the times (3)

about half of the times (2) sometimes (1) never do not knowrdquo The responses are depicted in

the following table

Evaluation of Entry into Ice cream Business for Bangladesh Limited 47

444474544655555566756665775967779991011101111101210111110101113111412131314161

011121411131216181519181518211817171719181718201721222130303434253437403741394

046383944464746453745414641374638504843414839373030292726232725222020201926202

21722221317Midmorning

breakWhile clubbing at aAt the cinemaSpecial eventNormal lunch out ofA night in with

friendsNormal dinner atInformal dinner out ofAt home by myselfAt home by myself inOut

shoppingSpecial lunch atDay out with SpouseWatching TVAlwaysmost of the timesAbout half

of the timesSometimesneverdo not know

Figure 14 Frequency of Ice cream Consumption

As it can be seen ldquoDay out with Spouse Special lunch at home Special dinner at home

Watching TV Family day out Celebrationrdquo are the occasions where most frequently ice cream is

consumed

653 Market Character Mapping Relevant Occasions vs Frequency of Consumption

If we plot frequency of consumption on the X-axis of a chart and relevance of occasion

occurrence on the Y-axis taking the above mentioned values as cut-off values we get four

quadrants in the chart depicting four market scenarios that any ice cream manufacturer in

Bangladesh market might encounter given the current market situation This market

segmentation is based on frequency of ice cream consumption in daily occasions of consumer

lives

The segments are

1048766 OPPORTUNITY MARKET High Relevant Occasions-Low Ice cream Frequency

1048766 QUESTION MARKET Less Relevant Occasions-Low Ice cream Frequency

1048766 HIGH FREQUENCY MARKET Relevant Occasions-High Ice cream Frequency

1048766 CAPTIVE MARKET Less Relevant Occasions-High Ice cream Frequency

The chart looks as follows Evaluation of Entry into Ice cream Business for Bangladesh Limited

48

Figure 15 Relevance of Occasion-Frequency of Consumption Mapping

As it can be seen from the above chart Bangladesh Market still lies in the Opportunity and

Question market zone with a pull towards High frequency and Captive Market zones This is

evident from market data as penetration of ice cream still remains at Thana headquarters levels

Also this explains the high market growth rate of 17 as market is yet under developed and

branded quality ice cream has yet not reached all levels of consumers especially rural level that

constitutes around 75 of Bangladeshi market

From the above analysis we can establish that target of ice cream manufacturers should be to

penetrate more into the Bangladeshi market to create higher frequency of ice cream

consumption The following chart shows the strategies to follow for ice cream manufacturers

Figure 16 Required Market Strategy for Bangladesh

Evaluation of Entry into Ice cream Business for Bangladesh Limited 49

As relevance of ice cream consumption occasions can hardly be controlled by marketers their

endeavour should be to create more ldquoemotional and functionalrdquo attachment to ice cream in less

frequent occasions through ldquomarket developmentrdquo strategy to earn share from overall food

expenditure of consumers and at the same time make them consume more ice cream in highly

relevant occasions through ldquopenetrationrdquo strategy

654 Consumersrsquo Emotional Requirements and Product Attributes

All consumers under these clusters also identify the emotional requirements and the significant

product attributes they seek from their current preferred and future desired ice creams These are

provided below

Cluster

Emotional Functional Requirement

Product Attributes

Enjoyment

Flavour Variety

1048766 Combination of different flavours

1048766 Combination of different textures

1048766 Very sweet

1048766 With wafer or biscuit

1048766 With chocolate

1048766 Of a well known brand

Socially Involved

Spoonable Rich

1048766 Very creamy

1048766 Only natural ingredients

1048766 No mess

Care

Size Creaminess

1048766 Big

1048766 Rich full taste

1048766 Smooth

1048766 Value for money

1048766 No mess

Unwind amp Escape

Economy

1048766 Crunchy

1048766 Economic

1048766 Of a well known brand

1048766 Nutritious

Balanced Convenience

Health Conscious

1048766 Of a well known brand

1048766 Nutritious

1048766 Milk based

1048766 Low sugar

1048766 Low carbohydrates

1048766 Filling

Active Self-Grooming

Fruit Vitamins

1048766 Healthy

1048766 Fruit based

1048766 Low fat

1048766 Liquid or drinkable

1048766 Nutritious

1048766 Of a well known brand

Confidence

Drinkable Light

1048766 Low calories

1048766 Light on the stomach

1048766 Chewy or gooey

1048766 Not so sweet

1048766 Natural appearance

Sensual

Appeal or image

1048766 No artificial additives

Evaluation of Entry into Ice cream Business for Bangladesh Limited 50

1048766 Natural appearance

1048766 Melting slowly

1048766 Attractive packaging

1048766 High quality ingredients

1048766 Of a well known brand

Table 29 Requirements amp Product Attributes Desired by Consumer Clusters

Of these findings we see that the identified highlighted barriers to ice cream consumption are

pretty evident among the consumers Mostly people want products of a reliable source or a well

known brand low calories quality ingredients value for money economic type

Evaluation of Entry into Ice cream Business for Bangladesh Limited 51

70 INDUSTRY ATTRACTIVENESS AND ENTRY PROSPECTS

71 Driving Forces of Growth

As identified in the earlier sections there are several driving forces behind the growth of ice-

cream industry in Bangladesh

712 Trade and Infrastructural Level

1048766 As a result of globalization newer varieties have been introduced to the local products Many

foreign companies are also coming as franchise so there has been increased competition and

these boutiques are setting higher standards for the local producers

1048766 The present market growth rate is 18-19 which is being influenced by larger players like

Igloo who are expanding their distribution nation wide with expansion of national electricity

grid

1048766 With entry of Modern Trade and recent organized business approach of retailers has made it

possible for ice cream manufacturers to penetrate into shops even without providing them with

branded freezers

1048766 Weather change has increased ldquosummerrdquo season in our country which has reduced negative

seasonal impact on ice cream

1048766 Large companies like Igloo have taken global learning of using carts as an effective tool of

availability and visibility for ice cream

1048766 New and improved technologies are being used in the production process This technological

advancement has improved quality increased speed of production and made the process more

cost effective

713 Consumer Level

1048766 Only a few years back rich people could afford the luxury of having ice-cream but now it has

become a common product for everybody Ice-cream companies are producing different products

with a wide price range for consumers of every class and status

1048766 Nowadays companies are doing promotional campaigns more frequently the customers get to

know about the product which makes it easier for them to buy the best one

1048766 The improved standard of life and more modernized lifestyle of people is an important reason

for the increased consumption thus growth of the ice-cream industry

Evaluation of Entry into Ice cream Business for Bangladesh Limited 52

72 Prospects of Entry

The ice-cream industry of Bangladesh is an attractive one for the investors because there is a

huge market but number of producers is very small The major reasons behind industry

attractiveness are as follows

1048766 The industryrsquos current growth potential is very high with opportunity for market development

1048766 The competition currently permits adequate profitability and the competitive forces are

becoming stronger with time

1048766 Boutique segment is at a very high growth stage but no operator is currently operating with a

mid price range of BDT 100-400 Ice cream kiosks and small scooping boutiques can operate

within that range

1048766 Current industry driving forces are favourable for the future industry profitability

1048766 Globally oriented consumers look for variety in ice cream that is currently not available

Latest innovations came in the market in 2002 People would welcome new variety and flavours

1048766 There is a gap in the market for balanced convenience through ice cream where consumers can

get nutritional benefits for ice cream Also emotional attachment to ice cream could further be

improvised in promotional campaigns

1048766 There is high scope for market penetration and development to increase frequency of ice

cream consumption

1048766 Level of risk or uncertainty is very low in ice-cream industry because the consumer market is

so huge any product with a standard quality and careful pricing will be able to make significant

profit

1048766 As for geographic reach of the industry 60 market is still in Dhaka There is scope of

expansion and a new entrant can easily capture market share within Dhaka using carts even if

they do not want nation wide cold chain distribution

1048766 The production process is very complex and capital requirements are also high So before

going into production any company should know about their capabilities and weaknesses and

then start the business or else they might suffer huge loss at a certain level

1048766 Unilever can acquire the required resource and use existing multi-national multi-cultural

expertise to enter the market in a grand way

1048766 With high probability of entry from DANONE with more products like the ISIS diabetic ice

cream Unilever should consider entering in this industry as soon as possible

Evaluation of Entry into Ice cream Business for Bangladesh Limited 53

80 ENTRY STRATEGY FOR UNILEVER

While describing the suggested entry strategy for UBL certain issues have been kept

confidential and some issues have been touched but not explained to keep consistency with UBL

confidentiality policy

81 Suggested Entry Areas for UBL

1048766 Boutique segment of the Bangladesh ice cream is only 5 of the branded market UBL needs

to pursue a larger scope to make the entry viable

1048766 UBL cannot fight with unbranded segment as global product quality mandate of Unilever does

not allow UBL to fight in low price-low quality segment

1048766 Recommend entry should be in the common format segment with both single and multiple

servings and in the boutique segment with a different brand name (if possible BEN amp JERRYrsquoS)

1048766 UBL should build up state-of-art modern factory for manufacturing and establish cold chain

facilities initially focusing on metro cities

1048766 Investment issues are required to be addressed for building factory and cold chain and capital

requirement needs to be identified for that purpose4

1048766 UBL may have boutiques for driving image selective top-end offering

1048766 Kiosks can be setup near universities and shopping malls

1048766 Boutiques should be concentrated in Dhaka and Chittagong

1048766 Ice cream for boutiques and kiosks would be produced in factory as institutional packs of 9-10

litres

82 Products

1048766 As a Brand Building country in global Unilever operating framework UBL is entitled only to

bring products developed by the Brand Development countries

1048766 Unilever should focus on serving products that have nutritional benefits (already available

globally) along with usual satisfactions of sensual pleasure functional attributes etc

1048766 Current existent players especially Igloo and Kwality have extensively copied global and

regionally available Unilever products eg Cornelli is same as Wallrsquos Cornetto Vinetta is similar

to Vienetta Mega is similar to Magnum etc UBL needs to differentiate these to consumers on

the ldquotaste the originalrdquo platform where global quality is focused regarding the products

1048766 UBL should also bring regionally famous brands like Moo or Max to create image

differentiation

1048766 Magnum or Moo should be used as premium end ice cream to generate more profit margin

Evaluation of Entry into Ice cream Business for Bangladesh Limited 54

83 Placement

1048766 Distribution focus should be in Dhaka for entry as Dhaka contributes more than 60 of total

ice cream sales in the country

1048766 Company may use carts as distribution method They serve as good source of visibility and

availability It would help in increasing impulse purchase

1048766 At least 1500 outlets in Dhaka and Chittagong needs to be actively served using dedicated

branded refrigerators to generate sales

1048766 50 carts should operate in Dhaka and Chittagong

84 Price

1048766 UBL products should be priced at par with Igloo pricing for the common format ice creams

1048766 UBL can bring in premium single-serve SKUS for the higher economic classes in the price

range of BDT 60-80

1048766 Smaller SKUs (small lolly stick) can be introduced in the price range of BDT 10-15

1048766 In the boutique segment UBL should price products above the semi-premium segment

(Gelateria Igloo Sub Zero or Andersenrsquos) but lower than that of Club Gelato or MoumlvenPick

85 Promotion

1048766 UBL would require strong marketing campaign (As high as 50 of sales) to have a grand

entry in the market

1048766 Presence in the television media would be of utmost importance More than 50 of

promotional expense should be made here initially Gradually it can be reduced

1048766 Newspaper would serve as the second most important option

1048766 Billboards should also be used

1048766 Activations (similar to Lux Channel i Super Star or Igloo Festival) should be done to generate

trial

86 Scope of Opportunity

Table 30 Value and Volume Based Scope of Opportunity for UBL

Value (BDT Cr)

Volume (Tons)

Market

131

7835

Common

121

7600

Boutique

98

235

Evaluation of Entry into Ice cream Business for Bangladesh Limited 55

861 Geographic Contribution

1048766 Dhaka (61)

1048766 Chittagong (19)

1048766 Sylhet (10)

862 UBL objectives

Common Format Ice Creams

1048766 Target 10 Market share in 1st year operation

1048766 Value BDT 11 Cr

1048766 Production capacity required 21 Tons day

1048766 Freezer Placement 1500 freezers

1048766 Cart operation At least 50 carts

Boutiques

1048766 Target Further develop the market

1048766 Focus Dhaka Chittagong and Sylhet Metro

1048766 Franchise At least 20 franchisee operations nation wide in divisional towns

1048766 Pricing Below imported parlours above common formats with around BDT 400 per Litre

87 Critical Success Factors

1048766 UBL is considered as a high profile company in Bangladesh and thus they cannot operate in

the market only with common products like choc-bars and cups They must have premium

products (these require extrusion line) also to carry their brand image Otherwise UBL would not

be able to charge usual premium over competition products

1048766 Launch of ice cream would require huge promotional and activation support in order to gain

customers from Igloo People want novelty regarding ice cream and UBL have to let them know

about their products and create hype

1048766 Cart should be used as a source of distribution Recent successes of Unilever companies like

Indonesia shows that carts can generate more sales and can be used as source of visibility in the

minds of both retail traders and consumers Carts can also provide incremental sales to the

company

1048766 UBL have to create a strong cold chain for ice cream (initially in Dhaka and Chittagong) to

ensure quality products for consumers

1048766 UBL have to build capacity very rapidly to meet consumer demand if the launch is successful

Evaluation of Entry into Ice cream Business for Bangladesh Limited 56

90 BUSINESS PROJECTION

91 Basic Assumptions

Business projection for ice cream business was made based on a conservative approach UBL

would require spending significantly on production capacity and factory dedicated to ice cream

Thus to analyse business possibilities of ice cream certain assumptions were made and collected

data were used These are

1048766 Production equipments and cabinets would cost approximately BDT 55 crores

1048766 Production equipments 45

1048766 Packaging Equipments 15

1048766 Storage Facility 20

1048766 Branded Freezers 10

1048766 Distribution Investment 10 (Distributors would also invest themselves)

1048766 Ice cream factory with a floor size of 20000 sqft would cost BDT 25 crores

1048766 Objective is to capture 10 market share in Dhaka and Chittagong in the first year

1048766 Business would grow by 50 in year 2 and 3 30 in year 4 and 25 in year 5

1048766 Weighted price per litre is BDT 170 according to volume share of single serve ice cream

multiple serve ice cream and boutique ice cream

1048766 Other financial assumptions were also made List of them are provided below but amount has

been removed for confidentiality issues

Assumptions

Trade Margin

Distributors Margin

DutyVAT Rate

Trade Terms Expense of NPS

Trade Terms Expense of NSV

Advertising ampPromotion of NPS

Indirects (Salaries Wages etc)

Trading Tax

Table 31 Assumptions for Business Projection

Evaluation of Entry into Ice cream Business for Bangladesh Limited 57

100 CONCLUSION

Ice cream has good prospect in Bangladesh It is still a growing market with opportunities for big

new entrants With the barriers of entry UBL needs to consider its priorities UBL being an HPC

company traditionally needs to acquire expertise in cold chain distribution and has to invest a lot

of money to rip the benefits of the industry However to initiate company can take regional

support and acquire resource expertise The company should enter the business as soon as

possible since there is potential threat from DANONE to introduce more ice creams after ISIS

diabetic ice cream and also with potential of the industry arch rival Nestlersquo might consider

entering into the industry too

Evaluation of Entry into Ice cream Business for Bangladesh Limited 58

References

Web References

1 wwwunilevercom

2 wwwunilevercombd

3 wwwhllcom

4 wwwunilevercompk

5 wwwthedailystarcom - Life Style Magazine

6 wwwreuterscouk

Evaluation of Entry into Ice cream Business for Bangladesh Limited 59

Page 28: Square Ice cream

manufacturing process from procurement of material mixing material flow ice cream making

packaging storing (at main warehouse) distributing and market shelving by the Quality Control

Department Current supply chain for various materials of Igloo is as follows Australia (Milk

Powder) Denmark (Ingredients emulsifiers amp stabilizers) China amp UAE (Food grade sticks)

China Denmark Singapore amp Thailand (Food grade packing materials)

Figure 9 Igloo Supply Chain

Distribution Network Their distribution network is stretched all over the country with a long

fleet of refrigerated vans Firstly the ice cream products are stored at the central warehouse of

the factory and from there they are distributed through the haulage vehicle to the operational

centres located in Dhaka Chittagong Comilla Rajshahi Barisal Bogra Rangpur and Khulna

Strictest cold chain maintenance during the distribution and selling of the ice creams is ensured

Their distribution process is as follows Manufacture Stored at -24c Transported by Refrigerated

trucks at -Reaches amp Preserved in Eight regional stores Refrigerated vehicles (Distributors)Retail

outlets (Deep freezers)

Figure 10 Distribution Process of Igloo

Evaluation of Entry into Ice cream Business for Bangladesh Limited 31

Trolley Operation Igloo also operates through trolleys for extending its reach to consumers at

the furthest points The trolleys are operated near schools alleys streets parks etc and play

rhythmic music to attract the consumers These are very colourfully decorated with Igloo

umbrella and the puller wears specific uniforms Igloo was the first in introducing and operating

these trolleys in Bangladesh for any Fast Moving Consumer Goods (FMCG) Igloo has around

125 trolleys operating throughout the country Individual trolleys are provided with a regular

supply of igloo ice creams

Marketing The marketing commitment of Igloo is based on the relationship with its customers

and consumer by not only manufacturing the highest quality product but also delivering the

product by maintaining this quality To satisfy the ever-changing needs of the customer Igloo

has regularly launched new ice creams and introduced new flavours And this commitment has

positioned Igloo as the market-leading brand by gaining the consumers trust with the positioning

as ldquoA WORLD OF GREAT TASTErdquo

Facilities and Logistics at a glance As of 2009 following are the facilities and logistics enjoyed

by the company

Factory location

Dhaka

Production Lines

4

Packages

Stick Cup Family pack Others (Nuggets and sandwich)

Machine suppliers

1048766 Mark-Italy

1048766 Tetra Pak(Hoyer)-Denmark

1048766 Sabore Denmark

1048766 Hass- Austria

Machine models

1048766 Freemark 1100 Italy

1048766 FM 3000 FM 6000 Italy

1048766 SL600 Denmark

Cone baking

Hass- Austria

Chocolate making

Macentyre-UK

Coverage

Nationwide

Operational centre

10

Total market vehicles

30

Distribution channel

Directthrough appointed distributors

Outlet service

7500

Injected deep freezers

4000

Trolley operations

125

Warehouse no

8

Table 20 Igloo Facilities and Logistics

Kwality

Kwality is currently the second largest ice cream manufacturer of the country The mother

company for the Kwality brand is Sanowara Drinks amp Beverages Ltd a sister concern of

Sanowara Group The company is famous for powdered milk brands Red Cow and Diploma in

Bangladesh The drinks and beverage concern of Sanowara made an entry into the market in

1997 with ldquoYesrdquo brand drinking water and launched the ice cream brand in 1999 With heavy

communication and novelty products it Evaluation of Entry into Ice cream Business for

Bangladesh Limited 32

successfully removed Polar from the second place with a current market share of 27 The

company also operates in the boutique segment with two parlours in Dhaka and Chittagong

Kwality ice cream factory is situated in Chittagong with a floor space of 35000 sft and fully

automated machinery wrapping mix machinery equipments from Italy having capacity of

around 20000 litres of ice cream per shift The ice cream factory employs 140 people The

company is ISO 9001-2000 certified

Kwality was the first true competitor for Igloo products with some major innovation in product

design and communication but their quality is perceived to be lower in the minds of the

consumers and they do not have extrusion ice cream The product prices are also similar to that

of Igloo but they charge a bit lower than Igloo in premium multiple servings However during

market visits it was seen that shops that keep only Kwality or Igloo and Kwality both they can

sell Kwality too although the sales amount is lower than that of Igloo People who look for Igloo

shopkeepers give them that directly but if they get a chance and Kwality ice cream stock is high

they also push Kwality to dry the stock out This gives an indication that market is larger than

what the current players are capable of serving even in Dhaka

Kwality follows a similar distribution model like Igloo but distribution frequency is lower and

amount of cart sellers is limited to 25 and they operate only in Dhaka

Polar

Once a giant in the industry Dhaka Ice Cream Industries Ltd introduced the first hygienically

packed ice cream in Bangladesh in 1987 and the brand name Polar was thus born In the early

days the company started ice cream business with a wide range of products and a variety of

flavours in Dhaka city In 1988 the company started its distribution in the city of Chittagong

then Bogra and continued to cover more cities Presently Polar ice cream is available

throughout Bangladesh The company today trails in the market with 15 market share in the

common format segment Recently Polar has announced launch of ISIS diabetic ice cream with

support from DANONE to turn around in the market

The company has its head office as well as a modern large-scale industrial plant in Dhaka Polar

ice cream is made with Danish expertise using Danish equipment and technology The

production activities and quality control measures are supervised and managed by Danish

experts Polar offers a wide range of delicious flavours and tastes made by ingredients imported

from Europe

Dhaka Ice Cream at present has 3 cold stores in Dhaka Chittagong and Bogra in Bangladesh

From Dhaka cold store they distribute ice creams in Mymensingh Tangail Jamalpur Sherpur

Kishoreganj Netrakona Comilla Narsingdi Barisal Madaripur Agaeljhara Faridpur Magura

Chuadanga Jessore Satkhira Khulna Pirojpur and Sylhet through their distributors In case of

long distance delivery points the company uses auto cooling freezer van

Evaluation of Entry into Ice cream Business for Bangladesh Limited 33

In Dhaka city they distribute ice creams directly to retail stores in freezer vans Besides that

they have several distributors at different points of the city Distributors cover their individual

areas where company is not able to supply directly in their freezer vans Similar model is

followed by the company to distribute ice cream from their other cold storages through out the

country For storing and selling ice creams in retail stores the company like the other players

arranges a deep freezer with the Polar logo and canopy light box

In addition to this distribution the company also undertakes home delivery of ice creams for

special occasions

Savoy

Savoy Ice-cream brand is owned by Sena Kalyan Sangstha (SKS) Group of industries It started

its journey in March 1995 with a factory in Tejgaon Dhaka Yearly turnover is estimated at BDT

388 crores with a market share of roughly 35

The factory has been established with Sonali Bank finance at 6040 equity ratio The total

production capacity of the factory has been estimated at 2400 litres of Ice-cream per day Total

land area of the factory premise is 116 Bigha with 8000 sft area covered with a total project cost

of BDT 144 The factory employs 73 people

Product ranges of the company include all the basic designs and flavours of the industry

However the company has not been much of an innovator in the industry Their product quality

is substantially low than that of other players and they price their products at 10-15 lower than

the other competitors The company imports raw materials mainly from Europe The general raw

materials are Euro cream Skimmed Milk Powder Cocoa Powder and Flavour (Vanilla Mango

and Strawberry) Colour (Yellow Red Chocolate and Green) Ripple Sauce Cheney Fruit Palm

Kernel Oil Anhydrous Butter Oil (Ghee) and Sugar etc

Milk Vita

Milk Vita is one of the most famous brand names in Bangladesh for its liquid dairy milk Owned

by Bangladesh Milk Producersrsquo Co-operative Union Limited (BMPCUL) the company came in

the market with proper dairy milk ice cream in form of cups and choc-bar With a production

capacity of around 1600 litres per day the company is trailing in the market place with 3

market share

Although the Milk Vita Choc-bar was perceived to be extremely tasty by consumers they

probably could not do well due price competition Currently they do not even distribute ice

cream in Dhaka However their presence is seen in outskirts of Dhaka and other nearby towns

If the current market situation prevails Milk Vita would lose their remaining market share and

other companies would benefit especially Igloo However one of the advantages of Milk Vita

remains to be

Evaluation of Entry into Ice cream Business for Bangladesh Limited 34

their nation wide milk supply network They have skimmed milk powder production plant that

Igloo does not have Thus they can combat the seasonality of milk supply that Igloo with its

huge requirement of milk cannot

Strengths and Weaknesses of Competitors

Company

Strengths

Weaknesses

Igloo

1048766 Strong brand image

1048766 High product quality

1048766 Highest no of variety

1048766 Strong distribution network

1048766 Highest visibility

1048766 Strong promotion

1048766 High production capacity

1048766 Presence of extrusion ice cream

1048766 Items are generally a bit pricy

1048766 Igloo does not give free freezers like other companies

1048766 Reluctant in recent times regarding innovation

1048766 Local sourcing of liquid milk does not meet demand

1048766 Failure to use ERP technology slowing decision making

Kwality

1048766 Product variety

1048766 Strong promotion

1048766 Free freezer distributed

1048766 Presence in all price segments

1048766 High production capacity

1048766 Weak distribution

1048766 Lower exposure

1048766 low amount of carts in operation

Polar

1048766 Free freezer

1048766 Quality perceived to be high compared to Kwality

1048766 Discoloured freezers

1048766 Lower exposure

1048766 Low product variety

1048766 Unused capacity

Savoy

1048766 Price is lower

1048766 Discoloured freezers

1048766 Low product variety

1048766 Weak distribution

1048766 Small amount of freezers

1048766 Low production capacity

Milk Vita

1048766 Quality is good due to dairy cream

1048766 Brand leverage from Milk Vita milk

1048766 Low exposure

1048766 Low variety

Table 21 Strengths and Weaknesses of Competition

512 Market Characteristics of the Boutique Segment

With a small market of BDT 98 Cr and 567 share in the branded ice cream market the

boutique segment is currently an increasing segment in the ice cream industry Boutique

segmentrsquos history dates back to 1960s when Igloo launched boutiques in Dhaka to save

distribution cost and promote a culture of ldquoice cream eating outrdquo In later years boutiques lost

their glamour and retail common format segment picked up growth However with Dolce Vita in

the late lsquo80s craze for Italian Artisan ice cream was recreated in the market Although Dolce

Vita is failing in recent times emergence of MoumlvenPick and Club Gelato in 2000 has uplifted the

segment once again Current growth rate of the

Evaluation of Entry into Ice cream Business for Bangladesh Limited 35

segment can be estimated to be approx 20-22 (higher than the common format segment)

Following are the basic detail of all the major players in the segment with their estimated sales3

Players

Outlet

Sales (Cr Taka)

Share

Club Gelato

1

136

199

MoumlvenPick

1

119

174

Andersenrsquos

3

119

174

Gelateria Igloo

3

119

174

Sub Zero (Kwality)

2

051

75

Baskin Robbins

1

015

22

Dolce Vita

1

017

25

American Soft

1

009

12

Rainbow

1

009

12

Others (off site)

089

130

Total Market

682

Table 22 Players and Shares in Boutique Segment

A Detail of Operation

General operational procedure followed by all the operators is as follows

1048766 Operating method There is a variation in operational method among the large operators

1048766 Club Gelato uses kitchen at own premise where imported ingredients and local milk (daily

special service from Milk Vita) are used to make ice cream

1048766 MoumlvenPick directly imports ice cream from Switzerland

1048766 Andersenrsquos Gelateria Igloo and Sub Zero produce ice cream at their factory with a mix of

imported and local ingredients

1048766 Products Around 30-35 flavours of artisan dairy ice cream are served at the premises

1048766 Most sold flavours are Vanilla Ferrero Rocher Butterscotch Chocolate Caramel etc

1048766 Other Products Larger players also serve ice cream desserts (milk shakes ice cappuccino etc)

pastries and other desserts with normal coffee and tea facility at their premises

1048766 Boutiques fight ice cream seasonality with the other products sales during off-peak ice cream

seasons Usually ice cream and other products contribute at 6040 ratio in summer and during

winter and off-peak seasons the ratio reverses

1048766 Pricing Usually the prices of products in this segment are 3-4 times higher than that of the

common format segment

1048766 Prices do not vary with flavours Variation depends on serve style (Cone tub) and use of

toppings and other ingredients (Chocolate sauce nut fruits) etc

1048766 Usual margin charged is around 50-60 over production cost Similar margin is charged for

other products like coffee ice cappuccino etc

3 Yearly sales is estimated based on companyrsquos approximate daily sales collected during

interview

Evaluation of Entry into Ice cream Business for Bangladesh Limited 36

1048766 Target Group Most of the consumers belong to SEC A and higher SEC A with DMFI of at

least BDT 20000

1048766 Foreign delegates and resident foreigners also visit these boutiques

1048766 Main purposes of visits in the boutiques are

bull Youth hangout with friends and having ice cream and ice cream derivatives

bull Family Family night out or eat out at a restaurant and then having dessert

bull Foreigners Having dessert after dinner

1048766 Rush time at boutiques are Afternoon 2-4 pm and at night 9-11 pm

1048766 Offsite sales Most of the large operators also sell offsite They have small freezers for off-site

1048766 Club Gelato and MoumlvenPick serves ice cream at high society parties and programmes

1048766 MoumlvenPick also has kiosks in known hotels like Sheraton

1048766 Promotion No mass promotion is done by any of the companies Word of mouth is the most

important source of promotion Posters and banners outside the premise and occasional

newspaper advertisements are used to communicate special offers

1048766 Growth Drivers Market growth is driven by image innovation quality decoration of facility

environment and special offers

1048766 Club Gelato has the image of selling true Italian dairy ice cream with an excellent hangout

environment

1048766 MoumlvenPick imports ice cream directly from Switzerland and is perceived to be of high quality

1048766 Andersenrsquos operates with the image of ice cream from Denmark

1048766 Gelateria Igloo (from Igloo) and Sub Zero (from Kwality) could not establish the premium

artisan ice cream image

B Players in the Boutique Segment

There are very few players who have significant impact in the boutique segment Detailed

information of all the major boutique segment players is provided below

Evaluation of Entry into Ice cream Business for Bangladesh Limited 37

Club Gelato

Basic Company Information

1048766 Location Banani Road 11 (Planning for a second one in Dhanmondi)

1048766 Established in 2001

1048766 Seating Capacity 48

1048766 Area 1250 sft (including kitchen)

1048766 Owner Mr Jahangir Alam (Bangladesh)

1048766 Business Type Joint business partnership with Singapore

1048766 Staff 15 people (6 in the kitchen)

1048766 Production capacity 150 litres per day

Product Related Information

1048766 Product Italian style parlour scoop ice cream fruit juice coffee and pastries

1048766 Flavours Around 32 flavours available

1048766 Most selling Ferraro Rocher Vanilla Pistachio

1048766 Innovations New variants and ingredients are communicated by their Italian supplier and

Club Gelato decides what to take from them

1048766 Serve type Cup Cone Glasses Box for take away

Consumer Profile

1048766 Primary Teenagers and Young Adults (18-30) amp Diplomats

1048766 Secondary Family consumers for eat out

1048766 Income Group High income customers tentatively from SEC A and higher SEC A

1048766 Geographic Area Diversified

1048766 Rush time 8-10 pm

Sales and Price Information

1048766 Sales BDT 50000 (60 Ice cream 40 other desserts) daily in summer In winter however

other products sell more and thus they keep total sales at the same level

1048766 Price 750 per litre for any flavour

1048766 Sales Volume 50-60 litres per day

Supply Chain Placement Information

1048766 Milk Local sourcing from Milk Vita (4050 litres per day)

1048766 Chocolates amp Flavours Belgium France Germany

1048766 Transportation Mainly air (They can afford it due to high margin)

1048766 Contribution of various materials Flavours (30) Milk (20) other parts are water and air

Promotional Materials

1048766 Materials used are near premises POS materials for promoting the parlour only

Table 23 Detail of Club Gelato

Evaluation of Entry into Ice cream Business for Bangladesh Limited 38

MoumlvenPick of Switzerland

Basic Company Information

1048766 Location Gulshan

1048766 Established in 2000

1048766 Seating Capacity 55

1048766 Owner Mr Arif Mahmud

1048766 Business Type Franchise of International MoumlvenPick

1048766 Storage Capacity in Shop 150 litres

Product Related Information

1048766 Product Imported MoumlvenPick ice creams coffee chicken sandwich and Frappe

1048766 Flavours Around 30 to 35 flavours available

1048766 Most selling Swiss Chocolate caramel Vanilla Dream Espresso Strawberry

1048766 Innovations New variants are communicated by their franchiser and they decide on flavours

that they want

1048766 Serve type Cup Cone Glasses Box for take away

Consumer Profile

1048766 Primary Teenagers and Young Adults (18-30) (70) amp Diplomats

1048766 Secondary Family consumers for eat out

1048766 Income Group High income customers tentatively from SEC A

1048766 Geographic Area Concentrated in Gulshan and nearby areas

1048766 Rush time Afternoon- Young Adult 10 to 11 pm Foreigners

1048766 the company also serves at parties and has freezers in known hotels where their ice creams

are served

Sales and Price Information

1048766 Sales BDT 35-40000 daily in summer

1048766 Price 640 per litre for any flavour

1048766 Sales Volume 55-60 litres per day

Supply Chain Placement Information

1048766 Transportation Imported finished goods by ship

1048766 Ship travel time 19 days

1048766 Port clearance 10 days

1048766 Safety Cushion Extra 10 days

Promotional Materials

1048766 Materials used are near premises POS materials for promoting the parlour only

Table 24 Detail of MoumlvenPick of Switzerland

Evaluation of Entry into Ice cream Business for Bangladesh Limited 39

Andersenrsquos of Denmark

Basic Company Information

1048766 Location Gulshan (2 others in Uttara Dhanmondi)

1048766 Established in 2001

1048766 Seating Capacity 48

1048766 Owner United Group

1048766 Business Type Franchise of Australian company Andersenrsquos of Denmark

1048766 Production Tongi Factory of United Group

1048766 Production capacity 2000 litres per day in factory

1048766 Storage Capacity in Shop 150 litres

Product Related Information

1048766 Product Danish parlour scoop ice cream and coffee

1048766 Flavours Around 30 to 35 flavours available

1048766 Most selling Strawberry Butter Scotch Green

1048766 Innovations New variants and ingredients are communicated by their franchiser and they

decide on flavours that they want

1048766 Serve type Cup Cone Glasses Box for take away

Consumer Profile

1048766 Primary Teenagers and Young Adults (18-30) (70) amp Diplomats

1048766 Secondary Family consumers for eat out

1048766 Income Group High income customers tentatively from SEC A

1048766 Geographic Area Concentrated in Gulshan and nearby areas

1048766 Rush time 8 to 10 pm

Sales and Price Information

1048766 Sales BDT 10-12000 daily in summer

1048766 Price 460 per litre for any flavour

1048766 Sales Volume 40-50 litres per day

Supply Chain Placement Information

1048766 Milk 2025 kg packs are imported

1048766 Chocolates amp Flavours Imported

1048766 Butte paper Local sourcing

1048766 Transportation Ship

Promotional Materials

1048766 Materials used are near premises POS materials for promoting the parlour only

Table 25 Detail of Andersenrsquos of Denmark

Evaluation of Entry into Ice cream Business for Bangladesh Limited 40

Gelateria Igloo

Basic Company Information

1048766 Location Banani Kemal Ataturk Avenue (Two others in GEC Mor Chittagong and Naya

Paltan)

1048766 Established in 2000

1048766 Seating Capacity 20

1048766 Production From Igloo factory in Shyampur Narayanganj

Product Related Information

1048766 Product Parlour scoop ice cream and coffee only

1048766 Flavours Around 30 flavours available

1048766 Most selling Vanilla Strawberry Chocolate Pistachio Butter Scotch Tutti Fruity

1048766 Serve type Cup Cone Glasses Box for take away

Consumer Profile

1048766 Primary Teenagers and Young Adults (18-30)

1048766 Secondary Family consumers for eat out

1048766 Income Group High income customers tentatively from SEC A and B

1048766 Geographic Area Diversified

1048766 Rush Time afternoon and evening

Sales and Price Information

1048766 Sales BDT 8000 to 10000 daily in summer Nearly one fourth in winter

1048766 Price Varies but 350 per litre of vanilla

Promotional Materials

1048766 POS materials at the premises

Table 26 Detail of Gelateria Igloo

52 Price Comparison of Common and Boutique Segments

Price ranges of both common format and boutique segment cannot exactly be pin pointed as

products do not follow common structure and variations occur with use of toppings mixing of

flavours and use of coatings However a price comparison has been made among the brands

based on their price of per litre of vanilla flavoured ice cream in the market It appears to be as

following

Company

Price Litre Vanilla

Club Gelato

750

MoumlvenPick

640

Andersenrsquos

460

Dolce Vita

440

Igloo

100

Kwality

100

Polar

100

Milk-Vita

90

Savoy

85

Table 27 Comparative Price Analysis

As it can be seen there is price gap within the range of BDT 100-400 Ice cream kiosks and

small scooping boutiques can operate within that range

Evaluation of Entry into Ice cream Business for Bangladesh Limited 41

60 CONSUMER ANALYSIS

61 Target Group of Ice cream

Who are the consumers of ice cream This question does not have a clear answer Ice cream is a

food for all It is the only food consumed by a human being at less than 0 degree centigrade

temperature and people of all ages feel indulged to have it However we can determine focus

target groups for both branded common format and artisan boutique ice cream Group

discussions and market visits were done to get insight into the consumers along side resources

form secondary sources Age based target group is common for both segments but variation

among the groups occur mainly based on SEC and DMFI classification

611 Geographic Group

Branded ice cream remains an urban product till date Geographically branded ice cream has

reached urban and semi urban areas up to Thana Head Quarter levels Ice cream has reached

areas where electricity is available Small artisan players are available in places where large

branded players have no distribution

612 Target Age Group

Age wise grouping of target consumers is as follows

1048766 Urban kids in the age group of 5-14

1048766 They mainly consume normal sticks cups cones innovative fillers and water ice creams

1048766 Urban youth in the age group of 15-24

1048766 They consume premium and extrusion sticks and cones

1048766 Urban mothers in the age group of 25-35

1048766 They determine the family purchases Even when the father purchases ice cream decision is

taken by them

Consumption pattern of various age groups are depicted in the following chart Ice cream

consumption pattern50203005 to 14 yrs15 to 24 yrs25 to 35 yrs

Figure 11 Target Group wise Consumption Pattern Evaluation of Entry into Ice cream Business

for Bangladesh Limited 42

613 Target SEC and DMFI Group

Common Format

SEC A and B is the target group for common format ice cream However with rapid increase in

price level over the years has made it a ldquohard to consumerdquo product for SEC B consumers who

belong to lower DMFI group

Boutique Format

Boutique formatrsquos higher margin and high price range makes it an exclusively SEC A ice cream

People belonging to upper and upper middle class have access to the mediocre boutiques and

only higher upper class can have premium ice creams like Club Gelato and MoumlvenPick

Another unique target group for boutique format are the foreigners who live in Bangladesh

These people tend to visit the parlours to have ice cream as dessert especially after dinner

62 Ice cream in Consumer Lifestyle

Figure 12 Ice cream in Consumer Life style

This simple overview of ice cream in consumer lifestyle was determined based on in-depth

research analysis of UBL and validated through qualitative group discussions by the author

However detail of in-depth research is provided in a later section of this chapter

Evaluation of Entry into Ice cream Business for Bangladesh Limited 43

63 Highlights of Purchase Habit of Ice cream

631 Common Habits across Target Groups

There are some common habits that were identified in earlier researches and group discussions

with consumers Common habits mean the consumer approach towards ice cream that is seen

across all target groups eg kids youth and adult purchasers These are outlined below

1048766 Ice cream is mainly seen as a dessert or a snack Impulse ice cream is seen as a quick snack

that is consumed when it is in sight Visibility plays a big role here Regarding family packs

people see it as a post-food dessert

1048766 Ice cream purchase is commonly a planned event When the contexts arise people generally

take a bit of time to decide whether or not to have ice cream or when they want to go to a

boutique they make due considerations regarding which boutique to visit

1048766 Ice cream purchase decision is taken based on favourite flavour People tend to try out new

variants and flavours when they first see it They compare the taste with earlier experience and

when they purchase later they choose the flavour they have liked most

1048766 For In-Home segment decision is mostly taken on the flavour Generally people come up with

different flavours of choice and most voted flavour is chosen

1048766 People become aware of new variants or flavours mainly through word-of-mouth

Advertisement (new launches special offers and festivals) in newspaper is another source of

awareness

1048766 People are currently indifferent towards the price level of premium flavours However some

feel that price of Choc-bar or water ice creams (lolly) is a bit much If less they would have

consumed more Some also feel that companies should come up with branded ice cream in the

price range of BDT 5-8

1048766 Ice cream is purchased from nearby shops If required brand and flavour is not available 2-3

shops will be visited and then available flavour will be selected even if the required one is not

found This is done mainly not to ruin the mood for ice cream

1048766 People are very open to try new brands and flavours especially if it comes from a credible

source They would try new flavours and if they are satisfied with the taste they would repeat

purchase

1048766 Regarding boutique visits people feel that boutiques need to have a proper environment

enough flavours and other snacks

1048766 While visiting boutique with family or companion they want variation in flavours so that

they would order different flavours and taste each otherrsquos ice cream It is seen as a sign of

togetherness

1048766 Frequency of ice cream purchase varies among people It depends on peer pressure collective

family decision summer heat and attitude towards ldquoice creamrdquo itself as a product Evaluation of

Entry into Ice cream Business for Bangladesh Limited 44

632 Habits of Kids

1048766 Kids choose ice cream flavours by the look of the product (generally pictures shown in POS

materials and carts) They love colour and designs of the products let it be a common format or a

boutique ice cream

1048766 Kids (when in house) would go with the housemaid to the nearby shop choose the flavour

they want (within range of the amount given to the maid) and buy it

1048766 When with parents they would take the product they like even if the price is lower than some

other product However mothers play a role in this decision They would want their children not

to choose too high priced a product or coloured products

633 Habits of Youth

1048766 Young people are the main consumer of impulse ice cream They also are one of the major

consumers in the boutique segment

1048766 Young people love to try out new products that come into the market Another side of the coin

is that they are not very loyal to a brand or a flavour and tend to switch a lot

1048766 Regarding boutique visits young people go to boutiques to have an ldquoice cream hang outrdquo with

peer groups They would stay there for a longer period of time while they have their ice cream

1048766 Some times young people make milk shakes and other ice cream based desserts

634 Habits of Mothers

1048766 Mothers worry about their childrenrsquos health and they prefer ldquovanillardquo type of brands

However when price constraint occurs they go for water ice creams for their children They try

to convince their kidrsquos purchase decision

1048766 Regarding family purchase motherrsquos decision is sometimes prioritized by the whole family

64 Barriers to Ice cream Consumption

641 Emotional Barriers

1048766 Overindulge (close to sinful)

1048766 Undisciplined (no control)

1048766 Childish (licking)

1048766 Artificial Image

642 Functional Barriers

1048766 People of SEC B feel that ice cream is an expensive dessert (If less expensive would consume

more often)

1048766 It leads to cold cough - especially in winter rainy season

1048766 It contains artificial additives preservatives

1048766 It is very high in calories that lead to fattening

Evaluation of Entry into Ice cream Business for Bangladesh Limited 45

1048766 It does not quench ldquothirstrdquo

1048766 Less convenient (portable immediate eat)

1048766 Messy Dripping

65 Research Findings

The highlights regarding purchase habits triggers and barriers of ice cream consumption provide

a glimpse into the consumer world of ice cream industry However UBL CMI conducted a

formal research exclusively on ice cream consumers to identify

1048766 Occasions of ice cream

1048766 Frequency of ice cream consumption

1048766 Expectations from ice cream occasions

1048766 Personalities that they desire from ice cream

651 Relevant Occasions in Daily Lives of Consumers

Research question regarding ldquousual occasions of life that occurred most frequently in day-to-day

lives of the respondentsrdquo generated the following replies

Occasion

of Respondents saying Yes

Watching TV

93

Normal Dinner At Home

91

Normal Lunch At Home

89

At Home While ReadingMusicSurfing

86

Informal Family Get Together

85

Out Of Home Hanging Out With Friends

84

Out Shopping

84

Mid-Afternoon Break At Home

83

At Home By Myself During The Day

82

Special Dinner At Home

82

Informal Dinner Out Of Home

82

Normal Lunch Out Of Home

82

Leisure Walk

79

Coming Home From WorkSchool

78

Special Dinner Out Of Home

78

Celebration

78

A Night In With Friends

77

At Home By Myself In The Evening

77

Special Lunch Out Of Home

76

Mid-Afternoon Break Out Of Home

75

Special Lunch At Home

73

Day out with Partner

72

Midmorning Break

70

At Breakfast

68

Family Day Out

68

During Work Or At School

65

Evaluation of Entry into Ice cream Business for Bangladesh Limited 46

Travelling ToFrom WorkSchool

65

At The Cinema

61

Special Event

56

Clubbing At A Party

50

Post GymSports

48

Table 28 Relevant Occasions in Consumersrsquo Lives

Respondents were then asked to mention ldquofrequency of occurrence of the identified occasionsrdquo

The identified replies are as follows Normal dinner at homenormal lunch at homeComing home

from workschoolTraveling tofrom workschoolDay out with Partner SpouseMid-afternoon

break at homeOut of home hanging out with friendsLeisure walkMid-afternoon break out of

homeA night in with friendsSpecial dinner at homeSpecial lunch out of homeFamily day

outSpecial eventPost gymsportsDaily2-3 Times A WeekWeekly2-3 Times A MonthOnce A

MonthEvery 2-3 MonthsLess OftenNever Figure 13 Frequency of Occurrence of Occasions

This shows that ldquoNormal dinner at home Watching TV Normal Lunch At Home At Home

While ReadingMusicSurfing Coming Home From WorkSchool During Work Or At School

Travelling ToFrom WorkSchool Midmorning Break Day Out With Partner Spouse At Home

By Myself During The Dayrdquo are the most frequent daily rituals of busy lives of consumers

652 Frequency of Ice cream Consumption

Respondents were asked to mention ldquoconsumption pattern of ice cream during the identified

occasionrdquo on a scale of 1-5 depicting frequencies like ldquo(5) always (4) most of the times (3)

about half of the times (2) sometimes (1) never do not knowrdquo The responses are depicted in

the following table

Evaluation of Entry into Ice cream Business for Bangladesh Limited 47

444474544655555566756665775967779991011101111101210111110101113111412131314161

011121411131216181519181518211817171719181718201721222130303434253437403741394

046383944464746453745414641374638504843414839373030292726232725222020201926202

21722221317Midmorning

breakWhile clubbing at aAt the cinemaSpecial eventNormal lunch out ofA night in with

friendsNormal dinner atInformal dinner out ofAt home by myselfAt home by myself inOut

shoppingSpecial lunch atDay out with SpouseWatching TVAlwaysmost of the timesAbout half

of the timesSometimesneverdo not know

Figure 14 Frequency of Ice cream Consumption

As it can be seen ldquoDay out with Spouse Special lunch at home Special dinner at home

Watching TV Family day out Celebrationrdquo are the occasions where most frequently ice cream is

consumed

653 Market Character Mapping Relevant Occasions vs Frequency of Consumption

If we plot frequency of consumption on the X-axis of a chart and relevance of occasion

occurrence on the Y-axis taking the above mentioned values as cut-off values we get four

quadrants in the chart depicting four market scenarios that any ice cream manufacturer in

Bangladesh market might encounter given the current market situation This market

segmentation is based on frequency of ice cream consumption in daily occasions of consumer

lives

The segments are

1048766 OPPORTUNITY MARKET High Relevant Occasions-Low Ice cream Frequency

1048766 QUESTION MARKET Less Relevant Occasions-Low Ice cream Frequency

1048766 HIGH FREQUENCY MARKET Relevant Occasions-High Ice cream Frequency

1048766 CAPTIVE MARKET Less Relevant Occasions-High Ice cream Frequency

The chart looks as follows Evaluation of Entry into Ice cream Business for Bangladesh Limited

48

Figure 15 Relevance of Occasion-Frequency of Consumption Mapping

As it can be seen from the above chart Bangladesh Market still lies in the Opportunity and

Question market zone with a pull towards High frequency and Captive Market zones This is

evident from market data as penetration of ice cream still remains at Thana headquarters levels

Also this explains the high market growth rate of 17 as market is yet under developed and

branded quality ice cream has yet not reached all levels of consumers especially rural level that

constitutes around 75 of Bangladeshi market

From the above analysis we can establish that target of ice cream manufacturers should be to

penetrate more into the Bangladeshi market to create higher frequency of ice cream

consumption The following chart shows the strategies to follow for ice cream manufacturers

Figure 16 Required Market Strategy for Bangladesh

Evaluation of Entry into Ice cream Business for Bangladesh Limited 49

As relevance of ice cream consumption occasions can hardly be controlled by marketers their

endeavour should be to create more ldquoemotional and functionalrdquo attachment to ice cream in less

frequent occasions through ldquomarket developmentrdquo strategy to earn share from overall food

expenditure of consumers and at the same time make them consume more ice cream in highly

relevant occasions through ldquopenetrationrdquo strategy

654 Consumersrsquo Emotional Requirements and Product Attributes

All consumers under these clusters also identify the emotional requirements and the significant

product attributes they seek from their current preferred and future desired ice creams These are

provided below

Cluster

Emotional Functional Requirement

Product Attributes

Enjoyment

Flavour Variety

1048766 Combination of different flavours

1048766 Combination of different textures

1048766 Very sweet

1048766 With wafer or biscuit

1048766 With chocolate

1048766 Of a well known brand

Socially Involved

Spoonable Rich

1048766 Very creamy

1048766 Only natural ingredients

1048766 No mess

Care

Size Creaminess

1048766 Big

1048766 Rich full taste

1048766 Smooth

1048766 Value for money

1048766 No mess

Unwind amp Escape

Economy

1048766 Crunchy

1048766 Economic

1048766 Of a well known brand

1048766 Nutritious

Balanced Convenience

Health Conscious

1048766 Of a well known brand

1048766 Nutritious

1048766 Milk based

1048766 Low sugar

1048766 Low carbohydrates

1048766 Filling

Active Self-Grooming

Fruit Vitamins

1048766 Healthy

1048766 Fruit based

1048766 Low fat

1048766 Liquid or drinkable

1048766 Nutritious

1048766 Of a well known brand

Confidence

Drinkable Light

1048766 Low calories

1048766 Light on the stomach

1048766 Chewy or gooey

1048766 Not so sweet

1048766 Natural appearance

Sensual

Appeal or image

1048766 No artificial additives

Evaluation of Entry into Ice cream Business for Bangladesh Limited 50

1048766 Natural appearance

1048766 Melting slowly

1048766 Attractive packaging

1048766 High quality ingredients

1048766 Of a well known brand

Table 29 Requirements amp Product Attributes Desired by Consumer Clusters

Of these findings we see that the identified highlighted barriers to ice cream consumption are

pretty evident among the consumers Mostly people want products of a reliable source or a well

known brand low calories quality ingredients value for money economic type

Evaluation of Entry into Ice cream Business for Bangladesh Limited 51

70 INDUSTRY ATTRACTIVENESS AND ENTRY PROSPECTS

71 Driving Forces of Growth

As identified in the earlier sections there are several driving forces behind the growth of ice-

cream industry in Bangladesh

712 Trade and Infrastructural Level

1048766 As a result of globalization newer varieties have been introduced to the local products Many

foreign companies are also coming as franchise so there has been increased competition and

these boutiques are setting higher standards for the local producers

1048766 The present market growth rate is 18-19 which is being influenced by larger players like

Igloo who are expanding their distribution nation wide with expansion of national electricity

grid

1048766 With entry of Modern Trade and recent organized business approach of retailers has made it

possible for ice cream manufacturers to penetrate into shops even without providing them with

branded freezers

1048766 Weather change has increased ldquosummerrdquo season in our country which has reduced negative

seasonal impact on ice cream

1048766 Large companies like Igloo have taken global learning of using carts as an effective tool of

availability and visibility for ice cream

1048766 New and improved technologies are being used in the production process This technological

advancement has improved quality increased speed of production and made the process more

cost effective

713 Consumer Level

1048766 Only a few years back rich people could afford the luxury of having ice-cream but now it has

become a common product for everybody Ice-cream companies are producing different products

with a wide price range for consumers of every class and status

1048766 Nowadays companies are doing promotional campaigns more frequently the customers get to

know about the product which makes it easier for them to buy the best one

1048766 The improved standard of life and more modernized lifestyle of people is an important reason

for the increased consumption thus growth of the ice-cream industry

Evaluation of Entry into Ice cream Business for Bangladesh Limited 52

72 Prospects of Entry

The ice-cream industry of Bangladesh is an attractive one for the investors because there is a

huge market but number of producers is very small The major reasons behind industry

attractiveness are as follows

1048766 The industryrsquos current growth potential is very high with opportunity for market development

1048766 The competition currently permits adequate profitability and the competitive forces are

becoming stronger with time

1048766 Boutique segment is at a very high growth stage but no operator is currently operating with a

mid price range of BDT 100-400 Ice cream kiosks and small scooping boutiques can operate

within that range

1048766 Current industry driving forces are favourable for the future industry profitability

1048766 Globally oriented consumers look for variety in ice cream that is currently not available

Latest innovations came in the market in 2002 People would welcome new variety and flavours

1048766 There is a gap in the market for balanced convenience through ice cream where consumers can

get nutritional benefits for ice cream Also emotional attachment to ice cream could further be

improvised in promotional campaigns

1048766 There is high scope for market penetration and development to increase frequency of ice

cream consumption

1048766 Level of risk or uncertainty is very low in ice-cream industry because the consumer market is

so huge any product with a standard quality and careful pricing will be able to make significant

profit

1048766 As for geographic reach of the industry 60 market is still in Dhaka There is scope of

expansion and a new entrant can easily capture market share within Dhaka using carts even if

they do not want nation wide cold chain distribution

1048766 The production process is very complex and capital requirements are also high So before

going into production any company should know about their capabilities and weaknesses and

then start the business or else they might suffer huge loss at a certain level

1048766 Unilever can acquire the required resource and use existing multi-national multi-cultural

expertise to enter the market in a grand way

1048766 With high probability of entry from DANONE with more products like the ISIS diabetic ice

cream Unilever should consider entering in this industry as soon as possible

Evaluation of Entry into Ice cream Business for Bangladesh Limited 53

80 ENTRY STRATEGY FOR UNILEVER

While describing the suggested entry strategy for UBL certain issues have been kept

confidential and some issues have been touched but not explained to keep consistency with UBL

confidentiality policy

81 Suggested Entry Areas for UBL

1048766 Boutique segment of the Bangladesh ice cream is only 5 of the branded market UBL needs

to pursue a larger scope to make the entry viable

1048766 UBL cannot fight with unbranded segment as global product quality mandate of Unilever does

not allow UBL to fight in low price-low quality segment

1048766 Recommend entry should be in the common format segment with both single and multiple

servings and in the boutique segment with a different brand name (if possible BEN amp JERRYrsquoS)

1048766 UBL should build up state-of-art modern factory for manufacturing and establish cold chain

facilities initially focusing on metro cities

1048766 Investment issues are required to be addressed for building factory and cold chain and capital

requirement needs to be identified for that purpose4

1048766 UBL may have boutiques for driving image selective top-end offering

1048766 Kiosks can be setup near universities and shopping malls

1048766 Boutiques should be concentrated in Dhaka and Chittagong

1048766 Ice cream for boutiques and kiosks would be produced in factory as institutional packs of 9-10

litres

82 Products

1048766 As a Brand Building country in global Unilever operating framework UBL is entitled only to

bring products developed by the Brand Development countries

1048766 Unilever should focus on serving products that have nutritional benefits (already available

globally) along with usual satisfactions of sensual pleasure functional attributes etc

1048766 Current existent players especially Igloo and Kwality have extensively copied global and

regionally available Unilever products eg Cornelli is same as Wallrsquos Cornetto Vinetta is similar

to Vienetta Mega is similar to Magnum etc UBL needs to differentiate these to consumers on

the ldquotaste the originalrdquo platform where global quality is focused regarding the products

1048766 UBL should also bring regionally famous brands like Moo or Max to create image

differentiation

1048766 Magnum or Moo should be used as premium end ice cream to generate more profit margin

Evaluation of Entry into Ice cream Business for Bangladesh Limited 54

83 Placement

1048766 Distribution focus should be in Dhaka for entry as Dhaka contributes more than 60 of total

ice cream sales in the country

1048766 Company may use carts as distribution method They serve as good source of visibility and

availability It would help in increasing impulse purchase

1048766 At least 1500 outlets in Dhaka and Chittagong needs to be actively served using dedicated

branded refrigerators to generate sales

1048766 50 carts should operate in Dhaka and Chittagong

84 Price

1048766 UBL products should be priced at par with Igloo pricing for the common format ice creams

1048766 UBL can bring in premium single-serve SKUS for the higher economic classes in the price

range of BDT 60-80

1048766 Smaller SKUs (small lolly stick) can be introduced in the price range of BDT 10-15

1048766 In the boutique segment UBL should price products above the semi-premium segment

(Gelateria Igloo Sub Zero or Andersenrsquos) but lower than that of Club Gelato or MoumlvenPick

85 Promotion

1048766 UBL would require strong marketing campaign (As high as 50 of sales) to have a grand

entry in the market

1048766 Presence in the television media would be of utmost importance More than 50 of

promotional expense should be made here initially Gradually it can be reduced

1048766 Newspaper would serve as the second most important option

1048766 Billboards should also be used

1048766 Activations (similar to Lux Channel i Super Star or Igloo Festival) should be done to generate

trial

86 Scope of Opportunity

Table 30 Value and Volume Based Scope of Opportunity for UBL

Value (BDT Cr)

Volume (Tons)

Market

131

7835

Common

121

7600

Boutique

98

235

Evaluation of Entry into Ice cream Business for Bangladesh Limited 55

861 Geographic Contribution

1048766 Dhaka (61)

1048766 Chittagong (19)

1048766 Sylhet (10)

862 UBL objectives

Common Format Ice Creams

1048766 Target 10 Market share in 1st year operation

1048766 Value BDT 11 Cr

1048766 Production capacity required 21 Tons day

1048766 Freezer Placement 1500 freezers

1048766 Cart operation At least 50 carts

Boutiques

1048766 Target Further develop the market

1048766 Focus Dhaka Chittagong and Sylhet Metro

1048766 Franchise At least 20 franchisee operations nation wide in divisional towns

1048766 Pricing Below imported parlours above common formats with around BDT 400 per Litre

87 Critical Success Factors

1048766 UBL is considered as a high profile company in Bangladesh and thus they cannot operate in

the market only with common products like choc-bars and cups They must have premium

products (these require extrusion line) also to carry their brand image Otherwise UBL would not

be able to charge usual premium over competition products

1048766 Launch of ice cream would require huge promotional and activation support in order to gain

customers from Igloo People want novelty regarding ice cream and UBL have to let them know

about their products and create hype

1048766 Cart should be used as a source of distribution Recent successes of Unilever companies like

Indonesia shows that carts can generate more sales and can be used as source of visibility in the

minds of both retail traders and consumers Carts can also provide incremental sales to the

company

1048766 UBL have to create a strong cold chain for ice cream (initially in Dhaka and Chittagong) to

ensure quality products for consumers

1048766 UBL have to build capacity very rapidly to meet consumer demand if the launch is successful

Evaluation of Entry into Ice cream Business for Bangladesh Limited 56

90 BUSINESS PROJECTION

91 Basic Assumptions

Business projection for ice cream business was made based on a conservative approach UBL

would require spending significantly on production capacity and factory dedicated to ice cream

Thus to analyse business possibilities of ice cream certain assumptions were made and collected

data were used These are

1048766 Production equipments and cabinets would cost approximately BDT 55 crores

1048766 Production equipments 45

1048766 Packaging Equipments 15

1048766 Storage Facility 20

1048766 Branded Freezers 10

1048766 Distribution Investment 10 (Distributors would also invest themselves)

1048766 Ice cream factory with a floor size of 20000 sqft would cost BDT 25 crores

1048766 Objective is to capture 10 market share in Dhaka and Chittagong in the first year

1048766 Business would grow by 50 in year 2 and 3 30 in year 4 and 25 in year 5

1048766 Weighted price per litre is BDT 170 according to volume share of single serve ice cream

multiple serve ice cream and boutique ice cream

1048766 Other financial assumptions were also made List of them are provided below but amount has

been removed for confidentiality issues

Assumptions

Trade Margin

Distributors Margin

DutyVAT Rate

Trade Terms Expense of NPS

Trade Terms Expense of NSV

Advertising ampPromotion of NPS

Indirects (Salaries Wages etc)

Trading Tax

Table 31 Assumptions for Business Projection

Evaluation of Entry into Ice cream Business for Bangladesh Limited 57

100 CONCLUSION

Ice cream has good prospect in Bangladesh It is still a growing market with opportunities for big

new entrants With the barriers of entry UBL needs to consider its priorities UBL being an HPC

company traditionally needs to acquire expertise in cold chain distribution and has to invest a lot

of money to rip the benefits of the industry However to initiate company can take regional

support and acquire resource expertise The company should enter the business as soon as

possible since there is potential threat from DANONE to introduce more ice creams after ISIS

diabetic ice cream and also with potential of the industry arch rival Nestlersquo might consider

entering into the industry too

Evaluation of Entry into Ice cream Business for Bangladesh Limited 58

References

Web References

1 wwwunilevercom

2 wwwunilevercombd

3 wwwhllcom

4 wwwunilevercompk

5 wwwthedailystarcom - Life Style Magazine

6 wwwreuterscouk

Evaluation of Entry into Ice cream Business for Bangladesh Limited 59

Page 29: Square Ice cream

positioned Igloo as the market-leading brand by gaining the consumers trust with the positioning

as ldquoA WORLD OF GREAT TASTErdquo

Facilities and Logistics at a glance As of 2009 following are the facilities and logistics enjoyed

by the company

Factory location

Dhaka

Production Lines

4

Packages

Stick Cup Family pack Others (Nuggets and sandwich)

Machine suppliers

1048766 Mark-Italy

1048766 Tetra Pak(Hoyer)-Denmark

1048766 Sabore Denmark

1048766 Hass- Austria

Machine models

1048766 Freemark 1100 Italy

1048766 FM 3000 FM 6000 Italy

1048766 SL600 Denmark

Cone baking

Hass- Austria

Chocolate making

Macentyre-UK

Coverage

Nationwide

Operational centre

10

Total market vehicles

30

Distribution channel

Directthrough appointed distributors

Outlet service

7500

Injected deep freezers

4000

Trolley operations

125

Warehouse no

8

Table 20 Igloo Facilities and Logistics

Kwality

Kwality is currently the second largest ice cream manufacturer of the country The mother

company for the Kwality brand is Sanowara Drinks amp Beverages Ltd a sister concern of

Sanowara Group The company is famous for powdered milk brands Red Cow and Diploma in

Bangladesh The drinks and beverage concern of Sanowara made an entry into the market in

1997 with ldquoYesrdquo brand drinking water and launched the ice cream brand in 1999 With heavy

communication and novelty products it Evaluation of Entry into Ice cream Business for

Bangladesh Limited 32

successfully removed Polar from the second place with a current market share of 27 The

company also operates in the boutique segment with two parlours in Dhaka and Chittagong

Kwality ice cream factory is situated in Chittagong with a floor space of 35000 sft and fully

automated machinery wrapping mix machinery equipments from Italy having capacity of

around 20000 litres of ice cream per shift The ice cream factory employs 140 people The

company is ISO 9001-2000 certified

Kwality was the first true competitor for Igloo products with some major innovation in product

design and communication but their quality is perceived to be lower in the minds of the

consumers and they do not have extrusion ice cream The product prices are also similar to that

of Igloo but they charge a bit lower than Igloo in premium multiple servings However during

market visits it was seen that shops that keep only Kwality or Igloo and Kwality both they can

sell Kwality too although the sales amount is lower than that of Igloo People who look for Igloo

shopkeepers give them that directly but if they get a chance and Kwality ice cream stock is high

they also push Kwality to dry the stock out This gives an indication that market is larger than

what the current players are capable of serving even in Dhaka

Kwality follows a similar distribution model like Igloo but distribution frequency is lower and

amount of cart sellers is limited to 25 and they operate only in Dhaka

Polar

Once a giant in the industry Dhaka Ice Cream Industries Ltd introduced the first hygienically

packed ice cream in Bangladesh in 1987 and the brand name Polar was thus born In the early

days the company started ice cream business with a wide range of products and a variety of

flavours in Dhaka city In 1988 the company started its distribution in the city of Chittagong

then Bogra and continued to cover more cities Presently Polar ice cream is available

throughout Bangladesh The company today trails in the market with 15 market share in the

common format segment Recently Polar has announced launch of ISIS diabetic ice cream with

support from DANONE to turn around in the market

The company has its head office as well as a modern large-scale industrial plant in Dhaka Polar

ice cream is made with Danish expertise using Danish equipment and technology The

production activities and quality control measures are supervised and managed by Danish

experts Polar offers a wide range of delicious flavours and tastes made by ingredients imported

from Europe

Dhaka Ice Cream at present has 3 cold stores in Dhaka Chittagong and Bogra in Bangladesh

From Dhaka cold store they distribute ice creams in Mymensingh Tangail Jamalpur Sherpur

Kishoreganj Netrakona Comilla Narsingdi Barisal Madaripur Agaeljhara Faridpur Magura

Chuadanga Jessore Satkhira Khulna Pirojpur and Sylhet through their distributors In case of

long distance delivery points the company uses auto cooling freezer van

Evaluation of Entry into Ice cream Business for Bangladesh Limited 33

In Dhaka city they distribute ice creams directly to retail stores in freezer vans Besides that

they have several distributors at different points of the city Distributors cover their individual

areas where company is not able to supply directly in their freezer vans Similar model is

followed by the company to distribute ice cream from their other cold storages through out the

country For storing and selling ice creams in retail stores the company like the other players

arranges a deep freezer with the Polar logo and canopy light box

In addition to this distribution the company also undertakes home delivery of ice creams for

special occasions

Savoy

Savoy Ice-cream brand is owned by Sena Kalyan Sangstha (SKS) Group of industries It started

its journey in March 1995 with a factory in Tejgaon Dhaka Yearly turnover is estimated at BDT

388 crores with a market share of roughly 35

The factory has been established with Sonali Bank finance at 6040 equity ratio The total

production capacity of the factory has been estimated at 2400 litres of Ice-cream per day Total

land area of the factory premise is 116 Bigha with 8000 sft area covered with a total project cost

of BDT 144 The factory employs 73 people

Product ranges of the company include all the basic designs and flavours of the industry

However the company has not been much of an innovator in the industry Their product quality

is substantially low than that of other players and they price their products at 10-15 lower than

the other competitors The company imports raw materials mainly from Europe The general raw

materials are Euro cream Skimmed Milk Powder Cocoa Powder and Flavour (Vanilla Mango

and Strawberry) Colour (Yellow Red Chocolate and Green) Ripple Sauce Cheney Fruit Palm

Kernel Oil Anhydrous Butter Oil (Ghee) and Sugar etc

Milk Vita

Milk Vita is one of the most famous brand names in Bangladesh for its liquid dairy milk Owned

by Bangladesh Milk Producersrsquo Co-operative Union Limited (BMPCUL) the company came in

the market with proper dairy milk ice cream in form of cups and choc-bar With a production

capacity of around 1600 litres per day the company is trailing in the market place with 3

market share

Although the Milk Vita Choc-bar was perceived to be extremely tasty by consumers they

probably could not do well due price competition Currently they do not even distribute ice

cream in Dhaka However their presence is seen in outskirts of Dhaka and other nearby towns

If the current market situation prevails Milk Vita would lose their remaining market share and

other companies would benefit especially Igloo However one of the advantages of Milk Vita

remains to be

Evaluation of Entry into Ice cream Business for Bangladesh Limited 34

their nation wide milk supply network They have skimmed milk powder production plant that

Igloo does not have Thus they can combat the seasonality of milk supply that Igloo with its

huge requirement of milk cannot

Strengths and Weaknesses of Competitors

Company

Strengths

Weaknesses

Igloo

1048766 Strong brand image

1048766 High product quality

1048766 Highest no of variety

1048766 Strong distribution network

1048766 Highest visibility

1048766 Strong promotion

1048766 High production capacity

1048766 Presence of extrusion ice cream

1048766 Items are generally a bit pricy

1048766 Igloo does not give free freezers like other companies

1048766 Reluctant in recent times regarding innovation

1048766 Local sourcing of liquid milk does not meet demand

1048766 Failure to use ERP technology slowing decision making

Kwality

1048766 Product variety

1048766 Strong promotion

1048766 Free freezer distributed

1048766 Presence in all price segments

1048766 High production capacity

1048766 Weak distribution

1048766 Lower exposure

1048766 low amount of carts in operation

Polar

1048766 Free freezer

1048766 Quality perceived to be high compared to Kwality

1048766 Discoloured freezers

1048766 Lower exposure

1048766 Low product variety

1048766 Unused capacity

Savoy

1048766 Price is lower

1048766 Discoloured freezers

1048766 Low product variety

1048766 Weak distribution

1048766 Small amount of freezers

1048766 Low production capacity

Milk Vita

1048766 Quality is good due to dairy cream

1048766 Brand leverage from Milk Vita milk

1048766 Low exposure

1048766 Low variety

Table 21 Strengths and Weaknesses of Competition

512 Market Characteristics of the Boutique Segment

With a small market of BDT 98 Cr and 567 share in the branded ice cream market the

boutique segment is currently an increasing segment in the ice cream industry Boutique

segmentrsquos history dates back to 1960s when Igloo launched boutiques in Dhaka to save

distribution cost and promote a culture of ldquoice cream eating outrdquo In later years boutiques lost

their glamour and retail common format segment picked up growth However with Dolce Vita in

the late lsquo80s craze for Italian Artisan ice cream was recreated in the market Although Dolce

Vita is failing in recent times emergence of MoumlvenPick and Club Gelato in 2000 has uplifted the

segment once again Current growth rate of the

Evaluation of Entry into Ice cream Business for Bangladesh Limited 35

segment can be estimated to be approx 20-22 (higher than the common format segment)

Following are the basic detail of all the major players in the segment with their estimated sales3

Players

Outlet

Sales (Cr Taka)

Share

Club Gelato

1

136

199

MoumlvenPick

1

119

174

Andersenrsquos

3

119

174

Gelateria Igloo

3

119

174

Sub Zero (Kwality)

2

051

75

Baskin Robbins

1

015

22

Dolce Vita

1

017

25

American Soft

1

009

12

Rainbow

1

009

12

Others (off site)

089

130

Total Market

682

Table 22 Players and Shares in Boutique Segment

A Detail of Operation

General operational procedure followed by all the operators is as follows

1048766 Operating method There is a variation in operational method among the large operators

1048766 Club Gelato uses kitchen at own premise where imported ingredients and local milk (daily

special service from Milk Vita) are used to make ice cream

1048766 MoumlvenPick directly imports ice cream from Switzerland

1048766 Andersenrsquos Gelateria Igloo and Sub Zero produce ice cream at their factory with a mix of

imported and local ingredients

1048766 Products Around 30-35 flavours of artisan dairy ice cream are served at the premises

1048766 Most sold flavours are Vanilla Ferrero Rocher Butterscotch Chocolate Caramel etc

1048766 Other Products Larger players also serve ice cream desserts (milk shakes ice cappuccino etc)

pastries and other desserts with normal coffee and tea facility at their premises

1048766 Boutiques fight ice cream seasonality with the other products sales during off-peak ice cream

seasons Usually ice cream and other products contribute at 6040 ratio in summer and during

winter and off-peak seasons the ratio reverses

1048766 Pricing Usually the prices of products in this segment are 3-4 times higher than that of the

common format segment

1048766 Prices do not vary with flavours Variation depends on serve style (Cone tub) and use of

toppings and other ingredients (Chocolate sauce nut fruits) etc

1048766 Usual margin charged is around 50-60 over production cost Similar margin is charged for

other products like coffee ice cappuccino etc

3 Yearly sales is estimated based on companyrsquos approximate daily sales collected during

interview

Evaluation of Entry into Ice cream Business for Bangladesh Limited 36

1048766 Target Group Most of the consumers belong to SEC A and higher SEC A with DMFI of at

least BDT 20000

1048766 Foreign delegates and resident foreigners also visit these boutiques

1048766 Main purposes of visits in the boutiques are

bull Youth hangout with friends and having ice cream and ice cream derivatives

bull Family Family night out or eat out at a restaurant and then having dessert

bull Foreigners Having dessert after dinner

1048766 Rush time at boutiques are Afternoon 2-4 pm and at night 9-11 pm

1048766 Offsite sales Most of the large operators also sell offsite They have small freezers for off-site

1048766 Club Gelato and MoumlvenPick serves ice cream at high society parties and programmes

1048766 MoumlvenPick also has kiosks in known hotels like Sheraton

1048766 Promotion No mass promotion is done by any of the companies Word of mouth is the most

important source of promotion Posters and banners outside the premise and occasional

newspaper advertisements are used to communicate special offers

1048766 Growth Drivers Market growth is driven by image innovation quality decoration of facility

environment and special offers

1048766 Club Gelato has the image of selling true Italian dairy ice cream with an excellent hangout

environment

1048766 MoumlvenPick imports ice cream directly from Switzerland and is perceived to be of high quality

1048766 Andersenrsquos operates with the image of ice cream from Denmark

1048766 Gelateria Igloo (from Igloo) and Sub Zero (from Kwality) could not establish the premium

artisan ice cream image

B Players in the Boutique Segment

There are very few players who have significant impact in the boutique segment Detailed

information of all the major boutique segment players is provided below

Evaluation of Entry into Ice cream Business for Bangladesh Limited 37

Club Gelato

Basic Company Information

1048766 Location Banani Road 11 (Planning for a second one in Dhanmondi)

1048766 Established in 2001

1048766 Seating Capacity 48

1048766 Area 1250 sft (including kitchen)

1048766 Owner Mr Jahangir Alam (Bangladesh)

1048766 Business Type Joint business partnership with Singapore

1048766 Staff 15 people (6 in the kitchen)

1048766 Production capacity 150 litres per day

Product Related Information

1048766 Product Italian style parlour scoop ice cream fruit juice coffee and pastries

1048766 Flavours Around 32 flavours available

1048766 Most selling Ferraro Rocher Vanilla Pistachio

1048766 Innovations New variants and ingredients are communicated by their Italian supplier and

Club Gelato decides what to take from them

1048766 Serve type Cup Cone Glasses Box for take away

Consumer Profile

1048766 Primary Teenagers and Young Adults (18-30) amp Diplomats

1048766 Secondary Family consumers for eat out

1048766 Income Group High income customers tentatively from SEC A and higher SEC A

1048766 Geographic Area Diversified

1048766 Rush time 8-10 pm

Sales and Price Information

1048766 Sales BDT 50000 (60 Ice cream 40 other desserts) daily in summer In winter however

other products sell more and thus they keep total sales at the same level

1048766 Price 750 per litre for any flavour

1048766 Sales Volume 50-60 litres per day

Supply Chain Placement Information

1048766 Milk Local sourcing from Milk Vita (4050 litres per day)

1048766 Chocolates amp Flavours Belgium France Germany

1048766 Transportation Mainly air (They can afford it due to high margin)

1048766 Contribution of various materials Flavours (30) Milk (20) other parts are water and air

Promotional Materials

1048766 Materials used are near premises POS materials for promoting the parlour only

Table 23 Detail of Club Gelato

Evaluation of Entry into Ice cream Business for Bangladesh Limited 38

MoumlvenPick of Switzerland

Basic Company Information

1048766 Location Gulshan

1048766 Established in 2000

1048766 Seating Capacity 55

1048766 Owner Mr Arif Mahmud

1048766 Business Type Franchise of International MoumlvenPick

1048766 Storage Capacity in Shop 150 litres

Product Related Information

1048766 Product Imported MoumlvenPick ice creams coffee chicken sandwich and Frappe

1048766 Flavours Around 30 to 35 flavours available

1048766 Most selling Swiss Chocolate caramel Vanilla Dream Espresso Strawberry

1048766 Innovations New variants are communicated by their franchiser and they decide on flavours

that they want

1048766 Serve type Cup Cone Glasses Box for take away

Consumer Profile

1048766 Primary Teenagers and Young Adults (18-30) (70) amp Diplomats

1048766 Secondary Family consumers for eat out

1048766 Income Group High income customers tentatively from SEC A

1048766 Geographic Area Concentrated in Gulshan and nearby areas

1048766 Rush time Afternoon- Young Adult 10 to 11 pm Foreigners

1048766 the company also serves at parties and has freezers in known hotels where their ice creams

are served

Sales and Price Information

1048766 Sales BDT 35-40000 daily in summer

1048766 Price 640 per litre for any flavour

1048766 Sales Volume 55-60 litres per day

Supply Chain Placement Information

1048766 Transportation Imported finished goods by ship

1048766 Ship travel time 19 days

1048766 Port clearance 10 days

1048766 Safety Cushion Extra 10 days

Promotional Materials

1048766 Materials used are near premises POS materials for promoting the parlour only

Table 24 Detail of MoumlvenPick of Switzerland

Evaluation of Entry into Ice cream Business for Bangladesh Limited 39

Andersenrsquos of Denmark

Basic Company Information

1048766 Location Gulshan (2 others in Uttara Dhanmondi)

1048766 Established in 2001

1048766 Seating Capacity 48

1048766 Owner United Group

1048766 Business Type Franchise of Australian company Andersenrsquos of Denmark

1048766 Production Tongi Factory of United Group

1048766 Production capacity 2000 litres per day in factory

1048766 Storage Capacity in Shop 150 litres

Product Related Information

1048766 Product Danish parlour scoop ice cream and coffee

1048766 Flavours Around 30 to 35 flavours available

1048766 Most selling Strawberry Butter Scotch Green

1048766 Innovations New variants and ingredients are communicated by their franchiser and they

decide on flavours that they want

1048766 Serve type Cup Cone Glasses Box for take away

Consumer Profile

1048766 Primary Teenagers and Young Adults (18-30) (70) amp Diplomats

1048766 Secondary Family consumers for eat out

1048766 Income Group High income customers tentatively from SEC A

1048766 Geographic Area Concentrated in Gulshan and nearby areas

1048766 Rush time 8 to 10 pm

Sales and Price Information

1048766 Sales BDT 10-12000 daily in summer

1048766 Price 460 per litre for any flavour

1048766 Sales Volume 40-50 litres per day

Supply Chain Placement Information

1048766 Milk 2025 kg packs are imported

1048766 Chocolates amp Flavours Imported

1048766 Butte paper Local sourcing

1048766 Transportation Ship

Promotional Materials

1048766 Materials used are near premises POS materials for promoting the parlour only

Table 25 Detail of Andersenrsquos of Denmark

Evaluation of Entry into Ice cream Business for Bangladesh Limited 40

Gelateria Igloo

Basic Company Information

1048766 Location Banani Kemal Ataturk Avenue (Two others in GEC Mor Chittagong and Naya

Paltan)

1048766 Established in 2000

1048766 Seating Capacity 20

1048766 Production From Igloo factory in Shyampur Narayanganj

Product Related Information

1048766 Product Parlour scoop ice cream and coffee only

1048766 Flavours Around 30 flavours available

1048766 Most selling Vanilla Strawberry Chocolate Pistachio Butter Scotch Tutti Fruity

1048766 Serve type Cup Cone Glasses Box for take away

Consumer Profile

1048766 Primary Teenagers and Young Adults (18-30)

1048766 Secondary Family consumers for eat out

1048766 Income Group High income customers tentatively from SEC A and B

1048766 Geographic Area Diversified

1048766 Rush Time afternoon and evening

Sales and Price Information

1048766 Sales BDT 8000 to 10000 daily in summer Nearly one fourth in winter

1048766 Price Varies but 350 per litre of vanilla

Promotional Materials

1048766 POS materials at the premises

Table 26 Detail of Gelateria Igloo

52 Price Comparison of Common and Boutique Segments

Price ranges of both common format and boutique segment cannot exactly be pin pointed as

products do not follow common structure and variations occur with use of toppings mixing of

flavours and use of coatings However a price comparison has been made among the brands

based on their price of per litre of vanilla flavoured ice cream in the market It appears to be as

following

Company

Price Litre Vanilla

Club Gelato

750

MoumlvenPick

640

Andersenrsquos

460

Dolce Vita

440

Igloo

100

Kwality

100

Polar

100

Milk-Vita

90

Savoy

85

Table 27 Comparative Price Analysis

As it can be seen there is price gap within the range of BDT 100-400 Ice cream kiosks and

small scooping boutiques can operate within that range

Evaluation of Entry into Ice cream Business for Bangladesh Limited 41

60 CONSUMER ANALYSIS

61 Target Group of Ice cream

Who are the consumers of ice cream This question does not have a clear answer Ice cream is a

food for all It is the only food consumed by a human being at less than 0 degree centigrade

temperature and people of all ages feel indulged to have it However we can determine focus

target groups for both branded common format and artisan boutique ice cream Group

discussions and market visits were done to get insight into the consumers along side resources

form secondary sources Age based target group is common for both segments but variation

among the groups occur mainly based on SEC and DMFI classification

611 Geographic Group

Branded ice cream remains an urban product till date Geographically branded ice cream has

reached urban and semi urban areas up to Thana Head Quarter levels Ice cream has reached

areas where electricity is available Small artisan players are available in places where large

branded players have no distribution

612 Target Age Group

Age wise grouping of target consumers is as follows

1048766 Urban kids in the age group of 5-14

1048766 They mainly consume normal sticks cups cones innovative fillers and water ice creams

1048766 Urban youth in the age group of 15-24

1048766 They consume premium and extrusion sticks and cones

1048766 Urban mothers in the age group of 25-35

1048766 They determine the family purchases Even when the father purchases ice cream decision is

taken by them

Consumption pattern of various age groups are depicted in the following chart Ice cream

consumption pattern50203005 to 14 yrs15 to 24 yrs25 to 35 yrs

Figure 11 Target Group wise Consumption Pattern Evaluation of Entry into Ice cream Business

for Bangladesh Limited 42

613 Target SEC and DMFI Group

Common Format

SEC A and B is the target group for common format ice cream However with rapid increase in

price level over the years has made it a ldquohard to consumerdquo product for SEC B consumers who

belong to lower DMFI group

Boutique Format

Boutique formatrsquos higher margin and high price range makes it an exclusively SEC A ice cream

People belonging to upper and upper middle class have access to the mediocre boutiques and

only higher upper class can have premium ice creams like Club Gelato and MoumlvenPick

Another unique target group for boutique format are the foreigners who live in Bangladesh

These people tend to visit the parlours to have ice cream as dessert especially after dinner

62 Ice cream in Consumer Lifestyle

Figure 12 Ice cream in Consumer Life style

This simple overview of ice cream in consumer lifestyle was determined based on in-depth

research analysis of UBL and validated through qualitative group discussions by the author

However detail of in-depth research is provided in a later section of this chapter

Evaluation of Entry into Ice cream Business for Bangladesh Limited 43

63 Highlights of Purchase Habit of Ice cream

631 Common Habits across Target Groups

There are some common habits that were identified in earlier researches and group discussions

with consumers Common habits mean the consumer approach towards ice cream that is seen

across all target groups eg kids youth and adult purchasers These are outlined below

1048766 Ice cream is mainly seen as a dessert or a snack Impulse ice cream is seen as a quick snack

that is consumed when it is in sight Visibility plays a big role here Regarding family packs

people see it as a post-food dessert

1048766 Ice cream purchase is commonly a planned event When the contexts arise people generally

take a bit of time to decide whether or not to have ice cream or when they want to go to a

boutique they make due considerations regarding which boutique to visit

1048766 Ice cream purchase decision is taken based on favourite flavour People tend to try out new

variants and flavours when they first see it They compare the taste with earlier experience and

when they purchase later they choose the flavour they have liked most

1048766 For In-Home segment decision is mostly taken on the flavour Generally people come up with

different flavours of choice and most voted flavour is chosen

1048766 People become aware of new variants or flavours mainly through word-of-mouth

Advertisement (new launches special offers and festivals) in newspaper is another source of

awareness

1048766 People are currently indifferent towards the price level of premium flavours However some

feel that price of Choc-bar or water ice creams (lolly) is a bit much If less they would have

consumed more Some also feel that companies should come up with branded ice cream in the

price range of BDT 5-8

1048766 Ice cream is purchased from nearby shops If required brand and flavour is not available 2-3

shops will be visited and then available flavour will be selected even if the required one is not

found This is done mainly not to ruin the mood for ice cream

1048766 People are very open to try new brands and flavours especially if it comes from a credible

source They would try new flavours and if they are satisfied with the taste they would repeat

purchase

1048766 Regarding boutique visits people feel that boutiques need to have a proper environment

enough flavours and other snacks

1048766 While visiting boutique with family or companion they want variation in flavours so that

they would order different flavours and taste each otherrsquos ice cream It is seen as a sign of

togetherness

1048766 Frequency of ice cream purchase varies among people It depends on peer pressure collective

family decision summer heat and attitude towards ldquoice creamrdquo itself as a product Evaluation of

Entry into Ice cream Business for Bangladesh Limited 44

632 Habits of Kids

1048766 Kids choose ice cream flavours by the look of the product (generally pictures shown in POS

materials and carts) They love colour and designs of the products let it be a common format or a

boutique ice cream

1048766 Kids (when in house) would go with the housemaid to the nearby shop choose the flavour

they want (within range of the amount given to the maid) and buy it

1048766 When with parents they would take the product they like even if the price is lower than some

other product However mothers play a role in this decision They would want their children not

to choose too high priced a product or coloured products

633 Habits of Youth

1048766 Young people are the main consumer of impulse ice cream They also are one of the major

consumers in the boutique segment

1048766 Young people love to try out new products that come into the market Another side of the coin

is that they are not very loyal to a brand or a flavour and tend to switch a lot

1048766 Regarding boutique visits young people go to boutiques to have an ldquoice cream hang outrdquo with

peer groups They would stay there for a longer period of time while they have their ice cream

1048766 Some times young people make milk shakes and other ice cream based desserts

634 Habits of Mothers

1048766 Mothers worry about their childrenrsquos health and they prefer ldquovanillardquo type of brands

However when price constraint occurs they go for water ice creams for their children They try

to convince their kidrsquos purchase decision

1048766 Regarding family purchase motherrsquos decision is sometimes prioritized by the whole family

64 Barriers to Ice cream Consumption

641 Emotional Barriers

1048766 Overindulge (close to sinful)

1048766 Undisciplined (no control)

1048766 Childish (licking)

1048766 Artificial Image

642 Functional Barriers

1048766 People of SEC B feel that ice cream is an expensive dessert (If less expensive would consume

more often)

1048766 It leads to cold cough - especially in winter rainy season

1048766 It contains artificial additives preservatives

1048766 It is very high in calories that lead to fattening

Evaluation of Entry into Ice cream Business for Bangladesh Limited 45

1048766 It does not quench ldquothirstrdquo

1048766 Less convenient (portable immediate eat)

1048766 Messy Dripping

65 Research Findings

The highlights regarding purchase habits triggers and barriers of ice cream consumption provide

a glimpse into the consumer world of ice cream industry However UBL CMI conducted a

formal research exclusively on ice cream consumers to identify

1048766 Occasions of ice cream

1048766 Frequency of ice cream consumption

1048766 Expectations from ice cream occasions

1048766 Personalities that they desire from ice cream

651 Relevant Occasions in Daily Lives of Consumers

Research question regarding ldquousual occasions of life that occurred most frequently in day-to-day

lives of the respondentsrdquo generated the following replies

Occasion

of Respondents saying Yes

Watching TV

93

Normal Dinner At Home

91

Normal Lunch At Home

89

At Home While ReadingMusicSurfing

86

Informal Family Get Together

85

Out Of Home Hanging Out With Friends

84

Out Shopping

84

Mid-Afternoon Break At Home

83

At Home By Myself During The Day

82

Special Dinner At Home

82

Informal Dinner Out Of Home

82

Normal Lunch Out Of Home

82

Leisure Walk

79

Coming Home From WorkSchool

78

Special Dinner Out Of Home

78

Celebration

78

A Night In With Friends

77

At Home By Myself In The Evening

77

Special Lunch Out Of Home

76

Mid-Afternoon Break Out Of Home

75

Special Lunch At Home

73

Day out with Partner

72

Midmorning Break

70

At Breakfast

68

Family Day Out

68

During Work Or At School

65

Evaluation of Entry into Ice cream Business for Bangladesh Limited 46

Travelling ToFrom WorkSchool

65

At The Cinema

61

Special Event

56

Clubbing At A Party

50

Post GymSports

48

Table 28 Relevant Occasions in Consumersrsquo Lives

Respondents were then asked to mention ldquofrequency of occurrence of the identified occasionsrdquo

The identified replies are as follows Normal dinner at homenormal lunch at homeComing home

from workschoolTraveling tofrom workschoolDay out with Partner SpouseMid-afternoon

break at homeOut of home hanging out with friendsLeisure walkMid-afternoon break out of

homeA night in with friendsSpecial dinner at homeSpecial lunch out of homeFamily day

outSpecial eventPost gymsportsDaily2-3 Times A WeekWeekly2-3 Times A MonthOnce A

MonthEvery 2-3 MonthsLess OftenNever Figure 13 Frequency of Occurrence of Occasions

This shows that ldquoNormal dinner at home Watching TV Normal Lunch At Home At Home

While ReadingMusicSurfing Coming Home From WorkSchool During Work Or At School

Travelling ToFrom WorkSchool Midmorning Break Day Out With Partner Spouse At Home

By Myself During The Dayrdquo are the most frequent daily rituals of busy lives of consumers

652 Frequency of Ice cream Consumption

Respondents were asked to mention ldquoconsumption pattern of ice cream during the identified

occasionrdquo on a scale of 1-5 depicting frequencies like ldquo(5) always (4) most of the times (3)

about half of the times (2) sometimes (1) never do not knowrdquo The responses are depicted in

the following table

Evaluation of Entry into Ice cream Business for Bangladesh Limited 47

444474544655555566756665775967779991011101111101210111110101113111412131314161

011121411131216181519181518211817171719181718201721222130303434253437403741394

046383944464746453745414641374638504843414839373030292726232725222020201926202

21722221317Midmorning

breakWhile clubbing at aAt the cinemaSpecial eventNormal lunch out ofA night in with

friendsNormal dinner atInformal dinner out ofAt home by myselfAt home by myself inOut

shoppingSpecial lunch atDay out with SpouseWatching TVAlwaysmost of the timesAbout half

of the timesSometimesneverdo not know

Figure 14 Frequency of Ice cream Consumption

As it can be seen ldquoDay out with Spouse Special lunch at home Special dinner at home

Watching TV Family day out Celebrationrdquo are the occasions where most frequently ice cream is

consumed

653 Market Character Mapping Relevant Occasions vs Frequency of Consumption

If we plot frequency of consumption on the X-axis of a chart and relevance of occasion

occurrence on the Y-axis taking the above mentioned values as cut-off values we get four

quadrants in the chart depicting four market scenarios that any ice cream manufacturer in

Bangladesh market might encounter given the current market situation This market

segmentation is based on frequency of ice cream consumption in daily occasions of consumer

lives

The segments are

1048766 OPPORTUNITY MARKET High Relevant Occasions-Low Ice cream Frequency

1048766 QUESTION MARKET Less Relevant Occasions-Low Ice cream Frequency

1048766 HIGH FREQUENCY MARKET Relevant Occasions-High Ice cream Frequency

1048766 CAPTIVE MARKET Less Relevant Occasions-High Ice cream Frequency

The chart looks as follows Evaluation of Entry into Ice cream Business for Bangladesh Limited

48

Figure 15 Relevance of Occasion-Frequency of Consumption Mapping

As it can be seen from the above chart Bangladesh Market still lies in the Opportunity and

Question market zone with a pull towards High frequency and Captive Market zones This is

evident from market data as penetration of ice cream still remains at Thana headquarters levels

Also this explains the high market growth rate of 17 as market is yet under developed and

branded quality ice cream has yet not reached all levels of consumers especially rural level that

constitutes around 75 of Bangladeshi market

From the above analysis we can establish that target of ice cream manufacturers should be to

penetrate more into the Bangladeshi market to create higher frequency of ice cream

consumption The following chart shows the strategies to follow for ice cream manufacturers

Figure 16 Required Market Strategy for Bangladesh

Evaluation of Entry into Ice cream Business for Bangladesh Limited 49

As relevance of ice cream consumption occasions can hardly be controlled by marketers their

endeavour should be to create more ldquoemotional and functionalrdquo attachment to ice cream in less

frequent occasions through ldquomarket developmentrdquo strategy to earn share from overall food

expenditure of consumers and at the same time make them consume more ice cream in highly

relevant occasions through ldquopenetrationrdquo strategy

654 Consumersrsquo Emotional Requirements and Product Attributes

All consumers under these clusters also identify the emotional requirements and the significant

product attributes they seek from their current preferred and future desired ice creams These are

provided below

Cluster

Emotional Functional Requirement

Product Attributes

Enjoyment

Flavour Variety

1048766 Combination of different flavours

1048766 Combination of different textures

1048766 Very sweet

1048766 With wafer or biscuit

1048766 With chocolate

1048766 Of a well known brand

Socially Involved

Spoonable Rich

1048766 Very creamy

1048766 Only natural ingredients

1048766 No mess

Care

Size Creaminess

1048766 Big

1048766 Rich full taste

1048766 Smooth

1048766 Value for money

1048766 No mess

Unwind amp Escape

Economy

1048766 Crunchy

1048766 Economic

1048766 Of a well known brand

1048766 Nutritious

Balanced Convenience

Health Conscious

1048766 Of a well known brand

1048766 Nutritious

1048766 Milk based

1048766 Low sugar

1048766 Low carbohydrates

1048766 Filling

Active Self-Grooming

Fruit Vitamins

1048766 Healthy

1048766 Fruit based

1048766 Low fat

1048766 Liquid or drinkable

1048766 Nutritious

1048766 Of a well known brand

Confidence

Drinkable Light

1048766 Low calories

1048766 Light on the stomach

1048766 Chewy or gooey

1048766 Not so sweet

1048766 Natural appearance

Sensual

Appeal or image

1048766 No artificial additives

Evaluation of Entry into Ice cream Business for Bangladesh Limited 50

1048766 Natural appearance

1048766 Melting slowly

1048766 Attractive packaging

1048766 High quality ingredients

1048766 Of a well known brand

Table 29 Requirements amp Product Attributes Desired by Consumer Clusters

Of these findings we see that the identified highlighted barriers to ice cream consumption are

pretty evident among the consumers Mostly people want products of a reliable source or a well

known brand low calories quality ingredients value for money economic type

Evaluation of Entry into Ice cream Business for Bangladesh Limited 51

70 INDUSTRY ATTRACTIVENESS AND ENTRY PROSPECTS

71 Driving Forces of Growth

As identified in the earlier sections there are several driving forces behind the growth of ice-

cream industry in Bangladesh

712 Trade and Infrastructural Level

1048766 As a result of globalization newer varieties have been introduced to the local products Many

foreign companies are also coming as franchise so there has been increased competition and

these boutiques are setting higher standards for the local producers

1048766 The present market growth rate is 18-19 which is being influenced by larger players like

Igloo who are expanding their distribution nation wide with expansion of national electricity

grid

1048766 With entry of Modern Trade and recent organized business approach of retailers has made it

possible for ice cream manufacturers to penetrate into shops even without providing them with

branded freezers

1048766 Weather change has increased ldquosummerrdquo season in our country which has reduced negative

seasonal impact on ice cream

1048766 Large companies like Igloo have taken global learning of using carts as an effective tool of

availability and visibility for ice cream

1048766 New and improved technologies are being used in the production process This technological

advancement has improved quality increased speed of production and made the process more

cost effective

713 Consumer Level

1048766 Only a few years back rich people could afford the luxury of having ice-cream but now it has

become a common product for everybody Ice-cream companies are producing different products

with a wide price range for consumers of every class and status

1048766 Nowadays companies are doing promotional campaigns more frequently the customers get to

know about the product which makes it easier for them to buy the best one

1048766 The improved standard of life and more modernized lifestyle of people is an important reason

for the increased consumption thus growth of the ice-cream industry

Evaluation of Entry into Ice cream Business for Bangladesh Limited 52

72 Prospects of Entry

The ice-cream industry of Bangladesh is an attractive one for the investors because there is a

huge market but number of producers is very small The major reasons behind industry

attractiveness are as follows

1048766 The industryrsquos current growth potential is very high with opportunity for market development

1048766 The competition currently permits adequate profitability and the competitive forces are

becoming stronger with time

1048766 Boutique segment is at a very high growth stage but no operator is currently operating with a

mid price range of BDT 100-400 Ice cream kiosks and small scooping boutiques can operate

within that range

1048766 Current industry driving forces are favourable for the future industry profitability

1048766 Globally oriented consumers look for variety in ice cream that is currently not available

Latest innovations came in the market in 2002 People would welcome new variety and flavours

1048766 There is a gap in the market for balanced convenience through ice cream where consumers can

get nutritional benefits for ice cream Also emotional attachment to ice cream could further be

improvised in promotional campaigns

1048766 There is high scope for market penetration and development to increase frequency of ice

cream consumption

1048766 Level of risk or uncertainty is very low in ice-cream industry because the consumer market is

so huge any product with a standard quality and careful pricing will be able to make significant

profit

1048766 As for geographic reach of the industry 60 market is still in Dhaka There is scope of

expansion and a new entrant can easily capture market share within Dhaka using carts even if

they do not want nation wide cold chain distribution

1048766 The production process is very complex and capital requirements are also high So before

going into production any company should know about their capabilities and weaknesses and

then start the business or else they might suffer huge loss at a certain level

1048766 Unilever can acquire the required resource and use existing multi-national multi-cultural

expertise to enter the market in a grand way

1048766 With high probability of entry from DANONE with more products like the ISIS diabetic ice

cream Unilever should consider entering in this industry as soon as possible

Evaluation of Entry into Ice cream Business for Bangladesh Limited 53

80 ENTRY STRATEGY FOR UNILEVER

While describing the suggested entry strategy for UBL certain issues have been kept

confidential and some issues have been touched but not explained to keep consistency with UBL

confidentiality policy

81 Suggested Entry Areas for UBL

1048766 Boutique segment of the Bangladesh ice cream is only 5 of the branded market UBL needs

to pursue a larger scope to make the entry viable

1048766 UBL cannot fight with unbranded segment as global product quality mandate of Unilever does

not allow UBL to fight in low price-low quality segment

1048766 Recommend entry should be in the common format segment with both single and multiple

servings and in the boutique segment with a different brand name (if possible BEN amp JERRYrsquoS)

1048766 UBL should build up state-of-art modern factory for manufacturing and establish cold chain

facilities initially focusing on metro cities

1048766 Investment issues are required to be addressed for building factory and cold chain and capital

requirement needs to be identified for that purpose4

1048766 UBL may have boutiques for driving image selective top-end offering

1048766 Kiosks can be setup near universities and shopping malls

1048766 Boutiques should be concentrated in Dhaka and Chittagong

1048766 Ice cream for boutiques and kiosks would be produced in factory as institutional packs of 9-10

litres

82 Products

1048766 As a Brand Building country in global Unilever operating framework UBL is entitled only to

bring products developed by the Brand Development countries

1048766 Unilever should focus on serving products that have nutritional benefits (already available

globally) along with usual satisfactions of sensual pleasure functional attributes etc

1048766 Current existent players especially Igloo and Kwality have extensively copied global and

regionally available Unilever products eg Cornelli is same as Wallrsquos Cornetto Vinetta is similar

to Vienetta Mega is similar to Magnum etc UBL needs to differentiate these to consumers on

the ldquotaste the originalrdquo platform where global quality is focused regarding the products

1048766 UBL should also bring regionally famous brands like Moo or Max to create image

differentiation

1048766 Magnum or Moo should be used as premium end ice cream to generate more profit margin

Evaluation of Entry into Ice cream Business for Bangladesh Limited 54

83 Placement

1048766 Distribution focus should be in Dhaka for entry as Dhaka contributes more than 60 of total

ice cream sales in the country

1048766 Company may use carts as distribution method They serve as good source of visibility and

availability It would help in increasing impulse purchase

1048766 At least 1500 outlets in Dhaka and Chittagong needs to be actively served using dedicated

branded refrigerators to generate sales

1048766 50 carts should operate in Dhaka and Chittagong

84 Price

1048766 UBL products should be priced at par with Igloo pricing for the common format ice creams

1048766 UBL can bring in premium single-serve SKUS for the higher economic classes in the price

range of BDT 60-80

1048766 Smaller SKUs (small lolly stick) can be introduced in the price range of BDT 10-15

1048766 In the boutique segment UBL should price products above the semi-premium segment

(Gelateria Igloo Sub Zero or Andersenrsquos) but lower than that of Club Gelato or MoumlvenPick

85 Promotion

1048766 UBL would require strong marketing campaign (As high as 50 of sales) to have a grand

entry in the market

1048766 Presence in the television media would be of utmost importance More than 50 of

promotional expense should be made here initially Gradually it can be reduced

1048766 Newspaper would serve as the second most important option

1048766 Billboards should also be used

1048766 Activations (similar to Lux Channel i Super Star or Igloo Festival) should be done to generate

trial

86 Scope of Opportunity

Table 30 Value and Volume Based Scope of Opportunity for UBL

Value (BDT Cr)

Volume (Tons)

Market

131

7835

Common

121

7600

Boutique

98

235

Evaluation of Entry into Ice cream Business for Bangladesh Limited 55

861 Geographic Contribution

1048766 Dhaka (61)

1048766 Chittagong (19)

1048766 Sylhet (10)

862 UBL objectives

Common Format Ice Creams

1048766 Target 10 Market share in 1st year operation

1048766 Value BDT 11 Cr

1048766 Production capacity required 21 Tons day

1048766 Freezer Placement 1500 freezers

1048766 Cart operation At least 50 carts

Boutiques

1048766 Target Further develop the market

1048766 Focus Dhaka Chittagong and Sylhet Metro

1048766 Franchise At least 20 franchisee operations nation wide in divisional towns

1048766 Pricing Below imported parlours above common formats with around BDT 400 per Litre

87 Critical Success Factors

1048766 UBL is considered as a high profile company in Bangladesh and thus they cannot operate in

the market only with common products like choc-bars and cups They must have premium

products (these require extrusion line) also to carry their brand image Otherwise UBL would not

be able to charge usual premium over competition products

1048766 Launch of ice cream would require huge promotional and activation support in order to gain

customers from Igloo People want novelty regarding ice cream and UBL have to let them know

about their products and create hype

1048766 Cart should be used as a source of distribution Recent successes of Unilever companies like

Indonesia shows that carts can generate more sales and can be used as source of visibility in the

minds of both retail traders and consumers Carts can also provide incremental sales to the

company

1048766 UBL have to create a strong cold chain for ice cream (initially in Dhaka and Chittagong) to

ensure quality products for consumers

1048766 UBL have to build capacity very rapidly to meet consumer demand if the launch is successful

Evaluation of Entry into Ice cream Business for Bangladesh Limited 56

90 BUSINESS PROJECTION

91 Basic Assumptions

Business projection for ice cream business was made based on a conservative approach UBL

would require spending significantly on production capacity and factory dedicated to ice cream

Thus to analyse business possibilities of ice cream certain assumptions were made and collected

data were used These are

1048766 Production equipments and cabinets would cost approximately BDT 55 crores

1048766 Production equipments 45

1048766 Packaging Equipments 15

1048766 Storage Facility 20

1048766 Branded Freezers 10

1048766 Distribution Investment 10 (Distributors would also invest themselves)

1048766 Ice cream factory with a floor size of 20000 sqft would cost BDT 25 crores

1048766 Objective is to capture 10 market share in Dhaka and Chittagong in the first year

1048766 Business would grow by 50 in year 2 and 3 30 in year 4 and 25 in year 5

1048766 Weighted price per litre is BDT 170 according to volume share of single serve ice cream

multiple serve ice cream and boutique ice cream

1048766 Other financial assumptions were also made List of them are provided below but amount has

been removed for confidentiality issues

Assumptions

Trade Margin

Distributors Margin

DutyVAT Rate

Trade Terms Expense of NPS

Trade Terms Expense of NSV

Advertising ampPromotion of NPS

Indirects (Salaries Wages etc)

Trading Tax

Table 31 Assumptions for Business Projection

Evaluation of Entry into Ice cream Business for Bangladesh Limited 57

100 CONCLUSION

Ice cream has good prospect in Bangladesh It is still a growing market with opportunities for big

new entrants With the barriers of entry UBL needs to consider its priorities UBL being an HPC

company traditionally needs to acquire expertise in cold chain distribution and has to invest a lot

of money to rip the benefits of the industry However to initiate company can take regional

support and acquire resource expertise The company should enter the business as soon as

possible since there is potential threat from DANONE to introduce more ice creams after ISIS

diabetic ice cream and also with potential of the industry arch rival Nestlersquo might consider

entering into the industry too

Evaluation of Entry into Ice cream Business for Bangladesh Limited 58

References

Web References

1 wwwunilevercom

2 wwwunilevercombd

3 wwwhllcom

4 wwwunilevercompk

5 wwwthedailystarcom - Life Style Magazine

6 wwwreuterscouk

Evaluation of Entry into Ice cream Business for Bangladesh Limited 59

Page 30: Square Ice cream

Macentyre-UK

Coverage

Nationwide

Operational centre

10

Total market vehicles

30

Distribution channel

Directthrough appointed distributors

Outlet service

7500

Injected deep freezers

4000

Trolley operations

125

Warehouse no

8

Table 20 Igloo Facilities and Logistics

Kwality

Kwality is currently the second largest ice cream manufacturer of the country The mother

company for the Kwality brand is Sanowara Drinks amp Beverages Ltd a sister concern of

Sanowara Group The company is famous for powdered milk brands Red Cow and Diploma in

Bangladesh The drinks and beverage concern of Sanowara made an entry into the market in

1997 with ldquoYesrdquo brand drinking water and launched the ice cream brand in 1999 With heavy

communication and novelty products it Evaluation of Entry into Ice cream Business for

Bangladesh Limited 32

successfully removed Polar from the second place with a current market share of 27 The

company also operates in the boutique segment with two parlours in Dhaka and Chittagong

Kwality ice cream factory is situated in Chittagong with a floor space of 35000 sft and fully

automated machinery wrapping mix machinery equipments from Italy having capacity of

around 20000 litres of ice cream per shift The ice cream factory employs 140 people The

company is ISO 9001-2000 certified

Kwality was the first true competitor for Igloo products with some major innovation in product

design and communication but their quality is perceived to be lower in the minds of the

consumers and they do not have extrusion ice cream The product prices are also similar to that

of Igloo but they charge a bit lower than Igloo in premium multiple servings However during

market visits it was seen that shops that keep only Kwality or Igloo and Kwality both they can

sell Kwality too although the sales amount is lower than that of Igloo People who look for Igloo

shopkeepers give them that directly but if they get a chance and Kwality ice cream stock is high

they also push Kwality to dry the stock out This gives an indication that market is larger than

what the current players are capable of serving even in Dhaka

Kwality follows a similar distribution model like Igloo but distribution frequency is lower and

amount of cart sellers is limited to 25 and they operate only in Dhaka

Polar

Once a giant in the industry Dhaka Ice Cream Industries Ltd introduced the first hygienically

packed ice cream in Bangladesh in 1987 and the brand name Polar was thus born In the early

days the company started ice cream business with a wide range of products and a variety of

flavours in Dhaka city In 1988 the company started its distribution in the city of Chittagong

then Bogra and continued to cover more cities Presently Polar ice cream is available

throughout Bangladesh The company today trails in the market with 15 market share in the

common format segment Recently Polar has announced launch of ISIS diabetic ice cream with

support from DANONE to turn around in the market

The company has its head office as well as a modern large-scale industrial plant in Dhaka Polar

ice cream is made with Danish expertise using Danish equipment and technology The

production activities and quality control measures are supervised and managed by Danish

experts Polar offers a wide range of delicious flavours and tastes made by ingredients imported

from Europe

Dhaka Ice Cream at present has 3 cold stores in Dhaka Chittagong and Bogra in Bangladesh

From Dhaka cold store they distribute ice creams in Mymensingh Tangail Jamalpur Sherpur

Kishoreganj Netrakona Comilla Narsingdi Barisal Madaripur Agaeljhara Faridpur Magura

Chuadanga Jessore Satkhira Khulna Pirojpur and Sylhet through their distributors In case of

long distance delivery points the company uses auto cooling freezer van

Evaluation of Entry into Ice cream Business for Bangladesh Limited 33

In Dhaka city they distribute ice creams directly to retail stores in freezer vans Besides that

they have several distributors at different points of the city Distributors cover their individual

areas where company is not able to supply directly in their freezer vans Similar model is

followed by the company to distribute ice cream from their other cold storages through out the

country For storing and selling ice creams in retail stores the company like the other players

arranges a deep freezer with the Polar logo and canopy light box

In addition to this distribution the company also undertakes home delivery of ice creams for

special occasions

Savoy

Savoy Ice-cream brand is owned by Sena Kalyan Sangstha (SKS) Group of industries It started

its journey in March 1995 with a factory in Tejgaon Dhaka Yearly turnover is estimated at BDT

388 crores with a market share of roughly 35

The factory has been established with Sonali Bank finance at 6040 equity ratio The total

production capacity of the factory has been estimated at 2400 litres of Ice-cream per day Total

land area of the factory premise is 116 Bigha with 8000 sft area covered with a total project cost

of BDT 144 The factory employs 73 people

Product ranges of the company include all the basic designs and flavours of the industry

However the company has not been much of an innovator in the industry Their product quality

is substantially low than that of other players and they price their products at 10-15 lower than

the other competitors The company imports raw materials mainly from Europe The general raw

materials are Euro cream Skimmed Milk Powder Cocoa Powder and Flavour (Vanilla Mango

and Strawberry) Colour (Yellow Red Chocolate and Green) Ripple Sauce Cheney Fruit Palm

Kernel Oil Anhydrous Butter Oil (Ghee) and Sugar etc

Milk Vita

Milk Vita is one of the most famous brand names in Bangladesh for its liquid dairy milk Owned

by Bangladesh Milk Producersrsquo Co-operative Union Limited (BMPCUL) the company came in

the market with proper dairy milk ice cream in form of cups and choc-bar With a production

capacity of around 1600 litres per day the company is trailing in the market place with 3

market share

Although the Milk Vita Choc-bar was perceived to be extremely tasty by consumers they

probably could not do well due price competition Currently they do not even distribute ice

cream in Dhaka However their presence is seen in outskirts of Dhaka and other nearby towns

If the current market situation prevails Milk Vita would lose their remaining market share and

other companies would benefit especially Igloo However one of the advantages of Milk Vita

remains to be

Evaluation of Entry into Ice cream Business for Bangladesh Limited 34

their nation wide milk supply network They have skimmed milk powder production plant that

Igloo does not have Thus they can combat the seasonality of milk supply that Igloo with its

huge requirement of milk cannot

Strengths and Weaknesses of Competitors

Company

Strengths

Weaknesses

Igloo

1048766 Strong brand image

1048766 High product quality

1048766 Highest no of variety

1048766 Strong distribution network

1048766 Highest visibility

1048766 Strong promotion

1048766 High production capacity

1048766 Presence of extrusion ice cream

1048766 Items are generally a bit pricy

1048766 Igloo does not give free freezers like other companies

1048766 Reluctant in recent times regarding innovation

1048766 Local sourcing of liquid milk does not meet demand

1048766 Failure to use ERP technology slowing decision making

Kwality

1048766 Product variety

1048766 Strong promotion

1048766 Free freezer distributed

1048766 Presence in all price segments

1048766 High production capacity

1048766 Weak distribution

1048766 Lower exposure

1048766 low amount of carts in operation

Polar

1048766 Free freezer

1048766 Quality perceived to be high compared to Kwality

1048766 Discoloured freezers

1048766 Lower exposure

1048766 Low product variety

1048766 Unused capacity

Savoy

1048766 Price is lower

1048766 Discoloured freezers

1048766 Low product variety

1048766 Weak distribution

1048766 Small amount of freezers

1048766 Low production capacity

Milk Vita

1048766 Quality is good due to dairy cream

1048766 Brand leverage from Milk Vita milk

1048766 Low exposure

1048766 Low variety

Table 21 Strengths and Weaknesses of Competition

512 Market Characteristics of the Boutique Segment

With a small market of BDT 98 Cr and 567 share in the branded ice cream market the

boutique segment is currently an increasing segment in the ice cream industry Boutique

segmentrsquos history dates back to 1960s when Igloo launched boutiques in Dhaka to save

distribution cost and promote a culture of ldquoice cream eating outrdquo In later years boutiques lost

their glamour and retail common format segment picked up growth However with Dolce Vita in

the late lsquo80s craze for Italian Artisan ice cream was recreated in the market Although Dolce

Vita is failing in recent times emergence of MoumlvenPick and Club Gelato in 2000 has uplifted the

segment once again Current growth rate of the

Evaluation of Entry into Ice cream Business for Bangladesh Limited 35

segment can be estimated to be approx 20-22 (higher than the common format segment)

Following are the basic detail of all the major players in the segment with their estimated sales3

Players

Outlet

Sales (Cr Taka)

Share

Club Gelato

1

136

199

MoumlvenPick

1

119

174

Andersenrsquos

3

119

174

Gelateria Igloo

3

119

174

Sub Zero (Kwality)

2

051

75

Baskin Robbins

1

015

22

Dolce Vita

1

017

25

American Soft

1

009

12

Rainbow

1

009

12

Others (off site)

089

130

Total Market

682

Table 22 Players and Shares in Boutique Segment

A Detail of Operation

General operational procedure followed by all the operators is as follows

1048766 Operating method There is a variation in operational method among the large operators

1048766 Club Gelato uses kitchen at own premise where imported ingredients and local milk (daily

special service from Milk Vita) are used to make ice cream

1048766 MoumlvenPick directly imports ice cream from Switzerland

1048766 Andersenrsquos Gelateria Igloo and Sub Zero produce ice cream at their factory with a mix of

imported and local ingredients

1048766 Products Around 30-35 flavours of artisan dairy ice cream are served at the premises

1048766 Most sold flavours are Vanilla Ferrero Rocher Butterscotch Chocolate Caramel etc

1048766 Other Products Larger players also serve ice cream desserts (milk shakes ice cappuccino etc)

pastries and other desserts with normal coffee and tea facility at their premises

1048766 Boutiques fight ice cream seasonality with the other products sales during off-peak ice cream

seasons Usually ice cream and other products contribute at 6040 ratio in summer and during

winter and off-peak seasons the ratio reverses

1048766 Pricing Usually the prices of products in this segment are 3-4 times higher than that of the

common format segment

1048766 Prices do not vary with flavours Variation depends on serve style (Cone tub) and use of

toppings and other ingredients (Chocolate sauce nut fruits) etc

1048766 Usual margin charged is around 50-60 over production cost Similar margin is charged for

other products like coffee ice cappuccino etc

3 Yearly sales is estimated based on companyrsquos approximate daily sales collected during

interview

Evaluation of Entry into Ice cream Business for Bangladesh Limited 36

1048766 Target Group Most of the consumers belong to SEC A and higher SEC A with DMFI of at

least BDT 20000

1048766 Foreign delegates and resident foreigners also visit these boutiques

1048766 Main purposes of visits in the boutiques are

bull Youth hangout with friends and having ice cream and ice cream derivatives

bull Family Family night out or eat out at a restaurant and then having dessert

bull Foreigners Having dessert after dinner

1048766 Rush time at boutiques are Afternoon 2-4 pm and at night 9-11 pm

1048766 Offsite sales Most of the large operators also sell offsite They have small freezers for off-site

1048766 Club Gelato and MoumlvenPick serves ice cream at high society parties and programmes

1048766 MoumlvenPick also has kiosks in known hotels like Sheraton

1048766 Promotion No mass promotion is done by any of the companies Word of mouth is the most

important source of promotion Posters and banners outside the premise and occasional

newspaper advertisements are used to communicate special offers

1048766 Growth Drivers Market growth is driven by image innovation quality decoration of facility

environment and special offers

1048766 Club Gelato has the image of selling true Italian dairy ice cream with an excellent hangout

environment

1048766 MoumlvenPick imports ice cream directly from Switzerland and is perceived to be of high quality

1048766 Andersenrsquos operates with the image of ice cream from Denmark

1048766 Gelateria Igloo (from Igloo) and Sub Zero (from Kwality) could not establish the premium

artisan ice cream image

B Players in the Boutique Segment

There are very few players who have significant impact in the boutique segment Detailed

information of all the major boutique segment players is provided below

Evaluation of Entry into Ice cream Business for Bangladesh Limited 37

Club Gelato

Basic Company Information

1048766 Location Banani Road 11 (Planning for a second one in Dhanmondi)

1048766 Established in 2001

1048766 Seating Capacity 48

1048766 Area 1250 sft (including kitchen)

1048766 Owner Mr Jahangir Alam (Bangladesh)

1048766 Business Type Joint business partnership with Singapore

1048766 Staff 15 people (6 in the kitchen)

1048766 Production capacity 150 litres per day

Product Related Information

1048766 Product Italian style parlour scoop ice cream fruit juice coffee and pastries

1048766 Flavours Around 32 flavours available

1048766 Most selling Ferraro Rocher Vanilla Pistachio

1048766 Innovations New variants and ingredients are communicated by their Italian supplier and

Club Gelato decides what to take from them

1048766 Serve type Cup Cone Glasses Box for take away

Consumer Profile

1048766 Primary Teenagers and Young Adults (18-30) amp Diplomats

1048766 Secondary Family consumers for eat out

1048766 Income Group High income customers tentatively from SEC A and higher SEC A

1048766 Geographic Area Diversified

1048766 Rush time 8-10 pm

Sales and Price Information

1048766 Sales BDT 50000 (60 Ice cream 40 other desserts) daily in summer In winter however

other products sell more and thus they keep total sales at the same level

1048766 Price 750 per litre for any flavour

1048766 Sales Volume 50-60 litres per day

Supply Chain Placement Information

1048766 Milk Local sourcing from Milk Vita (4050 litres per day)

1048766 Chocolates amp Flavours Belgium France Germany

1048766 Transportation Mainly air (They can afford it due to high margin)

1048766 Contribution of various materials Flavours (30) Milk (20) other parts are water and air

Promotional Materials

1048766 Materials used are near premises POS materials for promoting the parlour only

Table 23 Detail of Club Gelato

Evaluation of Entry into Ice cream Business for Bangladesh Limited 38

MoumlvenPick of Switzerland

Basic Company Information

1048766 Location Gulshan

1048766 Established in 2000

1048766 Seating Capacity 55

1048766 Owner Mr Arif Mahmud

1048766 Business Type Franchise of International MoumlvenPick

1048766 Storage Capacity in Shop 150 litres

Product Related Information

1048766 Product Imported MoumlvenPick ice creams coffee chicken sandwich and Frappe

1048766 Flavours Around 30 to 35 flavours available

1048766 Most selling Swiss Chocolate caramel Vanilla Dream Espresso Strawberry

1048766 Innovations New variants are communicated by their franchiser and they decide on flavours

that they want

1048766 Serve type Cup Cone Glasses Box for take away

Consumer Profile

1048766 Primary Teenagers and Young Adults (18-30) (70) amp Diplomats

1048766 Secondary Family consumers for eat out

1048766 Income Group High income customers tentatively from SEC A

1048766 Geographic Area Concentrated in Gulshan and nearby areas

1048766 Rush time Afternoon- Young Adult 10 to 11 pm Foreigners

1048766 the company also serves at parties and has freezers in known hotels where their ice creams

are served

Sales and Price Information

1048766 Sales BDT 35-40000 daily in summer

1048766 Price 640 per litre for any flavour

1048766 Sales Volume 55-60 litres per day

Supply Chain Placement Information

1048766 Transportation Imported finished goods by ship

1048766 Ship travel time 19 days

1048766 Port clearance 10 days

1048766 Safety Cushion Extra 10 days

Promotional Materials

1048766 Materials used are near premises POS materials for promoting the parlour only

Table 24 Detail of MoumlvenPick of Switzerland

Evaluation of Entry into Ice cream Business for Bangladesh Limited 39

Andersenrsquos of Denmark

Basic Company Information

1048766 Location Gulshan (2 others in Uttara Dhanmondi)

1048766 Established in 2001

1048766 Seating Capacity 48

1048766 Owner United Group

1048766 Business Type Franchise of Australian company Andersenrsquos of Denmark

1048766 Production Tongi Factory of United Group

1048766 Production capacity 2000 litres per day in factory

1048766 Storage Capacity in Shop 150 litres

Product Related Information

1048766 Product Danish parlour scoop ice cream and coffee

1048766 Flavours Around 30 to 35 flavours available

1048766 Most selling Strawberry Butter Scotch Green

1048766 Innovations New variants and ingredients are communicated by their franchiser and they

decide on flavours that they want

1048766 Serve type Cup Cone Glasses Box for take away

Consumer Profile

1048766 Primary Teenagers and Young Adults (18-30) (70) amp Diplomats

1048766 Secondary Family consumers for eat out

1048766 Income Group High income customers tentatively from SEC A

1048766 Geographic Area Concentrated in Gulshan and nearby areas

1048766 Rush time 8 to 10 pm

Sales and Price Information

1048766 Sales BDT 10-12000 daily in summer

1048766 Price 460 per litre for any flavour

1048766 Sales Volume 40-50 litres per day

Supply Chain Placement Information

1048766 Milk 2025 kg packs are imported

1048766 Chocolates amp Flavours Imported

1048766 Butte paper Local sourcing

1048766 Transportation Ship

Promotional Materials

1048766 Materials used are near premises POS materials for promoting the parlour only

Table 25 Detail of Andersenrsquos of Denmark

Evaluation of Entry into Ice cream Business for Bangladesh Limited 40

Gelateria Igloo

Basic Company Information

1048766 Location Banani Kemal Ataturk Avenue (Two others in GEC Mor Chittagong and Naya

Paltan)

1048766 Established in 2000

1048766 Seating Capacity 20

1048766 Production From Igloo factory in Shyampur Narayanganj

Product Related Information

1048766 Product Parlour scoop ice cream and coffee only

1048766 Flavours Around 30 flavours available

1048766 Most selling Vanilla Strawberry Chocolate Pistachio Butter Scotch Tutti Fruity

1048766 Serve type Cup Cone Glasses Box for take away

Consumer Profile

1048766 Primary Teenagers and Young Adults (18-30)

1048766 Secondary Family consumers for eat out

1048766 Income Group High income customers tentatively from SEC A and B

1048766 Geographic Area Diversified

1048766 Rush Time afternoon and evening

Sales and Price Information

1048766 Sales BDT 8000 to 10000 daily in summer Nearly one fourth in winter

1048766 Price Varies but 350 per litre of vanilla

Promotional Materials

1048766 POS materials at the premises

Table 26 Detail of Gelateria Igloo

52 Price Comparison of Common and Boutique Segments

Price ranges of both common format and boutique segment cannot exactly be pin pointed as

products do not follow common structure and variations occur with use of toppings mixing of

flavours and use of coatings However a price comparison has been made among the brands

based on their price of per litre of vanilla flavoured ice cream in the market It appears to be as

following

Company

Price Litre Vanilla

Club Gelato

750

MoumlvenPick

640

Andersenrsquos

460

Dolce Vita

440

Igloo

100

Kwality

100

Polar

100

Milk-Vita

90

Savoy

85

Table 27 Comparative Price Analysis

As it can be seen there is price gap within the range of BDT 100-400 Ice cream kiosks and

small scooping boutiques can operate within that range

Evaluation of Entry into Ice cream Business for Bangladesh Limited 41

60 CONSUMER ANALYSIS

61 Target Group of Ice cream

Who are the consumers of ice cream This question does not have a clear answer Ice cream is a

food for all It is the only food consumed by a human being at less than 0 degree centigrade

temperature and people of all ages feel indulged to have it However we can determine focus

target groups for both branded common format and artisan boutique ice cream Group

discussions and market visits were done to get insight into the consumers along side resources

form secondary sources Age based target group is common for both segments but variation

among the groups occur mainly based on SEC and DMFI classification

611 Geographic Group

Branded ice cream remains an urban product till date Geographically branded ice cream has

reached urban and semi urban areas up to Thana Head Quarter levels Ice cream has reached

areas where electricity is available Small artisan players are available in places where large

branded players have no distribution

612 Target Age Group

Age wise grouping of target consumers is as follows

1048766 Urban kids in the age group of 5-14

1048766 They mainly consume normal sticks cups cones innovative fillers and water ice creams

1048766 Urban youth in the age group of 15-24

1048766 They consume premium and extrusion sticks and cones

1048766 Urban mothers in the age group of 25-35

1048766 They determine the family purchases Even when the father purchases ice cream decision is

taken by them

Consumption pattern of various age groups are depicted in the following chart Ice cream

consumption pattern50203005 to 14 yrs15 to 24 yrs25 to 35 yrs

Figure 11 Target Group wise Consumption Pattern Evaluation of Entry into Ice cream Business

for Bangladesh Limited 42

613 Target SEC and DMFI Group

Common Format

SEC A and B is the target group for common format ice cream However with rapid increase in

price level over the years has made it a ldquohard to consumerdquo product for SEC B consumers who

belong to lower DMFI group

Boutique Format

Boutique formatrsquos higher margin and high price range makes it an exclusively SEC A ice cream

People belonging to upper and upper middle class have access to the mediocre boutiques and

only higher upper class can have premium ice creams like Club Gelato and MoumlvenPick

Another unique target group for boutique format are the foreigners who live in Bangladesh

These people tend to visit the parlours to have ice cream as dessert especially after dinner

62 Ice cream in Consumer Lifestyle

Figure 12 Ice cream in Consumer Life style

This simple overview of ice cream in consumer lifestyle was determined based on in-depth

research analysis of UBL and validated through qualitative group discussions by the author

However detail of in-depth research is provided in a later section of this chapter

Evaluation of Entry into Ice cream Business for Bangladesh Limited 43

63 Highlights of Purchase Habit of Ice cream

631 Common Habits across Target Groups

There are some common habits that were identified in earlier researches and group discussions

with consumers Common habits mean the consumer approach towards ice cream that is seen

across all target groups eg kids youth and adult purchasers These are outlined below

1048766 Ice cream is mainly seen as a dessert or a snack Impulse ice cream is seen as a quick snack

that is consumed when it is in sight Visibility plays a big role here Regarding family packs

people see it as a post-food dessert

1048766 Ice cream purchase is commonly a planned event When the contexts arise people generally

take a bit of time to decide whether or not to have ice cream or when they want to go to a

boutique they make due considerations regarding which boutique to visit

1048766 Ice cream purchase decision is taken based on favourite flavour People tend to try out new

variants and flavours when they first see it They compare the taste with earlier experience and

when they purchase later they choose the flavour they have liked most

1048766 For In-Home segment decision is mostly taken on the flavour Generally people come up with

different flavours of choice and most voted flavour is chosen

1048766 People become aware of new variants or flavours mainly through word-of-mouth

Advertisement (new launches special offers and festivals) in newspaper is another source of

awareness

1048766 People are currently indifferent towards the price level of premium flavours However some

feel that price of Choc-bar or water ice creams (lolly) is a bit much If less they would have

consumed more Some also feel that companies should come up with branded ice cream in the

price range of BDT 5-8

1048766 Ice cream is purchased from nearby shops If required brand and flavour is not available 2-3

shops will be visited and then available flavour will be selected even if the required one is not

found This is done mainly not to ruin the mood for ice cream

1048766 People are very open to try new brands and flavours especially if it comes from a credible

source They would try new flavours and if they are satisfied with the taste they would repeat

purchase

1048766 Regarding boutique visits people feel that boutiques need to have a proper environment

enough flavours and other snacks

1048766 While visiting boutique with family or companion they want variation in flavours so that

they would order different flavours and taste each otherrsquos ice cream It is seen as a sign of

togetherness

1048766 Frequency of ice cream purchase varies among people It depends on peer pressure collective

family decision summer heat and attitude towards ldquoice creamrdquo itself as a product Evaluation of

Entry into Ice cream Business for Bangladesh Limited 44

632 Habits of Kids

1048766 Kids choose ice cream flavours by the look of the product (generally pictures shown in POS

materials and carts) They love colour and designs of the products let it be a common format or a

boutique ice cream

1048766 Kids (when in house) would go with the housemaid to the nearby shop choose the flavour

they want (within range of the amount given to the maid) and buy it

1048766 When with parents they would take the product they like even if the price is lower than some

other product However mothers play a role in this decision They would want their children not

to choose too high priced a product or coloured products

633 Habits of Youth

1048766 Young people are the main consumer of impulse ice cream They also are one of the major

consumers in the boutique segment

1048766 Young people love to try out new products that come into the market Another side of the coin

is that they are not very loyal to a brand or a flavour and tend to switch a lot

1048766 Regarding boutique visits young people go to boutiques to have an ldquoice cream hang outrdquo with

peer groups They would stay there for a longer period of time while they have their ice cream

1048766 Some times young people make milk shakes and other ice cream based desserts

634 Habits of Mothers

1048766 Mothers worry about their childrenrsquos health and they prefer ldquovanillardquo type of brands

However when price constraint occurs they go for water ice creams for their children They try

to convince their kidrsquos purchase decision

1048766 Regarding family purchase motherrsquos decision is sometimes prioritized by the whole family

64 Barriers to Ice cream Consumption

641 Emotional Barriers

1048766 Overindulge (close to sinful)

1048766 Undisciplined (no control)

1048766 Childish (licking)

1048766 Artificial Image

642 Functional Barriers

1048766 People of SEC B feel that ice cream is an expensive dessert (If less expensive would consume

more often)

1048766 It leads to cold cough - especially in winter rainy season

1048766 It contains artificial additives preservatives

1048766 It is very high in calories that lead to fattening

Evaluation of Entry into Ice cream Business for Bangladesh Limited 45

1048766 It does not quench ldquothirstrdquo

1048766 Less convenient (portable immediate eat)

1048766 Messy Dripping

65 Research Findings

The highlights regarding purchase habits triggers and barriers of ice cream consumption provide

a glimpse into the consumer world of ice cream industry However UBL CMI conducted a

formal research exclusively on ice cream consumers to identify

1048766 Occasions of ice cream

1048766 Frequency of ice cream consumption

1048766 Expectations from ice cream occasions

1048766 Personalities that they desire from ice cream

651 Relevant Occasions in Daily Lives of Consumers

Research question regarding ldquousual occasions of life that occurred most frequently in day-to-day

lives of the respondentsrdquo generated the following replies

Occasion

of Respondents saying Yes

Watching TV

93

Normal Dinner At Home

91

Normal Lunch At Home

89

At Home While ReadingMusicSurfing

86

Informal Family Get Together

85

Out Of Home Hanging Out With Friends

84

Out Shopping

84

Mid-Afternoon Break At Home

83

At Home By Myself During The Day

82

Special Dinner At Home

82

Informal Dinner Out Of Home

82

Normal Lunch Out Of Home

82

Leisure Walk

79

Coming Home From WorkSchool

78

Special Dinner Out Of Home

78

Celebration

78

A Night In With Friends

77

At Home By Myself In The Evening

77

Special Lunch Out Of Home

76

Mid-Afternoon Break Out Of Home

75

Special Lunch At Home

73

Day out with Partner

72

Midmorning Break

70

At Breakfast

68

Family Day Out

68

During Work Or At School

65

Evaluation of Entry into Ice cream Business for Bangladesh Limited 46

Travelling ToFrom WorkSchool

65

At The Cinema

61

Special Event

56

Clubbing At A Party

50

Post GymSports

48

Table 28 Relevant Occasions in Consumersrsquo Lives

Respondents were then asked to mention ldquofrequency of occurrence of the identified occasionsrdquo

The identified replies are as follows Normal dinner at homenormal lunch at homeComing home

from workschoolTraveling tofrom workschoolDay out with Partner SpouseMid-afternoon

break at homeOut of home hanging out with friendsLeisure walkMid-afternoon break out of

homeA night in with friendsSpecial dinner at homeSpecial lunch out of homeFamily day

outSpecial eventPost gymsportsDaily2-3 Times A WeekWeekly2-3 Times A MonthOnce A

MonthEvery 2-3 MonthsLess OftenNever Figure 13 Frequency of Occurrence of Occasions

This shows that ldquoNormal dinner at home Watching TV Normal Lunch At Home At Home

While ReadingMusicSurfing Coming Home From WorkSchool During Work Or At School

Travelling ToFrom WorkSchool Midmorning Break Day Out With Partner Spouse At Home

By Myself During The Dayrdquo are the most frequent daily rituals of busy lives of consumers

652 Frequency of Ice cream Consumption

Respondents were asked to mention ldquoconsumption pattern of ice cream during the identified

occasionrdquo on a scale of 1-5 depicting frequencies like ldquo(5) always (4) most of the times (3)

about half of the times (2) sometimes (1) never do not knowrdquo The responses are depicted in

the following table

Evaluation of Entry into Ice cream Business for Bangladesh Limited 47

444474544655555566756665775967779991011101111101210111110101113111412131314161

011121411131216181519181518211817171719181718201721222130303434253437403741394

046383944464746453745414641374638504843414839373030292726232725222020201926202

21722221317Midmorning

breakWhile clubbing at aAt the cinemaSpecial eventNormal lunch out ofA night in with

friendsNormal dinner atInformal dinner out ofAt home by myselfAt home by myself inOut

shoppingSpecial lunch atDay out with SpouseWatching TVAlwaysmost of the timesAbout half

of the timesSometimesneverdo not know

Figure 14 Frequency of Ice cream Consumption

As it can be seen ldquoDay out with Spouse Special lunch at home Special dinner at home

Watching TV Family day out Celebrationrdquo are the occasions where most frequently ice cream is

consumed

653 Market Character Mapping Relevant Occasions vs Frequency of Consumption

If we plot frequency of consumption on the X-axis of a chart and relevance of occasion

occurrence on the Y-axis taking the above mentioned values as cut-off values we get four

quadrants in the chart depicting four market scenarios that any ice cream manufacturer in

Bangladesh market might encounter given the current market situation This market

segmentation is based on frequency of ice cream consumption in daily occasions of consumer

lives

The segments are

1048766 OPPORTUNITY MARKET High Relevant Occasions-Low Ice cream Frequency

1048766 QUESTION MARKET Less Relevant Occasions-Low Ice cream Frequency

1048766 HIGH FREQUENCY MARKET Relevant Occasions-High Ice cream Frequency

1048766 CAPTIVE MARKET Less Relevant Occasions-High Ice cream Frequency

The chart looks as follows Evaluation of Entry into Ice cream Business for Bangladesh Limited

48

Figure 15 Relevance of Occasion-Frequency of Consumption Mapping

As it can be seen from the above chart Bangladesh Market still lies in the Opportunity and

Question market zone with a pull towards High frequency and Captive Market zones This is

evident from market data as penetration of ice cream still remains at Thana headquarters levels

Also this explains the high market growth rate of 17 as market is yet under developed and

branded quality ice cream has yet not reached all levels of consumers especially rural level that

constitutes around 75 of Bangladeshi market

From the above analysis we can establish that target of ice cream manufacturers should be to

penetrate more into the Bangladeshi market to create higher frequency of ice cream

consumption The following chart shows the strategies to follow for ice cream manufacturers

Figure 16 Required Market Strategy for Bangladesh

Evaluation of Entry into Ice cream Business for Bangladesh Limited 49

As relevance of ice cream consumption occasions can hardly be controlled by marketers their

endeavour should be to create more ldquoemotional and functionalrdquo attachment to ice cream in less

frequent occasions through ldquomarket developmentrdquo strategy to earn share from overall food

expenditure of consumers and at the same time make them consume more ice cream in highly

relevant occasions through ldquopenetrationrdquo strategy

654 Consumersrsquo Emotional Requirements and Product Attributes

All consumers under these clusters also identify the emotional requirements and the significant

product attributes they seek from their current preferred and future desired ice creams These are

provided below

Cluster

Emotional Functional Requirement

Product Attributes

Enjoyment

Flavour Variety

1048766 Combination of different flavours

1048766 Combination of different textures

1048766 Very sweet

1048766 With wafer or biscuit

1048766 With chocolate

1048766 Of a well known brand

Socially Involved

Spoonable Rich

1048766 Very creamy

1048766 Only natural ingredients

1048766 No mess

Care

Size Creaminess

1048766 Big

1048766 Rich full taste

1048766 Smooth

1048766 Value for money

1048766 No mess

Unwind amp Escape

Economy

1048766 Crunchy

1048766 Economic

1048766 Of a well known brand

1048766 Nutritious

Balanced Convenience

Health Conscious

1048766 Of a well known brand

1048766 Nutritious

1048766 Milk based

1048766 Low sugar

1048766 Low carbohydrates

1048766 Filling

Active Self-Grooming

Fruit Vitamins

1048766 Healthy

1048766 Fruit based

1048766 Low fat

1048766 Liquid or drinkable

1048766 Nutritious

1048766 Of a well known brand

Confidence

Drinkable Light

1048766 Low calories

1048766 Light on the stomach

1048766 Chewy or gooey

1048766 Not so sweet

1048766 Natural appearance

Sensual

Appeal or image

1048766 No artificial additives

Evaluation of Entry into Ice cream Business for Bangladesh Limited 50

1048766 Natural appearance

1048766 Melting slowly

1048766 Attractive packaging

1048766 High quality ingredients

1048766 Of a well known brand

Table 29 Requirements amp Product Attributes Desired by Consumer Clusters

Of these findings we see that the identified highlighted barriers to ice cream consumption are

pretty evident among the consumers Mostly people want products of a reliable source or a well

known brand low calories quality ingredients value for money economic type

Evaluation of Entry into Ice cream Business for Bangladesh Limited 51

70 INDUSTRY ATTRACTIVENESS AND ENTRY PROSPECTS

71 Driving Forces of Growth

As identified in the earlier sections there are several driving forces behind the growth of ice-

cream industry in Bangladesh

712 Trade and Infrastructural Level

1048766 As a result of globalization newer varieties have been introduced to the local products Many

foreign companies are also coming as franchise so there has been increased competition and

these boutiques are setting higher standards for the local producers

1048766 The present market growth rate is 18-19 which is being influenced by larger players like

Igloo who are expanding their distribution nation wide with expansion of national electricity

grid

1048766 With entry of Modern Trade and recent organized business approach of retailers has made it

possible for ice cream manufacturers to penetrate into shops even without providing them with

branded freezers

1048766 Weather change has increased ldquosummerrdquo season in our country which has reduced negative

seasonal impact on ice cream

1048766 Large companies like Igloo have taken global learning of using carts as an effective tool of

availability and visibility for ice cream

1048766 New and improved technologies are being used in the production process This technological

advancement has improved quality increased speed of production and made the process more

cost effective

713 Consumer Level

1048766 Only a few years back rich people could afford the luxury of having ice-cream but now it has

become a common product for everybody Ice-cream companies are producing different products

with a wide price range for consumers of every class and status

1048766 Nowadays companies are doing promotional campaigns more frequently the customers get to

know about the product which makes it easier for them to buy the best one

1048766 The improved standard of life and more modernized lifestyle of people is an important reason

for the increased consumption thus growth of the ice-cream industry

Evaluation of Entry into Ice cream Business for Bangladesh Limited 52

72 Prospects of Entry

The ice-cream industry of Bangladesh is an attractive one for the investors because there is a

huge market but number of producers is very small The major reasons behind industry

attractiveness are as follows

1048766 The industryrsquos current growth potential is very high with opportunity for market development

1048766 The competition currently permits adequate profitability and the competitive forces are

becoming stronger with time

1048766 Boutique segment is at a very high growth stage but no operator is currently operating with a

mid price range of BDT 100-400 Ice cream kiosks and small scooping boutiques can operate

within that range

1048766 Current industry driving forces are favourable for the future industry profitability

1048766 Globally oriented consumers look for variety in ice cream that is currently not available

Latest innovations came in the market in 2002 People would welcome new variety and flavours

1048766 There is a gap in the market for balanced convenience through ice cream where consumers can

get nutritional benefits for ice cream Also emotional attachment to ice cream could further be

improvised in promotional campaigns

1048766 There is high scope for market penetration and development to increase frequency of ice

cream consumption

1048766 Level of risk or uncertainty is very low in ice-cream industry because the consumer market is

so huge any product with a standard quality and careful pricing will be able to make significant

profit

1048766 As for geographic reach of the industry 60 market is still in Dhaka There is scope of

expansion and a new entrant can easily capture market share within Dhaka using carts even if

they do not want nation wide cold chain distribution

1048766 The production process is very complex and capital requirements are also high So before

going into production any company should know about their capabilities and weaknesses and

then start the business or else they might suffer huge loss at a certain level

1048766 Unilever can acquire the required resource and use existing multi-national multi-cultural

expertise to enter the market in a grand way

1048766 With high probability of entry from DANONE with more products like the ISIS diabetic ice

cream Unilever should consider entering in this industry as soon as possible

Evaluation of Entry into Ice cream Business for Bangladesh Limited 53

80 ENTRY STRATEGY FOR UNILEVER

While describing the suggested entry strategy for UBL certain issues have been kept

confidential and some issues have been touched but not explained to keep consistency with UBL

confidentiality policy

81 Suggested Entry Areas for UBL

1048766 Boutique segment of the Bangladesh ice cream is only 5 of the branded market UBL needs

to pursue a larger scope to make the entry viable

1048766 UBL cannot fight with unbranded segment as global product quality mandate of Unilever does

not allow UBL to fight in low price-low quality segment

1048766 Recommend entry should be in the common format segment with both single and multiple

servings and in the boutique segment with a different brand name (if possible BEN amp JERRYrsquoS)

1048766 UBL should build up state-of-art modern factory for manufacturing and establish cold chain

facilities initially focusing on metro cities

1048766 Investment issues are required to be addressed for building factory and cold chain and capital

requirement needs to be identified for that purpose4

1048766 UBL may have boutiques for driving image selective top-end offering

1048766 Kiosks can be setup near universities and shopping malls

1048766 Boutiques should be concentrated in Dhaka and Chittagong

1048766 Ice cream for boutiques and kiosks would be produced in factory as institutional packs of 9-10

litres

82 Products

1048766 As a Brand Building country in global Unilever operating framework UBL is entitled only to

bring products developed by the Brand Development countries

1048766 Unilever should focus on serving products that have nutritional benefits (already available

globally) along with usual satisfactions of sensual pleasure functional attributes etc

1048766 Current existent players especially Igloo and Kwality have extensively copied global and

regionally available Unilever products eg Cornelli is same as Wallrsquos Cornetto Vinetta is similar

to Vienetta Mega is similar to Magnum etc UBL needs to differentiate these to consumers on

the ldquotaste the originalrdquo platform where global quality is focused regarding the products

1048766 UBL should also bring regionally famous brands like Moo or Max to create image

differentiation

1048766 Magnum or Moo should be used as premium end ice cream to generate more profit margin

Evaluation of Entry into Ice cream Business for Bangladesh Limited 54

83 Placement

1048766 Distribution focus should be in Dhaka for entry as Dhaka contributes more than 60 of total

ice cream sales in the country

1048766 Company may use carts as distribution method They serve as good source of visibility and

availability It would help in increasing impulse purchase

1048766 At least 1500 outlets in Dhaka and Chittagong needs to be actively served using dedicated

branded refrigerators to generate sales

1048766 50 carts should operate in Dhaka and Chittagong

84 Price

1048766 UBL products should be priced at par with Igloo pricing for the common format ice creams

1048766 UBL can bring in premium single-serve SKUS for the higher economic classes in the price

range of BDT 60-80

1048766 Smaller SKUs (small lolly stick) can be introduced in the price range of BDT 10-15

1048766 In the boutique segment UBL should price products above the semi-premium segment

(Gelateria Igloo Sub Zero or Andersenrsquos) but lower than that of Club Gelato or MoumlvenPick

85 Promotion

1048766 UBL would require strong marketing campaign (As high as 50 of sales) to have a grand

entry in the market

1048766 Presence in the television media would be of utmost importance More than 50 of

promotional expense should be made here initially Gradually it can be reduced

1048766 Newspaper would serve as the second most important option

1048766 Billboards should also be used

1048766 Activations (similar to Lux Channel i Super Star or Igloo Festival) should be done to generate

trial

86 Scope of Opportunity

Table 30 Value and Volume Based Scope of Opportunity for UBL

Value (BDT Cr)

Volume (Tons)

Market

131

7835

Common

121

7600

Boutique

98

235

Evaluation of Entry into Ice cream Business for Bangladesh Limited 55

861 Geographic Contribution

1048766 Dhaka (61)

1048766 Chittagong (19)

1048766 Sylhet (10)

862 UBL objectives

Common Format Ice Creams

1048766 Target 10 Market share in 1st year operation

1048766 Value BDT 11 Cr

1048766 Production capacity required 21 Tons day

1048766 Freezer Placement 1500 freezers

1048766 Cart operation At least 50 carts

Boutiques

1048766 Target Further develop the market

1048766 Focus Dhaka Chittagong and Sylhet Metro

1048766 Franchise At least 20 franchisee operations nation wide in divisional towns

1048766 Pricing Below imported parlours above common formats with around BDT 400 per Litre

87 Critical Success Factors

1048766 UBL is considered as a high profile company in Bangladesh and thus they cannot operate in

the market only with common products like choc-bars and cups They must have premium

products (these require extrusion line) also to carry their brand image Otherwise UBL would not

be able to charge usual premium over competition products

1048766 Launch of ice cream would require huge promotional and activation support in order to gain

customers from Igloo People want novelty regarding ice cream and UBL have to let them know

about their products and create hype

1048766 Cart should be used as a source of distribution Recent successes of Unilever companies like

Indonesia shows that carts can generate more sales and can be used as source of visibility in the

minds of both retail traders and consumers Carts can also provide incremental sales to the

company

1048766 UBL have to create a strong cold chain for ice cream (initially in Dhaka and Chittagong) to

ensure quality products for consumers

1048766 UBL have to build capacity very rapidly to meet consumer demand if the launch is successful

Evaluation of Entry into Ice cream Business for Bangladesh Limited 56

90 BUSINESS PROJECTION

91 Basic Assumptions

Business projection for ice cream business was made based on a conservative approach UBL

would require spending significantly on production capacity and factory dedicated to ice cream

Thus to analyse business possibilities of ice cream certain assumptions were made and collected

data were used These are

1048766 Production equipments and cabinets would cost approximately BDT 55 crores

1048766 Production equipments 45

1048766 Packaging Equipments 15

1048766 Storage Facility 20

1048766 Branded Freezers 10

1048766 Distribution Investment 10 (Distributors would also invest themselves)

1048766 Ice cream factory with a floor size of 20000 sqft would cost BDT 25 crores

1048766 Objective is to capture 10 market share in Dhaka and Chittagong in the first year

1048766 Business would grow by 50 in year 2 and 3 30 in year 4 and 25 in year 5

1048766 Weighted price per litre is BDT 170 according to volume share of single serve ice cream

multiple serve ice cream and boutique ice cream

1048766 Other financial assumptions were also made List of them are provided below but amount has

been removed for confidentiality issues

Assumptions

Trade Margin

Distributors Margin

DutyVAT Rate

Trade Terms Expense of NPS

Trade Terms Expense of NSV

Advertising ampPromotion of NPS

Indirects (Salaries Wages etc)

Trading Tax

Table 31 Assumptions for Business Projection

Evaluation of Entry into Ice cream Business for Bangladesh Limited 57

100 CONCLUSION

Ice cream has good prospect in Bangladesh It is still a growing market with opportunities for big

new entrants With the barriers of entry UBL needs to consider its priorities UBL being an HPC

company traditionally needs to acquire expertise in cold chain distribution and has to invest a lot

of money to rip the benefits of the industry However to initiate company can take regional

support and acquire resource expertise The company should enter the business as soon as

possible since there is potential threat from DANONE to introduce more ice creams after ISIS

diabetic ice cream and also with potential of the industry arch rival Nestlersquo might consider

entering into the industry too

Evaluation of Entry into Ice cream Business for Bangladesh Limited 58

References

Web References

1 wwwunilevercom

2 wwwunilevercombd

3 wwwhllcom

4 wwwunilevercompk

5 wwwthedailystarcom - Life Style Magazine

6 wwwreuterscouk

Evaluation of Entry into Ice cream Business for Bangladesh Limited 59

Page 31: Square Ice cream

Bangladesh The drinks and beverage concern of Sanowara made an entry into the market in

1997 with ldquoYesrdquo brand drinking water and launched the ice cream brand in 1999 With heavy

communication and novelty products it Evaluation of Entry into Ice cream Business for

Bangladesh Limited 32

successfully removed Polar from the second place with a current market share of 27 The

company also operates in the boutique segment with two parlours in Dhaka and Chittagong

Kwality ice cream factory is situated in Chittagong with a floor space of 35000 sft and fully

automated machinery wrapping mix machinery equipments from Italy having capacity of

around 20000 litres of ice cream per shift The ice cream factory employs 140 people The

company is ISO 9001-2000 certified

Kwality was the first true competitor for Igloo products with some major innovation in product

design and communication but their quality is perceived to be lower in the minds of the

consumers and they do not have extrusion ice cream The product prices are also similar to that

of Igloo but they charge a bit lower than Igloo in premium multiple servings However during

market visits it was seen that shops that keep only Kwality or Igloo and Kwality both they can

sell Kwality too although the sales amount is lower than that of Igloo People who look for Igloo

shopkeepers give them that directly but if they get a chance and Kwality ice cream stock is high

they also push Kwality to dry the stock out This gives an indication that market is larger than

what the current players are capable of serving even in Dhaka

Kwality follows a similar distribution model like Igloo but distribution frequency is lower and

amount of cart sellers is limited to 25 and they operate only in Dhaka

Polar

Once a giant in the industry Dhaka Ice Cream Industries Ltd introduced the first hygienically

packed ice cream in Bangladesh in 1987 and the brand name Polar was thus born In the early

days the company started ice cream business with a wide range of products and a variety of

flavours in Dhaka city In 1988 the company started its distribution in the city of Chittagong

then Bogra and continued to cover more cities Presently Polar ice cream is available

throughout Bangladesh The company today trails in the market with 15 market share in the

common format segment Recently Polar has announced launch of ISIS diabetic ice cream with

support from DANONE to turn around in the market

The company has its head office as well as a modern large-scale industrial plant in Dhaka Polar

ice cream is made with Danish expertise using Danish equipment and technology The

production activities and quality control measures are supervised and managed by Danish

experts Polar offers a wide range of delicious flavours and tastes made by ingredients imported

from Europe

Dhaka Ice Cream at present has 3 cold stores in Dhaka Chittagong and Bogra in Bangladesh

From Dhaka cold store they distribute ice creams in Mymensingh Tangail Jamalpur Sherpur

Kishoreganj Netrakona Comilla Narsingdi Barisal Madaripur Agaeljhara Faridpur Magura

Chuadanga Jessore Satkhira Khulna Pirojpur and Sylhet through their distributors In case of

long distance delivery points the company uses auto cooling freezer van

Evaluation of Entry into Ice cream Business for Bangladesh Limited 33

In Dhaka city they distribute ice creams directly to retail stores in freezer vans Besides that

they have several distributors at different points of the city Distributors cover their individual

areas where company is not able to supply directly in their freezer vans Similar model is

followed by the company to distribute ice cream from their other cold storages through out the

country For storing and selling ice creams in retail stores the company like the other players

arranges a deep freezer with the Polar logo and canopy light box

In addition to this distribution the company also undertakes home delivery of ice creams for

special occasions

Savoy

Savoy Ice-cream brand is owned by Sena Kalyan Sangstha (SKS) Group of industries It started

its journey in March 1995 with a factory in Tejgaon Dhaka Yearly turnover is estimated at BDT

388 crores with a market share of roughly 35

The factory has been established with Sonali Bank finance at 6040 equity ratio The total

production capacity of the factory has been estimated at 2400 litres of Ice-cream per day Total

land area of the factory premise is 116 Bigha with 8000 sft area covered with a total project cost

of BDT 144 The factory employs 73 people

Product ranges of the company include all the basic designs and flavours of the industry

However the company has not been much of an innovator in the industry Their product quality

is substantially low than that of other players and they price their products at 10-15 lower than

the other competitors The company imports raw materials mainly from Europe The general raw

materials are Euro cream Skimmed Milk Powder Cocoa Powder and Flavour (Vanilla Mango

and Strawberry) Colour (Yellow Red Chocolate and Green) Ripple Sauce Cheney Fruit Palm

Kernel Oil Anhydrous Butter Oil (Ghee) and Sugar etc

Milk Vita

Milk Vita is one of the most famous brand names in Bangladesh for its liquid dairy milk Owned

by Bangladesh Milk Producersrsquo Co-operative Union Limited (BMPCUL) the company came in

the market with proper dairy milk ice cream in form of cups and choc-bar With a production

capacity of around 1600 litres per day the company is trailing in the market place with 3

market share

Although the Milk Vita Choc-bar was perceived to be extremely tasty by consumers they

probably could not do well due price competition Currently they do not even distribute ice

cream in Dhaka However their presence is seen in outskirts of Dhaka and other nearby towns

If the current market situation prevails Milk Vita would lose their remaining market share and

other companies would benefit especially Igloo However one of the advantages of Milk Vita

remains to be

Evaluation of Entry into Ice cream Business for Bangladesh Limited 34

their nation wide milk supply network They have skimmed milk powder production plant that

Igloo does not have Thus they can combat the seasonality of milk supply that Igloo with its

huge requirement of milk cannot

Strengths and Weaknesses of Competitors

Company

Strengths

Weaknesses

Igloo

1048766 Strong brand image

1048766 High product quality

1048766 Highest no of variety

1048766 Strong distribution network

1048766 Highest visibility

1048766 Strong promotion

1048766 High production capacity

1048766 Presence of extrusion ice cream

1048766 Items are generally a bit pricy

1048766 Igloo does not give free freezers like other companies

1048766 Reluctant in recent times regarding innovation

1048766 Local sourcing of liquid milk does not meet demand

1048766 Failure to use ERP technology slowing decision making

Kwality

1048766 Product variety

1048766 Strong promotion

1048766 Free freezer distributed

1048766 Presence in all price segments

1048766 High production capacity

1048766 Weak distribution

1048766 Lower exposure

1048766 low amount of carts in operation

Polar

1048766 Free freezer

1048766 Quality perceived to be high compared to Kwality

1048766 Discoloured freezers

1048766 Lower exposure

1048766 Low product variety

1048766 Unused capacity

Savoy

1048766 Price is lower

1048766 Discoloured freezers

1048766 Low product variety

1048766 Weak distribution

1048766 Small amount of freezers

1048766 Low production capacity

Milk Vita

1048766 Quality is good due to dairy cream

1048766 Brand leverage from Milk Vita milk

1048766 Low exposure

1048766 Low variety

Table 21 Strengths and Weaknesses of Competition

512 Market Characteristics of the Boutique Segment

With a small market of BDT 98 Cr and 567 share in the branded ice cream market the

boutique segment is currently an increasing segment in the ice cream industry Boutique

segmentrsquos history dates back to 1960s when Igloo launched boutiques in Dhaka to save

distribution cost and promote a culture of ldquoice cream eating outrdquo In later years boutiques lost

their glamour and retail common format segment picked up growth However with Dolce Vita in

the late lsquo80s craze for Italian Artisan ice cream was recreated in the market Although Dolce

Vita is failing in recent times emergence of MoumlvenPick and Club Gelato in 2000 has uplifted the

segment once again Current growth rate of the

Evaluation of Entry into Ice cream Business for Bangladesh Limited 35

segment can be estimated to be approx 20-22 (higher than the common format segment)

Following are the basic detail of all the major players in the segment with their estimated sales3

Players

Outlet

Sales (Cr Taka)

Share

Club Gelato

1

136

199

MoumlvenPick

1

119

174

Andersenrsquos

3

119

174

Gelateria Igloo

3

119

174

Sub Zero (Kwality)

2

051

75

Baskin Robbins

1

015

22

Dolce Vita

1

017

25

American Soft

1

009

12

Rainbow

1

009

12

Others (off site)

089

130

Total Market

682

Table 22 Players and Shares in Boutique Segment

A Detail of Operation

General operational procedure followed by all the operators is as follows

1048766 Operating method There is a variation in operational method among the large operators

1048766 Club Gelato uses kitchen at own premise where imported ingredients and local milk (daily

special service from Milk Vita) are used to make ice cream

1048766 MoumlvenPick directly imports ice cream from Switzerland

1048766 Andersenrsquos Gelateria Igloo and Sub Zero produce ice cream at their factory with a mix of

imported and local ingredients

1048766 Products Around 30-35 flavours of artisan dairy ice cream are served at the premises

1048766 Most sold flavours are Vanilla Ferrero Rocher Butterscotch Chocolate Caramel etc

1048766 Other Products Larger players also serve ice cream desserts (milk shakes ice cappuccino etc)

pastries and other desserts with normal coffee and tea facility at their premises

1048766 Boutiques fight ice cream seasonality with the other products sales during off-peak ice cream

seasons Usually ice cream and other products contribute at 6040 ratio in summer and during

winter and off-peak seasons the ratio reverses

1048766 Pricing Usually the prices of products in this segment are 3-4 times higher than that of the

common format segment

1048766 Prices do not vary with flavours Variation depends on serve style (Cone tub) and use of

toppings and other ingredients (Chocolate sauce nut fruits) etc

1048766 Usual margin charged is around 50-60 over production cost Similar margin is charged for

other products like coffee ice cappuccino etc

3 Yearly sales is estimated based on companyrsquos approximate daily sales collected during

interview

Evaluation of Entry into Ice cream Business for Bangladesh Limited 36

1048766 Target Group Most of the consumers belong to SEC A and higher SEC A with DMFI of at

least BDT 20000

1048766 Foreign delegates and resident foreigners also visit these boutiques

1048766 Main purposes of visits in the boutiques are

bull Youth hangout with friends and having ice cream and ice cream derivatives

bull Family Family night out or eat out at a restaurant and then having dessert

bull Foreigners Having dessert after dinner

1048766 Rush time at boutiques are Afternoon 2-4 pm and at night 9-11 pm

1048766 Offsite sales Most of the large operators also sell offsite They have small freezers for off-site

1048766 Club Gelato and MoumlvenPick serves ice cream at high society parties and programmes

1048766 MoumlvenPick also has kiosks in known hotels like Sheraton

1048766 Promotion No mass promotion is done by any of the companies Word of mouth is the most

important source of promotion Posters and banners outside the premise and occasional

newspaper advertisements are used to communicate special offers

1048766 Growth Drivers Market growth is driven by image innovation quality decoration of facility

environment and special offers

1048766 Club Gelato has the image of selling true Italian dairy ice cream with an excellent hangout

environment

1048766 MoumlvenPick imports ice cream directly from Switzerland and is perceived to be of high quality

1048766 Andersenrsquos operates with the image of ice cream from Denmark

1048766 Gelateria Igloo (from Igloo) and Sub Zero (from Kwality) could not establish the premium

artisan ice cream image

B Players in the Boutique Segment

There are very few players who have significant impact in the boutique segment Detailed

information of all the major boutique segment players is provided below

Evaluation of Entry into Ice cream Business for Bangladesh Limited 37

Club Gelato

Basic Company Information

1048766 Location Banani Road 11 (Planning for a second one in Dhanmondi)

1048766 Established in 2001

1048766 Seating Capacity 48

1048766 Area 1250 sft (including kitchen)

1048766 Owner Mr Jahangir Alam (Bangladesh)

1048766 Business Type Joint business partnership with Singapore

1048766 Staff 15 people (6 in the kitchen)

1048766 Production capacity 150 litres per day

Product Related Information

1048766 Product Italian style parlour scoop ice cream fruit juice coffee and pastries

1048766 Flavours Around 32 flavours available

1048766 Most selling Ferraro Rocher Vanilla Pistachio

1048766 Innovations New variants and ingredients are communicated by their Italian supplier and

Club Gelato decides what to take from them

1048766 Serve type Cup Cone Glasses Box for take away

Consumer Profile

1048766 Primary Teenagers and Young Adults (18-30) amp Diplomats

1048766 Secondary Family consumers for eat out

1048766 Income Group High income customers tentatively from SEC A and higher SEC A

1048766 Geographic Area Diversified

1048766 Rush time 8-10 pm

Sales and Price Information

1048766 Sales BDT 50000 (60 Ice cream 40 other desserts) daily in summer In winter however

other products sell more and thus they keep total sales at the same level

1048766 Price 750 per litre for any flavour

1048766 Sales Volume 50-60 litres per day

Supply Chain Placement Information

1048766 Milk Local sourcing from Milk Vita (4050 litres per day)

1048766 Chocolates amp Flavours Belgium France Germany

1048766 Transportation Mainly air (They can afford it due to high margin)

1048766 Contribution of various materials Flavours (30) Milk (20) other parts are water and air

Promotional Materials

1048766 Materials used are near premises POS materials for promoting the parlour only

Table 23 Detail of Club Gelato

Evaluation of Entry into Ice cream Business for Bangladesh Limited 38

MoumlvenPick of Switzerland

Basic Company Information

1048766 Location Gulshan

1048766 Established in 2000

1048766 Seating Capacity 55

1048766 Owner Mr Arif Mahmud

1048766 Business Type Franchise of International MoumlvenPick

1048766 Storage Capacity in Shop 150 litres

Product Related Information

1048766 Product Imported MoumlvenPick ice creams coffee chicken sandwich and Frappe

1048766 Flavours Around 30 to 35 flavours available

1048766 Most selling Swiss Chocolate caramel Vanilla Dream Espresso Strawberry

1048766 Innovations New variants are communicated by their franchiser and they decide on flavours

that they want

1048766 Serve type Cup Cone Glasses Box for take away

Consumer Profile

1048766 Primary Teenagers and Young Adults (18-30) (70) amp Diplomats

1048766 Secondary Family consumers for eat out

1048766 Income Group High income customers tentatively from SEC A

1048766 Geographic Area Concentrated in Gulshan and nearby areas

1048766 Rush time Afternoon- Young Adult 10 to 11 pm Foreigners

1048766 the company also serves at parties and has freezers in known hotels where their ice creams

are served

Sales and Price Information

1048766 Sales BDT 35-40000 daily in summer

1048766 Price 640 per litre for any flavour

1048766 Sales Volume 55-60 litres per day

Supply Chain Placement Information

1048766 Transportation Imported finished goods by ship

1048766 Ship travel time 19 days

1048766 Port clearance 10 days

1048766 Safety Cushion Extra 10 days

Promotional Materials

1048766 Materials used are near premises POS materials for promoting the parlour only

Table 24 Detail of MoumlvenPick of Switzerland

Evaluation of Entry into Ice cream Business for Bangladesh Limited 39

Andersenrsquos of Denmark

Basic Company Information

1048766 Location Gulshan (2 others in Uttara Dhanmondi)

1048766 Established in 2001

1048766 Seating Capacity 48

1048766 Owner United Group

1048766 Business Type Franchise of Australian company Andersenrsquos of Denmark

1048766 Production Tongi Factory of United Group

1048766 Production capacity 2000 litres per day in factory

1048766 Storage Capacity in Shop 150 litres

Product Related Information

1048766 Product Danish parlour scoop ice cream and coffee

1048766 Flavours Around 30 to 35 flavours available

1048766 Most selling Strawberry Butter Scotch Green

1048766 Innovations New variants and ingredients are communicated by their franchiser and they

decide on flavours that they want

1048766 Serve type Cup Cone Glasses Box for take away

Consumer Profile

1048766 Primary Teenagers and Young Adults (18-30) (70) amp Diplomats

1048766 Secondary Family consumers for eat out

1048766 Income Group High income customers tentatively from SEC A

1048766 Geographic Area Concentrated in Gulshan and nearby areas

1048766 Rush time 8 to 10 pm

Sales and Price Information

1048766 Sales BDT 10-12000 daily in summer

1048766 Price 460 per litre for any flavour

1048766 Sales Volume 40-50 litres per day

Supply Chain Placement Information

1048766 Milk 2025 kg packs are imported

1048766 Chocolates amp Flavours Imported

1048766 Butte paper Local sourcing

1048766 Transportation Ship

Promotional Materials

1048766 Materials used are near premises POS materials for promoting the parlour only

Table 25 Detail of Andersenrsquos of Denmark

Evaluation of Entry into Ice cream Business for Bangladesh Limited 40

Gelateria Igloo

Basic Company Information

1048766 Location Banani Kemal Ataturk Avenue (Two others in GEC Mor Chittagong and Naya

Paltan)

1048766 Established in 2000

1048766 Seating Capacity 20

1048766 Production From Igloo factory in Shyampur Narayanganj

Product Related Information

1048766 Product Parlour scoop ice cream and coffee only

1048766 Flavours Around 30 flavours available

1048766 Most selling Vanilla Strawberry Chocolate Pistachio Butter Scotch Tutti Fruity

1048766 Serve type Cup Cone Glasses Box for take away

Consumer Profile

1048766 Primary Teenagers and Young Adults (18-30)

1048766 Secondary Family consumers for eat out

1048766 Income Group High income customers tentatively from SEC A and B

1048766 Geographic Area Diversified

1048766 Rush Time afternoon and evening

Sales and Price Information

1048766 Sales BDT 8000 to 10000 daily in summer Nearly one fourth in winter

1048766 Price Varies but 350 per litre of vanilla

Promotional Materials

1048766 POS materials at the premises

Table 26 Detail of Gelateria Igloo

52 Price Comparison of Common and Boutique Segments

Price ranges of both common format and boutique segment cannot exactly be pin pointed as

products do not follow common structure and variations occur with use of toppings mixing of

flavours and use of coatings However a price comparison has been made among the brands

based on their price of per litre of vanilla flavoured ice cream in the market It appears to be as

following

Company

Price Litre Vanilla

Club Gelato

750

MoumlvenPick

640

Andersenrsquos

460

Dolce Vita

440

Igloo

100

Kwality

100

Polar

100

Milk-Vita

90

Savoy

85

Table 27 Comparative Price Analysis

As it can be seen there is price gap within the range of BDT 100-400 Ice cream kiosks and

small scooping boutiques can operate within that range

Evaluation of Entry into Ice cream Business for Bangladesh Limited 41

60 CONSUMER ANALYSIS

61 Target Group of Ice cream

Who are the consumers of ice cream This question does not have a clear answer Ice cream is a

food for all It is the only food consumed by a human being at less than 0 degree centigrade

temperature and people of all ages feel indulged to have it However we can determine focus

target groups for both branded common format and artisan boutique ice cream Group

discussions and market visits were done to get insight into the consumers along side resources

form secondary sources Age based target group is common for both segments but variation

among the groups occur mainly based on SEC and DMFI classification

611 Geographic Group

Branded ice cream remains an urban product till date Geographically branded ice cream has

reached urban and semi urban areas up to Thana Head Quarter levels Ice cream has reached

areas where electricity is available Small artisan players are available in places where large

branded players have no distribution

612 Target Age Group

Age wise grouping of target consumers is as follows

1048766 Urban kids in the age group of 5-14

1048766 They mainly consume normal sticks cups cones innovative fillers and water ice creams

1048766 Urban youth in the age group of 15-24

1048766 They consume premium and extrusion sticks and cones

1048766 Urban mothers in the age group of 25-35

1048766 They determine the family purchases Even when the father purchases ice cream decision is

taken by them

Consumption pattern of various age groups are depicted in the following chart Ice cream

consumption pattern50203005 to 14 yrs15 to 24 yrs25 to 35 yrs

Figure 11 Target Group wise Consumption Pattern Evaluation of Entry into Ice cream Business

for Bangladesh Limited 42

613 Target SEC and DMFI Group

Common Format

SEC A and B is the target group for common format ice cream However with rapid increase in

price level over the years has made it a ldquohard to consumerdquo product for SEC B consumers who

belong to lower DMFI group

Boutique Format

Boutique formatrsquos higher margin and high price range makes it an exclusively SEC A ice cream

People belonging to upper and upper middle class have access to the mediocre boutiques and

only higher upper class can have premium ice creams like Club Gelato and MoumlvenPick

Another unique target group for boutique format are the foreigners who live in Bangladesh

These people tend to visit the parlours to have ice cream as dessert especially after dinner

62 Ice cream in Consumer Lifestyle

Figure 12 Ice cream in Consumer Life style

This simple overview of ice cream in consumer lifestyle was determined based on in-depth

research analysis of UBL and validated through qualitative group discussions by the author

However detail of in-depth research is provided in a later section of this chapter

Evaluation of Entry into Ice cream Business for Bangladesh Limited 43

63 Highlights of Purchase Habit of Ice cream

631 Common Habits across Target Groups

There are some common habits that were identified in earlier researches and group discussions

with consumers Common habits mean the consumer approach towards ice cream that is seen

across all target groups eg kids youth and adult purchasers These are outlined below

1048766 Ice cream is mainly seen as a dessert or a snack Impulse ice cream is seen as a quick snack

that is consumed when it is in sight Visibility plays a big role here Regarding family packs

people see it as a post-food dessert

1048766 Ice cream purchase is commonly a planned event When the contexts arise people generally

take a bit of time to decide whether or not to have ice cream or when they want to go to a

boutique they make due considerations regarding which boutique to visit

1048766 Ice cream purchase decision is taken based on favourite flavour People tend to try out new

variants and flavours when they first see it They compare the taste with earlier experience and

when they purchase later they choose the flavour they have liked most

1048766 For In-Home segment decision is mostly taken on the flavour Generally people come up with

different flavours of choice and most voted flavour is chosen

1048766 People become aware of new variants or flavours mainly through word-of-mouth

Advertisement (new launches special offers and festivals) in newspaper is another source of

awareness

1048766 People are currently indifferent towards the price level of premium flavours However some

feel that price of Choc-bar or water ice creams (lolly) is a bit much If less they would have

consumed more Some also feel that companies should come up with branded ice cream in the

price range of BDT 5-8

1048766 Ice cream is purchased from nearby shops If required brand and flavour is not available 2-3

shops will be visited and then available flavour will be selected even if the required one is not

found This is done mainly not to ruin the mood for ice cream

1048766 People are very open to try new brands and flavours especially if it comes from a credible

source They would try new flavours and if they are satisfied with the taste they would repeat

purchase

1048766 Regarding boutique visits people feel that boutiques need to have a proper environment

enough flavours and other snacks

1048766 While visiting boutique with family or companion they want variation in flavours so that

they would order different flavours and taste each otherrsquos ice cream It is seen as a sign of

togetherness

1048766 Frequency of ice cream purchase varies among people It depends on peer pressure collective

family decision summer heat and attitude towards ldquoice creamrdquo itself as a product Evaluation of

Entry into Ice cream Business for Bangladesh Limited 44

632 Habits of Kids

1048766 Kids choose ice cream flavours by the look of the product (generally pictures shown in POS

materials and carts) They love colour and designs of the products let it be a common format or a

boutique ice cream

1048766 Kids (when in house) would go with the housemaid to the nearby shop choose the flavour

they want (within range of the amount given to the maid) and buy it

1048766 When with parents they would take the product they like even if the price is lower than some

other product However mothers play a role in this decision They would want their children not

to choose too high priced a product or coloured products

633 Habits of Youth

1048766 Young people are the main consumer of impulse ice cream They also are one of the major

consumers in the boutique segment

1048766 Young people love to try out new products that come into the market Another side of the coin

is that they are not very loyal to a brand or a flavour and tend to switch a lot

1048766 Regarding boutique visits young people go to boutiques to have an ldquoice cream hang outrdquo with

peer groups They would stay there for a longer period of time while they have their ice cream

1048766 Some times young people make milk shakes and other ice cream based desserts

634 Habits of Mothers

1048766 Mothers worry about their childrenrsquos health and they prefer ldquovanillardquo type of brands

However when price constraint occurs they go for water ice creams for their children They try

to convince their kidrsquos purchase decision

1048766 Regarding family purchase motherrsquos decision is sometimes prioritized by the whole family

64 Barriers to Ice cream Consumption

641 Emotional Barriers

1048766 Overindulge (close to sinful)

1048766 Undisciplined (no control)

1048766 Childish (licking)

1048766 Artificial Image

642 Functional Barriers

1048766 People of SEC B feel that ice cream is an expensive dessert (If less expensive would consume

more often)

1048766 It leads to cold cough - especially in winter rainy season

1048766 It contains artificial additives preservatives

1048766 It is very high in calories that lead to fattening

Evaluation of Entry into Ice cream Business for Bangladesh Limited 45

1048766 It does not quench ldquothirstrdquo

1048766 Less convenient (portable immediate eat)

1048766 Messy Dripping

65 Research Findings

The highlights regarding purchase habits triggers and barriers of ice cream consumption provide

a glimpse into the consumer world of ice cream industry However UBL CMI conducted a

formal research exclusively on ice cream consumers to identify

1048766 Occasions of ice cream

1048766 Frequency of ice cream consumption

1048766 Expectations from ice cream occasions

1048766 Personalities that they desire from ice cream

651 Relevant Occasions in Daily Lives of Consumers

Research question regarding ldquousual occasions of life that occurred most frequently in day-to-day

lives of the respondentsrdquo generated the following replies

Occasion

of Respondents saying Yes

Watching TV

93

Normal Dinner At Home

91

Normal Lunch At Home

89

At Home While ReadingMusicSurfing

86

Informal Family Get Together

85

Out Of Home Hanging Out With Friends

84

Out Shopping

84

Mid-Afternoon Break At Home

83

At Home By Myself During The Day

82

Special Dinner At Home

82

Informal Dinner Out Of Home

82

Normal Lunch Out Of Home

82

Leisure Walk

79

Coming Home From WorkSchool

78

Special Dinner Out Of Home

78

Celebration

78

A Night In With Friends

77

At Home By Myself In The Evening

77

Special Lunch Out Of Home

76

Mid-Afternoon Break Out Of Home

75

Special Lunch At Home

73

Day out with Partner

72

Midmorning Break

70

At Breakfast

68

Family Day Out

68

During Work Or At School

65

Evaluation of Entry into Ice cream Business for Bangladesh Limited 46

Travelling ToFrom WorkSchool

65

At The Cinema

61

Special Event

56

Clubbing At A Party

50

Post GymSports

48

Table 28 Relevant Occasions in Consumersrsquo Lives

Respondents were then asked to mention ldquofrequency of occurrence of the identified occasionsrdquo

The identified replies are as follows Normal dinner at homenormal lunch at homeComing home

from workschoolTraveling tofrom workschoolDay out with Partner SpouseMid-afternoon

break at homeOut of home hanging out with friendsLeisure walkMid-afternoon break out of

homeA night in with friendsSpecial dinner at homeSpecial lunch out of homeFamily day

outSpecial eventPost gymsportsDaily2-3 Times A WeekWeekly2-3 Times A MonthOnce A

MonthEvery 2-3 MonthsLess OftenNever Figure 13 Frequency of Occurrence of Occasions

This shows that ldquoNormal dinner at home Watching TV Normal Lunch At Home At Home

While ReadingMusicSurfing Coming Home From WorkSchool During Work Or At School

Travelling ToFrom WorkSchool Midmorning Break Day Out With Partner Spouse At Home

By Myself During The Dayrdquo are the most frequent daily rituals of busy lives of consumers

652 Frequency of Ice cream Consumption

Respondents were asked to mention ldquoconsumption pattern of ice cream during the identified

occasionrdquo on a scale of 1-5 depicting frequencies like ldquo(5) always (4) most of the times (3)

about half of the times (2) sometimes (1) never do not knowrdquo The responses are depicted in

the following table

Evaluation of Entry into Ice cream Business for Bangladesh Limited 47

444474544655555566756665775967779991011101111101210111110101113111412131314161

011121411131216181519181518211817171719181718201721222130303434253437403741394

046383944464746453745414641374638504843414839373030292726232725222020201926202

21722221317Midmorning

breakWhile clubbing at aAt the cinemaSpecial eventNormal lunch out ofA night in with

friendsNormal dinner atInformal dinner out ofAt home by myselfAt home by myself inOut

shoppingSpecial lunch atDay out with SpouseWatching TVAlwaysmost of the timesAbout half

of the timesSometimesneverdo not know

Figure 14 Frequency of Ice cream Consumption

As it can be seen ldquoDay out with Spouse Special lunch at home Special dinner at home

Watching TV Family day out Celebrationrdquo are the occasions where most frequently ice cream is

consumed

653 Market Character Mapping Relevant Occasions vs Frequency of Consumption

If we plot frequency of consumption on the X-axis of a chart and relevance of occasion

occurrence on the Y-axis taking the above mentioned values as cut-off values we get four

quadrants in the chart depicting four market scenarios that any ice cream manufacturer in

Bangladesh market might encounter given the current market situation This market

segmentation is based on frequency of ice cream consumption in daily occasions of consumer

lives

The segments are

1048766 OPPORTUNITY MARKET High Relevant Occasions-Low Ice cream Frequency

1048766 QUESTION MARKET Less Relevant Occasions-Low Ice cream Frequency

1048766 HIGH FREQUENCY MARKET Relevant Occasions-High Ice cream Frequency

1048766 CAPTIVE MARKET Less Relevant Occasions-High Ice cream Frequency

The chart looks as follows Evaluation of Entry into Ice cream Business for Bangladesh Limited

48

Figure 15 Relevance of Occasion-Frequency of Consumption Mapping

As it can be seen from the above chart Bangladesh Market still lies in the Opportunity and

Question market zone with a pull towards High frequency and Captive Market zones This is

evident from market data as penetration of ice cream still remains at Thana headquarters levels

Also this explains the high market growth rate of 17 as market is yet under developed and

branded quality ice cream has yet not reached all levels of consumers especially rural level that

constitutes around 75 of Bangladeshi market

From the above analysis we can establish that target of ice cream manufacturers should be to

penetrate more into the Bangladeshi market to create higher frequency of ice cream

consumption The following chart shows the strategies to follow for ice cream manufacturers

Figure 16 Required Market Strategy for Bangladesh

Evaluation of Entry into Ice cream Business for Bangladesh Limited 49

As relevance of ice cream consumption occasions can hardly be controlled by marketers their

endeavour should be to create more ldquoemotional and functionalrdquo attachment to ice cream in less

frequent occasions through ldquomarket developmentrdquo strategy to earn share from overall food

expenditure of consumers and at the same time make them consume more ice cream in highly

relevant occasions through ldquopenetrationrdquo strategy

654 Consumersrsquo Emotional Requirements and Product Attributes

All consumers under these clusters also identify the emotional requirements and the significant

product attributes they seek from their current preferred and future desired ice creams These are

provided below

Cluster

Emotional Functional Requirement

Product Attributes

Enjoyment

Flavour Variety

1048766 Combination of different flavours

1048766 Combination of different textures

1048766 Very sweet

1048766 With wafer or biscuit

1048766 With chocolate

1048766 Of a well known brand

Socially Involved

Spoonable Rich

1048766 Very creamy

1048766 Only natural ingredients

1048766 No mess

Care

Size Creaminess

1048766 Big

1048766 Rich full taste

1048766 Smooth

1048766 Value for money

1048766 No mess

Unwind amp Escape

Economy

1048766 Crunchy

1048766 Economic

1048766 Of a well known brand

1048766 Nutritious

Balanced Convenience

Health Conscious

1048766 Of a well known brand

1048766 Nutritious

1048766 Milk based

1048766 Low sugar

1048766 Low carbohydrates

1048766 Filling

Active Self-Grooming

Fruit Vitamins

1048766 Healthy

1048766 Fruit based

1048766 Low fat

1048766 Liquid or drinkable

1048766 Nutritious

1048766 Of a well known brand

Confidence

Drinkable Light

1048766 Low calories

1048766 Light on the stomach

1048766 Chewy or gooey

1048766 Not so sweet

1048766 Natural appearance

Sensual

Appeal or image

1048766 No artificial additives

Evaluation of Entry into Ice cream Business for Bangladesh Limited 50

1048766 Natural appearance

1048766 Melting slowly

1048766 Attractive packaging

1048766 High quality ingredients

1048766 Of a well known brand

Table 29 Requirements amp Product Attributes Desired by Consumer Clusters

Of these findings we see that the identified highlighted barriers to ice cream consumption are

pretty evident among the consumers Mostly people want products of a reliable source or a well

known brand low calories quality ingredients value for money economic type

Evaluation of Entry into Ice cream Business for Bangladesh Limited 51

70 INDUSTRY ATTRACTIVENESS AND ENTRY PROSPECTS

71 Driving Forces of Growth

As identified in the earlier sections there are several driving forces behind the growth of ice-

cream industry in Bangladesh

712 Trade and Infrastructural Level

1048766 As a result of globalization newer varieties have been introduced to the local products Many

foreign companies are also coming as franchise so there has been increased competition and

these boutiques are setting higher standards for the local producers

1048766 The present market growth rate is 18-19 which is being influenced by larger players like

Igloo who are expanding their distribution nation wide with expansion of national electricity

grid

1048766 With entry of Modern Trade and recent organized business approach of retailers has made it

possible for ice cream manufacturers to penetrate into shops even without providing them with

branded freezers

1048766 Weather change has increased ldquosummerrdquo season in our country which has reduced negative

seasonal impact on ice cream

1048766 Large companies like Igloo have taken global learning of using carts as an effective tool of

availability and visibility for ice cream

1048766 New and improved technologies are being used in the production process This technological

advancement has improved quality increased speed of production and made the process more

cost effective

713 Consumer Level

1048766 Only a few years back rich people could afford the luxury of having ice-cream but now it has

become a common product for everybody Ice-cream companies are producing different products

with a wide price range for consumers of every class and status

1048766 Nowadays companies are doing promotional campaigns more frequently the customers get to

know about the product which makes it easier for them to buy the best one

1048766 The improved standard of life and more modernized lifestyle of people is an important reason

for the increased consumption thus growth of the ice-cream industry

Evaluation of Entry into Ice cream Business for Bangladesh Limited 52

72 Prospects of Entry

The ice-cream industry of Bangladesh is an attractive one for the investors because there is a

huge market but number of producers is very small The major reasons behind industry

attractiveness are as follows

1048766 The industryrsquos current growth potential is very high with opportunity for market development

1048766 The competition currently permits adequate profitability and the competitive forces are

becoming stronger with time

1048766 Boutique segment is at a very high growth stage but no operator is currently operating with a

mid price range of BDT 100-400 Ice cream kiosks and small scooping boutiques can operate

within that range

1048766 Current industry driving forces are favourable for the future industry profitability

1048766 Globally oriented consumers look for variety in ice cream that is currently not available

Latest innovations came in the market in 2002 People would welcome new variety and flavours

1048766 There is a gap in the market for balanced convenience through ice cream where consumers can

get nutritional benefits for ice cream Also emotional attachment to ice cream could further be

improvised in promotional campaigns

1048766 There is high scope for market penetration and development to increase frequency of ice

cream consumption

1048766 Level of risk or uncertainty is very low in ice-cream industry because the consumer market is

so huge any product with a standard quality and careful pricing will be able to make significant

profit

1048766 As for geographic reach of the industry 60 market is still in Dhaka There is scope of

expansion and a new entrant can easily capture market share within Dhaka using carts even if

they do not want nation wide cold chain distribution

1048766 The production process is very complex and capital requirements are also high So before

going into production any company should know about their capabilities and weaknesses and

then start the business or else they might suffer huge loss at a certain level

1048766 Unilever can acquire the required resource and use existing multi-national multi-cultural

expertise to enter the market in a grand way

1048766 With high probability of entry from DANONE with more products like the ISIS diabetic ice

cream Unilever should consider entering in this industry as soon as possible

Evaluation of Entry into Ice cream Business for Bangladesh Limited 53

80 ENTRY STRATEGY FOR UNILEVER

While describing the suggested entry strategy for UBL certain issues have been kept

confidential and some issues have been touched but not explained to keep consistency with UBL

confidentiality policy

81 Suggested Entry Areas for UBL

1048766 Boutique segment of the Bangladesh ice cream is only 5 of the branded market UBL needs

to pursue a larger scope to make the entry viable

1048766 UBL cannot fight with unbranded segment as global product quality mandate of Unilever does

not allow UBL to fight in low price-low quality segment

1048766 Recommend entry should be in the common format segment with both single and multiple

servings and in the boutique segment with a different brand name (if possible BEN amp JERRYrsquoS)

1048766 UBL should build up state-of-art modern factory for manufacturing and establish cold chain

facilities initially focusing on metro cities

1048766 Investment issues are required to be addressed for building factory and cold chain and capital

requirement needs to be identified for that purpose4

1048766 UBL may have boutiques for driving image selective top-end offering

1048766 Kiosks can be setup near universities and shopping malls

1048766 Boutiques should be concentrated in Dhaka and Chittagong

1048766 Ice cream for boutiques and kiosks would be produced in factory as institutional packs of 9-10

litres

82 Products

1048766 As a Brand Building country in global Unilever operating framework UBL is entitled only to

bring products developed by the Brand Development countries

1048766 Unilever should focus on serving products that have nutritional benefits (already available

globally) along with usual satisfactions of sensual pleasure functional attributes etc

1048766 Current existent players especially Igloo and Kwality have extensively copied global and

regionally available Unilever products eg Cornelli is same as Wallrsquos Cornetto Vinetta is similar

to Vienetta Mega is similar to Magnum etc UBL needs to differentiate these to consumers on

the ldquotaste the originalrdquo platform where global quality is focused regarding the products

1048766 UBL should also bring regionally famous brands like Moo or Max to create image

differentiation

1048766 Magnum or Moo should be used as premium end ice cream to generate more profit margin

Evaluation of Entry into Ice cream Business for Bangladesh Limited 54

83 Placement

1048766 Distribution focus should be in Dhaka for entry as Dhaka contributes more than 60 of total

ice cream sales in the country

1048766 Company may use carts as distribution method They serve as good source of visibility and

availability It would help in increasing impulse purchase

1048766 At least 1500 outlets in Dhaka and Chittagong needs to be actively served using dedicated

branded refrigerators to generate sales

1048766 50 carts should operate in Dhaka and Chittagong

84 Price

1048766 UBL products should be priced at par with Igloo pricing for the common format ice creams

1048766 UBL can bring in premium single-serve SKUS for the higher economic classes in the price

range of BDT 60-80

1048766 Smaller SKUs (small lolly stick) can be introduced in the price range of BDT 10-15

1048766 In the boutique segment UBL should price products above the semi-premium segment

(Gelateria Igloo Sub Zero or Andersenrsquos) but lower than that of Club Gelato or MoumlvenPick

85 Promotion

1048766 UBL would require strong marketing campaign (As high as 50 of sales) to have a grand

entry in the market

1048766 Presence in the television media would be of utmost importance More than 50 of

promotional expense should be made here initially Gradually it can be reduced

1048766 Newspaper would serve as the second most important option

1048766 Billboards should also be used

1048766 Activations (similar to Lux Channel i Super Star or Igloo Festival) should be done to generate

trial

86 Scope of Opportunity

Table 30 Value and Volume Based Scope of Opportunity for UBL

Value (BDT Cr)

Volume (Tons)

Market

131

7835

Common

121

7600

Boutique

98

235

Evaluation of Entry into Ice cream Business for Bangladesh Limited 55

861 Geographic Contribution

1048766 Dhaka (61)

1048766 Chittagong (19)

1048766 Sylhet (10)

862 UBL objectives

Common Format Ice Creams

1048766 Target 10 Market share in 1st year operation

1048766 Value BDT 11 Cr

1048766 Production capacity required 21 Tons day

1048766 Freezer Placement 1500 freezers

1048766 Cart operation At least 50 carts

Boutiques

1048766 Target Further develop the market

1048766 Focus Dhaka Chittagong and Sylhet Metro

1048766 Franchise At least 20 franchisee operations nation wide in divisional towns

1048766 Pricing Below imported parlours above common formats with around BDT 400 per Litre

87 Critical Success Factors

1048766 UBL is considered as a high profile company in Bangladesh and thus they cannot operate in

the market only with common products like choc-bars and cups They must have premium

products (these require extrusion line) also to carry their brand image Otherwise UBL would not

be able to charge usual premium over competition products

1048766 Launch of ice cream would require huge promotional and activation support in order to gain

customers from Igloo People want novelty regarding ice cream and UBL have to let them know

about their products and create hype

1048766 Cart should be used as a source of distribution Recent successes of Unilever companies like

Indonesia shows that carts can generate more sales and can be used as source of visibility in the

minds of both retail traders and consumers Carts can also provide incremental sales to the

company

1048766 UBL have to create a strong cold chain for ice cream (initially in Dhaka and Chittagong) to

ensure quality products for consumers

1048766 UBL have to build capacity very rapidly to meet consumer demand if the launch is successful

Evaluation of Entry into Ice cream Business for Bangladesh Limited 56

90 BUSINESS PROJECTION

91 Basic Assumptions

Business projection for ice cream business was made based on a conservative approach UBL

would require spending significantly on production capacity and factory dedicated to ice cream

Thus to analyse business possibilities of ice cream certain assumptions were made and collected

data were used These are

1048766 Production equipments and cabinets would cost approximately BDT 55 crores

1048766 Production equipments 45

1048766 Packaging Equipments 15

1048766 Storage Facility 20

1048766 Branded Freezers 10

1048766 Distribution Investment 10 (Distributors would also invest themselves)

1048766 Ice cream factory with a floor size of 20000 sqft would cost BDT 25 crores

1048766 Objective is to capture 10 market share in Dhaka and Chittagong in the first year

1048766 Business would grow by 50 in year 2 and 3 30 in year 4 and 25 in year 5

1048766 Weighted price per litre is BDT 170 according to volume share of single serve ice cream

multiple serve ice cream and boutique ice cream

1048766 Other financial assumptions were also made List of them are provided below but amount has

been removed for confidentiality issues

Assumptions

Trade Margin

Distributors Margin

DutyVAT Rate

Trade Terms Expense of NPS

Trade Terms Expense of NSV

Advertising ampPromotion of NPS

Indirects (Salaries Wages etc)

Trading Tax

Table 31 Assumptions for Business Projection

Evaluation of Entry into Ice cream Business for Bangladesh Limited 57

100 CONCLUSION

Ice cream has good prospect in Bangladesh It is still a growing market with opportunities for big

new entrants With the barriers of entry UBL needs to consider its priorities UBL being an HPC

company traditionally needs to acquire expertise in cold chain distribution and has to invest a lot

of money to rip the benefits of the industry However to initiate company can take regional

support and acquire resource expertise The company should enter the business as soon as

possible since there is potential threat from DANONE to introduce more ice creams after ISIS

diabetic ice cream and also with potential of the industry arch rival Nestlersquo might consider

entering into the industry too

Evaluation of Entry into Ice cream Business for Bangladesh Limited 58

References

Web References

1 wwwunilevercom

2 wwwunilevercombd

3 wwwhllcom

4 wwwunilevercompk

5 wwwthedailystarcom - Life Style Magazine

6 wwwreuterscouk

Evaluation of Entry into Ice cream Business for Bangladesh Limited 59

Page 32: Square Ice cream

common format segment Recently Polar has announced launch of ISIS diabetic ice cream with

support from DANONE to turn around in the market

The company has its head office as well as a modern large-scale industrial plant in Dhaka Polar

ice cream is made with Danish expertise using Danish equipment and technology The

production activities and quality control measures are supervised and managed by Danish

experts Polar offers a wide range of delicious flavours and tastes made by ingredients imported

from Europe

Dhaka Ice Cream at present has 3 cold stores in Dhaka Chittagong and Bogra in Bangladesh

From Dhaka cold store they distribute ice creams in Mymensingh Tangail Jamalpur Sherpur

Kishoreganj Netrakona Comilla Narsingdi Barisal Madaripur Agaeljhara Faridpur Magura

Chuadanga Jessore Satkhira Khulna Pirojpur and Sylhet through their distributors In case of

long distance delivery points the company uses auto cooling freezer van

Evaluation of Entry into Ice cream Business for Bangladesh Limited 33

In Dhaka city they distribute ice creams directly to retail stores in freezer vans Besides that

they have several distributors at different points of the city Distributors cover their individual

areas where company is not able to supply directly in their freezer vans Similar model is

followed by the company to distribute ice cream from their other cold storages through out the

country For storing and selling ice creams in retail stores the company like the other players

arranges a deep freezer with the Polar logo and canopy light box

In addition to this distribution the company also undertakes home delivery of ice creams for

special occasions

Savoy

Savoy Ice-cream brand is owned by Sena Kalyan Sangstha (SKS) Group of industries It started

its journey in March 1995 with a factory in Tejgaon Dhaka Yearly turnover is estimated at BDT

388 crores with a market share of roughly 35

The factory has been established with Sonali Bank finance at 6040 equity ratio The total

production capacity of the factory has been estimated at 2400 litres of Ice-cream per day Total

land area of the factory premise is 116 Bigha with 8000 sft area covered with a total project cost

of BDT 144 The factory employs 73 people

Product ranges of the company include all the basic designs and flavours of the industry

However the company has not been much of an innovator in the industry Their product quality

is substantially low than that of other players and they price their products at 10-15 lower than

the other competitors The company imports raw materials mainly from Europe The general raw

materials are Euro cream Skimmed Milk Powder Cocoa Powder and Flavour (Vanilla Mango

and Strawberry) Colour (Yellow Red Chocolate and Green) Ripple Sauce Cheney Fruit Palm

Kernel Oil Anhydrous Butter Oil (Ghee) and Sugar etc

Milk Vita

Milk Vita is one of the most famous brand names in Bangladesh for its liquid dairy milk Owned

by Bangladesh Milk Producersrsquo Co-operative Union Limited (BMPCUL) the company came in

the market with proper dairy milk ice cream in form of cups and choc-bar With a production

capacity of around 1600 litres per day the company is trailing in the market place with 3

market share

Although the Milk Vita Choc-bar was perceived to be extremely tasty by consumers they

probably could not do well due price competition Currently they do not even distribute ice

cream in Dhaka However their presence is seen in outskirts of Dhaka and other nearby towns

If the current market situation prevails Milk Vita would lose their remaining market share and

other companies would benefit especially Igloo However one of the advantages of Milk Vita

remains to be

Evaluation of Entry into Ice cream Business for Bangladesh Limited 34

their nation wide milk supply network They have skimmed milk powder production plant that

Igloo does not have Thus they can combat the seasonality of milk supply that Igloo with its

huge requirement of milk cannot

Strengths and Weaknesses of Competitors

Company

Strengths

Weaknesses

Igloo

1048766 Strong brand image

1048766 High product quality

1048766 Highest no of variety

1048766 Strong distribution network

1048766 Highest visibility

1048766 Strong promotion

1048766 High production capacity

1048766 Presence of extrusion ice cream

1048766 Items are generally a bit pricy

1048766 Igloo does not give free freezers like other companies

1048766 Reluctant in recent times regarding innovation

1048766 Local sourcing of liquid milk does not meet demand

1048766 Failure to use ERP technology slowing decision making

Kwality

1048766 Product variety

1048766 Strong promotion

1048766 Free freezer distributed

1048766 Presence in all price segments

1048766 High production capacity

1048766 Weak distribution

1048766 Lower exposure

1048766 low amount of carts in operation

Polar

1048766 Free freezer

1048766 Quality perceived to be high compared to Kwality

1048766 Discoloured freezers

1048766 Lower exposure

1048766 Low product variety

1048766 Unused capacity

Savoy

1048766 Price is lower

1048766 Discoloured freezers

1048766 Low product variety

1048766 Weak distribution

1048766 Small amount of freezers

1048766 Low production capacity

Milk Vita

1048766 Quality is good due to dairy cream

1048766 Brand leverage from Milk Vita milk

1048766 Low exposure

1048766 Low variety

Table 21 Strengths and Weaknesses of Competition

512 Market Characteristics of the Boutique Segment

With a small market of BDT 98 Cr and 567 share in the branded ice cream market the

boutique segment is currently an increasing segment in the ice cream industry Boutique

segmentrsquos history dates back to 1960s when Igloo launched boutiques in Dhaka to save

distribution cost and promote a culture of ldquoice cream eating outrdquo In later years boutiques lost

their glamour and retail common format segment picked up growth However with Dolce Vita in

the late lsquo80s craze for Italian Artisan ice cream was recreated in the market Although Dolce

Vita is failing in recent times emergence of MoumlvenPick and Club Gelato in 2000 has uplifted the

segment once again Current growth rate of the

Evaluation of Entry into Ice cream Business for Bangladesh Limited 35

segment can be estimated to be approx 20-22 (higher than the common format segment)

Following are the basic detail of all the major players in the segment with their estimated sales3

Players

Outlet

Sales (Cr Taka)

Share

Club Gelato

1

136

199

MoumlvenPick

1

119

174

Andersenrsquos

3

119

174

Gelateria Igloo

3

119

174

Sub Zero (Kwality)

2

051

75

Baskin Robbins

1

015

22

Dolce Vita

1

017

25

American Soft

1

009

12

Rainbow

1

009

12

Others (off site)

089

130

Total Market

682

Table 22 Players and Shares in Boutique Segment

A Detail of Operation

General operational procedure followed by all the operators is as follows

1048766 Operating method There is a variation in operational method among the large operators

1048766 Club Gelato uses kitchen at own premise where imported ingredients and local milk (daily

special service from Milk Vita) are used to make ice cream

1048766 MoumlvenPick directly imports ice cream from Switzerland

1048766 Andersenrsquos Gelateria Igloo and Sub Zero produce ice cream at their factory with a mix of

imported and local ingredients

1048766 Products Around 30-35 flavours of artisan dairy ice cream are served at the premises

1048766 Most sold flavours are Vanilla Ferrero Rocher Butterscotch Chocolate Caramel etc

1048766 Other Products Larger players also serve ice cream desserts (milk shakes ice cappuccino etc)

pastries and other desserts with normal coffee and tea facility at their premises

1048766 Boutiques fight ice cream seasonality with the other products sales during off-peak ice cream

seasons Usually ice cream and other products contribute at 6040 ratio in summer and during

winter and off-peak seasons the ratio reverses

1048766 Pricing Usually the prices of products in this segment are 3-4 times higher than that of the

common format segment

1048766 Prices do not vary with flavours Variation depends on serve style (Cone tub) and use of

toppings and other ingredients (Chocolate sauce nut fruits) etc

1048766 Usual margin charged is around 50-60 over production cost Similar margin is charged for

other products like coffee ice cappuccino etc

3 Yearly sales is estimated based on companyrsquos approximate daily sales collected during

interview

Evaluation of Entry into Ice cream Business for Bangladesh Limited 36

1048766 Target Group Most of the consumers belong to SEC A and higher SEC A with DMFI of at

least BDT 20000

1048766 Foreign delegates and resident foreigners also visit these boutiques

1048766 Main purposes of visits in the boutiques are

bull Youth hangout with friends and having ice cream and ice cream derivatives

bull Family Family night out or eat out at a restaurant and then having dessert

bull Foreigners Having dessert after dinner

1048766 Rush time at boutiques are Afternoon 2-4 pm and at night 9-11 pm

1048766 Offsite sales Most of the large operators also sell offsite They have small freezers for off-site

1048766 Club Gelato and MoumlvenPick serves ice cream at high society parties and programmes

1048766 MoumlvenPick also has kiosks in known hotels like Sheraton

1048766 Promotion No mass promotion is done by any of the companies Word of mouth is the most

important source of promotion Posters and banners outside the premise and occasional

newspaper advertisements are used to communicate special offers

1048766 Growth Drivers Market growth is driven by image innovation quality decoration of facility

environment and special offers

1048766 Club Gelato has the image of selling true Italian dairy ice cream with an excellent hangout

environment

1048766 MoumlvenPick imports ice cream directly from Switzerland and is perceived to be of high quality

1048766 Andersenrsquos operates with the image of ice cream from Denmark

1048766 Gelateria Igloo (from Igloo) and Sub Zero (from Kwality) could not establish the premium

artisan ice cream image

B Players in the Boutique Segment

There are very few players who have significant impact in the boutique segment Detailed

information of all the major boutique segment players is provided below

Evaluation of Entry into Ice cream Business for Bangladesh Limited 37

Club Gelato

Basic Company Information

1048766 Location Banani Road 11 (Planning for a second one in Dhanmondi)

1048766 Established in 2001

1048766 Seating Capacity 48

1048766 Area 1250 sft (including kitchen)

1048766 Owner Mr Jahangir Alam (Bangladesh)

1048766 Business Type Joint business partnership with Singapore

1048766 Staff 15 people (6 in the kitchen)

1048766 Production capacity 150 litres per day

Product Related Information

1048766 Product Italian style parlour scoop ice cream fruit juice coffee and pastries

1048766 Flavours Around 32 flavours available

1048766 Most selling Ferraro Rocher Vanilla Pistachio

1048766 Innovations New variants and ingredients are communicated by their Italian supplier and

Club Gelato decides what to take from them

1048766 Serve type Cup Cone Glasses Box for take away

Consumer Profile

1048766 Primary Teenagers and Young Adults (18-30) amp Diplomats

1048766 Secondary Family consumers for eat out

1048766 Income Group High income customers tentatively from SEC A and higher SEC A

1048766 Geographic Area Diversified

1048766 Rush time 8-10 pm

Sales and Price Information

1048766 Sales BDT 50000 (60 Ice cream 40 other desserts) daily in summer In winter however

other products sell more and thus they keep total sales at the same level

1048766 Price 750 per litre for any flavour

1048766 Sales Volume 50-60 litres per day

Supply Chain Placement Information

1048766 Milk Local sourcing from Milk Vita (4050 litres per day)

1048766 Chocolates amp Flavours Belgium France Germany

1048766 Transportation Mainly air (They can afford it due to high margin)

1048766 Contribution of various materials Flavours (30) Milk (20) other parts are water and air

Promotional Materials

1048766 Materials used are near premises POS materials for promoting the parlour only

Table 23 Detail of Club Gelato

Evaluation of Entry into Ice cream Business for Bangladesh Limited 38

MoumlvenPick of Switzerland

Basic Company Information

1048766 Location Gulshan

1048766 Established in 2000

1048766 Seating Capacity 55

1048766 Owner Mr Arif Mahmud

1048766 Business Type Franchise of International MoumlvenPick

1048766 Storage Capacity in Shop 150 litres

Product Related Information

1048766 Product Imported MoumlvenPick ice creams coffee chicken sandwich and Frappe

1048766 Flavours Around 30 to 35 flavours available

1048766 Most selling Swiss Chocolate caramel Vanilla Dream Espresso Strawberry

1048766 Innovations New variants are communicated by their franchiser and they decide on flavours

that they want

1048766 Serve type Cup Cone Glasses Box for take away

Consumer Profile

1048766 Primary Teenagers and Young Adults (18-30) (70) amp Diplomats

1048766 Secondary Family consumers for eat out

1048766 Income Group High income customers tentatively from SEC A

1048766 Geographic Area Concentrated in Gulshan and nearby areas

1048766 Rush time Afternoon- Young Adult 10 to 11 pm Foreigners

1048766 the company also serves at parties and has freezers in known hotels where their ice creams

are served

Sales and Price Information

1048766 Sales BDT 35-40000 daily in summer

1048766 Price 640 per litre for any flavour

1048766 Sales Volume 55-60 litres per day

Supply Chain Placement Information

1048766 Transportation Imported finished goods by ship

1048766 Ship travel time 19 days

1048766 Port clearance 10 days

1048766 Safety Cushion Extra 10 days

Promotional Materials

1048766 Materials used are near premises POS materials for promoting the parlour only

Table 24 Detail of MoumlvenPick of Switzerland

Evaluation of Entry into Ice cream Business for Bangladesh Limited 39

Andersenrsquos of Denmark

Basic Company Information

1048766 Location Gulshan (2 others in Uttara Dhanmondi)

1048766 Established in 2001

1048766 Seating Capacity 48

1048766 Owner United Group

1048766 Business Type Franchise of Australian company Andersenrsquos of Denmark

1048766 Production Tongi Factory of United Group

1048766 Production capacity 2000 litres per day in factory

1048766 Storage Capacity in Shop 150 litres

Product Related Information

1048766 Product Danish parlour scoop ice cream and coffee

1048766 Flavours Around 30 to 35 flavours available

1048766 Most selling Strawberry Butter Scotch Green

1048766 Innovations New variants and ingredients are communicated by their franchiser and they

decide on flavours that they want

1048766 Serve type Cup Cone Glasses Box for take away

Consumer Profile

1048766 Primary Teenagers and Young Adults (18-30) (70) amp Diplomats

1048766 Secondary Family consumers for eat out

1048766 Income Group High income customers tentatively from SEC A

1048766 Geographic Area Concentrated in Gulshan and nearby areas

1048766 Rush time 8 to 10 pm

Sales and Price Information

1048766 Sales BDT 10-12000 daily in summer

1048766 Price 460 per litre for any flavour

1048766 Sales Volume 40-50 litres per day

Supply Chain Placement Information

1048766 Milk 2025 kg packs are imported

1048766 Chocolates amp Flavours Imported

1048766 Butte paper Local sourcing

1048766 Transportation Ship

Promotional Materials

1048766 Materials used are near premises POS materials for promoting the parlour only

Table 25 Detail of Andersenrsquos of Denmark

Evaluation of Entry into Ice cream Business for Bangladesh Limited 40

Gelateria Igloo

Basic Company Information

1048766 Location Banani Kemal Ataturk Avenue (Two others in GEC Mor Chittagong and Naya

Paltan)

1048766 Established in 2000

1048766 Seating Capacity 20

1048766 Production From Igloo factory in Shyampur Narayanganj

Product Related Information

1048766 Product Parlour scoop ice cream and coffee only

1048766 Flavours Around 30 flavours available

1048766 Most selling Vanilla Strawberry Chocolate Pistachio Butter Scotch Tutti Fruity

1048766 Serve type Cup Cone Glasses Box for take away

Consumer Profile

1048766 Primary Teenagers and Young Adults (18-30)

1048766 Secondary Family consumers for eat out

1048766 Income Group High income customers tentatively from SEC A and B

1048766 Geographic Area Diversified

1048766 Rush Time afternoon and evening

Sales and Price Information

1048766 Sales BDT 8000 to 10000 daily in summer Nearly one fourth in winter

1048766 Price Varies but 350 per litre of vanilla

Promotional Materials

1048766 POS materials at the premises

Table 26 Detail of Gelateria Igloo

52 Price Comparison of Common and Boutique Segments

Price ranges of both common format and boutique segment cannot exactly be pin pointed as

products do not follow common structure and variations occur with use of toppings mixing of

flavours and use of coatings However a price comparison has been made among the brands

based on their price of per litre of vanilla flavoured ice cream in the market It appears to be as

following

Company

Price Litre Vanilla

Club Gelato

750

MoumlvenPick

640

Andersenrsquos

460

Dolce Vita

440

Igloo

100

Kwality

100

Polar

100

Milk-Vita

90

Savoy

85

Table 27 Comparative Price Analysis

As it can be seen there is price gap within the range of BDT 100-400 Ice cream kiosks and

small scooping boutiques can operate within that range

Evaluation of Entry into Ice cream Business for Bangladesh Limited 41

60 CONSUMER ANALYSIS

61 Target Group of Ice cream

Who are the consumers of ice cream This question does not have a clear answer Ice cream is a

food for all It is the only food consumed by a human being at less than 0 degree centigrade

temperature and people of all ages feel indulged to have it However we can determine focus

target groups for both branded common format and artisan boutique ice cream Group

discussions and market visits were done to get insight into the consumers along side resources

form secondary sources Age based target group is common for both segments but variation

among the groups occur mainly based on SEC and DMFI classification

611 Geographic Group

Branded ice cream remains an urban product till date Geographically branded ice cream has

reached urban and semi urban areas up to Thana Head Quarter levels Ice cream has reached

areas where electricity is available Small artisan players are available in places where large

branded players have no distribution

612 Target Age Group

Age wise grouping of target consumers is as follows

1048766 Urban kids in the age group of 5-14

1048766 They mainly consume normal sticks cups cones innovative fillers and water ice creams

1048766 Urban youth in the age group of 15-24

1048766 They consume premium and extrusion sticks and cones

1048766 Urban mothers in the age group of 25-35

1048766 They determine the family purchases Even when the father purchases ice cream decision is

taken by them

Consumption pattern of various age groups are depicted in the following chart Ice cream

consumption pattern50203005 to 14 yrs15 to 24 yrs25 to 35 yrs

Figure 11 Target Group wise Consumption Pattern Evaluation of Entry into Ice cream Business

for Bangladesh Limited 42

613 Target SEC and DMFI Group

Common Format

SEC A and B is the target group for common format ice cream However with rapid increase in

price level over the years has made it a ldquohard to consumerdquo product for SEC B consumers who

belong to lower DMFI group

Boutique Format

Boutique formatrsquos higher margin and high price range makes it an exclusively SEC A ice cream

People belonging to upper and upper middle class have access to the mediocre boutiques and

only higher upper class can have premium ice creams like Club Gelato and MoumlvenPick

Another unique target group for boutique format are the foreigners who live in Bangladesh

These people tend to visit the parlours to have ice cream as dessert especially after dinner

62 Ice cream in Consumer Lifestyle

Figure 12 Ice cream in Consumer Life style

This simple overview of ice cream in consumer lifestyle was determined based on in-depth

research analysis of UBL and validated through qualitative group discussions by the author

However detail of in-depth research is provided in a later section of this chapter

Evaluation of Entry into Ice cream Business for Bangladesh Limited 43

63 Highlights of Purchase Habit of Ice cream

631 Common Habits across Target Groups

There are some common habits that were identified in earlier researches and group discussions

with consumers Common habits mean the consumer approach towards ice cream that is seen

across all target groups eg kids youth and adult purchasers These are outlined below

1048766 Ice cream is mainly seen as a dessert or a snack Impulse ice cream is seen as a quick snack

that is consumed when it is in sight Visibility plays a big role here Regarding family packs

people see it as a post-food dessert

1048766 Ice cream purchase is commonly a planned event When the contexts arise people generally

take a bit of time to decide whether or not to have ice cream or when they want to go to a

boutique they make due considerations regarding which boutique to visit

1048766 Ice cream purchase decision is taken based on favourite flavour People tend to try out new

variants and flavours when they first see it They compare the taste with earlier experience and

when they purchase later they choose the flavour they have liked most

1048766 For In-Home segment decision is mostly taken on the flavour Generally people come up with

different flavours of choice and most voted flavour is chosen

1048766 People become aware of new variants or flavours mainly through word-of-mouth

Advertisement (new launches special offers and festivals) in newspaper is another source of

awareness

1048766 People are currently indifferent towards the price level of premium flavours However some

feel that price of Choc-bar or water ice creams (lolly) is a bit much If less they would have

consumed more Some also feel that companies should come up with branded ice cream in the

price range of BDT 5-8

1048766 Ice cream is purchased from nearby shops If required brand and flavour is not available 2-3

shops will be visited and then available flavour will be selected even if the required one is not

found This is done mainly not to ruin the mood for ice cream

1048766 People are very open to try new brands and flavours especially if it comes from a credible

source They would try new flavours and if they are satisfied with the taste they would repeat

purchase

1048766 Regarding boutique visits people feel that boutiques need to have a proper environment

enough flavours and other snacks

1048766 While visiting boutique with family or companion they want variation in flavours so that

they would order different flavours and taste each otherrsquos ice cream It is seen as a sign of

togetherness

1048766 Frequency of ice cream purchase varies among people It depends on peer pressure collective

family decision summer heat and attitude towards ldquoice creamrdquo itself as a product Evaluation of

Entry into Ice cream Business for Bangladesh Limited 44

632 Habits of Kids

1048766 Kids choose ice cream flavours by the look of the product (generally pictures shown in POS

materials and carts) They love colour and designs of the products let it be a common format or a

boutique ice cream

1048766 Kids (when in house) would go with the housemaid to the nearby shop choose the flavour

they want (within range of the amount given to the maid) and buy it

1048766 When with parents they would take the product they like even if the price is lower than some

other product However mothers play a role in this decision They would want their children not

to choose too high priced a product or coloured products

633 Habits of Youth

1048766 Young people are the main consumer of impulse ice cream They also are one of the major

consumers in the boutique segment

1048766 Young people love to try out new products that come into the market Another side of the coin

is that they are not very loyal to a brand or a flavour and tend to switch a lot

1048766 Regarding boutique visits young people go to boutiques to have an ldquoice cream hang outrdquo with

peer groups They would stay there for a longer period of time while they have their ice cream

1048766 Some times young people make milk shakes and other ice cream based desserts

634 Habits of Mothers

1048766 Mothers worry about their childrenrsquos health and they prefer ldquovanillardquo type of brands

However when price constraint occurs they go for water ice creams for their children They try

to convince their kidrsquos purchase decision

1048766 Regarding family purchase motherrsquos decision is sometimes prioritized by the whole family

64 Barriers to Ice cream Consumption

641 Emotional Barriers

1048766 Overindulge (close to sinful)

1048766 Undisciplined (no control)

1048766 Childish (licking)

1048766 Artificial Image

642 Functional Barriers

1048766 People of SEC B feel that ice cream is an expensive dessert (If less expensive would consume

more often)

1048766 It leads to cold cough - especially in winter rainy season

1048766 It contains artificial additives preservatives

1048766 It is very high in calories that lead to fattening

Evaluation of Entry into Ice cream Business for Bangladesh Limited 45

1048766 It does not quench ldquothirstrdquo

1048766 Less convenient (portable immediate eat)

1048766 Messy Dripping

65 Research Findings

The highlights regarding purchase habits triggers and barriers of ice cream consumption provide

a glimpse into the consumer world of ice cream industry However UBL CMI conducted a

formal research exclusively on ice cream consumers to identify

1048766 Occasions of ice cream

1048766 Frequency of ice cream consumption

1048766 Expectations from ice cream occasions

1048766 Personalities that they desire from ice cream

651 Relevant Occasions in Daily Lives of Consumers

Research question regarding ldquousual occasions of life that occurred most frequently in day-to-day

lives of the respondentsrdquo generated the following replies

Occasion

of Respondents saying Yes

Watching TV

93

Normal Dinner At Home

91

Normal Lunch At Home

89

At Home While ReadingMusicSurfing

86

Informal Family Get Together

85

Out Of Home Hanging Out With Friends

84

Out Shopping

84

Mid-Afternoon Break At Home

83

At Home By Myself During The Day

82

Special Dinner At Home

82

Informal Dinner Out Of Home

82

Normal Lunch Out Of Home

82

Leisure Walk

79

Coming Home From WorkSchool

78

Special Dinner Out Of Home

78

Celebration

78

A Night In With Friends

77

At Home By Myself In The Evening

77

Special Lunch Out Of Home

76

Mid-Afternoon Break Out Of Home

75

Special Lunch At Home

73

Day out with Partner

72

Midmorning Break

70

At Breakfast

68

Family Day Out

68

During Work Or At School

65

Evaluation of Entry into Ice cream Business for Bangladesh Limited 46

Travelling ToFrom WorkSchool

65

At The Cinema

61

Special Event

56

Clubbing At A Party

50

Post GymSports

48

Table 28 Relevant Occasions in Consumersrsquo Lives

Respondents were then asked to mention ldquofrequency of occurrence of the identified occasionsrdquo

The identified replies are as follows Normal dinner at homenormal lunch at homeComing home

from workschoolTraveling tofrom workschoolDay out with Partner SpouseMid-afternoon

break at homeOut of home hanging out with friendsLeisure walkMid-afternoon break out of

homeA night in with friendsSpecial dinner at homeSpecial lunch out of homeFamily day

outSpecial eventPost gymsportsDaily2-3 Times A WeekWeekly2-3 Times A MonthOnce A

MonthEvery 2-3 MonthsLess OftenNever Figure 13 Frequency of Occurrence of Occasions

This shows that ldquoNormal dinner at home Watching TV Normal Lunch At Home At Home

While ReadingMusicSurfing Coming Home From WorkSchool During Work Or At School

Travelling ToFrom WorkSchool Midmorning Break Day Out With Partner Spouse At Home

By Myself During The Dayrdquo are the most frequent daily rituals of busy lives of consumers

652 Frequency of Ice cream Consumption

Respondents were asked to mention ldquoconsumption pattern of ice cream during the identified

occasionrdquo on a scale of 1-5 depicting frequencies like ldquo(5) always (4) most of the times (3)

about half of the times (2) sometimes (1) never do not knowrdquo The responses are depicted in

the following table

Evaluation of Entry into Ice cream Business for Bangladesh Limited 47

444474544655555566756665775967779991011101111101210111110101113111412131314161

011121411131216181519181518211817171719181718201721222130303434253437403741394

046383944464746453745414641374638504843414839373030292726232725222020201926202

21722221317Midmorning

breakWhile clubbing at aAt the cinemaSpecial eventNormal lunch out ofA night in with

friendsNormal dinner atInformal dinner out ofAt home by myselfAt home by myself inOut

shoppingSpecial lunch atDay out with SpouseWatching TVAlwaysmost of the timesAbout half

of the timesSometimesneverdo not know

Figure 14 Frequency of Ice cream Consumption

As it can be seen ldquoDay out with Spouse Special lunch at home Special dinner at home

Watching TV Family day out Celebrationrdquo are the occasions where most frequently ice cream is

consumed

653 Market Character Mapping Relevant Occasions vs Frequency of Consumption

If we plot frequency of consumption on the X-axis of a chart and relevance of occasion

occurrence on the Y-axis taking the above mentioned values as cut-off values we get four

quadrants in the chart depicting four market scenarios that any ice cream manufacturer in

Bangladesh market might encounter given the current market situation This market

segmentation is based on frequency of ice cream consumption in daily occasions of consumer

lives

The segments are

1048766 OPPORTUNITY MARKET High Relevant Occasions-Low Ice cream Frequency

1048766 QUESTION MARKET Less Relevant Occasions-Low Ice cream Frequency

1048766 HIGH FREQUENCY MARKET Relevant Occasions-High Ice cream Frequency

1048766 CAPTIVE MARKET Less Relevant Occasions-High Ice cream Frequency

The chart looks as follows Evaluation of Entry into Ice cream Business for Bangladesh Limited

48

Figure 15 Relevance of Occasion-Frequency of Consumption Mapping

As it can be seen from the above chart Bangladesh Market still lies in the Opportunity and

Question market zone with a pull towards High frequency and Captive Market zones This is

evident from market data as penetration of ice cream still remains at Thana headquarters levels

Also this explains the high market growth rate of 17 as market is yet under developed and

branded quality ice cream has yet not reached all levels of consumers especially rural level that

constitutes around 75 of Bangladeshi market

From the above analysis we can establish that target of ice cream manufacturers should be to

penetrate more into the Bangladeshi market to create higher frequency of ice cream

consumption The following chart shows the strategies to follow for ice cream manufacturers

Figure 16 Required Market Strategy for Bangladesh

Evaluation of Entry into Ice cream Business for Bangladesh Limited 49

As relevance of ice cream consumption occasions can hardly be controlled by marketers their

endeavour should be to create more ldquoemotional and functionalrdquo attachment to ice cream in less

frequent occasions through ldquomarket developmentrdquo strategy to earn share from overall food

expenditure of consumers and at the same time make them consume more ice cream in highly

relevant occasions through ldquopenetrationrdquo strategy

654 Consumersrsquo Emotional Requirements and Product Attributes

All consumers under these clusters also identify the emotional requirements and the significant

product attributes they seek from their current preferred and future desired ice creams These are

provided below

Cluster

Emotional Functional Requirement

Product Attributes

Enjoyment

Flavour Variety

1048766 Combination of different flavours

1048766 Combination of different textures

1048766 Very sweet

1048766 With wafer or biscuit

1048766 With chocolate

1048766 Of a well known brand

Socially Involved

Spoonable Rich

1048766 Very creamy

1048766 Only natural ingredients

1048766 No mess

Care

Size Creaminess

1048766 Big

1048766 Rich full taste

1048766 Smooth

1048766 Value for money

1048766 No mess

Unwind amp Escape

Economy

1048766 Crunchy

1048766 Economic

1048766 Of a well known brand

1048766 Nutritious

Balanced Convenience

Health Conscious

1048766 Of a well known brand

1048766 Nutritious

1048766 Milk based

1048766 Low sugar

1048766 Low carbohydrates

1048766 Filling

Active Self-Grooming

Fruit Vitamins

1048766 Healthy

1048766 Fruit based

1048766 Low fat

1048766 Liquid or drinkable

1048766 Nutritious

1048766 Of a well known brand

Confidence

Drinkable Light

1048766 Low calories

1048766 Light on the stomach

1048766 Chewy or gooey

1048766 Not so sweet

1048766 Natural appearance

Sensual

Appeal or image

1048766 No artificial additives

Evaluation of Entry into Ice cream Business for Bangladesh Limited 50

1048766 Natural appearance

1048766 Melting slowly

1048766 Attractive packaging

1048766 High quality ingredients

1048766 Of a well known brand

Table 29 Requirements amp Product Attributes Desired by Consumer Clusters

Of these findings we see that the identified highlighted barriers to ice cream consumption are

pretty evident among the consumers Mostly people want products of a reliable source or a well

known brand low calories quality ingredients value for money economic type

Evaluation of Entry into Ice cream Business for Bangladesh Limited 51

70 INDUSTRY ATTRACTIVENESS AND ENTRY PROSPECTS

71 Driving Forces of Growth

As identified in the earlier sections there are several driving forces behind the growth of ice-

cream industry in Bangladesh

712 Trade and Infrastructural Level

1048766 As a result of globalization newer varieties have been introduced to the local products Many

foreign companies are also coming as franchise so there has been increased competition and

these boutiques are setting higher standards for the local producers

1048766 The present market growth rate is 18-19 which is being influenced by larger players like

Igloo who are expanding their distribution nation wide with expansion of national electricity

grid

1048766 With entry of Modern Trade and recent organized business approach of retailers has made it

possible for ice cream manufacturers to penetrate into shops even without providing them with

branded freezers

1048766 Weather change has increased ldquosummerrdquo season in our country which has reduced negative

seasonal impact on ice cream

1048766 Large companies like Igloo have taken global learning of using carts as an effective tool of

availability and visibility for ice cream

1048766 New and improved technologies are being used in the production process This technological

advancement has improved quality increased speed of production and made the process more

cost effective

713 Consumer Level

1048766 Only a few years back rich people could afford the luxury of having ice-cream but now it has

become a common product for everybody Ice-cream companies are producing different products

with a wide price range for consumers of every class and status

1048766 Nowadays companies are doing promotional campaigns more frequently the customers get to

know about the product which makes it easier for them to buy the best one

1048766 The improved standard of life and more modernized lifestyle of people is an important reason

for the increased consumption thus growth of the ice-cream industry

Evaluation of Entry into Ice cream Business for Bangladesh Limited 52

72 Prospects of Entry

The ice-cream industry of Bangladesh is an attractive one for the investors because there is a

huge market but number of producers is very small The major reasons behind industry

attractiveness are as follows

1048766 The industryrsquos current growth potential is very high with opportunity for market development

1048766 The competition currently permits adequate profitability and the competitive forces are

becoming stronger with time

1048766 Boutique segment is at a very high growth stage but no operator is currently operating with a

mid price range of BDT 100-400 Ice cream kiosks and small scooping boutiques can operate

within that range

1048766 Current industry driving forces are favourable for the future industry profitability

1048766 Globally oriented consumers look for variety in ice cream that is currently not available

Latest innovations came in the market in 2002 People would welcome new variety and flavours

1048766 There is a gap in the market for balanced convenience through ice cream where consumers can

get nutritional benefits for ice cream Also emotional attachment to ice cream could further be

improvised in promotional campaigns

1048766 There is high scope for market penetration and development to increase frequency of ice

cream consumption

1048766 Level of risk or uncertainty is very low in ice-cream industry because the consumer market is

so huge any product with a standard quality and careful pricing will be able to make significant

profit

1048766 As for geographic reach of the industry 60 market is still in Dhaka There is scope of

expansion and a new entrant can easily capture market share within Dhaka using carts even if

they do not want nation wide cold chain distribution

1048766 The production process is very complex and capital requirements are also high So before

going into production any company should know about their capabilities and weaknesses and

then start the business or else they might suffer huge loss at a certain level

1048766 Unilever can acquire the required resource and use existing multi-national multi-cultural

expertise to enter the market in a grand way

1048766 With high probability of entry from DANONE with more products like the ISIS diabetic ice

cream Unilever should consider entering in this industry as soon as possible

Evaluation of Entry into Ice cream Business for Bangladesh Limited 53

80 ENTRY STRATEGY FOR UNILEVER

While describing the suggested entry strategy for UBL certain issues have been kept

confidential and some issues have been touched but not explained to keep consistency with UBL

confidentiality policy

81 Suggested Entry Areas for UBL

1048766 Boutique segment of the Bangladesh ice cream is only 5 of the branded market UBL needs

to pursue a larger scope to make the entry viable

1048766 UBL cannot fight with unbranded segment as global product quality mandate of Unilever does

not allow UBL to fight in low price-low quality segment

1048766 Recommend entry should be in the common format segment with both single and multiple

servings and in the boutique segment with a different brand name (if possible BEN amp JERRYrsquoS)

1048766 UBL should build up state-of-art modern factory for manufacturing and establish cold chain

facilities initially focusing on metro cities

1048766 Investment issues are required to be addressed for building factory and cold chain and capital

requirement needs to be identified for that purpose4

1048766 UBL may have boutiques for driving image selective top-end offering

1048766 Kiosks can be setup near universities and shopping malls

1048766 Boutiques should be concentrated in Dhaka and Chittagong

1048766 Ice cream for boutiques and kiosks would be produced in factory as institutional packs of 9-10

litres

82 Products

1048766 As a Brand Building country in global Unilever operating framework UBL is entitled only to

bring products developed by the Brand Development countries

1048766 Unilever should focus on serving products that have nutritional benefits (already available

globally) along with usual satisfactions of sensual pleasure functional attributes etc

1048766 Current existent players especially Igloo and Kwality have extensively copied global and

regionally available Unilever products eg Cornelli is same as Wallrsquos Cornetto Vinetta is similar

to Vienetta Mega is similar to Magnum etc UBL needs to differentiate these to consumers on

the ldquotaste the originalrdquo platform where global quality is focused regarding the products

1048766 UBL should also bring regionally famous brands like Moo or Max to create image

differentiation

1048766 Magnum or Moo should be used as premium end ice cream to generate more profit margin

Evaluation of Entry into Ice cream Business for Bangladesh Limited 54

83 Placement

1048766 Distribution focus should be in Dhaka for entry as Dhaka contributes more than 60 of total

ice cream sales in the country

1048766 Company may use carts as distribution method They serve as good source of visibility and

availability It would help in increasing impulse purchase

1048766 At least 1500 outlets in Dhaka and Chittagong needs to be actively served using dedicated

branded refrigerators to generate sales

1048766 50 carts should operate in Dhaka and Chittagong

84 Price

1048766 UBL products should be priced at par with Igloo pricing for the common format ice creams

1048766 UBL can bring in premium single-serve SKUS for the higher economic classes in the price

range of BDT 60-80

1048766 Smaller SKUs (small lolly stick) can be introduced in the price range of BDT 10-15

1048766 In the boutique segment UBL should price products above the semi-premium segment

(Gelateria Igloo Sub Zero or Andersenrsquos) but lower than that of Club Gelato or MoumlvenPick

85 Promotion

1048766 UBL would require strong marketing campaign (As high as 50 of sales) to have a grand

entry in the market

1048766 Presence in the television media would be of utmost importance More than 50 of

promotional expense should be made here initially Gradually it can be reduced

1048766 Newspaper would serve as the second most important option

1048766 Billboards should also be used

1048766 Activations (similar to Lux Channel i Super Star or Igloo Festival) should be done to generate

trial

86 Scope of Opportunity

Table 30 Value and Volume Based Scope of Opportunity for UBL

Value (BDT Cr)

Volume (Tons)

Market

131

7835

Common

121

7600

Boutique

98

235

Evaluation of Entry into Ice cream Business for Bangladesh Limited 55

861 Geographic Contribution

1048766 Dhaka (61)

1048766 Chittagong (19)

1048766 Sylhet (10)

862 UBL objectives

Common Format Ice Creams

1048766 Target 10 Market share in 1st year operation

1048766 Value BDT 11 Cr

1048766 Production capacity required 21 Tons day

1048766 Freezer Placement 1500 freezers

1048766 Cart operation At least 50 carts

Boutiques

1048766 Target Further develop the market

1048766 Focus Dhaka Chittagong and Sylhet Metro

1048766 Franchise At least 20 franchisee operations nation wide in divisional towns

1048766 Pricing Below imported parlours above common formats with around BDT 400 per Litre

87 Critical Success Factors

1048766 UBL is considered as a high profile company in Bangladesh and thus they cannot operate in

the market only with common products like choc-bars and cups They must have premium

products (these require extrusion line) also to carry their brand image Otherwise UBL would not

be able to charge usual premium over competition products

1048766 Launch of ice cream would require huge promotional and activation support in order to gain

customers from Igloo People want novelty regarding ice cream and UBL have to let them know

about their products and create hype

1048766 Cart should be used as a source of distribution Recent successes of Unilever companies like

Indonesia shows that carts can generate more sales and can be used as source of visibility in the

minds of both retail traders and consumers Carts can also provide incremental sales to the

company

1048766 UBL have to create a strong cold chain for ice cream (initially in Dhaka and Chittagong) to

ensure quality products for consumers

1048766 UBL have to build capacity very rapidly to meet consumer demand if the launch is successful

Evaluation of Entry into Ice cream Business for Bangladesh Limited 56

90 BUSINESS PROJECTION

91 Basic Assumptions

Business projection for ice cream business was made based on a conservative approach UBL

would require spending significantly on production capacity and factory dedicated to ice cream

Thus to analyse business possibilities of ice cream certain assumptions were made and collected

data were used These are

1048766 Production equipments and cabinets would cost approximately BDT 55 crores

1048766 Production equipments 45

1048766 Packaging Equipments 15

1048766 Storage Facility 20

1048766 Branded Freezers 10

1048766 Distribution Investment 10 (Distributors would also invest themselves)

1048766 Ice cream factory with a floor size of 20000 sqft would cost BDT 25 crores

1048766 Objective is to capture 10 market share in Dhaka and Chittagong in the first year

1048766 Business would grow by 50 in year 2 and 3 30 in year 4 and 25 in year 5

1048766 Weighted price per litre is BDT 170 according to volume share of single serve ice cream

multiple serve ice cream and boutique ice cream

1048766 Other financial assumptions were also made List of them are provided below but amount has

been removed for confidentiality issues

Assumptions

Trade Margin

Distributors Margin

DutyVAT Rate

Trade Terms Expense of NPS

Trade Terms Expense of NSV

Advertising ampPromotion of NPS

Indirects (Salaries Wages etc)

Trading Tax

Table 31 Assumptions for Business Projection

Evaluation of Entry into Ice cream Business for Bangladesh Limited 57

100 CONCLUSION

Ice cream has good prospect in Bangladesh It is still a growing market with opportunities for big

new entrants With the barriers of entry UBL needs to consider its priorities UBL being an HPC

company traditionally needs to acquire expertise in cold chain distribution and has to invest a lot

of money to rip the benefits of the industry However to initiate company can take regional

support and acquire resource expertise The company should enter the business as soon as

possible since there is potential threat from DANONE to introduce more ice creams after ISIS

diabetic ice cream and also with potential of the industry arch rival Nestlersquo might consider

entering into the industry too

Evaluation of Entry into Ice cream Business for Bangladesh Limited 58

References

Web References

1 wwwunilevercom

2 wwwunilevercombd

3 wwwhllcom

4 wwwunilevercompk

5 wwwthedailystarcom - Life Style Magazine

6 wwwreuterscouk

Evaluation of Entry into Ice cream Business for Bangladesh Limited 59

Page 33: Square Ice cream

land area of the factory premise is 116 Bigha with 8000 sft area covered with a total project cost

of BDT 144 The factory employs 73 people

Product ranges of the company include all the basic designs and flavours of the industry

However the company has not been much of an innovator in the industry Their product quality

is substantially low than that of other players and they price their products at 10-15 lower than

the other competitors The company imports raw materials mainly from Europe The general raw

materials are Euro cream Skimmed Milk Powder Cocoa Powder and Flavour (Vanilla Mango

and Strawberry) Colour (Yellow Red Chocolate and Green) Ripple Sauce Cheney Fruit Palm

Kernel Oil Anhydrous Butter Oil (Ghee) and Sugar etc

Milk Vita

Milk Vita is one of the most famous brand names in Bangladesh for its liquid dairy milk Owned

by Bangladesh Milk Producersrsquo Co-operative Union Limited (BMPCUL) the company came in

the market with proper dairy milk ice cream in form of cups and choc-bar With a production

capacity of around 1600 litres per day the company is trailing in the market place with 3

market share

Although the Milk Vita Choc-bar was perceived to be extremely tasty by consumers they

probably could not do well due price competition Currently they do not even distribute ice

cream in Dhaka However their presence is seen in outskirts of Dhaka and other nearby towns

If the current market situation prevails Milk Vita would lose their remaining market share and

other companies would benefit especially Igloo However one of the advantages of Milk Vita

remains to be

Evaluation of Entry into Ice cream Business for Bangladesh Limited 34

their nation wide milk supply network They have skimmed milk powder production plant that

Igloo does not have Thus they can combat the seasonality of milk supply that Igloo with its

huge requirement of milk cannot

Strengths and Weaknesses of Competitors

Company

Strengths

Weaknesses

Igloo

1048766 Strong brand image

1048766 High product quality

1048766 Highest no of variety

1048766 Strong distribution network

1048766 Highest visibility

1048766 Strong promotion

1048766 High production capacity

1048766 Presence of extrusion ice cream

1048766 Items are generally a bit pricy

1048766 Igloo does not give free freezers like other companies

1048766 Reluctant in recent times regarding innovation

1048766 Local sourcing of liquid milk does not meet demand

1048766 Failure to use ERP technology slowing decision making

Kwality

1048766 Product variety

1048766 Strong promotion

1048766 Free freezer distributed

1048766 Presence in all price segments

1048766 High production capacity

1048766 Weak distribution

1048766 Lower exposure

1048766 low amount of carts in operation

Polar

1048766 Free freezer

1048766 Quality perceived to be high compared to Kwality

1048766 Discoloured freezers

1048766 Lower exposure

1048766 Low product variety

1048766 Unused capacity

Savoy

1048766 Price is lower

1048766 Discoloured freezers

1048766 Low product variety

1048766 Weak distribution

1048766 Small amount of freezers

1048766 Low production capacity

Milk Vita

1048766 Quality is good due to dairy cream

1048766 Brand leverage from Milk Vita milk

1048766 Low exposure

1048766 Low variety

Table 21 Strengths and Weaknesses of Competition

512 Market Characteristics of the Boutique Segment

With a small market of BDT 98 Cr and 567 share in the branded ice cream market the

boutique segment is currently an increasing segment in the ice cream industry Boutique

segmentrsquos history dates back to 1960s when Igloo launched boutiques in Dhaka to save

distribution cost and promote a culture of ldquoice cream eating outrdquo In later years boutiques lost

their glamour and retail common format segment picked up growth However with Dolce Vita in

the late lsquo80s craze for Italian Artisan ice cream was recreated in the market Although Dolce

Vita is failing in recent times emergence of MoumlvenPick and Club Gelato in 2000 has uplifted the

segment once again Current growth rate of the

Evaluation of Entry into Ice cream Business for Bangladesh Limited 35

segment can be estimated to be approx 20-22 (higher than the common format segment)

Following are the basic detail of all the major players in the segment with their estimated sales3

Players

Outlet

Sales (Cr Taka)

Share

Club Gelato

1

136

199

MoumlvenPick

1

119

174

Andersenrsquos

3

119

174

Gelateria Igloo

3

119

174

Sub Zero (Kwality)

2

051

75

Baskin Robbins

1

015

22

Dolce Vita

1

017

25

American Soft

1

009

12

Rainbow

1

009

12

Others (off site)

089

130

Total Market

682

Table 22 Players and Shares in Boutique Segment

A Detail of Operation

General operational procedure followed by all the operators is as follows

1048766 Operating method There is a variation in operational method among the large operators

1048766 Club Gelato uses kitchen at own premise where imported ingredients and local milk (daily

special service from Milk Vita) are used to make ice cream

1048766 MoumlvenPick directly imports ice cream from Switzerland

1048766 Andersenrsquos Gelateria Igloo and Sub Zero produce ice cream at their factory with a mix of

imported and local ingredients

1048766 Products Around 30-35 flavours of artisan dairy ice cream are served at the premises

1048766 Most sold flavours are Vanilla Ferrero Rocher Butterscotch Chocolate Caramel etc

1048766 Other Products Larger players also serve ice cream desserts (milk shakes ice cappuccino etc)

pastries and other desserts with normal coffee and tea facility at their premises

1048766 Boutiques fight ice cream seasonality with the other products sales during off-peak ice cream

seasons Usually ice cream and other products contribute at 6040 ratio in summer and during

winter and off-peak seasons the ratio reverses

1048766 Pricing Usually the prices of products in this segment are 3-4 times higher than that of the

common format segment

1048766 Prices do not vary with flavours Variation depends on serve style (Cone tub) and use of

toppings and other ingredients (Chocolate sauce nut fruits) etc

1048766 Usual margin charged is around 50-60 over production cost Similar margin is charged for

other products like coffee ice cappuccino etc

3 Yearly sales is estimated based on companyrsquos approximate daily sales collected during

interview

Evaluation of Entry into Ice cream Business for Bangladesh Limited 36

1048766 Target Group Most of the consumers belong to SEC A and higher SEC A with DMFI of at

least BDT 20000

1048766 Foreign delegates and resident foreigners also visit these boutiques

1048766 Main purposes of visits in the boutiques are

bull Youth hangout with friends and having ice cream and ice cream derivatives

bull Family Family night out or eat out at a restaurant and then having dessert

bull Foreigners Having dessert after dinner

1048766 Rush time at boutiques are Afternoon 2-4 pm and at night 9-11 pm

1048766 Offsite sales Most of the large operators also sell offsite They have small freezers for off-site

1048766 Club Gelato and MoumlvenPick serves ice cream at high society parties and programmes

1048766 MoumlvenPick also has kiosks in known hotels like Sheraton

1048766 Promotion No mass promotion is done by any of the companies Word of mouth is the most

important source of promotion Posters and banners outside the premise and occasional

newspaper advertisements are used to communicate special offers

1048766 Growth Drivers Market growth is driven by image innovation quality decoration of facility

environment and special offers

1048766 Club Gelato has the image of selling true Italian dairy ice cream with an excellent hangout

environment

1048766 MoumlvenPick imports ice cream directly from Switzerland and is perceived to be of high quality

1048766 Andersenrsquos operates with the image of ice cream from Denmark

1048766 Gelateria Igloo (from Igloo) and Sub Zero (from Kwality) could not establish the premium

artisan ice cream image

B Players in the Boutique Segment

There are very few players who have significant impact in the boutique segment Detailed

information of all the major boutique segment players is provided below

Evaluation of Entry into Ice cream Business for Bangladesh Limited 37

Club Gelato

Basic Company Information

1048766 Location Banani Road 11 (Planning for a second one in Dhanmondi)

1048766 Established in 2001

1048766 Seating Capacity 48

1048766 Area 1250 sft (including kitchen)

1048766 Owner Mr Jahangir Alam (Bangladesh)

1048766 Business Type Joint business partnership with Singapore

1048766 Staff 15 people (6 in the kitchen)

1048766 Production capacity 150 litres per day

Product Related Information

1048766 Product Italian style parlour scoop ice cream fruit juice coffee and pastries

1048766 Flavours Around 32 flavours available

1048766 Most selling Ferraro Rocher Vanilla Pistachio

1048766 Innovations New variants and ingredients are communicated by their Italian supplier and

Club Gelato decides what to take from them

1048766 Serve type Cup Cone Glasses Box for take away

Consumer Profile

1048766 Primary Teenagers and Young Adults (18-30) amp Diplomats

1048766 Secondary Family consumers for eat out

1048766 Income Group High income customers tentatively from SEC A and higher SEC A

1048766 Geographic Area Diversified

1048766 Rush time 8-10 pm

Sales and Price Information

1048766 Sales BDT 50000 (60 Ice cream 40 other desserts) daily in summer In winter however

other products sell more and thus they keep total sales at the same level

1048766 Price 750 per litre for any flavour

1048766 Sales Volume 50-60 litres per day

Supply Chain Placement Information

1048766 Milk Local sourcing from Milk Vita (4050 litres per day)

1048766 Chocolates amp Flavours Belgium France Germany

1048766 Transportation Mainly air (They can afford it due to high margin)

1048766 Contribution of various materials Flavours (30) Milk (20) other parts are water and air

Promotional Materials

1048766 Materials used are near premises POS materials for promoting the parlour only

Table 23 Detail of Club Gelato

Evaluation of Entry into Ice cream Business for Bangladesh Limited 38

MoumlvenPick of Switzerland

Basic Company Information

1048766 Location Gulshan

1048766 Established in 2000

1048766 Seating Capacity 55

1048766 Owner Mr Arif Mahmud

1048766 Business Type Franchise of International MoumlvenPick

1048766 Storage Capacity in Shop 150 litres

Product Related Information

1048766 Product Imported MoumlvenPick ice creams coffee chicken sandwich and Frappe

1048766 Flavours Around 30 to 35 flavours available

1048766 Most selling Swiss Chocolate caramel Vanilla Dream Espresso Strawberry

1048766 Innovations New variants are communicated by their franchiser and they decide on flavours

that they want

1048766 Serve type Cup Cone Glasses Box for take away

Consumer Profile

1048766 Primary Teenagers and Young Adults (18-30) (70) amp Diplomats

1048766 Secondary Family consumers for eat out

1048766 Income Group High income customers tentatively from SEC A

1048766 Geographic Area Concentrated in Gulshan and nearby areas

1048766 Rush time Afternoon- Young Adult 10 to 11 pm Foreigners

1048766 the company also serves at parties and has freezers in known hotels where their ice creams

are served

Sales and Price Information

1048766 Sales BDT 35-40000 daily in summer

1048766 Price 640 per litre for any flavour

1048766 Sales Volume 55-60 litres per day

Supply Chain Placement Information

1048766 Transportation Imported finished goods by ship

1048766 Ship travel time 19 days

1048766 Port clearance 10 days

1048766 Safety Cushion Extra 10 days

Promotional Materials

1048766 Materials used are near premises POS materials for promoting the parlour only

Table 24 Detail of MoumlvenPick of Switzerland

Evaluation of Entry into Ice cream Business for Bangladesh Limited 39

Andersenrsquos of Denmark

Basic Company Information

1048766 Location Gulshan (2 others in Uttara Dhanmondi)

1048766 Established in 2001

1048766 Seating Capacity 48

1048766 Owner United Group

1048766 Business Type Franchise of Australian company Andersenrsquos of Denmark

1048766 Production Tongi Factory of United Group

1048766 Production capacity 2000 litres per day in factory

1048766 Storage Capacity in Shop 150 litres

Product Related Information

1048766 Product Danish parlour scoop ice cream and coffee

1048766 Flavours Around 30 to 35 flavours available

1048766 Most selling Strawberry Butter Scotch Green

1048766 Innovations New variants and ingredients are communicated by their franchiser and they

decide on flavours that they want

1048766 Serve type Cup Cone Glasses Box for take away

Consumer Profile

1048766 Primary Teenagers and Young Adults (18-30) (70) amp Diplomats

1048766 Secondary Family consumers for eat out

1048766 Income Group High income customers tentatively from SEC A

1048766 Geographic Area Concentrated in Gulshan and nearby areas

1048766 Rush time 8 to 10 pm

Sales and Price Information

1048766 Sales BDT 10-12000 daily in summer

1048766 Price 460 per litre for any flavour

1048766 Sales Volume 40-50 litres per day

Supply Chain Placement Information

1048766 Milk 2025 kg packs are imported

1048766 Chocolates amp Flavours Imported

1048766 Butte paper Local sourcing

1048766 Transportation Ship

Promotional Materials

1048766 Materials used are near premises POS materials for promoting the parlour only

Table 25 Detail of Andersenrsquos of Denmark

Evaluation of Entry into Ice cream Business for Bangladesh Limited 40

Gelateria Igloo

Basic Company Information

1048766 Location Banani Kemal Ataturk Avenue (Two others in GEC Mor Chittagong and Naya

Paltan)

1048766 Established in 2000

1048766 Seating Capacity 20

1048766 Production From Igloo factory in Shyampur Narayanganj

Product Related Information

1048766 Product Parlour scoop ice cream and coffee only

1048766 Flavours Around 30 flavours available

1048766 Most selling Vanilla Strawberry Chocolate Pistachio Butter Scotch Tutti Fruity

1048766 Serve type Cup Cone Glasses Box for take away

Consumer Profile

1048766 Primary Teenagers and Young Adults (18-30)

1048766 Secondary Family consumers for eat out

1048766 Income Group High income customers tentatively from SEC A and B

1048766 Geographic Area Diversified

1048766 Rush Time afternoon and evening

Sales and Price Information

1048766 Sales BDT 8000 to 10000 daily in summer Nearly one fourth in winter

1048766 Price Varies but 350 per litre of vanilla

Promotional Materials

1048766 POS materials at the premises

Table 26 Detail of Gelateria Igloo

52 Price Comparison of Common and Boutique Segments

Price ranges of both common format and boutique segment cannot exactly be pin pointed as

products do not follow common structure and variations occur with use of toppings mixing of

flavours and use of coatings However a price comparison has been made among the brands

based on their price of per litre of vanilla flavoured ice cream in the market It appears to be as

following

Company

Price Litre Vanilla

Club Gelato

750

MoumlvenPick

640

Andersenrsquos

460

Dolce Vita

440

Igloo

100

Kwality

100

Polar

100

Milk-Vita

90

Savoy

85

Table 27 Comparative Price Analysis

As it can be seen there is price gap within the range of BDT 100-400 Ice cream kiosks and

small scooping boutiques can operate within that range

Evaluation of Entry into Ice cream Business for Bangladesh Limited 41

60 CONSUMER ANALYSIS

61 Target Group of Ice cream

Who are the consumers of ice cream This question does not have a clear answer Ice cream is a

food for all It is the only food consumed by a human being at less than 0 degree centigrade

temperature and people of all ages feel indulged to have it However we can determine focus

target groups for both branded common format and artisan boutique ice cream Group

discussions and market visits were done to get insight into the consumers along side resources

form secondary sources Age based target group is common for both segments but variation

among the groups occur mainly based on SEC and DMFI classification

611 Geographic Group

Branded ice cream remains an urban product till date Geographically branded ice cream has

reached urban and semi urban areas up to Thana Head Quarter levels Ice cream has reached

areas where electricity is available Small artisan players are available in places where large

branded players have no distribution

612 Target Age Group

Age wise grouping of target consumers is as follows

1048766 Urban kids in the age group of 5-14

1048766 They mainly consume normal sticks cups cones innovative fillers and water ice creams

1048766 Urban youth in the age group of 15-24

1048766 They consume premium and extrusion sticks and cones

1048766 Urban mothers in the age group of 25-35

1048766 They determine the family purchases Even when the father purchases ice cream decision is

taken by them

Consumption pattern of various age groups are depicted in the following chart Ice cream

consumption pattern50203005 to 14 yrs15 to 24 yrs25 to 35 yrs

Figure 11 Target Group wise Consumption Pattern Evaluation of Entry into Ice cream Business

for Bangladesh Limited 42

613 Target SEC and DMFI Group

Common Format

SEC A and B is the target group for common format ice cream However with rapid increase in

price level over the years has made it a ldquohard to consumerdquo product for SEC B consumers who

belong to lower DMFI group

Boutique Format

Boutique formatrsquos higher margin and high price range makes it an exclusively SEC A ice cream

People belonging to upper and upper middle class have access to the mediocre boutiques and

only higher upper class can have premium ice creams like Club Gelato and MoumlvenPick

Another unique target group for boutique format are the foreigners who live in Bangladesh

These people tend to visit the parlours to have ice cream as dessert especially after dinner

62 Ice cream in Consumer Lifestyle

Figure 12 Ice cream in Consumer Life style

This simple overview of ice cream in consumer lifestyle was determined based on in-depth

research analysis of UBL and validated through qualitative group discussions by the author

However detail of in-depth research is provided in a later section of this chapter

Evaluation of Entry into Ice cream Business for Bangladesh Limited 43

63 Highlights of Purchase Habit of Ice cream

631 Common Habits across Target Groups

There are some common habits that were identified in earlier researches and group discussions

with consumers Common habits mean the consumer approach towards ice cream that is seen

across all target groups eg kids youth and adult purchasers These are outlined below

1048766 Ice cream is mainly seen as a dessert or a snack Impulse ice cream is seen as a quick snack

that is consumed when it is in sight Visibility plays a big role here Regarding family packs

people see it as a post-food dessert

1048766 Ice cream purchase is commonly a planned event When the contexts arise people generally

take a bit of time to decide whether or not to have ice cream or when they want to go to a

boutique they make due considerations regarding which boutique to visit

1048766 Ice cream purchase decision is taken based on favourite flavour People tend to try out new

variants and flavours when they first see it They compare the taste with earlier experience and

when they purchase later they choose the flavour they have liked most

1048766 For In-Home segment decision is mostly taken on the flavour Generally people come up with

different flavours of choice and most voted flavour is chosen

1048766 People become aware of new variants or flavours mainly through word-of-mouth

Advertisement (new launches special offers and festivals) in newspaper is another source of

awareness

1048766 People are currently indifferent towards the price level of premium flavours However some

feel that price of Choc-bar or water ice creams (lolly) is a bit much If less they would have

consumed more Some also feel that companies should come up with branded ice cream in the

price range of BDT 5-8

1048766 Ice cream is purchased from nearby shops If required brand and flavour is not available 2-3

shops will be visited and then available flavour will be selected even if the required one is not

found This is done mainly not to ruin the mood for ice cream

1048766 People are very open to try new brands and flavours especially if it comes from a credible

source They would try new flavours and if they are satisfied with the taste they would repeat

purchase

1048766 Regarding boutique visits people feel that boutiques need to have a proper environment

enough flavours and other snacks

1048766 While visiting boutique with family or companion they want variation in flavours so that

they would order different flavours and taste each otherrsquos ice cream It is seen as a sign of

togetherness

1048766 Frequency of ice cream purchase varies among people It depends on peer pressure collective

family decision summer heat and attitude towards ldquoice creamrdquo itself as a product Evaluation of

Entry into Ice cream Business for Bangladesh Limited 44

632 Habits of Kids

1048766 Kids choose ice cream flavours by the look of the product (generally pictures shown in POS

materials and carts) They love colour and designs of the products let it be a common format or a

boutique ice cream

1048766 Kids (when in house) would go with the housemaid to the nearby shop choose the flavour

they want (within range of the amount given to the maid) and buy it

1048766 When with parents they would take the product they like even if the price is lower than some

other product However mothers play a role in this decision They would want their children not

to choose too high priced a product or coloured products

633 Habits of Youth

1048766 Young people are the main consumer of impulse ice cream They also are one of the major

consumers in the boutique segment

1048766 Young people love to try out new products that come into the market Another side of the coin

is that they are not very loyal to a brand or a flavour and tend to switch a lot

1048766 Regarding boutique visits young people go to boutiques to have an ldquoice cream hang outrdquo with

peer groups They would stay there for a longer period of time while they have their ice cream

1048766 Some times young people make milk shakes and other ice cream based desserts

634 Habits of Mothers

1048766 Mothers worry about their childrenrsquos health and they prefer ldquovanillardquo type of brands

However when price constraint occurs they go for water ice creams for their children They try

to convince their kidrsquos purchase decision

1048766 Regarding family purchase motherrsquos decision is sometimes prioritized by the whole family

64 Barriers to Ice cream Consumption

641 Emotional Barriers

1048766 Overindulge (close to sinful)

1048766 Undisciplined (no control)

1048766 Childish (licking)

1048766 Artificial Image

642 Functional Barriers

1048766 People of SEC B feel that ice cream is an expensive dessert (If less expensive would consume

more often)

1048766 It leads to cold cough - especially in winter rainy season

1048766 It contains artificial additives preservatives

1048766 It is very high in calories that lead to fattening

Evaluation of Entry into Ice cream Business for Bangladesh Limited 45

1048766 It does not quench ldquothirstrdquo

1048766 Less convenient (portable immediate eat)

1048766 Messy Dripping

65 Research Findings

The highlights regarding purchase habits triggers and barriers of ice cream consumption provide

a glimpse into the consumer world of ice cream industry However UBL CMI conducted a

formal research exclusively on ice cream consumers to identify

1048766 Occasions of ice cream

1048766 Frequency of ice cream consumption

1048766 Expectations from ice cream occasions

1048766 Personalities that they desire from ice cream

651 Relevant Occasions in Daily Lives of Consumers

Research question regarding ldquousual occasions of life that occurred most frequently in day-to-day

lives of the respondentsrdquo generated the following replies

Occasion

of Respondents saying Yes

Watching TV

93

Normal Dinner At Home

91

Normal Lunch At Home

89

At Home While ReadingMusicSurfing

86

Informal Family Get Together

85

Out Of Home Hanging Out With Friends

84

Out Shopping

84

Mid-Afternoon Break At Home

83

At Home By Myself During The Day

82

Special Dinner At Home

82

Informal Dinner Out Of Home

82

Normal Lunch Out Of Home

82

Leisure Walk

79

Coming Home From WorkSchool

78

Special Dinner Out Of Home

78

Celebration

78

A Night In With Friends

77

At Home By Myself In The Evening

77

Special Lunch Out Of Home

76

Mid-Afternoon Break Out Of Home

75

Special Lunch At Home

73

Day out with Partner

72

Midmorning Break

70

At Breakfast

68

Family Day Out

68

During Work Or At School

65

Evaluation of Entry into Ice cream Business for Bangladesh Limited 46

Travelling ToFrom WorkSchool

65

At The Cinema

61

Special Event

56

Clubbing At A Party

50

Post GymSports

48

Table 28 Relevant Occasions in Consumersrsquo Lives

Respondents were then asked to mention ldquofrequency of occurrence of the identified occasionsrdquo

The identified replies are as follows Normal dinner at homenormal lunch at homeComing home

from workschoolTraveling tofrom workschoolDay out with Partner SpouseMid-afternoon

break at homeOut of home hanging out with friendsLeisure walkMid-afternoon break out of

homeA night in with friendsSpecial dinner at homeSpecial lunch out of homeFamily day

outSpecial eventPost gymsportsDaily2-3 Times A WeekWeekly2-3 Times A MonthOnce A

MonthEvery 2-3 MonthsLess OftenNever Figure 13 Frequency of Occurrence of Occasions

This shows that ldquoNormal dinner at home Watching TV Normal Lunch At Home At Home

While ReadingMusicSurfing Coming Home From WorkSchool During Work Or At School

Travelling ToFrom WorkSchool Midmorning Break Day Out With Partner Spouse At Home

By Myself During The Dayrdquo are the most frequent daily rituals of busy lives of consumers

652 Frequency of Ice cream Consumption

Respondents were asked to mention ldquoconsumption pattern of ice cream during the identified

occasionrdquo on a scale of 1-5 depicting frequencies like ldquo(5) always (4) most of the times (3)

about half of the times (2) sometimes (1) never do not knowrdquo The responses are depicted in

the following table

Evaluation of Entry into Ice cream Business for Bangladesh Limited 47

444474544655555566756665775967779991011101111101210111110101113111412131314161

011121411131216181519181518211817171719181718201721222130303434253437403741394

046383944464746453745414641374638504843414839373030292726232725222020201926202

21722221317Midmorning

breakWhile clubbing at aAt the cinemaSpecial eventNormal lunch out ofA night in with

friendsNormal dinner atInformal dinner out ofAt home by myselfAt home by myself inOut

shoppingSpecial lunch atDay out with SpouseWatching TVAlwaysmost of the timesAbout half

of the timesSometimesneverdo not know

Figure 14 Frequency of Ice cream Consumption

As it can be seen ldquoDay out with Spouse Special lunch at home Special dinner at home

Watching TV Family day out Celebrationrdquo are the occasions where most frequently ice cream is

consumed

653 Market Character Mapping Relevant Occasions vs Frequency of Consumption

If we plot frequency of consumption on the X-axis of a chart and relevance of occasion

occurrence on the Y-axis taking the above mentioned values as cut-off values we get four

quadrants in the chart depicting four market scenarios that any ice cream manufacturer in

Bangladesh market might encounter given the current market situation This market

segmentation is based on frequency of ice cream consumption in daily occasions of consumer

lives

The segments are

1048766 OPPORTUNITY MARKET High Relevant Occasions-Low Ice cream Frequency

1048766 QUESTION MARKET Less Relevant Occasions-Low Ice cream Frequency

1048766 HIGH FREQUENCY MARKET Relevant Occasions-High Ice cream Frequency

1048766 CAPTIVE MARKET Less Relevant Occasions-High Ice cream Frequency

The chart looks as follows Evaluation of Entry into Ice cream Business for Bangladesh Limited

48

Figure 15 Relevance of Occasion-Frequency of Consumption Mapping

As it can be seen from the above chart Bangladesh Market still lies in the Opportunity and

Question market zone with a pull towards High frequency and Captive Market zones This is

evident from market data as penetration of ice cream still remains at Thana headquarters levels

Also this explains the high market growth rate of 17 as market is yet under developed and

branded quality ice cream has yet not reached all levels of consumers especially rural level that

constitutes around 75 of Bangladeshi market

From the above analysis we can establish that target of ice cream manufacturers should be to

penetrate more into the Bangladeshi market to create higher frequency of ice cream

consumption The following chart shows the strategies to follow for ice cream manufacturers

Figure 16 Required Market Strategy for Bangladesh

Evaluation of Entry into Ice cream Business for Bangladesh Limited 49

As relevance of ice cream consumption occasions can hardly be controlled by marketers their

endeavour should be to create more ldquoemotional and functionalrdquo attachment to ice cream in less

frequent occasions through ldquomarket developmentrdquo strategy to earn share from overall food

expenditure of consumers and at the same time make them consume more ice cream in highly

relevant occasions through ldquopenetrationrdquo strategy

654 Consumersrsquo Emotional Requirements and Product Attributes

All consumers under these clusters also identify the emotional requirements and the significant

product attributes they seek from their current preferred and future desired ice creams These are

provided below

Cluster

Emotional Functional Requirement

Product Attributes

Enjoyment

Flavour Variety

1048766 Combination of different flavours

1048766 Combination of different textures

1048766 Very sweet

1048766 With wafer or biscuit

1048766 With chocolate

1048766 Of a well known brand

Socially Involved

Spoonable Rich

1048766 Very creamy

1048766 Only natural ingredients

1048766 No mess

Care

Size Creaminess

1048766 Big

1048766 Rich full taste

1048766 Smooth

1048766 Value for money

1048766 No mess

Unwind amp Escape

Economy

1048766 Crunchy

1048766 Economic

1048766 Of a well known brand

1048766 Nutritious

Balanced Convenience

Health Conscious

1048766 Of a well known brand

1048766 Nutritious

1048766 Milk based

1048766 Low sugar

1048766 Low carbohydrates

1048766 Filling

Active Self-Grooming

Fruit Vitamins

1048766 Healthy

1048766 Fruit based

1048766 Low fat

1048766 Liquid or drinkable

1048766 Nutritious

1048766 Of a well known brand

Confidence

Drinkable Light

1048766 Low calories

1048766 Light on the stomach

1048766 Chewy or gooey

1048766 Not so sweet

1048766 Natural appearance

Sensual

Appeal or image

1048766 No artificial additives

Evaluation of Entry into Ice cream Business for Bangladesh Limited 50

1048766 Natural appearance

1048766 Melting slowly

1048766 Attractive packaging

1048766 High quality ingredients

1048766 Of a well known brand

Table 29 Requirements amp Product Attributes Desired by Consumer Clusters

Of these findings we see that the identified highlighted barriers to ice cream consumption are

pretty evident among the consumers Mostly people want products of a reliable source or a well

known brand low calories quality ingredients value for money economic type

Evaluation of Entry into Ice cream Business for Bangladesh Limited 51

70 INDUSTRY ATTRACTIVENESS AND ENTRY PROSPECTS

71 Driving Forces of Growth

As identified in the earlier sections there are several driving forces behind the growth of ice-

cream industry in Bangladesh

712 Trade and Infrastructural Level

1048766 As a result of globalization newer varieties have been introduced to the local products Many

foreign companies are also coming as franchise so there has been increased competition and

these boutiques are setting higher standards for the local producers

1048766 The present market growth rate is 18-19 which is being influenced by larger players like

Igloo who are expanding their distribution nation wide with expansion of national electricity

grid

1048766 With entry of Modern Trade and recent organized business approach of retailers has made it

possible for ice cream manufacturers to penetrate into shops even without providing them with

branded freezers

1048766 Weather change has increased ldquosummerrdquo season in our country which has reduced negative

seasonal impact on ice cream

1048766 Large companies like Igloo have taken global learning of using carts as an effective tool of

availability and visibility for ice cream

1048766 New and improved technologies are being used in the production process This technological

advancement has improved quality increased speed of production and made the process more

cost effective

713 Consumer Level

1048766 Only a few years back rich people could afford the luxury of having ice-cream but now it has

become a common product for everybody Ice-cream companies are producing different products

with a wide price range for consumers of every class and status

1048766 Nowadays companies are doing promotional campaigns more frequently the customers get to

know about the product which makes it easier for them to buy the best one

1048766 The improved standard of life and more modernized lifestyle of people is an important reason

for the increased consumption thus growth of the ice-cream industry

Evaluation of Entry into Ice cream Business for Bangladesh Limited 52

72 Prospects of Entry

The ice-cream industry of Bangladesh is an attractive one for the investors because there is a

huge market but number of producers is very small The major reasons behind industry

attractiveness are as follows

1048766 The industryrsquos current growth potential is very high with opportunity for market development

1048766 The competition currently permits adequate profitability and the competitive forces are

becoming stronger with time

1048766 Boutique segment is at a very high growth stage but no operator is currently operating with a

mid price range of BDT 100-400 Ice cream kiosks and small scooping boutiques can operate

within that range

1048766 Current industry driving forces are favourable for the future industry profitability

1048766 Globally oriented consumers look for variety in ice cream that is currently not available

Latest innovations came in the market in 2002 People would welcome new variety and flavours

1048766 There is a gap in the market for balanced convenience through ice cream where consumers can

get nutritional benefits for ice cream Also emotional attachment to ice cream could further be

improvised in promotional campaigns

1048766 There is high scope for market penetration and development to increase frequency of ice

cream consumption

1048766 Level of risk or uncertainty is very low in ice-cream industry because the consumer market is

so huge any product with a standard quality and careful pricing will be able to make significant

profit

1048766 As for geographic reach of the industry 60 market is still in Dhaka There is scope of

expansion and a new entrant can easily capture market share within Dhaka using carts even if

they do not want nation wide cold chain distribution

1048766 The production process is very complex and capital requirements are also high So before

going into production any company should know about their capabilities and weaknesses and

then start the business or else they might suffer huge loss at a certain level

1048766 Unilever can acquire the required resource and use existing multi-national multi-cultural

expertise to enter the market in a grand way

1048766 With high probability of entry from DANONE with more products like the ISIS diabetic ice

cream Unilever should consider entering in this industry as soon as possible

Evaluation of Entry into Ice cream Business for Bangladesh Limited 53

80 ENTRY STRATEGY FOR UNILEVER

While describing the suggested entry strategy for UBL certain issues have been kept

confidential and some issues have been touched but not explained to keep consistency with UBL

confidentiality policy

81 Suggested Entry Areas for UBL

1048766 Boutique segment of the Bangladesh ice cream is only 5 of the branded market UBL needs

to pursue a larger scope to make the entry viable

1048766 UBL cannot fight with unbranded segment as global product quality mandate of Unilever does

not allow UBL to fight in low price-low quality segment

1048766 Recommend entry should be in the common format segment with both single and multiple

servings and in the boutique segment with a different brand name (if possible BEN amp JERRYrsquoS)

1048766 UBL should build up state-of-art modern factory for manufacturing and establish cold chain

facilities initially focusing on metro cities

1048766 Investment issues are required to be addressed for building factory and cold chain and capital

requirement needs to be identified for that purpose4

1048766 UBL may have boutiques for driving image selective top-end offering

1048766 Kiosks can be setup near universities and shopping malls

1048766 Boutiques should be concentrated in Dhaka and Chittagong

1048766 Ice cream for boutiques and kiosks would be produced in factory as institutional packs of 9-10

litres

82 Products

1048766 As a Brand Building country in global Unilever operating framework UBL is entitled only to

bring products developed by the Brand Development countries

1048766 Unilever should focus on serving products that have nutritional benefits (already available

globally) along with usual satisfactions of sensual pleasure functional attributes etc

1048766 Current existent players especially Igloo and Kwality have extensively copied global and

regionally available Unilever products eg Cornelli is same as Wallrsquos Cornetto Vinetta is similar

to Vienetta Mega is similar to Magnum etc UBL needs to differentiate these to consumers on

the ldquotaste the originalrdquo platform where global quality is focused regarding the products

1048766 UBL should also bring regionally famous brands like Moo or Max to create image

differentiation

1048766 Magnum or Moo should be used as premium end ice cream to generate more profit margin

Evaluation of Entry into Ice cream Business for Bangladesh Limited 54

83 Placement

1048766 Distribution focus should be in Dhaka for entry as Dhaka contributes more than 60 of total

ice cream sales in the country

1048766 Company may use carts as distribution method They serve as good source of visibility and

availability It would help in increasing impulse purchase

1048766 At least 1500 outlets in Dhaka and Chittagong needs to be actively served using dedicated

branded refrigerators to generate sales

1048766 50 carts should operate in Dhaka and Chittagong

84 Price

1048766 UBL products should be priced at par with Igloo pricing for the common format ice creams

1048766 UBL can bring in premium single-serve SKUS for the higher economic classes in the price

range of BDT 60-80

1048766 Smaller SKUs (small lolly stick) can be introduced in the price range of BDT 10-15

1048766 In the boutique segment UBL should price products above the semi-premium segment

(Gelateria Igloo Sub Zero or Andersenrsquos) but lower than that of Club Gelato or MoumlvenPick

85 Promotion

1048766 UBL would require strong marketing campaign (As high as 50 of sales) to have a grand

entry in the market

1048766 Presence in the television media would be of utmost importance More than 50 of

promotional expense should be made here initially Gradually it can be reduced

1048766 Newspaper would serve as the second most important option

1048766 Billboards should also be used

1048766 Activations (similar to Lux Channel i Super Star or Igloo Festival) should be done to generate

trial

86 Scope of Opportunity

Table 30 Value and Volume Based Scope of Opportunity for UBL

Value (BDT Cr)

Volume (Tons)

Market

131

7835

Common

121

7600

Boutique

98

235

Evaluation of Entry into Ice cream Business for Bangladesh Limited 55

861 Geographic Contribution

1048766 Dhaka (61)

1048766 Chittagong (19)

1048766 Sylhet (10)

862 UBL objectives

Common Format Ice Creams

1048766 Target 10 Market share in 1st year operation

1048766 Value BDT 11 Cr

1048766 Production capacity required 21 Tons day

1048766 Freezer Placement 1500 freezers

1048766 Cart operation At least 50 carts

Boutiques

1048766 Target Further develop the market

1048766 Focus Dhaka Chittagong and Sylhet Metro

1048766 Franchise At least 20 franchisee operations nation wide in divisional towns

1048766 Pricing Below imported parlours above common formats with around BDT 400 per Litre

87 Critical Success Factors

1048766 UBL is considered as a high profile company in Bangladesh and thus they cannot operate in

the market only with common products like choc-bars and cups They must have premium

products (these require extrusion line) also to carry their brand image Otherwise UBL would not

be able to charge usual premium over competition products

1048766 Launch of ice cream would require huge promotional and activation support in order to gain

customers from Igloo People want novelty regarding ice cream and UBL have to let them know

about their products and create hype

1048766 Cart should be used as a source of distribution Recent successes of Unilever companies like

Indonesia shows that carts can generate more sales and can be used as source of visibility in the

minds of both retail traders and consumers Carts can also provide incremental sales to the

company

1048766 UBL have to create a strong cold chain for ice cream (initially in Dhaka and Chittagong) to

ensure quality products for consumers

1048766 UBL have to build capacity very rapidly to meet consumer demand if the launch is successful

Evaluation of Entry into Ice cream Business for Bangladesh Limited 56

90 BUSINESS PROJECTION

91 Basic Assumptions

Business projection for ice cream business was made based on a conservative approach UBL

would require spending significantly on production capacity and factory dedicated to ice cream

Thus to analyse business possibilities of ice cream certain assumptions were made and collected

data were used These are

1048766 Production equipments and cabinets would cost approximately BDT 55 crores

1048766 Production equipments 45

1048766 Packaging Equipments 15

1048766 Storage Facility 20

1048766 Branded Freezers 10

1048766 Distribution Investment 10 (Distributors would also invest themselves)

1048766 Ice cream factory with a floor size of 20000 sqft would cost BDT 25 crores

1048766 Objective is to capture 10 market share in Dhaka and Chittagong in the first year

1048766 Business would grow by 50 in year 2 and 3 30 in year 4 and 25 in year 5

1048766 Weighted price per litre is BDT 170 according to volume share of single serve ice cream

multiple serve ice cream and boutique ice cream

1048766 Other financial assumptions were also made List of them are provided below but amount has

been removed for confidentiality issues

Assumptions

Trade Margin

Distributors Margin

DutyVAT Rate

Trade Terms Expense of NPS

Trade Terms Expense of NSV

Advertising ampPromotion of NPS

Indirects (Salaries Wages etc)

Trading Tax

Table 31 Assumptions for Business Projection

Evaluation of Entry into Ice cream Business for Bangladesh Limited 57

100 CONCLUSION

Ice cream has good prospect in Bangladesh It is still a growing market with opportunities for big

new entrants With the barriers of entry UBL needs to consider its priorities UBL being an HPC

company traditionally needs to acquire expertise in cold chain distribution and has to invest a lot

of money to rip the benefits of the industry However to initiate company can take regional

support and acquire resource expertise The company should enter the business as soon as

possible since there is potential threat from DANONE to introduce more ice creams after ISIS

diabetic ice cream and also with potential of the industry arch rival Nestlersquo might consider

entering into the industry too

Evaluation of Entry into Ice cream Business for Bangladesh Limited 58

References

Web References

1 wwwunilevercom

2 wwwunilevercombd

3 wwwhllcom

4 wwwunilevercompk

5 wwwthedailystarcom - Life Style Magazine

6 wwwreuterscouk

Evaluation of Entry into Ice cream Business for Bangladesh Limited 59

Page 34: Square Ice cream

Strengths

Weaknesses

Igloo

1048766 Strong brand image

1048766 High product quality

1048766 Highest no of variety

1048766 Strong distribution network

1048766 Highest visibility

1048766 Strong promotion

1048766 High production capacity

1048766 Presence of extrusion ice cream

1048766 Items are generally a bit pricy

1048766 Igloo does not give free freezers like other companies

1048766 Reluctant in recent times regarding innovation

1048766 Local sourcing of liquid milk does not meet demand

1048766 Failure to use ERP technology slowing decision making

Kwality

1048766 Product variety

1048766 Strong promotion

1048766 Free freezer distributed

1048766 Presence in all price segments

1048766 High production capacity

1048766 Weak distribution

1048766 Lower exposure

1048766 low amount of carts in operation

Polar

1048766 Free freezer

1048766 Quality perceived to be high compared to Kwality

1048766 Discoloured freezers

1048766 Lower exposure

1048766 Low product variety

1048766 Unused capacity

Savoy

1048766 Price is lower

1048766 Discoloured freezers

1048766 Low product variety

1048766 Weak distribution

1048766 Small amount of freezers

1048766 Low production capacity

Milk Vita

1048766 Quality is good due to dairy cream

1048766 Brand leverage from Milk Vita milk

1048766 Low exposure

1048766 Low variety

Table 21 Strengths and Weaknesses of Competition

512 Market Characteristics of the Boutique Segment

With a small market of BDT 98 Cr and 567 share in the branded ice cream market the

boutique segment is currently an increasing segment in the ice cream industry Boutique

segmentrsquos history dates back to 1960s when Igloo launched boutiques in Dhaka to save

distribution cost and promote a culture of ldquoice cream eating outrdquo In later years boutiques lost

their glamour and retail common format segment picked up growth However with Dolce Vita in

the late lsquo80s craze for Italian Artisan ice cream was recreated in the market Although Dolce

Vita is failing in recent times emergence of MoumlvenPick and Club Gelato in 2000 has uplifted the

segment once again Current growth rate of the

Evaluation of Entry into Ice cream Business for Bangladesh Limited 35

segment can be estimated to be approx 20-22 (higher than the common format segment)

Following are the basic detail of all the major players in the segment with their estimated sales3

Players

Outlet

Sales (Cr Taka)

Share

Club Gelato

1

136

199

MoumlvenPick

1

119

174

Andersenrsquos

3

119

174

Gelateria Igloo

3

119

174

Sub Zero (Kwality)

2

051

75

Baskin Robbins

1

015

22

Dolce Vita

1

017

25

American Soft

1

009

12

Rainbow

1

009

12

Others (off site)

089

130

Total Market

682

Table 22 Players and Shares in Boutique Segment

A Detail of Operation

General operational procedure followed by all the operators is as follows

1048766 Operating method There is a variation in operational method among the large operators

1048766 Club Gelato uses kitchen at own premise where imported ingredients and local milk (daily

special service from Milk Vita) are used to make ice cream

1048766 MoumlvenPick directly imports ice cream from Switzerland

1048766 Andersenrsquos Gelateria Igloo and Sub Zero produce ice cream at their factory with a mix of

imported and local ingredients

1048766 Products Around 30-35 flavours of artisan dairy ice cream are served at the premises

1048766 Most sold flavours are Vanilla Ferrero Rocher Butterscotch Chocolate Caramel etc

1048766 Other Products Larger players also serve ice cream desserts (milk shakes ice cappuccino etc)

pastries and other desserts with normal coffee and tea facility at their premises

1048766 Boutiques fight ice cream seasonality with the other products sales during off-peak ice cream

seasons Usually ice cream and other products contribute at 6040 ratio in summer and during

winter and off-peak seasons the ratio reverses

1048766 Pricing Usually the prices of products in this segment are 3-4 times higher than that of the

common format segment

1048766 Prices do not vary with flavours Variation depends on serve style (Cone tub) and use of

toppings and other ingredients (Chocolate sauce nut fruits) etc

1048766 Usual margin charged is around 50-60 over production cost Similar margin is charged for

other products like coffee ice cappuccino etc

3 Yearly sales is estimated based on companyrsquos approximate daily sales collected during

interview

Evaluation of Entry into Ice cream Business for Bangladesh Limited 36

1048766 Target Group Most of the consumers belong to SEC A and higher SEC A with DMFI of at

least BDT 20000

1048766 Foreign delegates and resident foreigners also visit these boutiques

1048766 Main purposes of visits in the boutiques are

bull Youth hangout with friends and having ice cream and ice cream derivatives

bull Family Family night out or eat out at a restaurant and then having dessert

bull Foreigners Having dessert after dinner

1048766 Rush time at boutiques are Afternoon 2-4 pm and at night 9-11 pm

1048766 Offsite sales Most of the large operators also sell offsite They have small freezers for off-site

1048766 Club Gelato and MoumlvenPick serves ice cream at high society parties and programmes

1048766 MoumlvenPick also has kiosks in known hotels like Sheraton

1048766 Promotion No mass promotion is done by any of the companies Word of mouth is the most

important source of promotion Posters and banners outside the premise and occasional

newspaper advertisements are used to communicate special offers

1048766 Growth Drivers Market growth is driven by image innovation quality decoration of facility

environment and special offers

1048766 Club Gelato has the image of selling true Italian dairy ice cream with an excellent hangout

environment

1048766 MoumlvenPick imports ice cream directly from Switzerland and is perceived to be of high quality

1048766 Andersenrsquos operates with the image of ice cream from Denmark

1048766 Gelateria Igloo (from Igloo) and Sub Zero (from Kwality) could not establish the premium

artisan ice cream image

B Players in the Boutique Segment

There are very few players who have significant impact in the boutique segment Detailed

information of all the major boutique segment players is provided below

Evaluation of Entry into Ice cream Business for Bangladesh Limited 37

Club Gelato

Basic Company Information

1048766 Location Banani Road 11 (Planning for a second one in Dhanmondi)

1048766 Established in 2001

1048766 Seating Capacity 48

1048766 Area 1250 sft (including kitchen)

1048766 Owner Mr Jahangir Alam (Bangladesh)

1048766 Business Type Joint business partnership with Singapore

1048766 Staff 15 people (6 in the kitchen)

1048766 Production capacity 150 litres per day

Product Related Information

1048766 Product Italian style parlour scoop ice cream fruit juice coffee and pastries

1048766 Flavours Around 32 flavours available

1048766 Most selling Ferraro Rocher Vanilla Pistachio

1048766 Innovations New variants and ingredients are communicated by their Italian supplier and

Club Gelato decides what to take from them

1048766 Serve type Cup Cone Glasses Box for take away

Consumer Profile

1048766 Primary Teenagers and Young Adults (18-30) amp Diplomats

1048766 Secondary Family consumers for eat out

1048766 Income Group High income customers tentatively from SEC A and higher SEC A

1048766 Geographic Area Diversified

1048766 Rush time 8-10 pm

Sales and Price Information

1048766 Sales BDT 50000 (60 Ice cream 40 other desserts) daily in summer In winter however

other products sell more and thus they keep total sales at the same level

1048766 Price 750 per litre for any flavour

1048766 Sales Volume 50-60 litres per day

Supply Chain Placement Information

1048766 Milk Local sourcing from Milk Vita (4050 litres per day)

1048766 Chocolates amp Flavours Belgium France Germany

1048766 Transportation Mainly air (They can afford it due to high margin)

1048766 Contribution of various materials Flavours (30) Milk (20) other parts are water and air

Promotional Materials

1048766 Materials used are near premises POS materials for promoting the parlour only

Table 23 Detail of Club Gelato

Evaluation of Entry into Ice cream Business for Bangladesh Limited 38

MoumlvenPick of Switzerland

Basic Company Information

1048766 Location Gulshan

1048766 Established in 2000

1048766 Seating Capacity 55

1048766 Owner Mr Arif Mahmud

1048766 Business Type Franchise of International MoumlvenPick

1048766 Storage Capacity in Shop 150 litres

Product Related Information

1048766 Product Imported MoumlvenPick ice creams coffee chicken sandwich and Frappe

1048766 Flavours Around 30 to 35 flavours available

1048766 Most selling Swiss Chocolate caramel Vanilla Dream Espresso Strawberry

1048766 Innovations New variants are communicated by their franchiser and they decide on flavours

that they want

1048766 Serve type Cup Cone Glasses Box for take away

Consumer Profile

1048766 Primary Teenagers and Young Adults (18-30) (70) amp Diplomats

1048766 Secondary Family consumers for eat out

1048766 Income Group High income customers tentatively from SEC A

1048766 Geographic Area Concentrated in Gulshan and nearby areas

1048766 Rush time Afternoon- Young Adult 10 to 11 pm Foreigners

1048766 the company also serves at parties and has freezers in known hotels where their ice creams

are served

Sales and Price Information

1048766 Sales BDT 35-40000 daily in summer

1048766 Price 640 per litre for any flavour

1048766 Sales Volume 55-60 litres per day

Supply Chain Placement Information

1048766 Transportation Imported finished goods by ship

1048766 Ship travel time 19 days

1048766 Port clearance 10 days

1048766 Safety Cushion Extra 10 days

Promotional Materials

1048766 Materials used are near premises POS materials for promoting the parlour only

Table 24 Detail of MoumlvenPick of Switzerland

Evaluation of Entry into Ice cream Business for Bangladesh Limited 39

Andersenrsquos of Denmark

Basic Company Information

1048766 Location Gulshan (2 others in Uttara Dhanmondi)

1048766 Established in 2001

1048766 Seating Capacity 48

1048766 Owner United Group

1048766 Business Type Franchise of Australian company Andersenrsquos of Denmark

1048766 Production Tongi Factory of United Group

1048766 Production capacity 2000 litres per day in factory

1048766 Storage Capacity in Shop 150 litres

Product Related Information

1048766 Product Danish parlour scoop ice cream and coffee

1048766 Flavours Around 30 to 35 flavours available

1048766 Most selling Strawberry Butter Scotch Green

1048766 Innovations New variants and ingredients are communicated by their franchiser and they

decide on flavours that they want

1048766 Serve type Cup Cone Glasses Box for take away

Consumer Profile

1048766 Primary Teenagers and Young Adults (18-30) (70) amp Diplomats

1048766 Secondary Family consumers for eat out

1048766 Income Group High income customers tentatively from SEC A

1048766 Geographic Area Concentrated in Gulshan and nearby areas

1048766 Rush time 8 to 10 pm

Sales and Price Information

1048766 Sales BDT 10-12000 daily in summer

1048766 Price 460 per litre for any flavour

1048766 Sales Volume 40-50 litres per day

Supply Chain Placement Information

1048766 Milk 2025 kg packs are imported

1048766 Chocolates amp Flavours Imported

1048766 Butte paper Local sourcing

1048766 Transportation Ship

Promotional Materials

1048766 Materials used are near premises POS materials for promoting the parlour only

Table 25 Detail of Andersenrsquos of Denmark

Evaluation of Entry into Ice cream Business for Bangladesh Limited 40

Gelateria Igloo

Basic Company Information

1048766 Location Banani Kemal Ataturk Avenue (Two others in GEC Mor Chittagong and Naya

Paltan)

1048766 Established in 2000

1048766 Seating Capacity 20

1048766 Production From Igloo factory in Shyampur Narayanganj

Product Related Information

1048766 Product Parlour scoop ice cream and coffee only

1048766 Flavours Around 30 flavours available

1048766 Most selling Vanilla Strawberry Chocolate Pistachio Butter Scotch Tutti Fruity

1048766 Serve type Cup Cone Glasses Box for take away

Consumer Profile

1048766 Primary Teenagers and Young Adults (18-30)

1048766 Secondary Family consumers for eat out

1048766 Income Group High income customers tentatively from SEC A and B

1048766 Geographic Area Diversified

1048766 Rush Time afternoon and evening

Sales and Price Information

1048766 Sales BDT 8000 to 10000 daily in summer Nearly one fourth in winter

1048766 Price Varies but 350 per litre of vanilla

Promotional Materials

1048766 POS materials at the premises

Table 26 Detail of Gelateria Igloo

52 Price Comparison of Common and Boutique Segments

Price ranges of both common format and boutique segment cannot exactly be pin pointed as

products do not follow common structure and variations occur with use of toppings mixing of

flavours and use of coatings However a price comparison has been made among the brands

based on their price of per litre of vanilla flavoured ice cream in the market It appears to be as

following

Company

Price Litre Vanilla

Club Gelato

750

MoumlvenPick

640

Andersenrsquos

460

Dolce Vita

440

Igloo

100

Kwality

100

Polar

100

Milk-Vita

90

Savoy

85

Table 27 Comparative Price Analysis

As it can be seen there is price gap within the range of BDT 100-400 Ice cream kiosks and

small scooping boutiques can operate within that range

Evaluation of Entry into Ice cream Business for Bangladesh Limited 41

60 CONSUMER ANALYSIS

61 Target Group of Ice cream

Who are the consumers of ice cream This question does not have a clear answer Ice cream is a

food for all It is the only food consumed by a human being at less than 0 degree centigrade

temperature and people of all ages feel indulged to have it However we can determine focus

target groups for both branded common format and artisan boutique ice cream Group

discussions and market visits were done to get insight into the consumers along side resources

form secondary sources Age based target group is common for both segments but variation

among the groups occur mainly based on SEC and DMFI classification

611 Geographic Group

Branded ice cream remains an urban product till date Geographically branded ice cream has

reached urban and semi urban areas up to Thana Head Quarter levels Ice cream has reached

areas where electricity is available Small artisan players are available in places where large

branded players have no distribution

612 Target Age Group

Age wise grouping of target consumers is as follows

1048766 Urban kids in the age group of 5-14

1048766 They mainly consume normal sticks cups cones innovative fillers and water ice creams

1048766 Urban youth in the age group of 15-24

1048766 They consume premium and extrusion sticks and cones

1048766 Urban mothers in the age group of 25-35

1048766 They determine the family purchases Even when the father purchases ice cream decision is

taken by them

Consumption pattern of various age groups are depicted in the following chart Ice cream

consumption pattern50203005 to 14 yrs15 to 24 yrs25 to 35 yrs

Figure 11 Target Group wise Consumption Pattern Evaluation of Entry into Ice cream Business

for Bangladesh Limited 42

613 Target SEC and DMFI Group

Common Format

SEC A and B is the target group for common format ice cream However with rapid increase in

price level over the years has made it a ldquohard to consumerdquo product for SEC B consumers who

belong to lower DMFI group

Boutique Format

Boutique formatrsquos higher margin and high price range makes it an exclusively SEC A ice cream

People belonging to upper and upper middle class have access to the mediocre boutiques and

only higher upper class can have premium ice creams like Club Gelato and MoumlvenPick

Another unique target group for boutique format are the foreigners who live in Bangladesh

These people tend to visit the parlours to have ice cream as dessert especially after dinner

62 Ice cream in Consumer Lifestyle

Figure 12 Ice cream in Consumer Life style

This simple overview of ice cream in consumer lifestyle was determined based on in-depth

research analysis of UBL and validated through qualitative group discussions by the author

However detail of in-depth research is provided in a later section of this chapter

Evaluation of Entry into Ice cream Business for Bangladesh Limited 43

63 Highlights of Purchase Habit of Ice cream

631 Common Habits across Target Groups

There are some common habits that were identified in earlier researches and group discussions

with consumers Common habits mean the consumer approach towards ice cream that is seen

across all target groups eg kids youth and adult purchasers These are outlined below

1048766 Ice cream is mainly seen as a dessert or a snack Impulse ice cream is seen as a quick snack

that is consumed when it is in sight Visibility plays a big role here Regarding family packs

people see it as a post-food dessert

1048766 Ice cream purchase is commonly a planned event When the contexts arise people generally

take a bit of time to decide whether or not to have ice cream or when they want to go to a

boutique they make due considerations regarding which boutique to visit

1048766 Ice cream purchase decision is taken based on favourite flavour People tend to try out new

variants and flavours when they first see it They compare the taste with earlier experience and

when they purchase later they choose the flavour they have liked most

1048766 For In-Home segment decision is mostly taken on the flavour Generally people come up with

different flavours of choice and most voted flavour is chosen

1048766 People become aware of new variants or flavours mainly through word-of-mouth

Advertisement (new launches special offers and festivals) in newspaper is another source of

awareness

1048766 People are currently indifferent towards the price level of premium flavours However some

feel that price of Choc-bar or water ice creams (lolly) is a bit much If less they would have

consumed more Some also feel that companies should come up with branded ice cream in the

price range of BDT 5-8

1048766 Ice cream is purchased from nearby shops If required brand and flavour is not available 2-3

shops will be visited and then available flavour will be selected even if the required one is not

found This is done mainly not to ruin the mood for ice cream

1048766 People are very open to try new brands and flavours especially if it comes from a credible

source They would try new flavours and if they are satisfied with the taste they would repeat

purchase

1048766 Regarding boutique visits people feel that boutiques need to have a proper environment

enough flavours and other snacks

1048766 While visiting boutique with family or companion they want variation in flavours so that

they would order different flavours and taste each otherrsquos ice cream It is seen as a sign of

togetherness

1048766 Frequency of ice cream purchase varies among people It depends on peer pressure collective

family decision summer heat and attitude towards ldquoice creamrdquo itself as a product Evaluation of

Entry into Ice cream Business for Bangladesh Limited 44

632 Habits of Kids

1048766 Kids choose ice cream flavours by the look of the product (generally pictures shown in POS

materials and carts) They love colour and designs of the products let it be a common format or a

boutique ice cream

1048766 Kids (when in house) would go with the housemaid to the nearby shop choose the flavour

they want (within range of the amount given to the maid) and buy it

1048766 When with parents they would take the product they like even if the price is lower than some

other product However mothers play a role in this decision They would want their children not

to choose too high priced a product or coloured products

633 Habits of Youth

1048766 Young people are the main consumer of impulse ice cream They also are one of the major

consumers in the boutique segment

1048766 Young people love to try out new products that come into the market Another side of the coin

is that they are not very loyal to a brand or a flavour and tend to switch a lot

1048766 Regarding boutique visits young people go to boutiques to have an ldquoice cream hang outrdquo with

peer groups They would stay there for a longer period of time while they have their ice cream

1048766 Some times young people make milk shakes and other ice cream based desserts

634 Habits of Mothers

1048766 Mothers worry about their childrenrsquos health and they prefer ldquovanillardquo type of brands

However when price constraint occurs they go for water ice creams for their children They try

to convince their kidrsquos purchase decision

1048766 Regarding family purchase motherrsquos decision is sometimes prioritized by the whole family

64 Barriers to Ice cream Consumption

641 Emotional Barriers

1048766 Overindulge (close to sinful)

1048766 Undisciplined (no control)

1048766 Childish (licking)

1048766 Artificial Image

642 Functional Barriers

1048766 People of SEC B feel that ice cream is an expensive dessert (If less expensive would consume

more often)

1048766 It leads to cold cough - especially in winter rainy season

1048766 It contains artificial additives preservatives

1048766 It is very high in calories that lead to fattening

Evaluation of Entry into Ice cream Business for Bangladesh Limited 45

1048766 It does not quench ldquothirstrdquo

1048766 Less convenient (portable immediate eat)

1048766 Messy Dripping

65 Research Findings

The highlights regarding purchase habits triggers and barriers of ice cream consumption provide

a glimpse into the consumer world of ice cream industry However UBL CMI conducted a

formal research exclusively on ice cream consumers to identify

1048766 Occasions of ice cream

1048766 Frequency of ice cream consumption

1048766 Expectations from ice cream occasions

1048766 Personalities that they desire from ice cream

651 Relevant Occasions in Daily Lives of Consumers

Research question regarding ldquousual occasions of life that occurred most frequently in day-to-day

lives of the respondentsrdquo generated the following replies

Occasion

of Respondents saying Yes

Watching TV

93

Normal Dinner At Home

91

Normal Lunch At Home

89

At Home While ReadingMusicSurfing

86

Informal Family Get Together

85

Out Of Home Hanging Out With Friends

84

Out Shopping

84

Mid-Afternoon Break At Home

83

At Home By Myself During The Day

82

Special Dinner At Home

82

Informal Dinner Out Of Home

82

Normal Lunch Out Of Home

82

Leisure Walk

79

Coming Home From WorkSchool

78

Special Dinner Out Of Home

78

Celebration

78

A Night In With Friends

77

At Home By Myself In The Evening

77

Special Lunch Out Of Home

76

Mid-Afternoon Break Out Of Home

75

Special Lunch At Home

73

Day out with Partner

72

Midmorning Break

70

At Breakfast

68

Family Day Out

68

During Work Or At School

65

Evaluation of Entry into Ice cream Business for Bangladesh Limited 46

Travelling ToFrom WorkSchool

65

At The Cinema

61

Special Event

56

Clubbing At A Party

50

Post GymSports

48

Table 28 Relevant Occasions in Consumersrsquo Lives

Respondents were then asked to mention ldquofrequency of occurrence of the identified occasionsrdquo

The identified replies are as follows Normal dinner at homenormal lunch at homeComing home

from workschoolTraveling tofrom workschoolDay out with Partner SpouseMid-afternoon

break at homeOut of home hanging out with friendsLeisure walkMid-afternoon break out of

homeA night in with friendsSpecial dinner at homeSpecial lunch out of homeFamily day

outSpecial eventPost gymsportsDaily2-3 Times A WeekWeekly2-3 Times A MonthOnce A

MonthEvery 2-3 MonthsLess OftenNever Figure 13 Frequency of Occurrence of Occasions

This shows that ldquoNormal dinner at home Watching TV Normal Lunch At Home At Home

While ReadingMusicSurfing Coming Home From WorkSchool During Work Or At School

Travelling ToFrom WorkSchool Midmorning Break Day Out With Partner Spouse At Home

By Myself During The Dayrdquo are the most frequent daily rituals of busy lives of consumers

652 Frequency of Ice cream Consumption

Respondents were asked to mention ldquoconsumption pattern of ice cream during the identified

occasionrdquo on a scale of 1-5 depicting frequencies like ldquo(5) always (4) most of the times (3)

about half of the times (2) sometimes (1) never do not knowrdquo The responses are depicted in

the following table

Evaluation of Entry into Ice cream Business for Bangladesh Limited 47

444474544655555566756665775967779991011101111101210111110101113111412131314161

011121411131216181519181518211817171719181718201721222130303434253437403741394

046383944464746453745414641374638504843414839373030292726232725222020201926202

21722221317Midmorning

breakWhile clubbing at aAt the cinemaSpecial eventNormal lunch out ofA night in with

friendsNormal dinner atInformal dinner out ofAt home by myselfAt home by myself inOut

shoppingSpecial lunch atDay out with SpouseWatching TVAlwaysmost of the timesAbout half

of the timesSometimesneverdo not know

Figure 14 Frequency of Ice cream Consumption

As it can be seen ldquoDay out with Spouse Special lunch at home Special dinner at home

Watching TV Family day out Celebrationrdquo are the occasions where most frequently ice cream is

consumed

653 Market Character Mapping Relevant Occasions vs Frequency of Consumption

If we plot frequency of consumption on the X-axis of a chart and relevance of occasion

occurrence on the Y-axis taking the above mentioned values as cut-off values we get four

quadrants in the chart depicting four market scenarios that any ice cream manufacturer in

Bangladesh market might encounter given the current market situation This market

segmentation is based on frequency of ice cream consumption in daily occasions of consumer

lives

The segments are

1048766 OPPORTUNITY MARKET High Relevant Occasions-Low Ice cream Frequency

1048766 QUESTION MARKET Less Relevant Occasions-Low Ice cream Frequency

1048766 HIGH FREQUENCY MARKET Relevant Occasions-High Ice cream Frequency

1048766 CAPTIVE MARKET Less Relevant Occasions-High Ice cream Frequency

The chart looks as follows Evaluation of Entry into Ice cream Business for Bangladesh Limited

48

Figure 15 Relevance of Occasion-Frequency of Consumption Mapping

As it can be seen from the above chart Bangladesh Market still lies in the Opportunity and

Question market zone with a pull towards High frequency and Captive Market zones This is

evident from market data as penetration of ice cream still remains at Thana headquarters levels

Also this explains the high market growth rate of 17 as market is yet under developed and

branded quality ice cream has yet not reached all levels of consumers especially rural level that

constitutes around 75 of Bangladeshi market

From the above analysis we can establish that target of ice cream manufacturers should be to

penetrate more into the Bangladeshi market to create higher frequency of ice cream

consumption The following chart shows the strategies to follow for ice cream manufacturers

Figure 16 Required Market Strategy for Bangladesh

Evaluation of Entry into Ice cream Business for Bangladesh Limited 49

As relevance of ice cream consumption occasions can hardly be controlled by marketers their

endeavour should be to create more ldquoemotional and functionalrdquo attachment to ice cream in less

frequent occasions through ldquomarket developmentrdquo strategy to earn share from overall food

expenditure of consumers and at the same time make them consume more ice cream in highly

relevant occasions through ldquopenetrationrdquo strategy

654 Consumersrsquo Emotional Requirements and Product Attributes

All consumers under these clusters also identify the emotional requirements and the significant

product attributes they seek from their current preferred and future desired ice creams These are

provided below

Cluster

Emotional Functional Requirement

Product Attributes

Enjoyment

Flavour Variety

1048766 Combination of different flavours

1048766 Combination of different textures

1048766 Very sweet

1048766 With wafer or biscuit

1048766 With chocolate

1048766 Of a well known brand

Socially Involved

Spoonable Rich

1048766 Very creamy

1048766 Only natural ingredients

1048766 No mess

Care

Size Creaminess

1048766 Big

1048766 Rich full taste

1048766 Smooth

1048766 Value for money

1048766 No mess

Unwind amp Escape

Economy

1048766 Crunchy

1048766 Economic

1048766 Of a well known brand

1048766 Nutritious

Balanced Convenience

Health Conscious

1048766 Of a well known brand

1048766 Nutritious

1048766 Milk based

1048766 Low sugar

1048766 Low carbohydrates

1048766 Filling

Active Self-Grooming

Fruit Vitamins

1048766 Healthy

1048766 Fruit based

1048766 Low fat

1048766 Liquid or drinkable

1048766 Nutritious

1048766 Of a well known brand

Confidence

Drinkable Light

1048766 Low calories

1048766 Light on the stomach

1048766 Chewy or gooey

1048766 Not so sweet

1048766 Natural appearance

Sensual

Appeal or image

1048766 No artificial additives

Evaluation of Entry into Ice cream Business for Bangladesh Limited 50

1048766 Natural appearance

1048766 Melting slowly

1048766 Attractive packaging

1048766 High quality ingredients

1048766 Of a well known brand

Table 29 Requirements amp Product Attributes Desired by Consumer Clusters

Of these findings we see that the identified highlighted barriers to ice cream consumption are

pretty evident among the consumers Mostly people want products of a reliable source or a well

known brand low calories quality ingredients value for money economic type

Evaluation of Entry into Ice cream Business for Bangladesh Limited 51

70 INDUSTRY ATTRACTIVENESS AND ENTRY PROSPECTS

71 Driving Forces of Growth

As identified in the earlier sections there are several driving forces behind the growth of ice-

cream industry in Bangladesh

712 Trade and Infrastructural Level

1048766 As a result of globalization newer varieties have been introduced to the local products Many

foreign companies are also coming as franchise so there has been increased competition and

these boutiques are setting higher standards for the local producers

1048766 The present market growth rate is 18-19 which is being influenced by larger players like

Igloo who are expanding their distribution nation wide with expansion of national electricity

grid

1048766 With entry of Modern Trade and recent organized business approach of retailers has made it

possible for ice cream manufacturers to penetrate into shops even without providing them with

branded freezers

1048766 Weather change has increased ldquosummerrdquo season in our country which has reduced negative

seasonal impact on ice cream

1048766 Large companies like Igloo have taken global learning of using carts as an effective tool of

availability and visibility for ice cream

1048766 New and improved technologies are being used in the production process This technological

advancement has improved quality increased speed of production and made the process more

cost effective

713 Consumer Level

1048766 Only a few years back rich people could afford the luxury of having ice-cream but now it has

become a common product for everybody Ice-cream companies are producing different products

with a wide price range for consumers of every class and status

1048766 Nowadays companies are doing promotional campaigns more frequently the customers get to

know about the product which makes it easier for them to buy the best one

1048766 The improved standard of life and more modernized lifestyle of people is an important reason

for the increased consumption thus growth of the ice-cream industry

Evaluation of Entry into Ice cream Business for Bangladesh Limited 52

72 Prospects of Entry

The ice-cream industry of Bangladesh is an attractive one for the investors because there is a

huge market but number of producers is very small The major reasons behind industry

attractiveness are as follows

1048766 The industryrsquos current growth potential is very high with opportunity for market development

1048766 The competition currently permits adequate profitability and the competitive forces are

becoming stronger with time

1048766 Boutique segment is at a very high growth stage but no operator is currently operating with a

mid price range of BDT 100-400 Ice cream kiosks and small scooping boutiques can operate

within that range

1048766 Current industry driving forces are favourable for the future industry profitability

1048766 Globally oriented consumers look for variety in ice cream that is currently not available

Latest innovations came in the market in 2002 People would welcome new variety and flavours

1048766 There is a gap in the market for balanced convenience through ice cream where consumers can

get nutritional benefits for ice cream Also emotional attachment to ice cream could further be

improvised in promotional campaigns

1048766 There is high scope for market penetration and development to increase frequency of ice

cream consumption

1048766 Level of risk or uncertainty is very low in ice-cream industry because the consumer market is

so huge any product with a standard quality and careful pricing will be able to make significant

profit

1048766 As for geographic reach of the industry 60 market is still in Dhaka There is scope of

expansion and a new entrant can easily capture market share within Dhaka using carts even if

they do not want nation wide cold chain distribution

1048766 The production process is very complex and capital requirements are also high So before

going into production any company should know about their capabilities and weaknesses and

then start the business or else they might suffer huge loss at a certain level

1048766 Unilever can acquire the required resource and use existing multi-national multi-cultural

expertise to enter the market in a grand way

1048766 With high probability of entry from DANONE with more products like the ISIS diabetic ice

cream Unilever should consider entering in this industry as soon as possible

Evaluation of Entry into Ice cream Business for Bangladesh Limited 53

80 ENTRY STRATEGY FOR UNILEVER

While describing the suggested entry strategy for UBL certain issues have been kept

confidential and some issues have been touched but not explained to keep consistency with UBL

confidentiality policy

81 Suggested Entry Areas for UBL

1048766 Boutique segment of the Bangladesh ice cream is only 5 of the branded market UBL needs

to pursue a larger scope to make the entry viable

1048766 UBL cannot fight with unbranded segment as global product quality mandate of Unilever does

not allow UBL to fight in low price-low quality segment

1048766 Recommend entry should be in the common format segment with both single and multiple

servings and in the boutique segment with a different brand name (if possible BEN amp JERRYrsquoS)

1048766 UBL should build up state-of-art modern factory for manufacturing and establish cold chain

facilities initially focusing on metro cities

1048766 Investment issues are required to be addressed for building factory and cold chain and capital

requirement needs to be identified for that purpose4

1048766 UBL may have boutiques for driving image selective top-end offering

1048766 Kiosks can be setup near universities and shopping malls

1048766 Boutiques should be concentrated in Dhaka and Chittagong

1048766 Ice cream for boutiques and kiosks would be produced in factory as institutional packs of 9-10

litres

82 Products

1048766 As a Brand Building country in global Unilever operating framework UBL is entitled only to

bring products developed by the Brand Development countries

1048766 Unilever should focus on serving products that have nutritional benefits (already available

globally) along with usual satisfactions of sensual pleasure functional attributes etc

1048766 Current existent players especially Igloo and Kwality have extensively copied global and

regionally available Unilever products eg Cornelli is same as Wallrsquos Cornetto Vinetta is similar

to Vienetta Mega is similar to Magnum etc UBL needs to differentiate these to consumers on

the ldquotaste the originalrdquo platform where global quality is focused regarding the products

1048766 UBL should also bring regionally famous brands like Moo or Max to create image

differentiation

1048766 Magnum or Moo should be used as premium end ice cream to generate more profit margin

Evaluation of Entry into Ice cream Business for Bangladesh Limited 54

83 Placement

1048766 Distribution focus should be in Dhaka for entry as Dhaka contributes more than 60 of total

ice cream sales in the country

1048766 Company may use carts as distribution method They serve as good source of visibility and

availability It would help in increasing impulse purchase

1048766 At least 1500 outlets in Dhaka and Chittagong needs to be actively served using dedicated

branded refrigerators to generate sales

1048766 50 carts should operate in Dhaka and Chittagong

84 Price

1048766 UBL products should be priced at par with Igloo pricing for the common format ice creams

1048766 UBL can bring in premium single-serve SKUS for the higher economic classes in the price

range of BDT 60-80

1048766 Smaller SKUs (small lolly stick) can be introduced in the price range of BDT 10-15

1048766 In the boutique segment UBL should price products above the semi-premium segment

(Gelateria Igloo Sub Zero or Andersenrsquos) but lower than that of Club Gelato or MoumlvenPick

85 Promotion

1048766 UBL would require strong marketing campaign (As high as 50 of sales) to have a grand

entry in the market

1048766 Presence in the television media would be of utmost importance More than 50 of

promotional expense should be made here initially Gradually it can be reduced

1048766 Newspaper would serve as the second most important option

1048766 Billboards should also be used

1048766 Activations (similar to Lux Channel i Super Star or Igloo Festival) should be done to generate

trial

86 Scope of Opportunity

Table 30 Value and Volume Based Scope of Opportunity for UBL

Value (BDT Cr)

Volume (Tons)

Market

131

7835

Common

121

7600

Boutique

98

235

Evaluation of Entry into Ice cream Business for Bangladesh Limited 55

861 Geographic Contribution

1048766 Dhaka (61)

1048766 Chittagong (19)

1048766 Sylhet (10)

862 UBL objectives

Common Format Ice Creams

1048766 Target 10 Market share in 1st year operation

1048766 Value BDT 11 Cr

1048766 Production capacity required 21 Tons day

1048766 Freezer Placement 1500 freezers

1048766 Cart operation At least 50 carts

Boutiques

1048766 Target Further develop the market

1048766 Focus Dhaka Chittagong and Sylhet Metro

1048766 Franchise At least 20 franchisee operations nation wide in divisional towns

1048766 Pricing Below imported parlours above common formats with around BDT 400 per Litre

87 Critical Success Factors

1048766 UBL is considered as a high profile company in Bangladesh and thus they cannot operate in

the market only with common products like choc-bars and cups They must have premium

products (these require extrusion line) also to carry their brand image Otherwise UBL would not

be able to charge usual premium over competition products

1048766 Launch of ice cream would require huge promotional and activation support in order to gain

customers from Igloo People want novelty regarding ice cream and UBL have to let them know

about their products and create hype

1048766 Cart should be used as a source of distribution Recent successes of Unilever companies like

Indonesia shows that carts can generate more sales and can be used as source of visibility in the

minds of both retail traders and consumers Carts can also provide incremental sales to the

company

1048766 UBL have to create a strong cold chain for ice cream (initially in Dhaka and Chittagong) to

ensure quality products for consumers

1048766 UBL have to build capacity very rapidly to meet consumer demand if the launch is successful

Evaluation of Entry into Ice cream Business for Bangladesh Limited 56

90 BUSINESS PROJECTION

91 Basic Assumptions

Business projection for ice cream business was made based on a conservative approach UBL

would require spending significantly on production capacity and factory dedicated to ice cream

Thus to analyse business possibilities of ice cream certain assumptions were made and collected

data were used These are

1048766 Production equipments and cabinets would cost approximately BDT 55 crores

1048766 Production equipments 45

1048766 Packaging Equipments 15

1048766 Storage Facility 20

1048766 Branded Freezers 10

1048766 Distribution Investment 10 (Distributors would also invest themselves)

1048766 Ice cream factory with a floor size of 20000 sqft would cost BDT 25 crores

1048766 Objective is to capture 10 market share in Dhaka and Chittagong in the first year

1048766 Business would grow by 50 in year 2 and 3 30 in year 4 and 25 in year 5

1048766 Weighted price per litre is BDT 170 according to volume share of single serve ice cream

multiple serve ice cream and boutique ice cream

1048766 Other financial assumptions were also made List of them are provided below but amount has

been removed for confidentiality issues

Assumptions

Trade Margin

Distributors Margin

DutyVAT Rate

Trade Terms Expense of NPS

Trade Terms Expense of NSV

Advertising ampPromotion of NPS

Indirects (Salaries Wages etc)

Trading Tax

Table 31 Assumptions for Business Projection

Evaluation of Entry into Ice cream Business for Bangladesh Limited 57

100 CONCLUSION

Ice cream has good prospect in Bangladesh It is still a growing market with opportunities for big

new entrants With the barriers of entry UBL needs to consider its priorities UBL being an HPC

company traditionally needs to acquire expertise in cold chain distribution and has to invest a lot

of money to rip the benefits of the industry However to initiate company can take regional

support and acquire resource expertise The company should enter the business as soon as

possible since there is potential threat from DANONE to introduce more ice creams after ISIS

diabetic ice cream and also with potential of the industry arch rival Nestlersquo might consider

entering into the industry too

Evaluation of Entry into Ice cream Business for Bangladesh Limited 58

References

Web References

1 wwwunilevercom

2 wwwunilevercombd

3 wwwhllcom

4 wwwunilevercompk

5 wwwthedailystarcom - Life Style Magazine

6 wwwreuterscouk

Evaluation of Entry into Ice cream Business for Bangladesh Limited 59

Page 35: Square Ice cream

1048766 High production capacity

1048766 Weak distribution

1048766 Lower exposure

1048766 low amount of carts in operation

Polar

1048766 Free freezer

1048766 Quality perceived to be high compared to Kwality

1048766 Discoloured freezers

1048766 Lower exposure

1048766 Low product variety

1048766 Unused capacity

Savoy

1048766 Price is lower

1048766 Discoloured freezers

1048766 Low product variety

1048766 Weak distribution

1048766 Small amount of freezers

1048766 Low production capacity

Milk Vita

1048766 Quality is good due to dairy cream

1048766 Brand leverage from Milk Vita milk

1048766 Low exposure

1048766 Low variety

Table 21 Strengths and Weaknesses of Competition

512 Market Characteristics of the Boutique Segment

With a small market of BDT 98 Cr and 567 share in the branded ice cream market the

boutique segment is currently an increasing segment in the ice cream industry Boutique

segmentrsquos history dates back to 1960s when Igloo launched boutiques in Dhaka to save

distribution cost and promote a culture of ldquoice cream eating outrdquo In later years boutiques lost

their glamour and retail common format segment picked up growth However with Dolce Vita in

the late lsquo80s craze for Italian Artisan ice cream was recreated in the market Although Dolce

Vita is failing in recent times emergence of MoumlvenPick and Club Gelato in 2000 has uplifted the

segment once again Current growth rate of the

Evaluation of Entry into Ice cream Business for Bangladesh Limited 35

segment can be estimated to be approx 20-22 (higher than the common format segment)

Following are the basic detail of all the major players in the segment with their estimated sales3

Players

Outlet

Sales (Cr Taka)

Share

Club Gelato

1

136

199

MoumlvenPick

1

119

174

Andersenrsquos

3

119

174

Gelateria Igloo

3

119

174

Sub Zero (Kwality)

2

051

75

Baskin Robbins

1

015

22

Dolce Vita

1

017

25

American Soft

1

009

12

Rainbow

1

009

12

Others (off site)

089

130

Total Market

682

Table 22 Players and Shares in Boutique Segment

A Detail of Operation

General operational procedure followed by all the operators is as follows

1048766 Operating method There is a variation in operational method among the large operators

1048766 Club Gelato uses kitchen at own premise where imported ingredients and local milk (daily

special service from Milk Vita) are used to make ice cream

1048766 MoumlvenPick directly imports ice cream from Switzerland

1048766 Andersenrsquos Gelateria Igloo and Sub Zero produce ice cream at their factory with a mix of

imported and local ingredients

1048766 Products Around 30-35 flavours of artisan dairy ice cream are served at the premises

1048766 Most sold flavours are Vanilla Ferrero Rocher Butterscotch Chocolate Caramel etc

1048766 Other Products Larger players also serve ice cream desserts (milk shakes ice cappuccino etc)

pastries and other desserts with normal coffee and tea facility at their premises

1048766 Boutiques fight ice cream seasonality with the other products sales during off-peak ice cream

seasons Usually ice cream and other products contribute at 6040 ratio in summer and during

winter and off-peak seasons the ratio reverses

1048766 Pricing Usually the prices of products in this segment are 3-4 times higher than that of the

common format segment

1048766 Prices do not vary with flavours Variation depends on serve style (Cone tub) and use of

toppings and other ingredients (Chocolate sauce nut fruits) etc

1048766 Usual margin charged is around 50-60 over production cost Similar margin is charged for

other products like coffee ice cappuccino etc

3 Yearly sales is estimated based on companyrsquos approximate daily sales collected during

interview

Evaluation of Entry into Ice cream Business for Bangladesh Limited 36

1048766 Target Group Most of the consumers belong to SEC A and higher SEC A with DMFI of at

least BDT 20000

1048766 Foreign delegates and resident foreigners also visit these boutiques

1048766 Main purposes of visits in the boutiques are

bull Youth hangout with friends and having ice cream and ice cream derivatives

bull Family Family night out or eat out at a restaurant and then having dessert

bull Foreigners Having dessert after dinner

1048766 Rush time at boutiques are Afternoon 2-4 pm and at night 9-11 pm

1048766 Offsite sales Most of the large operators also sell offsite They have small freezers for off-site

1048766 Club Gelato and MoumlvenPick serves ice cream at high society parties and programmes

1048766 MoumlvenPick also has kiosks in known hotels like Sheraton

1048766 Promotion No mass promotion is done by any of the companies Word of mouth is the most

important source of promotion Posters and banners outside the premise and occasional

newspaper advertisements are used to communicate special offers

1048766 Growth Drivers Market growth is driven by image innovation quality decoration of facility

environment and special offers

1048766 Club Gelato has the image of selling true Italian dairy ice cream with an excellent hangout

environment

1048766 MoumlvenPick imports ice cream directly from Switzerland and is perceived to be of high quality

1048766 Andersenrsquos operates with the image of ice cream from Denmark

1048766 Gelateria Igloo (from Igloo) and Sub Zero (from Kwality) could not establish the premium

artisan ice cream image

B Players in the Boutique Segment

There are very few players who have significant impact in the boutique segment Detailed

information of all the major boutique segment players is provided below

Evaluation of Entry into Ice cream Business for Bangladesh Limited 37

Club Gelato

Basic Company Information

1048766 Location Banani Road 11 (Planning for a second one in Dhanmondi)

1048766 Established in 2001

1048766 Seating Capacity 48

1048766 Area 1250 sft (including kitchen)

1048766 Owner Mr Jahangir Alam (Bangladesh)

1048766 Business Type Joint business partnership with Singapore

1048766 Staff 15 people (6 in the kitchen)

1048766 Production capacity 150 litres per day

Product Related Information

1048766 Product Italian style parlour scoop ice cream fruit juice coffee and pastries

1048766 Flavours Around 32 flavours available

1048766 Most selling Ferraro Rocher Vanilla Pistachio

1048766 Innovations New variants and ingredients are communicated by their Italian supplier and

Club Gelato decides what to take from them

1048766 Serve type Cup Cone Glasses Box for take away

Consumer Profile

1048766 Primary Teenagers and Young Adults (18-30) amp Diplomats

1048766 Secondary Family consumers for eat out

1048766 Income Group High income customers tentatively from SEC A and higher SEC A

1048766 Geographic Area Diversified

1048766 Rush time 8-10 pm

Sales and Price Information

1048766 Sales BDT 50000 (60 Ice cream 40 other desserts) daily in summer In winter however

other products sell more and thus they keep total sales at the same level

1048766 Price 750 per litre for any flavour

1048766 Sales Volume 50-60 litres per day

Supply Chain Placement Information

1048766 Milk Local sourcing from Milk Vita (4050 litres per day)

1048766 Chocolates amp Flavours Belgium France Germany

1048766 Transportation Mainly air (They can afford it due to high margin)

1048766 Contribution of various materials Flavours (30) Milk (20) other parts are water and air

Promotional Materials

1048766 Materials used are near premises POS materials for promoting the parlour only

Table 23 Detail of Club Gelato

Evaluation of Entry into Ice cream Business for Bangladesh Limited 38

MoumlvenPick of Switzerland

Basic Company Information

1048766 Location Gulshan

1048766 Established in 2000

1048766 Seating Capacity 55

1048766 Owner Mr Arif Mahmud

1048766 Business Type Franchise of International MoumlvenPick

1048766 Storage Capacity in Shop 150 litres

Product Related Information

1048766 Product Imported MoumlvenPick ice creams coffee chicken sandwich and Frappe

1048766 Flavours Around 30 to 35 flavours available

1048766 Most selling Swiss Chocolate caramel Vanilla Dream Espresso Strawberry

1048766 Innovations New variants are communicated by their franchiser and they decide on flavours

that they want

1048766 Serve type Cup Cone Glasses Box for take away

Consumer Profile

1048766 Primary Teenagers and Young Adults (18-30) (70) amp Diplomats

1048766 Secondary Family consumers for eat out

1048766 Income Group High income customers tentatively from SEC A

1048766 Geographic Area Concentrated in Gulshan and nearby areas

1048766 Rush time Afternoon- Young Adult 10 to 11 pm Foreigners

1048766 the company also serves at parties and has freezers in known hotels where their ice creams

are served

Sales and Price Information

1048766 Sales BDT 35-40000 daily in summer

1048766 Price 640 per litre for any flavour

1048766 Sales Volume 55-60 litres per day

Supply Chain Placement Information

1048766 Transportation Imported finished goods by ship

1048766 Ship travel time 19 days

1048766 Port clearance 10 days

1048766 Safety Cushion Extra 10 days

Promotional Materials

1048766 Materials used are near premises POS materials for promoting the parlour only

Table 24 Detail of MoumlvenPick of Switzerland

Evaluation of Entry into Ice cream Business for Bangladesh Limited 39

Andersenrsquos of Denmark

Basic Company Information

1048766 Location Gulshan (2 others in Uttara Dhanmondi)

1048766 Established in 2001

1048766 Seating Capacity 48

1048766 Owner United Group

1048766 Business Type Franchise of Australian company Andersenrsquos of Denmark

1048766 Production Tongi Factory of United Group

1048766 Production capacity 2000 litres per day in factory

1048766 Storage Capacity in Shop 150 litres

Product Related Information

1048766 Product Danish parlour scoop ice cream and coffee

1048766 Flavours Around 30 to 35 flavours available

1048766 Most selling Strawberry Butter Scotch Green

1048766 Innovations New variants and ingredients are communicated by their franchiser and they

decide on flavours that they want

1048766 Serve type Cup Cone Glasses Box for take away

Consumer Profile

1048766 Primary Teenagers and Young Adults (18-30) (70) amp Diplomats

1048766 Secondary Family consumers for eat out

1048766 Income Group High income customers tentatively from SEC A

1048766 Geographic Area Concentrated in Gulshan and nearby areas

1048766 Rush time 8 to 10 pm

Sales and Price Information

1048766 Sales BDT 10-12000 daily in summer

1048766 Price 460 per litre for any flavour

1048766 Sales Volume 40-50 litres per day

Supply Chain Placement Information

1048766 Milk 2025 kg packs are imported

1048766 Chocolates amp Flavours Imported

1048766 Butte paper Local sourcing

1048766 Transportation Ship

Promotional Materials

1048766 Materials used are near premises POS materials for promoting the parlour only

Table 25 Detail of Andersenrsquos of Denmark

Evaluation of Entry into Ice cream Business for Bangladesh Limited 40

Gelateria Igloo

Basic Company Information

1048766 Location Banani Kemal Ataturk Avenue (Two others in GEC Mor Chittagong and Naya

Paltan)

1048766 Established in 2000

1048766 Seating Capacity 20

1048766 Production From Igloo factory in Shyampur Narayanganj

Product Related Information

1048766 Product Parlour scoop ice cream and coffee only

1048766 Flavours Around 30 flavours available

1048766 Most selling Vanilla Strawberry Chocolate Pistachio Butter Scotch Tutti Fruity

1048766 Serve type Cup Cone Glasses Box for take away

Consumer Profile

1048766 Primary Teenagers and Young Adults (18-30)

1048766 Secondary Family consumers for eat out

1048766 Income Group High income customers tentatively from SEC A and B

1048766 Geographic Area Diversified

1048766 Rush Time afternoon and evening

Sales and Price Information

1048766 Sales BDT 8000 to 10000 daily in summer Nearly one fourth in winter

1048766 Price Varies but 350 per litre of vanilla

Promotional Materials

1048766 POS materials at the premises

Table 26 Detail of Gelateria Igloo

52 Price Comparison of Common and Boutique Segments

Price ranges of both common format and boutique segment cannot exactly be pin pointed as

products do not follow common structure and variations occur with use of toppings mixing of

flavours and use of coatings However a price comparison has been made among the brands

based on their price of per litre of vanilla flavoured ice cream in the market It appears to be as

following

Company

Price Litre Vanilla

Club Gelato

750

MoumlvenPick

640

Andersenrsquos

460

Dolce Vita

440

Igloo

100

Kwality

100

Polar

100

Milk-Vita

90

Savoy

85

Table 27 Comparative Price Analysis

As it can be seen there is price gap within the range of BDT 100-400 Ice cream kiosks and

small scooping boutiques can operate within that range

Evaluation of Entry into Ice cream Business for Bangladesh Limited 41

60 CONSUMER ANALYSIS

61 Target Group of Ice cream

Who are the consumers of ice cream This question does not have a clear answer Ice cream is a

food for all It is the only food consumed by a human being at less than 0 degree centigrade

temperature and people of all ages feel indulged to have it However we can determine focus

target groups for both branded common format and artisan boutique ice cream Group

discussions and market visits were done to get insight into the consumers along side resources

form secondary sources Age based target group is common for both segments but variation

among the groups occur mainly based on SEC and DMFI classification

611 Geographic Group

Branded ice cream remains an urban product till date Geographically branded ice cream has

reached urban and semi urban areas up to Thana Head Quarter levels Ice cream has reached

areas where electricity is available Small artisan players are available in places where large

branded players have no distribution

612 Target Age Group

Age wise grouping of target consumers is as follows

1048766 Urban kids in the age group of 5-14

1048766 They mainly consume normal sticks cups cones innovative fillers and water ice creams

1048766 Urban youth in the age group of 15-24

1048766 They consume premium and extrusion sticks and cones

1048766 Urban mothers in the age group of 25-35

1048766 They determine the family purchases Even when the father purchases ice cream decision is

taken by them

Consumption pattern of various age groups are depicted in the following chart Ice cream

consumption pattern50203005 to 14 yrs15 to 24 yrs25 to 35 yrs

Figure 11 Target Group wise Consumption Pattern Evaluation of Entry into Ice cream Business

for Bangladesh Limited 42

613 Target SEC and DMFI Group

Common Format

SEC A and B is the target group for common format ice cream However with rapid increase in

price level over the years has made it a ldquohard to consumerdquo product for SEC B consumers who

belong to lower DMFI group

Boutique Format

Boutique formatrsquos higher margin and high price range makes it an exclusively SEC A ice cream

People belonging to upper and upper middle class have access to the mediocre boutiques and

only higher upper class can have premium ice creams like Club Gelato and MoumlvenPick

Another unique target group for boutique format are the foreigners who live in Bangladesh

These people tend to visit the parlours to have ice cream as dessert especially after dinner

62 Ice cream in Consumer Lifestyle

Figure 12 Ice cream in Consumer Life style

This simple overview of ice cream in consumer lifestyle was determined based on in-depth

research analysis of UBL and validated through qualitative group discussions by the author

However detail of in-depth research is provided in a later section of this chapter

Evaluation of Entry into Ice cream Business for Bangladesh Limited 43

63 Highlights of Purchase Habit of Ice cream

631 Common Habits across Target Groups

There are some common habits that were identified in earlier researches and group discussions

with consumers Common habits mean the consumer approach towards ice cream that is seen

across all target groups eg kids youth and adult purchasers These are outlined below

1048766 Ice cream is mainly seen as a dessert or a snack Impulse ice cream is seen as a quick snack

that is consumed when it is in sight Visibility plays a big role here Regarding family packs

people see it as a post-food dessert

1048766 Ice cream purchase is commonly a planned event When the contexts arise people generally

take a bit of time to decide whether or not to have ice cream or when they want to go to a

boutique they make due considerations regarding which boutique to visit

1048766 Ice cream purchase decision is taken based on favourite flavour People tend to try out new

variants and flavours when they first see it They compare the taste with earlier experience and

when they purchase later they choose the flavour they have liked most

1048766 For In-Home segment decision is mostly taken on the flavour Generally people come up with

different flavours of choice and most voted flavour is chosen

1048766 People become aware of new variants or flavours mainly through word-of-mouth

Advertisement (new launches special offers and festivals) in newspaper is another source of

awareness

1048766 People are currently indifferent towards the price level of premium flavours However some

feel that price of Choc-bar or water ice creams (lolly) is a bit much If less they would have

consumed more Some also feel that companies should come up with branded ice cream in the

price range of BDT 5-8

1048766 Ice cream is purchased from nearby shops If required brand and flavour is not available 2-3

shops will be visited and then available flavour will be selected even if the required one is not

found This is done mainly not to ruin the mood for ice cream

1048766 People are very open to try new brands and flavours especially if it comes from a credible

source They would try new flavours and if they are satisfied with the taste they would repeat

purchase

1048766 Regarding boutique visits people feel that boutiques need to have a proper environment

enough flavours and other snacks

1048766 While visiting boutique with family or companion they want variation in flavours so that

they would order different flavours and taste each otherrsquos ice cream It is seen as a sign of

togetherness

1048766 Frequency of ice cream purchase varies among people It depends on peer pressure collective

family decision summer heat and attitude towards ldquoice creamrdquo itself as a product Evaluation of

Entry into Ice cream Business for Bangladesh Limited 44

632 Habits of Kids

1048766 Kids choose ice cream flavours by the look of the product (generally pictures shown in POS

materials and carts) They love colour and designs of the products let it be a common format or a

boutique ice cream

1048766 Kids (when in house) would go with the housemaid to the nearby shop choose the flavour

they want (within range of the amount given to the maid) and buy it

1048766 When with parents they would take the product they like even if the price is lower than some

other product However mothers play a role in this decision They would want their children not

to choose too high priced a product or coloured products

633 Habits of Youth

1048766 Young people are the main consumer of impulse ice cream They also are one of the major

consumers in the boutique segment

1048766 Young people love to try out new products that come into the market Another side of the coin

is that they are not very loyal to a brand or a flavour and tend to switch a lot

1048766 Regarding boutique visits young people go to boutiques to have an ldquoice cream hang outrdquo with

peer groups They would stay there for a longer period of time while they have their ice cream

1048766 Some times young people make milk shakes and other ice cream based desserts

634 Habits of Mothers

1048766 Mothers worry about their childrenrsquos health and they prefer ldquovanillardquo type of brands

However when price constraint occurs they go for water ice creams for their children They try

to convince their kidrsquos purchase decision

1048766 Regarding family purchase motherrsquos decision is sometimes prioritized by the whole family

64 Barriers to Ice cream Consumption

641 Emotional Barriers

1048766 Overindulge (close to sinful)

1048766 Undisciplined (no control)

1048766 Childish (licking)

1048766 Artificial Image

642 Functional Barriers

1048766 People of SEC B feel that ice cream is an expensive dessert (If less expensive would consume

more often)

1048766 It leads to cold cough - especially in winter rainy season

1048766 It contains artificial additives preservatives

1048766 It is very high in calories that lead to fattening

Evaluation of Entry into Ice cream Business for Bangladesh Limited 45

1048766 It does not quench ldquothirstrdquo

1048766 Less convenient (portable immediate eat)

1048766 Messy Dripping

65 Research Findings

The highlights regarding purchase habits triggers and barriers of ice cream consumption provide

a glimpse into the consumer world of ice cream industry However UBL CMI conducted a

formal research exclusively on ice cream consumers to identify

1048766 Occasions of ice cream

1048766 Frequency of ice cream consumption

1048766 Expectations from ice cream occasions

1048766 Personalities that they desire from ice cream

651 Relevant Occasions in Daily Lives of Consumers

Research question regarding ldquousual occasions of life that occurred most frequently in day-to-day

lives of the respondentsrdquo generated the following replies

Occasion

of Respondents saying Yes

Watching TV

93

Normal Dinner At Home

91

Normal Lunch At Home

89

At Home While ReadingMusicSurfing

86

Informal Family Get Together

85

Out Of Home Hanging Out With Friends

84

Out Shopping

84

Mid-Afternoon Break At Home

83

At Home By Myself During The Day

82

Special Dinner At Home

82

Informal Dinner Out Of Home

82

Normal Lunch Out Of Home

82

Leisure Walk

79

Coming Home From WorkSchool

78

Special Dinner Out Of Home

78

Celebration

78

A Night In With Friends

77

At Home By Myself In The Evening

77

Special Lunch Out Of Home

76

Mid-Afternoon Break Out Of Home

75

Special Lunch At Home

73

Day out with Partner

72

Midmorning Break

70

At Breakfast

68

Family Day Out

68

During Work Or At School

65

Evaluation of Entry into Ice cream Business for Bangladesh Limited 46

Travelling ToFrom WorkSchool

65

At The Cinema

61

Special Event

56

Clubbing At A Party

50

Post GymSports

48

Table 28 Relevant Occasions in Consumersrsquo Lives

Respondents were then asked to mention ldquofrequency of occurrence of the identified occasionsrdquo

The identified replies are as follows Normal dinner at homenormal lunch at homeComing home

from workschoolTraveling tofrom workschoolDay out with Partner SpouseMid-afternoon

break at homeOut of home hanging out with friendsLeisure walkMid-afternoon break out of

homeA night in with friendsSpecial dinner at homeSpecial lunch out of homeFamily day

outSpecial eventPost gymsportsDaily2-3 Times A WeekWeekly2-3 Times A MonthOnce A

MonthEvery 2-3 MonthsLess OftenNever Figure 13 Frequency of Occurrence of Occasions

This shows that ldquoNormal dinner at home Watching TV Normal Lunch At Home At Home

While ReadingMusicSurfing Coming Home From WorkSchool During Work Or At School

Travelling ToFrom WorkSchool Midmorning Break Day Out With Partner Spouse At Home

By Myself During The Dayrdquo are the most frequent daily rituals of busy lives of consumers

652 Frequency of Ice cream Consumption

Respondents were asked to mention ldquoconsumption pattern of ice cream during the identified

occasionrdquo on a scale of 1-5 depicting frequencies like ldquo(5) always (4) most of the times (3)

about half of the times (2) sometimes (1) never do not knowrdquo The responses are depicted in

the following table

Evaluation of Entry into Ice cream Business for Bangladesh Limited 47

444474544655555566756665775967779991011101111101210111110101113111412131314161

011121411131216181519181518211817171719181718201721222130303434253437403741394

046383944464746453745414641374638504843414839373030292726232725222020201926202

21722221317Midmorning

breakWhile clubbing at aAt the cinemaSpecial eventNormal lunch out ofA night in with

friendsNormal dinner atInformal dinner out ofAt home by myselfAt home by myself inOut

shoppingSpecial lunch atDay out with SpouseWatching TVAlwaysmost of the timesAbout half

of the timesSometimesneverdo not know

Figure 14 Frequency of Ice cream Consumption

As it can be seen ldquoDay out with Spouse Special lunch at home Special dinner at home

Watching TV Family day out Celebrationrdquo are the occasions where most frequently ice cream is

consumed

653 Market Character Mapping Relevant Occasions vs Frequency of Consumption

If we plot frequency of consumption on the X-axis of a chart and relevance of occasion

occurrence on the Y-axis taking the above mentioned values as cut-off values we get four

quadrants in the chart depicting four market scenarios that any ice cream manufacturer in

Bangladesh market might encounter given the current market situation This market

segmentation is based on frequency of ice cream consumption in daily occasions of consumer

lives

The segments are

1048766 OPPORTUNITY MARKET High Relevant Occasions-Low Ice cream Frequency

1048766 QUESTION MARKET Less Relevant Occasions-Low Ice cream Frequency

1048766 HIGH FREQUENCY MARKET Relevant Occasions-High Ice cream Frequency

1048766 CAPTIVE MARKET Less Relevant Occasions-High Ice cream Frequency

The chart looks as follows Evaluation of Entry into Ice cream Business for Bangladesh Limited

48

Figure 15 Relevance of Occasion-Frequency of Consumption Mapping

As it can be seen from the above chart Bangladesh Market still lies in the Opportunity and

Question market zone with a pull towards High frequency and Captive Market zones This is

evident from market data as penetration of ice cream still remains at Thana headquarters levels

Also this explains the high market growth rate of 17 as market is yet under developed and

branded quality ice cream has yet not reached all levels of consumers especially rural level that

constitutes around 75 of Bangladeshi market

From the above analysis we can establish that target of ice cream manufacturers should be to

penetrate more into the Bangladeshi market to create higher frequency of ice cream

consumption The following chart shows the strategies to follow for ice cream manufacturers

Figure 16 Required Market Strategy for Bangladesh

Evaluation of Entry into Ice cream Business for Bangladesh Limited 49

As relevance of ice cream consumption occasions can hardly be controlled by marketers their

endeavour should be to create more ldquoemotional and functionalrdquo attachment to ice cream in less

frequent occasions through ldquomarket developmentrdquo strategy to earn share from overall food

expenditure of consumers and at the same time make them consume more ice cream in highly

relevant occasions through ldquopenetrationrdquo strategy

654 Consumersrsquo Emotional Requirements and Product Attributes

All consumers under these clusters also identify the emotional requirements and the significant

product attributes they seek from their current preferred and future desired ice creams These are

provided below

Cluster

Emotional Functional Requirement

Product Attributes

Enjoyment

Flavour Variety

1048766 Combination of different flavours

1048766 Combination of different textures

1048766 Very sweet

1048766 With wafer or biscuit

1048766 With chocolate

1048766 Of a well known brand

Socially Involved

Spoonable Rich

1048766 Very creamy

1048766 Only natural ingredients

1048766 No mess

Care

Size Creaminess

1048766 Big

1048766 Rich full taste

1048766 Smooth

1048766 Value for money

1048766 No mess

Unwind amp Escape

Economy

1048766 Crunchy

1048766 Economic

1048766 Of a well known brand

1048766 Nutritious

Balanced Convenience

Health Conscious

1048766 Of a well known brand

1048766 Nutritious

1048766 Milk based

1048766 Low sugar

1048766 Low carbohydrates

1048766 Filling

Active Self-Grooming

Fruit Vitamins

1048766 Healthy

1048766 Fruit based

1048766 Low fat

1048766 Liquid or drinkable

1048766 Nutritious

1048766 Of a well known brand

Confidence

Drinkable Light

1048766 Low calories

1048766 Light on the stomach

1048766 Chewy or gooey

1048766 Not so sweet

1048766 Natural appearance

Sensual

Appeal or image

1048766 No artificial additives

Evaluation of Entry into Ice cream Business for Bangladesh Limited 50

1048766 Natural appearance

1048766 Melting slowly

1048766 Attractive packaging

1048766 High quality ingredients

1048766 Of a well known brand

Table 29 Requirements amp Product Attributes Desired by Consumer Clusters

Of these findings we see that the identified highlighted barriers to ice cream consumption are

pretty evident among the consumers Mostly people want products of a reliable source or a well

known brand low calories quality ingredients value for money economic type

Evaluation of Entry into Ice cream Business for Bangladesh Limited 51

70 INDUSTRY ATTRACTIVENESS AND ENTRY PROSPECTS

71 Driving Forces of Growth

As identified in the earlier sections there are several driving forces behind the growth of ice-

cream industry in Bangladesh

712 Trade and Infrastructural Level

1048766 As a result of globalization newer varieties have been introduced to the local products Many

foreign companies are also coming as franchise so there has been increased competition and

these boutiques are setting higher standards for the local producers

1048766 The present market growth rate is 18-19 which is being influenced by larger players like

Igloo who are expanding their distribution nation wide with expansion of national electricity

grid

1048766 With entry of Modern Trade and recent organized business approach of retailers has made it

possible for ice cream manufacturers to penetrate into shops even without providing them with

branded freezers

1048766 Weather change has increased ldquosummerrdquo season in our country which has reduced negative

seasonal impact on ice cream

1048766 Large companies like Igloo have taken global learning of using carts as an effective tool of

availability and visibility for ice cream

1048766 New and improved technologies are being used in the production process This technological

advancement has improved quality increased speed of production and made the process more

cost effective

713 Consumer Level

1048766 Only a few years back rich people could afford the luxury of having ice-cream but now it has

become a common product for everybody Ice-cream companies are producing different products

with a wide price range for consumers of every class and status

1048766 Nowadays companies are doing promotional campaigns more frequently the customers get to

know about the product which makes it easier for them to buy the best one

1048766 The improved standard of life and more modernized lifestyle of people is an important reason

for the increased consumption thus growth of the ice-cream industry

Evaluation of Entry into Ice cream Business for Bangladesh Limited 52

72 Prospects of Entry

The ice-cream industry of Bangladesh is an attractive one for the investors because there is a

huge market but number of producers is very small The major reasons behind industry

attractiveness are as follows

1048766 The industryrsquos current growth potential is very high with opportunity for market development

1048766 The competition currently permits adequate profitability and the competitive forces are

becoming stronger with time

1048766 Boutique segment is at a very high growth stage but no operator is currently operating with a

mid price range of BDT 100-400 Ice cream kiosks and small scooping boutiques can operate

within that range

1048766 Current industry driving forces are favourable for the future industry profitability

1048766 Globally oriented consumers look for variety in ice cream that is currently not available

Latest innovations came in the market in 2002 People would welcome new variety and flavours

1048766 There is a gap in the market for balanced convenience through ice cream where consumers can

get nutritional benefits for ice cream Also emotional attachment to ice cream could further be

improvised in promotional campaigns

1048766 There is high scope for market penetration and development to increase frequency of ice

cream consumption

1048766 Level of risk or uncertainty is very low in ice-cream industry because the consumer market is

so huge any product with a standard quality and careful pricing will be able to make significant

profit

1048766 As for geographic reach of the industry 60 market is still in Dhaka There is scope of

expansion and a new entrant can easily capture market share within Dhaka using carts even if

they do not want nation wide cold chain distribution

1048766 The production process is very complex and capital requirements are also high So before

going into production any company should know about their capabilities and weaknesses and

then start the business or else they might suffer huge loss at a certain level

1048766 Unilever can acquire the required resource and use existing multi-national multi-cultural

expertise to enter the market in a grand way

1048766 With high probability of entry from DANONE with more products like the ISIS diabetic ice

cream Unilever should consider entering in this industry as soon as possible

Evaluation of Entry into Ice cream Business for Bangladesh Limited 53

80 ENTRY STRATEGY FOR UNILEVER

While describing the suggested entry strategy for UBL certain issues have been kept

confidential and some issues have been touched but not explained to keep consistency with UBL

confidentiality policy

81 Suggested Entry Areas for UBL

1048766 Boutique segment of the Bangladesh ice cream is only 5 of the branded market UBL needs

to pursue a larger scope to make the entry viable

1048766 UBL cannot fight with unbranded segment as global product quality mandate of Unilever does

not allow UBL to fight in low price-low quality segment

1048766 Recommend entry should be in the common format segment with both single and multiple

servings and in the boutique segment with a different brand name (if possible BEN amp JERRYrsquoS)

1048766 UBL should build up state-of-art modern factory for manufacturing and establish cold chain

facilities initially focusing on metro cities

1048766 Investment issues are required to be addressed for building factory and cold chain and capital

requirement needs to be identified for that purpose4

1048766 UBL may have boutiques for driving image selective top-end offering

1048766 Kiosks can be setup near universities and shopping malls

1048766 Boutiques should be concentrated in Dhaka and Chittagong

1048766 Ice cream for boutiques and kiosks would be produced in factory as institutional packs of 9-10

litres

82 Products

1048766 As a Brand Building country in global Unilever operating framework UBL is entitled only to

bring products developed by the Brand Development countries

1048766 Unilever should focus on serving products that have nutritional benefits (already available

globally) along with usual satisfactions of sensual pleasure functional attributes etc

1048766 Current existent players especially Igloo and Kwality have extensively copied global and

regionally available Unilever products eg Cornelli is same as Wallrsquos Cornetto Vinetta is similar

to Vienetta Mega is similar to Magnum etc UBL needs to differentiate these to consumers on

the ldquotaste the originalrdquo platform where global quality is focused regarding the products

1048766 UBL should also bring regionally famous brands like Moo or Max to create image

differentiation

1048766 Magnum or Moo should be used as premium end ice cream to generate more profit margin

Evaluation of Entry into Ice cream Business for Bangladesh Limited 54

83 Placement

1048766 Distribution focus should be in Dhaka for entry as Dhaka contributes more than 60 of total

ice cream sales in the country

1048766 Company may use carts as distribution method They serve as good source of visibility and

availability It would help in increasing impulse purchase

1048766 At least 1500 outlets in Dhaka and Chittagong needs to be actively served using dedicated

branded refrigerators to generate sales

1048766 50 carts should operate in Dhaka and Chittagong

84 Price

1048766 UBL products should be priced at par with Igloo pricing for the common format ice creams

1048766 UBL can bring in premium single-serve SKUS for the higher economic classes in the price

range of BDT 60-80

1048766 Smaller SKUs (small lolly stick) can be introduced in the price range of BDT 10-15

1048766 In the boutique segment UBL should price products above the semi-premium segment

(Gelateria Igloo Sub Zero or Andersenrsquos) but lower than that of Club Gelato or MoumlvenPick

85 Promotion

1048766 UBL would require strong marketing campaign (As high as 50 of sales) to have a grand

entry in the market

1048766 Presence in the television media would be of utmost importance More than 50 of

promotional expense should be made here initially Gradually it can be reduced

1048766 Newspaper would serve as the second most important option

1048766 Billboards should also be used

1048766 Activations (similar to Lux Channel i Super Star or Igloo Festival) should be done to generate

trial

86 Scope of Opportunity

Table 30 Value and Volume Based Scope of Opportunity for UBL

Value (BDT Cr)

Volume (Tons)

Market

131

7835

Common

121

7600

Boutique

98

235

Evaluation of Entry into Ice cream Business for Bangladesh Limited 55

861 Geographic Contribution

1048766 Dhaka (61)

1048766 Chittagong (19)

1048766 Sylhet (10)

862 UBL objectives

Common Format Ice Creams

1048766 Target 10 Market share in 1st year operation

1048766 Value BDT 11 Cr

1048766 Production capacity required 21 Tons day

1048766 Freezer Placement 1500 freezers

1048766 Cart operation At least 50 carts

Boutiques

1048766 Target Further develop the market

1048766 Focus Dhaka Chittagong and Sylhet Metro

1048766 Franchise At least 20 franchisee operations nation wide in divisional towns

1048766 Pricing Below imported parlours above common formats with around BDT 400 per Litre

87 Critical Success Factors

1048766 UBL is considered as a high profile company in Bangladesh and thus they cannot operate in

the market only with common products like choc-bars and cups They must have premium

products (these require extrusion line) also to carry their brand image Otherwise UBL would not

be able to charge usual premium over competition products

1048766 Launch of ice cream would require huge promotional and activation support in order to gain

customers from Igloo People want novelty regarding ice cream and UBL have to let them know

about their products and create hype

1048766 Cart should be used as a source of distribution Recent successes of Unilever companies like

Indonesia shows that carts can generate more sales and can be used as source of visibility in the

minds of both retail traders and consumers Carts can also provide incremental sales to the

company

1048766 UBL have to create a strong cold chain for ice cream (initially in Dhaka and Chittagong) to

ensure quality products for consumers

1048766 UBL have to build capacity very rapidly to meet consumer demand if the launch is successful

Evaluation of Entry into Ice cream Business for Bangladesh Limited 56

90 BUSINESS PROJECTION

91 Basic Assumptions

Business projection for ice cream business was made based on a conservative approach UBL

would require spending significantly on production capacity and factory dedicated to ice cream

Thus to analyse business possibilities of ice cream certain assumptions were made and collected

data were used These are

1048766 Production equipments and cabinets would cost approximately BDT 55 crores

1048766 Production equipments 45

1048766 Packaging Equipments 15

1048766 Storage Facility 20

1048766 Branded Freezers 10

1048766 Distribution Investment 10 (Distributors would also invest themselves)

1048766 Ice cream factory with a floor size of 20000 sqft would cost BDT 25 crores

1048766 Objective is to capture 10 market share in Dhaka and Chittagong in the first year

1048766 Business would grow by 50 in year 2 and 3 30 in year 4 and 25 in year 5

1048766 Weighted price per litre is BDT 170 according to volume share of single serve ice cream

multiple serve ice cream and boutique ice cream

1048766 Other financial assumptions were also made List of them are provided below but amount has

been removed for confidentiality issues

Assumptions

Trade Margin

Distributors Margin

DutyVAT Rate

Trade Terms Expense of NPS

Trade Terms Expense of NSV

Advertising ampPromotion of NPS

Indirects (Salaries Wages etc)

Trading Tax

Table 31 Assumptions for Business Projection

Evaluation of Entry into Ice cream Business for Bangladesh Limited 57

100 CONCLUSION

Ice cream has good prospect in Bangladesh It is still a growing market with opportunities for big

new entrants With the barriers of entry UBL needs to consider its priorities UBL being an HPC

company traditionally needs to acquire expertise in cold chain distribution and has to invest a lot

of money to rip the benefits of the industry However to initiate company can take regional

support and acquire resource expertise The company should enter the business as soon as

possible since there is potential threat from DANONE to introduce more ice creams after ISIS

diabetic ice cream and also with potential of the industry arch rival Nestlersquo might consider

entering into the industry too

Evaluation of Entry into Ice cream Business for Bangladesh Limited 58

References

Web References

1 wwwunilevercom

2 wwwunilevercombd

3 wwwhllcom

4 wwwunilevercompk

5 wwwthedailystarcom - Life Style Magazine

6 wwwreuterscouk

Evaluation of Entry into Ice cream Business for Bangladesh Limited 59

Page 36: Square Ice cream

1048766 Low exposure

1048766 Low variety

Table 21 Strengths and Weaknesses of Competition

512 Market Characteristics of the Boutique Segment

With a small market of BDT 98 Cr and 567 share in the branded ice cream market the

boutique segment is currently an increasing segment in the ice cream industry Boutique

segmentrsquos history dates back to 1960s when Igloo launched boutiques in Dhaka to save

distribution cost and promote a culture of ldquoice cream eating outrdquo In later years boutiques lost

their glamour and retail common format segment picked up growth However with Dolce Vita in

the late lsquo80s craze for Italian Artisan ice cream was recreated in the market Although Dolce

Vita is failing in recent times emergence of MoumlvenPick and Club Gelato in 2000 has uplifted the

segment once again Current growth rate of the

Evaluation of Entry into Ice cream Business for Bangladesh Limited 35

segment can be estimated to be approx 20-22 (higher than the common format segment)

Following are the basic detail of all the major players in the segment with their estimated sales3

Players

Outlet

Sales (Cr Taka)

Share

Club Gelato

1

136

199

MoumlvenPick

1

119

174

Andersenrsquos

3

119

174

Gelateria Igloo

3

119

174

Sub Zero (Kwality)

2

051

75

Baskin Robbins

1

015

22

Dolce Vita

1

017

25

American Soft

1

009

12

Rainbow

1

009

12

Others (off site)

089

130

Total Market

682

Table 22 Players and Shares in Boutique Segment

A Detail of Operation

General operational procedure followed by all the operators is as follows

1048766 Operating method There is a variation in operational method among the large operators

1048766 Club Gelato uses kitchen at own premise where imported ingredients and local milk (daily

special service from Milk Vita) are used to make ice cream

1048766 MoumlvenPick directly imports ice cream from Switzerland

1048766 Andersenrsquos Gelateria Igloo and Sub Zero produce ice cream at their factory with a mix of

imported and local ingredients

1048766 Products Around 30-35 flavours of artisan dairy ice cream are served at the premises

1048766 Most sold flavours are Vanilla Ferrero Rocher Butterscotch Chocolate Caramel etc

1048766 Other Products Larger players also serve ice cream desserts (milk shakes ice cappuccino etc)

pastries and other desserts with normal coffee and tea facility at their premises

1048766 Boutiques fight ice cream seasonality with the other products sales during off-peak ice cream

seasons Usually ice cream and other products contribute at 6040 ratio in summer and during

winter and off-peak seasons the ratio reverses

1048766 Pricing Usually the prices of products in this segment are 3-4 times higher than that of the

common format segment

1048766 Prices do not vary with flavours Variation depends on serve style (Cone tub) and use of

toppings and other ingredients (Chocolate sauce nut fruits) etc

1048766 Usual margin charged is around 50-60 over production cost Similar margin is charged for

other products like coffee ice cappuccino etc

3 Yearly sales is estimated based on companyrsquos approximate daily sales collected during

interview

Evaluation of Entry into Ice cream Business for Bangladesh Limited 36

1048766 Target Group Most of the consumers belong to SEC A and higher SEC A with DMFI of at

least BDT 20000

1048766 Foreign delegates and resident foreigners also visit these boutiques

1048766 Main purposes of visits in the boutiques are

bull Youth hangout with friends and having ice cream and ice cream derivatives

bull Family Family night out or eat out at a restaurant and then having dessert

bull Foreigners Having dessert after dinner

1048766 Rush time at boutiques are Afternoon 2-4 pm and at night 9-11 pm

1048766 Offsite sales Most of the large operators also sell offsite They have small freezers for off-site

1048766 Club Gelato and MoumlvenPick serves ice cream at high society parties and programmes

1048766 MoumlvenPick also has kiosks in known hotels like Sheraton

1048766 Promotion No mass promotion is done by any of the companies Word of mouth is the most

important source of promotion Posters and banners outside the premise and occasional

newspaper advertisements are used to communicate special offers

1048766 Growth Drivers Market growth is driven by image innovation quality decoration of facility

environment and special offers

1048766 Club Gelato has the image of selling true Italian dairy ice cream with an excellent hangout

environment

1048766 MoumlvenPick imports ice cream directly from Switzerland and is perceived to be of high quality

1048766 Andersenrsquos operates with the image of ice cream from Denmark

1048766 Gelateria Igloo (from Igloo) and Sub Zero (from Kwality) could not establish the premium

artisan ice cream image

B Players in the Boutique Segment

There are very few players who have significant impact in the boutique segment Detailed

information of all the major boutique segment players is provided below

Evaluation of Entry into Ice cream Business for Bangladesh Limited 37

Club Gelato

Basic Company Information

1048766 Location Banani Road 11 (Planning for a second one in Dhanmondi)

1048766 Established in 2001

1048766 Seating Capacity 48

1048766 Area 1250 sft (including kitchen)

1048766 Owner Mr Jahangir Alam (Bangladesh)

1048766 Business Type Joint business partnership with Singapore

1048766 Staff 15 people (6 in the kitchen)

1048766 Production capacity 150 litres per day

Product Related Information

1048766 Product Italian style parlour scoop ice cream fruit juice coffee and pastries

1048766 Flavours Around 32 flavours available

1048766 Most selling Ferraro Rocher Vanilla Pistachio

1048766 Innovations New variants and ingredients are communicated by their Italian supplier and

Club Gelato decides what to take from them

1048766 Serve type Cup Cone Glasses Box for take away

Consumer Profile

1048766 Primary Teenagers and Young Adults (18-30) amp Diplomats

1048766 Secondary Family consumers for eat out

1048766 Income Group High income customers tentatively from SEC A and higher SEC A

1048766 Geographic Area Diversified

1048766 Rush time 8-10 pm

Sales and Price Information

1048766 Sales BDT 50000 (60 Ice cream 40 other desserts) daily in summer In winter however

other products sell more and thus they keep total sales at the same level

1048766 Price 750 per litre for any flavour

1048766 Sales Volume 50-60 litres per day

Supply Chain Placement Information

1048766 Milk Local sourcing from Milk Vita (4050 litres per day)

1048766 Chocolates amp Flavours Belgium France Germany

1048766 Transportation Mainly air (They can afford it due to high margin)

1048766 Contribution of various materials Flavours (30) Milk (20) other parts are water and air

Promotional Materials

1048766 Materials used are near premises POS materials for promoting the parlour only

Table 23 Detail of Club Gelato

Evaluation of Entry into Ice cream Business for Bangladesh Limited 38

MoumlvenPick of Switzerland

Basic Company Information

1048766 Location Gulshan

1048766 Established in 2000

1048766 Seating Capacity 55

1048766 Owner Mr Arif Mahmud

1048766 Business Type Franchise of International MoumlvenPick

1048766 Storage Capacity in Shop 150 litres

Product Related Information

1048766 Product Imported MoumlvenPick ice creams coffee chicken sandwich and Frappe

1048766 Flavours Around 30 to 35 flavours available

1048766 Most selling Swiss Chocolate caramel Vanilla Dream Espresso Strawberry

1048766 Innovations New variants are communicated by their franchiser and they decide on flavours

that they want

1048766 Serve type Cup Cone Glasses Box for take away

Consumer Profile

1048766 Primary Teenagers and Young Adults (18-30) (70) amp Diplomats

1048766 Secondary Family consumers for eat out

1048766 Income Group High income customers tentatively from SEC A

1048766 Geographic Area Concentrated in Gulshan and nearby areas

1048766 Rush time Afternoon- Young Adult 10 to 11 pm Foreigners

1048766 the company also serves at parties and has freezers in known hotels where their ice creams

are served

Sales and Price Information

1048766 Sales BDT 35-40000 daily in summer

1048766 Price 640 per litre for any flavour

1048766 Sales Volume 55-60 litres per day

Supply Chain Placement Information

1048766 Transportation Imported finished goods by ship

1048766 Ship travel time 19 days

1048766 Port clearance 10 days

1048766 Safety Cushion Extra 10 days

Promotional Materials

1048766 Materials used are near premises POS materials for promoting the parlour only

Table 24 Detail of MoumlvenPick of Switzerland

Evaluation of Entry into Ice cream Business for Bangladesh Limited 39

Andersenrsquos of Denmark

Basic Company Information

1048766 Location Gulshan (2 others in Uttara Dhanmondi)

1048766 Established in 2001

1048766 Seating Capacity 48

1048766 Owner United Group

1048766 Business Type Franchise of Australian company Andersenrsquos of Denmark

1048766 Production Tongi Factory of United Group

1048766 Production capacity 2000 litres per day in factory

1048766 Storage Capacity in Shop 150 litres

Product Related Information

1048766 Product Danish parlour scoop ice cream and coffee

1048766 Flavours Around 30 to 35 flavours available

1048766 Most selling Strawberry Butter Scotch Green

1048766 Innovations New variants and ingredients are communicated by their franchiser and they

decide on flavours that they want

1048766 Serve type Cup Cone Glasses Box for take away

Consumer Profile

1048766 Primary Teenagers and Young Adults (18-30) (70) amp Diplomats

1048766 Secondary Family consumers for eat out

1048766 Income Group High income customers tentatively from SEC A

1048766 Geographic Area Concentrated in Gulshan and nearby areas

1048766 Rush time 8 to 10 pm

Sales and Price Information

1048766 Sales BDT 10-12000 daily in summer

1048766 Price 460 per litre for any flavour

1048766 Sales Volume 40-50 litres per day

Supply Chain Placement Information

1048766 Milk 2025 kg packs are imported

1048766 Chocolates amp Flavours Imported

1048766 Butte paper Local sourcing

1048766 Transportation Ship

Promotional Materials

1048766 Materials used are near premises POS materials for promoting the parlour only

Table 25 Detail of Andersenrsquos of Denmark

Evaluation of Entry into Ice cream Business for Bangladesh Limited 40

Gelateria Igloo

Basic Company Information

1048766 Location Banani Kemal Ataturk Avenue (Two others in GEC Mor Chittagong and Naya

Paltan)

1048766 Established in 2000

1048766 Seating Capacity 20

1048766 Production From Igloo factory in Shyampur Narayanganj

Product Related Information

1048766 Product Parlour scoop ice cream and coffee only

1048766 Flavours Around 30 flavours available

1048766 Most selling Vanilla Strawberry Chocolate Pistachio Butter Scotch Tutti Fruity

1048766 Serve type Cup Cone Glasses Box for take away

Consumer Profile

1048766 Primary Teenagers and Young Adults (18-30)

1048766 Secondary Family consumers for eat out

1048766 Income Group High income customers tentatively from SEC A and B

1048766 Geographic Area Diversified

1048766 Rush Time afternoon and evening

Sales and Price Information

1048766 Sales BDT 8000 to 10000 daily in summer Nearly one fourth in winter

1048766 Price Varies but 350 per litre of vanilla

Promotional Materials

1048766 POS materials at the premises

Table 26 Detail of Gelateria Igloo

52 Price Comparison of Common and Boutique Segments

Price ranges of both common format and boutique segment cannot exactly be pin pointed as

products do not follow common structure and variations occur with use of toppings mixing of

flavours and use of coatings However a price comparison has been made among the brands

based on their price of per litre of vanilla flavoured ice cream in the market It appears to be as

following

Company

Price Litre Vanilla

Club Gelato

750

MoumlvenPick

640

Andersenrsquos

460

Dolce Vita

440

Igloo

100

Kwality

100

Polar

100

Milk-Vita

90

Savoy

85

Table 27 Comparative Price Analysis

As it can be seen there is price gap within the range of BDT 100-400 Ice cream kiosks and

small scooping boutiques can operate within that range

Evaluation of Entry into Ice cream Business for Bangladesh Limited 41

60 CONSUMER ANALYSIS

61 Target Group of Ice cream

Who are the consumers of ice cream This question does not have a clear answer Ice cream is a

food for all It is the only food consumed by a human being at less than 0 degree centigrade

temperature and people of all ages feel indulged to have it However we can determine focus

target groups for both branded common format and artisan boutique ice cream Group

discussions and market visits were done to get insight into the consumers along side resources

form secondary sources Age based target group is common for both segments but variation

among the groups occur mainly based on SEC and DMFI classification

611 Geographic Group

Branded ice cream remains an urban product till date Geographically branded ice cream has

reached urban and semi urban areas up to Thana Head Quarter levels Ice cream has reached

areas where electricity is available Small artisan players are available in places where large

branded players have no distribution

612 Target Age Group

Age wise grouping of target consumers is as follows

1048766 Urban kids in the age group of 5-14

1048766 They mainly consume normal sticks cups cones innovative fillers and water ice creams

1048766 Urban youth in the age group of 15-24

1048766 They consume premium and extrusion sticks and cones

1048766 Urban mothers in the age group of 25-35

1048766 They determine the family purchases Even when the father purchases ice cream decision is

taken by them

Consumption pattern of various age groups are depicted in the following chart Ice cream

consumption pattern50203005 to 14 yrs15 to 24 yrs25 to 35 yrs

Figure 11 Target Group wise Consumption Pattern Evaluation of Entry into Ice cream Business

for Bangladesh Limited 42

613 Target SEC and DMFI Group

Common Format

SEC A and B is the target group for common format ice cream However with rapid increase in

price level over the years has made it a ldquohard to consumerdquo product for SEC B consumers who

belong to lower DMFI group

Boutique Format

Boutique formatrsquos higher margin and high price range makes it an exclusively SEC A ice cream

People belonging to upper and upper middle class have access to the mediocre boutiques and

only higher upper class can have premium ice creams like Club Gelato and MoumlvenPick

Another unique target group for boutique format are the foreigners who live in Bangladesh

These people tend to visit the parlours to have ice cream as dessert especially after dinner

62 Ice cream in Consumer Lifestyle

Figure 12 Ice cream in Consumer Life style

This simple overview of ice cream in consumer lifestyle was determined based on in-depth

research analysis of UBL and validated through qualitative group discussions by the author

However detail of in-depth research is provided in a later section of this chapter

Evaluation of Entry into Ice cream Business for Bangladesh Limited 43

63 Highlights of Purchase Habit of Ice cream

631 Common Habits across Target Groups

There are some common habits that were identified in earlier researches and group discussions

with consumers Common habits mean the consumer approach towards ice cream that is seen

across all target groups eg kids youth and adult purchasers These are outlined below

1048766 Ice cream is mainly seen as a dessert or a snack Impulse ice cream is seen as a quick snack

that is consumed when it is in sight Visibility plays a big role here Regarding family packs

people see it as a post-food dessert

1048766 Ice cream purchase is commonly a planned event When the contexts arise people generally

take a bit of time to decide whether or not to have ice cream or when they want to go to a

boutique they make due considerations regarding which boutique to visit

1048766 Ice cream purchase decision is taken based on favourite flavour People tend to try out new

variants and flavours when they first see it They compare the taste with earlier experience and

when they purchase later they choose the flavour they have liked most

1048766 For In-Home segment decision is mostly taken on the flavour Generally people come up with

different flavours of choice and most voted flavour is chosen

1048766 People become aware of new variants or flavours mainly through word-of-mouth

Advertisement (new launches special offers and festivals) in newspaper is another source of

awareness

1048766 People are currently indifferent towards the price level of premium flavours However some

feel that price of Choc-bar or water ice creams (lolly) is a bit much If less they would have

consumed more Some also feel that companies should come up with branded ice cream in the

price range of BDT 5-8

1048766 Ice cream is purchased from nearby shops If required brand and flavour is not available 2-3

shops will be visited and then available flavour will be selected even if the required one is not

found This is done mainly not to ruin the mood for ice cream

1048766 People are very open to try new brands and flavours especially if it comes from a credible

source They would try new flavours and if they are satisfied with the taste they would repeat

purchase

1048766 Regarding boutique visits people feel that boutiques need to have a proper environment

enough flavours and other snacks

1048766 While visiting boutique with family or companion they want variation in flavours so that

they would order different flavours and taste each otherrsquos ice cream It is seen as a sign of

togetherness

1048766 Frequency of ice cream purchase varies among people It depends on peer pressure collective

family decision summer heat and attitude towards ldquoice creamrdquo itself as a product Evaluation of

Entry into Ice cream Business for Bangladesh Limited 44

632 Habits of Kids

1048766 Kids choose ice cream flavours by the look of the product (generally pictures shown in POS

materials and carts) They love colour and designs of the products let it be a common format or a

boutique ice cream

1048766 Kids (when in house) would go with the housemaid to the nearby shop choose the flavour

they want (within range of the amount given to the maid) and buy it

1048766 When with parents they would take the product they like even if the price is lower than some

other product However mothers play a role in this decision They would want their children not

to choose too high priced a product or coloured products

633 Habits of Youth

1048766 Young people are the main consumer of impulse ice cream They also are one of the major

consumers in the boutique segment

1048766 Young people love to try out new products that come into the market Another side of the coin

is that they are not very loyal to a brand or a flavour and tend to switch a lot

1048766 Regarding boutique visits young people go to boutiques to have an ldquoice cream hang outrdquo with

peer groups They would stay there for a longer period of time while they have their ice cream

1048766 Some times young people make milk shakes and other ice cream based desserts

634 Habits of Mothers

1048766 Mothers worry about their childrenrsquos health and they prefer ldquovanillardquo type of brands

However when price constraint occurs they go for water ice creams for their children They try

to convince their kidrsquos purchase decision

1048766 Regarding family purchase motherrsquos decision is sometimes prioritized by the whole family

64 Barriers to Ice cream Consumption

641 Emotional Barriers

1048766 Overindulge (close to sinful)

1048766 Undisciplined (no control)

1048766 Childish (licking)

1048766 Artificial Image

642 Functional Barriers

1048766 People of SEC B feel that ice cream is an expensive dessert (If less expensive would consume

more often)

1048766 It leads to cold cough - especially in winter rainy season

1048766 It contains artificial additives preservatives

1048766 It is very high in calories that lead to fattening

Evaluation of Entry into Ice cream Business for Bangladesh Limited 45

1048766 It does not quench ldquothirstrdquo

1048766 Less convenient (portable immediate eat)

1048766 Messy Dripping

65 Research Findings

The highlights regarding purchase habits triggers and barriers of ice cream consumption provide

a glimpse into the consumer world of ice cream industry However UBL CMI conducted a

formal research exclusively on ice cream consumers to identify

1048766 Occasions of ice cream

1048766 Frequency of ice cream consumption

1048766 Expectations from ice cream occasions

1048766 Personalities that they desire from ice cream

651 Relevant Occasions in Daily Lives of Consumers

Research question regarding ldquousual occasions of life that occurred most frequently in day-to-day

lives of the respondentsrdquo generated the following replies

Occasion

of Respondents saying Yes

Watching TV

93

Normal Dinner At Home

91

Normal Lunch At Home

89

At Home While ReadingMusicSurfing

86

Informal Family Get Together

85

Out Of Home Hanging Out With Friends

84

Out Shopping

84

Mid-Afternoon Break At Home

83

At Home By Myself During The Day

82

Special Dinner At Home

82

Informal Dinner Out Of Home

82

Normal Lunch Out Of Home

82

Leisure Walk

79

Coming Home From WorkSchool

78

Special Dinner Out Of Home

78

Celebration

78

A Night In With Friends

77

At Home By Myself In The Evening

77

Special Lunch Out Of Home

76

Mid-Afternoon Break Out Of Home

75

Special Lunch At Home

73

Day out with Partner

72

Midmorning Break

70

At Breakfast

68

Family Day Out

68

During Work Or At School

65

Evaluation of Entry into Ice cream Business for Bangladesh Limited 46

Travelling ToFrom WorkSchool

65

At The Cinema

61

Special Event

56

Clubbing At A Party

50

Post GymSports

48

Table 28 Relevant Occasions in Consumersrsquo Lives

Respondents were then asked to mention ldquofrequency of occurrence of the identified occasionsrdquo

The identified replies are as follows Normal dinner at homenormal lunch at homeComing home

from workschoolTraveling tofrom workschoolDay out with Partner SpouseMid-afternoon

break at homeOut of home hanging out with friendsLeisure walkMid-afternoon break out of

homeA night in with friendsSpecial dinner at homeSpecial lunch out of homeFamily day

outSpecial eventPost gymsportsDaily2-3 Times A WeekWeekly2-3 Times A MonthOnce A

MonthEvery 2-3 MonthsLess OftenNever Figure 13 Frequency of Occurrence of Occasions

This shows that ldquoNormal dinner at home Watching TV Normal Lunch At Home At Home

While ReadingMusicSurfing Coming Home From WorkSchool During Work Or At School

Travelling ToFrom WorkSchool Midmorning Break Day Out With Partner Spouse At Home

By Myself During The Dayrdquo are the most frequent daily rituals of busy lives of consumers

652 Frequency of Ice cream Consumption

Respondents were asked to mention ldquoconsumption pattern of ice cream during the identified

occasionrdquo on a scale of 1-5 depicting frequencies like ldquo(5) always (4) most of the times (3)

about half of the times (2) sometimes (1) never do not knowrdquo The responses are depicted in

the following table

Evaluation of Entry into Ice cream Business for Bangladesh Limited 47

444474544655555566756665775967779991011101111101210111110101113111412131314161

011121411131216181519181518211817171719181718201721222130303434253437403741394

046383944464746453745414641374638504843414839373030292726232725222020201926202

21722221317Midmorning

breakWhile clubbing at aAt the cinemaSpecial eventNormal lunch out ofA night in with

friendsNormal dinner atInformal dinner out ofAt home by myselfAt home by myself inOut

shoppingSpecial lunch atDay out with SpouseWatching TVAlwaysmost of the timesAbout half

of the timesSometimesneverdo not know

Figure 14 Frequency of Ice cream Consumption

As it can be seen ldquoDay out with Spouse Special lunch at home Special dinner at home

Watching TV Family day out Celebrationrdquo are the occasions where most frequently ice cream is

consumed

653 Market Character Mapping Relevant Occasions vs Frequency of Consumption

If we plot frequency of consumption on the X-axis of a chart and relevance of occasion

occurrence on the Y-axis taking the above mentioned values as cut-off values we get four

quadrants in the chart depicting four market scenarios that any ice cream manufacturer in

Bangladesh market might encounter given the current market situation This market

segmentation is based on frequency of ice cream consumption in daily occasions of consumer

lives

The segments are

1048766 OPPORTUNITY MARKET High Relevant Occasions-Low Ice cream Frequency

1048766 QUESTION MARKET Less Relevant Occasions-Low Ice cream Frequency

1048766 HIGH FREQUENCY MARKET Relevant Occasions-High Ice cream Frequency

1048766 CAPTIVE MARKET Less Relevant Occasions-High Ice cream Frequency

The chart looks as follows Evaluation of Entry into Ice cream Business for Bangladesh Limited

48

Figure 15 Relevance of Occasion-Frequency of Consumption Mapping

As it can be seen from the above chart Bangladesh Market still lies in the Opportunity and

Question market zone with a pull towards High frequency and Captive Market zones This is

evident from market data as penetration of ice cream still remains at Thana headquarters levels

Also this explains the high market growth rate of 17 as market is yet under developed and

branded quality ice cream has yet not reached all levels of consumers especially rural level that

constitutes around 75 of Bangladeshi market

From the above analysis we can establish that target of ice cream manufacturers should be to

penetrate more into the Bangladeshi market to create higher frequency of ice cream

consumption The following chart shows the strategies to follow for ice cream manufacturers

Figure 16 Required Market Strategy for Bangladesh

Evaluation of Entry into Ice cream Business for Bangladesh Limited 49

As relevance of ice cream consumption occasions can hardly be controlled by marketers their

endeavour should be to create more ldquoemotional and functionalrdquo attachment to ice cream in less

frequent occasions through ldquomarket developmentrdquo strategy to earn share from overall food

expenditure of consumers and at the same time make them consume more ice cream in highly

relevant occasions through ldquopenetrationrdquo strategy

654 Consumersrsquo Emotional Requirements and Product Attributes

All consumers under these clusters also identify the emotional requirements and the significant

product attributes they seek from their current preferred and future desired ice creams These are

provided below

Cluster

Emotional Functional Requirement

Product Attributes

Enjoyment

Flavour Variety

1048766 Combination of different flavours

1048766 Combination of different textures

1048766 Very sweet

1048766 With wafer or biscuit

1048766 With chocolate

1048766 Of a well known brand

Socially Involved

Spoonable Rich

1048766 Very creamy

1048766 Only natural ingredients

1048766 No mess

Care

Size Creaminess

1048766 Big

1048766 Rich full taste

1048766 Smooth

1048766 Value for money

1048766 No mess

Unwind amp Escape

Economy

1048766 Crunchy

1048766 Economic

1048766 Of a well known brand

1048766 Nutritious

Balanced Convenience

Health Conscious

1048766 Of a well known brand

1048766 Nutritious

1048766 Milk based

1048766 Low sugar

1048766 Low carbohydrates

1048766 Filling

Active Self-Grooming

Fruit Vitamins

1048766 Healthy

1048766 Fruit based

1048766 Low fat

1048766 Liquid or drinkable

1048766 Nutritious

1048766 Of a well known brand

Confidence

Drinkable Light

1048766 Low calories

1048766 Light on the stomach

1048766 Chewy or gooey

1048766 Not so sweet

1048766 Natural appearance

Sensual

Appeal or image

1048766 No artificial additives

Evaluation of Entry into Ice cream Business for Bangladesh Limited 50

1048766 Natural appearance

1048766 Melting slowly

1048766 Attractive packaging

1048766 High quality ingredients

1048766 Of a well known brand

Table 29 Requirements amp Product Attributes Desired by Consumer Clusters

Of these findings we see that the identified highlighted barriers to ice cream consumption are

pretty evident among the consumers Mostly people want products of a reliable source or a well

known brand low calories quality ingredients value for money economic type

Evaluation of Entry into Ice cream Business for Bangladesh Limited 51

70 INDUSTRY ATTRACTIVENESS AND ENTRY PROSPECTS

71 Driving Forces of Growth

As identified in the earlier sections there are several driving forces behind the growth of ice-

cream industry in Bangladesh

712 Trade and Infrastructural Level

1048766 As a result of globalization newer varieties have been introduced to the local products Many

foreign companies are also coming as franchise so there has been increased competition and

these boutiques are setting higher standards for the local producers

1048766 The present market growth rate is 18-19 which is being influenced by larger players like

Igloo who are expanding their distribution nation wide with expansion of national electricity

grid

1048766 With entry of Modern Trade and recent organized business approach of retailers has made it

possible for ice cream manufacturers to penetrate into shops even without providing them with

branded freezers

1048766 Weather change has increased ldquosummerrdquo season in our country which has reduced negative

seasonal impact on ice cream

1048766 Large companies like Igloo have taken global learning of using carts as an effective tool of

availability and visibility for ice cream

1048766 New and improved technologies are being used in the production process This technological

advancement has improved quality increased speed of production and made the process more

cost effective

713 Consumer Level

1048766 Only a few years back rich people could afford the luxury of having ice-cream but now it has

become a common product for everybody Ice-cream companies are producing different products

with a wide price range for consumers of every class and status

1048766 Nowadays companies are doing promotional campaigns more frequently the customers get to

know about the product which makes it easier for them to buy the best one

1048766 The improved standard of life and more modernized lifestyle of people is an important reason

for the increased consumption thus growth of the ice-cream industry

Evaluation of Entry into Ice cream Business for Bangladesh Limited 52

72 Prospects of Entry

The ice-cream industry of Bangladesh is an attractive one for the investors because there is a

huge market but number of producers is very small The major reasons behind industry

attractiveness are as follows

1048766 The industryrsquos current growth potential is very high with opportunity for market development

1048766 The competition currently permits adequate profitability and the competitive forces are

becoming stronger with time

1048766 Boutique segment is at a very high growth stage but no operator is currently operating with a

mid price range of BDT 100-400 Ice cream kiosks and small scooping boutiques can operate

within that range

1048766 Current industry driving forces are favourable for the future industry profitability

1048766 Globally oriented consumers look for variety in ice cream that is currently not available

Latest innovations came in the market in 2002 People would welcome new variety and flavours

1048766 There is a gap in the market for balanced convenience through ice cream where consumers can

get nutritional benefits for ice cream Also emotional attachment to ice cream could further be

improvised in promotional campaigns

1048766 There is high scope for market penetration and development to increase frequency of ice

cream consumption

1048766 Level of risk or uncertainty is very low in ice-cream industry because the consumer market is

so huge any product with a standard quality and careful pricing will be able to make significant

profit

1048766 As for geographic reach of the industry 60 market is still in Dhaka There is scope of

expansion and a new entrant can easily capture market share within Dhaka using carts even if

they do not want nation wide cold chain distribution

1048766 The production process is very complex and capital requirements are also high So before

going into production any company should know about their capabilities and weaknesses and

then start the business or else they might suffer huge loss at a certain level

1048766 Unilever can acquire the required resource and use existing multi-national multi-cultural

expertise to enter the market in a grand way

1048766 With high probability of entry from DANONE with more products like the ISIS diabetic ice

cream Unilever should consider entering in this industry as soon as possible

Evaluation of Entry into Ice cream Business for Bangladesh Limited 53

80 ENTRY STRATEGY FOR UNILEVER

While describing the suggested entry strategy for UBL certain issues have been kept

confidential and some issues have been touched but not explained to keep consistency with UBL

confidentiality policy

81 Suggested Entry Areas for UBL

1048766 Boutique segment of the Bangladesh ice cream is only 5 of the branded market UBL needs

to pursue a larger scope to make the entry viable

1048766 UBL cannot fight with unbranded segment as global product quality mandate of Unilever does

not allow UBL to fight in low price-low quality segment

1048766 Recommend entry should be in the common format segment with both single and multiple

servings and in the boutique segment with a different brand name (if possible BEN amp JERRYrsquoS)

1048766 UBL should build up state-of-art modern factory for manufacturing and establish cold chain

facilities initially focusing on metro cities

1048766 Investment issues are required to be addressed for building factory and cold chain and capital

requirement needs to be identified for that purpose4

1048766 UBL may have boutiques for driving image selective top-end offering

1048766 Kiosks can be setup near universities and shopping malls

1048766 Boutiques should be concentrated in Dhaka and Chittagong

1048766 Ice cream for boutiques and kiosks would be produced in factory as institutional packs of 9-10

litres

82 Products

1048766 As a Brand Building country in global Unilever operating framework UBL is entitled only to

bring products developed by the Brand Development countries

1048766 Unilever should focus on serving products that have nutritional benefits (already available

globally) along with usual satisfactions of sensual pleasure functional attributes etc

1048766 Current existent players especially Igloo and Kwality have extensively copied global and

regionally available Unilever products eg Cornelli is same as Wallrsquos Cornetto Vinetta is similar

to Vienetta Mega is similar to Magnum etc UBL needs to differentiate these to consumers on

the ldquotaste the originalrdquo platform where global quality is focused regarding the products

1048766 UBL should also bring regionally famous brands like Moo or Max to create image

differentiation

1048766 Magnum or Moo should be used as premium end ice cream to generate more profit margin

Evaluation of Entry into Ice cream Business for Bangladesh Limited 54

83 Placement

1048766 Distribution focus should be in Dhaka for entry as Dhaka contributes more than 60 of total

ice cream sales in the country

1048766 Company may use carts as distribution method They serve as good source of visibility and

availability It would help in increasing impulse purchase

1048766 At least 1500 outlets in Dhaka and Chittagong needs to be actively served using dedicated

branded refrigerators to generate sales

1048766 50 carts should operate in Dhaka and Chittagong

84 Price

1048766 UBL products should be priced at par with Igloo pricing for the common format ice creams

1048766 UBL can bring in premium single-serve SKUS for the higher economic classes in the price

range of BDT 60-80

1048766 Smaller SKUs (small lolly stick) can be introduced in the price range of BDT 10-15

1048766 In the boutique segment UBL should price products above the semi-premium segment

(Gelateria Igloo Sub Zero or Andersenrsquos) but lower than that of Club Gelato or MoumlvenPick

85 Promotion

1048766 UBL would require strong marketing campaign (As high as 50 of sales) to have a grand

entry in the market

1048766 Presence in the television media would be of utmost importance More than 50 of

promotional expense should be made here initially Gradually it can be reduced

1048766 Newspaper would serve as the second most important option

1048766 Billboards should also be used

1048766 Activations (similar to Lux Channel i Super Star or Igloo Festival) should be done to generate

trial

86 Scope of Opportunity

Table 30 Value and Volume Based Scope of Opportunity for UBL

Value (BDT Cr)

Volume (Tons)

Market

131

7835

Common

121

7600

Boutique

98

235

Evaluation of Entry into Ice cream Business for Bangladesh Limited 55

861 Geographic Contribution

1048766 Dhaka (61)

1048766 Chittagong (19)

1048766 Sylhet (10)

862 UBL objectives

Common Format Ice Creams

1048766 Target 10 Market share in 1st year operation

1048766 Value BDT 11 Cr

1048766 Production capacity required 21 Tons day

1048766 Freezer Placement 1500 freezers

1048766 Cart operation At least 50 carts

Boutiques

1048766 Target Further develop the market

1048766 Focus Dhaka Chittagong and Sylhet Metro

1048766 Franchise At least 20 franchisee operations nation wide in divisional towns

1048766 Pricing Below imported parlours above common formats with around BDT 400 per Litre

87 Critical Success Factors

1048766 UBL is considered as a high profile company in Bangladesh and thus they cannot operate in

the market only with common products like choc-bars and cups They must have premium

products (these require extrusion line) also to carry their brand image Otherwise UBL would not

be able to charge usual premium over competition products

1048766 Launch of ice cream would require huge promotional and activation support in order to gain

customers from Igloo People want novelty regarding ice cream and UBL have to let them know

about their products and create hype

1048766 Cart should be used as a source of distribution Recent successes of Unilever companies like

Indonesia shows that carts can generate more sales and can be used as source of visibility in the

minds of both retail traders and consumers Carts can also provide incremental sales to the

company

1048766 UBL have to create a strong cold chain for ice cream (initially in Dhaka and Chittagong) to

ensure quality products for consumers

1048766 UBL have to build capacity very rapidly to meet consumer demand if the launch is successful

Evaluation of Entry into Ice cream Business for Bangladesh Limited 56

90 BUSINESS PROJECTION

91 Basic Assumptions

Business projection for ice cream business was made based on a conservative approach UBL

would require spending significantly on production capacity and factory dedicated to ice cream

Thus to analyse business possibilities of ice cream certain assumptions were made and collected

data were used These are

1048766 Production equipments and cabinets would cost approximately BDT 55 crores

1048766 Production equipments 45

1048766 Packaging Equipments 15

1048766 Storage Facility 20

1048766 Branded Freezers 10

1048766 Distribution Investment 10 (Distributors would also invest themselves)

1048766 Ice cream factory with a floor size of 20000 sqft would cost BDT 25 crores

1048766 Objective is to capture 10 market share in Dhaka and Chittagong in the first year

1048766 Business would grow by 50 in year 2 and 3 30 in year 4 and 25 in year 5

1048766 Weighted price per litre is BDT 170 according to volume share of single serve ice cream

multiple serve ice cream and boutique ice cream

1048766 Other financial assumptions were also made List of them are provided below but amount has

been removed for confidentiality issues

Assumptions

Trade Margin

Distributors Margin

DutyVAT Rate

Trade Terms Expense of NPS

Trade Terms Expense of NSV

Advertising ampPromotion of NPS

Indirects (Salaries Wages etc)

Trading Tax

Table 31 Assumptions for Business Projection

Evaluation of Entry into Ice cream Business for Bangladesh Limited 57

100 CONCLUSION

Ice cream has good prospect in Bangladesh It is still a growing market with opportunities for big

new entrants With the barriers of entry UBL needs to consider its priorities UBL being an HPC

company traditionally needs to acquire expertise in cold chain distribution and has to invest a lot

of money to rip the benefits of the industry However to initiate company can take regional

support and acquire resource expertise The company should enter the business as soon as

possible since there is potential threat from DANONE to introduce more ice creams after ISIS

diabetic ice cream and also with potential of the industry arch rival Nestlersquo might consider

entering into the industry too

Evaluation of Entry into Ice cream Business for Bangladesh Limited 58

References

Web References

1 wwwunilevercom

2 wwwunilevercombd

3 wwwhllcom

4 wwwunilevercompk

5 wwwthedailystarcom - Life Style Magazine

6 wwwreuterscouk

Evaluation of Entry into Ice cream Business for Bangladesh Limited 59

Page 37: Square Ice cream

1

119

174

Andersenrsquos

3

119

174

Gelateria Igloo

3

119

174

Sub Zero (Kwality)

2

051

75

Baskin Robbins

1

015

22

Dolce Vita

1

017

25

American Soft

1

009

12

Rainbow

1

009

12

Others (off site)

089

130

Total Market

682

Table 22 Players and Shares in Boutique Segment

A Detail of Operation

General operational procedure followed by all the operators is as follows

1048766 Operating method There is a variation in operational method among the large operators

1048766 Club Gelato uses kitchen at own premise where imported ingredients and local milk (daily

special service from Milk Vita) are used to make ice cream

1048766 MoumlvenPick directly imports ice cream from Switzerland

1048766 Andersenrsquos Gelateria Igloo and Sub Zero produce ice cream at their factory with a mix of

imported and local ingredients

1048766 Products Around 30-35 flavours of artisan dairy ice cream are served at the premises

1048766 Most sold flavours are Vanilla Ferrero Rocher Butterscotch Chocolate Caramel etc

1048766 Other Products Larger players also serve ice cream desserts (milk shakes ice cappuccino etc)

pastries and other desserts with normal coffee and tea facility at their premises

1048766 Boutiques fight ice cream seasonality with the other products sales during off-peak ice cream

seasons Usually ice cream and other products contribute at 6040 ratio in summer and during

winter and off-peak seasons the ratio reverses

1048766 Pricing Usually the prices of products in this segment are 3-4 times higher than that of the

common format segment

1048766 Prices do not vary with flavours Variation depends on serve style (Cone tub) and use of

toppings and other ingredients (Chocolate sauce nut fruits) etc

1048766 Usual margin charged is around 50-60 over production cost Similar margin is charged for

other products like coffee ice cappuccino etc

3 Yearly sales is estimated based on companyrsquos approximate daily sales collected during

interview

Evaluation of Entry into Ice cream Business for Bangladesh Limited 36

1048766 Target Group Most of the consumers belong to SEC A and higher SEC A with DMFI of at

least BDT 20000

1048766 Foreign delegates and resident foreigners also visit these boutiques

1048766 Main purposes of visits in the boutiques are

bull Youth hangout with friends and having ice cream and ice cream derivatives

bull Family Family night out or eat out at a restaurant and then having dessert

bull Foreigners Having dessert after dinner

1048766 Rush time at boutiques are Afternoon 2-4 pm and at night 9-11 pm

1048766 Offsite sales Most of the large operators also sell offsite They have small freezers for off-site

1048766 Club Gelato and MoumlvenPick serves ice cream at high society parties and programmes

1048766 MoumlvenPick also has kiosks in known hotels like Sheraton

1048766 Promotion No mass promotion is done by any of the companies Word of mouth is the most

important source of promotion Posters and banners outside the premise and occasional

newspaper advertisements are used to communicate special offers

1048766 Growth Drivers Market growth is driven by image innovation quality decoration of facility

environment and special offers

1048766 Club Gelato has the image of selling true Italian dairy ice cream with an excellent hangout

environment

1048766 MoumlvenPick imports ice cream directly from Switzerland and is perceived to be of high quality

1048766 Andersenrsquos operates with the image of ice cream from Denmark

1048766 Gelateria Igloo (from Igloo) and Sub Zero (from Kwality) could not establish the premium

artisan ice cream image

B Players in the Boutique Segment

There are very few players who have significant impact in the boutique segment Detailed

information of all the major boutique segment players is provided below

Evaluation of Entry into Ice cream Business for Bangladesh Limited 37

Club Gelato

Basic Company Information

1048766 Location Banani Road 11 (Planning for a second one in Dhanmondi)

1048766 Established in 2001

1048766 Seating Capacity 48

1048766 Area 1250 sft (including kitchen)

1048766 Owner Mr Jahangir Alam (Bangladesh)

1048766 Business Type Joint business partnership with Singapore

1048766 Staff 15 people (6 in the kitchen)

1048766 Production capacity 150 litres per day

Product Related Information

1048766 Product Italian style parlour scoop ice cream fruit juice coffee and pastries

1048766 Flavours Around 32 flavours available

1048766 Most selling Ferraro Rocher Vanilla Pistachio

1048766 Innovations New variants and ingredients are communicated by their Italian supplier and

Club Gelato decides what to take from them

1048766 Serve type Cup Cone Glasses Box for take away

Consumer Profile

1048766 Primary Teenagers and Young Adults (18-30) amp Diplomats

1048766 Secondary Family consumers for eat out

1048766 Income Group High income customers tentatively from SEC A and higher SEC A

1048766 Geographic Area Diversified

1048766 Rush time 8-10 pm

Sales and Price Information

1048766 Sales BDT 50000 (60 Ice cream 40 other desserts) daily in summer In winter however

other products sell more and thus they keep total sales at the same level

1048766 Price 750 per litre for any flavour

1048766 Sales Volume 50-60 litres per day

Supply Chain Placement Information

1048766 Milk Local sourcing from Milk Vita (4050 litres per day)

1048766 Chocolates amp Flavours Belgium France Germany

1048766 Transportation Mainly air (They can afford it due to high margin)

1048766 Contribution of various materials Flavours (30) Milk (20) other parts are water and air

Promotional Materials

1048766 Materials used are near premises POS materials for promoting the parlour only

Table 23 Detail of Club Gelato

Evaluation of Entry into Ice cream Business for Bangladesh Limited 38

MoumlvenPick of Switzerland

Basic Company Information

1048766 Location Gulshan

1048766 Established in 2000

1048766 Seating Capacity 55

1048766 Owner Mr Arif Mahmud

1048766 Business Type Franchise of International MoumlvenPick

1048766 Storage Capacity in Shop 150 litres

Product Related Information

1048766 Product Imported MoumlvenPick ice creams coffee chicken sandwich and Frappe

1048766 Flavours Around 30 to 35 flavours available

1048766 Most selling Swiss Chocolate caramel Vanilla Dream Espresso Strawberry

1048766 Innovations New variants are communicated by their franchiser and they decide on flavours

that they want

1048766 Serve type Cup Cone Glasses Box for take away

Consumer Profile

1048766 Primary Teenagers and Young Adults (18-30) (70) amp Diplomats

1048766 Secondary Family consumers for eat out

1048766 Income Group High income customers tentatively from SEC A

1048766 Geographic Area Concentrated in Gulshan and nearby areas

1048766 Rush time Afternoon- Young Adult 10 to 11 pm Foreigners

1048766 the company also serves at parties and has freezers in known hotels where their ice creams

are served

Sales and Price Information

1048766 Sales BDT 35-40000 daily in summer

1048766 Price 640 per litre for any flavour

1048766 Sales Volume 55-60 litres per day

Supply Chain Placement Information

1048766 Transportation Imported finished goods by ship

1048766 Ship travel time 19 days

1048766 Port clearance 10 days

1048766 Safety Cushion Extra 10 days

Promotional Materials

1048766 Materials used are near premises POS materials for promoting the parlour only

Table 24 Detail of MoumlvenPick of Switzerland

Evaluation of Entry into Ice cream Business for Bangladesh Limited 39

Andersenrsquos of Denmark

Basic Company Information

1048766 Location Gulshan (2 others in Uttara Dhanmondi)

1048766 Established in 2001

1048766 Seating Capacity 48

1048766 Owner United Group

1048766 Business Type Franchise of Australian company Andersenrsquos of Denmark

1048766 Production Tongi Factory of United Group

1048766 Production capacity 2000 litres per day in factory

1048766 Storage Capacity in Shop 150 litres

Product Related Information

1048766 Product Danish parlour scoop ice cream and coffee

1048766 Flavours Around 30 to 35 flavours available

1048766 Most selling Strawberry Butter Scotch Green

1048766 Innovations New variants and ingredients are communicated by their franchiser and they

decide on flavours that they want

1048766 Serve type Cup Cone Glasses Box for take away

Consumer Profile

1048766 Primary Teenagers and Young Adults (18-30) (70) amp Diplomats

1048766 Secondary Family consumers for eat out

1048766 Income Group High income customers tentatively from SEC A

1048766 Geographic Area Concentrated in Gulshan and nearby areas

1048766 Rush time 8 to 10 pm

Sales and Price Information

1048766 Sales BDT 10-12000 daily in summer

1048766 Price 460 per litre for any flavour

1048766 Sales Volume 40-50 litres per day

Supply Chain Placement Information

1048766 Milk 2025 kg packs are imported

1048766 Chocolates amp Flavours Imported

1048766 Butte paper Local sourcing

1048766 Transportation Ship

Promotional Materials

1048766 Materials used are near premises POS materials for promoting the parlour only

Table 25 Detail of Andersenrsquos of Denmark

Evaluation of Entry into Ice cream Business for Bangladesh Limited 40

Gelateria Igloo

Basic Company Information

1048766 Location Banani Kemal Ataturk Avenue (Two others in GEC Mor Chittagong and Naya

Paltan)

1048766 Established in 2000

1048766 Seating Capacity 20

1048766 Production From Igloo factory in Shyampur Narayanganj

Product Related Information

1048766 Product Parlour scoop ice cream and coffee only

1048766 Flavours Around 30 flavours available

1048766 Most selling Vanilla Strawberry Chocolate Pistachio Butter Scotch Tutti Fruity

1048766 Serve type Cup Cone Glasses Box for take away

Consumer Profile

1048766 Primary Teenagers and Young Adults (18-30)

1048766 Secondary Family consumers for eat out

1048766 Income Group High income customers tentatively from SEC A and B

1048766 Geographic Area Diversified

1048766 Rush Time afternoon and evening

Sales and Price Information

1048766 Sales BDT 8000 to 10000 daily in summer Nearly one fourth in winter

1048766 Price Varies but 350 per litre of vanilla

Promotional Materials

1048766 POS materials at the premises

Table 26 Detail of Gelateria Igloo

52 Price Comparison of Common and Boutique Segments

Price ranges of both common format and boutique segment cannot exactly be pin pointed as

products do not follow common structure and variations occur with use of toppings mixing of

flavours and use of coatings However a price comparison has been made among the brands

based on their price of per litre of vanilla flavoured ice cream in the market It appears to be as

following

Company

Price Litre Vanilla

Club Gelato

750

MoumlvenPick

640

Andersenrsquos

460

Dolce Vita

440

Igloo

100

Kwality

100

Polar

100

Milk-Vita

90

Savoy

85

Table 27 Comparative Price Analysis

As it can be seen there is price gap within the range of BDT 100-400 Ice cream kiosks and

small scooping boutiques can operate within that range

Evaluation of Entry into Ice cream Business for Bangladesh Limited 41

60 CONSUMER ANALYSIS

61 Target Group of Ice cream

Who are the consumers of ice cream This question does not have a clear answer Ice cream is a

food for all It is the only food consumed by a human being at less than 0 degree centigrade

temperature and people of all ages feel indulged to have it However we can determine focus

target groups for both branded common format and artisan boutique ice cream Group

discussions and market visits were done to get insight into the consumers along side resources

form secondary sources Age based target group is common for both segments but variation

among the groups occur mainly based on SEC and DMFI classification

611 Geographic Group

Branded ice cream remains an urban product till date Geographically branded ice cream has

reached urban and semi urban areas up to Thana Head Quarter levels Ice cream has reached

areas where electricity is available Small artisan players are available in places where large

branded players have no distribution

612 Target Age Group

Age wise grouping of target consumers is as follows

1048766 Urban kids in the age group of 5-14

1048766 They mainly consume normal sticks cups cones innovative fillers and water ice creams

1048766 Urban youth in the age group of 15-24

1048766 They consume premium and extrusion sticks and cones

1048766 Urban mothers in the age group of 25-35

1048766 They determine the family purchases Even when the father purchases ice cream decision is

taken by them

Consumption pattern of various age groups are depicted in the following chart Ice cream

consumption pattern50203005 to 14 yrs15 to 24 yrs25 to 35 yrs

Figure 11 Target Group wise Consumption Pattern Evaluation of Entry into Ice cream Business

for Bangladesh Limited 42

613 Target SEC and DMFI Group

Common Format

SEC A and B is the target group for common format ice cream However with rapid increase in

price level over the years has made it a ldquohard to consumerdquo product for SEC B consumers who

belong to lower DMFI group

Boutique Format

Boutique formatrsquos higher margin and high price range makes it an exclusively SEC A ice cream

People belonging to upper and upper middle class have access to the mediocre boutiques and

only higher upper class can have premium ice creams like Club Gelato and MoumlvenPick

Another unique target group for boutique format are the foreigners who live in Bangladesh

These people tend to visit the parlours to have ice cream as dessert especially after dinner

62 Ice cream in Consumer Lifestyle

Figure 12 Ice cream in Consumer Life style

This simple overview of ice cream in consumer lifestyle was determined based on in-depth

research analysis of UBL and validated through qualitative group discussions by the author

However detail of in-depth research is provided in a later section of this chapter

Evaluation of Entry into Ice cream Business for Bangladesh Limited 43

63 Highlights of Purchase Habit of Ice cream

631 Common Habits across Target Groups

There are some common habits that were identified in earlier researches and group discussions

with consumers Common habits mean the consumer approach towards ice cream that is seen

across all target groups eg kids youth and adult purchasers These are outlined below

1048766 Ice cream is mainly seen as a dessert or a snack Impulse ice cream is seen as a quick snack

that is consumed when it is in sight Visibility plays a big role here Regarding family packs

people see it as a post-food dessert

1048766 Ice cream purchase is commonly a planned event When the contexts arise people generally

take a bit of time to decide whether or not to have ice cream or when they want to go to a

boutique they make due considerations regarding which boutique to visit

1048766 Ice cream purchase decision is taken based on favourite flavour People tend to try out new

variants and flavours when they first see it They compare the taste with earlier experience and

when they purchase later they choose the flavour they have liked most

1048766 For In-Home segment decision is mostly taken on the flavour Generally people come up with

different flavours of choice and most voted flavour is chosen

1048766 People become aware of new variants or flavours mainly through word-of-mouth

Advertisement (new launches special offers and festivals) in newspaper is another source of

awareness

1048766 People are currently indifferent towards the price level of premium flavours However some

feel that price of Choc-bar or water ice creams (lolly) is a bit much If less they would have

consumed more Some also feel that companies should come up with branded ice cream in the

price range of BDT 5-8

1048766 Ice cream is purchased from nearby shops If required brand and flavour is not available 2-3

shops will be visited and then available flavour will be selected even if the required one is not

found This is done mainly not to ruin the mood for ice cream

1048766 People are very open to try new brands and flavours especially if it comes from a credible

source They would try new flavours and if they are satisfied with the taste they would repeat

purchase

1048766 Regarding boutique visits people feel that boutiques need to have a proper environment

enough flavours and other snacks

1048766 While visiting boutique with family or companion they want variation in flavours so that

they would order different flavours and taste each otherrsquos ice cream It is seen as a sign of

togetherness

1048766 Frequency of ice cream purchase varies among people It depends on peer pressure collective

family decision summer heat and attitude towards ldquoice creamrdquo itself as a product Evaluation of

Entry into Ice cream Business for Bangladesh Limited 44

632 Habits of Kids

1048766 Kids choose ice cream flavours by the look of the product (generally pictures shown in POS

materials and carts) They love colour and designs of the products let it be a common format or a

boutique ice cream

1048766 Kids (when in house) would go with the housemaid to the nearby shop choose the flavour

they want (within range of the amount given to the maid) and buy it

1048766 When with parents they would take the product they like even if the price is lower than some

other product However mothers play a role in this decision They would want their children not

to choose too high priced a product or coloured products

633 Habits of Youth

1048766 Young people are the main consumer of impulse ice cream They also are one of the major

consumers in the boutique segment

1048766 Young people love to try out new products that come into the market Another side of the coin

is that they are not very loyal to a brand or a flavour and tend to switch a lot

1048766 Regarding boutique visits young people go to boutiques to have an ldquoice cream hang outrdquo with

peer groups They would stay there for a longer period of time while they have their ice cream

1048766 Some times young people make milk shakes and other ice cream based desserts

634 Habits of Mothers

1048766 Mothers worry about their childrenrsquos health and they prefer ldquovanillardquo type of brands

However when price constraint occurs they go for water ice creams for their children They try

to convince their kidrsquos purchase decision

1048766 Regarding family purchase motherrsquos decision is sometimes prioritized by the whole family

64 Barriers to Ice cream Consumption

641 Emotional Barriers

1048766 Overindulge (close to sinful)

1048766 Undisciplined (no control)

1048766 Childish (licking)

1048766 Artificial Image

642 Functional Barriers

1048766 People of SEC B feel that ice cream is an expensive dessert (If less expensive would consume

more often)

1048766 It leads to cold cough - especially in winter rainy season

1048766 It contains artificial additives preservatives

1048766 It is very high in calories that lead to fattening

Evaluation of Entry into Ice cream Business for Bangladesh Limited 45

1048766 It does not quench ldquothirstrdquo

1048766 Less convenient (portable immediate eat)

1048766 Messy Dripping

65 Research Findings

The highlights regarding purchase habits triggers and barriers of ice cream consumption provide

a glimpse into the consumer world of ice cream industry However UBL CMI conducted a

formal research exclusively on ice cream consumers to identify

1048766 Occasions of ice cream

1048766 Frequency of ice cream consumption

1048766 Expectations from ice cream occasions

1048766 Personalities that they desire from ice cream

651 Relevant Occasions in Daily Lives of Consumers

Research question regarding ldquousual occasions of life that occurred most frequently in day-to-day

lives of the respondentsrdquo generated the following replies

Occasion

of Respondents saying Yes

Watching TV

93

Normal Dinner At Home

91

Normal Lunch At Home

89

At Home While ReadingMusicSurfing

86

Informal Family Get Together

85

Out Of Home Hanging Out With Friends

84

Out Shopping

84

Mid-Afternoon Break At Home

83

At Home By Myself During The Day

82

Special Dinner At Home

82

Informal Dinner Out Of Home

82

Normal Lunch Out Of Home

82

Leisure Walk

79

Coming Home From WorkSchool

78

Special Dinner Out Of Home

78

Celebration

78

A Night In With Friends

77

At Home By Myself In The Evening

77

Special Lunch Out Of Home

76

Mid-Afternoon Break Out Of Home

75

Special Lunch At Home

73

Day out with Partner

72

Midmorning Break

70

At Breakfast

68

Family Day Out

68

During Work Or At School

65

Evaluation of Entry into Ice cream Business for Bangladesh Limited 46

Travelling ToFrom WorkSchool

65

At The Cinema

61

Special Event

56

Clubbing At A Party

50

Post GymSports

48

Table 28 Relevant Occasions in Consumersrsquo Lives

Respondents were then asked to mention ldquofrequency of occurrence of the identified occasionsrdquo

The identified replies are as follows Normal dinner at homenormal lunch at homeComing home

from workschoolTraveling tofrom workschoolDay out with Partner SpouseMid-afternoon

break at homeOut of home hanging out with friendsLeisure walkMid-afternoon break out of

homeA night in with friendsSpecial dinner at homeSpecial lunch out of homeFamily day

outSpecial eventPost gymsportsDaily2-3 Times A WeekWeekly2-3 Times A MonthOnce A

MonthEvery 2-3 MonthsLess OftenNever Figure 13 Frequency of Occurrence of Occasions

This shows that ldquoNormal dinner at home Watching TV Normal Lunch At Home At Home

While ReadingMusicSurfing Coming Home From WorkSchool During Work Or At School

Travelling ToFrom WorkSchool Midmorning Break Day Out With Partner Spouse At Home

By Myself During The Dayrdquo are the most frequent daily rituals of busy lives of consumers

652 Frequency of Ice cream Consumption

Respondents were asked to mention ldquoconsumption pattern of ice cream during the identified

occasionrdquo on a scale of 1-5 depicting frequencies like ldquo(5) always (4) most of the times (3)

about half of the times (2) sometimes (1) never do not knowrdquo The responses are depicted in

the following table

Evaluation of Entry into Ice cream Business for Bangladesh Limited 47

444474544655555566756665775967779991011101111101210111110101113111412131314161

011121411131216181519181518211817171719181718201721222130303434253437403741394

046383944464746453745414641374638504843414839373030292726232725222020201926202

21722221317Midmorning

breakWhile clubbing at aAt the cinemaSpecial eventNormal lunch out ofA night in with

friendsNormal dinner atInformal dinner out ofAt home by myselfAt home by myself inOut

shoppingSpecial lunch atDay out with SpouseWatching TVAlwaysmost of the timesAbout half

of the timesSometimesneverdo not know

Figure 14 Frequency of Ice cream Consumption

As it can be seen ldquoDay out with Spouse Special lunch at home Special dinner at home

Watching TV Family day out Celebrationrdquo are the occasions where most frequently ice cream is

consumed

653 Market Character Mapping Relevant Occasions vs Frequency of Consumption

If we plot frequency of consumption on the X-axis of a chart and relevance of occasion

occurrence on the Y-axis taking the above mentioned values as cut-off values we get four

quadrants in the chart depicting four market scenarios that any ice cream manufacturer in

Bangladesh market might encounter given the current market situation This market

segmentation is based on frequency of ice cream consumption in daily occasions of consumer

lives

The segments are

1048766 OPPORTUNITY MARKET High Relevant Occasions-Low Ice cream Frequency

1048766 QUESTION MARKET Less Relevant Occasions-Low Ice cream Frequency

1048766 HIGH FREQUENCY MARKET Relevant Occasions-High Ice cream Frequency

1048766 CAPTIVE MARKET Less Relevant Occasions-High Ice cream Frequency

The chart looks as follows Evaluation of Entry into Ice cream Business for Bangladesh Limited

48

Figure 15 Relevance of Occasion-Frequency of Consumption Mapping

As it can be seen from the above chart Bangladesh Market still lies in the Opportunity and

Question market zone with a pull towards High frequency and Captive Market zones This is

evident from market data as penetration of ice cream still remains at Thana headquarters levels

Also this explains the high market growth rate of 17 as market is yet under developed and

branded quality ice cream has yet not reached all levels of consumers especially rural level that

constitutes around 75 of Bangladeshi market

From the above analysis we can establish that target of ice cream manufacturers should be to

penetrate more into the Bangladeshi market to create higher frequency of ice cream

consumption The following chart shows the strategies to follow for ice cream manufacturers

Figure 16 Required Market Strategy for Bangladesh

Evaluation of Entry into Ice cream Business for Bangladesh Limited 49

As relevance of ice cream consumption occasions can hardly be controlled by marketers their

endeavour should be to create more ldquoemotional and functionalrdquo attachment to ice cream in less

frequent occasions through ldquomarket developmentrdquo strategy to earn share from overall food

expenditure of consumers and at the same time make them consume more ice cream in highly

relevant occasions through ldquopenetrationrdquo strategy

654 Consumersrsquo Emotional Requirements and Product Attributes

All consumers under these clusters also identify the emotional requirements and the significant

product attributes they seek from their current preferred and future desired ice creams These are

provided below

Cluster

Emotional Functional Requirement

Product Attributes

Enjoyment

Flavour Variety

1048766 Combination of different flavours

1048766 Combination of different textures

1048766 Very sweet

1048766 With wafer or biscuit

1048766 With chocolate

1048766 Of a well known brand

Socially Involved

Spoonable Rich

1048766 Very creamy

1048766 Only natural ingredients

1048766 No mess

Care

Size Creaminess

1048766 Big

1048766 Rich full taste

1048766 Smooth

1048766 Value for money

1048766 No mess

Unwind amp Escape

Economy

1048766 Crunchy

1048766 Economic

1048766 Of a well known brand

1048766 Nutritious

Balanced Convenience

Health Conscious

1048766 Of a well known brand

1048766 Nutritious

1048766 Milk based

1048766 Low sugar

1048766 Low carbohydrates

1048766 Filling

Active Self-Grooming

Fruit Vitamins

1048766 Healthy

1048766 Fruit based

1048766 Low fat

1048766 Liquid or drinkable

1048766 Nutritious

1048766 Of a well known brand

Confidence

Drinkable Light

1048766 Low calories

1048766 Light on the stomach

1048766 Chewy or gooey

1048766 Not so sweet

1048766 Natural appearance

Sensual

Appeal or image

1048766 No artificial additives

Evaluation of Entry into Ice cream Business for Bangladesh Limited 50

1048766 Natural appearance

1048766 Melting slowly

1048766 Attractive packaging

1048766 High quality ingredients

1048766 Of a well known brand

Table 29 Requirements amp Product Attributes Desired by Consumer Clusters

Of these findings we see that the identified highlighted barriers to ice cream consumption are

pretty evident among the consumers Mostly people want products of a reliable source or a well

known brand low calories quality ingredients value for money economic type

Evaluation of Entry into Ice cream Business for Bangladesh Limited 51

70 INDUSTRY ATTRACTIVENESS AND ENTRY PROSPECTS

71 Driving Forces of Growth

As identified in the earlier sections there are several driving forces behind the growth of ice-

cream industry in Bangladesh

712 Trade and Infrastructural Level

1048766 As a result of globalization newer varieties have been introduced to the local products Many

foreign companies are also coming as franchise so there has been increased competition and

these boutiques are setting higher standards for the local producers

1048766 The present market growth rate is 18-19 which is being influenced by larger players like

Igloo who are expanding their distribution nation wide with expansion of national electricity

grid

1048766 With entry of Modern Trade and recent organized business approach of retailers has made it

possible for ice cream manufacturers to penetrate into shops even without providing them with

branded freezers

1048766 Weather change has increased ldquosummerrdquo season in our country which has reduced negative

seasonal impact on ice cream

1048766 Large companies like Igloo have taken global learning of using carts as an effective tool of

availability and visibility for ice cream

1048766 New and improved technologies are being used in the production process This technological

advancement has improved quality increased speed of production and made the process more

cost effective

713 Consumer Level

1048766 Only a few years back rich people could afford the luxury of having ice-cream but now it has

become a common product for everybody Ice-cream companies are producing different products

with a wide price range for consumers of every class and status

1048766 Nowadays companies are doing promotional campaigns more frequently the customers get to

know about the product which makes it easier for them to buy the best one

1048766 The improved standard of life and more modernized lifestyle of people is an important reason

for the increased consumption thus growth of the ice-cream industry

Evaluation of Entry into Ice cream Business for Bangladesh Limited 52

72 Prospects of Entry

The ice-cream industry of Bangladesh is an attractive one for the investors because there is a

huge market but number of producers is very small The major reasons behind industry

attractiveness are as follows

1048766 The industryrsquos current growth potential is very high with opportunity for market development

1048766 The competition currently permits adequate profitability and the competitive forces are

becoming stronger with time

1048766 Boutique segment is at a very high growth stage but no operator is currently operating with a

mid price range of BDT 100-400 Ice cream kiosks and small scooping boutiques can operate

within that range

1048766 Current industry driving forces are favourable for the future industry profitability

1048766 Globally oriented consumers look for variety in ice cream that is currently not available

Latest innovations came in the market in 2002 People would welcome new variety and flavours

1048766 There is a gap in the market for balanced convenience through ice cream where consumers can

get nutritional benefits for ice cream Also emotional attachment to ice cream could further be

improvised in promotional campaigns

1048766 There is high scope for market penetration and development to increase frequency of ice

cream consumption

1048766 Level of risk or uncertainty is very low in ice-cream industry because the consumer market is

so huge any product with a standard quality and careful pricing will be able to make significant

profit

1048766 As for geographic reach of the industry 60 market is still in Dhaka There is scope of

expansion and a new entrant can easily capture market share within Dhaka using carts even if

they do not want nation wide cold chain distribution

1048766 The production process is very complex and capital requirements are also high So before

going into production any company should know about their capabilities and weaknesses and

then start the business or else they might suffer huge loss at a certain level

1048766 Unilever can acquire the required resource and use existing multi-national multi-cultural

expertise to enter the market in a grand way

1048766 With high probability of entry from DANONE with more products like the ISIS diabetic ice

cream Unilever should consider entering in this industry as soon as possible

Evaluation of Entry into Ice cream Business for Bangladesh Limited 53

80 ENTRY STRATEGY FOR UNILEVER

While describing the suggested entry strategy for UBL certain issues have been kept

confidential and some issues have been touched but not explained to keep consistency with UBL

confidentiality policy

81 Suggested Entry Areas for UBL

1048766 Boutique segment of the Bangladesh ice cream is only 5 of the branded market UBL needs

to pursue a larger scope to make the entry viable

1048766 UBL cannot fight with unbranded segment as global product quality mandate of Unilever does

not allow UBL to fight in low price-low quality segment

1048766 Recommend entry should be in the common format segment with both single and multiple

servings and in the boutique segment with a different brand name (if possible BEN amp JERRYrsquoS)

1048766 UBL should build up state-of-art modern factory for manufacturing and establish cold chain

facilities initially focusing on metro cities

1048766 Investment issues are required to be addressed for building factory and cold chain and capital

requirement needs to be identified for that purpose4

1048766 UBL may have boutiques for driving image selective top-end offering

1048766 Kiosks can be setup near universities and shopping malls

1048766 Boutiques should be concentrated in Dhaka and Chittagong

1048766 Ice cream for boutiques and kiosks would be produced in factory as institutional packs of 9-10

litres

82 Products

1048766 As a Brand Building country in global Unilever operating framework UBL is entitled only to

bring products developed by the Brand Development countries

1048766 Unilever should focus on serving products that have nutritional benefits (already available

globally) along with usual satisfactions of sensual pleasure functional attributes etc

1048766 Current existent players especially Igloo and Kwality have extensively copied global and

regionally available Unilever products eg Cornelli is same as Wallrsquos Cornetto Vinetta is similar

to Vienetta Mega is similar to Magnum etc UBL needs to differentiate these to consumers on

the ldquotaste the originalrdquo platform where global quality is focused regarding the products

1048766 UBL should also bring regionally famous brands like Moo or Max to create image

differentiation

1048766 Magnum or Moo should be used as premium end ice cream to generate more profit margin

Evaluation of Entry into Ice cream Business for Bangladesh Limited 54

83 Placement

1048766 Distribution focus should be in Dhaka for entry as Dhaka contributes more than 60 of total

ice cream sales in the country

1048766 Company may use carts as distribution method They serve as good source of visibility and

availability It would help in increasing impulse purchase

1048766 At least 1500 outlets in Dhaka and Chittagong needs to be actively served using dedicated

branded refrigerators to generate sales

1048766 50 carts should operate in Dhaka and Chittagong

84 Price

1048766 UBL products should be priced at par with Igloo pricing for the common format ice creams

1048766 UBL can bring in premium single-serve SKUS for the higher economic classes in the price

range of BDT 60-80

1048766 Smaller SKUs (small lolly stick) can be introduced in the price range of BDT 10-15

1048766 In the boutique segment UBL should price products above the semi-premium segment

(Gelateria Igloo Sub Zero or Andersenrsquos) but lower than that of Club Gelato or MoumlvenPick

85 Promotion

1048766 UBL would require strong marketing campaign (As high as 50 of sales) to have a grand

entry in the market

1048766 Presence in the television media would be of utmost importance More than 50 of

promotional expense should be made here initially Gradually it can be reduced

1048766 Newspaper would serve as the second most important option

1048766 Billboards should also be used

1048766 Activations (similar to Lux Channel i Super Star or Igloo Festival) should be done to generate

trial

86 Scope of Opportunity

Table 30 Value and Volume Based Scope of Opportunity for UBL

Value (BDT Cr)

Volume (Tons)

Market

131

7835

Common

121

7600

Boutique

98

235

Evaluation of Entry into Ice cream Business for Bangladesh Limited 55

861 Geographic Contribution

1048766 Dhaka (61)

1048766 Chittagong (19)

1048766 Sylhet (10)

862 UBL objectives

Common Format Ice Creams

1048766 Target 10 Market share in 1st year operation

1048766 Value BDT 11 Cr

1048766 Production capacity required 21 Tons day

1048766 Freezer Placement 1500 freezers

1048766 Cart operation At least 50 carts

Boutiques

1048766 Target Further develop the market

1048766 Focus Dhaka Chittagong and Sylhet Metro

1048766 Franchise At least 20 franchisee operations nation wide in divisional towns

1048766 Pricing Below imported parlours above common formats with around BDT 400 per Litre

87 Critical Success Factors

1048766 UBL is considered as a high profile company in Bangladesh and thus they cannot operate in

the market only with common products like choc-bars and cups They must have premium

products (these require extrusion line) also to carry their brand image Otherwise UBL would not

be able to charge usual premium over competition products

1048766 Launch of ice cream would require huge promotional and activation support in order to gain

customers from Igloo People want novelty regarding ice cream and UBL have to let them know

about their products and create hype

1048766 Cart should be used as a source of distribution Recent successes of Unilever companies like

Indonesia shows that carts can generate more sales and can be used as source of visibility in the

minds of both retail traders and consumers Carts can also provide incremental sales to the

company

1048766 UBL have to create a strong cold chain for ice cream (initially in Dhaka and Chittagong) to

ensure quality products for consumers

1048766 UBL have to build capacity very rapidly to meet consumer demand if the launch is successful

Evaluation of Entry into Ice cream Business for Bangladesh Limited 56

90 BUSINESS PROJECTION

91 Basic Assumptions

Business projection for ice cream business was made based on a conservative approach UBL

would require spending significantly on production capacity and factory dedicated to ice cream

Thus to analyse business possibilities of ice cream certain assumptions were made and collected

data were used These are

1048766 Production equipments and cabinets would cost approximately BDT 55 crores

1048766 Production equipments 45

1048766 Packaging Equipments 15

1048766 Storage Facility 20

1048766 Branded Freezers 10

1048766 Distribution Investment 10 (Distributors would also invest themselves)

1048766 Ice cream factory with a floor size of 20000 sqft would cost BDT 25 crores

1048766 Objective is to capture 10 market share in Dhaka and Chittagong in the first year

1048766 Business would grow by 50 in year 2 and 3 30 in year 4 and 25 in year 5

1048766 Weighted price per litre is BDT 170 according to volume share of single serve ice cream

multiple serve ice cream and boutique ice cream

1048766 Other financial assumptions were also made List of them are provided below but amount has

been removed for confidentiality issues

Assumptions

Trade Margin

Distributors Margin

DutyVAT Rate

Trade Terms Expense of NPS

Trade Terms Expense of NSV

Advertising ampPromotion of NPS

Indirects (Salaries Wages etc)

Trading Tax

Table 31 Assumptions for Business Projection

Evaluation of Entry into Ice cream Business for Bangladesh Limited 57

100 CONCLUSION

Ice cream has good prospect in Bangladesh It is still a growing market with opportunities for big

new entrants With the barriers of entry UBL needs to consider its priorities UBL being an HPC

company traditionally needs to acquire expertise in cold chain distribution and has to invest a lot

of money to rip the benefits of the industry However to initiate company can take regional

support and acquire resource expertise The company should enter the business as soon as

possible since there is potential threat from DANONE to introduce more ice creams after ISIS

diabetic ice cream and also with potential of the industry arch rival Nestlersquo might consider

entering into the industry too

Evaluation of Entry into Ice cream Business for Bangladesh Limited 58

References

Web References

1 wwwunilevercom

2 wwwunilevercombd

3 wwwhllcom

4 wwwunilevercompk

5 wwwthedailystarcom - Life Style Magazine

6 wwwreuterscouk

Evaluation of Entry into Ice cream Business for Bangladesh Limited 59

Page 38: Square Ice cream

017

25

American Soft

1

009

12

Rainbow

1

009

12

Others (off site)

089

130

Total Market

682

Table 22 Players and Shares in Boutique Segment

A Detail of Operation

General operational procedure followed by all the operators is as follows

1048766 Operating method There is a variation in operational method among the large operators

1048766 Club Gelato uses kitchen at own premise where imported ingredients and local milk (daily

special service from Milk Vita) are used to make ice cream

1048766 MoumlvenPick directly imports ice cream from Switzerland

1048766 Andersenrsquos Gelateria Igloo and Sub Zero produce ice cream at their factory with a mix of

imported and local ingredients

1048766 Products Around 30-35 flavours of artisan dairy ice cream are served at the premises

1048766 Most sold flavours are Vanilla Ferrero Rocher Butterscotch Chocolate Caramel etc

1048766 Other Products Larger players also serve ice cream desserts (milk shakes ice cappuccino etc)

pastries and other desserts with normal coffee and tea facility at their premises

1048766 Boutiques fight ice cream seasonality with the other products sales during off-peak ice cream

seasons Usually ice cream and other products contribute at 6040 ratio in summer and during

winter and off-peak seasons the ratio reverses

1048766 Pricing Usually the prices of products in this segment are 3-4 times higher than that of the

common format segment

1048766 Prices do not vary with flavours Variation depends on serve style (Cone tub) and use of

toppings and other ingredients (Chocolate sauce nut fruits) etc

1048766 Usual margin charged is around 50-60 over production cost Similar margin is charged for

other products like coffee ice cappuccino etc

3 Yearly sales is estimated based on companyrsquos approximate daily sales collected during

interview

Evaluation of Entry into Ice cream Business for Bangladesh Limited 36

1048766 Target Group Most of the consumers belong to SEC A and higher SEC A with DMFI of at

least BDT 20000

1048766 Foreign delegates and resident foreigners also visit these boutiques

1048766 Main purposes of visits in the boutiques are

bull Youth hangout with friends and having ice cream and ice cream derivatives

bull Family Family night out or eat out at a restaurant and then having dessert

bull Foreigners Having dessert after dinner

1048766 Rush time at boutiques are Afternoon 2-4 pm and at night 9-11 pm

1048766 Offsite sales Most of the large operators also sell offsite They have small freezers for off-site

1048766 Club Gelato and MoumlvenPick serves ice cream at high society parties and programmes

1048766 MoumlvenPick also has kiosks in known hotels like Sheraton

1048766 Promotion No mass promotion is done by any of the companies Word of mouth is the most

important source of promotion Posters and banners outside the premise and occasional

newspaper advertisements are used to communicate special offers

1048766 Growth Drivers Market growth is driven by image innovation quality decoration of facility

environment and special offers

1048766 Club Gelato has the image of selling true Italian dairy ice cream with an excellent hangout

environment

1048766 MoumlvenPick imports ice cream directly from Switzerland and is perceived to be of high quality

1048766 Andersenrsquos operates with the image of ice cream from Denmark

1048766 Gelateria Igloo (from Igloo) and Sub Zero (from Kwality) could not establish the premium

artisan ice cream image

B Players in the Boutique Segment

There are very few players who have significant impact in the boutique segment Detailed

information of all the major boutique segment players is provided below

Evaluation of Entry into Ice cream Business for Bangladesh Limited 37

Club Gelato

Basic Company Information

1048766 Location Banani Road 11 (Planning for a second one in Dhanmondi)

1048766 Established in 2001

1048766 Seating Capacity 48

1048766 Area 1250 sft (including kitchen)

1048766 Owner Mr Jahangir Alam (Bangladesh)

1048766 Business Type Joint business partnership with Singapore

1048766 Staff 15 people (6 in the kitchen)

1048766 Production capacity 150 litres per day

Product Related Information

1048766 Product Italian style parlour scoop ice cream fruit juice coffee and pastries

1048766 Flavours Around 32 flavours available

1048766 Most selling Ferraro Rocher Vanilla Pistachio

1048766 Innovations New variants and ingredients are communicated by their Italian supplier and

Club Gelato decides what to take from them

1048766 Serve type Cup Cone Glasses Box for take away

Consumer Profile

1048766 Primary Teenagers and Young Adults (18-30) amp Diplomats

1048766 Secondary Family consumers for eat out

1048766 Income Group High income customers tentatively from SEC A and higher SEC A

1048766 Geographic Area Diversified

1048766 Rush time 8-10 pm

Sales and Price Information

1048766 Sales BDT 50000 (60 Ice cream 40 other desserts) daily in summer In winter however

other products sell more and thus they keep total sales at the same level

1048766 Price 750 per litre for any flavour

1048766 Sales Volume 50-60 litres per day

Supply Chain Placement Information

1048766 Milk Local sourcing from Milk Vita (4050 litres per day)

1048766 Chocolates amp Flavours Belgium France Germany

1048766 Transportation Mainly air (They can afford it due to high margin)

1048766 Contribution of various materials Flavours (30) Milk (20) other parts are water and air

Promotional Materials

1048766 Materials used are near premises POS materials for promoting the parlour only

Table 23 Detail of Club Gelato

Evaluation of Entry into Ice cream Business for Bangladesh Limited 38

MoumlvenPick of Switzerland

Basic Company Information

1048766 Location Gulshan

1048766 Established in 2000

1048766 Seating Capacity 55

1048766 Owner Mr Arif Mahmud

1048766 Business Type Franchise of International MoumlvenPick

1048766 Storage Capacity in Shop 150 litres

Product Related Information

1048766 Product Imported MoumlvenPick ice creams coffee chicken sandwich and Frappe

1048766 Flavours Around 30 to 35 flavours available

1048766 Most selling Swiss Chocolate caramel Vanilla Dream Espresso Strawberry

1048766 Innovations New variants are communicated by their franchiser and they decide on flavours

that they want

1048766 Serve type Cup Cone Glasses Box for take away

Consumer Profile

1048766 Primary Teenagers and Young Adults (18-30) (70) amp Diplomats

1048766 Secondary Family consumers for eat out

1048766 Income Group High income customers tentatively from SEC A

1048766 Geographic Area Concentrated in Gulshan and nearby areas

1048766 Rush time Afternoon- Young Adult 10 to 11 pm Foreigners

1048766 the company also serves at parties and has freezers in known hotels where their ice creams

are served

Sales and Price Information

1048766 Sales BDT 35-40000 daily in summer

1048766 Price 640 per litre for any flavour

1048766 Sales Volume 55-60 litres per day

Supply Chain Placement Information

1048766 Transportation Imported finished goods by ship

1048766 Ship travel time 19 days

1048766 Port clearance 10 days

1048766 Safety Cushion Extra 10 days

Promotional Materials

1048766 Materials used are near premises POS materials for promoting the parlour only

Table 24 Detail of MoumlvenPick of Switzerland

Evaluation of Entry into Ice cream Business for Bangladesh Limited 39

Andersenrsquos of Denmark

Basic Company Information

1048766 Location Gulshan (2 others in Uttara Dhanmondi)

1048766 Established in 2001

1048766 Seating Capacity 48

1048766 Owner United Group

1048766 Business Type Franchise of Australian company Andersenrsquos of Denmark

1048766 Production Tongi Factory of United Group

1048766 Production capacity 2000 litres per day in factory

1048766 Storage Capacity in Shop 150 litres

Product Related Information

1048766 Product Danish parlour scoop ice cream and coffee

1048766 Flavours Around 30 to 35 flavours available

1048766 Most selling Strawberry Butter Scotch Green

1048766 Innovations New variants and ingredients are communicated by their franchiser and they

decide on flavours that they want

1048766 Serve type Cup Cone Glasses Box for take away

Consumer Profile

1048766 Primary Teenagers and Young Adults (18-30) (70) amp Diplomats

1048766 Secondary Family consumers for eat out

1048766 Income Group High income customers tentatively from SEC A

1048766 Geographic Area Concentrated in Gulshan and nearby areas

1048766 Rush time 8 to 10 pm

Sales and Price Information

1048766 Sales BDT 10-12000 daily in summer

1048766 Price 460 per litre for any flavour

1048766 Sales Volume 40-50 litres per day

Supply Chain Placement Information

1048766 Milk 2025 kg packs are imported

1048766 Chocolates amp Flavours Imported

1048766 Butte paper Local sourcing

1048766 Transportation Ship

Promotional Materials

1048766 Materials used are near premises POS materials for promoting the parlour only

Table 25 Detail of Andersenrsquos of Denmark

Evaluation of Entry into Ice cream Business for Bangladesh Limited 40

Gelateria Igloo

Basic Company Information

1048766 Location Banani Kemal Ataturk Avenue (Two others in GEC Mor Chittagong and Naya

Paltan)

1048766 Established in 2000

1048766 Seating Capacity 20

1048766 Production From Igloo factory in Shyampur Narayanganj

Product Related Information

1048766 Product Parlour scoop ice cream and coffee only

1048766 Flavours Around 30 flavours available

1048766 Most selling Vanilla Strawberry Chocolate Pistachio Butter Scotch Tutti Fruity

1048766 Serve type Cup Cone Glasses Box for take away

Consumer Profile

1048766 Primary Teenagers and Young Adults (18-30)

1048766 Secondary Family consumers for eat out

1048766 Income Group High income customers tentatively from SEC A and B

1048766 Geographic Area Diversified

1048766 Rush Time afternoon and evening

Sales and Price Information

1048766 Sales BDT 8000 to 10000 daily in summer Nearly one fourth in winter

1048766 Price Varies but 350 per litre of vanilla

Promotional Materials

1048766 POS materials at the premises

Table 26 Detail of Gelateria Igloo

52 Price Comparison of Common and Boutique Segments

Price ranges of both common format and boutique segment cannot exactly be pin pointed as

products do not follow common structure and variations occur with use of toppings mixing of

flavours and use of coatings However a price comparison has been made among the brands

based on their price of per litre of vanilla flavoured ice cream in the market It appears to be as

following

Company

Price Litre Vanilla

Club Gelato

750

MoumlvenPick

640

Andersenrsquos

460

Dolce Vita

440

Igloo

100

Kwality

100

Polar

100

Milk-Vita

90

Savoy

85

Table 27 Comparative Price Analysis

As it can be seen there is price gap within the range of BDT 100-400 Ice cream kiosks and

small scooping boutiques can operate within that range

Evaluation of Entry into Ice cream Business for Bangladesh Limited 41

60 CONSUMER ANALYSIS

61 Target Group of Ice cream

Who are the consumers of ice cream This question does not have a clear answer Ice cream is a

food for all It is the only food consumed by a human being at less than 0 degree centigrade

temperature and people of all ages feel indulged to have it However we can determine focus

target groups for both branded common format and artisan boutique ice cream Group

discussions and market visits were done to get insight into the consumers along side resources

form secondary sources Age based target group is common for both segments but variation

among the groups occur mainly based on SEC and DMFI classification

611 Geographic Group

Branded ice cream remains an urban product till date Geographically branded ice cream has

reached urban and semi urban areas up to Thana Head Quarter levels Ice cream has reached

areas where electricity is available Small artisan players are available in places where large

branded players have no distribution

612 Target Age Group

Age wise grouping of target consumers is as follows

1048766 Urban kids in the age group of 5-14

1048766 They mainly consume normal sticks cups cones innovative fillers and water ice creams

1048766 Urban youth in the age group of 15-24

1048766 They consume premium and extrusion sticks and cones

1048766 Urban mothers in the age group of 25-35

1048766 They determine the family purchases Even when the father purchases ice cream decision is

taken by them

Consumption pattern of various age groups are depicted in the following chart Ice cream

consumption pattern50203005 to 14 yrs15 to 24 yrs25 to 35 yrs

Figure 11 Target Group wise Consumption Pattern Evaluation of Entry into Ice cream Business

for Bangladesh Limited 42

613 Target SEC and DMFI Group

Common Format

SEC A and B is the target group for common format ice cream However with rapid increase in

price level over the years has made it a ldquohard to consumerdquo product for SEC B consumers who

belong to lower DMFI group

Boutique Format

Boutique formatrsquos higher margin and high price range makes it an exclusively SEC A ice cream

People belonging to upper and upper middle class have access to the mediocre boutiques and

only higher upper class can have premium ice creams like Club Gelato and MoumlvenPick

Another unique target group for boutique format are the foreigners who live in Bangladesh

These people tend to visit the parlours to have ice cream as dessert especially after dinner

62 Ice cream in Consumer Lifestyle

Figure 12 Ice cream in Consumer Life style

This simple overview of ice cream in consumer lifestyle was determined based on in-depth

research analysis of UBL and validated through qualitative group discussions by the author

However detail of in-depth research is provided in a later section of this chapter

Evaluation of Entry into Ice cream Business for Bangladesh Limited 43

63 Highlights of Purchase Habit of Ice cream

631 Common Habits across Target Groups

There are some common habits that were identified in earlier researches and group discussions

with consumers Common habits mean the consumer approach towards ice cream that is seen

across all target groups eg kids youth and adult purchasers These are outlined below

1048766 Ice cream is mainly seen as a dessert or a snack Impulse ice cream is seen as a quick snack

that is consumed when it is in sight Visibility plays a big role here Regarding family packs

people see it as a post-food dessert

1048766 Ice cream purchase is commonly a planned event When the contexts arise people generally

take a bit of time to decide whether or not to have ice cream or when they want to go to a

boutique they make due considerations regarding which boutique to visit

1048766 Ice cream purchase decision is taken based on favourite flavour People tend to try out new

variants and flavours when they first see it They compare the taste with earlier experience and

when they purchase later they choose the flavour they have liked most

1048766 For In-Home segment decision is mostly taken on the flavour Generally people come up with

different flavours of choice and most voted flavour is chosen

1048766 People become aware of new variants or flavours mainly through word-of-mouth

Advertisement (new launches special offers and festivals) in newspaper is another source of

awareness

1048766 People are currently indifferent towards the price level of premium flavours However some

feel that price of Choc-bar or water ice creams (lolly) is a bit much If less they would have

consumed more Some also feel that companies should come up with branded ice cream in the

price range of BDT 5-8

1048766 Ice cream is purchased from nearby shops If required brand and flavour is not available 2-3

shops will be visited and then available flavour will be selected even if the required one is not

found This is done mainly not to ruin the mood for ice cream

1048766 People are very open to try new brands and flavours especially if it comes from a credible

source They would try new flavours and if they are satisfied with the taste they would repeat

purchase

1048766 Regarding boutique visits people feel that boutiques need to have a proper environment

enough flavours and other snacks

1048766 While visiting boutique with family or companion they want variation in flavours so that

they would order different flavours and taste each otherrsquos ice cream It is seen as a sign of

togetherness

1048766 Frequency of ice cream purchase varies among people It depends on peer pressure collective

family decision summer heat and attitude towards ldquoice creamrdquo itself as a product Evaluation of

Entry into Ice cream Business for Bangladesh Limited 44

632 Habits of Kids

1048766 Kids choose ice cream flavours by the look of the product (generally pictures shown in POS

materials and carts) They love colour and designs of the products let it be a common format or a

boutique ice cream

1048766 Kids (when in house) would go with the housemaid to the nearby shop choose the flavour

they want (within range of the amount given to the maid) and buy it

1048766 When with parents they would take the product they like even if the price is lower than some

other product However mothers play a role in this decision They would want their children not

to choose too high priced a product or coloured products

633 Habits of Youth

1048766 Young people are the main consumer of impulse ice cream They also are one of the major

consumers in the boutique segment

1048766 Young people love to try out new products that come into the market Another side of the coin

is that they are not very loyal to a brand or a flavour and tend to switch a lot

1048766 Regarding boutique visits young people go to boutiques to have an ldquoice cream hang outrdquo with

peer groups They would stay there for a longer period of time while they have their ice cream

1048766 Some times young people make milk shakes and other ice cream based desserts

634 Habits of Mothers

1048766 Mothers worry about their childrenrsquos health and they prefer ldquovanillardquo type of brands

However when price constraint occurs they go for water ice creams for their children They try

to convince their kidrsquos purchase decision

1048766 Regarding family purchase motherrsquos decision is sometimes prioritized by the whole family

64 Barriers to Ice cream Consumption

641 Emotional Barriers

1048766 Overindulge (close to sinful)

1048766 Undisciplined (no control)

1048766 Childish (licking)

1048766 Artificial Image

642 Functional Barriers

1048766 People of SEC B feel that ice cream is an expensive dessert (If less expensive would consume

more often)

1048766 It leads to cold cough - especially in winter rainy season

1048766 It contains artificial additives preservatives

1048766 It is very high in calories that lead to fattening

Evaluation of Entry into Ice cream Business for Bangladesh Limited 45

1048766 It does not quench ldquothirstrdquo

1048766 Less convenient (portable immediate eat)

1048766 Messy Dripping

65 Research Findings

The highlights regarding purchase habits triggers and barriers of ice cream consumption provide

a glimpse into the consumer world of ice cream industry However UBL CMI conducted a

formal research exclusively on ice cream consumers to identify

1048766 Occasions of ice cream

1048766 Frequency of ice cream consumption

1048766 Expectations from ice cream occasions

1048766 Personalities that they desire from ice cream

651 Relevant Occasions in Daily Lives of Consumers

Research question regarding ldquousual occasions of life that occurred most frequently in day-to-day

lives of the respondentsrdquo generated the following replies

Occasion

of Respondents saying Yes

Watching TV

93

Normal Dinner At Home

91

Normal Lunch At Home

89

At Home While ReadingMusicSurfing

86

Informal Family Get Together

85

Out Of Home Hanging Out With Friends

84

Out Shopping

84

Mid-Afternoon Break At Home

83

At Home By Myself During The Day

82

Special Dinner At Home

82

Informal Dinner Out Of Home

82

Normal Lunch Out Of Home

82

Leisure Walk

79

Coming Home From WorkSchool

78

Special Dinner Out Of Home

78

Celebration

78

A Night In With Friends

77

At Home By Myself In The Evening

77

Special Lunch Out Of Home

76

Mid-Afternoon Break Out Of Home

75

Special Lunch At Home

73

Day out with Partner

72

Midmorning Break

70

At Breakfast

68

Family Day Out

68

During Work Or At School

65

Evaluation of Entry into Ice cream Business for Bangladesh Limited 46

Travelling ToFrom WorkSchool

65

At The Cinema

61

Special Event

56

Clubbing At A Party

50

Post GymSports

48

Table 28 Relevant Occasions in Consumersrsquo Lives

Respondents were then asked to mention ldquofrequency of occurrence of the identified occasionsrdquo

The identified replies are as follows Normal dinner at homenormal lunch at homeComing home

from workschoolTraveling tofrom workschoolDay out with Partner SpouseMid-afternoon

break at homeOut of home hanging out with friendsLeisure walkMid-afternoon break out of

homeA night in with friendsSpecial dinner at homeSpecial lunch out of homeFamily day

outSpecial eventPost gymsportsDaily2-3 Times A WeekWeekly2-3 Times A MonthOnce A

MonthEvery 2-3 MonthsLess OftenNever Figure 13 Frequency of Occurrence of Occasions

This shows that ldquoNormal dinner at home Watching TV Normal Lunch At Home At Home

While ReadingMusicSurfing Coming Home From WorkSchool During Work Or At School

Travelling ToFrom WorkSchool Midmorning Break Day Out With Partner Spouse At Home

By Myself During The Dayrdquo are the most frequent daily rituals of busy lives of consumers

652 Frequency of Ice cream Consumption

Respondents were asked to mention ldquoconsumption pattern of ice cream during the identified

occasionrdquo on a scale of 1-5 depicting frequencies like ldquo(5) always (4) most of the times (3)

about half of the times (2) sometimes (1) never do not knowrdquo The responses are depicted in

the following table

Evaluation of Entry into Ice cream Business for Bangladesh Limited 47

444474544655555566756665775967779991011101111101210111110101113111412131314161

011121411131216181519181518211817171719181718201721222130303434253437403741394

046383944464746453745414641374638504843414839373030292726232725222020201926202

21722221317Midmorning

breakWhile clubbing at aAt the cinemaSpecial eventNormal lunch out ofA night in with

friendsNormal dinner atInformal dinner out ofAt home by myselfAt home by myself inOut

shoppingSpecial lunch atDay out with SpouseWatching TVAlwaysmost of the timesAbout half

of the timesSometimesneverdo not know

Figure 14 Frequency of Ice cream Consumption

As it can be seen ldquoDay out with Spouse Special lunch at home Special dinner at home

Watching TV Family day out Celebrationrdquo are the occasions where most frequently ice cream is

consumed

653 Market Character Mapping Relevant Occasions vs Frequency of Consumption

If we plot frequency of consumption on the X-axis of a chart and relevance of occasion

occurrence on the Y-axis taking the above mentioned values as cut-off values we get four

quadrants in the chart depicting four market scenarios that any ice cream manufacturer in

Bangladesh market might encounter given the current market situation This market

segmentation is based on frequency of ice cream consumption in daily occasions of consumer

lives

The segments are

1048766 OPPORTUNITY MARKET High Relevant Occasions-Low Ice cream Frequency

1048766 QUESTION MARKET Less Relevant Occasions-Low Ice cream Frequency

1048766 HIGH FREQUENCY MARKET Relevant Occasions-High Ice cream Frequency

1048766 CAPTIVE MARKET Less Relevant Occasions-High Ice cream Frequency

The chart looks as follows Evaluation of Entry into Ice cream Business for Bangladesh Limited

48

Figure 15 Relevance of Occasion-Frequency of Consumption Mapping

As it can be seen from the above chart Bangladesh Market still lies in the Opportunity and

Question market zone with a pull towards High frequency and Captive Market zones This is

evident from market data as penetration of ice cream still remains at Thana headquarters levels

Also this explains the high market growth rate of 17 as market is yet under developed and

branded quality ice cream has yet not reached all levels of consumers especially rural level that

constitutes around 75 of Bangladeshi market

From the above analysis we can establish that target of ice cream manufacturers should be to

penetrate more into the Bangladeshi market to create higher frequency of ice cream

consumption The following chart shows the strategies to follow for ice cream manufacturers

Figure 16 Required Market Strategy for Bangladesh

Evaluation of Entry into Ice cream Business for Bangladesh Limited 49

As relevance of ice cream consumption occasions can hardly be controlled by marketers their

endeavour should be to create more ldquoemotional and functionalrdquo attachment to ice cream in less

frequent occasions through ldquomarket developmentrdquo strategy to earn share from overall food

expenditure of consumers and at the same time make them consume more ice cream in highly

relevant occasions through ldquopenetrationrdquo strategy

654 Consumersrsquo Emotional Requirements and Product Attributes

All consumers under these clusters also identify the emotional requirements and the significant

product attributes they seek from their current preferred and future desired ice creams These are

provided below

Cluster

Emotional Functional Requirement

Product Attributes

Enjoyment

Flavour Variety

1048766 Combination of different flavours

1048766 Combination of different textures

1048766 Very sweet

1048766 With wafer or biscuit

1048766 With chocolate

1048766 Of a well known brand

Socially Involved

Spoonable Rich

1048766 Very creamy

1048766 Only natural ingredients

1048766 No mess

Care

Size Creaminess

1048766 Big

1048766 Rich full taste

1048766 Smooth

1048766 Value for money

1048766 No mess

Unwind amp Escape

Economy

1048766 Crunchy

1048766 Economic

1048766 Of a well known brand

1048766 Nutritious

Balanced Convenience

Health Conscious

1048766 Of a well known brand

1048766 Nutritious

1048766 Milk based

1048766 Low sugar

1048766 Low carbohydrates

1048766 Filling

Active Self-Grooming

Fruit Vitamins

1048766 Healthy

1048766 Fruit based

1048766 Low fat

1048766 Liquid or drinkable

1048766 Nutritious

1048766 Of a well known brand

Confidence

Drinkable Light

1048766 Low calories

1048766 Light on the stomach

1048766 Chewy or gooey

1048766 Not so sweet

1048766 Natural appearance

Sensual

Appeal or image

1048766 No artificial additives

Evaluation of Entry into Ice cream Business for Bangladesh Limited 50

1048766 Natural appearance

1048766 Melting slowly

1048766 Attractive packaging

1048766 High quality ingredients

1048766 Of a well known brand

Table 29 Requirements amp Product Attributes Desired by Consumer Clusters

Of these findings we see that the identified highlighted barriers to ice cream consumption are

pretty evident among the consumers Mostly people want products of a reliable source or a well

known brand low calories quality ingredients value for money economic type

Evaluation of Entry into Ice cream Business for Bangladesh Limited 51

70 INDUSTRY ATTRACTIVENESS AND ENTRY PROSPECTS

71 Driving Forces of Growth

As identified in the earlier sections there are several driving forces behind the growth of ice-

cream industry in Bangladesh

712 Trade and Infrastructural Level

1048766 As a result of globalization newer varieties have been introduced to the local products Many

foreign companies are also coming as franchise so there has been increased competition and

these boutiques are setting higher standards for the local producers

1048766 The present market growth rate is 18-19 which is being influenced by larger players like

Igloo who are expanding their distribution nation wide with expansion of national electricity

grid

1048766 With entry of Modern Trade and recent organized business approach of retailers has made it

possible for ice cream manufacturers to penetrate into shops even without providing them with

branded freezers

1048766 Weather change has increased ldquosummerrdquo season in our country which has reduced negative

seasonal impact on ice cream

1048766 Large companies like Igloo have taken global learning of using carts as an effective tool of

availability and visibility for ice cream

1048766 New and improved technologies are being used in the production process This technological

advancement has improved quality increased speed of production and made the process more

cost effective

713 Consumer Level

1048766 Only a few years back rich people could afford the luxury of having ice-cream but now it has

become a common product for everybody Ice-cream companies are producing different products

with a wide price range for consumers of every class and status

1048766 Nowadays companies are doing promotional campaigns more frequently the customers get to

know about the product which makes it easier for them to buy the best one

1048766 The improved standard of life and more modernized lifestyle of people is an important reason

for the increased consumption thus growth of the ice-cream industry

Evaluation of Entry into Ice cream Business for Bangladesh Limited 52

72 Prospects of Entry

The ice-cream industry of Bangladesh is an attractive one for the investors because there is a

huge market but number of producers is very small The major reasons behind industry

attractiveness are as follows

1048766 The industryrsquos current growth potential is very high with opportunity for market development

1048766 The competition currently permits adequate profitability and the competitive forces are

becoming stronger with time

1048766 Boutique segment is at a very high growth stage but no operator is currently operating with a

mid price range of BDT 100-400 Ice cream kiosks and small scooping boutiques can operate

within that range

1048766 Current industry driving forces are favourable for the future industry profitability

1048766 Globally oriented consumers look for variety in ice cream that is currently not available

Latest innovations came in the market in 2002 People would welcome new variety and flavours

1048766 There is a gap in the market for balanced convenience through ice cream where consumers can

get nutritional benefits for ice cream Also emotional attachment to ice cream could further be

improvised in promotional campaigns

1048766 There is high scope for market penetration and development to increase frequency of ice

cream consumption

1048766 Level of risk or uncertainty is very low in ice-cream industry because the consumer market is

so huge any product with a standard quality and careful pricing will be able to make significant

profit

1048766 As for geographic reach of the industry 60 market is still in Dhaka There is scope of

expansion and a new entrant can easily capture market share within Dhaka using carts even if

they do not want nation wide cold chain distribution

1048766 The production process is very complex and capital requirements are also high So before

going into production any company should know about their capabilities and weaknesses and

then start the business or else they might suffer huge loss at a certain level

1048766 Unilever can acquire the required resource and use existing multi-national multi-cultural

expertise to enter the market in a grand way

1048766 With high probability of entry from DANONE with more products like the ISIS diabetic ice

cream Unilever should consider entering in this industry as soon as possible

Evaluation of Entry into Ice cream Business for Bangladesh Limited 53

80 ENTRY STRATEGY FOR UNILEVER

While describing the suggested entry strategy for UBL certain issues have been kept

confidential and some issues have been touched but not explained to keep consistency with UBL

confidentiality policy

81 Suggested Entry Areas for UBL

1048766 Boutique segment of the Bangladesh ice cream is only 5 of the branded market UBL needs

to pursue a larger scope to make the entry viable

1048766 UBL cannot fight with unbranded segment as global product quality mandate of Unilever does

not allow UBL to fight in low price-low quality segment

1048766 Recommend entry should be in the common format segment with both single and multiple

servings and in the boutique segment with a different brand name (if possible BEN amp JERRYrsquoS)

1048766 UBL should build up state-of-art modern factory for manufacturing and establish cold chain

facilities initially focusing on metro cities

1048766 Investment issues are required to be addressed for building factory and cold chain and capital

requirement needs to be identified for that purpose4

1048766 UBL may have boutiques for driving image selective top-end offering

1048766 Kiosks can be setup near universities and shopping malls

1048766 Boutiques should be concentrated in Dhaka and Chittagong

1048766 Ice cream for boutiques and kiosks would be produced in factory as institutional packs of 9-10

litres

82 Products

1048766 As a Brand Building country in global Unilever operating framework UBL is entitled only to

bring products developed by the Brand Development countries

1048766 Unilever should focus on serving products that have nutritional benefits (already available

globally) along with usual satisfactions of sensual pleasure functional attributes etc

1048766 Current existent players especially Igloo and Kwality have extensively copied global and

regionally available Unilever products eg Cornelli is same as Wallrsquos Cornetto Vinetta is similar

to Vienetta Mega is similar to Magnum etc UBL needs to differentiate these to consumers on

the ldquotaste the originalrdquo platform where global quality is focused regarding the products

1048766 UBL should also bring regionally famous brands like Moo or Max to create image

differentiation

1048766 Magnum or Moo should be used as premium end ice cream to generate more profit margin

Evaluation of Entry into Ice cream Business for Bangladesh Limited 54

83 Placement

1048766 Distribution focus should be in Dhaka for entry as Dhaka contributes more than 60 of total

ice cream sales in the country

1048766 Company may use carts as distribution method They serve as good source of visibility and

availability It would help in increasing impulse purchase

1048766 At least 1500 outlets in Dhaka and Chittagong needs to be actively served using dedicated

branded refrigerators to generate sales

1048766 50 carts should operate in Dhaka and Chittagong

84 Price

1048766 UBL products should be priced at par with Igloo pricing for the common format ice creams

1048766 UBL can bring in premium single-serve SKUS for the higher economic classes in the price

range of BDT 60-80

1048766 Smaller SKUs (small lolly stick) can be introduced in the price range of BDT 10-15

1048766 In the boutique segment UBL should price products above the semi-premium segment

(Gelateria Igloo Sub Zero or Andersenrsquos) but lower than that of Club Gelato or MoumlvenPick

85 Promotion

1048766 UBL would require strong marketing campaign (As high as 50 of sales) to have a grand

entry in the market

1048766 Presence in the television media would be of utmost importance More than 50 of

promotional expense should be made here initially Gradually it can be reduced

1048766 Newspaper would serve as the second most important option

1048766 Billboards should also be used

1048766 Activations (similar to Lux Channel i Super Star or Igloo Festival) should be done to generate

trial

86 Scope of Opportunity

Table 30 Value and Volume Based Scope of Opportunity for UBL

Value (BDT Cr)

Volume (Tons)

Market

131

7835

Common

121

7600

Boutique

98

235

Evaluation of Entry into Ice cream Business for Bangladesh Limited 55

861 Geographic Contribution

1048766 Dhaka (61)

1048766 Chittagong (19)

1048766 Sylhet (10)

862 UBL objectives

Common Format Ice Creams

1048766 Target 10 Market share in 1st year operation

1048766 Value BDT 11 Cr

1048766 Production capacity required 21 Tons day

1048766 Freezer Placement 1500 freezers

1048766 Cart operation At least 50 carts

Boutiques

1048766 Target Further develop the market

1048766 Focus Dhaka Chittagong and Sylhet Metro

1048766 Franchise At least 20 franchisee operations nation wide in divisional towns

1048766 Pricing Below imported parlours above common formats with around BDT 400 per Litre

87 Critical Success Factors

1048766 UBL is considered as a high profile company in Bangladesh and thus they cannot operate in

the market only with common products like choc-bars and cups They must have premium

products (these require extrusion line) also to carry their brand image Otherwise UBL would not

be able to charge usual premium over competition products

1048766 Launch of ice cream would require huge promotional and activation support in order to gain

customers from Igloo People want novelty regarding ice cream and UBL have to let them know

about their products and create hype

1048766 Cart should be used as a source of distribution Recent successes of Unilever companies like

Indonesia shows that carts can generate more sales and can be used as source of visibility in the

minds of both retail traders and consumers Carts can also provide incremental sales to the

company

1048766 UBL have to create a strong cold chain for ice cream (initially in Dhaka and Chittagong) to

ensure quality products for consumers

1048766 UBL have to build capacity very rapidly to meet consumer demand if the launch is successful

Evaluation of Entry into Ice cream Business for Bangladesh Limited 56

90 BUSINESS PROJECTION

91 Basic Assumptions

Business projection for ice cream business was made based on a conservative approach UBL

would require spending significantly on production capacity and factory dedicated to ice cream

Thus to analyse business possibilities of ice cream certain assumptions were made and collected

data were used These are

1048766 Production equipments and cabinets would cost approximately BDT 55 crores

1048766 Production equipments 45

1048766 Packaging Equipments 15

1048766 Storage Facility 20

1048766 Branded Freezers 10

1048766 Distribution Investment 10 (Distributors would also invest themselves)

1048766 Ice cream factory with a floor size of 20000 sqft would cost BDT 25 crores

1048766 Objective is to capture 10 market share in Dhaka and Chittagong in the first year

1048766 Business would grow by 50 in year 2 and 3 30 in year 4 and 25 in year 5

1048766 Weighted price per litre is BDT 170 according to volume share of single serve ice cream

multiple serve ice cream and boutique ice cream

1048766 Other financial assumptions were also made List of them are provided below but amount has

been removed for confidentiality issues

Assumptions

Trade Margin

Distributors Margin

DutyVAT Rate

Trade Terms Expense of NPS

Trade Terms Expense of NSV

Advertising ampPromotion of NPS

Indirects (Salaries Wages etc)

Trading Tax

Table 31 Assumptions for Business Projection

Evaluation of Entry into Ice cream Business for Bangladesh Limited 57

100 CONCLUSION

Ice cream has good prospect in Bangladesh It is still a growing market with opportunities for big

new entrants With the barriers of entry UBL needs to consider its priorities UBL being an HPC

company traditionally needs to acquire expertise in cold chain distribution and has to invest a lot

of money to rip the benefits of the industry However to initiate company can take regional

support and acquire resource expertise The company should enter the business as soon as

possible since there is potential threat from DANONE to introduce more ice creams after ISIS

diabetic ice cream and also with potential of the industry arch rival Nestlersquo might consider

entering into the industry too

Evaluation of Entry into Ice cream Business for Bangladesh Limited 58

References

Web References

1 wwwunilevercom

2 wwwunilevercombd

3 wwwhllcom

4 wwwunilevercompk

5 wwwthedailystarcom - Life Style Magazine

6 wwwreuterscouk

Evaluation of Entry into Ice cream Business for Bangladesh Limited 59

Page 39: Square Ice cream

1048766 MoumlvenPick directly imports ice cream from Switzerland

1048766 Andersenrsquos Gelateria Igloo and Sub Zero produce ice cream at their factory with a mix of

imported and local ingredients

1048766 Products Around 30-35 flavours of artisan dairy ice cream are served at the premises

1048766 Most sold flavours are Vanilla Ferrero Rocher Butterscotch Chocolate Caramel etc

1048766 Other Products Larger players also serve ice cream desserts (milk shakes ice cappuccino etc)

pastries and other desserts with normal coffee and tea facility at their premises

1048766 Boutiques fight ice cream seasonality with the other products sales during off-peak ice cream

seasons Usually ice cream and other products contribute at 6040 ratio in summer and during

winter and off-peak seasons the ratio reverses

1048766 Pricing Usually the prices of products in this segment are 3-4 times higher than that of the

common format segment

1048766 Prices do not vary with flavours Variation depends on serve style (Cone tub) and use of

toppings and other ingredients (Chocolate sauce nut fruits) etc

1048766 Usual margin charged is around 50-60 over production cost Similar margin is charged for

other products like coffee ice cappuccino etc

3 Yearly sales is estimated based on companyrsquos approximate daily sales collected during

interview

Evaluation of Entry into Ice cream Business for Bangladesh Limited 36

1048766 Target Group Most of the consumers belong to SEC A and higher SEC A with DMFI of at

least BDT 20000

1048766 Foreign delegates and resident foreigners also visit these boutiques

1048766 Main purposes of visits in the boutiques are

bull Youth hangout with friends and having ice cream and ice cream derivatives

bull Family Family night out or eat out at a restaurant and then having dessert

bull Foreigners Having dessert after dinner

1048766 Rush time at boutiques are Afternoon 2-4 pm and at night 9-11 pm

1048766 Offsite sales Most of the large operators also sell offsite They have small freezers for off-site

1048766 Club Gelato and MoumlvenPick serves ice cream at high society parties and programmes

1048766 MoumlvenPick also has kiosks in known hotels like Sheraton

1048766 Promotion No mass promotion is done by any of the companies Word of mouth is the most

important source of promotion Posters and banners outside the premise and occasional

newspaper advertisements are used to communicate special offers

1048766 Growth Drivers Market growth is driven by image innovation quality decoration of facility

environment and special offers

1048766 Club Gelato has the image of selling true Italian dairy ice cream with an excellent hangout

environment

1048766 MoumlvenPick imports ice cream directly from Switzerland and is perceived to be of high quality

1048766 Andersenrsquos operates with the image of ice cream from Denmark

1048766 Gelateria Igloo (from Igloo) and Sub Zero (from Kwality) could not establish the premium

artisan ice cream image

B Players in the Boutique Segment

There are very few players who have significant impact in the boutique segment Detailed

information of all the major boutique segment players is provided below

Evaluation of Entry into Ice cream Business for Bangladesh Limited 37

Club Gelato

Basic Company Information

1048766 Location Banani Road 11 (Planning for a second one in Dhanmondi)

1048766 Established in 2001

1048766 Seating Capacity 48

1048766 Area 1250 sft (including kitchen)

1048766 Owner Mr Jahangir Alam (Bangladesh)

1048766 Business Type Joint business partnership with Singapore

1048766 Staff 15 people (6 in the kitchen)

1048766 Production capacity 150 litres per day

Product Related Information

1048766 Product Italian style parlour scoop ice cream fruit juice coffee and pastries

1048766 Flavours Around 32 flavours available

1048766 Most selling Ferraro Rocher Vanilla Pistachio

1048766 Innovations New variants and ingredients are communicated by their Italian supplier and

Club Gelato decides what to take from them

1048766 Serve type Cup Cone Glasses Box for take away

Consumer Profile

1048766 Primary Teenagers and Young Adults (18-30) amp Diplomats

1048766 Secondary Family consumers for eat out

1048766 Income Group High income customers tentatively from SEC A and higher SEC A

1048766 Geographic Area Diversified

1048766 Rush time 8-10 pm

Sales and Price Information

1048766 Sales BDT 50000 (60 Ice cream 40 other desserts) daily in summer In winter however

other products sell more and thus they keep total sales at the same level

1048766 Price 750 per litre for any flavour

1048766 Sales Volume 50-60 litres per day

Supply Chain Placement Information

1048766 Milk Local sourcing from Milk Vita (4050 litres per day)

1048766 Chocolates amp Flavours Belgium France Germany

1048766 Transportation Mainly air (They can afford it due to high margin)

1048766 Contribution of various materials Flavours (30) Milk (20) other parts are water and air

Promotional Materials

1048766 Materials used are near premises POS materials for promoting the parlour only

Table 23 Detail of Club Gelato

Evaluation of Entry into Ice cream Business for Bangladesh Limited 38

MoumlvenPick of Switzerland

Basic Company Information

1048766 Location Gulshan

1048766 Established in 2000

1048766 Seating Capacity 55

1048766 Owner Mr Arif Mahmud

1048766 Business Type Franchise of International MoumlvenPick

1048766 Storage Capacity in Shop 150 litres

Product Related Information

1048766 Product Imported MoumlvenPick ice creams coffee chicken sandwich and Frappe

1048766 Flavours Around 30 to 35 flavours available

1048766 Most selling Swiss Chocolate caramel Vanilla Dream Espresso Strawberry

1048766 Innovations New variants are communicated by their franchiser and they decide on flavours

that they want

1048766 Serve type Cup Cone Glasses Box for take away

Consumer Profile

1048766 Primary Teenagers and Young Adults (18-30) (70) amp Diplomats

1048766 Secondary Family consumers for eat out

1048766 Income Group High income customers tentatively from SEC A

1048766 Geographic Area Concentrated in Gulshan and nearby areas

1048766 Rush time Afternoon- Young Adult 10 to 11 pm Foreigners

1048766 the company also serves at parties and has freezers in known hotels where their ice creams

are served

Sales and Price Information

1048766 Sales BDT 35-40000 daily in summer

1048766 Price 640 per litre for any flavour

1048766 Sales Volume 55-60 litres per day

Supply Chain Placement Information

1048766 Transportation Imported finished goods by ship

1048766 Ship travel time 19 days

1048766 Port clearance 10 days

1048766 Safety Cushion Extra 10 days

Promotional Materials

1048766 Materials used are near premises POS materials for promoting the parlour only

Table 24 Detail of MoumlvenPick of Switzerland

Evaluation of Entry into Ice cream Business for Bangladesh Limited 39

Andersenrsquos of Denmark

Basic Company Information

1048766 Location Gulshan (2 others in Uttara Dhanmondi)

1048766 Established in 2001

1048766 Seating Capacity 48

1048766 Owner United Group

1048766 Business Type Franchise of Australian company Andersenrsquos of Denmark

1048766 Production Tongi Factory of United Group

1048766 Production capacity 2000 litres per day in factory

1048766 Storage Capacity in Shop 150 litres

Product Related Information

1048766 Product Danish parlour scoop ice cream and coffee

1048766 Flavours Around 30 to 35 flavours available

1048766 Most selling Strawberry Butter Scotch Green

1048766 Innovations New variants and ingredients are communicated by their franchiser and they

decide on flavours that they want

1048766 Serve type Cup Cone Glasses Box for take away

Consumer Profile

1048766 Primary Teenagers and Young Adults (18-30) (70) amp Diplomats

1048766 Secondary Family consumers for eat out

1048766 Income Group High income customers tentatively from SEC A

1048766 Geographic Area Concentrated in Gulshan and nearby areas

1048766 Rush time 8 to 10 pm

Sales and Price Information

1048766 Sales BDT 10-12000 daily in summer

1048766 Price 460 per litre for any flavour

1048766 Sales Volume 40-50 litres per day

Supply Chain Placement Information

1048766 Milk 2025 kg packs are imported

1048766 Chocolates amp Flavours Imported

1048766 Butte paper Local sourcing

1048766 Transportation Ship

Promotional Materials

1048766 Materials used are near premises POS materials for promoting the parlour only

Table 25 Detail of Andersenrsquos of Denmark

Evaluation of Entry into Ice cream Business for Bangladesh Limited 40

Gelateria Igloo

Basic Company Information

1048766 Location Banani Kemal Ataturk Avenue (Two others in GEC Mor Chittagong and Naya

Paltan)

1048766 Established in 2000

1048766 Seating Capacity 20

1048766 Production From Igloo factory in Shyampur Narayanganj

Product Related Information

1048766 Product Parlour scoop ice cream and coffee only

1048766 Flavours Around 30 flavours available

1048766 Most selling Vanilla Strawberry Chocolate Pistachio Butter Scotch Tutti Fruity

1048766 Serve type Cup Cone Glasses Box for take away

Consumer Profile

1048766 Primary Teenagers and Young Adults (18-30)

1048766 Secondary Family consumers for eat out

1048766 Income Group High income customers tentatively from SEC A and B

1048766 Geographic Area Diversified

1048766 Rush Time afternoon and evening

Sales and Price Information

1048766 Sales BDT 8000 to 10000 daily in summer Nearly one fourth in winter

1048766 Price Varies but 350 per litre of vanilla

Promotional Materials

1048766 POS materials at the premises

Table 26 Detail of Gelateria Igloo

52 Price Comparison of Common and Boutique Segments

Price ranges of both common format and boutique segment cannot exactly be pin pointed as

products do not follow common structure and variations occur with use of toppings mixing of

flavours and use of coatings However a price comparison has been made among the brands

based on their price of per litre of vanilla flavoured ice cream in the market It appears to be as

following

Company

Price Litre Vanilla

Club Gelato

750

MoumlvenPick

640

Andersenrsquos

460

Dolce Vita

440

Igloo

100

Kwality

100

Polar

100

Milk-Vita

90

Savoy

85

Table 27 Comparative Price Analysis

As it can be seen there is price gap within the range of BDT 100-400 Ice cream kiosks and

small scooping boutiques can operate within that range

Evaluation of Entry into Ice cream Business for Bangladesh Limited 41

60 CONSUMER ANALYSIS

61 Target Group of Ice cream

Who are the consumers of ice cream This question does not have a clear answer Ice cream is a

food for all It is the only food consumed by a human being at less than 0 degree centigrade

temperature and people of all ages feel indulged to have it However we can determine focus

target groups for both branded common format and artisan boutique ice cream Group

discussions and market visits were done to get insight into the consumers along side resources

form secondary sources Age based target group is common for both segments but variation

among the groups occur mainly based on SEC and DMFI classification

611 Geographic Group

Branded ice cream remains an urban product till date Geographically branded ice cream has

reached urban and semi urban areas up to Thana Head Quarter levels Ice cream has reached

areas where electricity is available Small artisan players are available in places where large

branded players have no distribution

612 Target Age Group

Age wise grouping of target consumers is as follows

1048766 Urban kids in the age group of 5-14

1048766 They mainly consume normal sticks cups cones innovative fillers and water ice creams

1048766 Urban youth in the age group of 15-24

1048766 They consume premium and extrusion sticks and cones

1048766 Urban mothers in the age group of 25-35

1048766 They determine the family purchases Even when the father purchases ice cream decision is

taken by them

Consumption pattern of various age groups are depicted in the following chart Ice cream

consumption pattern50203005 to 14 yrs15 to 24 yrs25 to 35 yrs

Figure 11 Target Group wise Consumption Pattern Evaluation of Entry into Ice cream Business

for Bangladesh Limited 42

613 Target SEC and DMFI Group

Common Format

SEC A and B is the target group for common format ice cream However with rapid increase in

price level over the years has made it a ldquohard to consumerdquo product for SEC B consumers who

belong to lower DMFI group

Boutique Format

Boutique formatrsquos higher margin and high price range makes it an exclusively SEC A ice cream

People belonging to upper and upper middle class have access to the mediocre boutiques and

only higher upper class can have premium ice creams like Club Gelato and MoumlvenPick

Another unique target group for boutique format are the foreigners who live in Bangladesh

These people tend to visit the parlours to have ice cream as dessert especially after dinner

62 Ice cream in Consumer Lifestyle

Figure 12 Ice cream in Consumer Life style

This simple overview of ice cream in consumer lifestyle was determined based on in-depth

research analysis of UBL and validated through qualitative group discussions by the author

However detail of in-depth research is provided in a later section of this chapter

Evaluation of Entry into Ice cream Business for Bangladesh Limited 43

63 Highlights of Purchase Habit of Ice cream

631 Common Habits across Target Groups

There are some common habits that were identified in earlier researches and group discussions

with consumers Common habits mean the consumer approach towards ice cream that is seen

across all target groups eg kids youth and adult purchasers These are outlined below

1048766 Ice cream is mainly seen as a dessert or a snack Impulse ice cream is seen as a quick snack

that is consumed when it is in sight Visibility plays a big role here Regarding family packs

people see it as a post-food dessert

1048766 Ice cream purchase is commonly a planned event When the contexts arise people generally

take a bit of time to decide whether or not to have ice cream or when they want to go to a

boutique they make due considerations regarding which boutique to visit

1048766 Ice cream purchase decision is taken based on favourite flavour People tend to try out new

variants and flavours when they first see it They compare the taste with earlier experience and

when they purchase later they choose the flavour they have liked most

1048766 For In-Home segment decision is mostly taken on the flavour Generally people come up with

different flavours of choice and most voted flavour is chosen

1048766 People become aware of new variants or flavours mainly through word-of-mouth

Advertisement (new launches special offers and festivals) in newspaper is another source of

awareness

1048766 People are currently indifferent towards the price level of premium flavours However some

feel that price of Choc-bar or water ice creams (lolly) is a bit much If less they would have

consumed more Some also feel that companies should come up with branded ice cream in the

price range of BDT 5-8

1048766 Ice cream is purchased from nearby shops If required brand and flavour is not available 2-3

shops will be visited and then available flavour will be selected even if the required one is not

found This is done mainly not to ruin the mood for ice cream

1048766 People are very open to try new brands and flavours especially if it comes from a credible

source They would try new flavours and if they are satisfied with the taste they would repeat

purchase

1048766 Regarding boutique visits people feel that boutiques need to have a proper environment

enough flavours and other snacks

1048766 While visiting boutique with family or companion they want variation in flavours so that

they would order different flavours and taste each otherrsquos ice cream It is seen as a sign of

togetherness

1048766 Frequency of ice cream purchase varies among people It depends on peer pressure collective

family decision summer heat and attitude towards ldquoice creamrdquo itself as a product Evaluation of

Entry into Ice cream Business for Bangladesh Limited 44

632 Habits of Kids

1048766 Kids choose ice cream flavours by the look of the product (generally pictures shown in POS

materials and carts) They love colour and designs of the products let it be a common format or a

boutique ice cream

1048766 Kids (when in house) would go with the housemaid to the nearby shop choose the flavour

they want (within range of the amount given to the maid) and buy it

1048766 When with parents they would take the product they like even if the price is lower than some

other product However mothers play a role in this decision They would want their children not

to choose too high priced a product or coloured products

633 Habits of Youth

1048766 Young people are the main consumer of impulse ice cream They also are one of the major

consumers in the boutique segment

1048766 Young people love to try out new products that come into the market Another side of the coin

is that they are not very loyal to a brand or a flavour and tend to switch a lot

1048766 Regarding boutique visits young people go to boutiques to have an ldquoice cream hang outrdquo with

peer groups They would stay there for a longer period of time while they have their ice cream

1048766 Some times young people make milk shakes and other ice cream based desserts

634 Habits of Mothers

1048766 Mothers worry about their childrenrsquos health and they prefer ldquovanillardquo type of brands

However when price constraint occurs they go for water ice creams for their children They try

to convince their kidrsquos purchase decision

1048766 Regarding family purchase motherrsquos decision is sometimes prioritized by the whole family

64 Barriers to Ice cream Consumption

641 Emotional Barriers

1048766 Overindulge (close to sinful)

1048766 Undisciplined (no control)

1048766 Childish (licking)

1048766 Artificial Image

642 Functional Barriers

1048766 People of SEC B feel that ice cream is an expensive dessert (If less expensive would consume

more often)

1048766 It leads to cold cough - especially in winter rainy season

1048766 It contains artificial additives preservatives

1048766 It is very high in calories that lead to fattening

Evaluation of Entry into Ice cream Business for Bangladesh Limited 45

1048766 It does not quench ldquothirstrdquo

1048766 Less convenient (portable immediate eat)

1048766 Messy Dripping

65 Research Findings

The highlights regarding purchase habits triggers and barriers of ice cream consumption provide

a glimpse into the consumer world of ice cream industry However UBL CMI conducted a

formal research exclusively on ice cream consumers to identify

1048766 Occasions of ice cream

1048766 Frequency of ice cream consumption

1048766 Expectations from ice cream occasions

1048766 Personalities that they desire from ice cream

651 Relevant Occasions in Daily Lives of Consumers

Research question regarding ldquousual occasions of life that occurred most frequently in day-to-day

lives of the respondentsrdquo generated the following replies

Occasion

of Respondents saying Yes

Watching TV

93

Normal Dinner At Home

91

Normal Lunch At Home

89

At Home While ReadingMusicSurfing

86

Informal Family Get Together

85

Out Of Home Hanging Out With Friends

84

Out Shopping

84

Mid-Afternoon Break At Home

83

At Home By Myself During The Day

82

Special Dinner At Home

82

Informal Dinner Out Of Home

82

Normal Lunch Out Of Home

82

Leisure Walk

79

Coming Home From WorkSchool

78

Special Dinner Out Of Home

78

Celebration

78

A Night In With Friends

77

At Home By Myself In The Evening

77

Special Lunch Out Of Home

76

Mid-Afternoon Break Out Of Home

75

Special Lunch At Home

73

Day out with Partner

72

Midmorning Break

70

At Breakfast

68

Family Day Out

68

During Work Or At School

65

Evaluation of Entry into Ice cream Business for Bangladesh Limited 46

Travelling ToFrom WorkSchool

65

At The Cinema

61

Special Event

56

Clubbing At A Party

50

Post GymSports

48

Table 28 Relevant Occasions in Consumersrsquo Lives

Respondents were then asked to mention ldquofrequency of occurrence of the identified occasionsrdquo

The identified replies are as follows Normal dinner at homenormal lunch at homeComing home

from workschoolTraveling tofrom workschoolDay out with Partner SpouseMid-afternoon

break at homeOut of home hanging out with friendsLeisure walkMid-afternoon break out of

homeA night in with friendsSpecial dinner at homeSpecial lunch out of homeFamily day

outSpecial eventPost gymsportsDaily2-3 Times A WeekWeekly2-3 Times A MonthOnce A

MonthEvery 2-3 MonthsLess OftenNever Figure 13 Frequency of Occurrence of Occasions

This shows that ldquoNormal dinner at home Watching TV Normal Lunch At Home At Home

While ReadingMusicSurfing Coming Home From WorkSchool During Work Or At School

Travelling ToFrom WorkSchool Midmorning Break Day Out With Partner Spouse At Home

By Myself During The Dayrdquo are the most frequent daily rituals of busy lives of consumers

652 Frequency of Ice cream Consumption

Respondents were asked to mention ldquoconsumption pattern of ice cream during the identified

occasionrdquo on a scale of 1-5 depicting frequencies like ldquo(5) always (4) most of the times (3)

about half of the times (2) sometimes (1) never do not knowrdquo The responses are depicted in

the following table

Evaluation of Entry into Ice cream Business for Bangladesh Limited 47

444474544655555566756665775967779991011101111101210111110101113111412131314161

011121411131216181519181518211817171719181718201721222130303434253437403741394

046383944464746453745414641374638504843414839373030292726232725222020201926202

21722221317Midmorning

breakWhile clubbing at aAt the cinemaSpecial eventNormal lunch out ofA night in with

friendsNormal dinner atInformal dinner out ofAt home by myselfAt home by myself inOut

shoppingSpecial lunch atDay out with SpouseWatching TVAlwaysmost of the timesAbout half

of the timesSometimesneverdo not know

Figure 14 Frequency of Ice cream Consumption

As it can be seen ldquoDay out with Spouse Special lunch at home Special dinner at home

Watching TV Family day out Celebrationrdquo are the occasions where most frequently ice cream is

consumed

653 Market Character Mapping Relevant Occasions vs Frequency of Consumption

If we plot frequency of consumption on the X-axis of a chart and relevance of occasion

occurrence on the Y-axis taking the above mentioned values as cut-off values we get four

quadrants in the chart depicting four market scenarios that any ice cream manufacturer in

Bangladesh market might encounter given the current market situation This market

segmentation is based on frequency of ice cream consumption in daily occasions of consumer

lives

The segments are

1048766 OPPORTUNITY MARKET High Relevant Occasions-Low Ice cream Frequency

1048766 QUESTION MARKET Less Relevant Occasions-Low Ice cream Frequency

1048766 HIGH FREQUENCY MARKET Relevant Occasions-High Ice cream Frequency

1048766 CAPTIVE MARKET Less Relevant Occasions-High Ice cream Frequency

The chart looks as follows Evaluation of Entry into Ice cream Business for Bangladesh Limited

48

Figure 15 Relevance of Occasion-Frequency of Consumption Mapping

As it can be seen from the above chart Bangladesh Market still lies in the Opportunity and

Question market zone with a pull towards High frequency and Captive Market zones This is

evident from market data as penetration of ice cream still remains at Thana headquarters levels

Also this explains the high market growth rate of 17 as market is yet under developed and

branded quality ice cream has yet not reached all levels of consumers especially rural level that

constitutes around 75 of Bangladeshi market

From the above analysis we can establish that target of ice cream manufacturers should be to

penetrate more into the Bangladeshi market to create higher frequency of ice cream

consumption The following chart shows the strategies to follow for ice cream manufacturers

Figure 16 Required Market Strategy for Bangladesh

Evaluation of Entry into Ice cream Business for Bangladesh Limited 49

As relevance of ice cream consumption occasions can hardly be controlled by marketers their

endeavour should be to create more ldquoemotional and functionalrdquo attachment to ice cream in less

frequent occasions through ldquomarket developmentrdquo strategy to earn share from overall food

expenditure of consumers and at the same time make them consume more ice cream in highly

relevant occasions through ldquopenetrationrdquo strategy

654 Consumersrsquo Emotional Requirements and Product Attributes

All consumers under these clusters also identify the emotional requirements and the significant

product attributes they seek from their current preferred and future desired ice creams These are

provided below

Cluster

Emotional Functional Requirement

Product Attributes

Enjoyment

Flavour Variety

1048766 Combination of different flavours

1048766 Combination of different textures

1048766 Very sweet

1048766 With wafer or biscuit

1048766 With chocolate

1048766 Of a well known brand

Socially Involved

Spoonable Rich

1048766 Very creamy

1048766 Only natural ingredients

1048766 No mess

Care

Size Creaminess

1048766 Big

1048766 Rich full taste

1048766 Smooth

1048766 Value for money

1048766 No mess

Unwind amp Escape

Economy

1048766 Crunchy

1048766 Economic

1048766 Of a well known brand

1048766 Nutritious

Balanced Convenience

Health Conscious

1048766 Of a well known brand

1048766 Nutritious

1048766 Milk based

1048766 Low sugar

1048766 Low carbohydrates

1048766 Filling

Active Self-Grooming

Fruit Vitamins

1048766 Healthy

1048766 Fruit based

1048766 Low fat

1048766 Liquid or drinkable

1048766 Nutritious

1048766 Of a well known brand

Confidence

Drinkable Light

1048766 Low calories

1048766 Light on the stomach

1048766 Chewy or gooey

1048766 Not so sweet

1048766 Natural appearance

Sensual

Appeal or image

1048766 No artificial additives

Evaluation of Entry into Ice cream Business for Bangladesh Limited 50

1048766 Natural appearance

1048766 Melting slowly

1048766 Attractive packaging

1048766 High quality ingredients

1048766 Of a well known brand

Table 29 Requirements amp Product Attributes Desired by Consumer Clusters

Of these findings we see that the identified highlighted barriers to ice cream consumption are

pretty evident among the consumers Mostly people want products of a reliable source or a well

known brand low calories quality ingredients value for money economic type

Evaluation of Entry into Ice cream Business for Bangladesh Limited 51

70 INDUSTRY ATTRACTIVENESS AND ENTRY PROSPECTS

71 Driving Forces of Growth

As identified in the earlier sections there are several driving forces behind the growth of ice-

cream industry in Bangladesh

712 Trade and Infrastructural Level

1048766 As a result of globalization newer varieties have been introduced to the local products Many

foreign companies are also coming as franchise so there has been increased competition and

these boutiques are setting higher standards for the local producers

1048766 The present market growth rate is 18-19 which is being influenced by larger players like

Igloo who are expanding their distribution nation wide with expansion of national electricity

grid

1048766 With entry of Modern Trade and recent organized business approach of retailers has made it

possible for ice cream manufacturers to penetrate into shops even without providing them with

branded freezers

1048766 Weather change has increased ldquosummerrdquo season in our country which has reduced negative

seasonal impact on ice cream

1048766 Large companies like Igloo have taken global learning of using carts as an effective tool of

availability and visibility for ice cream

1048766 New and improved technologies are being used in the production process This technological

advancement has improved quality increased speed of production and made the process more

cost effective

713 Consumer Level

1048766 Only a few years back rich people could afford the luxury of having ice-cream but now it has

become a common product for everybody Ice-cream companies are producing different products

with a wide price range for consumers of every class and status

1048766 Nowadays companies are doing promotional campaigns more frequently the customers get to

know about the product which makes it easier for them to buy the best one

1048766 The improved standard of life and more modernized lifestyle of people is an important reason

for the increased consumption thus growth of the ice-cream industry

Evaluation of Entry into Ice cream Business for Bangladesh Limited 52

72 Prospects of Entry

The ice-cream industry of Bangladesh is an attractive one for the investors because there is a

huge market but number of producers is very small The major reasons behind industry

attractiveness are as follows

1048766 The industryrsquos current growth potential is very high with opportunity for market development

1048766 The competition currently permits adequate profitability and the competitive forces are

becoming stronger with time

1048766 Boutique segment is at a very high growth stage but no operator is currently operating with a

mid price range of BDT 100-400 Ice cream kiosks and small scooping boutiques can operate

within that range

1048766 Current industry driving forces are favourable for the future industry profitability

1048766 Globally oriented consumers look for variety in ice cream that is currently not available

Latest innovations came in the market in 2002 People would welcome new variety and flavours

1048766 There is a gap in the market for balanced convenience through ice cream where consumers can

get nutritional benefits for ice cream Also emotional attachment to ice cream could further be

improvised in promotional campaigns

1048766 There is high scope for market penetration and development to increase frequency of ice

cream consumption

1048766 Level of risk or uncertainty is very low in ice-cream industry because the consumer market is

so huge any product with a standard quality and careful pricing will be able to make significant

profit

1048766 As for geographic reach of the industry 60 market is still in Dhaka There is scope of

expansion and a new entrant can easily capture market share within Dhaka using carts even if

they do not want nation wide cold chain distribution

1048766 The production process is very complex and capital requirements are also high So before

going into production any company should know about their capabilities and weaknesses and

then start the business or else they might suffer huge loss at a certain level

1048766 Unilever can acquire the required resource and use existing multi-national multi-cultural

expertise to enter the market in a grand way

1048766 With high probability of entry from DANONE with more products like the ISIS diabetic ice

cream Unilever should consider entering in this industry as soon as possible

Evaluation of Entry into Ice cream Business for Bangladesh Limited 53

80 ENTRY STRATEGY FOR UNILEVER

While describing the suggested entry strategy for UBL certain issues have been kept

confidential and some issues have been touched but not explained to keep consistency with UBL

confidentiality policy

81 Suggested Entry Areas for UBL

1048766 Boutique segment of the Bangladesh ice cream is only 5 of the branded market UBL needs

to pursue a larger scope to make the entry viable

1048766 UBL cannot fight with unbranded segment as global product quality mandate of Unilever does

not allow UBL to fight in low price-low quality segment

1048766 Recommend entry should be in the common format segment with both single and multiple

servings and in the boutique segment with a different brand name (if possible BEN amp JERRYrsquoS)

1048766 UBL should build up state-of-art modern factory for manufacturing and establish cold chain

facilities initially focusing on metro cities

1048766 Investment issues are required to be addressed for building factory and cold chain and capital

requirement needs to be identified for that purpose4

1048766 UBL may have boutiques for driving image selective top-end offering

1048766 Kiosks can be setup near universities and shopping malls

1048766 Boutiques should be concentrated in Dhaka and Chittagong

1048766 Ice cream for boutiques and kiosks would be produced in factory as institutional packs of 9-10

litres

82 Products

1048766 As a Brand Building country in global Unilever operating framework UBL is entitled only to

bring products developed by the Brand Development countries

1048766 Unilever should focus on serving products that have nutritional benefits (already available

globally) along with usual satisfactions of sensual pleasure functional attributes etc

1048766 Current existent players especially Igloo and Kwality have extensively copied global and

regionally available Unilever products eg Cornelli is same as Wallrsquos Cornetto Vinetta is similar

to Vienetta Mega is similar to Magnum etc UBL needs to differentiate these to consumers on

the ldquotaste the originalrdquo platform where global quality is focused regarding the products

1048766 UBL should also bring regionally famous brands like Moo or Max to create image

differentiation

1048766 Magnum or Moo should be used as premium end ice cream to generate more profit margin

Evaluation of Entry into Ice cream Business for Bangladesh Limited 54

83 Placement

1048766 Distribution focus should be in Dhaka for entry as Dhaka contributes more than 60 of total

ice cream sales in the country

1048766 Company may use carts as distribution method They serve as good source of visibility and

availability It would help in increasing impulse purchase

1048766 At least 1500 outlets in Dhaka and Chittagong needs to be actively served using dedicated

branded refrigerators to generate sales

1048766 50 carts should operate in Dhaka and Chittagong

84 Price

1048766 UBL products should be priced at par with Igloo pricing for the common format ice creams

1048766 UBL can bring in premium single-serve SKUS for the higher economic classes in the price

range of BDT 60-80

1048766 Smaller SKUs (small lolly stick) can be introduced in the price range of BDT 10-15

1048766 In the boutique segment UBL should price products above the semi-premium segment

(Gelateria Igloo Sub Zero or Andersenrsquos) but lower than that of Club Gelato or MoumlvenPick

85 Promotion

1048766 UBL would require strong marketing campaign (As high as 50 of sales) to have a grand

entry in the market

1048766 Presence in the television media would be of utmost importance More than 50 of

promotional expense should be made here initially Gradually it can be reduced

1048766 Newspaper would serve as the second most important option

1048766 Billboards should also be used

1048766 Activations (similar to Lux Channel i Super Star or Igloo Festival) should be done to generate

trial

86 Scope of Opportunity

Table 30 Value and Volume Based Scope of Opportunity for UBL

Value (BDT Cr)

Volume (Tons)

Market

131

7835

Common

121

7600

Boutique

98

235

Evaluation of Entry into Ice cream Business for Bangladesh Limited 55

861 Geographic Contribution

1048766 Dhaka (61)

1048766 Chittagong (19)

1048766 Sylhet (10)

862 UBL objectives

Common Format Ice Creams

1048766 Target 10 Market share in 1st year operation

1048766 Value BDT 11 Cr

1048766 Production capacity required 21 Tons day

1048766 Freezer Placement 1500 freezers

1048766 Cart operation At least 50 carts

Boutiques

1048766 Target Further develop the market

1048766 Focus Dhaka Chittagong and Sylhet Metro

1048766 Franchise At least 20 franchisee operations nation wide in divisional towns

1048766 Pricing Below imported parlours above common formats with around BDT 400 per Litre

87 Critical Success Factors

1048766 UBL is considered as a high profile company in Bangladesh and thus they cannot operate in

the market only with common products like choc-bars and cups They must have premium

products (these require extrusion line) also to carry their brand image Otherwise UBL would not

be able to charge usual premium over competition products

1048766 Launch of ice cream would require huge promotional and activation support in order to gain

customers from Igloo People want novelty regarding ice cream and UBL have to let them know

about their products and create hype

1048766 Cart should be used as a source of distribution Recent successes of Unilever companies like

Indonesia shows that carts can generate more sales and can be used as source of visibility in the

minds of both retail traders and consumers Carts can also provide incremental sales to the

company

1048766 UBL have to create a strong cold chain for ice cream (initially in Dhaka and Chittagong) to

ensure quality products for consumers

1048766 UBL have to build capacity very rapidly to meet consumer demand if the launch is successful

Evaluation of Entry into Ice cream Business for Bangladesh Limited 56

90 BUSINESS PROJECTION

91 Basic Assumptions

Business projection for ice cream business was made based on a conservative approach UBL

would require spending significantly on production capacity and factory dedicated to ice cream

Thus to analyse business possibilities of ice cream certain assumptions were made and collected

data were used These are

1048766 Production equipments and cabinets would cost approximately BDT 55 crores

1048766 Production equipments 45

1048766 Packaging Equipments 15

1048766 Storage Facility 20

1048766 Branded Freezers 10

1048766 Distribution Investment 10 (Distributors would also invest themselves)

1048766 Ice cream factory with a floor size of 20000 sqft would cost BDT 25 crores

1048766 Objective is to capture 10 market share in Dhaka and Chittagong in the first year

1048766 Business would grow by 50 in year 2 and 3 30 in year 4 and 25 in year 5

1048766 Weighted price per litre is BDT 170 according to volume share of single serve ice cream

multiple serve ice cream and boutique ice cream

1048766 Other financial assumptions were also made List of them are provided below but amount has

been removed for confidentiality issues

Assumptions

Trade Margin

Distributors Margin

DutyVAT Rate

Trade Terms Expense of NPS

Trade Terms Expense of NSV

Advertising ampPromotion of NPS

Indirects (Salaries Wages etc)

Trading Tax

Table 31 Assumptions for Business Projection

Evaluation of Entry into Ice cream Business for Bangladesh Limited 57

100 CONCLUSION

Ice cream has good prospect in Bangladesh It is still a growing market with opportunities for big

new entrants With the barriers of entry UBL needs to consider its priorities UBL being an HPC

company traditionally needs to acquire expertise in cold chain distribution and has to invest a lot

of money to rip the benefits of the industry However to initiate company can take regional

support and acquire resource expertise The company should enter the business as soon as

possible since there is potential threat from DANONE to introduce more ice creams after ISIS

diabetic ice cream and also with potential of the industry arch rival Nestlersquo might consider

entering into the industry too

Evaluation of Entry into Ice cream Business for Bangladesh Limited 58

References

Web References

1 wwwunilevercom

2 wwwunilevercombd

3 wwwhllcom

4 wwwunilevercompk

5 wwwthedailystarcom - Life Style Magazine

6 wwwreuterscouk

Evaluation of Entry into Ice cream Business for Bangladesh Limited 59

Page 40: Square Ice cream

bull Family Family night out or eat out at a restaurant and then having dessert

bull Foreigners Having dessert after dinner

1048766 Rush time at boutiques are Afternoon 2-4 pm and at night 9-11 pm

1048766 Offsite sales Most of the large operators also sell offsite They have small freezers for off-site

1048766 Club Gelato and MoumlvenPick serves ice cream at high society parties and programmes

1048766 MoumlvenPick also has kiosks in known hotels like Sheraton

1048766 Promotion No mass promotion is done by any of the companies Word of mouth is the most

important source of promotion Posters and banners outside the premise and occasional

newspaper advertisements are used to communicate special offers

1048766 Growth Drivers Market growth is driven by image innovation quality decoration of facility

environment and special offers

1048766 Club Gelato has the image of selling true Italian dairy ice cream with an excellent hangout

environment

1048766 MoumlvenPick imports ice cream directly from Switzerland and is perceived to be of high quality

1048766 Andersenrsquos operates with the image of ice cream from Denmark

1048766 Gelateria Igloo (from Igloo) and Sub Zero (from Kwality) could not establish the premium

artisan ice cream image

B Players in the Boutique Segment

There are very few players who have significant impact in the boutique segment Detailed

information of all the major boutique segment players is provided below

Evaluation of Entry into Ice cream Business for Bangladesh Limited 37

Club Gelato

Basic Company Information

1048766 Location Banani Road 11 (Planning for a second one in Dhanmondi)

1048766 Established in 2001

1048766 Seating Capacity 48

1048766 Area 1250 sft (including kitchen)

1048766 Owner Mr Jahangir Alam (Bangladesh)

1048766 Business Type Joint business partnership with Singapore

1048766 Staff 15 people (6 in the kitchen)

1048766 Production capacity 150 litres per day

Product Related Information

1048766 Product Italian style parlour scoop ice cream fruit juice coffee and pastries

1048766 Flavours Around 32 flavours available

1048766 Most selling Ferraro Rocher Vanilla Pistachio

1048766 Innovations New variants and ingredients are communicated by their Italian supplier and

Club Gelato decides what to take from them

1048766 Serve type Cup Cone Glasses Box for take away

Consumer Profile

1048766 Primary Teenagers and Young Adults (18-30) amp Diplomats

1048766 Secondary Family consumers for eat out

1048766 Income Group High income customers tentatively from SEC A and higher SEC A

1048766 Geographic Area Diversified

1048766 Rush time 8-10 pm

Sales and Price Information

1048766 Sales BDT 50000 (60 Ice cream 40 other desserts) daily in summer In winter however

other products sell more and thus they keep total sales at the same level

1048766 Price 750 per litre for any flavour

1048766 Sales Volume 50-60 litres per day

Supply Chain Placement Information

1048766 Milk Local sourcing from Milk Vita (4050 litres per day)

1048766 Chocolates amp Flavours Belgium France Germany

1048766 Transportation Mainly air (They can afford it due to high margin)

1048766 Contribution of various materials Flavours (30) Milk (20) other parts are water and air

Promotional Materials

1048766 Materials used are near premises POS materials for promoting the parlour only

Table 23 Detail of Club Gelato

Evaluation of Entry into Ice cream Business for Bangladesh Limited 38

MoumlvenPick of Switzerland

Basic Company Information

1048766 Location Gulshan

1048766 Established in 2000

1048766 Seating Capacity 55

1048766 Owner Mr Arif Mahmud

1048766 Business Type Franchise of International MoumlvenPick

1048766 Storage Capacity in Shop 150 litres

Product Related Information

1048766 Product Imported MoumlvenPick ice creams coffee chicken sandwich and Frappe

1048766 Flavours Around 30 to 35 flavours available

1048766 Most selling Swiss Chocolate caramel Vanilla Dream Espresso Strawberry

1048766 Innovations New variants are communicated by their franchiser and they decide on flavours

that they want

1048766 Serve type Cup Cone Glasses Box for take away

Consumer Profile

1048766 Primary Teenagers and Young Adults (18-30) (70) amp Diplomats

1048766 Secondary Family consumers for eat out

1048766 Income Group High income customers tentatively from SEC A

1048766 Geographic Area Concentrated in Gulshan and nearby areas

1048766 Rush time Afternoon- Young Adult 10 to 11 pm Foreigners

1048766 the company also serves at parties and has freezers in known hotels where their ice creams

are served

Sales and Price Information

1048766 Sales BDT 35-40000 daily in summer

1048766 Price 640 per litre for any flavour

1048766 Sales Volume 55-60 litres per day

Supply Chain Placement Information

1048766 Transportation Imported finished goods by ship

1048766 Ship travel time 19 days

1048766 Port clearance 10 days

1048766 Safety Cushion Extra 10 days

Promotional Materials

1048766 Materials used are near premises POS materials for promoting the parlour only

Table 24 Detail of MoumlvenPick of Switzerland

Evaluation of Entry into Ice cream Business for Bangladesh Limited 39

Andersenrsquos of Denmark

Basic Company Information

1048766 Location Gulshan (2 others in Uttara Dhanmondi)

1048766 Established in 2001

1048766 Seating Capacity 48

1048766 Owner United Group

1048766 Business Type Franchise of Australian company Andersenrsquos of Denmark

1048766 Production Tongi Factory of United Group

1048766 Production capacity 2000 litres per day in factory

1048766 Storage Capacity in Shop 150 litres

Product Related Information

1048766 Product Danish parlour scoop ice cream and coffee

1048766 Flavours Around 30 to 35 flavours available

1048766 Most selling Strawberry Butter Scotch Green

1048766 Innovations New variants and ingredients are communicated by their franchiser and they

decide on flavours that they want

1048766 Serve type Cup Cone Glasses Box for take away

Consumer Profile

1048766 Primary Teenagers and Young Adults (18-30) (70) amp Diplomats

1048766 Secondary Family consumers for eat out

1048766 Income Group High income customers tentatively from SEC A

1048766 Geographic Area Concentrated in Gulshan and nearby areas

1048766 Rush time 8 to 10 pm

Sales and Price Information

1048766 Sales BDT 10-12000 daily in summer

1048766 Price 460 per litre for any flavour

1048766 Sales Volume 40-50 litres per day

Supply Chain Placement Information

1048766 Milk 2025 kg packs are imported

1048766 Chocolates amp Flavours Imported

1048766 Butte paper Local sourcing

1048766 Transportation Ship

Promotional Materials

1048766 Materials used are near premises POS materials for promoting the parlour only

Table 25 Detail of Andersenrsquos of Denmark

Evaluation of Entry into Ice cream Business for Bangladesh Limited 40

Gelateria Igloo

Basic Company Information

1048766 Location Banani Kemal Ataturk Avenue (Two others in GEC Mor Chittagong and Naya

Paltan)

1048766 Established in 2000

1048766 Seating Capacity 20

1048766 Production From Igloo factory in Shyampur Narayanganj

Product Related Information

1048766 Product Parlour scoop ice cream and coffee only

1048766 Flavours Around 30 flavours available

1048766 Most selling Vanilla Strawberry Chocolate Pistachio Butter Scotch Tutti Fruity

1048766 Serve type Cup Cone Glasses Box for take away

Consumer Profile

1048766 Primary Teenagers and Young Adults (18-30)

1048766 Secondary Family consumers for eat out

1048766 Income Group High income customers tentatively from SEC A and B

1048766 Geographic Area Diversified

1048766 Rush Time afternoon and evening

Sales and Price Information

1048766 Sales BDT 8000 to 10000 daily in summer Nearly one fourth in winter

1048766 Price Varies but 350 per litre of vanilla

Promotional Materials

1048766 POS materials at the premises

Table 26 Detail of Gelateria Igloo

52 Price Comparison of Common and Boutique Segments

Price ranges of both common format and boutique segment cannot exactly be pin pointed as

products do not follow common structure and variations occur with use of toppings mixing of

flavours and use of coatings However a price comparison has been made among the brands

based on their price of per litre of vanilla flavoured ice cream in the market It appears to be as

following

Company

Price Litre Vanilla

Club Gelato

750

MoumlvenPick

640

Andersenrsquos

460

Dolce Vita

440

Igloo

100

Kwality

100

Polar

100

Milk-Vita

90

Savoy

85

Table 27 Comparative Price Analysis

As it can be seen there is price gap within the range of BDT 100-400 Ice cream kiosks and

small scooping boutiques can operate within that range

Evaluation of Entry into Ice cream Business for Bangladesh Limited 41

60 CONSUMER ANALYSIS

61 Target Group of Ice cream

Who are the consumers of ice cream This question does not have a clear answer Ice cream is a

food for all It is the only food consumed by a human being at less than 0 degree centigrade

temperature and people of all ages feel indulged to have it However we can determine focus

target groups for both branded common format and artisan boutique ice cream Group

discussions and market visits were done to get insight into the consumers along side resources

form secondary sources Age based target group is common for both segments but variation

among the groups occur mainly based on SEC and DMFI classification

611 Geographic Group

Branded ice cream remains an urban product till date Geographically branded ice cream has

reached urban and semi urban areas up to Thana Head Quarter levels Ice cream has reached

areas where electricity is available Small artisan players are available in places where large

branded players have no distribution

612 Target Age Group

Age wise grouping of target consumers is as follows

1048766 Urban kids in the age group of 5-14

1048766 They mainly consume normal sticks cups cones innovative fillers and water ice creams

1048766 Urban youth in the age group of 15-24

1048766 They consume premium and extrusion sticks and cones

1048766 Urban mothers in the age group of 25-35

1048766 They determine the family purchases Even when the father purchases ice cream decision is

taken by them

Consumption pattern of various age groups are depicted in the following chart Ice cream

consumption pattern50203005 to 14 yrs15 to 24 yrs25 to 35 yrs

Figure 11 Target Group wise Consumption Pattern Evaluation of Entry into Ice cream Business

for Bangladesh Limited 42

613 Target SEC and DMFI Group

Common Format

SEC A and B is the target group for common format ice cream However with rapid increase in

price level over the years has made it a ldquohard to consumerdquo product for SEC B consumers who

belong to lower DMFI group

Boutique Format

Boutique formatrsquos higher margin and high price range makes it an exclusively SEC A ice cream

People belonging to upper and upper middle class have access to the mediocre boutiques and

only higher upper class can have premium ice creams like Club Gelato and MoumlvenPick

Another unique target group for boutique format are the foreigners who live in Bangladesh

These people tend to visit the parlours to have ice cream as dessert especially after dinner

62 Ice cream in Consumer Lifestyle

Figure 12 Ice cream in Consumer Life style

This simple overview of ice cream in consumer lifestyle was determined based on in-depth

research analysis of UBL and validated through qualitative group discussions by the author

However detail of in-depth research is provided in a later section of this chapter

Evaluation of Entry into Ice cream Business for Bangladesh Limited 43

63 Highlights of Purchase Habit of Ice cream

631 Common Habits across Target Groups

There are some common habits that were identified in earlier researches and group discussions

with consumers Common habits mean the consumer approach towards ice cream that is seen

across all target groups eg kids youth and adult purchasers These are outlined below

1048766 Ice cream is mainly seen as a dessert or a snack Impulse ice cream is seen as a quick snack

that is consumed when it is in sight Visibility plays a big role here Regarding family packs

people see it as a post-food dessert

1048766 Ice cream purchase is commonly a planned event When the contexts arise people generally

take a bit of time to decide whether or not to have ice cream or when they want to go to a

boutique they make due considerations regarding which boutique to visit

1048766 Ice cream purchase decision is taken based on favourite flavour People tend to try out new

variants and flavours when they first see it They compare the taste with earlier experience and

when they purchase later they choose the flavour they have liked most

1048766 For In-Home segment decision is mostly taken on the flavour Generally people come up with

different flavours of choice and most voted flavour is chosen

1048766 People become aware of new variants or flavours mainly through word-of-mouth

Advertisement (new launches special offers and festivals) in newspaper is another source of

awareness

1048766 People are currently indifferent towards the price level of premium flavours However some

feel that price of Choc-bar or water ice creams (lolly) is a bit much If less they would have

consumed more Some also feel that companies should come up with branded ice cream in the

price range of BDT 5-8

1048766 Ice cream is purchased from nearby shops If required brand and flavour is not available 2-3

shops will be visited and then available flavour will be selected even if the required one is not

found This is done mainly not to ruin the mood for ice cream

1048766 People are very open to try new brands and flavours especially if it comes from a credible

source They would try new flavours and if they are satisfied with the taste they would repeat

purchase

1048766 Regarding boutique visits people feel that boutiques need to have a proper environment

enough flavours and other snacks

1048766 While visiting boutique with family or companion they want variation in flavours so that

they would order different flavours and taste each otherrsquos ice cream It is seen as a sign of

togetherness

1048766 Frequency of ice cream purchase varies among people It depends on peer pressure collective

family decision summer heat and attitude towards ldquoice creamrdquo itself as a product Evaluation of

Entry into Ice cream Business for Bangladesh Limited 44

632 Habits of Kids

1048766 Kids choose ice cream flavours by the look of the product (generally pictures shown in POS

materials and carts) They love colour and designs of the products let it be a common format or a

boutique ice cream

1048766 Kids (when in house) would go with the housemaid to the nearby shop choose the flavour

they want (within range of the amount given to the maid) and buy it

1048766 When with parents they would take the product they like even if the price is lower than some

other product However mothers play a role in this decision They would want their children not

to choose too high priced a product or coloured products

633 Habits of Youth

1048766 Young people are the main consumer of impulse ice cream They also are one of the major

consumers in the boutique segment

1048766 Young people love to try out new products that come into the market Another side of the coin

is that they are not very loyal to a brand or a flavour and tend to switch a lot

1048766 Regarding boutique visits young people go to boutiques to have an ldquoice cream hang outrdquo with

peer groups They would stay there for a longer period of time while they have their ice cream

1048766 Some times young people make milk shakes and other ice cream based desserts

634 Habits of Mothers

1048766 Mothers worry about their childrenrsquos health and they prefer ldquovanillardquo type of brands

However when price constraint occurs they go for water ice creams for their children They try

to convince their kidrsquos purchase decision

1048766 Regarding family purchase motherrsquos decision is sometimes prioritized by the whole family

64 Barriers to Ice cream Consumption

641 Emotional Barriers

1048766 Overindulge (close to sinful)

1048766 Undisciplined (no control)

1048766 Childish (licking)

1048766 Artificial Image

642 Functional Barriers

1048766 People of SEC B feel that ice cream is an expensive dessert (If less expensive would consume

more often)

1048766 It leads to cold cough - especially in winter rainy season

1048766 It contains artificial additives preservatives

1048766 It is very high in calories that lead to fattening

Evaluation of Entry into Ice cream Business for Bangladesh Limited 45

1048766 It does not quench ldquothirstrdquo

1048766 Less convenient (portable immediate eat)

1048766 Messy Dripping

65 Research Findings

The highlights regarding purchase habits triggers and barriers of ice cream consumption provide

a glimpse into the consumer world of ice cream industry However UBL CMI conducted a

formal research exclusively on ice cream consumers to identify

1048766 Occasions of ice cream

1048766 Frequency of ice cream consumption

1048766 Expectations from ice cream occasions

1048766 Personalities that they desire from ice cream

651 Relevant Occasions in Daily Lives of Consumers

Research question regarding ldquousual occasions of life that occurred most frequently in day-to-day

lives of the respondentsrdquo generated the following replies

Occasion

of Respondents saying Yes

Watching TV

93

Normal Dinner At Home

91

Normal Lunch At Home

89

At Home While ReadingMusicSurfing

86

Informal Family Get Together

85

Out Of Home Hanging Out With Friends

84

Out Shopping

84

Mid-Afternoon Break At Home

83

At Home By Myself During The Day

82

Special Dinner At Home

82

Informal Dinner Out Of Home

82

Normal Lunch Out Of Home

82

Leisure Walk

79

Coming Home From WorkSchool

78

Special Dinner Out Of Home

78

Celebration

78

A Night In With Friends

77

At Home By Myself In The Evening

77

Special Lunch Out Of Home

76

Mid-Afternoon Break Out Of Home

75

Special Lunch At Home

73

Day out with Partner

72

Midmorning Break

70

At Breakfast

68

Family Day Out

68

During Work Or At School

65

Evaluation of Entry into Ice cream Business for Bangladesh Limited 46

Travelling ToFrom WorkSchool

65

At The Cinema

61

Special Event

56

Clubbing At A Party

50

Post GymSports

48

Table 28 Relevant Occasions in Consumersrsquo Lives

Respondents were then asked to mention ldquofrequency of occurrence of the identified occasionsrdquo

The identified replies are as follows Normal dinner at homenormal lunch at homeComing home

from workschoolTraveling tofrom workschoolDay out with Partner SpouseMid-afternoon

break at homeOut of home hanging out with friendsLeisure walkMid-afternoon break out of

homeA night in with friendsSpecial dinner at homeSpecial lunch out of homeFamily day

outSpecial eventPost gymsportsDaily2-3 Times A WeekWeekly2-3 Times A MonthOnce A

MonthEvery 2-3 MonthsLess OftenNever Figure 13 Frequency of Occurrence of Occasions

This shows that ldquoNormal dinner at home Watching TV Normal Lunch At Home At Home

While ReadingMusicSurfing Coming Home From WorkSchool During Work Or At School

Travelling ToFrom WorkSchool Midmorning Break Day Out With Partner Spouse At Home

By Myself During The Dayrdquo are the most frequent daily rituals of busy lives of consumers

652 Frequency of Ice cream Consumption

Respondents were asked to mention ldquoconsumption pattern of ice cream during the identified

occasionrdquo on a scale of 1-5 depicting frequencies like ldquo(5) always (4) most of the times (3)

about half of the times (2) sometimes (1) never do not knowrdquo The responses are depicted in

the following table

Evaluation of Entry into Ice cream Business for Bangladesh Limited 47

444474544655555566756665775967779991011101111101210111110101113111412131314161

011121411131216181519181518211817171719181718201721222130303434253437403741394

046383944464746453745414641374638504843414839373030292726232725222020201926202

21722221317Midmorning

breakWhile clubbing at aAt the cinemaSpecial eventNormal lunch out ofA night in with

friendsNormal dinner atInformal dinner out ofAt home by myselfAt home by myself inOut

shoppingSpecial lunch atDay out with SpouseWatching TVAlwaysmost of the timesAbout half

of the timesSometimesneverdo not know

Figure 14 Frequency of Ice cream Consumption

As it can be seen ldquoDay out with Spouse Special lunch at home Special dinner at home

Watching TV Family day out Celebrationrdquo are the occasions where most frequently ice cream is

consumed

653 Market Character Mapping Relevant Occasions vs Frequency of Consumption

If we plot frequency of consumption on the X-axis of a chart and relevance of occasion

occurrence on the Y-axis taking the above mentioned values as cut-off values we get four

quadrants in the chart depicting four market scenarios that any ice cream manufacturer in

Bangladesh market might encounter given the current market situation This market

segmentation is based on frequency of ice cream consumption in daily occasions of consumer

lives

The segments are

1048766 OPPORTUNITY MARKET High Relevant Occasions-Low Ice cream Frequency

1048766 QUESTION MARKET Less Relevant Occasions-Low Ice cream Frequency

1048766 HIGH FREQUENCY MARKET Relevant Occasions-High Ice cream Frequency

1048766 CAPTIVE MARKET Less Relevant Occasions-High Ice cream Frequency

The chart looks as follows Evaluation of Entry into Ice cream Business for Bangladesh Limited

48

Figure 15 Relevance of Occasion-Frequency of Consumption Mapping

As it can be seen from the above chart Bangladesh Market still lies in the Opportunity and

Question market zone with a pull towards High frequency and Captive Market zones This is

evident from market data as penetration of ice cream still remains at Thana headquarters levels

Also this explains the high market growth rate of 17 as market is yet under developed and

branded quality ice cream has yet not reached all levels of consumers especially rural level that

constitutes around 75 of Bangladeshi market

From the above analysis we can establish that target of ice cream manufacturers should be to

penetrate more into the Bangladeshi market to create higher frequency of ice cream

consumption The following chart shows the strategies to follow for ice cream manufacturers

Figure 16 Required Market Strategy for Bangladesh

Evaluation of Entry into Ice cream Business for Bangladesh Limited 49

As relevance of ice cream consumption occasions can hardly be controlled by marketers their

endeavour should be to create more ldquoemotional and functionalrdquo attachment to ice cream in less

frequent occasions through ldquomarket developmentrdquo strategy to earn share from overall food

expenditure of consumers and at the same time make them consume more ice cream in highly

relevant occasions through ldquopenetrationrdquo strategy

654 Consumersrsquo Emotional Requirements and Product Attributes

All consumers under these clusters also identify the emotional requirements and the significant

product attributes they seek from their current preferred and future desired ice creams These are

provided below

Cluster

Emotional Functional Requirement

Product Attributes

Enjoyment

Flavour Variety

1048766 Combination of different flavours

1048766 Combination of different textures

1048766 Very sweet

1048766 With wafer or biscuit

1048766 With chocolate

1048766 Of a well known brand

Socially Involved

Spoonable Rich

1048766 Very creamy

1048766 Only natural ingredients

1048766 No mess

Care

Size Creaminess

1048766 Big

1048766 Rich full taste

1048766 Smooth

1048766 Value for money

1048766 No mess

Unwind amp Escape

Economy

1048766 Crunchy

1048766 Economic

1048766 Of a well known brand

1048766 Nutritious

Balanced Convenience

Health Conscious

1048766 Of a well known brand

1048766 Nutritious

1048766 Milk based

1048766 Low sugar

1048766 Low carbohydrates

1048766 Filling

Active Self-Grooming

Fruit Vitamins

1048766 Healthy

1048766 Fruit based

1048766 Low fat

1048766 Liquid or drinkable

1048766 Nutritious

1048766 Of a well known brand

Confidence

Drinkable Light

1048766 Low calories

1048766 Light on the stomach

1048766 Chewy or gooey

1048766 Not so sweet

1048766 Natural appearance

Sensual

Appeal or image

1048766 No artificial additives

Evaluation of Entry into Ice cream Business for Bangladesh Limited 50

1048766 Natural appearance

1048766 Melting slowly

1048766 Attractive packaging

1048766 High quality ingredients

1048766 Of a well known brand

Table 29 Requirements amp Product Attributes Desired by Consumer Clusters

Of these findings we see that the identified highlighted barriers to ice cream consumption are

pretty evident among the consumers Mostly people want products of a reliable source or a well

known brand low calories quality ingredients value for money economic type

Evaluation of Entry into Ice cream Business for Bangladesh Limited 51

70 INDUSTRY ATTRACTIVENESS AND ENTRY PROSPECTS

71 Driving Forces of Growth

As identified in the earlier sections there are several driving forces behind the growth of ice-

cream industry in Bangladesh

712 Trade and Infrastructural Level

1048766 As a result of globalization newer varieties have been introduced to the local products Many

foreign companies are also coming as franchise so there has been increased competition and

these boutiques are setting higher standards for the local producers

1048766 The present market growth rate is 18-19 which is being influenced by larger players like

Igloo who are expanding their distribution nation wide with expansion of national electricity

grid

1048766 With entry of Modern Trade and recent organized business approach of retailers has made it

possible for ice cream manufacturers to penetrate into shops even without providing them with

branded freezers

1048766 Weather change has increased ldquosummerrdquo season in our country which has reduced negative

seasonal impact on ice cream

1048766 Large companies like Igloo have taken global learning of using carts as an effective tool of

availability and visibility for ice cream

1048766 New and improved technologies are being used in the production process This technological

advancement has improved quality increased speed of production and made the process more

cost effective

713 Consumer Level

1048766 Only a few years back rich people could afford the luxury of having ice-cream but now it has

become a common product for everybody Ice-cream companies are producing different products

with a wide price range for consumers of every class and status

1048766 Nowadays companies are doing promotional campaigns more frequently the customers get to

know about the product which makes it easier for them to buy the best one

1048766 The improved standard of life and more modernized lifestyle of people is an important reason

for the increased consumption thus growth of the ice-cream industry

Evaluation of Entry into Ice cream Business for Bangladesh Limited 52

72 Prospects of Entry

The ice-cream industry of Bangladesh is an attractive one for the investors because there is a

huge market but number of producers is very small The major reasons behind industry

attractiveness are as follows

1048766 The industryrsquos current growth potential is very high with opportunity for market development

1048766 The competition currently permits adequate profitability and the competitive forces are

becoming stronger with time

1048766 Boutique segment is at a very high growth stage but no operator is currently operating with a

mid price range of BDT 100-400 Ice cream kiosks and small scooping boutiques can operate

within that range

1048766 Current industry driving forces are favourable for the future industry profitability

1048766 Globally oriented consumers look for variety in ice cream that is currently not available

Latest innovations came in the market in 2002 People would welcome new variety and flavours

1048766 There is a gap in the market for balanced convenience through ice cream where consumers can

get nutritional benefits for ice cream Also emotional attachment to ice cream could further be

improvised in promotional campaigns

1048766 There is high scope for market penetration and development to increase frequency of ice

cream consumption

1048766 Level of risk or uncertainty is very low in ice-cream industry because the consumer market is

so huge any product with a standard quality and careful pricing will be able to make significant

profit

1048766 As for geographic reach of the industry 60 market is still in Dhaka There is scope of

expansion and a new entrant can easily capture market share within Dhaka using carts even if

they do not want nation wide cold chain distribution

1048766 The production process is very complex and capital requirements are also high So before

going into production any company should know about their capabilities and weaknesses and

then start the business or else they might suffer huge loss at a certain level

1048766 Unilever can acquire the required resource and use existing multi-national multi-cultural

expertise to enter the market in a grand way

1048766 With high probability of entry from DANONE with more products like the ISIS diabetic ice

cream Unilever should consider entering in this industry as soon as possible

Evaluation of Entry into Ice cream Business for Bangladesh Limited 53

80 ENTRY STRATEGY FOR UNILEVER

While describing the suggested entry strategy for UBL certain issues have been kept

confidential and some issues have been touched but not explained to keep consistency with UBL

confidentiality policy

81 Suggested Entry Areas for UBL

1048766 Boutique segment of the Bangladesh ice cream is only 5 of the branded market UBL needs

to pursue a larger scope to make the entry viable

1048766 UBL cannot fight with unbranded segment as global product quality mandate of Unilever does

not allow UBL to fight in low price-low quality segment

1048766 Recommend entry should be in the common format segment with both single and multiple

servings and in the boutique segment with a different brand name (if possible BEN amp JERRYrsquoS)

1048766 UBL should build up state-of-art modern factory for manufacturing and establish cold chain

facilities initially focusing on metro cities

1048766 Investment issues are required to be addressed for building factory and cold chain and capital

requirement needs to be identified for that purpose4

1048766 UBL may have boutiques for driving image selective top-end offering

1048766 Kiosks can be setup near universities and shopping malls

1048766 Boutiques should be concentrated in Dhaka and Chittagong

1048766 Ice cream for boutiques and kiosks would be produced in factory as institutional packs of 9-10

litres

82 Products

1048766 As a Brand Building country in global Unilever operating framework UBL is entitled only to

bring products developed by the Brand Development countries

1048766 Unilever should focus on serving products that have nutritional benefits (already available

globally) along with usual satisfactions of sensual pleasure functional attributes etc

1048766 Current existent players especially Igloo and Kwality have extensively copied global and

regionally available Unilever products eg Cornelli is same as Wallrsquos Cornetto Vinetta is similar

to Vienetta Mega is similar to Magnum etc UBL needs to differentiate these to consumers on

the ldquotaste the originalrdquo platform where global quality is focused regarding the products

1048766 UBL should also bring regionally famous brands like Moo or Max to create image

differentiation

1048766 Magnum or Moo should be used as premium end ice cream to generate more profit margin

Evaluation of Entry into Ice cream Business for Bangladesh Limited 54

83 Placement

1048766 Distribution focus should be in Dhaka for entry as Dhaka contributes more than 60 of total

ice cream sales in the country

1048766 Company may use carts as distribution method They serve as good source of visibility and

availability It would help in increasing impulse purchase

1048766 At least 1500 outlets in Dhaka and Chittagong needs to be actively served using dedicated

branded refrigerators to generate sales

1048766 50 carts should operate in Dhaka and Chittagong

84 Price

1048766 UBL products should be priced at par with Igloo pricing for the common format ice creams

1048766 UBL can bring in premium single-serve SKUS for the higher economic classes in the price

range of BDT 60-80

1048766 Smaller SKUs (small lolly stick) can be introduced in the price range of BDT 10-15

1048766 In the boutique segment UBL should price products above the semi-premium segment

(Gelateria Igloo Sub Zero or Andersenrsquos) but lower than that of Club Gelato or MoumlvenPick

85 Promotion

1048766 UBL would require strong marketing campaign (As high as 50 of sales) to have a grand

entry in the market

1048766 Presence in the television media would be of utmost importance More than 50 of

promotional expense should be made here initially Gradually it can be reduced

1048766 Newspaper would serve as the second most important option

1048766 Billboards should also be used

1048766 Activations (similar to Lux Channel i Super Star or Igloo Festival) should be done to generate

trial

86 Scope of Opportunity

Table 30 Value and Volume Based Scope of Opportunity for UBL

Value (BDT Cr)

Volume (Tons)

Market

131

7835

Common

121

7600

Boutique

98

235

Evaluation of Entry into Ice cream Business for Bangladesh Limited 55

861 Geographic Contribution

1048766 Dhaka (61)

1048766 Chittagong (19)

1048766 Sylhet (10)

862 UBL objectives

Common Format Ice Creams

1048766 Target 10 Market share in 1st year operation

1048766 Value BDT 11 Cr

1048766 Production capacity required 21 Tons day

1048766 Freezer Placement 1500 freezers

1048766 Cart operation At least 50 carts

Boutiques

1048766 Target Further develop the market

1048766 Focus Dhaka Chittagong and Sylhet Metro

1048766 Franchise At least 20 franchisee operations nation wide in divisional towns

1048766 Pricing Below imported parlours above common formats with around BDT 400 per Litre

87 Critical Success Factors

1048766 UBL is considered as a high profile company in Bangladesh and thus they cannot operate in

the market only with common products like choc-bars and cups They must have premium

products (these require extrusion line) also to carry their brand image Otherwise UBL would not

be able to charge usual premium over competition products

1048766 Launch of ice cream would require huge promotional and activation support in order to gain

customers from Igloo People want novelty regarding ice cream and UBL have to let them know

about their products and create hype

1048766 Cart should be used as a source of distribution Recent successes of Unilever companies like

Indonesia shows that carts can generate more sales and can be used as source of visibility in the

minds of both retail traders and consumers Carts can also provide incremental sales to the

company

1048766 UBL have to create a strong cold chain for ice cream (initially in Dhaka and Chittagong) to

ensure quality products for consumers

1048766 UBL have to build capacity very rapidly to meet consumer demand if the launch is successful

Evaluation of Entry into Ice cream Business for Bangladesh Limited 56

90 BUSINESS PROJECTION

91 Basic Assumptions

Business projection for ice cream business was made based on a conservative approach UBL

would require spending significantly on production capacity and factory dedicated to ice cream

Thus to analyse business possibilities of ice cream certain assumptions were made and collected

data were used These are

1048766 Production equipments and cabinets would cost approximately BDT 55 crores

1048766 Production equipments 45

1048766 Packaging Equipments 15

1048766 Storage Facility 20

1048766 Branded Freezers 10

1048766 Distribution Investment 10 (Distributors would also invest themselves)

1048766 Ice cream factory with a floor size of 20000 sqft would cost BDT 25 crores

1048766 Objective is to capture 10 market share in Dhaka and Chittagong in the first year

1048766 Business would grow by 50 in year 2 and 3 30 in year 4 and 25 in year 5

1048766 Weighted price per litre is BDT 170 according to volume share of single serve ice cream

multiple serve ice cream and boutique ice cream

1048766 Other financial assumptions were also made List of them are provided below but amount has

been removed for confidentiality issues

Assumptions

Trade Margin

Distributors Margin

DutyVAT Rate

Trade Terms Expense of NPS

Trade Terms Expense of NSV

Advertising ampPromotion of NPS

Indirects (Salaries Wages etc)

Trading Tax

Table 31 Assumptions for Business Projection

Evaluation of Entry into Ice cream Business for Bangladesh Limited 57

100 CONCLUSION

Ice cream has good prospect in Bangladesh It is still a growing market with opportunities for big

new entrants With the barriers of entry UBL needs to consider its priorities UBL being an HPC

company traditionally needs to acquire expertise in cold chain distribution and has to invest a lot

of money to rip the benefits of the industry However to initiate company can take regional

support and acquire resource expertise The company should enter the business as soon as

possible since there is potential threat from DANONE to introduce more ice creams after ISIS

diabetic ice cream and also with potential of the industry arch rival Nestlersquo might consider

entering into the industry too

Evaluation of Entry into Ice cream Business for Bangladesh Limited 58

References

Web References

1 wwwunilevercom

2 wwwunilevercombd

3 wwwhllcom

4 wwwunilevercompk

5 wwwthedailystarcom - Life Style Magazine

6 wwwreuterscouk

Evaluation of Entry into Ice cream Business for Bangladesh Limited 59

Page 41: Square Ice cream

1048766 Location Banani Road 11 (Planning for a second one in Dhanmondi)

1048766 Established in 2001

1048766 Seating Capacity 48

1048766 Area 1250 sft (including kitchen)

1048766 Owner Mr Jahangir Alam (Bangladesh)

1048766 Business Type Joint business partnership with Singapore

1048766 Staff 15 people (6 in the kitchen)

1048766 Production capacity 150 litres per day

Product Related Information

1048766 Product Italian style parlour scoop ice cream fruit juice coffee and pastries

1048766 Flavours Around 32 flavours available

1048766 Most selling Ferraro Rocher Vanilla Pistachio

1048766 Innovations New variants and ingredients are communicated by their Italian supplier and

Club Gelato decides what to take from them

1048766 Serve type Cup Cone Glasses Box for take away

Consumer Profile

1048766 Primary Teenagers and Young Adults (18-30) amp Diplomats

1048766 Secondary Family consumers for eat out

1048766 Income Group High income customers tentatively from SEC A and higher SEC A

1048766 Geographic Area Diversified

1048766 Rush time 8-10 pm

Sales and Price Information

1048766 Sales BDT 50000 (60 Ice cream 40 other desserts) daily in summer In winter however

other products sell more and thus they keep total sales at the same level

1048766 Price 750 per litre for any flavour

1048766 Sales Volume 50-60 litres per day

Supply Chain Placement Information

1048766 Milk Local sourcing from Milk Vita (4050 litres per day)

1048766 Chocolates amp Flavours Belgium France Germany

1048766 Transportation Mainly air (They can afford it due to high margin)

1048766 Contribution of various materials Flavours (30) Milk (20) other parts are water and air

Promotional Materials

1048766 Materials used are near premises POS materials for promoting the parlour only

Table 23 Detail of Club Gelato

Evaluation of Entry into Ice cream Business for Bangladesh Limited 38

MoumlvenPick of Switzerland

Basic Company Information

1048766 Location Gulshan

1048766 Established in 2000

1048766 Seating Capacity 55

1048766 Owner Mr Arif Mahmud

1048766 Business Type Franchise of International MoumlvenPick

1048766 Storage Capacity in Shop 150 litres

Product Related Information

1048766 Product Imported MoumlvenPick ice creams coffee chicken sandwich and Frappe

1048766 Flavours Around 30 to 35 flavours available

1048766 Most selling Swiss Chocolate caramel Vanilla Dream Espresso Strawberry

1048766 Innovations New variants are communicated by their franchiser and they decide on flavours

that they want

1048766 Serve type Cup Cone Glasses Box for take away

Consumer Profile

1048766 Primary Teenagers and Young Adults (18-30) (70) amp Diplomats

1048766 Secondary Family consumers for eat out

1048766 Income Group High income customers tentatively from SEC A

1048766 Geographic Area Concentrated in Gulshan and nearby areas

1048766 Rush time Afternoon- Young Adult 10 to 11 pm Foreigners

1048766 the company also serves at parties and has freezers in known hotels where their ice creams

are served

Sales and Price Information

1048766 Sales BDT 35-40000 daily in summer

1048766 Price 640 per litre for any flavour

1048766 Sales Volume 55-60 litres per day

Supply Chain Placement Information

1048766 Transportation Imported finished goods by ship

1048766 Ship travel time 19 days

1048766 Port clearance 10 days

1048766 Safety Cushion Extra 10 days

Promotional Materials

1048766 Materials used are near premises POS materials for promoting the parlour only

Table 24 Detail of MoumlvenPick of Switzerland

Evaluation of Entry into Ice cream Business for Bangladesh Limited 39

Andersenrsquos of Denmark

Basic Company Information

1048766 Location Gulshan (2 others in Uttara Dhanmondi)

1048766 Established in 2001

1048766 Seating Capacity 48

1048766 Owner United Group

1048766 Business Type Franchise of Australian company Andersenrsquos of Denmark

1048766 Production Tongi Factory of United Group

1048766 Production capacity 2000 litres per day in factory

1048766 Storage Capacity in Shop 150 litres

Product Related Information

1048766 Product Danish parlour scoop ice cream and coffee

1048766 Flavours Around 30 to 35 flavours available

1048766 Most selling Strawberry Butter Scotch Green

1048766 Innovations New variants and ingredients are communicated by their franchiser and they

decide on flavours that they want

1048766 Serve type Cup Cone Glasses Box for take away

Consumer Profile

1048766 Primary Teenagers and Young Adults (18-30) (70) amp Diplomats

1048766 Secondary Family consumers for eat out

1048766 Income Group High income customers tentatively from SEC A

1048766 Geographic Area Concentrated in Gulshan and nearby areas

1048766 Rush time 8 to 10 pm

Sales and Price Information

1048766 Sales BDT 10-12000 daily in summer

1048766 Price 460 per litre for any flavour

1048766 Sales Volume 40-50 litres per day

Supply Chain Placement Information

1048766 Milk 2025 kg packs are imported

1048766 Chocolates amp Flavours Imported

1048766 Butte paper Local sourcing

1048766 Transportation Ship

Promotional Materials

1048766 Materials used are near premises POS materials for promoting the parlour only

Table 25 Detail of Andersenrsquos of Denmark

Evaluation of Entry into Ice cream Business for Bangladesh Limited 40

Gelateria Igloo

Basic Company Information

1048766 Location Banani Kemal Ataturk Avenue (Two others in GEC Mor Chittagong and Naya

Paltan)

1048766 Established in 2000

1048766 Seating Capacity 20

1048766 Production From Igloo factory in Shyampur Narayanganj

Product Related Information

1048766 Product Parlour scoop ice cream and coffee only

1048766 Flavours Around 30 flavours available

1048766 Most selling Vanilla Strawberry Chocolate Pistachio Butter Scotch Tutti Fruity

1048766 Serve type Cup Cone Glasses Box for take away

Consumer Profile

1048766 Primary Teenagers and Young Adults (18-30)

1048766 Secondary Family consumers for eat out

1048766 Income Group High income customers tentatively from SEC A and B

1048766 Geographic Area Diversified

1048766 Rush Time afternoon and evening

Sales and Price Information

1048766 Sales BDT 8000 to 10000 daily in summer Nearly one fourth in winter

1048766 Price Varies but 350 per litre of vanilla

Promotional Materials

1048766 POS materials at the premises

Table 26 Detail of Gelateria Igloo

52 Price Comparison of Common and Boutique Segments

Price ranges of both common format and boutique segment cannot exactly be pin pointed as

products do not follow common structure and variations occur with use of toppings mixing of

flavours and use of coatings However a price comparison has been made among the brands

based on their price of per litre of vanilla flavoured ice cream in the market It appears to be as

following

Company

Price Litre Vanilla

Club Gelato

750

MoumlvenPick

640

Andersenrsquos

460

Dolce Vita

440

Igloo

100

Kwality

100

Polar

100

Milk-Vita

90

Savoy

85

Table 27 Comparative Price Analysis

As it can be seen there is price gap within the range of BDT 100-400 Ice cream kiosks and

small scooping boutiques can operate within that range

Evaluation of Entry into Ice cream Business for Bangladesh Limited 41

60 CONSUMER ANALYSIS

61 Target Group of Ice cream

Who are the consumers of ice cream This question does not have a clear answer Ice cream is a

food for all It is the only food consumed by a human being at less than 0 degree centigrade

temperature and people of all ages feel indulged to have it However we can determine focus

target groups for both branded common format and artisan boutique ice cream Group

discussions and market visits were done to get insight into the consumers along side resources

form secondary sources Age based target group is common for both segments but variation

among the groups occur mainly based on SEC and DMFI classification

611 Geographic Group

Branded ice cream remains an urban product till date Geographically branded ice cream has

reached urban and semi urban areas up to Thana Head Quarter levels Ice cream has reached

areas where electricity is available Small artisan players are available in places where large

branded players have no distribution

612 Target Age Group

Age wise grouping of target consumers is as follows

1048766 Urban kids in the age group of 5-14

1048766 They mainly consume normal sticks cups cones innovative fillers and water ice creams

1048766 Urban youth in the age group of 15-24

1048766 They consume premium and extrusion sticks and cones

1048766 Urban mothers in the age group of 25-35

1048766 They determine the family purchases Even when the father purchases ice cream decision is

taken by them

Consumption pattern of various age groups are depicted in the following chart Ice cream

consumption pattern50203005 to 14 yrs15 to 24 yrs25 to 35 yrs

Figure 11 Target Group wise Consumption Pattern Evaluation of Entry into Ice cream Business

for Bangladesh Limited 42

613 Target SEC and DMFI Group

Common Format

SEC A and B is the target group for common format ice cream However with rapid increase in

price level over the years has made it a ldquohard to consumerdquo product for SEC B consumers who

belong to lower DMFI group

Boutique Format

Boutique formatrsquos higher margin and high price range makes it an exclusively SEC A ice cream

People belonging to upper and upper middle class have access to the mediocre boutiques and

only higher upper class can have premium ice creams like Club Gelato and MoumlvenPick

Another unique target group for boutique format are the foreigners who live in Bangladesh

These people tend to visit the parlours to have ice cream as dessert especially after dinner

62 Ice cream in Consumer Lifestyle

Figure 12 Ice cream in Consumer Life style

This simple overview of ice cream in consumer lifestyle was determined based on in-depth

research analysis of UBL and validated through qualitative group discussions by the author

However detail of in-depth research is provided in a later section of this chapter

Evaluation of Entry into Ice cream Business for Bangladesh Limited 43

63 Highlights of Purchase Habit of Ice cream

631 Common Habits across Target Groups

There are some common habits that were identified in earlier researches and group discussions

with consumers Common habits mean the consumer approach towards ice cream that is seen

across all target groups eg kids youth and adult purchasers These are outlined below

1048766 Ice cream is mainly seen as a dessert or a snack Impulse ice cream is seen as a quick snack

that is consumed when it is in sight Visibility plays a big role here Regarding family packs

people see it as a post-food dessert

1048766 Ice cream purchase is commonly a planned event When the contexts arise people generally

take a bit of time to decide whether or not to have ice cream or when they want to go to a

boutique they make due considerations regarding which boutique to visit

1048766 Ice cream purchase decision is taken based on favourite flavour People tend to try out new

variants and flavours when they first see it They compare the taste with earlier experience and

when they purchase later they choose the flavour they have liked most

1048766 For In-Home segment decision is mostly taken on the flavour Generally people come up with

different flavours of choice and most voted flavour is chosen

1048766 People become aware of new variants or flavours mainly through word-of-mouth

Advertisement (new launches special offers and festivals) in newspaper is another source of

awareness

1048766 People are currently indifferent towards the price level of premium flavours However some

feel that price of Choc-bar or water ice creams (lolly) is a bit much If less they would have

consumed more Some also feel that companies should come up with branded ice cream in the

price range of BDT 5-8

1048766 Ice cream is purchased from nearby shops If required brand and flavour is not available 2-3

shops will be visited and then available flavour will be selected even if the required one is not

found This is done mainly not to ruin the mood for ice cream

1048766 People are very open to try new brands and flavours especially if it comes from a credible

source They would try new flavours and if they are satisfied with the taste they would repeat

purchase

1048766 Regarding boutique visits people feel that boutiques need to have a proper environment

enough flavours and other snacks

1048766 While visiting boutique with family or companion they want variation in flavours so that

they would order different flavours and taste each otherrsquos ice cream It is seen as a sign of

togetherness

1048766 Frequency of ice cream purchase varies among people It depends on peer pressure collective

family decision summer heat and attitude towards ldquoice creamrdquo itself as a product Evaluation of

Entry into Ice cream Business for Bangladesh Limited 44

632 Habits of Kids

1048766 Kids choose ice cream flavours by the look of the product (generally pictures shown in POS

materials and carts) They love colour and designs of the products let it be a common format or a

boutique ice cream

1048766 Kids (when in house) would go with the housemaid to the nearby shop choose the flavour

they want (within range of the amount given to the maid) and buy it

1048766 When with parents they would take the product they like even if the price is lower than some

other product However mothers play a role in this decision They would want their children not

to choose too high priced a product or coloured products

633 Habits of Youth

1048766 Young people are the main consumer of impulse ice cream They also are one of the major

consumers in the boutique segment

1048766 Young people love to try out new products that come into the market Another side of the coin

is that they are not very loyal to a brand or a flavour and tend to switch a lot

1048766 Regarding boutique visits young people go to boutiques to have an ldquoice cream hang outrdquo with

peer groups They would stay there for a longer period of time while they have their ice cream

1048766 Some times young people make milk shakes and other ice cream based desserts

634 Habits of Mothers

1048766 Mothers worry about their childrenrsquos health and they prefer ldquovanillardquo type of brands

However when price constraint occurs they go for water ice creams for their children They try

to convince their kidrsquos purchase decision

1048766 Regarding family purchase motherrsquos decision is sometimes prioritized by the whole family

64 Barriers to Ice cream Consumption

641 Emotional Barriers

1048766 Overindulge (close to sinful)

1048766 Undisciplined (no control)

1048766 Childish (licking)

1048766 Artificial Image

642 Functional Barriers

1048766 People of SEC B feel that ice cream is an expensive dessert (If less expensive would consume

more often)

1048766 It leads to cold cough - especially in winter rainy season

1048766 It contains artificial additives preservatives

1048766 It is very high in calories that lead to fattening

Evaluation of Entry into Ice cream Business for Bangladesh Limited 45

1048766 It does not quench ldquothirstrdquo

1048766 Less convenient (portable immediate eat)

1048766 Messy Dripping

65 Research Findings

The highlights regarding purchase habits triggers and barriers of ice cream consumption provide

a glimpse into the consumer world of ice cream industry However UBL CMI conducted a

formal research exclusively on ice cream consumers to identify

1048766 Occasions of ice cream

1048766 Frequency of ice cream consumption

1048766 Expectations from ice cream occasions

1048766 Personalities that they desire from ice cream

651 Relevant Occasions in Daily Lives of Consumers

Research question regarding ldquousual occasions of life that occurred most frequently in day-to-day

lives of the respondentsrdquo generated the following replies

Occasion

of Respondents saying Yes

Watching TV

93

Normal Dinner At Home

91

Normal Lunch At Home

89

At Home While ReadingMusicSurfing

86

Informal Family Get Together

85

Out Of Home Hanging Out With Friends

84

Out Shopping

84

Mid-Afternoon Break At Home

83

At Home By Myself During The Day

82

Special Dinner At Home

82

Informal Dinner Out Of Home

82

Normal Lunch Out Of Home

82

Leisure Walk

79

Coming Home From WorkSchool

78

Special Dinner Out Of Home

78

Celebration

78

A Night In With Friends

77

At Home By Myself In The Evening

77

Special Lunch Out Of Home

76

Mid-Afternoon Break Out Of Home

75

Special Lunch At Home

73

Day out with Partner

72

Midmorning Break

70

At Breakfast

68

Family Day Out

68

During Work Or At School

65

Evaluation of Entry into Ice cream Business for Bangladesh Limited 46

Travelling ToFrom WorkSchool

65

At The Cinema

61

Special Event

56

Clubbing At A Party

50

Post GymSports

48

Table 28 Relevant Occasions in Consumersrsquo Lives

Respondents were then asked to mention ldquofrequency of occurrence of the identified occasionsrdquo

The identified replies are as follows Normal dinner at homenormal lunch at homeComing home

from workschoolTraveling tofrom workschoolDay out with Partner SpouseMid-afternoon

break at homeOut of home hanging out with friendsLeisure walkMid-afternoon break out of

homeA night in with friendsSpecial dinner at homeSpecial lunch out of homeFamily day

outSpecial eventPost gymsportsDaily2-3 Times A WeekWeekly2-3 Times A MonthOnce A

MonthEvery 2-3 MonthsLess OftenNever Figure 13 Frequency of Occurrence of Occasions

This shows that ldquoNormal dinner at home Watching TV Normal Lunch At Home At Home

While ReadingMusicSurfing Coming Home From WorkSchool During Work Or At School

Travelling ToFrom WorkSchool Midmorning Break Day Out With Partner Spouse At Home

By Myself During The Dayrdquo are the most frequent daily rituals of busy lives of consumers

652 Frequency of Ice cream Consumption

Respondents were asked to mention ldquoconsumption pattern of ice cream during the identified

occasionrdquo on a scale of 1-5 depicting frequencies like ldquo(5) always (4) most of the times (3)

about half of the times (2) sometimes (1) never do not knowrdquo The responses are depicted in

the following table

Evaluation of Entry into Ice cream Business for Bangladesh Limited 47

444474544655555566756665775967779991011101111101210111110101113111412131314161

011121411131216181519181518211817171719181718201721222130303434253437403741394

046383944464746453745414641374638504843414839373030292726232725222020201926202

21722221317Midmorning

breakWhile clubbing at aAt the cinemaSpecial eventNormal lunch out ofA night in with

friendsNormal dinner atInformal dinner out ofAt home by myselfAt home by myself inOut

shoppingSpecial lunch atDay out with SpouseWatching TVAlwaysmost of the timesAbout half

of the timesSometimesneverdo not know

Figure 14 Frequency of Ice cream Consumption

As it can be seen ldquoDay out with Spouse Special lunch at home Special dinner at home

Watching TV Family day out Celebrationrdquo are the occasions where most frequently ice cream is

consumed

653 Market Character Mapping Relevant Occasions vs Frequency of Consumption

If we plot frequency of consumption on the X-axis of a chart and relevance of occasion

occurrence on the Y-axis taking the above mentioned values as cut-off values we get four

quadrants in the chart depicting four market scenarios that any ice cream manufacturer in

Bangladesh market might encounter given the current market situation This market

segmentation is based on frequency of ice cream consumption in daily occasions of consumer

lives

The segments are

1048766 OPPORTUNITY MARKET High Relevant Occasions-Low Ice cream Frequency

1048766 QUESTION MARKET Less Relevant Occasions-Low Ice cream Frequency

1048766 HIGH FREQUENCY MARKET Relevant Occasions-High Ice cream Frequency

1048766 CAPTIVE MARKET Less Relevant Occasions-High Ice cream Frequency

The chart looks as follows Evaluation of Entry into Ice cream Business for Bangladesh Limited

48

Figure 15 Relevance of Occasion-Frequency of Consumption Mapping

As it can be seen from the above chart Bangladesh Market still lies in the Opportunity and

Question market zone with a pull towards High frequency and Captive Market zones This is

evident from market data as penetration of ice cream still remains at Thana headquarters levels

Also this explains the high market growth rate of 17 as market is yet under developed and

branded quality ice cream has yet not reached all levels of consumers especially rural level that

constitutes around 75 of Bangladeshi market

From the above analysis we can establish that target of ice cream manufacturers should be to

penetrate more into the Bangladeshi market to create higher frequency of ice cream

consumption The following chart shows the strategies to follow for ice cream manufacturers

Figure 16 Required Market Strategy for Bangladesh

Evaluation of Entry into Ice cream Business for Bangladesh Limited 49

As relevance of ice cream consumption occasions can hardly be controlled by marketers their

endeavour should be to create more ldquoemotional and functionalrdquo attachment to ice cream in less

frequent occasions through ldquomarket developmentrdquo strategy to earn share from overall food

expenditure of consumers and at the same time make them consume more ice cream in highly

relevant occasions through ldquopenetrationrdquo strategy

654 Consumersrsquo Emotional Requirements and Product Attributes

All consumers under these clusters also identify the emotional requirements and the significant

product attributes they seek from their current preferred and future desired ice creams These are

provided below

Cluster

Emotional Functional Requirement

Product Attributes

Enjoyment

Flavour Variety

1048766 Combination of different flavours

1048766 Combination of different textures

1048766 Very sweet

1048766 With wafer or biscuit

1048766 With chocolate

1048766 Of a well known brand

Socially Involved

Spoonable Rich

1048766 Very creamy

1048766 Only natural ingredients

1048766 No mess

Care

Size Creaminess

1048766 Big

1048766 Rich full taste

1048766 Smooth

1048766 Value for money

1048766 No mess

Unwind amp Escape

Economy

1048766 Crunchy

1048766 Economic

1048766 Of a well known brand

1048766 Nutritious

Balanced Convenience

Health Conscious

1048766 Of a well known brand

1048766 Nutritious

1048766 Milk based

1048766 Low sugar

1048766 Low carbohydrates

1048766 Filling

Active Self-Grooming

Fruit Vitamins

1048766 Healthy

1048766 Fruit based

1048766 Low fat

1048766 Liquid or drinkable

1048766 Nutritious

1048766 Of a well known brand

Confidence

Drinkable Light

1048766 Low calories

1048766 Light on the stomach

1048766 Chewy or gooey

1048766 Not so sweet

1048766 Natural appearance

Sensual

Appeal or image

1048766 No artificial additives

Evaluation of Entry into Ice cream Business for Bangladesh Limited 50

1048766 Natural appearance

1048766 Melting slowly

1048766 Attractive packaging

1048766 High quality ingredients

1048766 Of a well known brand

Table 29 Requirements amp Product Attributes Desired by Consumer Clusters

Of these findings we see that the identified highlighted barriers to ice cream consumption are

pretty evident among the consumers Mostly people want products of a reliable source or a well

known brand low calories quality ingredients value for money economic type

Evaluation of Entry into Ice cream Business for Bangladesh Limited 51

70 INDUSTRY ATTRACTIVENESS AND ENTRY PROSPECTS

71 Driving Forces of Growth

As identified in the earlier sections there are several driving forces behind the growth of ice-

cream industry in Bangladesh

712 Trade and Infrastructural Level

1048766 As a result of globalization newer varieties have been introduced to the local products Many

foreign companies are also coming as franchise so there has been increased competition and

these boutiques are setting higher standards for the local producers

1048766 The present market growth rate is 18-19 which is being influenced by larger players like

Igloo who are expanding their distribution nation wide with expansion of national electricity

grid

1048766 With entry of Modern Trade and recent organized business approach of retailers has made it

possible for ice cream manufacturers to penetrate into shops even without providing them with

branded freezers

1048766 Weather change has increased ldquosummerrdquo season in our country which has reduced negative

seasonal impact on ice cream

1048766 Large companies like Igloo have taken global learning of using carts as an effective tool of

availability and visibility for ice cream

1048766 New and improved technologies are being used in the production process This technological

advancement has improved quality increased speed of production and made the process more

cost effective

713 Consumer Level

1048766 Only a few years back rich people could afford the luxury of having ice-cream but now it has

become a common product for everybody Ice-cream companies are producing different products

with a wide price range for consumers of every class and status

1048766 Nowadays companies are doing promotional campaigns more frequently the customers get to

know about the product which makes it easier for them to buy the best one

1048766 The improved standard of life and more modernized lifestyle of people is an important reason

for the increased consumption thus growth of the ice-cream industry

Evaluation of Entry into Ice cream Business for Bangladesh Limited 52

72 Prospects of Entry

The ice-cream industry of Bangladesh is an attractive one for the investors because there is a

huge market but number of producers is very small The major reasons behind industry

attractiveness are as follows

1048766 The industryrsquos current growth potential is very high with opportunity for market development

1048766 The competition currently permits adequate profitability and the competitive forces are

becoming stronger with time

1048766 Boutique segment is at a very high growth stage but no operator is currently operating with a

mid price range of BDT 100-400 Ice cream kiosks and small scooping boutiques can operate

within that range

1048766 Current industry driving forces are favourable for the future industry profitability

1048766 Globally oriented consumers look for variety in ice cream that is currently not available

Latest innovations came in the market in 2002 People would welcome new variety and flavours

1048766 There is a gap in the market for balanced convenience through ice cream where consumers can

get nutritional benefits for ice cream Also emotional attachment to ice cream could further be

improvised in promotional campaigns

1048766 There is high scope for market penetration and development to increase frequency of ice

cream consumption

1048766 Level of risk or uncertainty is very low in ice-cream industry because the consumer market is

so huge any product with a standard quality and careful pricing will be able to make significant

profit

1048766 As for geographic reach of the industry 60 market is still in Dhaka There is scope of

expansion and a new entrant can easily capture market share within Dhaka using carts even if

they do not want nation wide cold chain distribution

1048766 The production process is very complex and capital requirements are also high So before

going into production any company should know about their capabilities and weaknesses and

then start the business or else they might suffer huge loss at a certain level

1048766 Unilever can acquire the required resource and use existing multi-national multi-cultural

expertise to enter the market in a grand way

1048766 With high probability of entry from DANONE with more products like the ISIS diabetic ice

cream Unilever should consider entering in this industry as soon as possible

Evaluation of Entry into Ice cream Business for Bangladesh Limited 53

80 ENTRY STRATEGY FOR UNILEVER

While describing the suggested entry strategy for UBL certain issues have been kept

confidential and some issues have been touched but not explained to keep consistency with UBL

confidentiality policy

81 Suggested Entry Areas for UBL

1048766 Boutique segment of the Bangladesh ice cream is only 5 of the branded market UBL needs

to pursue a larger scope to make the entry viable

1048766 UBL cannot fight with unbranded segment as global product quality mandate of Unilever does

not allow UBL to fight in low price-low quality segment

1048766 Recommend entry should be in the common format segment with both single and multiple

servings and in the boutique segment with a different brand name (if possible BEN amp JERRYrsquoS)

1048766 UBL should build up state-of-art modern factory for manufacturing and establish cold chain

facilities initially focusing on metro cities

1048766 Investment issues are required to be addressed for building factory and cold chain and capital

requirement needs to be identified for that purpose4

1048766 UBL may have boutiques for driving image selective top-end offering

1048766 Kiosks can be setup near universities and shopping malls

1048766 Boutiques should be concentrated in Dhaka and Chittagong

1048766 Ice cream for boutiques and kiosks would be produced in factory as institutional packs of 9-10

litres

82 Products

1048766 As a Brand Building country in global Unilever operating framework UBL is entitled only to

bring products developed by the Brand Development countries

1048766 Unilever should focus on serving products that have nutritional benefits (already available

globally) along with usual satisfactions of sensual pleasure functional attributes etc

1048766 Current existent players especially Igloo and Kwality have extensively copied global and

regionally available Unilever products eg Cornelli is same as Wallrsquos Cornetto Vinetta is similar

to Vienetta Mega is similar to Magnum etc UBL needs to differentiate these to consumers on

the ldquotaste the originalrdquo platform where global quality is focused regarding the products

1048766 UBL should also bring regionally famous brands like Moo or Max to create image

differentiation

1048766 Magnum or Moo should be used as premium end ice cream to generate more profit margin

Evaluation of Entry into Ice cream Business for Bangladesh Limited 54

83 Placement

1048766 Distribution focus should be in Dhaka for entry as Dhaka contributes more than 60 of total

ice cream sales in the country

1048766 Company may use carts as distribution method They serve as good source of visibility and

availability It would help in increasing impulse purchase

1048766 At least 1500 outlets in Dhaka and Chittagong needs to be actively served using dedicated

branded refrigerators to generate sales

1048766 50 carts should operate in Dhaka and Chittagong

84 Price

1048766 UBL products should be priced at par with Igloo pricing for the common format ice creams

1048766 UBL can bring in premium single-serve SKUS for the higher economic classes in the price

range of BDT 60-80

1048766 Smaller SKUs (small lolly stick) can be introduced in the price range of BDT 10-15

1048766 In the boutique segment UBL should price products above the semi-premium segment

(Gelateria Igloo Sub Zero or Andersenrsquos) but lower than that of Club Gelato or MoumlvenPick

85 Promotion

1048766 UBL would require strong marketing campaign (As high as 50 of sales) to have a grand

entry in the market

1048766 Presence in the television media would be of utmost importance More than 50 of

promotional expense should be made here initially Gradually it can be reduced

1048766 Newspaper would serve as the second most important option

1048766 Billboards should also be used

1048766 Activations (similar to Lux Channel i Super Star or Igloo Festival) should be done to generate

trial

86 Scope of Opportunity

Table 30 Value and Volume Based Scope of Opportunity for UBL

Value (BDT Cr)

Volume (Tons)

Market

131

7835

Common

121

7600

Boutique

98

235

Evaluation of Entry into Ice cream Business for Bangladesh Limited 55

861 Geographic Contribution

1048766 Dhaka (61)

1048766 Chittagong (19)

1048766 Sylhet (10)

862 UBL objectives

Common Format Ice Creams

1048766 Target 10 Market share in 1st year operation

1048766 Value BDT 11 Cr

1048766 Production capacity required 21 Tons day

1048766 Freezer Placement 1500 freezers

1048766 Cart operation At least 50 carts

Boutiques

1048766 Target Further develop the market

1048766 Focus Dhaka Chittagong and Sylhet Metro

1048766 Franchise At least 20 franchisee operations nation wide in divisional towns

1048766 Pricing Below imported parlours above common formats with around BDT 400 per Litre

87 Critical Success Factors

1048766 UBL is considered as a high profile company in Bangladesh and thus they cannot operate in

the market only with common products like choc-bars and cups They must have premium

products (these require extrusion line) also to carry their brand image Otherwise UBL would not

be able to charge usual premium over competition products

1048766 Launch of ice cream would require huge promotional and activation support in order to gain

customers from Igloo People want novelty regarding ice cream and UBL have to let them know

about their products and create hype

1048766 Cart should be used as a source of distribution Recent successes of Unilever companies like

Indonesia shows that carts can generate more sales and can be used as source of visibility in the

minds of both retail traders and consumers Carts can also provide incremental sales to the

company

1048766 UBL have to create a strong cold chain for ice cream (initially in Dhaka and Chittagong) to

ensure quality products for consumers

1048766 UBL have to build capacity very rapidly to meet consumer demand if the launch is successful

Evaluation of Entry into Ice cream Business for Bangladesh Limited 56

90 BUSINESS PROJECTION

91 Basic Assumptions

Business projection for ice cream business was made based on a conservative approach UBL

would require spending significantly on production capacity and factory dedicated to ice cream

Thus to analyse business possibilities of ice cream certain assumptions were made and collected

data were used These are

1048766 Production equipments and cabinets would cost approximately BDT 55 crores

1048766 Production equipments 45

1048766 Packaging Equipments 15

1048766 Storage Facility 20

1048766 Branded Freezers 10

1048766 Distribution Investment 10 (Distributors would also invest themselves)

1048766 Ice cream factory with a floor size of 20000 sqft would cost BDT 25 crores

1048766 Objective is to capture 10 market share in Dhaka and Chittagong in the first year

1048766 Business would grow by 50 in year 2 and 3 30 in year 4 and 25 in year 5

1048766 Weighted price per litre is BDT 170 according to volume share of single serve ice cream

multiple serve ice cream and boutique ice cream

1048766 Other financial assumptions were also made List of them are provided below but amount has

been removed for confidentiality issues

Assumptions

Trade Margin

Distributors Margin

DutyVAT Rate

Trade Terms Expense of NPS

Trade Terms Expense of NSV

Advertising ampPromotion of NPS

Indirects (Salaries Wages etc)

Trading Tax

Table 31 Assumptions for Business Projection

Evaluation of Entry into Ice cream Business for Bangladesh Limited 57

100 CONCLUSION

Ice cream has good prospect in Bangladesh It is still a growing market with opportunities for big

new entrants With the barriers of entry UBL needs to consider its priorities UBL being an HPC

company traditionally needs to acquire expertise in cold chain distribution and has to invest a lot

of money to rip the benefits of the industry However to initiate company can take regional

support and acquire resource expertise The company should enter the business as soon as

possible since there is potential threat from DANONE to introduce more ice creams after ISIS

diabetic ice cream and also with potential of the industry arch rival Nestlersquo might consider

entering into the industry too

Evaluation of Entry into Ice cream Business for Bangladesh Limited 58

References

Web References

1 wwwunilevercom

2 wwwunilevercombd

3 wwwhllcom

4 wwwunilevercompk

5 wwwthedailystarcom - Life Style Magazine

6 wwwreuterscouk

Evaluation of Entry into Ice cream Business for Bangladesh Limited 59

Page 42: Square Ice cream

Sales and Price Information

1048766 Sales BDT 50000 (60 Ice cream 40 other desserts) daily in summer In winter however

other products sell more and thus they keep total sales at the same level

1048766 Price 750 per litre for any flavour

1048766 Sales Volume 50-60 litres per day

Supply Chain Placement Information

1048766 Milk Local sourcing from Milk Vita (4050 litres per day)

1048766 Chocolates amp Flavours Belgium France Germany

1048766 Transportation Mainly air (They can afford it due to high margin)

1048766 Contribution of various materials Flavours (30) Milk (20) other parts are water and air

Promotional Materials

1048766 Materials used are near premises POS materials for promoting the parlour only

Table 23 Detail of Club Gelato

Evaluation of Entry into Ice cream Business for Bangladesh Limited 38

MoumlvenPick of Switzerland

Basic Company Information

1048766 Location Gulshan

1048766 Established in 2000

1048766 Seating Capacity 55

1048766 Owner Mr Arif Mahmud

1048766 Business Type Franchise of International MoumlvenPick

1048766 Storage Capacity in Shop 150 litres

Product Related Information

1048766 Product Imported MoumlvenPick ice creams coffee chicken sandwich and Frappe

1048766 Flavours Around 30 to 35 flavours available

1048766 Most selling Swiss Chocolate caramel Vanilla Dream Espresso Strawberry

1048766 Innovations New variants are communicated by their franchiser and they decide on flavours

that they want

1048766 Serve type Cup Cone Glasses Box for take away

Consumer Profile

1048766 Primary Teenagers and Young Adults (18-30) (70) amp Diplomats

1048766 Secondary Family consumers for eat out

1048766 Income Group High income customers tentatively from SEC A

1048766 Geographic Area Concentrated in Gulshan and nearby areas

1048766 Rush time Afternoon- Young Adult 10 to 11 pm Foreigners

1048766 the company also serves at parties and has freezers in known hotels where their ice creams

are served

Sales and Price Information

1048766 Sales BDT 35-40000 daily in summer

1048766 Price 640 per litre for any flavour

1048766 Sales Volume 55-60 litres per day

Supply Chain Placement Information

1048766 Transportation Imported finished goods by ship

1048766 Ship travel time 19 days

1048766 Port clearance 10 days

1048766 Safety Cushion Extra 10 days

Promotional Materials

1048766 Materials used are near premises POS materials for promoting the parlour only

Table 24 Detail of MoumlvenPick of Switzerland

Evaluation of Entry into Ice cream Business for Bangladesh Limited 39

Andersenrsquos of Denmark

Basic Company Information

1048766 Location Gulshan (2 others in Uttara Dhanmondi)

1048766 Established in 2001

1048766 Seating Capacity 48

1048766 Owner United Group

1048766 Business Type Franchise of Australian company Andersenrsquos of Denmark

1048766 Production Tongi Factory of United Group

1048766 Production capacity 2000 litres per day in factory

1048766 Storage Capacity in Shop 150 litres

Product Related Information

1048766 Product Danish parlour scoop ice cream and coffee

1048766 Flavours Around 30 to 35 flavours available

1048766 Most selling Strawberry Butter Scotch Green

1048766 Innovations New variants and ingredients are communicated by their franchiser and they

decide on flavours that they want

1048766 Serve type Cup Cone Glasses Box for take away

Consumer Profile

1048766 Primary Teenagers and Young Adults (18-30) (70) amp Diplomats

1048766 Secondary Family consumers for eat out

1048766 Income Group High income customers tentatively from SEC A

1048766 Geographic Area Concentrated in Gulshan and nearby areas

1048766 Rush time 8 to 10 pm

Sales and Price Information

1048766 Sales BDT 10-12000 daily in summer

1048766 Price 460 per litre for any flavour

1048766 Sales Volume 40-50 litres per day

Supply Chain Placement Information

1048766 Milk 2025 kg packs are imported

1048766 Chocolates amp Flavours Imported

1048766 Butte paper Local sourcing

1048766 Transportation Ship

Promotional Materials

1048766 Materials used are near premises POS materials for promoting the parlour only

Table 25 Detail of Andersenrsquos of Denmark

Evaluation of Entry into Ice cream Business for Bangladesh Limited 40

Gelateria Igloo

Basic Company Information

1048766 Location Banani Kemal Ataturk Avenue (Two others in GEC Mor Chittagong and Naya

Paltan)

1048766 Established in 2000

1048766 Seating Capacity 20

1048766 Production From Igloo factory in Shyampur Narayanganj

Product Related Information

1048766 Product Parlour scoop ice cream and coffee only

1048766 Flavours Around 30 flavours available

1048766 Most selling Vanilla Strawberry Chocolate Pistachio Butter Scotch Tutti Fruity

1048766 Serve type Cup Cone Glasses Box for take away

Consumer Profile

1048766 Primary Teenagers and Young Adults (18-30)

1048766 Secondary Family consumers for eat out

1048766 Income Group High income customers tentatively from SEC A and B

1048766 Geographic Area Diversified

1048766 Rush Time afternoon and evening

Sales and Price Information

1048766 Sales BDT 8000 to 10000 daily in summer Nearly one fourth in winter

1048766 Price Varies but 350 per litre of vanilla

Promotional Materials

1048766 POS materials at the premises

Table 26 Detail of Gelateria Igloo

52 Price Comparison of Common and Boutique Segments

Price ranges of both common format and boutique segment cannot exactly be pin pointed as

products do not follow common structure and variations occur with use of toppings mixing of

flavours and use of coatings However a price comparison has been made among the brands

based on their price of per litre of vanilla flavoured ice cream in the market It appears to be as

following

Company

Price Litre Vanilla

Club Gelato

750

MoumlvenPick

640

Andersenrsquos

460

Dolce Vita

440

Igloo

100

Kwality

100

Polar

100

Milk-Vita

90

Savoy

85

Table 27 Comparative Price Analysis

As it can be seen there is price gap within the range of BDT 100-400 Ice cream kiosks and

small scooping boutiques can operate within that range

Evaluation of Entry into Ice cream Business for Bangladesh Limited 41

60 CONSUMER ANALYSIS

61 Target Group of Ice cream

Who are the consumers of ice cream This question does not have a clear answer Ice cream is a

food for all It is the only food consumed by a human being at less than 0 degree centigrade

temperature and people of all ages feel indulged to have it However we can determine focus

target groups for both branded common format and artisan boutique ice cream Group

discussions and market visits were done to get insight into the consumers along side resources

form secondary sources Age based target group is common for both segments but variation

among the groups occur mainly based on SEC and DMFI classification

611 Geographic Group

Branded ice cream remains an urban product till date Geographically branded ice cream has

reached urban and semi urban areas up to Thana Head Quarter levels Ice cream has reached

areas where electricity is available Small artisan players are available in places where large

branded players have no distribution

612 Target Age Group

Age wise grouping of target consumers is as follows

1048766 Urban kids in the age group of 5-14

1048766 They mainly consume normal sticks cups cones innovative fillers and water ice creams

1048766 Urban youth in the age group of 15-24

1048766 They consume premium and extrusion sticks and cones

1048766 Urban mothers in the age group of 25-35

1048766 They determine the family purchases Even when the father purchases ice cream decision is

taken by them

Consumption pattern of various age groups are depicted in the following chart Ice cream

consumption pattern50203005 to 14 yrs15 to 24 yrs25 to 35 yrs

Figure 11 Target Group wise Consumption Pattern Evaluation of Entry into Ice cream Business

for Bangladesh Limited 42

613 Target SEC and DMFI Group

Common Format

SEC A and B is the target group for common format ice cream However with rapid increase in

price level over the years has made it a ldquohard to consumerdquo product for SEC B consumers who

belong to lower DMFI group

Boutique Format

Boutique formatrsquos higher margin and high price range makes it an exclusively SEC A ice cream

People belonging to upper and upper middle class have access to the mediocre boutiques and

only higher upper class can have premium ice creams like Club Gelato and MoumlvenPick

Another unique target group for boutique format are the foreigners who live in Bangladesh

These people tend to visit the parlours to have ice cream as dessert especially after dinner

62 Ice cream in Consumer Lifestyle

Figure 12 Ice cream in Consumer Life style

This simple overview of ice cream in consumer lifestyle was determined based on in-depth

research analysis of UBL and validated through qualitative group discussions by the author

However detail of in-depth research is provided in a later section of this chapter

Evaluation of Entry into Ice cream Business for Bangladesh Limited 43

63 Highlights of Purchase Habit of Ice cream

631 Common Habits across Target Groups

There are some common habits that were identified in earlier researches and group discussions

with consumers Common habits mean the consumer approach towards ice cream that is seen

across all target groups eg kids youth and adult purchasers These are outlined below

1048766 Ice cream is mainly seen as a dessert or a snack Impulse ice cream is seen as a quick snack

that is consumed when it is in sight Visibility plays a big role here Regarding family packs

people see it as a post-food dessert

1048766 Ice cream purchase is commonly a planned event When the contexts arise people generally

take a bit of time to decide whether or not to have ice cream or when they want to go to a

boutique they make due considerations regarding which boutique to visit

1048766 Ice cream purchase decision is taken based on favourite flavour People tend to try out new

variants and flavours when they first see it They compare the taste with earlier experience and

when they purchase later they choose the flavour they have liked most

1048766 For In-Home segment decision is mostly taken on the flavour Generally people come up with

different flavours of choice and most voted flavour is chosen

1048766 People become aware of new variants or flavours mainly through word-of-mouth

Advertisement (new launches special offers and festivals) in newspaper is another source of

awareness

1048766 People are currently indifferent towards the price level of premium flavours However some

feel that price of Choc-bar or water ice creams (lolly) is a bit much If less they would have

consumed more Some also feel that companies should come up with branded ice cream in the

price range of BDT 5-8

1048766 Ice cream is purchased from nearby shops If required brand and flavour is not available 2-3

shops will be visited and then available flavour will be selected even if the required one is not

found This is done mainly not to ruin the mood for ice cream

1048766 People are very open to try new brands and flavours especially if it comes from a credible

source They would try new flavours and if they are satisfied with the taste they would repeat

purchase

1048766 Regarding boutique visits people feel that boutiques need to have a proper environment

enough flavours and other snacks

1048766 While visiting boutique with family or companion they want variation in flavours so that

they would order different flavours and taste each otherrsquos ice cream It is seen as a sign of

togetherness

1048766 Frequency of ice cream purchase varies among people It depends on peer pressure collective

family decision summer heat and attitude towards ldquoice creamrdquo itself as a product Evaluation of

Entry into Ice cream Business for Bangladesh Limited 44

632 Habits of Kids

1048766 Kids choose ice cream flavours by the look of the product (generally pictures shown in POS

materials and carts) They love colour and designs of the products let it be a common format or a

boutique ice cream

1048766 Kids (when in house) would go with the housemaid to the nearby shop choose the flavour

they want (within range of the amount given to the maid) and buy it

1048766 When with parents they would take the product they like even if the price is lower than some

other product However mothers play a role in this decision They would want their children not

to choose too high priced a product or coloured products

633 Habits of Youth

1048766 Young people are the main consumer of impulse ice cream They also are one of the major

consumers in the boutique segment

1048766 Young people love to try out new products that come into the market Another side of the coin

is that they are not very loyal to a brand or a flavour and tend to switch a lot

1048766 Regarding boutique visits young people go to boutiques to have an ldquoice cream hang outrdquo with

peer groups They would stay there for a longer period of time while they have their ice cream

1048766 Some times young people make milk shakes and other ice cream based desserts

634 Habits of Mothers

1048766 Mothers worry about their childrenrsquos health and they prefer ldquovanillardquo type of brands

However when price constraint occurs they go for water ice creams for their children They try

to convince their kidrsquos purchase decision

1048766 Regarding family purchase motherrsquos decision is sometimes prioritized by the whole family

64 Barriers to Ice cream Consumption

641 Emotional Barriers

1048766 Overindulge (close to sinful)

1048766 Undisciplined (no control)

1048766 Childish (licking)

1048766 Artificial Image

642 Functional Barriers

1048766 People of SEC B feel that ice cream is an expensive dessert (If less expensive would consume

more often)

1048766 It leads to cold cough - especially in winter rainy season

1048766 It contains artificial additives preservatives

1048766 It is very high in calories that lead to fattening

Evaluation of Entry into Ice cream Business for Bangladesh Limited 45

1048766 It does not quench ldquothirstrdquo

1048766 Less convenient (portable immediate eat)

1048766 Messy Dripping

65 Research Findings

The highlights regarding purchase habits triggers and barriers of ice cream consumption provide

a glimpse into the consumer world of ice cream industry However UBL CMI conducted a

formal research exclusively on ice cream consumers to identify

1048766 Occasions of ice cream

1048766 Frequency of ice cream consumption

1048766 Expectations from ice cream occasions

1048766 Personalities that they desire from ice cream

651 Relevant Occasions in Daily Lives of Consumers

Research question regarding ldquousual occasions of life that occurred most frequently in day-to-day

lives of the respondentsrdquo generated the following replies

Occasion

of Respondents saying Yes

Watching TV

93

Normal Dinner At Home

91

Normal Lunch At Home

89

At Home While ReadingMusicSurfing

86

Informal Family Get Together

85

Out Of Home Hanging Out With Friends

84

Out Shopping

84

Mid-Afternoon Break At Home

83

At Home By Myself During The Day

82

Special Dinner At Home

82

Informal Dinner Out Of Home

82

Normal Lunch Out Of Home

82

Leisure Walk

79

Coming Home From WorkSchool

78

Special Dinner Out Of Home

78

Celebration

78

A Night In With Friends

77

At Home By Myself In The Evening

77

Special Lunch Out Of Home

76

Mid-Afternoon Break Out Of Home

75

Special Lunch At Home

73

Day out with Partner

72

Midmorning Break

70

At Breakfast

68

Family Day Out

68

During Work Or At School

65

Evaluation of Entry into Ice cream Business for Bangladesh Limited 46

Travelling ToFrom WorkSchool

65

At The Cinema

61

Special Event

56

Clubbing At A Party

50

Post GymSports

48

Table 28 Relevant Occasions in Consumersrsquo Lives

Respondents were then asked to mention ldquofrequency of occurrence of the identified occasionsrdquo

The identified replies are as follows Normal dinner at homenormal lunch at homeComing home

from workschoolTraveling tofrom workschoolDay out with Partner SpouseMid-afternoon

break at homeOut of home hanging out with friendsLeisure walkMid-afternoon break out of

homeA night in with friendsSpecial dinner at homeSpecial lunch out of homeFamily day

outSpecial eventPost gymsportsDaily2-3 Times A WeekWeekly2-3 Times A MonthOnce A

MonthEvery 2-3 MonthsLess OftenNever Figure 13 Frequency of Occurrence of Occasions

This shows that ldquoNormal dinner at home Watching TV Normal Lunch At Home At Home

While ReadingMusicSurfing Coming Home From WorkSchool During Work Or At School

Travelling ToFrom WorkSchool Midmorning Break Day Out With Partner Spouse At Home

By Myself During The Dayrdquo are the most frequent daily rituals of busy lives of consumers

652 Frequency of Ice cream Consumption

Respondents were asked to mention ldquoconsumption pattern of ice cream during the identified

occasionrdquo on a scale of 1-5 depicting frequencies like ldquo(5) always (4) most of the times (3)

about half of the times (2) sometimes (1) never do not knowrdquo The responses are depicted in

the following table

Evaluation of Entry into Ice cream Business for Bangladesh Limited 47

444474544655555566756665775967779991011101111101210111110101113111412131314161

011121411131216181519181518211817171719181718201721222130303434253437403741394

046383944464746453745414641374638504843414839373030292726232725222020201926202

21722221317Midmorning

breakWhile clubbing at aAt the cinemaSpecial eventNormal lunch out ofA night in with

friendsNormal dinner atInformal dinner out ofAt home by myselfAt home by myself inOut

shoppingSpecial lunch atDay out with SpouseWatching TVAlwaysmost of the timesAbout half

of the timesSometimesneverdo not know

Figure 14 Frequency of Ice cream Consumption

As it can be seen ldquoDay out with Spouse Special lunch at home Special dinner at home

Watching TV Family day out Celebrationrdquo are the occasions where most frequently ice cream is

consumed

653 Market Character Mapping Relevant Occasions vs Frequency of Consumption

If we plot frequency of consumption on the X-axis of a chart and relevance of occasion

occurrence on the Y-axis taking the above mentioned values as cut-off values we get four

quadrants in the chart depicting four market scenarios that any ice cream manufacturer in

Bangladesh market might encounter given the current market situation This market

segmentation is based on frequency of ice cream consumption in daily occasions of consumer

lives

The segments are

1048766 OPPORTUNITY MARKET High Relevant Occasions-Low Ice cream Frequency

1048766 QUESTION MARKET Less Relevant Occasions-Low Ice cream Frequency

1048766 HIGH FREQUENCY MARKET Relevant Occasions-High Ice cream Frequency

1048766 CAPTIVE MARKET Less Relevant Occasions-High Ice cream Frequency

The chart looks as follows Evaluation of Entry into Ice cream Business for Bangladesh Limited

48

Figure 15 Relevance of Occasion-Frequency of Consumption Mapping

As it can be seen from the above chart Bangladesh Market still lies in the Opportunity and

Question market zone with a pull towards High frequency and Captive Market zones This is

evident from market data as penetration of ice cream still remains at Thana headquarters levels

Also this explains the high market growth rate of 17 as market is yet under developed and

branded quality ice cream has yet not reached all levels of consumers especially rural level that

constitutes around 75 of Bangladeshi market

From the above analysis we can establish that target of ice cream manufacturers should be to

penetrate more into the Bangladeshi market to create higher frequency of ice cream

consumption The following chart shows the strategies to follow for ice cream manufacturers

Figure 16 Required Market Strategy for Bangladesh

Evaluation of Entry into Ice cream Business for Bangladesh Limited 49

As relevance of ice cream consumption occasions can hardly be controlled by marketers their

endeavour should be to create more ldquoemotional and functionalrdquo attachment to ice cream in less

frequent occasions through ldquomarket developmentrdquo strategy to earn share from overall food

expenditure of consumers and at the same time make them consume more ice cream in highly

relevant occasions through ldquopenetrationrdquo strategy

654 Consumersrsquo Emotional Requirements and Product Attributes

All consumers under these clusters also identify the emotional requirements and the significant

product attributes they seek from their current preferred and future desired ice creams These are

provided below

Cluster

Emotional Functional Requirement

Product Attributes

Enjoyment

Flavour Variety

1048766 Combination of different flavours

1048766 Combination of different textures

1048766 Very sweet

1048766 With wafer or biscuit

1048766 With chocolate

1048766 Of a well known brand

Socially Involved

Spoonable Rich

1048766 Very creamy

1048766 Only natural ingredients

1048766 No mess

Care

Size Creaminess

1048766 Big

1048766 Rich full taste

1048766 Smooth

1048766 Value for money

1048766 No mess

Unwind amp Escape

Economy

1048766 Crunchy

1048766 Economic

1048766 Of a well known brand

1048766 Nutritious

Balanced Convenience

Health Conscious

1048766 Of a well known brand

1048766 Nutritious

1048766 Milk based

1048766 Low sugar

1048766 Low carbohydrates

1048766 Filling

Active Self-Grooming

Fruit Vitamins

1048766 Healthy

1048766 Fruit based

1048766 Low fat

1048766 Liquid or drinkable

1048766 Nutritious

1048766 Of a well known brand

Confidence

Drinkable Light

1048766 Low calories

1048766 Light on the stomach

1048766 Chewy or gooey

1048766 Not so sweet

1048766 Natural appearance

Sensual

Appeal or image

1048766 No artificial additives

Evaluation of Entry into Ice cream Business for Bangladesh Limited 50

1048766 Natural appearance

1048766 Melting slowly

1048766 Attractive packaging

1048766 High quality ingredients

1048766 Of a well known brand

Table 29 Requirements amp Product Attributes Desired by Consumer Clusters

Of these findings we see that the identified highlighted barriers to ice cream consumption are

pretty evident among the consumers Mostly people want products of a reliable source or a well

known brand low calories quality ingredients value for money economic type

Evaluation of Entry into Ice cream Business for Bangladesh Limited 51

70 INDUSTRY ATTRACTIVENESS AND ENTRY PROSPECTS

71 Driving Forces of Growth

As identified in the earlier sections there are several driving forces behind the growth of ice-

cream industry in Bangladesh

712 Trade and Infrastructural Level

1048766 As a result of globalization newer varieties have been introduced to the local products Many

foreign companies are also coming as franchise so there has been increased competition and

these boutiques are setting higher standards for the local producers

1048766 The present market growth rate is 18-19 which is being influenced by larger players like

Igloo who are expanding their distribution nation wide with expansion of national electricity

grid

1048766 With entry of Modern Trade and recent organized business approach of retailers has made it

possible for ice cream manufacturers to penetrate into shops even without providing them with

branded freezers

1048766 Weather change has increased ldquosummerrdquo season in our country which has reduced negative

seasonal impact on ice cream

1048766 Large companies like Igloo have taken global learning of using carts as an effective tool of

availability and visibility for ice cream

1048766 New and improved technologies are being used in the production process This technological

advancement has improved quality increased speed of production and made the process more

cost effective

713 Consumer Level

1048766 Only a few years back rich people could afford the luxury of having ice-cream but now it has

become a common product for everybody Ice-cream companies are producing different products

with a wide price range for consumers of every class and status

1048766 Nowadays companies are doing promotional campaigns more frequently the customers get to

know about the product which makes it easier for them to buy the best one

1048766 The improved standard of life and more modernized lifestyle of people is an important reason

for the increased consumption thus growth of the ice-cream industry

Evaluation of Entry into Ice cream Business for Bangladesh Limited 52

72 Prospects of Entry

The ice-cream industry of Bangladesh is an attractive one for the investors because there is a

huge market but number of producers is very small The major reasons behind industry

attractiveness are as follows

1048766 The industryrsquos current growth potential is very high with opportunity for market development

1048766 The competition currently permits adequate profitability and the competitive forces are

becoming stronger with time

1048766 Boutique segment is at a very high growth stage but no operator is currently operating with a

mid price range of BDT 100-400 Ice cream kiosks and small scooping boutiques can operate

within that range

1048766 Current industry driving forces are favourable for the future industry profitability

1048766 Globally oriented consumers look for variety in ice cream that is currently not available

Latest innovations came in the market in 2002 People would welcome new variety and flavours

1048766 There is a gap in the market for balanced convenience through ice cream where consumers can

get nutritional benefits for ice cream Also emotional attachment to ice cream could further be

improvised in promotional campaigns

1048766 There is high scope for market penetration and development to increase frequency of ice

cream consumption

1048766 Level of risk or uncertainty is very low in ice-cream industry because the consumer market is

so huge any product with a standard quality and careful pricing will be able to make significant

profit

1048766 As for geographic reach of the industry 60 market is still in Dhaka There is scope of

expansion and a new entrant can easily capture market share within Dhaka using carts even if

they do not want nation wide cold chain distribution

1048766 The production process is very complex and capital requirements are also high So before

going into production any company should know about their capabilities and weaknesses and

then start the business or else they might suffer huge loss at a certain level

1048766 Unilever can acquire the required resource and use existing multi-national multi-cultural

expertise to enter the market in a grand way

1048766 With high probability of entry from DANONE with more products like the ISIS diabetic ice

cream Unilever should consider entering in this industry as soon as possible

Evaluation of Entry into Ice cream Business for Bangladesh Limited 53

80 ENTRY STRATEGY FOR UNILEVER

While describing the suggested entry strategy for UBL certain issues have been kept

confidential and some issues have been touched but not explained to keep consistency with UBL

confidentiality policy

81 Suggested Entry Areas for UBL

1048766 Boutique segment of the Bangladesh ice cream is only 5 of the branded market UBL needs

to pursue a larger scope to make the entry viable

1048766 UBL cannot fight with unbranded segment as global product quality mandate of Unilever does

not allow UBL to fight in low price-low quality segment

1048766 Recommend entry should be in the common format segment with both single and multiple

servings and in the boutique segment with a different brand name (if possible BEN amp JERRYrsquoS)

1048766 UBL should build up state-of-art modern factory for manufacturing and establish cold chain

facilities initially focusing on metro cities

1048766 Investment issues are required to be addressed for building factory and cold chain and capital

requirement needs to be identified for that purpose4

1048766 UBL may have boutiques for driving image selective top-end offering

1048766 Kiosks can be setup near universities and shopping malls

1048766 Boutiques should be concentrated in Dhaka and Chittagong

1048766 Ice cream for boutiques and kiosks would be produced in factory as institutional packs of 9-10

litres

82 Products

1048766 As a Brand Building country in global Unilever operating framework UBL is entitled only to

bring products developed by the Brand Development countries

1048766 Unilever should focus on serving products that have nutritional benefits (already available

globally) along with usual satisfactions of sensual pleasure functional attributes etc

1048766 Current existent players especially Igloo and Kwality have extensively copied global and

regionally available Unilever products eg Cornelli is same as Wallrsquos Cornetto Vinetta is similar

to Vienetta Mega is similar to Magnum etc UBL needs to differentiate these to consumers on

the ldquotaste the originalrdquo platform where global quality is focused regarding the products

1048766 UBL should also bring regionally famous brands like Moo or Max to create image

differentiation

1048766 Magnum or Moo should be used as premium end ice cream to generate more profit margin

Evaluation of Entry into Ice cream Business for Bangladesh Limited 54

83 Placement

1048766 Distribution focus should be in Dhaka for entry as Dhaka contributes more than 60 of total

ice cream sales in the country

1048766 Company may use carts as distribution method They serve as good source of visibility and

availability It would help in increasing impulse purchase

1048766 At least 1500 outlets in Dhaka and Chittagong needs to be actively served using dedicated

branded refrigerators to generate sales

1048766 50 carts should operate in Dhaka and Chittagong

84 Price

1048766 UBL products should be priced at par with Igloo pricing for the common format ice creams

1048766 UBL can bring in premium single-serve SKUS for the higher economic classes in the price

range of BDT 60-80

1048766 Smaller SKUs (small lolly stick) can be introduced in the price range of BDT 10-15

1048766 In the boutique segment UBL should price products above the semi-premium segment

(Gelateria Igloo Sub Zero or Andersenrsquos) but lower than that of Club Gelato or MoumlvenPick

85 Promotion

1048766 UBL would require strong marketing campaign (As high as 50 of sales) to have a grand

entry in the market

1048766 Presence in the television media would be of utmost importance More than 50 of

promotional expense should be made here initially Gradually it can be reduced

1048766 Newspaper would serve as the second most important option

1048766 Billboards should also be used

1048766 Activations (similar to Lux Channel i Super Star or Igloo Festival) should be done to generate

trial

86 Scope of Opportunity

Table 30 Value and Volume Based Scope of Opportunity for UBL

Value (BDT Cr)

Volume (Tons)

Market

131

7835

Common

121

7600

Boutique

98

235

Evaluation of Entry into Ice cream Business for Bangladesh Limited 55

861 Geographic Contribution

1048766 Dhaka (61)

1048766 Chittagong (19)

1048766 Sylhet (10)

862 UBL objectives

Common Format Ice Creams

1048766 Target 10 Market share in 1st year operation

1048766 Value BDT 11 Cr

1048766 Production capacity required 21 Tons day

1048766 Freezer Placement 1500 freezers

1048766 Cart operation At least 50 carts

Boutiques

1048766 Target Further develop the market

1048766 Focus Dhaka Chittagong and Sylhet Metro

1048766 Franchise At least 20 franchisee operations nation wide in divisional towns

1048766 Pricing Below imported parlours above common formats with around BDT 400 per Litre

87 Critical Success Factors

1048766 UBL is considered as a high profile company in Bangladesh and thus they cannot operate in

the market only with common products like choc-bars and cups They must have premium

products (these require extrusion line) also to carry their brand image Otherwise UBL would not

be able to charge usual premium over competition products

1048766 Launch of ice cream would require huge promotional and activation support in order to gain

customers from Igloo People want novelty regarding ice cream and UBL have to let them know

about their products and create hype

1048766 Cart should be used as a source of distribution Recent successes of Unilever companies like

Indonesia shows that carts can generate more sales and can be used as source of visibility in the

minds of both retail traders and consumers Carts can also provide incremental sales to the

company

1048766 UBL have to create a strong cold chain for ice cream (initially in Dhaka and Chittagong) to

ensure quality products for consumers

1048766 UBL have to build capacity very rapidly to meet consumer demand if the launch is successful

Evaluation of Entry into Ice cream Business for Bangladesh Limited 56

90 BUSINESS PROJECTION

91 Basic Assumptions

Business projection for ice cream business was made based on a conservative approach UBL

would require spending significantly on production capacity and factory dedicated to ice cream

Thus to analyse business possibilities of ice cream certain assumptions were made and collected

data were used These are

1048766 Production equipments and cabinets would cost approximately BDT 55 crores

1048766 Production equipments 45

1048766 Packaging Equipments 15

1048766 Storage Facility 20

1048766 Branded Freezers 10

1048766 Distribution Investment 10 (Distributors would also invest themselves)

1048766 Ice cream factory with a floor size of 20000 sqft would cost BDT 25 crores

1048766 Objective is to capture 10 market share in Dhaka and Chittagong in the first year

1048766 Business would grow by 50 in year 2 and 3 30 in year 4 and 25 in year 5

1048766 Weighted price per litre is BDT 170 according to volume share of single serve ice cream

multiple serve ice cream and boutique ice cream

1048766 Other financial assumptions were also made List of them are provided below but amount has

been removed for confidentiality issues

Assumptions

Trade Margin

Distributors Margin

DutyVAT Rate

Trade Terms Expense of NPS

Trade Terms Expense of NSV

Advertising ampPromotion of NPS

Indirects (Salaries Wages etc)

Trading Tax

Table 31 Assumptions for Business Projection

Evaluation of Entry into Ice cream Business for Bangladesh Limited 57

100 CONCLUSION

Ice cream has good prospect in Bangladesh It is still a growing market with opportunities for big

new entrants With the barriers of entry UBL needs to consider its priorities UBL being an HPC

company traditionally needs to acquire expertise in cold chain distribution and has to invest a lot

of money to rip the benefits of the industry However to initiate company can take regional

support and acquire resource expertise The company should enter the business as soon as

possible since there is potential threat from DANONE to introduce more ice creams after ISIS

diabetic ice cream and also with potential of the industry arch rival Nestlersquo might consider

entering into the industry too

Evaluation of Entry into Ice cream Business for Bangladesh Limited 58

References

Web References

1 wwwunilevercom

2 wwwunilevercombd

3 wwwhllcom

4 wwwunilevercompk

5 wwwthedailystarcom - Life Style Magazine

6 wwwreuterscouk

Evaluation of Entry into Ice cream Business for Bangladesh Limited 59

Page 43: Square Ice cream

1048766 Storage Capacity in Shop 150 litres

Product Related Information

1048766 Product Imported MoumlvenPick ice creams coffee chicken sandwich and Frappe

1048766 Flavours Around 30 to 35 flavours available

1048766 Most selling Swiss Chocolate caramel Vanilla Dream Espresso Strawberry

1048766 Innovations New variants are communicated by their franchiser and they decide on flavours

that they want

1048766 Serve type Cup Cone Glasses Box for take away

Consumer Profile

1048766 Primary Teenagers and Young Adults (18-30) (70) amp Diplomats

1048766 Secondary Family consumers for eat out

1048766 Income Group High income customers tentatively from SEC A

1048766 Geographic Area Concentrated in Gulshan and nearby areas

1048766 Rush time Afternoon- Young Adult 10 to 11 pm Foreigners

1048766 the company also serves at parties and has freezers in known hotels where their ice creams

are served

Sales and Price Information

1048766 Sales BDT 35-40000 daily in summer

1048766 Price 640 per litre for any flavour

1048766 Sales Volume 55-60 litres per day

Supply Chain Placement Information

1048766 Transportation Imported finished goods by ship

1048766 Ship travel time 19 days

1048766 Port clearance 10 days

1048766 Safety Cushion Extra 10 days

Promotional Materials

1048766 Materials used are near premises POS materials for promoting the parlour only

Table 24 Detail of MoumlvenPick of Switzerland

Evaluation of Entry into Ice cream Business for Bangladesh Limited 39

Andersenrsquos of Denmark

Basic Company Information

1048766 Location Gulshan (2 others in Uttara Dhanmondi)

1048766 Established in 2001

1048766 Seating Capacity 48

1048766 Owner United Group

1048766 Business Type Franchise of Australian company Andersenrsquos of Denmark

1048766 Production Tongi Factory of United Group

1048766 Production capacity 2000 litres per day in factory

1048766 Storage Capacity in Shop 150 litres

Product Related Information

1048766 Product Danish parlour scoop ice cream and coffee

1048766 Flavours Around 30 to 35 flavours available

1048766 Most selling Strawberry Butter Scotch Green

1048766 Innovations New variants and ingredients are communicated by their franchiser and they

decide on flavours that they want

1048766 Serve type Cup Cone Glasses Box for take away

Consumer Profile

1048766 Primary Teenagers and Young Adults (18-30) (70) amp Diplomats

1048766 Secondary Family consumers for eat out

1048766 Income Group High income customers tentatively from SEC A

1048766 Geographic Area Concentrated in Gulshan and nearby areas

1048766 Rush time 8 to 10 pm

Sales and Price Information

1048766 Sales BDT 10-12000 daily in summer

1048766 Price 460 per litre for any flavour

1048766 Sales Volume 40-50 litres per day

Supply Chain Placement Information

1048766 Milk 2025 kg packs are imported

1048766 Chocolates amp Flavours Imported

1048766 Butte paper Local sourcing

1048766 Transportation Ship

Promotional Materials

1048766 Materials used are near premises POS materials for promoting the parlour only

Table 25 Detail of Andersenrsquos of Denmark

Evaluation of Entry into Ice cream Business for Bangladesh Limited 40

Gelateria Igloo

Basic Company Information

1048766 Location Banani Kemal Ataturk Avenue (Two others in GEC Mor Chittagong and Naya

Paltan)

1048766 Established in 2000

1048766 Seating Capacity 20

1048766 Production From Igloo factory in Shyampur Narayanganj

Product Related Information

1048766 Product Parlour scoop ice cream and coffee only

1048766 Flavours Around 30 flavours available

1048766 Most selling Vanilla Strawberry Chocolate Pistachio Butter Scotch Tutti Fruity

1048766 Serve type Cup Cone Glasses Box for take away

Consumer Profile

1048766 Primary Teenagers and Young Adults (18-30)

1048766 Secondary Family consumers for eat out

1048766 Income Group High income customers tentatively from SEC A and B

1048766 Geographic Area Diversified

1048766 Rush Time afternoon and evening

Sales and Price Information

1048766 Sales BDT 8000 to 10000 daily in summer Nearly one fourth in winter

1048766 Price Varies but 350 per litre of vanilla

Promotional Materials

1048766 POS materials at the premises

Table 26 Detail of Gelateria Igloo

52 Price Comparison of Common and Boutique Segments

Price ranges of both common format and boutique segment cannot exactly be pin pointed as

products do not follow common structure and variations occur with use of toppings mixing of

flavours and use of coatings However a price comparison has been made among the brands

based on their price of per litre of vanilla flavoured ice cream in the market It appears to be as

following

Company

Price Litre Vanilla

Club Gelato

750

MoumlvenPick

640

Andersenrsquos

460

Dolce Vita

440

Igloo

100

Kwality

100

Polar

100

Milk-Vita

90

Savoy

85

Table 27 Comparative Price Analysis

As it can be seen there is price gap within the range of BDT 100-400 Ice cream kiosks and

small scooping boutiques can operate within that range

Evaluation of Entry into Ice cream Business for Bangladesh Limited 41

60 CONSUMER ANALYSIS

61 Target Group of Ice cream

Who are the consumers of ice cream This question does not have a clear answer Ice cream is a

food for all It is the only food consumed by a human being at less than 0 degree centigrade

temperature and people of all ages feel indulged to have it However we can determine focus

target groups for both branded common format and artisan boutique ice cream Group

discussions and market visits were done to get insight into the consumers along side resources

form secondary sources Age based target group is common for both segments but variation

among the groups occur mainly based on SEC and DMFI classification

611 Geographic Group

Branded ice cream remains an urban product till date Geographically branded ice cream has

reached urban and semi urban areas up to Thana Head Quarter levels Ice cream has reached

areas where electricity is available Small artisan players are available in places where large

branded players have no distribution

612 Target Age Group

Age wise grouping of target consumers is as follows

1048766 Urban kids in the age group of 5-14

1048766 They mainly consume normal sticks cups cones innovative fillers and water ice creams

1048766 Urban youth in the age group of 15-24

1048766 They consume premium and extrusion sticks and cones

1048766 Urban mothers in the age group of 25-35

1048766 They determine the family purchases Even when the father purchases ice cream decision is

taken by them

Consumption pattern of various age groups are depicted in the following chart Ice cream

consumption pattern50203005 to 14 yrs15 to 24 yrs25 to 35 yrs

Figure 11 Target Group wise Consumption Pattern Evaluation of Entry into Ice cream Business

for Bangladesh Limited 42

613 Target SEC and DMFI Group

Common Format

SEC A and B is the target group for common format ice cream However with rapid increase in

price level over the years has made it a ldquohard to consumerdquo product for SEC B consumers who

belong to lower DMFI group

Boutique Format

Boutique formatrsquos higher margin and high price range makes it an exclusively SEC A ice cream

People belonging to upper and upper middle class have access to the mediocre boutiques and

only higher upper class can have premium ice creams like Club Gelato and MoumlvenPick

Another unique target group for boutique format are the foreigners who live in Bangladesh

These people tend to visit the parlours to have ice cream as dessert especially after dinner

62 Ice cream in Consumer Lifestyle

Figure 12 Ice cream in Consumer Life style

This simple overview of ice cream in consumer lifestyle was determined based on in-depth

research analysis of UBL and validated through qualitative group discussions by the author

However detail of in-depth research is provided in a later section of this chapter

Evaluation of Entry into Ice cream Business for Bangladesh Limited 43

63 Highlights of Purchase Habit of Ice cream

631 Common Habits across Target Groups

There are some common habits that were identified in earlier researches and group discussions

with consumers Common habits mean the consumer approach towards ice cream that is seen

across all target groups eg kids youth and adult purchasers These are outlined below

1048766 Ice cream is mainly seen as a dessert or a snack Impulse ice cream is seen as a quick snack

that is consumed when it is in sight Visibility plays a big role here Regarding family packs

people see it as a post-food dessert

1048766 Ice cream purchase is commonly a planned event When the contexts arise people generally

take a bit of time to decide whether or not to have ice cream or when they want to go to a

boutique they make due considerations regarding which boutique to visit

1048766 Ice cream purchase decision is taken based on favourite flavour People tend to try out new

variants and flavours when they first see it They compare the taste with earlier experience and

when they purchase later they choose the flavour they have liked most

1048766 For In-Home segment decision is mostly taken on the flavour Generally people come up with

different flavours of choice and most voted flavour is chosen

1048766 People become aware of new variants or flavours mainly through word-of-mouth

Advertisement (new launches special offers and festivals) in newspaper is another source of

awareness

1048766 People are currently indifferent towards the price level of premium flavours However some

feel that price of Choc-bar or water ice creams (lolly) is a bit much If less they would have

consumed more Some also feel that companies should come up with branded ice cream in the

price range of BDT 5-8

1048766 Ice cream is purchased from nearby shops If required brand and flavour is not available 2-3

shops will be visited and then available flavour will be selected even if the required one is not

found This is done mainly not to ruin the mood for ice cream

1048766 People are very open to try new brands and flavours especially if it comes from a credible

source They would try new flavours and if they are satisfied with the taste they would repeat

purchase

1048766 Regarding boutique visits people feel that boutiques need to have a proper environment

enough flavours and other snacks

1048766 While visiting boutique with family or companion they want variation in flavours so that

they would order different flavours and taste each otherrsquos ice cream It is seen as a sign of

togetherness

1048766 Frequency of ice cream purchase varies among people It depends on peer pressure collective

family decision summer heat and attitude towards ldquoice creamrdquo itself as a product Evaluation of

Entry into Ice cream Business for Bangladesh Limited 44

632 Habits of Kids

1048766 Kids choose ice cream flavours by the look of the product (generally pictures shown in POS

materials and carts) They love colour and designs of the products let it be a common format or a

boutique ice cream

1048766 Kids (when in house) would go with the housemaid to the nearby shop choose the flavour

they want (within range of the amount given to the maid) and buy it

1048766 When with parents they would take the product they like even if the price is lower than some

other product However mothers play a role in this decision They would want their children not

to choose too high priced a product or coloured products

633 Habits of Youth

1048766 Young people are the main consumer of impulse ice cream They also are one of the major

consumers in the boutique segment

1048766 Young people love to try out new products that come into the market Another side of the coin

is that they are not very loyal to a brand or a flavour and tend to switch a lot

1048766 Regarding boutique visits young people go to boutiques to have an ldquoice cream hang outrdquo with

peer groups They would stay there for a longer period of time while they have their ice cream

1048766 Some times young people make milk shakes and other ice cream based desserts

634 Habits of Mothers

1048766 Mothers worry about their childrenrsquos health and they prefer ldquovanillardquo type of brands

However when price constraint occurs they go for water ice creams for their children They try

to convince their kidrsquos purchase decision

1048766 Regarding family purchase motherrsquos decision is sometimes prioritized by the whole family

64 Barriers to Ice cream Consumption

641 Emotional Barriers

1048766 Overindulge (close to sinful)

1048766 Undisciplined (no control)

1048766 Childish (licking)

1048766 Artificial Image

642 Functional Barriers

1048766 People of SEC B feel that ice cream is an expensive dessert (If less expensive would consume

more often)

1048766 It leads to cold cough - especially in winter rainy season

1048766 It contains artificial additives preservatives

1048766 It is very high in calories that lead to fattening

Evaluation of Entry into Ice cream Business for Bangladesh Limited 45

1048766 It does not quench ldquothirstrdquo

1048766 Less convenient (portable immediate eat)

1048766 Messy Dripping

65 Research Findings

The highlights regarding purchase habits triggers and barriers of ice cream consumption provide

a glimpse into the consumer world of ice cream industry However UBL CMI conducted a

formal research exclusively on ice cream consumers to identify

1048766 Occasions of ice cream

1048766 Frequency of ice cream consumption

1048766 Expectations from ice cream occasions

1048766 Personalities that they desire from ice cream

651 Relevant Occasions in Daily Lives of Consumers

Research question regarding ldquousual occasions of life that occurred most frequently in day-to-day

lives of the respondentsrdquo generated the following replies

Occasion

of Respondents saying Yes

Watching TV

93

Normal Dinner At Home

91

Normal Lunch At Home

89

At Home While ReadingMusicSurfing

86

Informal Family Get Together

85

Out Of Home Hanging Out With Friends

84

Out Shopping

84

Mid-Afternoon Break At Home

83

At Home By Myself During The Day

82

Special Dinner At Home

82

Informal Dinner Out Of Home

82

Normal Lunch Out Of Home

82

Leisure Walk

79

Coming Home From WorkSchool

78

Special Dinner Out Of Home

78

Celebration

78

A Night In With Friends

77

At Home By Myself In The Evening

77

Special Lunch Out Of Home

76

Mid-Afternoon Break Out Of Home

75

Special Lunch At Home

73

Day out with Partner

72

Midmorning Break

70

At Breakfast

68

Family Day Out

68

During Work Or At School

65

Evaluation of Entry into Ice cream Business for Bangladesh Limited 46

Travelling ToFrom WorkSchool

65

At The Cinema

61

Special Event

56

Clubbing At A Party

50

Post GymSports

48

Table 28 Relevant Occasions in Consumersrsquo Lives

Respondents were then asked to mention ldquofrequency of occurrence of the identified occasionsrdquo

The identified replies are as follows Normal dinner at homenormal lunch at homeComing home

from workschoolTraveling tofrom workschoolDay out with Partner SpouseMid-afternoon

break at homeOut of home hanging out with friendsLeisure walkMid-afternoon break out of

homeA night in with friendsSpecial dinner at homeSpecial lunch out of homeFamily day

outSpecial eventPost gymsportsDaily2-3 Times A WeekWeekly2-3 Times A MonthOnce A

MonthEvery 2-3 MonthsLess OftenNever Figure 13 Frequency of Occurrence of Occasions

This shows that ldquoNormal dinner at home Watching TV Normal Lunch At Home At Home

While ReadingMusicSurfing Coming Home From WorkSchool During Work Or At School

Travelling ToFrom WorkSchool Midmorning Break Day Out With Partner Spouse At Home

By Myself During The Dayrdquo are the most frequent daily rituals of busy lives of consumers

652 Frequency of Ice cream Consumption

Respondents were asked to mention ldquoconsumption pattern of ice cream during the identified

occasionrdquo on a scale of 1-5 depicting frequencies like ldquo(5) always (4) most of the times (3)

about half of the times (2) sometimes (1) never do not knowrdquo The responses are depicted in

the following table

Evaluation of Entry into Ice cream Business for Bangladesh Limited 47

444474544655555566756665775967779991011101111101210111110101113111412131314161

011121411131216181519181518211817171719181718201721222130303434253437403741394

046383944464746453745414641374638504843414839373030292726232725222020201926202

21722221317Midmorning

breakWhile clubbing at aAt the cinemaSpecial eventNormal lunch out ofA night in with

friendsNormal dinner atInformal dinner out ofAt home by myselfAt home by myself inOut

shoppingSpecial lunch atDay out with SpouseWatching TVAlwaysmost of the timesAbout half

of the timesSometimesneverdo not know

Figure 14 Frequency of Ice cream Consumption

As it can be seen ldquoDay out with Spouse Special lunch at home Special dinner at home

Watching TV Family day out Celebrationrdquo are the occasions where most frequently ice cream is

consumed

653 Market Character Mapping Relevant Occasions vs Frequency of Consumption

If we plot frequency of consumption on the X-axis of a chart and relevance of occasion

occurrence on the Y-axis taking the above mentioned values as cut-off values we get four

quadrants in the chart depicting four market scenarios that any ice cream manufacturer in

Bangladesh market might encounter given the current market situation This market

segmentation is based on frequency of ice cream consumption in daily occasions of consumer

lives

The segments are

1048766 OPPORTUNITY MARKET High Relevant Occasions-Low Ice cream Frequency

1048766 QUESTION MARKET Less Relevant Occasions-Low Ice cream Frequency

1048766 HIGH FREQUENCY MARKET Relevant Occasions-High Ice cream Frequency

1048766 CAPTIVE MARKET Less Relevant Occasions-High Ice cream Frequency

The chart looks as follows Evaluation of Entry into Ice cream Business for Bangladesh Limited

48

Figure 15 Relevance of Occasion-Frequency of Consumption Mapping

As it can be seen from the above chart Bangladesh Market still lies in the Opportunity and

Question market zone with a pull towards High frequency and Captive Market zones This is

evident from market data as penetration of ice cream still remains at Thana headquarters levels

Also this explains the high market growth rate of 17 as market is yet under developed and

branded quality ice cream has yet not reached all levels of consumers especially rural level that

constitutes around 75 of Bangladeshi market

From the above analysis we can establish that target of ice cream manufacturers should be to

penetrate more into the Bangladeshi market to create higher frequency of ice cream

consumption The following chart shows the strategies to follow for ice cream manufacturers

Figure 16 Required Market Strategy for Bangladesh

Evaluation of Entry into Ice cream Business for Bangladesh Limited 49

As relevance of ice cream consumption occasions can hardly be controlled by marketers their

endeavour should be to create more ldquoemotional and functionalrdquo attachment to ice cream in less

frequent occasions through ldquomarket developmentrdquo strategy to earn share from overall food

expenditure of consumers and at the same time make them consume more ice cream in highly

relevant occasions through ldquopenetrationrdquo strategy

654 Consumersrsquo Emotional Requirements and Product Attributes

All consumers under these clusters also identify the emotional requirements and the significant

product attributes they seek from their current preferred and future desired ice creams These are

provided below

Cluster

Emotional Functional Requirement

Product Attributes

Enjoyment

Flavour Variety

1048766 Combination of different flavours

1048766 Combination of different textures

1048766 Very sweet

1048766 With wafer or biscuit

1048766 With chocolate

1048766 Of a well known brand

Socially Involved

Spoonable Rich

1048766 Very creamy

1048766 Only natural ingredients

1048766 No mess

Care

Size Creaminess

1048766 Big

1048766 Rich full taste

1048766 Smooth

1048766 Value for money

1048766 No mess

Unwind amp Escape

Economy

1048766 Crunchy

1048766 Economic

1048766 Of a well known brand

1048766 Nutritious

Balanced Convenience

Health Conscious

1048766 Of a well known brand

1048766 Nutritious

1048766 Milk based

1048766 Low sugar

1048766 Low carbohydrates

1048766 Filling

Active Self-Grooming

Fruit Vitamins

1048766 Healthy

1048766 Fruit based

1048766 Low fat

1048766 Liquid or drinkable

1048766 Nutritious

1048766 Of a well known brand

Confidence

Drinkable Light

1048766 Low calories

1048766 Light on the stomach

1048766 Chewy or gooey

1048766 Not so sweet

1048766 Natural appearance

Sensual

Appeal or image

1048766 No artificial additives

Evaluation of Entry into Ice cream Business for Bangladesh Limited 50

1048766 Natural appearance

1048766 Melting slowly

1048766 Attractive packaging

1048766 High quality ingredients

1048766 Of a well known brand

Table 29 Requirements amp Product Attributes Desired by Consumer Clusters

Of these findings we see that the identified highlighted barriers to ice cream consumption are

pretty evident among the consumers Mostly people want products of a reliable source or a well

known brand low calories quality ingredients value for money economic type

Evaluation of Entry into Ice cream Business for Bangladesh Limited 51

70 INDUSTRY ATTRACTIVENESS AND ENTRY PROSPECTS

71 Driving Forces of Growth

As identified in the earlier sections there are several driving forces behind the growth of ice-

cream industry in Bangladesh

712 Trade and Infrastructural Level

1048766 As a result of globalization newer varieties have been introduced to the local products Many

foreign companies are also coming as franchise so there has been increased competition and

these boutiques are setting higher standards for the local producers

1048766 The present market growth rate is 18-19 which is being influenced by larger players like

Igloo who are expanding their distribution nation wide with expansion of national electricity

grid

1048766 With entry of Modern Trade and recent organized business approach of retailers has made it

possible for ice cream manufacturers to penetrate into shops even without providing them with

branded freezers

1048766 Weather change has increased ldquosummerrdquo season in our country which has reduced negative

seasonal impact on ice cream

1048766 Large companies like Igloo have taken global learning of using carts as an effective tool of

availability and visibility for ice cream

1048766 New and improved technologies are being used in the production process This technological

advancement has improved quality increased speed of production and made the process more

cost effective

713 Consumer Level

1048766 Only a few years back rich people could afford the luxury of having ice-cream but now it has

become a common product for everybody Ice-cream companies are producing different products

with a wide price range for consumers of every class and status

1048766 Nowadays companies are doing promotional campaigns more frequently the customers get to

know about the product which makes it easier for them to buy the best one

1048766 The improved standard of life and more modernized lifestyle of people is an important reason

for the increased consumption thus growth of the ice-cream industry

Evaluation of Entry into Ice cream Business for Bangladesh Limited 52

72 Prospects of Entry

The ice-cream industry of Bangladesh is an attractive one for the investors because there is a

huge market but number of producers is very small The major reasons behind industry

attractiveness are as follows

1048766 The industryrsquos current growth potential is very high with opportunity for market development

1048766 The competition currently permits adequate profitability and the competitive forces are

becoming stronger with time

1048766 Boutique segment is at a very high growth stage but no operator is currently operating with a

mid price range of BDT 100-400 Ice cream kiosks and small scooping boutiques can operate

within that range

1048766 Current industry driving forces are favourable for the future industry profitability

1048766 Globally oriented consumers look for variety in ice cream that is currently not available

Latest innovations came in the market in 2002 People would welcome new variety and flavours

1048766 There is a gap in the market for balanced convenience through ice cream where consumers can

get nutritional benefits for ice cream Also emotional attachment to ice cream could further be

improvised in promotional campaigns

1048766 There is high scope for market penetration and development to increase frequency of ice

cream consumption

1048766 Level of risk or uncertainty is very low in ice-cream industry because the consumer market is

so huge any product with a standard quality and careful pricing will be able to make significant

profit

1048766 As for geographic reach of the industry 60 market is still in Dhaka There is scope of

expansion and a new entrant can easily capture market share within Dhaka using carts even if

they do not want nation wide cold chain distribution

1048766 The production process is very complex and capital requirements are also high So before

going into production any company should know about their capabilities and weaknesses and

then start the business or else they might suffer huge loss at a certain level

1048766 Unilever can acquire the required resource and use existing multi-national multi-cultural

expertise to enter the market in a grand way

1048766 With high probability of entry from DANONE with more products like the ISIS diabetic ice

cream Unilever should consider entering in this industry as soon as possible

Evaluation of Entry into Ice cream Business for Bangladesh Limited 53

80 ENTRY STRATEGY FOR UNILEVER

While describing the suggested entry strategy for UBL certain issues have been kept

confidential and some issues have been touched but not explained to keep consistency with UBL

confidentiality policy

81 Suggested Entry Areas for UBL

1048766 Boutique segment of the Bangladesh ice cream is only 5 of the branded market UBL needs

to pursue a larger scope to make the entry viable

1048766 UBL cannot fight with unbranded segment as global product quality mandate of Unilever does

not allow UBL to fight in low price-low quality segment

1048766 Recommend entry should be in the common format segment with both single and multiple

servings and in the boutique segment with a different brand name (if possible BEN amp JERRYrsquoS)

1048766 UBL should build up state-of-art modern factory for manufacturing and establish cold chain

facilities initially focusing on metro cities

1048766 Investment issues are required to be addressed for building factory and cold chain and capital

requirement needs to be identified for that purpose4

1048766 UBL may have boutiques for driving image selective top-end offering

1048766 Kiosks can be setup near universities and shopping malls

1048766 Boutiques should be concentrated in Dhaka and Chittagong

1048766 Ice cream for boutiques and kiosks would be produced in factory as institutional packs of 9-10

litres

82 Products

1048766 As a Brand Building country in global Unilever operating framework UBL is entitled only to

bring products developed by the Brand Development countries

1048766 Unilever should focus on serving products that have nutritional benefits (already available

globally) along with usual satisfactions of sensual pleasure functional attributes etc

1048766 Current existent players especially Igloo and Kwality have extensively copied global and

regionally available Unilever products eg Cornelli is same as Wallrsquos Cornetto Vinetta is similar

to Vienetta Mega is similar to Magnum etc UBL needs to differentiate these to consumers on

the ldquotaste the originalrdquo platform where global quality is focused regarding the products

1048766 UBL should also bring regionally famous brands like Moo or Max to create image

differentiation

1048766 Magnum or Moo should be used as premium end ice cream to generate more profit margin

Evaluation of Entry into Ice cream Business for Bangladesh Limited 54

83 Placement

1048766 Distribution focus should be in Dhaka for entry as Dhaka contributes more than 60 of total

ice cream sales in the country

1048766 Company may use carts as distribution method They serve as good source of visibility and

availability It would help in increasing impulse purchase

1048766 At least 1500 outlets in Dhaka and Chittagong needs to be actively served using dedicated

branded refrigerators to generate sales

1048766 50 carts should operate in Dhaka and Chittagong

84 Price

1048766 UBL products should be priced at par with Igloo pricing for the common format ice creams

1048766 UBL can bring in premium single-serve SKUS for the higher economic classes in the price

range of BDT 60-80

1048766 Smaller SKUs (small lolly stick) can be introduced in the price range of BDT 10-15

1048766 In the boutique segment UBL should price products above the semi-premium segment

(Gelateria Igloo Sub Zero or Andersenrsquos) but lower than that of Club Gelato or MoumlvenPick

85 Promotion

1048766 UBL would require strong marketing campaign (As high as 50 of sales) to have a grand

entry in the market

1048766 Presence in the television media would be of utmost importance More than 50 of

promotional expense should be made here initially Gradually it can be reduced

1048766 Newspaper would serve as the second most important option

1048766 Billboards should also be used

1048766 Activations (similar to Lux Channel i Super Star or Igloo Festival) should be done to generate

trial

86 Scope of Opportunity

Table 30 Value and Volume Based Scope of Opportunity for UBL

Value (BDT Cr)

Volume (Tons)

Market

131

7835

Common

121

7600

Boutique

98

235

Evaluation of Entry into Ice cream Business for Bangladesh Limited 55

861 Geographic Contribution

1048766 Dhaka (61)

1048766 Chittagong (19)

1048766 Sylhet (10)

862 UBL objectives

Common Format Ice Creams

1048766 Target 10 Market share in 1st year operation

1048766 Value BDT 11 Cr

1048766 Production capacity required 21 Tons day

1048766 Freezer Placement 1500 freezers

1048766 Cart operation At least 50 carts

Boutiques

1048766 Target Further develop the market

1048766 Focus Dhaka Chittagong and Sylhet Metro

1048766 Franchise At least 20 franchisee operations nation wide in divisional towns

1048766 Pricing Below imported parlours above common formats with around BDT 400 per Litre

87 Critical Success Factors

1048766 UBL is considered as a high profile company in Bangladesh and thus they cannot operate in

the market only with common products like choc-bars and cups They must have premium

products (these require extrusion line) also to carry their brand image Otherwise UBL would not

be able to charge usual premium over competition products

1048766 Launch of ice cream would require huge promotional and activation support in order to gain

customers from Igloo People want novelty regarding ice cream and UBL have to let them know

about their products and create hype

1048766 Cart should be used as a source of distribution Recent successes of Unilever companies like

Indonesia shows that carts can generate more sales and can be used as source of visibility in the

minds of both retail traders and consumers Carts can also provide incremental sales to the

company

1048766 UBL have to create a strong cold chain for ice cream (initially in Dhaka and Chittagong) to

ensure quality products for consumers

1048766 UBL have to build capacity very rapidly to meet consumer demand if the launch is successful

Evaluation of Entry into Ice cream Business for Bangladesh Limited 56

90 BUSINESS PROJECTION

91 Basic Assumptions

Business projection for ice cream business was made based on a conservative approach UBL

would require spending significantly on production capacity and factory dedicated to ice cream

Thus to analyse business possibilities of ice cream certain assumptions were made and collected

data were used These are

1048766 Production equipments and cabinets would cost approximately BDT 55 crores

1048766 Production equipments 45

1048766 Packaging Equipments 15

1048766 Storage Facility 20

1048766 Branded Freezers 10

1048766 Distribution Investment 10 (Distributors would also invest themselves)

1048766 Ice cream factory with a floor size of 20000 sqft would cost BDT 25 crores

1048766 Objective is to capture 10 market share in Dhaka and Chittagong in the first year

1048766 Business would grow by 50 in year 2 and 3 30 in year 4 and 25 in year 5

1048766 Weighted price per litre is BDT 170 according to volume share of single serve ice cream

multiple serve ice cream and boutique ice cream

1048766 Other financial assumptions were also made List of them are provided below but amount has

been removed for confidentiality issues

Assumptions

Trade Margin

Distributors Margin

DutyVAT Rate

Trade Terms Expense of NPS

Trade Terms Expense of NSV

Advertising ampPromotion of NPS

Indirects (Salaries Wages etc)

Trading Tax

Table 31 Assumptions for Business Projection

Evaluation of Entry into Ice cream Business for Bangladesh Limited 57

100 CONCLUSION

Ice cream has good prospect in Bangladesh It is still a growing market with opportunities for big

new entrants With the barriers of entry UBL needs to consider its priorities UBL being an HPC

company traditionally needs to acquire expertise in cold chain distribution and has to invest a lot

of money to rip the benefits of the industry However to initiate company can take regional

support and acquire resource expertise The company should enter the business as soon as

possible since there is potential threat from DANONE to introduce more ice creams after ISIS

diabetic ice cream and also with potential of the industry arch rival Nestlersquo might consider

entering into the industry too

Evaluation of Entry into Ice cream Business for Bangladesh Limited 58

References

Web References

1 wwwunilevercom

2 wwwunilevercombd

3 wwwhllcom

4 wwwunilevercompk

5 wwwthedailystarcom - Life Style Magazine

6 wwwreuterscouk

Evaluation of Entry into Ice cream Business for Bangladesh Limited 59

Page 44: Square Ice cream

1048766 Ship travel time 19 days

1048766 Port clearance 10 days

1048766 Safety Cushion Extra 10 days

Promotional Materials

1048766 Materials used are near premises POS materials for promoting the parlour only

Table 24 Detail of MoumlvenPick of Switzerland

Evaluation of Entry into Ice cream Business for Bangladesh Limited 39

Andersenrsquos of Denmark

Basic Company Information

1048766 Location Gulshan (2 others in Uttara Dhanmondi)

1048766 Established in 2001

1048766 Seating Capacity 48

1048766 Owner United Group

1048766 Business Type Franchise of Australian company Andersenrsquos of Denmark

1048766 Production Tongi Factory of United Group

1048766 Production capacity 2000 litres per day in factory

1048766 Storage Capacity in Shop 150 litres

Product Related Information

1048766 Product Danish parlour scoop ice cream and coffee

1048766 Flavours Around 30 to 35 flavours available

1048766 Most selling Strawberry Butter Scotch Green

1048766 Innovations New variants and ingredients are communicated by their franchiser and they

decide on flavours that they want

1048766 Serve type Cup Cone Glasses Box for take away

Consumer Profile

1048766 Primary Teenagers and Young Adults (18-30) (70) amp Diplomats

1048766 Secondary Family consumers for eat out

1048766 Income Group High income customers tentatively from SEC A

1048766 Geographic Area Concentrated in Gulshan and nearby areas

1048766 Rush time 8 to 10 pm

Sales and Price Information

1048766 Sales BDT 10-12000 daily in summer

1048766 Price 460 per litre for any flavour

1048766 Sales Volume 40-50 litres per day

Supply Chain Placement Information

1048766 Milk 2025 kg packs are imported

1048766 Chocolates amp Flavours Imported

1048766 Butte paper Local sourcing

1048766 Transportation Ship

Promotional Materials

1048766 Materials used are near premises POS materials for promoting the parlour only

Table 25 Detail of Andersenrsquos of Denmark

Evaluation of Entry into Ice cream Business for Bangladesh Limited 40

Gelateria Igloo

Basic Company Information

1048766 Location Banani Kemal Ataturk Avenue (Two others in GEC Mor Chittagong and Naya

Paltan)

1048766 Established in 2000

1048766 Seating Capacity 20

1048766 Production From Igloo factory in Shyampur Narayanganj

Product Related Information

1048766 Product Parlour scoop ice cream and coffee only

1048766 Flavours Around 30 flavours available

1048766 Most selling Vanilla Strawberry Chocolate Pistachio Butter Scotch Tutti Fruity

1048766 Serve type Cup Cone Glasses Box for take away

Consumer Profile

1048766 Primary Teenagers and Young Adults (18-30)

1048766 Secondary Family consumers for eat out

1048766 Income Group High income customers tentatively from SEC A and B

1048766 Geographic Area Diversified

1048766 Rush Time afternoon and evening

Sales and Price Information

1048766 Sales BDT 8000 to 10000 daily in summer Nearly one fourth in winter

1048766 Price Varies but 350 per litre of vanilla

Promotional Materials

1048766 POS materials at the premises

Table 26 Detail of Gelateria Igloo

52 Price Comparison of Common and Boutique Segments

Price ranges of both common format and boutique segment cannot exactly be pin pointed as

products do not follow common structure and variations occur with use of toppings mixing of

flavours and use of coatings However a price comparison has been made among the brands

based on their price of per litre of vanilla flavoured ice cream in the market It appears to be as

following

Company

Price Litre Vanilla

Club Gelato

750

MoumlvenPick

640

Andersenrsquos

460

Dolce Vita

440

Igloo

100

Kwality

100

Polar

100

Milk-Vita

90

Savoy

85

Table 27 Comparative Price Analysis

As it can be seen there is price gap within the range of BDT 100-400 Ice cream kiosks and

small scooping boutiques can operate within that range

Evaluation of Entry into Ice cream Business for Bangladesh Limited 41

60 CONSUMER ANALYSIS

61 Target Group of Ice cream

Who are the consumers of ice cream This question does not have a clear answer Ice cream is a

food for all It is the only food consumed by a human being at less than 0 degree centigrade

temperature and people of all ages feel indulged to have it However we can determine focus

target groups for both branded common format and artisan boutique ice cream Group

discussions and market visits were done to get insight into the consumers along side resources

form secondary sources Age based target group is common for both segments but variation

among the groups occur mainly based on SEC and DMFI classification

611 Geographic Group

Branded ice cream remains an urban product till date Geographically branded ice cream has

reached urban and semi urban areas up to Thana Head Quarter levels Ice cream has reached

areas where electricity is available Small artisan players are available in places where large

branded players have no distribution

612 Target Age Group

Age wise grouping of target consumers is as follows

1048766 Urban kids in the age group of 5-14

1048766 They mainly consume normal sticks cups cones innovative fillers and water ice creams

1048766 Urban youth in the age group of 15-24

1048766 They consume premium and extrusion sticks and cones

1048766 Urban mothers in the age group of 25-35

1048766 They determine the family purchases Even when the father purchases ice cream decision is

taken by them

Consumption pattern of various age groups are depicted in the following chart Ice cream

consumption pattern50203005 to 14 yrs15 to 24 yrs25 to 35 yrs

Figure 11 Target Group wise Consumption Pattern Evaluation of Entry into Ice cream Business

for Bangladesh Limited 42

613 Target SEC and DMFI Group

Common Format

SEC A and B is the target group for common format ice cream However with rapid increase in

price level over the years has made it a ldquohard to consumerdquo product for SEC B consumers who

belong to lower DMFI group

Boutique Format

Boutique formatrsquos higher margin and high price range makes it an exclusively SEC A ice cream

People belonging to upper and upper middle class have access to the mediocre boutiques and

only higher upper class can have premium ice creams like Club Gelato and MoumlvenPick

Another unique target group for boutique format are the foreigners who live in Bangladesh

These people tend to visit the parlours to have ice cream as dessert especially after dinner

62 Ice cream in Consumer Lifestyle

Figure 12 Ice cream in Consumer Life style

This simple overview of ice cream in consumer lifestyle was determined based on in-depth

research analysis of UBL and validated through qualitative group discussions by the author

However detail of in-depth research is provided in a later section of this chapter

Evaluation of Entry into Ice cream Business for Bangladesh Limited 43

63 Highlights of Purchase Habit of Ice cream

631 Common Habits across Target Groups

There are some common habits that were identified in earlier researches and group discussions

with consumers Common habits mean the consumer approach towards ice cream that is seen

across all target groups eg kids youth and adult purchasers These are outlined below

1048766 Ice cream is mainly seen as a dessert or a snack Impulse ice cream is seen as a quick snack

that is consumed when it is in sight Visibility plays a big role here Regarding family packs

people see it as a post-food dessert

1048766 Ice cream purchase is commonly a planned event When the contexts arise people generally

take a bit of time to decide whether or not to have ice cream or when they want to go to a

boutique they make due considerations regarding which boutique to visit

1048766 Ice cream purchase decision is taken based on favourite flavour People tend to try out new

variants and flavours when they first see it They compare the taste with earlier experience and

when they purchase later they choose the flavour they have liked most

1048766 For In-Home segment decision is mostly taken on the flavour Generally people come up with

different flavours of choice and most voted flavour is chosen

1048766 People become aware of new variants or flavours mainly through word-of-mouth

Advertisement (new launches special offers and festivals) in newspaper is another source of

awareness

1048766 People are currently indifferent towards the price level of premium flavours However some

feel that price of Choc-bar or water ice creams (lolly) is a bit much If less they would have

consumed more Some also feel that companies should come up with branded ice cream in the

price range of BDT 5-8

1048766 Ice cream is purchased from nearby shops If required brand and flavour is not available 2-3

shops will be visited and then available flavour will be selected even if the required one is not

found This is done mainly not to ruin the mood for ice cream

1048766 People are very open to try new brands and flavours especially if it comes from a credible

source They would try new flavours and if they are satisfied with the taste they would repeat

purchase

1048766 Regarding boutique visits people feel that boutiques need to have a proper environment

enough flavours and other snacks

1048766 While visiting boutique with family or companion they want variation in flavours so that

they would order different flavours and taste each otherrsquos ice cream It is seen as a sign of

togetherness

1048766 Frequency of ice cream purchase varies among people It depends on peer pressure collective

family decision summer heat and attitude towards ldquoice creamrdquo itself as a product Evaluation of

Entry into Ice cream Business for Bangladesh Limited 44

632 Habits of Kids

1048766 Kids choose ice cream flavours by the look of the product (generally pictures shown in POS

materials and carts) They love colour and designs of the products let it be a common format or a

boutique ice cream

1048766 Kids (when in house) would go with the housemaid to the nearby shop choose the flavour

they want (within range of the amount given to the maid) and buy it

1048766 When with parents they would take the product they like even if the price is lower than some

other product However mothers play a role in this decision They would want their children not

to choose too high priced a product or coloured products

633 Habits of Youth

1048766 Young people are the main consumer of impulse ice cream They also are one of the major

consumers in the boutique segment

1048766 Young people love to try out new products that come into the market Another side of the coin

is that they are not very loyal to a brand or a flavour and tend to switch a lot

1048766 Regarding boutique visits young people go to boutiques to have an ldquoice cream hang outrdquo with

peer groups They would stay there for a longer period of time while they have their ice cream

1048766 Some times young people make milk shakes and other ice cream based desserts

634 Habits of Mothers

1048766 Mothers worry about their childrenrsquos health and they prefer ldquovanillardquo type of brands

However when price constraint occurs they go for water ice creams for their children They try

to convince their kidrsquos purchase decision

1048766 Regarding family purchase motherrsquos decision is sometimes prioritized by the whole family

64 Barriers to Ice cream Consumption

641 Emotional Barriers

1048766 Overindulge (close to sinful)

1048766 Undisciplined (no control)

1048766 Childish (licking)

1048766 Artificial Image

642 Functional Barriers

1048766 People of SEC B feel that ice cream is an expensive dessert (If less expensive would consume

more often)

1048766 It leads to cold cough - especially in winter rainy season

1048766 It contains artificial additives preservatives

1048766 It is very high in calories that lead to fattening

Evaluation of Entry into Ice cream Business for Bangladesh Limited 45

1048766 It does not quench ldquothirstrdquo

1048766 Less convenient (portable immediate eat)

1048766 Messy Dripping

65 Research Findings

The highlights regarding purchase habits triggers and barriers of ice cream consumption provide

a glimpse into the consumer world of ice cream industry However UBL CMI conducted a

formal research exclusively on ice cream consumers to identify

1048766 Occasions of ice cream

1048766 Frequency of ice cream consumption

1048766 Expectations from ice cream occasions

1048766 Personalities that they desire from ice cream

651 Relevant Occasions in Daily Lives of Consumers

Research question regarding ldquousual occasions of life that occurred most frequently in day-to-day

lives of the respondentsrdquo generated the following replies

Occasion

of Respondents saying Yes

Watching TV

93

Normal Dinner At Home

91

Normal Lunch At Home

89

At Home While ReadingMusicSurfing

86

Informal Family Get Together

85

Out Of Home Hanging Out With Friends

84

Out Shopping

84

Mid-Afternoon Break At Home

83

At Home By Myself During The Day

82

Special Dinner At Home

82

Informal Dinner Out Of Home

82

Normal Lunch Out Of Home

82

Leisure Walk

79

Coming Home From WorkSchool

78

Special Dinner Out Of Home

78

Celebration

78

A Night In With Friends

77

At Home By Myself In The Evening

77

Special Lunch Out Of Home

76

Mid-Afternoon Break Out Of Home

75

Special Lunch At Home

73

Day out with Partner

72

Midmorning Break

70

At Breakfast

68

Family Day Out

68

During Work Or At School

65

Evaluation of Entry into Ice cream Business for Bangladesh Limited 46

Travelling ToFrom WorkSchool

65

At The Cinema

61

Special Event

56

Clubbing At A Party

50

Post GymSports

48

Table 28 Relevant Occasions in Consumersrsquo Lives

Respondents were then asked to mention ldquofrequency of occurrence of the identified occasionsrdquo

The identified replies are as follows Normal dinner at homenormal lunch at homeComing home

from workschoolTraveling tofrom workschoolDay out with Partner SpouseMid-afternoon

break at homeOut of home hanging out with friendsLeisure walkMid-afternoon break out of

homeA night in with friendsSpecial dinner at homeSpecial lunch out of homeFamily day

outSpecial eventPost gymsportsDaily2-3 Times A WeekWeekly2-3 Times A MonthOnce A

MonthEvery 2-3 MonthsLess OftenNever Figure 13 Frequency of Occurrence of Occasions

This shows that ldquoNormal dinner at home Watching TV Normal Lunch At Home At Home

While ReadingMusicSurfing Coming Home From WorkSchool During Work Or At School

Travelling ToFrom WorkSchool Midmorning Break Day Out With Partner Spouse At Home

By Myself During The Dayrdquo are the most frequent daily rituals of busy lives of consumers

652 Frequency of Ice cream Consumption

Respondents were asked to mention ldquoconsumption pattern of ice cream during the identified

occasionrdquo on a scale of 1-5 depicting frequencies like ldquo(5) always (4) most of the times (3)

about half of the times (2) sometimes (1) never do not knowrdquo The responses are depicted in

the following table

Evaluation of Entry into Ice cream Business for Bangladesh Limited 47

444474544655555566756665775967779991011101111101210111110101113111412131314161

011121411131216181519181518211817171719181718201721222130303434253437403741394

046383944464746453745414641374638504843414839373030292726232725222020201926202

21722221317Midmorning

breakWhile clubbing at aAt the cinemaSpecial eventNormal lunch out ofA night in with

friendsNormal dinner atInformal dinner out ofAt home by myselfAt home by myself inOut

shoppingSpecial lunch atDay out with SpouseWatching TVAlwaysmost of the timesAbout half

of the timesSometimesneverdo not know

Figure 14 Frequency of Ice cream Consumption

As it can be seen ldquoDay out with Spouse Special lunch at home Special dinner at home

Watching TV Family day out Celebrationrdquo are the occasions where most frequently ice cream is

consumed

653 Market Character Mapping Relevant Occasions vs Frequency of Consumption

If we plot frequency of consumption on the X-axis of a chart and relevance of occasion

occurrence on the Y-axis taking the above mentioned values as cut-off values we get four

quadrants in the chart depicting four market scenarios that any ice cream manufacturer in

Bangladesh market might encounter given the current market situation This market

segmentation is based on frequency of ice cream consumption in daily occasions of consumer

lives

The segments are

1048766 OPPORTUNITY MARKET High Relevant Occasions-Low Ice cream Frequency

1048766 QUESTION MARKET Less Relevant Occasions-Low Ice cream Frequency

1048766 HIGH FREQUENCY MARKET Relevant Occasions-High Ice cream Frequency

1048766 CAPTIVE MARKET Less Relevant Occasions-High Ice cream Frequency

The chart looks as follows Evaluation of Entry into Ice cream Business for Bangladesh Limited

48

Figure 15 Relevance of Occasion-Frequency of Consumption Mapping

As it can be seen from the above chart Bangladesh Market still lies in the Opportunity and

Question market zone with a pull towards High frequency and Captive Market zones This is

evident from market data as penetration of ice cream still remains at Thana headquarters levels

Also this explains the high market growth rate of 17 as market is yet under developed and

branded quality ice cream has yet not reached all levels of consumers especially rural level that

constitutes around 75 of Bangladeshi market

From the above analysis we can establish that target of ice cream manufacturers should be to

penetrate more into the Bangladeshi market to create higher frequency of ice cream

consumption The following chart shows the strategies to follow for ice cream manufacturers

Figure 16 Required Market Strategy for Bangladesh

Evaluation of Entry into Ice cream Business for Bangladesh Limited 49

As relevance of ice cream consumption occasions can hardly be controlled by marketers their

endeavour should be to create more ldquoemotional and functionalrdquo attachment to ice cream in less

frequent occasions through ldquomarket developmentrdquo strategy to earn share from overall food

expenditure of consumers and at the same time make them consume more ice cream in highly

relevant occasions through ldquopenetrationrdquo strategy

654 Consumersrsquo Emotional Requirements and Product Attributes

All consumers under these clusters also identify the emotional requirements and the significant

product attributes they seek from their current preferred and future desired ice creams These are

provided below

Cluster

Emotional Functional Requirement

Product Attributes

Enjoyment

Flavour Variety

1048766 Combination of different flavours

1048766 Combination of different textures

1048766 Very sweet

1048766 With wafer or biscuit

1048766 With chocolate

1048766 Of a well known brand

Socially Involved

Spoonable Rich

1048766 Very creamy

1048766 Only natural ingredients

1048766 No mess

Care

Size Creaminess

1048766 Big

1048766 Rich full taste

1048766 Smooth

1048766 Value for money

1048766 No mess

Unwind amp Escape

Economy

1048766 Crunchy

1048766 Economic

1048766 Of a well known brand

1048766 Nutritious

Balanced Convenience

Health Conscious

1048766 Of a well known brand

1048766 Nutritious

1048766 Milk based

1048766 Low sugar

1048766 Low carbohydrates

1048766 Filling

Active Self-Grooming

Fruit Vitamins

1048766 Healthy

1048766 Fruit based

1048766 Low fat

1048766 Liquid or drinkable

1048766 Nutritious

1048766 Of a well known brand

Confidence

Drinkable Light

1048766 Low calories

1048766 Light on the stomach

1048766 Chewy or gooey

1048766 Not so sweet

1048766 Natural appearance

Sensual

Appeal or image

1048766 No artificial additives

Evaluation of Entry into Ice cream Business for Bangladesh Limited 50

1048766 Natural appearance

1048766 Melting slowly

1048766 Attractive packaging

1048766 High quality ingredients

1048766 Of a well known brand

Table 29 Requirements amp Product Attributes Desired by Consumer Clusters

Of these findings we see that the identified highlighted barriers to ice cream consumption are

pretty evident among the consumers Mostly people want products of a reliable source or a well

known brand low calories quality ingredients value for money economic type

Evaluation of Entry into Ice cream Business for Bangladesh Limited 51

70 INDUSTRY ATTRACTIVENESS AND ENTRY PROSPECTS

71 Driving Forces of Growth

As identified in the earlier sections there are several driving forces behind the growth of ice-

cream industry in Bangladesh

712 Trade and Infrastructural Level

1048766 As a result of globalization newer varieties have been introduced to the local products Many

foreign companies are also coming as franchise so there has been increased competition and

these boutiques are setting higher standards for the local producers

1048766 The present market growth rate is 18-19 which is being influenced by larger players like

Igloo who are expanding their distribution nation wide with expansion of national electricity

grid

1048766 With entry of Modern Trade and recent organized business approach of retailers has made it

possible for ice cream manufacturers to penetrate into shops even without providing them with

branded freezers

1048766 Weather change has increased ldquosummerrdquo season in our country which has reduced negative

seasonal impact on ice cream

1048766 Large companies like Igloo have taken global learning of using carts as an effective tool of

availability and visibility for ice cream

1048766 New and improved technologies are being used in the production process This technological

advancement has improved quality increased speed of production and made the process more

cost effective

713 Consumer Level

1048766 Only a few years back rich people could afford the luxury of having ice-cream but now it has

become a common product for everybody Ice-cream companies are producing different products

with a wide price range for consumers of every class and status

1048766 Nowadays companies are doing promotional campaigns more frequently the customers get to

know about the product which makes it easier for them to buy the best one

1048766 The improved standard of life and more modernized lifestyle of people is an important reason

for the increased consumption thus growth of the ice-cream industry

Evaluation of Entry into Ice cream Business for Bangladesh Limited 52

72 Prospects of Entry

The ice-cream industry of Bangladesh is an attractive one for the investors because there is a

huge market but number of producers is very small The major reasons behind industry

attractiveness are as follows

1048766 The industryrsquos current growth potential is very high with opportunity for market development

1048766 The competition currently permits adequate profitability and the competitive forces are

becoming stronger with time

1048766 Boutique segment is at a very high growth stage but no operator is currently operating with a

mid price range of BDT 100-400 Ice cream kiosks and small scooping boutiques can operate

within that range

1048766 Current industry driving forces are favourable for the future industry profitability

1048766 Globally oriented consumers look for variety in ice cream that is currently not available

Latest innovations came in the market in 2002 People would welcome new variety and flavours

1048766 There is a gap in the market for balanced convenience through ice cream where consumers can

get nutritional benefits for ice cream Also emotional attachment to ice cream could further be

improvised in promotional campaigns

1048766 There is high scope for market penetration and development to increase frequency of ice

cream consumption

1048766 Level of risk or uncertainty is very low in ice-cream industry because the consumer market is

so huge any product with a standard quality and careful pricing will be able to make significant

profit

1048766 As for geographic reach of the industry 60 market is still in Dhaka There is scope of

expansion and a new entrant can easily capture market share within Dhaka using carts even if

they do not want nation wide cold chain distribution

1048766 The production process is very complex and capital requirements are also high So before

going into production any company should know about their capabilities and weaknesses and

then start the business or else they might suffer huge loss at a certain level

1048766 Unilever can acquire the required resource and use existing multi-national multi-cultural

expertise to enter the market in a grand way

1048766 With high probability of entry from DANONE with more products like the ISIS diabetic ice

cream Unilever should consider entering in this industry as soon as possible

Evaluation of Entry into Ice cream Business for Bangladesh Limited 53

80 ENTRY STRATEGY FOR UNILEVER

While describing the suggested entry strategy for UBL certain issues have been kept

confidential and some issues have been touched but not explained to keep consistency with UBL

confidentiality policy

81 Suggested Entry Areas for UBL

1048766 Boutique segment of the Bangladesh ice cream is only 5 of the branded market UBL needs

to pursue a larger scope to make the entry viable

1048766 UBL cannot fight with unbranded segment as global product quality mandate of Unilever does

not allow UBL to fight in low price-low quality segment

1048766 Recommend entry should be in the common format segment with both single and multiple

servings and in the boutique segment with a different brand name (if possible BEN amp JERRYrsquoS)

1048766 UBL should build up state-of-art modern factory for manufacturing and establish cold chain

facilities initially focusing on metro cities

1048766 Investment issues are required to be addressed for building factory and cold chain and capital

requirement needs to be identified for that purpose4

1048766 UBL may have boutiques for driving image selective top-end offering

1048766 Kiosks can be setup near universities and shopping malls

1048766 Boutiques should be concentrated in Dhaka and Chittagong

1048766 Ice cream for boutiques and kiosks would be produced in factory as institutional packs of 9-10

litres

82 Products

1048766 As a Brand Building country in global Unilever operating framework UBL is entitled only to

bring products developed by the Brand Development countries

1048766 Unilever should focus on serving products that have nutritional benefits (already available

globally) along with usual satisfactions of sensual pleasure functional attributes etc

1048766 Current existent players especially Igloo and Kwality have extensively copied global and

regionally available Unilever products eg Cornelli is same as Wallrsquos Cornetto Vinetta is similar

to Vienetta Mega is similar to Magnum etc UBL needs to differentiate these to consumers on

the ldquotaste the originalrdquo platform where global quality is focused regarding the products

1048766 UBL should also bring regionally famous brands like Moo or Max to create image

differentiation

1048766 Magnum or Moo should be used as premium end ice cream to generate more profit margin

Evaluation of Entry into Ice cream Business for Bangladesh Limited 54

83 Placement

1048766 Distribution focus should be in Dhaka for entry as Dhaka contributes more than 60 of total

ice cream sales in the country

1048766 Company may use carts as distribution method They serve as good source of visibility and

availability It would help in increasing impulse purchase

1048766 At least 1500 outlets in Dhaka and Chittagong needs to be actively served using dedicated

branded refrigerators to generate sales

1048766 50 carts should operate in Dhaka and Chittagong

84 Price

1048766 UBL products should be priced at par with Igloo pricing for the common format ice creams

1048766 UBL can bring in premium single-serve SKUS for the higher economic classes in the price

range of BDT 60-80

1048766 Smaller SKUs (small lolly stick) can be introduced in the price range of BDT 10-15

1048766 In the boutique segment UBL should price products above the semi-premium segment

(Gelateria Igloo Sub Zero or Andersenrsquos) but lower than that of Club Gelato or MoumlvenPick

85 Promotion

1048766 UBL would require strong marketing campaign (As high as 50 of sales) to have a grand

entry in the market

1048766 Presence in the television media would be of utmost importance More than 50 of

promotional expense should be made here initially Gradually it can be reduced

1048766 Newspaper would serve as the second most important option

1048766 Billboards should also be used

1048766 Activations (similar to Lux Channel i Super Star or Igloo Festival) should be done to generate

trial

86 Scope of Opportunity

Table 30 Value and Volume Based Scope of Opportunity for UBL

Value (BDT Cr)

Volume (Tons)

Market

131

7835

Common

121

7600

Boutique

98

235

Evaluation of Entry into Ice cream Business for Bangladesh Limited 55

861 Geographic Contribution

1048766 Dhaka (61)

1048766 Chittagong (19)

1048766 Sylhet (10)

862 UBL objectives

Common Format Ice Creams

1048766 Target 10 Market share in 1st year operation

1048766 Value BDT 11 Cr

1048766 Production capacity required 21 Tons day

1048766 Freezer Placement 1500 freezers

1048766 Cart operation At least 50 carts

Boutiques

1048766 Target Further develop the market

1048766 Focus Dhaka Chittagong and Sylhet Metro

1048766 Franchise At least 20 franchisee operations nation wide in divisional towns

1048766 Pricing Below imported parlours above common formats with around BDT 400 per Litre

87 Critical Success Factors

1048766 UBL is considered as a high profile company in Bangladesh and thus they cannot operate in

the market only with common products like choc-bars and cups They must have premium

products (these require extrusion line) also to carry their brand image Otherwise UBL would not

be able to charge usual premium over competition products

1048766 Launch of ice cream would require huge promotional and activation support in order to gain

customers from Igloo People want novelty regarding ice cream and UBL have to let them know

about their products and create hype

1048766 Cart should be used as a source of distribution Recent successes of Unilever companies like

Indonesia shows that carts can generate more sales and can be used as source of visibility in the

minds of both retail traders and consumers Carts can also provide incremental sales to the

company

1048766 UBL have to create a strong cold chain for ice cream (initially in Dhaka and Chittagong) to

ensure quality products for consumers

1048766 UBL have to build capacity very rapidly to meet consumer demand if the launch is successful

Evaluation of Entry into Ice cream Business for Bangladesh Limited 56

90 BUSINESS PROJECTION

91 Basic Assumptions

Business projection for ice cream business was made based on a conservative approach UBL

would require spending significantly on production capacity and factory dedicated to ice cream

Thus to analyse business possibilities of ice cream certain assumptions were made and collected

data were used These are

1048766 Production equipments and cabinets would cost approximately BDT 55 crores

1048766 Production equipments 45

1048766 Packaging Equipments 15

1048766 Storage Facility 20

1048766 Branded Freezers 10

1048766 Distribution Investment 10 (Distributors would also invest themselves)

1048766 Ice cream factory with a floor size of 20000 sqft would cost BDT 25 crores

1048766 Objective is to capture 10 market share in Dhaka and Chittagong in the first year

1048766 Business would grow by 50 in year 2 and 3 30 in year 4 and 25 in year 5

1048766 Weighted price per litre is BDT 170 according to volume share of single serve ice cream

multiple serve ice cream and boutique ice cream

1048766 Other financial assumptions were also made List of them are provided below but amount has

been removed for confidentiality issues

Assumptions

Trade Margin

Distributors Margin

DutyVAT Rate

Trade Terms Expense of NPS

Trade Terms Expense of NSV

Advertising ampPromotion of NPS

Indirects (Salaries Wages etc)

Trading Tax

Table 31 Assumptions for Business Projection

Evaluation of Entry into Ice cream Business for Bangladesh Limited 57

100 CONCLUSION

Ice cream has good prospect in Bangladesh It is still a growing market with opportunities for big

new entrants With the barriers of entry UBL needs to consider its priorities UBL being an HPC

company traditionally needs to acquire expertise in cold chain distribution and has to invest a lot

of money to rip the benefits of the industry However to initiate company can take regional

support and acquire resource expertise The company should enter the business as soon as

possible since there is potential threat from DANONE to introduce more ice creams after ISIS

diabetic ice cream and also with potential of the industry arch rival Nestlersquo might consider

entering into the industry too

Evaluation of Entry into Ice cream Business for Bangladesh Limited 58

References

Web References

1 wwwunilevercom

2 wwwunilevercombd

3 wwwhllcom

4 wwwunilevercompk

5 wwwthedailystarcom - Life Style Magazine

6 wwwreuterscouk

Evaluation of Entry into Ice cream Business for Bangladesh Limited 59

Page 45: Square Ice cream

1048766 Innovations New variants and ingredients are communicated by their franchiser and they

decide on flavours that they want

1048766 Serve type Cup Cone Glasses Box for take away

Consumer Profile

1048766 Primary Teenagers and Young Adults (18-30) (70) amp Diplomats

1048766 Secondary Family consumers for eat out

1048766 Income Group High income customers tentatively from SEC A

1048766 Geographic Area Concentrated in Gulshan and nearby areas

1048766 Rush time 8 to 10 pm

Sales and Price Information

1048766 Sales BDT 10-12000 daily in summer

1048766 Price 460 per litre for any flavour

1048766 Sales Volume 40-50 litres per day

Supply Chain Placement Information

1048766 Milk 2025 kg packs are imported

1048766 Chocolates amp Flavours Imported

1048766 Butte paper Local sourcing

1048766 Transportation Ship

Promotional Materials

1048766 Materials used are near premises POS materials for promoting the parlour only

Table 25 Detail of Andersenrsquos of Denmark

Evaluation of Entry into Ice cream Business for Bangladesh Limited 40

Gelateria Igloo

Basic Company Information

1048766 Location Banani Kemal Ataturk Avenue (Two others in GEC Mor Chittagong and Naya

Paltan)

1048766 Established in 2000

1048766 Seating Capacity 20

1048766 Production From Igloo factory in Shyampur Narayanganj

Product Related Information

1048766 Product Parlour scoop ice cream and coffee only

1048766 Flavours Around 30 flavours available

1048766 Most selling Vanilla Strawberry Chocolate Pistachio Butter Scotch Tutti Fruity

1048766 Serve type Cup Cone Glasses Box for take away

Consumer Profile

1048766 Primary Teenagers and Young Adults (18-30)

1048766 Secondary Family consumers for eat out

1048766 Income Group High income customers tentatively from SEC A and B

1048766 Geographic Area Diversified

1048766 Rush Time afternoon and evening

Sales and Price Information

1048766 Sales BDT 8000 to 10000 daily in summer Nearly one fourth in winter

1048766 Price Varies but 350 per litre of vanilla

Promotional Materials

1048766 POS materials at the premises

Table 26 Detail of Gelateria Igloo

52 Price Comparison of Common and Boutique Segments

Price ranges of both common format and boutique segment cannot exactly be pin pointed as

products do not follow common structure and variations occur with use of toppings mixing of

flavours and use of coatings However a price comparison has been made among the brands

based on their price of per litre of vanilla flavoured ice cream in the market It appears to be as

following

Company

Price Litre Vanilla

Club Gelato

750

MoumlvenPick

640

Andersenrsquos

460

Dolce Vita

440

Igloo

100

Kwality

100

Polar

100

Milk-Vita

90

Savoy

85

Table 27 Comparative Price Analysis

As it can be seen there is price gap within the range of BDT 100-400 Ice cream kiosks and

small scooping boutiques can operate within that range

Evaluation of Entry into Ice cream Business for Bangladesh Limited 41

60 CONSUMER ANALYSIS

61 Target Group of Ice cream

Who are the consumers of ice cream This question does not have a clear answer Ice cream is a

food for all It is the only food consumed by a human being at less than 0 degree centigrade

temperature and people of all ages feel indulged to have it However we can determine focus

target groups for both branded common format and artisan boutique ice cream Group

discussions and market visits were done to get insight into the consumers along side resources

form secondary sources Age based target group is common for both segments but variation

among the groups occur mainly based on SEC and DMFI classification

611 Geographic Group

Branded ice cream remains an urban product till date Geographically branded ice cream has

reached urban and semi urban areas up to Thana Head Quarter levels Ice cream has reached

areas where electricity is available Small artisan players are available in places where large

branded players have no distribution

612 Target Age Group

Age wise grouping of target consumers is as follows

1048766 Urban kids in the age group of 5-14

1048766 They mainly consume normal sticks cups cones innovative fillers and water ice creams

1048766 Urban youth in the age group of 15-24

1048766 They consume premium and extrusion sticks and cones

1048766 Urban mothers in the age group of 25-35

1048766 They determine the family purchases Even when the father purchases ice cream decision is

taken by them

Consumption pattern of various age groups are depicted in the following chart Ice cream

consumption pattern50203005 to 14 yrs15 to 24 yrs25 to 35 yrs

Figure 11 Target Group wise Consumption Pattern Evaluation of Entry into Ice cream Business

for Bangladesh Limited 42

613 Target SEC and DMFI Group

Common Format

SEC A and B is the target group for common format ice cream However with rapid increase in

price level over the years has made it a ldquohard to consumerdquo product for SEC B consumers who

belong to lower DMFI group

Boutique Format

Boutique formatrsquos higher margin and high price range makes it an exclusively SEC A ice cream

People belonging to upper and upper middle class have access to the mediocre boutiques and

only higher upper class can have premium ice creams like Club Gelato and MoumlvenPick

Another unique target group for boutique format are the foreigners who live in Bangladesh

These people tend to visit the parlours to have ice cream as dessert especially after dinner

62 Ice cream in Consumer Lifestyle

Figure 12 Ice cream in Consumer Life style

This simple overview of ice cream in consumer lifestyle was determined based on in-depth

research analysis of UBL and validated through qualitative group discussions by the author

However detail of in-depth research is provided in a later section of this chapter

Evaluation of Entry into Ice cream Business for Bangladesh Limited 43

63 Highlights of Purchase Habit of Ice cream

631 Common Habits across Target Groups

There are some common habits that were identified in earlier researches and group discussions

with consumers Common habits mean the consumer approach towards ice cream that is seen

across all target groups eg kids youth and adult purchasers These are outlined below

1048766 Ice cream is mainly seen as a dessert or a snack Impulse ice cream is seen as a quick snack

that is consumed when it is in sight Visibility plays a big role here Regarding family packs

people see it as a post-food dessert

1048766 Ice cream purchase is commonly a planned event When the contexts arise people generally

take a bit of time to decide whether or not to have ice cream or when they want to go to a

boutique they make due considerations regarding which boutique to visit

1048766 Ice cream purchase decision is taken based on favourite flavour People tend to try out new

variants and flavours when they first see it They compare the taste with earlier experience and

when they purchase later they choose the flavour they have liked most

1048766 For In-Home segment decision is mostly taken on the flavour Generally people come up with

different flavours of choice and most voted flavour is chosen

1048766 People become aware of new variants or flavours mainly through word-of-mouth

Advertisement (new launches special offers and festivals) in newspaper is another source of

awareness

1048766 People are currently indifferent towards the price level of premium flavours However some

feel that price of Choc-bar or water ice creams (lolly) is a bit much If less they would have

consumed more Some also feel that companies should come up with branded ice cream in the

price range of BDT 5-8

1048766 Ice cream is purchased from nearby shops If required brand and flavour is not available 2-3

shops will be visited and then available flavour will be selected even if the required one is not

found This is done mainly not to ruin the mood for ice cream

1048766 People are very open to try new brands and flavours especially if it comes from a credible

source They would try new flavours and if they are satisfied with the taste they would repeat

purchase

1048766 Regarding boutique visits people feel that boutiques need to have a proper environment

enough flavours and other snacks

1048766 While visiting boutique with family or companion they want variation in flavours so that

they would order different flavours and taste each otherrsquos ice cream It is seen as a sign of

togetherness

1048766 Frequency of ice cream purchase varies among people It depends on peer pressure collective

family decision summer heat and attitude towards ldquoice creamrdquo itself as a product Evaluation of

Entry into Ice cream Business for Bangladesh Limited 44

632 Habits of Kids

1048766 Kids choose ice cream flavours by the look of the product (generally pictures shown in POS

materials and carts) They love colour and designs of the products let it be a common format or a

boutique ice cream

1048766 Kids (when in house) would go with the housemaid to the nearby shop choose the flavour

they want (within range of the amount given to the maid) and buy it

1048766 When with parents they would take the product they like even if the price is lower than some

other product However mothers play a role in this decision They would want their children not

to choose too high priced a product or coloured products

633 Habits of Youth

1048766 Young people are the main consumer of impulse ice cream They also are one of the major

consumers in the boutique segment

1048766 Young people love to try out new products that come into the market Another side of the coin

is that they are not very loyal to a brand or a flavour and tend to switch a lot

1048766 Regarding boutique visits young people go to boutiques to have an ldquoice cream hang outrdquo with

peer groups They would stay there for a longer period of time while they have their ice cream

1048766 Some times young people make milk shakes and other ice cream based desserts

634 Habits of Mothers

1048766 Mothers worry about their childrenrsquos health and they prefer ldquovanillardquo type of brands

However when price constraint occurs they go for water ice creams for their children They try

to convince their kidrsquos purchase decision

1048766 Regarding family purchase motherrsquos decision is sometimes prioritized by the whole family

64 Barriers to Ice cream Consumption

641 Emotional Barriers

1048766 Overindulge (close to sinful)

1048766 Undisciplined (no control)

1048766 Childish (licking)

1048766 Artificial Image

642 Functional Barriers

1048766 People of SEC B feel that ice cream is an expensive dessert (If less expensive would consume

more often)

1048766 It leads to cold cough - especially in winter rainy season

1048766 It contains artificial additives preservatives

1048766 It is very high in calories that lead to fattening

Evaluation of Entry into Ice cream Business for Bangladesh Limited 45

1048766 It does not quench ldquothirstrdquo

1048766 Less convenient (portable immediate eat)

1048766 Messy Dripping

65 Research Findings

The highlights regarding purchase habits triggers and barriers of ice cream consumption provide

a glimpse into the consumer world of ice cream industry However UBL CMI conducted a

formal research exclusively on ice cream consumers to identify

1048766 Occasions of ice cream

1048766 Frequency of ice cream consumption

1048766 Expectations from ice cream occasions

1048766 Personalities that they desire from ice cream

651 Relevant Occasions in Daily Lives of Consumers

Research question regarding ldquousual occasions of life that occurred most frequently in day-to-day

lives of the respondentsrdquo generated the following replies

Occasion

of Respondents saying Yes

Watching TV

93

Normal Dinner At Home

91

Normal Lunch At Home

89

At Home While ReadingMusicSurfing

86

Informal Family Get Together

85

Out Of Home Hanging Out With Friends

84

Out Shopping

84

Mid-Afternoon Break At Home

83

At Home By Myself During The Day

82

Special Dinner At Home

82

Informal Dinner Out Of Home

82

Normal Lunch Out Of Home

82

Leisure Walk

79

Coming Home From WorkSchool

78

Special Dinner Out Of Home

78

Celebration

78

A Night In With Friends

77

At Home By Myself In The Evening

77

Special Lunch Out Of Home

76

Mid-Afternoon Break Out Of Home

75

Special Lunch At Home

73

Day out with Partner

72

Midmorning Break

70

At Breakfast

68

Family Day Out

68

During Work Or At School

65

Evaluation of Entry into Ice cream Business for Bangladesh Limited 46

Travelling ToFrom WorkSchool

65

At The Cinema

61

Special Event

56

Clubbing At A Party

50

Post GymSports

48

Table 28 Relevant Occasions in Consumersrsquo Lives

Respondents were then asked to mention ldquofrequency of occurrence of the identified occasionsrdquo

The identified replies are as follows Normal dinner at homenormal lunch at homeComing home

from workschoolTraveling tofrom workschoolDay out with Partner SpouseMid-afternoon

break at homeOut of home hanging out with friendsLeisure walkMid-afternoon break out of

homeA night in with friendsSpecial dinner at homeSpecial lunch out of homeFamily day

outSpecial eventPost gymsportsDaily2-3 Times A WeekWeekly2-3 Times A MonthOnce A

MonthEvery 2-3 MonthsLess OftenNever Figure 13 Frequency of Occurrence of Occasions

This shows that ldquoNormal dinner at home Watching TV Normal Lunch At Home At Home

While ReadingMusicSurfing Coming Home From WorkSchool During Work Or At School

Travelling ToFrom WorkSchool Midmorning Break Day Out With Partner Spouse At Home

By Myself During The Dayrdquo are the most frequent daily rituals of busy lives of consumers

652 Frequency of Ice cream Consumption

Respondents were asked to mention ldquoconsumption pattern of ice cream during the identified

occasionrdquo on a scale of 1-5 depicting frequencies like ldquo(5) always (4) most of the times (3)

about half of the times (2) sometimes (1) never do not knowrdquo The responses are depicted in

the following table

Evaluation of Entry into Ice cream Business for Bangladesh Limited 47

444474544655555566756665775967779991011101111101210111110101113111412131314161

011121411131216181519181518211817171719181718201721222130303434253437403741394

046383944464746453745414641374638504843414839373030292726232725222020201926202

21722221317Midmorning

breakWhile clubbing at aAt the cinemaSpecial eventNormal lunch out ofA night in with

friendsNormal dinner atInformal dinner out ofAt home by myselfAt home by myself inOut

shoppingSpecial lunch atDay out with SpouseWatching TVAlwaysmost of the timesAbout half

of the timesSometimesneverdo not know

Figure 14 Frequency of Ice cream Consumption

As it can be seen ldquoDay out with Spouse Special lunch at home Special dinner at home

Watching TV Family day out Celebrationrdquo are the occasions where most frequently ice cream is

consumed

653 Market Character Mapping Relevant Occasions vs Frequency of Consumption

If we plot frequency of consumption on the X-axis of a chart and relevance of occasion

occurrence on the Y-axis taking the above mentioned values as cut-off values we get four

quadrants in the chart depicting four market scenarios that any ice cream manufacturer in

Bangladesh market might encounter given the current market situation This market

segmentation is based on frequency of ice cream consumption in daily occasions of consumer

lives

The segments are

1048766 OPPORTUNITY MARKET High Relevant Occasions-Low Ice cream Frequency

1048766 QUESTION MARKET Less Relevant Occasions-Low Ice cream Frequency

1048766 HIGH FREQUENCY MARKET Relevant Occasions-High Ice cream Frequency

1048766 CAPTIVE MARKET Less Relevant Occasions-High Ice cream Frequency

The chart looks as follows Evaluation of Entry into Ice cream Business for Bangladesh Limited

48

Figure 15 Relevance of Occasion-Frequency of Consumption Mapping

As it can be seen from the above chart Bangladesh Market still lies in the Opportunity and

Question market zone with a pull towards High frequency and Captive Market zones This is

evident from market data as penetration of ice cream still remains at Thana headquarters levels

Also this explains the high market growth rate of 17 as market is yet under developed and

branded quality ice cream has yet not reached all levels of consumers especially rural level that

constitutes around 75 of Bangladeshi market

From the above analysis we can establish that target of ice cream manufacturers should be to

penetrate more into the Bangladeshi market to create higher frequency of ice cream

consumption The following chart shows the strategies to follow for ice cream manufacturers

Figure 16 Required Market Strategy for Bangladesh

Evaluation of Entry into Ice cream Business for Bangladesh Limited 49

As relevance of ice cream consumption occasions can hardly be controlled by marketers their

endeavour should be to create more ldquoemotional and functionalrdquo attachment to ice cream in less

frequent occasions through ldquomarket developmentrdquo strategy to earn share from overall food

expenditure of consumers and at the same time make them consume more ice cream in highly

relevant occasions through ldquopenetrationrdquo strategy

654 Consumersrsquo Emotional Requirements and Product Attributes

All consumers under these clusters also identify the emotional requirements and the significant

product attributes they seek from their current preferred and future desired ice creams These are

provided below

Cluster

Emotional Functional Requirement

Product Attributes

Enjoyment

Flavour Variety

1048766 Combination of different flavours

1048766 Combination of different textures

1048766 Very sweet

1048766 With wafer or biscuit

1048766 With chocolate

1048766 Of a well known brand

Socially Involved

Spoonable Rich

1048766 Very creamy

1048766 Only natural ingredients

1048766 No mess

Care

Size Creaminess

1048766 Big

1048766 Rich full taste

1048766 Smooth

1048766 Value for money

1048766 No mess

Unwind amp Escape

Economy

1048766 Crunchy

1048766 Economic

1048766 Of a well known brand

1048766 Nutritious

Balanced Convenience

Health Conscious

1048766 Of a well known brand

1048766 Nutritious

1048766 Milk based

1048766 Low sugar

1048766 Low carbohydrates

1048766 Filling

Active Self-Grooming

Fruit Vitamins

1048766 Healthy

1048766 Fruit based

1048766 Low fat

1048766 Liquid or drinkable

1048766 Nutritious

1048766 Of a well known brand

Confidence

Drinkable Light

1048766 Low calories

1048766 Light on the stomach

1048766 Chewy or gooey

1048766 Not so sweet

1048766 Natural appearance

Sensual

Appeal or image

1048766 No artificial additives

Evaluation of Entry into Ice cream Business for Bangladesh Limited 50

1048766 Natural appearance

1048766 Melting slowly

1048766 Attractive packaging

1048766 High quality ingredients

1048766 Of a well known brand

Table 29 Requirements amp Product Attributes Desired by Consumer Clusters

Of these findings we see that the identified highlighted barriers to ice cream consumption are

pretty evident among the consumers Mostly people want products of a reliable source or a well

known brand low calories quality ingredients value for money economic type

Evaluation of Entry into Ice cream Business for Bangladesh Limited 51

70 INDUSTRY ATTRACTIVENESS AND ENTRY PROSPECTS

71 Driving Forces of Growth

As identified in the earlier sections there are several driving forces behind the growth of ice-

cream industry in Bangladesh

712 Trade and Infrastructural Level

1048766 As a result of globalization newer varieties have been introduced to the local products Many

foreign companies are also coming as franchise so there has been increased competition and

these boutiques are setting higher standards for the local producers

1048766 The present market growth rate is 18-19 which is being influenced by larger players like

Igloo who are expanding their distribution nation wide with expansion of national electricity

grid

1048766 With entry of Modern Trade and recent organized business approach of retailers has made it

possible for ice cream manufacturers to penetrate into shops even without providing them with

branded freezers

1048766 Weather change has increased ldquosummerrdquo season in our country which has reduced negative

seasonal impact on ice cream

1048766 Large companies like Igloo have taken global learning of using carts as an effective tool of

availability and visibility for ice cream

1048766 New and improved technologies are being used in the production process This technological

advancement has improved quality increased speed of production and made the process more

cost effective

713 Consumer Level

1048766 Only a few years back rich people could afford the luxury of having ice-cream but now it has

become a common product for everybody Ice-cream companies are producing different products

with a wide price range for consumers of every class and status

1048766 Nowadays companies are doing promotional campaigns more frequently the customers get to

know about the product which makes it easier for them to buy the best one

1048766 The improved standard of life and more modernized lifestyle of people is an important reason

for the increased consumption thus growth of the ice-cream industry

Evaluation of Entry into Ice cream Business for Bangladesh Limited 52

72 Prospects of Entry

The ice-cream industry of Bangladesh is an attractive one for the investors because there is a

huge market but number of producers is very small The major reasons behind industry

attractiveness are as follows

1048766 The industryrsquos current growth potential is very high with opportunity for market development

1048766 The competition currently permits adequate profitability and the competitive forces are

becoming stronger with time

1048766 Boutique segment is at a very high growth stage but no operator is currently operating with a

mid price range of BDT 100-400 Ice cream kiosks and small scooping boutiques can operate

within that range

1048766 Current industry driving forces are favourable for the future industry profitability

1048766 Globally oriented consumers look for variety in ice cream that is currently not available

Latest innovations came in the market in 2002 People would welcome new variety and flavours

1048766 There is a gap in the market for balanced convenience through ice cream where consumers can

get nutritional benefits for ice cream Also emotional attachment to ice cream could further be

improvised in promotional campaigns

1048766 There is high scope for market penetration and development to increase frequency of ice

cream consumption

1048766 Level of risk or uncertainty is very low in ice-cream industry because the consumer market is

so huge any product with a standard quality and careful pricing will be able to make significant

profit

1048766 As for geographic reach of the industry 60 market is still in Dhaka There is scope of

expansion and a new entrant can easily capture market share within Dhaka using carts even if

they do not want nation wide cold chain distribution

1048766 The production process is very complex and capital requirements are also high So before

going into production any company should know about their capabilities and weaknesses and

then start the business or else they might suffer huge loss at a certain level

1048766 Unilever can acquire the required resource and use existing multi-national multi-cultural

expertise to enter the market in a grand way

1048766 With high probability of entry from DANONE with more products like the ISIS diabetic ice

cream Unilever should consider entering in this industry as soon as possible

Evaluation of Entry into Ice cream Business for Bangladesh Limited 53

80 ENTRY STRATEGY FOR UNILEVER

While describing the suggested entry strategy for UBL certain issues have been kept

confidential and some issues have been touched but not explained to keep consistency with UBL

confidentiality policy

81 Suggested Entry Areas for UBL

1048766 Boutique segment of the Bangladesh ice cream is only 5 of the branded market UBL needs

to pursue a larger scope to make the entry viable

1048766 UBL cannot fight with unbranded segment as global product quality mandate of Unilever does

not allow UBL to fight in low price-low quality segment

1048766 Recommend entry should be in the common format segment with both single and multiple

servings and in the boutique segment with a different brand name (if possible BEN amp JERRYrsquoS)

1048766 UBL should build up state-of-art modern factory for manufacturing and establish cold chain

facilities initially focusing on metro cities

1048766 Investment issues are required to be addressed for building factory and cold chain and capital

requirement needs to be identified for that purpose4

1048766 UBL may have boutiques for driving image selective top-end offering

1048766 Kiosks can be setup near universities and shopping malls

1048766 Boutiques should be concentrated in Dhaka and Chittagong

1048766 Ice cream for boutiques and kiosks would be produced in factory as institutional packs of 9-10

litres

82 Products

1048766 As a Brand Building country in global Unilever operating framework UBL is entitled only to

bring products developed by the Brand Development countries

1048766 Unilever should focus on serving products that have nutritional benefits (already available

globally) along with usual satisfactions of sensual pleasure functional attributes etc

1048766 Current existent players especially Igloo and Kwality have extensively copied global and

regionally available Unilever products eg Cornelli is same as Wallrsquos Cornetto Vinetta is similar

to Vienetta Mega is similar to Magnum etc UBL needs to differentiate these to consumers on

the ldquotaste the originalrdquo platform where global quality is focused regarding the products

1048766 UBL should also bring regionally famous brands like Moo or Max to create image

differentiation

1048766 Magnum or Moo should be used as premium end ice cream to generate more profit margin

Evaluation of Entry into Ice cream Business for Bangladesh Limited 54

83 Placement

1048766 Distribution focus should be in Dhaka for entry as Dhaka contributes more than 60 of total

ice cream sales in the country

1048766 Company may use carts as distribution method They serve as good source of visibility and

availability It would help in increasing impulse purchase

1048766 At least 1500 outlets in Dhaka and Chittagong needs to be actively served using dedicated

branded refrigerators to generate sales

1048766 50 carts should operate in Dhaka and Chittagong

84 Price

1048766 UBL products should be priced at par with Igloo pricing for the common format ice creams

1048766 UBL can bring in premium single-serve SKUS for the higher economic classes in the price

range of BDT 60-80

1048766 Smaller SKUs (small lolly stick) can be introduced in the price range of BDT 10-15

1048766 In the boutique segment UBL should price products above the semi-premium segment

(Gelateria Igloo Sub Zero or Andersenrsquos) but lower than that of Club Gelato or MoumlvenPick

85 Promotion

1048766 UBL would require strong marketing campaign (As high as 50 of sales) to have a grand

entry in the market

1048766 Presence in the television media would be of utmost importance More than 50 of

promotional expense should be made here initially Gradually it can be reduced

1048766 Newspaper would serve as the second most important option

1048766 Billboards should also be used

1048766 Activations (similar to Lux Channel i Super Star or Igloo Festival) should be done to generate

trial

86 Scope of Opportunity

Table 30 Value and Volume Based Scope of Opportunity for UBL

Value (BDT Cr)

Volume (Tons)

Market

131

7835

Common

121

7600

Boutique

98

235

Evaluation of Entry into Ice cream Business for Bangladesh Limited 55

861 Geographic Contribution

1048766 Dhaka (61)

1048766 Chittagong (19)

1048766 Sylhet (10)

862 UBL objectives

Common Format Ice Creams

1048766 Target 10 Market share in 1st year operation

1048766 Value BDT 11 Cr

1048766 Production capacity required 21 Tons day

1048766 Freezer Placement 1500 freezers

1048766 Cart operation At least 50 carts

Boutiques

1048766 Target Further develop the market

1048766 Focus Dhaka Chittagong and Sylhet Metro

1048766 Franchise At least 20 franchisee operations nation wide in divisional towns

1048766 Pricing Below imported parlours above common formats with around BDT 400 per Litre

87 Critical Success Factors

1048766 UBL is considered as a high profile company in Bangladesh and thus they cannot operate in

the market only with common products like choc-bars and cups They must have premium

products (these require extrusion line) also to carry their brand image Otherwise UBL would not

be able to charge usual premium over competition products

1048766 Launch of ice cream would require huge promotional and activation support in order to gain

customers from Igloo People want novelty regarding ice cream and UBL have to let them know

about their products and create hype

1048766 Cart should be used as a source of distribution Recent successes of Unilever companies like

Indonesia shows that carts can generate more sales and can be used as source of visibility in the

minds of both retail traders and consumers Carts can also provide incremental sales to the

company

1048766 UBL have to create a strong cold chain for ice cream (initially in Dhaka and Chittagong) to

ensure quality products for consumers

1048766 UBL have to build capacity very rapidly to meet consumer demand if the launch is successful

Evaluation of Entry into Ice cream Business for Bangladesh Limited 56

90 BUSINESS PROJECTION

91 Basic Assumptions

Business projection for ice cream business was made based on a conservative approach UBL

would require spending significantly on production capacity and factory dedicated to ice cream

Thus to analyse business possibilities of ice cream certain assumptions were made and collected

data were used These are

1048766 Production equipments and cabinets would cost approximately BDT 55 crores

1048766 Production equipments 45

1048766 Packaging Equipments 15

1048766 Storage Facility 20

1048766 Branded Freezers 10

1048766 Distribution Investment 10 (Distributors would also invest themselves)

1048766 Ice cream factory with a floor size of 20000 sqft would cost BDT 25 crores

1048766 Objective is to capture 10 market share in Dhaka and Chittagong in the first year

1048766 Business would grow by 50 in year 2 and 3 30 in year 4 and 25 in year 5

1048766 Weighted price per litre is BDT 170 according to volume share of single serve ice cream

multiple serve ice cream and boutique ice cream

1048766 Other financial assumptions were also made List of them are provided below but amount has

been removed for confidentiality issues

Assumptions

Trade Margin

Distributors Margin

DutyVAT Rate

Trade Terms Expense of NPS

Trade Terms Expense of NSV

Advertising ampPromotion of NPS

Indirects (Salaries Wages etc)

Trading Tax

Table 31 Assumptions for Business Projection

Evaluation of Entry into Ice cream Business for Bangladesh Limited 57

100 CONCLUSION

Ice cream has good prospect in Bangladesh It is still a growing market with opportunities for big

new entrants With the barriers of entry UBL needs to consider its priorities UBL being an HPC

company traditionally needs to acquire expertise in cold chain distribution and has to invest a lot

of money to rip the benefits of the industry However to initiate company can take regional

support and acquire resource expertise The company should enter the business as soon as

possible since there is potential threat from DANONE to introduce more ice creams after ISIS

diabetic ice cream and also with potential of the industry arch rival Nestlersquo might consider

entering into the industry too

Evaluation of Entry into Ice cream Business for Bangladesh Limited 58

References

Web References

1 wwwunilevercom

2 wwwunilevercombd

3 wwwhllcom

4 wwwunilevercompk

5 wwwthedailystarcom - Life Style Magazine

6 wwwreuterscouk

Evaluation of Entry into Ice cream Business for Bangladesh Limited 59

Page 46: Square Ice cream

Evaluation of Entry into Ice cream Business for Bangladesh Limited 40

Gelateria Igloo

Basic Company Information

1048766 Location Banani Kemal Ataturk Avenue (Two others in GEC Mor Chittagong and Naya

Paltan)

1048766 Established in 2000

1048766 Seating Capacity 20

1048766 Production From Igloo factory in Shyampur Narayanganj

Product Related Information

1048766 Product Parlour scoop ice cream and coffee only

1048766 Flavours Around 30 flavours available

1048766 Most selling Vanilla Strawberry Chocolate Pistachio Butter Scotch Tutti Fruity

1048766 Serve type Cup Cone Glasses Box for take away

Consumer Profile

1048766 Primary Teenagers and Young Adults (18-30)

1048766 Secondary Family consumers for eat out

1048766 Income Group High income customers tentatively from SEC A and B

1048766 Geographic Area Diversified

1048766 Rush Time afternoon and evening

Sales and Price Information

1048766 Sales BDT 8000 to 10000 daily in summer Nearly one fourth in winter

1048766 Price Varies but 350 per litre of vanilla

Promotional Materials

1048766 POS materials at the premises

Table 26 Detail of Gelateria Igloo

52 Price Comparison of Common and Boutique Segments

Price ranges of both common format and boutique segment cannot exactly be pin pointed as

products do not follow common structure and variations occur with use of toppings mixing of

flavours and use of coatings However a price comparison has been made among the brands

based on their price of per litre of vanilla flavoured ice cream in the market It appears to be as

following

Company

Price Litre Vanilla

Club Gelato

750

MoumlvenPick

640

Andersenrsquos

460

Dolce Vita

440

Igloo

100

Kwality

100

Polar

100

Milk-Vita

90

Savoy

85

Table 27 Comparative Price Analysis

As it can be seen there is price gap within the range of BDT 100-400 Ice cream kiosks and

small scooping boutiques can operate within that range

Evaluation of Entry into Ice cream Business for Bangladesh Limited 41

60 CONSUMER ANALYSIS

61 Target Group of Ice cream

Who are the consumers of ice cream This question does not have a clear answer Ice cream is a

food for all It is the only food consumed by a human being at less than 0 degree centigrade

temperature and people of all ages feel indulged to have it However we can determine focus

target groups for both branded common format and artisan boutique ice cream Group

discussions and market visits were done to get insight into the consumers along side resources

form secondary sources Age based target group is common for both segments but variation

among the groups occur mainly based on SEC and DMFI classification

611 Geographic Group

Branded ice cream remains an urban product till date Geographically branded ice cream has

reached urban and semi urban areas up to Thana Head Quarter levels Ice cream has reached

areas where electricity is available Small artisan players are available in places where large

branded players have no distribution

612 Target Age Group

Age wise grouping of target consumers is as follows

1048766 Urban kids in the age group of 5-14

1048766 They mainly consume normal sticks cups cones innovative fillers and water ice creams

1048766 Urban youth in the age group of 15-24

1048766 They consume premium and extrusion sticks and cones

1048766 Urban mothers in the age group of 25-35

1048766 They determine the family purchases Even when the father purchases ice cream decision is

taken by them

Consumption pattern of various age groups are depicted in the following chart Ice cream

consumption pattern50203005 to 14 yrs15 to 24 yrs25 to 35 yrs

Figure 11 Target Group wise Consumption Pattern Evaluation of Entry into Ice cream Business

for Bangladesh Limited 42

613 Target SEC and DMFI Group

Common Format

SEC A and B is the target group for common format ice cream However with rapid increase in

price level over the years has made it a ldquohard to consumerdquo product for SEC B consumers who

belong to lower DMFI group

Boutique Format

Boutique formatrsquos higher margin and high price range makes it an exclusively SEC A ice cream

People belonging to upper and upper middle class have access to the mediocre boutiques and

only higher upper class can have premium ice creams like Club Gelato and MoumlvenPick

Another unique target group for boutique format are the foreigners who live in Bangladesh

These people tend to visit the parlours to have ice cream as dessert especially after dinner

62 Ice cream in Consumer Lifestyle

Figure 12 Ice cream in Consumer Life style

This simple overview of ice cream in consumer lifestyle was determined based on in-depth

research analysis of UBL and validated through qualitative group discussions by the author

However detail of in-depth research is provided in a later section of this chapter

Evaluation of Entry into Ice cream Business for Bangladesh Limited 43

63 Highlights of Purchase Habit of Ice cream

631 Common Habits across Target Groups

There are some common habits that were identified in earlier researches and group discussions

with consumers Common habits mean the consumer approach towards ice cream that is seen

across all target groups eg kids youth and adult purchasers These are outlined below

1048766 Ice cream is mainly seen as a dessert or a snack Impulse ice cream is seen as a quick snack

that is consumed when it is in sight Visibility plays a big role here Regarding family packs

people see it as a post-food dessert

1048766 Ice cream purchase is commonly a planned event When the contexts arise people generally

take a bit of time to decide whether or not to have ice cream or when they want to go to a

boutique they make due considerations regarding which boutique to visit

1048766 Ice cream purchase decision is taken based on favourite flavour People tend to try out new

variants and flavours when they first see it They compare the taste with earlier experience and

when they purchase later they choose the flavour they have liked most

1048766 For In-Home segment decision is mostly taken on the flavour Generally people come up with

different flavours of choice and most voted flavour is chosen

1048766 People become aware of new variants or flavours mainly through word-of-mouth

Advertisement (new launches special offers and festivals) in newspaper is another source of

awareness

1048766 People are currently indifferent towards the price level of premium flavours However some

feel that price of Choc-bar or water ice creams (lolly) is a bit much If less they would have

consumed more Some also feel that companies should come up with branded ice cream in the

price range of BDT 5-8

1048766 Ice cream is purchased from nearby shops If required brand and flavour is not available 2-3

shops will be visited and then available flavour will be selected even if the required one is not

found This is done mainly not to ruin the mood for ice cream

1048766 People are very open to try new brands and flavours especially if it comes from a credible

source They would try new flavours and if they are satisfied with the taste they would repeat

purchase

1048766 Regarding boutique visits people feel that boutiques need to have a proper environment

enough flavours and other snacks

1048766 While visiting boutique with family or companion they want variation in flavours so that

they would order different flavours and taste each otherrsquos ice cream It is seen as a sign of

togetherness

1048766 Frequency of ice cream purchase varies among people It depends on peer pressure collective

family decision summer heat and attitude towards ldquoice creamrdquo itself as a product Evaluation of

Entry into Ice cream Business for Bangladesh Limited 44

632 Habits of Kids

1048766 Kids choose ice cream flavours by the look of the product (generally pictures shown in POS

materials and carts) They love colour and designs of the products let it be a common format or a

boutique ice cream

1048766 Kids (when in house) would go with the housemaid to the nearby shop choose the flavour

they want (within range of the amount given to the maid) and buy it

1048766 When with parents they would take the product they like even if the price is lower than some

other product However mothers play a role in this decision They would want their children not

to choose too high priced a product or coloured products

633 Habits of Youth

1048766 Young people are the main consumer of impulse ice cream They also are one of the major

consumers in the boutique segment

1048766 Young people love to try out new products that come into the market Another side of the coin

is that they are not very loyal to a brand or a flavour and tend to switch a lot

1048766 Regarding boutique visits young people go to boutiques to have an ldquoice cream hang outrdquo with

peer groups They would stay there for a longer period of time while they have their ice cream

1048766 Some times young people make milk shakes and other ice cream based desserts

634 Habits of Mothers

1048766 Mothers worry about their childrenrsquos health and they prefer ldquovanillardquo type of brands

However when price constraint occurs they go for water ice creams for their children They try

to convince their kidrsquos purchase decision

1048766 Regarding family purchase motherrsquos decision is sometimes prioritized by the whole family

64 Barriers to Ice cream Consumption

641 Emotional Barriers

1048766 Overindulge (close to sinful)

1048766 Undisciplined (no control)

1048766 Childish (licking)

1048766 Artificial Image

642 Functional Barriers

1048766 People of SEC B feel that ice cream is an expensive dessert (If less expensive would consume

more often)

1048766 It leads to cold cough - especially in winter rainy season

1048766 It contains artificial additives preservatives

1048766 It is very high in calories that lead to fattening

Evaluation of Entry into Ice cream Business for Bangladesh Limited 45

1048766 It does not quench ldquothirstrdquo

1048766 Less convenient (portable immediate eat)

1048766 Messy Dripping

65 Research Findings

The highlights regarding purchase habits triggers and barriers of ice cream consumption provide

a glimpse into the consumer world of ice cream industry However UBL CMI conducted a

formal research exclusively on ice cream consumers to identify

1048766 Occasions of ice cream

1048766 Frequency of ice cream consumption

1048766 Expectations from ice cream occasions

1048766 Personalities that they desire from ice cream

651 Relevant Occasions in Daily Lives of Consumers

Research question regarding ldquousual occasions of life that occurred most frequently in day-to-day

lives of the respondentsrdquo generated the following replies

Occasion

of Respondents saying Yes

Watching TV

93

Normal Dinner At Home

91

Normal Lunch At Home

89

At Home While ReadingMusicSurfing

86

Informal Family Get Together

85

Out Of Home Hanging Out With Friends

84

Out Shopping

84

Mid-Afternoon Break At Home

83

At Home By Myself During The Day

82

Special Dinner At Home

82

Informal Dinner Out Of Home

82

Normal Lunch Out Of Home

82

Leisure Walk

79

Coming Home From WorkSchool

78

Special Dinner Out Of Home

78

Celebration

78

A Night In With Friends

77

At Home By Myself In The Evening

77

Special Lunch Out Of Home

76

Mid-Afternoon Break Out Of Home

75

Special Lunch At Home

73

Day out with Partner

72

Midmorning Break

70

At Breakfast

68

Family Day Out

68

During Work Or At School

65

Evaluation of Entry into Ice cream Business for Bangladesh Limited 46

Travelling ToFrom WorkSchool

65

At The Cinema

61

Special Event

56

Clubbing At A Party

50

Post GymSports

48

Table 28 Relevant Occasions in Consumersrsquo Lives

Respondents were then asked to mention ldquofrequency of occurrence of the identified occasionsrdquo

The identified replies are as follows Normal dinner at homenormal lunch at homeComing home

from workschoolTraveling tofrom workschoolDay out with Partner SpouseMid-afternoon

break at homeOut of home hanging out with friendsLeisure walkMid-afternoon break out of

homeA night in with friendsSpecial dinner at homeSpecial lunch out of homeFamily day

outSpecial eventPost gymsportsDaily2-3 Times A WeekWeekly2-3 Times A MonthOnce A

MonthEvery 2-3 MonthsLess OftenNever Figure 13 Frequency of Occurrence of Occasions

This shows that ldquoNormal dinner at home Watching TV Normal Lunch At Home At Home

While ReadingMusicSurfing Coming Home From WorkSchool During Work Or At School

Travelling ToFrom WorkSchool Midmorning Break Day Out With Partner Spouse At Home

By Myself During The Dayrdquo are the most frequent daily rituals of busy lives of consumers

652 Frequency of Ice cream Consumption

Respondents were asked to mention ldquoconsumption pattern of ice cream during the identified

occasionrdquo on a scale of 1-5 depicting frequencies like ldquo(5) always (4) most of the times (3)

about half of the times (2) sometimes (1) never do not knowrdquo The responses are depicted in

the following table

Evaluation of Entry into Ice cream Business for Bangladesh Limited 47

444474544655555566756665775967779991011101111101210111110101113111412131314161

011121411131216181519181518211817171719181718201721222130303434253437403741394

046383944464746453745414641374638504843414839373030292726232725222020201926202

21722221317Midmorning

breakWhile clubbing at aAt the cinemaSpecial eventNormal lunch out ofA night in with

friendsNormal dinner atInformal dinner out ofAt home by myselfAt home by myself inOut

shoppingSpecial lunch atDay out with SpouseWatching TVAlwaysmost of the timesAbout half

of the timesSometimesneverdo not know

Figure 14 Frequency of Ice cream Consumption

As it can be seen ldquoDay out with Spouse Special lunch at home Special dinner at home

Watching TV Family day out Celebrationrdquo are the occasions where most frequently ice cream is

consumed

653 Market Character Mapping Relevant Occasions vs Frequency of Consumption

If we plot frequency of consumption on the X-axis of a chart and relevance of occasion

occurrence on the Y-axis taking the above mentioned values as cut-off values we get four

quadrants in the chart depicting four market scenarios that any ice cream manufacturer in

Bangladesh market might encounter given the current market situation This market

segmentation is based on frequency of ice cream consumption in daily occasions of consumer

lives

The segments are

1048766 OPPORTUNITY MARKET High Relevant Occasions-Low Ice cream Frequency

1048766 QUESTION MARKET Less Relevant Occasions-Low Ice cream Frequency

1048766 HIGH FREQUENCY MARKET Relevant Occasions-High Ice cream Frequency

1048766 CAPTIVE MARKET Less Relevant Occasions-High Ice cream Frequency

The chart looks as follows Evaluation of Entry into Ice cream Business for Bangladesh Limited

48

Figure 15 Relevance of Occasion-Frequency of Consumption Mapping

As it can be seen from the above chart Bangladesh Market still lies in the Opportunity and

Question market zone with a pull towards High frequency and Captive Market zones This is

evident from market data as penetration of ice cream still remains at Thana headquarters levels

Also this explains the high market growth rate of 17 as market is yet under developed and

branded quality ice cream has yet not reached all levels of consumers especially rural level that

constitutes around 75 of Bangladeshi market

From the above analysis we can establish that target of ice cream manufacturers should be to

penetrate more into the Bangladeshi market to create higher frequency of ice cream

consumption The following chart shows the strategies to follow for ice cream manufacturers

Figure 16 Required Market Strategy for Bangladesh

Evaluation of Entry into Ice cream Business for Bangladesh Limited 49

As relevance of ice cream consumption occasions can hardly be controlled by marketers their

endeavour should be to create more ldquoemotional and functionalrdquo attachment to ice cream in less

frequent occasions through ldquomarket developmentrdquo strategy to earn share from overall food

expenditure of consumers and at the same time make them consume more ice cream in highly

relevant occasions through ldquopenetrationrdquo strategy

654 Consumersrsquo Emotional Requirements and Product Attributes

All consumers under these clusters also identify the emotional requirements and the significant

product attributes they seek from their current preferred and future desired ice creams These are

provided below

Cluster

Emotional Functional Requirement

Product Attributes

Enjoyment

Flavour Variety

1048766 Combination of different flavours

1048766 Combination of different textures

1048766 Very sweet

1048766 With wafer or biscuit

1048766 With chocolate

1048766 Of a well known brand

Socially Involved

Spoonable Rich

1048766 Very creamy

1048766 Only natural ingredients

1048766 No mess

Care

Size Creaminess

1048766 Big

1048766 Rich full taste

1048766 Smooth

1048766 Value for money

1048766 No mess

Unwind amp Escape

Economy

1048766 Crunchy

1048766 Economic

1048766 Of a well known brand

1048766 Nutritious

Balanced Convenience

Health Conscious

1048766 Of a well known brand

1048766 Nutritious

1048766 Milk based

1048766 Low sugar

1048766 Low carbohydrates

1048766 Filling

Active Self-Grooming

Fruit Vitamins

1048766 Healthy

1048766 Fruit based

1048766 Low fat

1048766 Liquid or drinkable

1048766 Nutritious

1048766 Of a well known brand

Confidence

Drinkable Light

1048766 Low calories

1048766 Light on the stomach

1048766 Chewy or gooey

1048766 Not so sweet

1048766 Natural appearance

Sensual

Appeal or image

1048766 No artificial additives

Evaluation of Entry into Ice cream Business for Bangladesh Limited 50

1048766 Natural appearance

1048766 Melting slowly

1048766 Attractive packaging

1048766 High quality ingredients

1048766 Of a well known brand

Table 29 Requirements amp Product Attributes Desired by Consumer Clusters

Of these findings we see that the identified highlighted barriers to ice cream consumption are

pretty evident among the consumers Mostly people want products of a reliable source or a well

known brand low calories quality ingredients value for money economic type

Evaluation of Entry into Ice cream Business for Bangladesh Limited 51

70 INDUSTRY ATTRACTIVENESS AND ENTRY PROSPECTS

71 Driving Forces of Growth

As identified in the earlier sections there are several driving forces behind the growth of ice-

cream industry in Bangladesh

712 Trade and Infrastructural Level

1048766 As a result of globalization newer varieties have been introduced to the local products Many

foreign companies are also coming as franchise so there has been increased competition and

these boutiques are setting higher standards for the local producers

1048766 The present market growth rate is 18-19 which is being influenced by larger players like

Igloo who are expanding their distribution nation wide with expansion of national electricity

grid

1048766 With entry of Modern Trade and recent organized business approach of retailers has made it

possible for ice cream manufacturers to penetrate into shops even without providing them with

branded freezers

1048766 Weather change has increased ldquosummerrdquo season in our country which has reduced negative

seasonal impact on ice cream

1048766 Large companies like Igloo have taken global learning of using carts as an effective tool of

availability and visibility for ice cream

1048766 New and improved technologies are being used in the production process This technological

advancement has improved quality increased speed of production and made the process more

cost effective

713 Consumer Level

1048766 Only a few years back rich people could afford the luxury of having ice-cream but now it has

become a common product for everybody Ice-cream companies are producing different products

with a wide price range for consumers of every class and status

1048766 Nowadays companies are doing promotional campaigns more frequently the customers get to

know about the product which makes it easier for them to buy the best one

1048766 The improved standard of life and more modernized lifestyle of people is an important reason

for the increased consumption thus growth of the ice-cream industry

Evaluation of Entry into Ice cream Business for Bangladesh Limited 52

72 Prospects of Entry

The ice-cream industry of Bangladesh is an attractive one for the investors because there is a

huge market but number of producers is very small The major reasons behind industry

attractiveness are as follows

1048766 The industryrsquos current growth potential is very high with opportunity for market development

1048766 The competition currently permits adequate profitability and the competitive forces are

becoming stronger with time

1048766 Boutique segment is at a very high growth stage but no operator is currently operating with a

mid price range of BDT 100-400 Ice cream kiosks and small scooping boutiques can operate

within that range

1048766 Current industry driving forces are favourable for the future industry profitability

1048766 Globally oriented consumers look for variety in ice cream that is currently not available

Latest innovations came in the market in 2002 People would welcome new variety and flavours

1048766 There is a gap in the market for balanced convenience through ice cream where consumers can

get nutritional benefits for ice cream Also emotional attachment to ice cream could further be

improvised in promotional campaigns

1048766 There is high scope for market penetration and development to increase frequency of ice

cream consumption

1048766 Level of risk or uncertainty is very low in ice-cream industry because the consumer market is

so huge any product with a standard quality and careful pricing will be able to make significant

profit

1048766 As for geographic reach of the industry 60 market is still in Dhaka There is scope of

expansion and a new entrant can easily capture market share within Dhaka using carts even if

they do not want nation wide cold chain distribution

1048766 The production process is very complex and capital requirements are also high So before

going into production any company should know about their capabilities and weaknesses and

then start the business or else they might suffer huge loss at a certain level

1048766 Unilever can acquire the required resource and use existing multi-national multi-cultural

expertise to enter the market in a grand way

1048766 With high probability of entry from DANONE with more products like the ISIS diabetic ice

cream Unilever should consider entering in this industry as soon as possible

Evaluation of Entry into Ice cream Business for Bangladesh Limited 53

80 ENTRY STRATEGY FOR UNILEVER

While describing the suggested entry strategy for UBL certain issues have been kept

confidential and some issues have been touched but not explained to keep consistency with UBL

confidentiality policy

81 Suggested Entry Areas for UBL

1048766 Boutique segment of the Bangladesh ice cream is only 5 of the branded market UBL needs

to pursue a larger scope to make the entry viable

1048766 UBL cannot fight with unbranded segment as global product quality mandate of Unilever does

not allow UBL to fight in low price-low quality segment

1048766 Recommend entry should be in the common format segment with both single and multiple

servings and in the boutique segment with a different brand name (if possible BEN amp JERRYrsquoS)

1048766 UBL should build up state-of-art modern factory for manufacturing and establish cold chain

facilities initially focusing on metro cities

1048766 Investment issues are required to be addressed for building factory and cold chain and capital

requirement needs to be identified for that purpose4

1048766 UBL may have boutiques for driving image selective top-end offering

1048766 Kiosks can be setup near universities and shopping malls

1048766 Boutiques should be concentrated in Dhaka and Chittagong

1048766 Ice cream for boutiques and kiosks would be produced in factory as institutional packs of 9-10

litres

82 Products

1048766 As a Brand Building country in global Unilever operating framework UBL is entitled only to

bring products developed by the Brand Development countries

1048766 Unilever should focus on serving products that have nutritional benefits (already available

globally) along with usual satisfactions of sensual pleasure functional attributes etc

1048766 Current existent players especially Igloo and Kwality have extensively copied global and

regionally available Unilever products eg Cornelli is same as Wallrsquos Cornetto Vinetta is similar

to Vienetta Mega is similar to Magnum etc UBL needs to differentiate these to consumers on

the ldquotaste the originalrdquo platform where global quality is focused regarding the products

1048766 UBL should also bring regionally famous brands like Moo or Max to create image

differentiation

1048766 Magnum or Moo should be used as premium end ice cream to generate more profit margin

Evaluation of Entry into Ice cream Business for Bangladesh Limited 54

83 Placement

1048766 Distribution focus should be in Dhaka for entry as Dhaka contributes more than 60 of total

ice cream sales in the country

1048766 Company may use carts as distribution method They serve as good source of visibility and

availability It would help in increasing impulse purchase

1048766 At least 1500 outlets in Dhaka and Chittagong needs to be actively served using dedicated

branded refrigerators to generate sales

1048766 50 carts should operate in Dhaka and Chittagong

84 Price

1048766 UBL products should be priced at par with Igloo pricing for the common format ice creams

1048766 UBL can bring in premium single-serve SKUS for the higher economic classes in the price

range of BDT 60-80

1048766 Smaller SKUs (small lolly stick) can be introduced in the price range of BDT 10-15

1048766 In the boutique segment UBL should price products above the semi-premium segment

(Gelateria Igloo Sub Zero or Andersenrsquos) but lower than that of Club Gelato or MoumlvenPick

85 Promotion

1048766 UBL would require strong marketing campaign (As high as 50 of sales) to have a grand

entry in the market

1048766 Presence in the television media would be of utmost importance More than 50 of

promotional expense should be made here initially Gradually it can be reduced

1048766 Newspaper would serve as the second most important option

1048766 Billboards should also be used

1048766 Activations (similar to Lux Channel i Super Star or Igloo Festival) should be done to generate

trial

86 Scope of Opportunity

Table 30 Value and Volume Based Scope of Opportunity for UBL

Value (BDT Cr)

Volume (Tons)

Market

131

7835

Common

121

7600

Boutique

98

235

Evaluation of Entry into Ice cream Business for Bangladesh Limited 55

861 Geographic Contribution

1048766 Dhaka (61)

1048766 Chittagong (19)

1048766 Sylhet (10)

862 UBL objectives

Common Format Ice Creams

1048766 Target 10 Market share in 1st year operation

1048766 Value BDT 11 Cr

1048766 Production capacity required 21 Tons day

1048766 Freezer Placement 1500 freezers

1048766 Cart operation At least 50 carts

Boutiques

1048766 Target Further develop the market

1048766 Focus Dhaka Chittagong and Sylhet Metro

1048766 Franchise At least 20 franchisee operations nation wide in divisional towns

1048766 Pricing Below imported parlours above common formats with around BDT 400 per Litre

87 Critical Success Factors

1048766 UBL is considered as a high profile company in Bangladesh and thus they cannot operate in

the market only with common products like choc-bars and cups They must have premium

products (these require extrusion line) also to carry their brand image Otherwise UBL would not

be able to charge usual premium over competition products

1048766 Launch of ice cream would require huge promotional and activation support in order to gain

customers from Igloo People want novelty regarding ice cream and UBL have to let them know

about their products and create hype

1048766 Cart should be used as a source of distribution Recent successes of Unilever companies like

Indonesia shows that carts can generate more sales and can be used as source of visibility in the

minds of both retail traders and consumers Carts can also provide incremental sales to the

company

1048766 UBL have to create a strong cold chain for ice cream (initially in Dhaka and Chittagong) to

ensure quality products for consumers

1048766 UBL have to build capacity very rapidly to meet consumer demand if the launch is successful

Evaluation of Entry into Ice cream Business for Bangladesh Limited 56

90 BUSINESS PROJECTION

91 Basic Assumptions

Business projection for ice cream business was made based on a conservative approach UBL

would require spending significantly on production capacity and factory dedicated to ice cream

Thus to analyse business possibilities of ice cream certain assumptions were made and collected

data were used These are

1048766 Production equipments and cabinets would cost approximately BDT 55 crores

1048766 Production equipments 45

1048766 Packaging Equipments 15

1048766 Storage Facility 20

1048766 Branded Freezers 10

1048766 Distribution Investment 10 (Distributors would also invest themselves)

1048766 Ice cream factory with a floor size of 20000 sqft would cost BDT 25 crores

1048766 Objective is to capture 10 market share in Dhaka and Chittagong in the first year

1048766 Business would grow by 50 in year 2 and 3 30 in year 4 and 25 in year 5

1048766 Weighted price per litre is BDT 170 according to volume share of single serve ice cream

multiple serve ice cream and boutique ice cream

1048766 Other financial assumptions were also made List of them are provided below but amount has

been removed for confidentiality issues

Assumptions

Trade Margin

Distributors Margin

DutyVAT Rate

Trade Terms Expense of NPS

Trade Terms Expense of NSV

Advertising ampPromotion of NPS

Indirects (Salaries Wages etc)

Trading Tax

Table 31 Assumptions for Business Projection

Evaluation of Entry into Ice cream Business for Bangladesh Limited 57

100 CONCLUSION

Ice cream has good prospect in Bangladesh It is still a growing market with opportunities for big

new entrants With the barriers of entry UBL needs to consider its priorities UBL being an HPC

company traditionally needs to acquire expertise in cold chain distribution and has to invest a lot

of money to rip the benefits of the industry However to initiate company can take regional

support and acquire resource expertise The company should enter the business as soon as

possible since there is potential threat from DANONE to introduce more ice creams after ISIS

diabetic ice cream and also with potential of the industry arch rival Nestlersquo might consider

entering into the industry too

Evaluation of Entry into Ice cream Business for Bangladesh Limited 58

References

Web References

1 wwwunilevercom

2 wwwunilevercombd

3 wwwhllcom

4 wwwunilevercompk

5 wwwthedailystarcom - Life Style Magazine

6 wwwreuterscouk

Evaluation of Entry into Ice cream Business for Bangladesh Limited 59

Page 47: Square Ice cream

1048766 Price Varies but 350 per litre of vanilla

Promotional Materials

1048766 POS materials at the premises

Table 26 Detail of Gelateria Igloo

52 Price Comparison of Common and Boutique Segments

Price ranges of both common format and boutique segment cannot exactly be pin pointed as

products do not follow common structure and variations occur with use of toppings mixing of

flavours and use of coatings However a price comparison has been made among the brands

based on their price of per litre of vanilla flavoured ice cream in the market It appears to be as

following

Company

Price Litre Vanilla

Club Gelato

750

MoumlvenPick

640

Andersenrsquos

460

Dolce Vita

440

Igloo

100

Kwality

100

Polar

100

Milk-Vita

90

Savoy

85

Table 27 Comparative Price Analysis

As it can be seen there is price gap within the range of BDT 100-400 Ice cream kiosks and

small scooping boutiques can operate within that range

Evaluation of Entry into Ice cream Business for Bangladesh Limited 41

60 CONSUMER ANALYSIS

61 Target Group of Ice cream

Who are the consumers of ice cream This question does not have a clear answer Ice cream is a

food for all It is the only food consumed by a human being at less than 0 degree centigrade

temperature and people of all ages feel indulged to have it However we can determine focus

target groups for both branded common format and artisan boutique ice cream Group

discussions and market visits were done to get insight into the consumers along side resources

form secondary sources Age based target group is common for both segments but variation

among the groups occur mainly based on SEC and DMFI classification

611 Geographic Group

Branded ice cream remains an urban product till date Geographically branded ice cream has

reached urban and semi urban areas up to Thana Head Quarter levels Ice cream has reached

areas where electricity is available Small artisan players are available in places where large

branded players have no distribution

612 Target Age Group

Age wise grouping of target consumers is as follows

1048766 Urban kids in the age group of 5-14

1048766 They mainly consume normal sticks cups cones innovative fillers and water ice creams

1048766 Urban youth in the age group of 15-24

1048766 They consume premium and extrusion sticks and cones

1048766 Urban mothers in the age group of 25-35

1048766 They determine the family purchases Even when the father purchases ice cream decision is

taken by them

Consumption pattern of various age groups are depicted in the following chart Ice cream

consumption pattern50203005 to 14 yrs15 to 24 yrs25 to 35 yrs

Figure 11 Target Group wise Consumption Pattern Evaluation of Entry into Ice cream Business

for Bangladesh Limited 42

613 Target SEC and DMFI Group

Common Format

SEC A and B is the target group for common format ice cream However with rapid increase in

price level over the years has made it a ldquohard to consumerdquo product for SEC B consumers who

belong to lower DMFI group

Boutique Format

Boutique formatrsquos higher margin and high price range makes it an exclusively SEC A ice cream

People belonging to upper and upper middle class have access to the mediocre boutiques and

only higher upper class can have premium ice creams like Club Gelato and MoumlvenPick

Another unique target group for boutique format are the foreigners who live in Bangladesh

These people tend to visit the parlours to have ice cream as dessert especially after dinner

62 Ice cream in Consumer Lifestyle

Figure 12 Ice cream in Consumer Life style

This simple overview of ice cream in consumer lifestyle was determined based on in-depth

research analysis of UBL and validated through qualitative group discussions by the author

However detail of in-depth research is provided in a later section of this chapter

Evaluation of Entry into Ice cream Business for Bangladesh Limited 43

63 Highlights of Purchase Habit of Ice cream

631 Common Habits across Target Groups

There are some common habits that were identified in earlier researches and group discussions

with consumers Common habits mean the consumer approach towards ice cream that is seen

across all target groups eg kids youth and adult purchasers These are outlined below

1048766 Ice cream is mainly seen as a dessert or a snack Impulse ice cream is seen as a quick snack

that is consumed when it is in sight Visibility plays a big role here Regarding family packs

people see it as a post-food dessert

1048766 Ice cream purchase is commonly a planned event When the contexts arise people generally

take a bit of time to decide whether or not to have ice cream or when they want to go to a

boutique they make due considerations regarding which boutique to visit

1048766 Ice cream purchase decision is taken based on favourite flavour People tend to try out new

variants and flavours when they first see it They compare the taste with earlier experience and

when they purchase later they choose the flavour they have liked most

1048766 For In-Home segment decision is mostly taken on the flavour Generally people come up with

different flavours of choice and most voted flavour is chosen

1048766 People become aware of new variants or flavours mainly through word-of-mouth

Advertisement (new launches special offers and festivals) in newspaper is another source of

awareness

1048766 People are currently indifferent towards the price level of premium flavours However some

feel that price of Choc-bar or water ice creams (lolly) is a bit much If less they would have

consumed more Some also feel that companies should come up with branded ice cream in the

price range of BDT 5-8

1048766 Ice cream is purchased from nearby shops If required brand and flavour is not available 2-3

shops will be visited and then available flavour will be selected even if the required one is not

found This is done mainly not to ruin the mood for ice cream

1048766 People are very open to try new brands and flavours especially if it comes from a credible

source They would try new flavours and if they are satisfied with the taste they would repeat

purchase

1048766 Regarding boutique visits people feel that boutiques need to have a proper environment

enough flavours and other snacks

1048766 While visiting boutique with family or companion they want variation in flavours so that

they would order different flavours and taste each otherrsquos ice cream It is seen as a sign of

togetherness

1048766 Frequency of ice cream purchase varies among people It depends on peer pressure collective

family decision summer heat and attitude towards ldquoice creamrdquo itself as a product Evaluation of

Entry into Ice cream Business for Bangladesh Limited 44

632 Habits of Kids

1048766 Kids choose ice cream flavours by the look of the product (generally pictures shown in POS

materials and carts) They love colour and designs of the products let it be a common format or a

boutique ice cream

1048766 Kids (when in house) would go with the housemaid to the nearby shop choose the flavour

they want (within range of the amount given to the maid) and buy it

1048766 When with parents they would take the product they like even if the price is lower than some

other product However mothers play a role in this decision They would want their children not

to choose too high priced a product or coloured products

633 Habits of Youth

1048766 Young people are the main consumer of impulse ice cream They also are one of the major

consumers in the boutique segment

1048766 Young people love to try out new products that come into the market Another side of the coin

is that they are not very loyal to a brand or a flavour and tend to switch a lot

1048766 Regarding boutique visits young people go to boutiques to have an ldquoice cream hang outrdquo with

peer groups They would stay there for a longer period of time while they have their ice cream

1048766 Some times young people make milk shakes and other ice cream based desserts

634 Habits of Mothers

1048766 Mothers worry about their childrenrsquos health and they prefer ldquovanillardquo type of brands

However when price constraint occurs they go for water ice creams for their children They try

to convince their kidrsquos purchase decision

1048766 Regarding family purchase motherrsquos decision is sometimes prioritized by the whole family

64 Barriers to Ice cream Consumption

641 Emotional Barriers

1048766 Overindulge (close to sinful)

1048766 Undisciplined (no control)

1048766 Childish (licking)

1048766 Artificial Image

642 Functional Barriers

1048766 People of SEC B feel that ice cream is an expensive dessert (If less expensive would consume

more often)

1048766 It leads to cold cough - especially in winter rainy season

1048766 It contains artificial additives preservatives

1048766 It is very high in calories that lead to fattening

Evaluation of Entry into Ice cream Business for Bangladesh Limited 45

1048766 It does not quench ldquothirstrdquo

1048766 Less convenient (portable immediate eat)

1048766 Messy Dripping

65 Research Findings

The highlights regarding purchase habits triggers and barriers of ice cream consumption provide

a glimpse into the consumer world of ice cream industry However UBL CMI conducted a

formal research exclusively on ice cream consumers to identify

1048766 Occasions of ice cream

1048766 Frequency of ice cream consumption

1048766 Expectations from ice cream occasions

1048766 Personalities that they desire from ice cream

651 Relevant Occasions in Daily Lives of Consumers

Research question regarding ldquousual occasions of life that occurred most frequently in day-to-day

lives of the respondentsrdquo generated the following replies

Occasion

of Respondents saying Yes

Watching TV

93

Normal Dinner At Home

91

Normal Lunch At Home

89

At Home While ReadingMusicSurfing

86

Informal Family Get Together

85

Out Of Home Hanging Out With Friends

84

Out Shopping

84

Mid-Afternoon Break At Home

83

At Home By Myself During The Day

82

Special Dinner At Home

82

Informal Dinner Out Of Home

82

Normal Lunch Out Of Home

82

Leisure Walk

79

Coming Home From WorkSchool

78

Special Dinner Out Of Home

78

Celebration

78

A Night In With Friends

77

At Home By Myself In The Evening

77

Special Lunch Out Of Home

76

Mid-Afternoon Break Out Of Home

75

Special Lunch At Home

73

Day out with Partner

72

Midmorning Break

70

At Breakfast

68

Family Day Out

68

During Work Or At School

65

Evaluation of Entry into Ice cream Business for Bangladesh Limited 46

Travelling ToFrom WorkSchool

65

At The Cinema

61

Special Event

56

Clubbing At A Party

50

Post GymSports

48

Table 28 Relevant Occasions in Consumersrsquo Lives

Respondents were then asked to mention ldquofrequency of occurrence of the identified occasionsrdquo

The identified replies are as follows Normal dinner at homenormal lunch at homeComing home

from workschoolTraveling tofrom workschoolDay out with Partner SpouseMid-afternoon

break at homeOut of home hanging out with friendsLeisure walkMid-afternoon break out of

homeA night in with friendsSpecial dinner at homeSpecial lunch out of homeFamily day

outSpecial eventPost gymsportsDaily2-3 Times A WeekWeekly2-3 Times A MonthOnce A

MonthEvery 2-3 MonthsLess OftenNever Figure 13 Frequency of Occurrence of Occasions

This shows that ldquoNormal dinner at home Watching TV Normal Lunch At Home At Home

While ReadingMusicSurfing Coming Home From WorkSchool During Work Or At School

Travelling ToFrom WorkSchool Midmorning Break Day Out With Partner Spouse At Home

By Myself During The Dayrdquo are the most frequent daily rituals of busy lives of consumers

652 Frequency of Ice cream Consumption

Respondents were asked to mention ldquoconsumption pattern of ice cream during the identified

occasionrdquo on a scale of 1-5 depicting frequencies like ldquo(5) always (4) most of the times (3)

about half of the times (2) sometimes (1) never do not knowrdquo The responses are depicted in

the following table

Evaluation of Entry into Ice cream Business for Bangladesh Limited 47

444474544655555566756665775967779991011101111101210111110101113111412131314161

011121411131216181519181518211817171719181718201721222130303434253437403741394

046383944464746453745414641374638504843414839373030292726232725222020201926202

21722221317Midmorning

breakWhile clubbing at aAt the cinemaSpecial eventNormal lunch out ofA night in with

friendsNormal dinner atInformal dinner out ofAt home by myselfAt home by myself inOut

shoppingSpecial lunch atDay out with SpouseWatching TVAlwaysmost of the timesAbout half

of the timesSometimesneverdo not know

Figure 14 Frequency of Ice cream Consumption

As it can be seen ldquoDay out with Spouse Special lunch at home Special dinner at home

Watching TV Family day out Celebrationrdquo are the occasions where most frequently ice cream is

consumed

653 Market Character Mapping Relevant Occasions vs Frequency of Consumption

If we plot frequency of consumption on the X-axis of a chart and relevance of occasion

occurrence on the Y-axis taking the above mentioned values as cut-off values we get four

quadrants in the chart depicting four market scenarios that any ice cream manufacturer in

Bangladesh market might encounter given the current market situation This market

segmentation is based on frequency of ice cream consumption in daily occasions of consumer

lives

The segments are

1048766 OPPORTUNITY MARKET High Relevant Occasions-Low Ice cream Frequency

1048766 QUESTION MARKET Less Relevant Occasions-Low Ice cream Frequency

1048766 HIGH FREQUENCY MARKET Relevant Occasions-High Ice cream Frequency

1048766 CAPTIVE MARKET Less Relevant Occasions-High Ice cream Frequency

The chart looks as follows Evaluation of Entry into Ice cream Business for Bangladesh Limited

48

Figure 15 Relevance of Occasion-Frequency of Consumption Mapping

As it can be seen from the above chart Bangladesh Market still lies in the Opportunity and

Question market zone with a pull towards High frequency and Captive Market zones This is

evident from market data as penetration of ice cream still remains at Thana headquarters levels

Also this explains the high market growth rate of 17 as market is yet under developed and

branded quality ice cream has yet not reached all levels of consumers especially rural level that

constitutes around 75 of Bangladeshi market

From the above analysis we can establish that target of ice cream manufacturers should be to

penetrate more into the Bangladeshi market to create higher frequency of ice cream

consumption The following chart shows the strategies to follow for ice cream manufacturers

Figure 16 Required Market Strategy for Bangladesh

Evaluation of Entry into Ice cream Business for Bangladesh Limited 49

As relevance of ice cream consumption occasions can hardly be controlled by marketers their

endeavour should be to create more ldquoemotional and functionalrdquo attachment to ice cream in less

frequent occasions through ldquomarket developmentrdquo strategy to earn share from overall food

expenditure of consumers and at the same time make them consume more ice cream in highly

relevant occasions through ldquopenetrationrdquo strategy

654 Consumersrsquo Emotional Requirements and Product Attributes

All consumers under these clusters also identify the emotional requirements and the significant

product attributes they seek from their current preferred and future desired ice creams These are

provided below

Cluster

Emotional Functional Requirement

Product Attributes

Enjoyment

Flavour Variety

1048766 Combination of different flavours

1048766 Combination of different textures

1048766 Very sweet

1048766 With wafer or biscuit

1048766 With chocolate

1048766 Of a well known brand

Socially Involved

Spoonable Rich

1048766 Very creamy

1048766 Only natural ingredients

1048766 No mess

Care

Size Creaminess

1048766 Big

1048766 Rich full taste

1048766 Smooth

1048766 Value for money

1048766 No mess

Unwind amp Escape

Economy

1048766 Crunchy

1048766 Economic

1048766 Of a well known brand

1048766 Nutritious

Balanced Convenience

Health Conscious

1048766 Of a well known brand

1048766 Nutritious

1048766 Milk based

1048766 Low sugar

1048766 Low carbohydrates

1048766 Filling

Active Self-Grooming

Fruit Vitamins

1048766 Healthy

1048766 Fruit based

1048766 Low fat

1048766 Liquid or drinkable

1048766 Nutritious

1048766 Of a well known brand

Confidence

Drinkable Light

1048766 Low calories

1048766 Light on the stomach

1048766 Chewy or gooey

1048766 Not so sweet

1048766 Natural appearance

Sensual

Appeal or image

1048766 No artificial additives

Evaluation of Entry into Ice cream Business for Bangladesh Limited 50

1048766 Natural appearance

1048766 Melting slowly

1048766 Attractive packaging

1048766 High quality ingredients

1048766 Of a well known brand

Table 29 Requirements amp Product Attributes Desired by Consumer Clusters

Of these findings we see that the identified highlighted barriers to ice cream consumption are

pretty evident among the consumers Mostly people want products of a reliable source or a well

known brand low calories quality ingredients value for money economic type

Evaluation of Entry into Ice cream Business for Bangladesh Limited 51

70 INDUSTRY ATTRACTIVENESS AND ENTRY PROSPECTS

71 Driving Forces of Growth

As identified in the earlier sections there are several driving forces behind the growth of ice-

cream industry in Bangladesh

712 Trade and Infrastructural Level

1048766 As a result of globalization newer varieties have been introduced to the local products Many

foreign companies are also coming as franchise so there has been increased competition and

these boutiques are setting higher standards for the local producers

1048766 The present market growth rate is 18-19 which is being influenced by larger players like

Igloo who are expanding their distribution nation wide with expansion of national electricity

grid

1048766 With entry of Modern Trade and recent organized business approach of retailers has made it

possible for ice cream manufacturers to penetrate into shops even without providing them with

branded freezers

1048766 Weather change has increased ldquosummerrdquo season in our country which has reduced negative

seasonal impact on ice cream

1048766 Large companies like Igloo have taken global learning of using carts as an effective tool of

availability and visibility for ice cream

1048766 New and improved technologies are being used in the production process This technological

advancement has improved quality increased speed of production and made the process more

cost effective

713 Consumer Level

1048766 Only a few years back rich people could afford the luxury of having ice-cream but now it has

become a common product for everybody Ice-cream companies are producing different products

with a wide price range for consumers of every class and status

1048766 Nowadays companies are doing promotional campaigns more frequently the customers get to

know about the product which makes it easier for them to buy the best one

1048766 The improved standard of life and more modernized lifestyle of people is an important reason

for the increased consumption thus growth of the ice-cream industry

Evaluation of Entry into Ice cream Business for Bangladesh Limited 52

72 Prospects of Entry

The ice-cream industry of Bangladesh is an attractive one for the investors because there is a

huge market but number of producers is very small The major reasons behind industry

attractiveness are as follows

1048766 The industryrsquos current growth potential is very high with opportunity for market development

1048766 The competition currently permits adequate profitability and the competitive forces are

becoming stronger with time

1048766 Boutique segment is at a very high growth stage but no operator is currently operating with a

mid price range of BDT 100-400 Ice cream kiosks and small scooping boutiques can operate

within that range

1048766 Current industry driving forces are favourable for the future industry profitability

1048766 Globally oriented consumers look for variety in ice cream that is currently not available

Latest innovations came in the market in 2002 People would welcome new variety and flavours

1048766 There is a gap in the market for balanced convenience through ice cream where consumers can

get nutritional benefits for ice cream Also emotional attachment to ice cream could further be

improvised in promotional campaigns

1048766 There is high scope for market penetration and development to increase frequency of ice

cream consumption

1048766 Level of risk or uncertainty is very low in ice-cream industry because the consumer market is

so huge any product with a standard quality and careful pricing will be able to make significant

profit

1048766 As for geographic reach of the industry 60 market is still in Dhaka There is scope of

expansion and a new entrant can easily capture market share within Dhaka using carts even if

they do not want nation wide cold chain distribution

1048766 The production process is very complex and capital requirements are also high So before

going into production any company should know about their capabilities and weaknesses and

then start the business or else they might suffer huge loss at a certain level

1048766 Unilever can acquire the required resource and use existing multi-national multi-cultural

expertise to enter the market in a grand way

1048766 With high probability of entry from DANONE with more products like the ISIS diabetic ice

cream Unilever should consider entering in this industry as soon as possible

Evaluation of Entry into Ice cream Business for Bangladesh Limited 53

80 ENTRY STRATEGY FOR UNILEVER

While describing the suggested entry strategy for UBL certain issues have been kept

confidential and some issues have been touched but not explained to keep consistency with UBL

confidentiality policy

81 Suggested Entry Areas for UBL

1048766 Boutique segment of the Bangladesh ice cream is only 5 of the branded market UBL needs

to pursue a larger scope to make the entry viable

1048766 UBL cannot fight with unbranded segment as global product quality mandate of Unilever does

not allow UBL to fight in low price-low quality segment

1048766 Recommend entry should be in the common format segment with both single and multiple

servings and in the boutique segment with a different brand name (if possible BEN amp JERRYrsquoS)

1048766 UBL should build up state-of-art modern factory for manufacturing and establish cold chain

facilities initially focusing on metro cities

1048766 Investment issues are required to be addressed for building factory and cold chain and capital

requirement needs to be identified for that purpose4

1048766 UBL may have boutiques for driving image selective top-end offering

1048766 Kiosks can be setup near universities and shopping malls

1048766 Boutiques should be concentrated in Dhaka and Chittagong

1048766 Ice cream for boutiques and kiosks would be produced in factory as institutional packs of 9-10

litres

82 Products

1048766 As a Brand Building country in global Unilever operating framework UBL is entitled only to

bring products developed by the Brand Development countries

1048766 Unilever should focus on serving products that have nutritional benefits (already available

globally) along with usual satisfactions of sensual pleasure functional attributes etc

1048766 Current existent players especially Igloo and Kwality have extensively copied global and

regionally available Unilever products eg Cornelli is same as Wallrsquos Cornetto Vinetta is similar

to Vienetta Mega is similar to Magnum etc UBL needs to differentiate these to consumers on

the ldquotaste the originalrdquo platform where global quality is focused regarding the products

1048766 UBL should also bring regionally famous brands like Moo or Max to create image

differentiation

1048766 Magnum or Moo should be used as premium end ice cream to generate more profit margin

Evaluation of Entry into Ice cream Business for Bangladesh Limited 54

83 Placement

1048766 Distribution focus should be in Dhaka for entry as Dhaka contributes more than 60 of total

ice cream sales in the country

1048766 Company may use carts as distribution method They serve as good source of visibility and

availability It would help in increasing impulse purchase

1048766 At least 1500 outlets in Dhaka and Chittagong needs to be actively served using dedicated

branded refrigerators to generate sales

1048766 50 carts should operate in Dhaka and Chittagong

84 Price

1048766 UBL products should be priced at par with Igloo pricing for the common format ice creams

1048766 UBL can bring in premium single-serve SKUS for the higher economic classes in the price

range of BDT 60-80

1048766 Smaller SKUs (small lolly stick) can be introduced in the price range of BDT 10-15

1048766 In the boutique segment UBL should price products above the semi-premium segment

(Gelateria Igloo Sub Zero or Andersenrsquos) but lower than that of Club Gelato or MoumlvenPick

85 Promotion

1048766 UBL would require strong marketing campaign (As high as 50 of sales) to have a grand

entry in the market

1048766 Presence in the television media would be of utmost importance More than 50 of

promotional expense should be made here initially Gradually it can be reduced

1048766 Newspaper would serve as the second most important option

1048766 Billboards should also be used

1048766 Activations (similar to Lux Channel i Super Star or Igloo Festival) should be done to generate

trial

86 Scope of Opportunity

Table 30 Value and Volume Based Scope of Opportunity for UBL

Value (BDT Cr)

Volume (Tons)

Market

131

7835

Common

121

7600

Boutique

98

235

Evaluation of Entry into Ice cream Business for Bangladesh Limited 55

861 Geographic Contribution

1048766 Dhaka (61)

1048766 Chittagong (19)

1048766 Sylhet (10)

862 UBL objectives

Common Format Ice Creams

1048766 Target 10 Market share in 1st year operation

1048766 Value BDT 11 Cr

1048766 Production capacity required 21 Tons day

1048766 Freezer Placement 1500 freezers

1048766 Cart operation At least 50 carts

Boutiques

1048766 Target Further develop the market

1048766 Focus Dhaka Chittagong and Sylhet Metro

1048766 Franchise At least 20 franchisee operations nation wide in divisional towns

1048766 Pricing Below imported parlours above common formats with around BDT 400 per Litre

87 Critical Success Factors

1048766 UBL is considered as a high profile company in Bangladesh and thus they cannot operate in

the market only with common products like choc-bars and cups They must have premium

products (these require extrusion line) also to carry their brand image Otherwise UBL would not

be able to charge usual premium over competition products

1048766 Launch of ice cream would require huge promotional and activation support in order to gain

customers from Igloo People want novelty regarding ice cream and UBL have to let them know

about their products and create hype

1048766 Cart should be used as a source of distribution Recent successes of Unilever companies like

Indonesia shows that carts can generate more sales and can be used as source of visibility in the

minds of both retail traders and consumers Carts can also provide incremental sales to the

company

1048766 UBL have to create a strong cold chain for ice cream (initially in Dhaka and Chittagong) to

ensure quality products for consumers

1048766 UBL have to build capacity very rapidly to meet consumer demand if the launch is successful

Evaluation of Entry into Ice cream Business for Bangladesh Limited 56

90 BUSINESS PROJECTION

91 Basic Assumptions

Business projection for ice cream business was made based on a conservative approach UBL

would require spending significantly on production capacity and factory dedicated to ice cream

Thus to analyse business possibilities of ice cream certain assumptions were made and collected

data were used These are

1048766 Production equipments and cabinets would cost approximately BDT 55 crores

1048766 Production equipments 45

1048766 Packaging Equipments 15

1048766 Storage Facility 20

1048766 Branded Freezers 10

1048766 Distribution Investment 10 (Distributors would also invest themselves)

1048766 Ice cream factory with a floor size of 20000 sqft would cost BDT 25 crores

1048766 Objective is to capture 10 market share in Dhaka and Chittagong in the first year

1048766 Business would grow by 50 in year 2 and 3 30 in year 4 and 25 in year 5

1048766 Weighted price per litre is BDT 170 according to volume share of single serve ice cream

multiple serve ice cream and boutique ice cream

1048766 Other financial assumptions were also made List of them are provided below but amount has

been removed for confidentiality issues

Assumptions

Trade Margin

Distributors Margin

DutyVAT Rate

Trade Terms Expense of NPS

Trade Terms Expense of NSV

Advertising ampPromotion of NPS

Indirects (Salaries Wages etc)

Trading Tax

Table 31 Assumptions for Business Projection

Evaluation of Entry into Ice cream Business for Bangladesh Limited 57

100 CONCLUSION

Ice cream has good prospect in Bangladesh It is still a growing market with opportunities for big

new entrants With the barriers of entry UBL needs to consider its priorities UBL being an HPC

company traditionally needs to acquire expertise in cold chain distribution and has to invest a lot

of money to rip the benefits of the industry However to initiate company can take regional

support and acquire resource expertise The company should enter the business as soon as

possible since there is potential threat from DANONE to introduce more ice creams after ISIS

diabetic ice cream and also with potential of the industry arch rival Nestlersquo might consider

entering into the industry too

Evaluation of Entry into Ice cream Business for Bangladesh Limited 58

References

Web References

1 wwwunilevercom

2 wwwunilevercombd

3 wwwhllcom

4 wwwunilevercompk

5 wwwthedailystarcom - Life Style Magazine

6 wwwreuterscouk

Evaluation of Entry into Ice cream Business for Bangladesh Limited 59

Page 48: Square Ice cream

Kwality

100

Polar

100

Milk-Vita

90

Savoy

85

Table 27 Comparative Price Analysis

As it can be seen there is price gap within the range of BDT 100-400 Ice cream kiosks and

small scooping boutiques can operate within that range

Evaluation of Entry into Ice cream Business for Bangladesh Limited 41

60 CONSUMER ANALYSIS

61 Target Group of Ice cream

Who are the consumers of ice cream This question does not have a clear answer Ice cream is a

food for all It is the only food consumed by a human being at less than 0 degree centigrade

temperature and people of all ages feel indulged to have it However we can determine focus

target groups for both branded common format and artisan boutique ice cream Group

discussions and market visits were done to get insight into the consumers along side resources

form secondary sources Age based target group is common for both segments but variation

among the groups occur mainly based on SEC and DMFI classification

611 Geographic Group

Branded ice cream remains an urban product till date Geographically branded ice cream has

reached urban and semi urban areas up to Thana Head Quarter levels Ice cream has reached

areas where electricity is available Small artisan players are available in places where large

branded players have no distribution

612 Target Age Group

Age wise grouping of target consumers is as follows

1048766 Urban kids in the age group of 5-14

1048766 They mainly consume normal sticks cups cones innovative fillers and water ice creams

1048766 Urban youth in the age group of 15-24

1048766 They consume premium and extrusion sticks and cones

1048766 Urban mothers in the age group of 25-35

1048766 They determine the family purchases Even when the father purchases ice cream decision is

taken by them

Consumption pattern of various age groups are depicted in the following chart Ice cream

consumption pattern50203005 to 14 yrs15 to 24 yrs25 to 35 yrs

Figure 11 Target Group wise Consumption Pattern Evaluation of Entry into Ice cream Business

for Bangladesh Limited 42

613 Target SEC and DMFI Group

Common Format

SEC A and B is the target group for common format ice cream However with rapid increase in

price level over the years has made it a ldquohard to consumerdquo product for SEC B consumers who

belong to lower DMFI group

Boutique Format

Boutique formatrsquos higher margin and high price range makes it an exclusively SEC A ice cream

People belonging to upper and upper middle class have access to the mediocre boutiques and

only higher upper class can have premium ice creams like Club Gelato and MoumlvenPick

Another unique target group for boutique format are the foreigners who live in Bangladesh

These people tend to visit the parlours to have ice cream as dessert especially after dinner

62 Ice cream in Consumer Lifestyle

Figure 12 Ice cream in Consumer Life style

This simple overview of ice cream in consumer lifestyle was determined based on in-depth

research analysis of UBL and validated through qualitative group discussions by the author

However detail of in-depth research is provided in a later section of this chapter

Evaluation of Entry into Ice cream Business for Bangladesh Limited 43

63 Highlights of Purchase Habit of Ice cream

631 Common Habits across Target Groups

There are some common habits that were identified in earlier researches and group discussions

with consumers Common habits mean the consumer approach towards ice cream that is seen

across all target groups eg kids youth and adult purchasers These are outlined below

1048766 Ice cream is mainly seen as a dessert or a snack Impulse ice cream is seen as a quick snack

that is consumed when it is in sight Visibility plays a big role here Regarding family packs

people see it as a post-food dessert

1048766 Ice cream purchase is commonly a planned event When the contexts arise people generally

take a bit of time to decide whether or not to have ice cream or when they want to go to a

boutique they make due considerations regarding which boutique to visit

1048766 Ice cream purchase decision is taken based on favourite flavour People tend to try out new

variants and flavours when they first see it They compare the taste with earlier experience and

when they purchase later they choose the flavour they have liked most

1048766 For In-Home segment decision is mostly taken on the flavour Generally people come up with

different flavours of choice and most voted flavour is chosen

1048766 People become aware of new variants or flavours mainly through word-of-mouth

Advertisement (new launches special offers and festivals) in newspaper is another source of

awareness

1048766 People are currently indifferent towards the price level of premium flavours However some

feel that price of Choc-bar or water ice creams (lolly) is a bit much If less they would have

consumed more Some also feel that companies should come up with branded ice cream in the

price range of BDT 5-8

1048766 Ice cream is purchased from nearby shops If required brand and flavour is not available 2-3

shops will be visited and then available flavour will be selected even if the required one is not

found This is done mainly not to ruin the mood for ice cream

1048766 People are very open to try new brands and flavours especially if it comes from a credible

source They would try new flavours and if they are satisfied with the taste they would repeat

purchase

1048766 Regarding boutique visits people feel that boutiques need to have a proper environment

enough flavours and other snacks

1048766 While visiting boutique with family or companion they want variation in flavours so that

they would order different flavours and taste each otherrsquos ice cream It is seen as a sign of

togetherness

1048766 Frequency of ice cream purchase varies among people It depends on peer pressure collective

family decision summer heat and attitude towards ldquoice creamrdquo itself as a product Evaluation of

Entry into Ice cream Business for Bangladesh Limited 44

632 Habits of Kids

1048766 Kids choose ice cream flavours by the look of the product (generally pictures shown in POS

materials and carts) They love colour and designs of the products let it be a common format or a

boutique ice cream

1048766 Kids (when in house) would go with the housemaid to the nearby shop choose the flavour

they want (within range of the amount given to the maid) and buy it

1048766 When with parents they would take the product they like even if the price is lower than some

other product However mothers play a role in this decision They would want their children not

to choose too high priced a product or coloured products

633 Habits of Youth

1048766 Young people are the main consumer of impulse ice cream They also are one of the major

consumers in the boutique segment

1048766 Young people love to try out new products that come into the market Another side of the coin

is that they are not very loyal to a brand or a flavour and tend to switch a lot

1048766 Regarding boutique visits young people go to boutiques to have an ldquoice cream hang outrdquo with

peer groups They would stay there for a longer period of time while they have their ice cream

1048766 Some times young people make milk shakes and other ice cream based desserts

634 Habits of Mothers

1048766 Mothers worry about their childrenrsquos health and they prefer ldquovanillardquo type of brands

However when price constraint occurs they go for water ice creams for their children They try

to convince their kidrsquos purchase decision

1048766 Regarding family purchase motherrsquos decision is sometimes prioritized by the whole family

64 Barriers to Ice cream Consumption

641 Emotional Barriers

1048766 Overindulge (close to sinful)

1048766 Undisciplined (no control)

1048766 Childish (licking)

1048766 Artificial Image

642 Functional Barriers

1048766 People of SEC B feel that ice cream is an expensive dessert (If less expensive would consume

more often)

1048766 It leads to cold cough - especially in winter rainy season

1048766 It contains artificial additives preservatives

1048766 It is very high in calories that lead to fattening

Evaluation of Entry into Ice cream Business for Bangladesh Limited 45

1048766 It does not quench ldquothirstrdquo

1048766 Less convenient (portable immediate eat)

1048766 Messy Dripping

65 Research Findings

The highlights regarding purchase habits triggers and barriers of ice cream consumption provide

a glimpse into the consumer world of ice cream industry However UBL CMI conducted a

formal research exclusively on ice cream consumers to identify

1048766 Occasions of ice cream

1048766 Frequency of ice cream consumption

1048766 Expectations from ice cream occasions

1048766 Personalities that they desire from ice cream

651 Relevant Occasions in Daily Lives of Consumers

Research question regarding ldquousual occasions of life that occurred most frequently in day-to-day

lives of the respondentsrdquo generated the following replies

Occasion

of Respondents saying Yes

Watching TV

93

Normal Dinner At Home

91

Normal Lunch At Home

89

At Home While ReadingMusicSurfing

86

Informal Family Get Together

85

Out Of Home Hanging Out With Friends

84

Out Shopping

84

Mid-Afternoon Break At Home

83

At Home By Myself During The Day

82

Special Dinner At Home

82

Informal Dinner Out Of Home

82

Normal Lunch Out Of Home

82

Leisure Walk

79

Coming Home From WorkSchool

78

Special Dinner Out Of Home

78

Celebration

78

A Night In With Friends

77

At Home By Myself In The Evening

77

Special Lunch Out Of Home

76

Mid-Afternoon Break Out Of Home

75

Special Lunch At Home

73

Day out with Partner

72

Midmorning Break

70

At Breakfast

68

Family Day Out

68

During Work Or At School

65

Evaluation of Entry into Ice cream Business for Bangladesh Limited 46

Travelling ToFrom WorkSchool

65

At The Cinema

61

Special Event

56

Clubbing At A Party

50

Post GymSports

48

Table 28 Relevant Occasions in Consumersrsquo Lives

Respondents were then asked to mention ldquofrequency of occurrence of the identified occasionsrdquo

The identified replies are as follows Normal dinner at homenormal lunch at homeComing home

from workschoolTraveling tofrom workschoolDay out with Partner SpouseMid-afternoon

break at homeOut of home hanging out with friendsLeisure walkMid-afternoon break out of

homeA night in with friendsSpecial dinner at homeSpecial lunch out of homeFamily day

outSpecial eventPost gymsportsDaily2-3 Times A WeekWeekly2-3 Times A MonthOnce A

MonthEvery 2-3 MonthsLess OftenNever Figure 13 Frequency of Occurrence of Occasions

This shows that ldquoNormal dinner at home Watching TV Normal Lunch At Home At Home

While ReadingMusicSurfing Coming Home From WorkSchool During Work Or At School

Travelling ToFrom WorkSchool Midmorning Break Day Out With Partner Spouse At Home

By Myself During The Dayrdquo are the most frequent daily rituals of busy lives of consumers

652 Frequency of Ice cream Consumption

Respondents were asked to mention ldquoconsumption pattern of ice cream during the identified

occasionrdquo on a scale of 1-5 depicting frequencies like ldquo(5) always (4) most of the times (3)

about half of the times (2) sometimes (1) never do not knowrdquo The responses are depicted in

the following table

Evaluation of Entry into Ice cream Business for Bangladesh Limited 47

444474544655555566756665775967779991011101111101210111110101113111412131314161

011121411131216181519181518211817171719181718201721222130303434253437403741394

046383944464746453745414641374638504843414839373030292726232725222020201926202

21722221317Midmorning

breakWhile clubbing at aAt the cinemaSpecial eventNormal lunch out ofA night in with

friendsNormal dinner atInformal dinner out ofAt home by myselfAt home by myself inOut

shoppingSpecial lunch atDay out with SpouseWatching TVAlwaysmost of the timesAbout half

of the timesSometimesneverdo not know

Figure 14 Frequency of Ice cream Consumption

As it can be seen ldquoDay out with Spouse Special lunch at home Special dinner at home

Watching TV Family day out Celebrationrdquo are the occasions where most frequently ice cream is

consumed

653 Market Character Mapping Relevant Occasions vs Frequency of Consumption

If we plot frequency of consumption on the X-axis of a chart and relevance of occasion

occurrence on the Y-axis taking the above mentioned values as cut-off values we get four

quadrants in the chart depicting four market scenarios that any ice cream manufacturer in

Bangladesh market might encounter given the current market situation This market

segmentation is based on frequency of ice cream consumption in daily occasions of consumer

lives

The segments are

1048766 OPPORTUNITY MARKET High Relevant Occasions-Low Ice cream Frequency

1048766 QUESTION MARKET Less Relevant Occasions-Low Ice cream Frequency

1048766 HIGH FREQUENCY MARKET Relevant Occasions-High Ice cream Frequency

1048766 CAPTIVE MARKET Less Relevant Occasions-High Ice cream Frequency

The chart looks as follows Evaluation of Entry into Ice cream Business for Bangladesh Limited

48

Figure 15 Relevance of Occasion-Frequency of Consumption Mapping

As it can be seen from the above chart Bangladesh Market still lies in the Opportunity and

Question market zone with a pull towards High frequency and Captive Market zones This is

evident from market data as penetration of ice cream still remains at Thana headquarters levels

Also this explains the high market growth rate of 17 as market is yet under developed and

branded quality ice cream has yet not reached all levels of consumers especially rural level that

constitutes around 75 of Bangladeshi market

From the above analysis we can establish that target of ice cream manufacturers should be to

penetrate more into the Bangladeshi market to create higher frequency of ice cream

consumption The following chart shows the strategies to follow for ice cream manufacturers

Figure 16 Required Market Strategy for Bangladesh

Evaluation of Entry into Ice cream Business for Bangladesh Limited 49

As relevance of ice cream consumption occasions can hardly be controlled by marketers their

endeavour should be to create more ldquoemotional and functionalrdquo attachment to ice cream in less

frequent occasions through ldquomarket developmentrdquo strategy to earn share from overall food

expenditure of consumers and at the same time make them consume more ice cream in highly

relevant occasions through ldquopenetrationrdquo strategy

654 Consumersrsquo Emotional Requirements and Product Attributes

All consumers under these clusters also identify the emotional requirements and the significant

product attributes they seek from their current preferred and future desired ice creams These are

provided below

Cluster

Emotional Functional Requirement

Product Attributes

Enjoyment

Flavour Variety

1048766 Combination of different flavours

1048766 Combination of different textures

1048766 Very sweet

1048766 With wafer or biscuit

1048766 With chocolate

1048766 Of a well known brand

Socially Involved

Spoonable Rich

1048766 Very creamy

1048766 Only natural ingredients

1048766 No mess

Care

Size Creaminess

1048766 Big

1048766 Rich full taste

1048766 Smooth

1048766 Value for money

1048766 No mess

Unwind amp Escape

Economy

1048766 Crunchy

1048766 Economic

1048766 Of a well known brand

1048766 Nutritious

Balanced Convenience

Health Conscious

1048766 Of a well known brand

1048766 Nutritious

1048766 Milk based

1048766 Low sugar

1048766 Low carbohydrates

1048766 Filling

Active Self-Grooming

Fruit Vitamins

1048766 Healthy

1048766 Fruit based

1048766 Low fat

1048766 Liquid or drinkable

1048766 Nutritious

1048766 Of a well known brand

Confidence

Drinkable Light

1048766 Low calories

1048766 Light on the stomach

1048766 Chewy or gooey

1048766 Not so sweet

1048766 Natural appearance

Sensual

Appeal or image

1048766 No artificial additives

Evaluation of Entry into Ice cream Business for Bangladesh Limited 50

1048766 Natural appearance

1048766 Melting slowly

1048766 Attractive packaging

1048766 High quality ingredients

1048766 Of a well known brand

Table 29 Requirements amp Product Attributes Desired by Consumer Clusters

Of these findings we see that the identified highlighted barriers to ice cream consumption are

pretty evident among the consumers Mostly people want products of a reliable source or a well

known brand low calories quality ingredients value for money economic type

Evaluation of Entry into Ice cream Business for Bangladesh Limited 51

70 INDUSTRY ATTRACTIVENESS AND ENTRY PROSPECTS

71 Driving Forces of Growth

As identified in the earlier sections there are several driving forces behind the growth of ice-

cream industry in Bangladesh

712 Trade and Infrastructural Level

1048766 As a result of globalization newer varieties have been introduced to the local products Many

foreign companies are also coming as franchise so there has been increased competition and

these boutiques are setting higher standards for the local producers

1048766 The present market growth rate is 18-19 which is being influenced by larger players like

Igloo who are expanding their distribution nation wide with expansion of national electricity

grid

1048766 With entry of Modern Trade and recent organized business approach of retailers has made it

possible for ice cream manufacturers to penetrate into shops even without providing them with

branded freezers

1048766 Weather change has increased ldquosummerrdquo season in our country which has reduced negative

seasonal impact on ice cream

1048766 Large companies like Igloo have taken global learning of using carts as an effective tool of

availability and visibility for ice cream

1048766 New and improved technologies are being used in the production process This technological

advancement has improved quality increased speed of production and made the process more

cost effective

713 Consumer Level

1048766 Only a few years back rich people could afford the luxury of having ice-cream but now it has

become a common product for everybody Ice-cream companies are producing different products

with a wide price range for consumers of every class and status

1048766 Nowadays companies are doing promotional campaigns more frequently the customers get to

know about the product which makes it easier for them to buy the best one

1048766 The improved standard of life and more modernized lifestyle of people is an important reason

for the increased consumption thus growth of the ice-cream industry

Evaluation of Entry into Ice cream Business for Bangladesh Limited 52

72 Prospects of Entry

The ice-cream industry of Bangladesh is an attractive one for the investors because there is a

huge market but number of producers is very small The major reasons behind industry

attractiveness are as follows

1048766 The industryrsquos current growth potential is very high with opportunity for market development

1048766 The competition currently permits adequate profitability and the competitive forces are

becoming stronger with time

1048766 Boutique segment is at a very high growth stage but no operator is currently operating with a

mid price range of BDT 100-400 Ice cream kiosks and small scooping boutiques can operate

within that range

1048766 Current industry driving forces are favourable for the future industry profitability

1048766 Globally oriented consumers look for variety in ice cream that is currently not available

Latest innovations came in the market in 2002 People would welcome new variety and flavours

1048766 There is a gap in the market for balanced convenience through ice cream where consumers can

get nutritional benefits for ice cream Also emotional attachment to ice cream could further be

improvised in promotional campaigns

1048766 There is high scope for market penetration and development to increase frequency of ice

cream consumption

1048766 Level of risk or uncertainty is very low in ice-cream industry because the consumer market is

so huge any product with a standard quality and careful pricing will be able to make significant

profit

1048766 As for geographic reach of the industry 60 market is still in Dhaka There is scope of

expansion and a new entrant can easily capture market share within Dhaka using carts even if

they do not want nation wide cold chain distribution

1048766 The production process is very complex and capital requirements are also high So before

going into production any company should know about their capabilities and weaknesses and

then start the business or else they might suffer huge loss at a certain level

1048766 Unilever can acquire the required resource and use existing multi-national multi-cultural

expertise to enter the market in a grand way

1048766 With high probability of entry from DANONE with more products like the ISIS diabetic ice

cream Unilever should consider entering in this industry as soon as possible

Evaluation of Entry into Ice cream Business for Bangladesh Limited 53

80 ENTRY STRATEGY FOR UNILEVER

While describing the suggested entry strategy for UBL certain issues have been kept

confidential and some issues have been touched but not explained to keep consistency with UBL

confidentiality policy

81 Suggested Entry Areas for UBL

1048766 Boutique segment of the Bangladesh ice cream is only 5 of the branded market UBL needs

to pursue a larger scope to make the entry viable

1048766 UBL cannot fight with unbranded segment as global product quality mandate of Unilever does

not allow UBL to fight in low price-low quality segment

1048766 Recommend entry should be in the common format segment with both single and multiple

servings and in the boutique segment with a different brand name (if possible BEN amp JERRYrsquoS)

1048766 UBL should build up state-of-art modern factory for manufacturing and establish cold chain

facilities initially focusing on metro cities

1048766 Investment issues are required to be addressed for building factory and cold chain and capital

requirement needs to be identified for that purpose4

1048766 UBL may have boutiques for driving image selective top-end offering

1048766 Kiosks can be setup near universities and shopping malls

1048766 Boutiques should be concentrated in Dhaka and Chittagong

1048766 Ice cream for boutiques and kiosks would be produced in factory as institutional packs of 9-10

litres

82 Products

1048766 As a Brand Building country in global Unilever operating framework UBL is entitled only to

bring products developed by the Brand Development countries

1048766 Unilever should focus on serving products that have nutritional benefits (already available

globally) along with usual satisfactions of sensual pleasure functional attributes etc

1048766 Current existent players especially Igloo and Kwality have extensively copied global and

regionally available Unilever products eg Cornelli is same as Wallrsquos Cornetto Vinetta is similar

to Vienetta Mega is similar to Magnum etc UBL needs to differentiate these to consumers on

the ldquotaste the originalrdquo platform where global quality is focused regarding the products

1048766 UBL should also bring regionally famous brands like Moo or Max to create image

differentiation

1048766 Magnum or Moo should be used as premium end ice cream to generate more profit margin

Evaluation of Entry into Ice cream Business for Bangladesh Limited 54

83 Placement

1048766 Distribution focus should be in Dhaka for entry as Dhaka contributes more than 60 of total

ice cream sales in the country

1048766 Company may use carts as distribution method They serve as good source of visibility and

availability It would help in increasing impulse purchase

1048766 At least 1500 outlets in Dhaka and Chittagong needs to be actively served using dedicated

branded refrigerators to generate sales

1048766 50 carts should operate in Dhaka and Chittagong

84 Price

1048766 UBL products should be priced at par with Igloo pricing for the common format ice creams

1048766 UBL can bring in premium single-serve SKUS for the higher economic classes in the price

range of BDT 60-80

1048766 Smaller SKUs (small lolly stick) can be introduced in the price range of BDT 10-15

1048766 In the boutique segment UBL should price products above the semi-premium segment

(Gelateria Igloo Sub Zero or Andersenrsquos) but lower than that of Club Gelato or MoumlvenPick

85 Promotion

1048766 UBL would require strong marketing campaign (As high as 50 of sales) to have a grand

entry in the market

1048766 Presence in the television media would be of utmost importance More than 50 of

promotional expense should be made here initially Gradually it can be reduced

1048766 Newspaper would serve as the second most important option

1048766 Billboards should also be used

1048766 Activations (similar to Lux Channel i Super Star or Igloo Festival) should be done to generate

trial

86 Scope of Opportunity

Table 30 Value and Volume Based Scope of Opportunity for UBL

Value (BDT Cr)

Volume (Tons)

Market

131

7835

Common

121

7600

Boutique

98

235

Evaluation of Entry into Ice cream Business for Bangladesh Limited 55

861 Geographic Contribution

1048766 Dhaka (61)

1048766 Chittagong (19)

1048766 Sylhet (10)

862 UBL objectives

Common Format Ice Creams

1048766 Target 10 Market share in 1st year operation

1048766 Value BDT 11 Cr

1048766 Production capacity required 21 Tons day

1048766 Freezer Placement 1500 freezers

1048766 Cart operation At least 50 carts

Boutiques

1048766 Target Further develop the market

1048766 Focus Dhaka Chittagong and Sylhet Metro

1048766 Franchise At least 20 franchisee operations nation wide in divisional towns

1048766 Pricing Below imported parlours above common formats with around BDT 400 per Litre

87 Critical Success Factors

1048766 UBL is considered as a high profile company in Bangladesh and thus they cannot operate in

the market only with common products like choc-bars and cups They must have premium

products (these require extrusion line) also to carry their brand image Otherwise UBL would not

be able to charge usual premium over competition products

1048766 Launch of ice cream would require huge promotional and activation support in order to gain

customers from Igloo People want novelty regarding ice cream and UBL have to let them know

about their products and create hype

1048766 Cart should be used as a source of distribution Recent successes of Unilever companies like

Indonesia shows that carts can generate more sales and can be used as source of visibility in the

minds of both retail traders and consumers Carts can also provide incremental sales to the

company

1048766 UBL have to create a strong cold chain for ice cream (initially in Dhaka and Chittagong) to

ensure quality products for consumers

1048766 UBL have to build capacity very rapidly to meet consumer demand if the launch is successful

Evaluation of Entry into Ice cream Business for Bangladesh Limited 56

90 BUSINESS PROJECTION

91 Basic Assumptions

Business projection for ice cream business was made based on a conservative approach UBL

would require spending significantly on production capacity and factory dedicated to ice cream

Thus to analyse business possibilities of ice cream certain assumptions were made and collected

data were used These are

1048766 Production equipments and cabinets would cost approximately BDT 55 crores

1048766 Production equipments 45

1048766 Packaging Equipments 15

1048766 Storage Facility 20

1048766 Branded Freezers 10

1048766 Distribution Investment 10 (Distributors would also invest themselves)

1048766 Ice cream factory with a floor size of 20000 sqft would cost BDT 25 crores

1048766 Objective is to capture 10 market share in Dhaka and Chittagong in the first year

1048766 Business would grow by 50 in year 2 and 3 30 in year 4 and 25 in year 5

1048766 Weighted price per litre is BDT 170 according to volume share of single serve ice cream

multiple serve ice cream and boutique ice cream

1048766 Other financial assumptions were also made List of them are provided below but amount has

been removed for confidentiality issues

Assumptions

Trade Margin

Distributors Margin

DutyVAT Rate

Trade Terms Expense of NPS

Trade Terms Expense of NSV

Advertising ampPromotion of NPS

Indirects (Salaries Wages etc)

Trading Tax

Table 31 Assumptions for Business Projection

Evaluation of Entry into Ice cream Business for Bangladesh Limited 57

100 CONCLUSION

Ice cream has good prospect in Bangladesh It is still a growing market with opportunities for big

new entrants With the barriers of entry UBL needs to consider its priorities UBL being an HPC

company traditionally needs to acquire expertise in cold chain distribution and has to invest a lot

of money to rip the benefits of the industry However to initiate company can take regional

support and acquire resource expertise The company should enter the business as soon as

possible since there is potential threat from DANONE to introduce more ice creams after ISIS

diabetic ice cream and also with potential of the industry arch rival Nestlersquo might consider

entering into the industry too

Evaluation of Entry into Ice cream Business for Bangladesh Limited 58

References

Web References

1 wwwunilevercom

2 wwwunilevercombd

3 wwwhllcom

4 wwwunilevercompk

5 wwwthedailystarcom - Life Style Magazine

6 wwwreuterscouk

Evaluation of Entry into Ice cream Business for Bangladesh Limited 59

Page 49: Square Ice cream

areas where electricity is available Small artisan players are available in places where large

branded players have no distribution

612 Target Age Group

Age wise grouping of target consumers is as follows

1048766 Urban kids in the age group of 5-14

1048766 They mainly consume normal sticks cups cones innovative fillers and water ice creams

1048766 Urban youth in the age group of 15-24

1048766 They consume premium and extrusion sticks and cones

1048766 Urban mothers in the age group of 25-35

1048766 They determine the family purchases Even when the father purchases ice cream decision is

taken by them

Consumption pattern of various age groups are depicted in the following chart Ice cream

consumption pattern50203005 to 14 yrs15 to 24 yrs25 to 35 yrs

Figure 11 Target Group wise Consumption Pattern Evaluation of Entry into Ice cream Business

for Bangladesh Limited 42

613 Target SEC and DMFI Group

Common Format

SEC A and B is the target group for common format ice cream However with rapid increase in

price level over the years has made it a ldquohard to consumerdquo product for SEC B consumers who

belong to lower DMFI group

Boutique Format

Boutique formatrsquos higher margin and high price range makes it an exclusively SEC A ice cream

People belonging to upper and upper middle class have access to the mediocre boutiques and

only higher upper class can have premium ice creams like Club Gelato and MoumlvenPick

Another unique target group for boutique format are the foreigners who live in Bangladesh

These people tend to visit the parlours to have ice cream as dessert especially after dinner

62 Ice cream in Consumer Lifestyle

Figure 12 Ice cream in Consumer Life style

This simple overview of ice cream in consumer lifestyle was determined based on in-depth

research analysis of UBL and validated through qualitative group discussions by the author

However detail of in-depth research is provided in a later section of this chapter

Evaluation of Entry into Ice cream Business for Bangladesh Limited 43

63 Highlights of Purchase Habit of Ice cream

631 Common Habits across Target Groups

There are some common habits that were identified in earlier researches and group discussions

with consumers Common habits mean the consumer approach towards ice cream that is seen

across all target groups eg kids youth and adult purchasers These are outlined below

1048766 Ice cream is mainly seen as a dessert or a snack Impulse ice cream is seen as a quick snack

that is consumed when it is in sight Visibility plays a big role here Regarding family packs

people see it as a post-food dessert

1048766 Ice cream purchase is commonly a planned event When the contexts arise people generally

take a bit of time to decide whether or not to have ice cream or when they want to go to a

boutique they make due considerations regarding which boutique to visit

1048766 Ice cream purchase decision is taken based on favourite flavour People tend to try out new

variants and flavours when they first see it They compare the taste with earlier experience and

when they purchase later they choose the flavour they have liked most

1048766 For In-Home segment decision is mostly taken on the flavour Generally people come up with

different flavours of choice and most voted flavour is chosen

1048766 People become aware of new variants or flavours mainly through word-of-mouth

Advertisement (new launches special offers and festivals) in newspaper is another source of

awareness

1048766 People are currently indifferent towards the price level of premium flavours However some

feel that price of Choc-bar or water ice creams (lolly) is a bit much If less they would have

consumed more Some also feel that companies should come up with branded ice cream in the

price range of BDT 5-8

1048766 Ice cream is purchased from nearby shops If required brand and flavour is not available 2-3

shops will be visited and then available flavour will be selected even if the required one is not

found This is done mainly not to ruin the mood for ice cream

1048766 People are very open to try new brands and flavours especially if it comes from a credible

source They would try new flavours and if they are satisfied with the taste they would repeat

purchase

1048766 Regarding boutique visits people feel that boutiques need to have a proper environment

enough flavours and other snacks

1048766 While visiting boutique with family or companion they want variation in flavours so that

they would order different flavours and taste each otherrsquos ice cream It is seen as a sign of

togetherness

1048766 Frequency of ice cream purchase varies among people It depends on peer pressure collective

family decision summer heat and attitude towards ldquoice creamrdquo itself as a product Evaluation of

Entry into Ice cream Business for Bangladesh Limited 44

632 Habits of Kids

1048766 Kids choose ice cream flavours by the look of the product (generally pictures shown in POS

materials and carts) They love colour and designs of the products let it be a common format or a

boutique ice cream

1048766 Kids (when in house) would go with the housemaid to the nearby shop choose the flavour

they want (within range of the amount given to the maid) and buy it

1048766 When with parents they would take the product they like even if the price is lower than some

other product However mothers play a role in this decision They would want their children not

to choose too high priced a product or coloured products

633 Habits of Youth

1048766 Young people are the main consumer of impulse ice cream They also are one of the major

consumers in the boutique segment

1048766 Young people love to try out new products that come into the market Another side of the coin

is that they are not very loyal to a brand or a flavour and tend to switch a lot

1048766 Regarding boutique visits young people go to boutiques to have an ldquoice cream hang outrdquo with

peer groups They would stay there for a longer period of time while they have their ice cream

1048766 Some times young people make milk shakes and other ice cream based desserts

634 Habits of Mothers

1048766 Mothers worry about their childrenrsquos health and they prefer ldquovanillardquo type of brands

However when price constraint occurs they go for water ice creams for their children They try

to convince their kidrsquos purchase decision

1048766 Regarding family purchase motherrsquos decision is sometimes prioritized by the whole family

64 Barriers to Ice cream Consumption

641 Emotional Barriers

1048766 Overindulge (close to sinful)

1048766 Undisciplined (no control)

1048766 Childish (licking)

1048766 Artificial Image

642 Functional Barriers

1048766 People of SEC B feel that ice cream is an expensive dessert (If less expensive would consume

more often)

1048766 It leads to cold cough - especially in winter rainy season

1048766 It contains artificial additives preservatives

1048766 It is very high in calories that lead to fattening

Evaluation of Entry into Ice cream Business for Bangladesh Limited 45

1048766 It does not quench ldquothirstrdquo

1048766 Less convenient (portable immediate eat)

1048766 Messy Dripping

65 Research Findings

The highlights regarding purchase habits triggers and barriers of ice cream consumption provide

a glimpse into the consumer world of ice cream industry However UBL CMI conducted a

formal research exclusively on ice cream consumers to identify

1048766 Occasions of ice cream

1048766 Frequency of ice cream consumption

1048766 Expectations from ice cream occasions

1048766 Personalities that they desire from ice cream

651 Relevant Occasions in Daily Lives of Consumers

Research question regarding ldquousual occasions of life that occurred most frequently in day-to-day

lives of the respondentsrdquo generated the following replies

Occasion

of Respondents saying Yes

Watching TV

93

Normal Dinner At Home

91

Normal Lunch At Home

89

At Home While ReadingMusicSurfing

86

Informal Family Get Together

85

Out Of Home Hanging Out With Friends

84

Out Shopping

84

Mid-Afternoon Break At Home

83

At Home By Myself During The Day

82

Special Dinner At Home

82

Informal Dinner Out Of Home

82

Normal Lunch Out Of Home

82

Leisure Walk

79

Coming Home From WorkSchool

78

Special Dinner Out Of Home

78

Celebration

78

A Night In With Friends

77

At Home By Myself In The Evening

77

Special Lunch Out Of Home

76

Mid-Afternoon Break Out Of Home

75

Special Lunch At Home

73

Day out with Partner

72

Midmorning Break

70

At Breakfast

68

Family Day Out

68

During Work Or At School

65

Evaluation of Entry into Ice cream Business for Bangladesh Limited 46

Travelling ToFrom WorkSchool

65

At The Cinema

61

Special Event

56

Clubbing At A Party

50

Post GymSports

48

Table 28 Relevant Occasions in Consumersrsquo Lives

Respondents were then asked to mention ldquofrequency of occurrence of the identified occasionsrdquo

The identified replies are as follows Normal dinner at homenormal lunch at homeComing home

from workschoolTraveling tofrom workschoolDay out with Partner SpouseMid-afternoon

break at homeOut of home hanging out with friendsLeisure walkMid-afternoon break out of

homeA night in with friendsSpecial dinner at homeSpecial lunch out of homeFamily day

outSpecial eventPost gymsportsDaily2-3 Times A WeekWeekly2-3 Times A MonthOnce A

MonthEvery 2-3 MonthsLess OftenNever Figure 13 Frequency of Occurrence of Occasions

This shows that ldquoNormal dinner at home Watching TV Normal Lunch At Home At Home

While ReadingMusicSurfing Coming Home From WorkSchool During Work Or At School

Travelling ToFrom WorkSchool Midmorning Break Day Out With Partner Spouse At Home

By Myself During The Dayrdquo are the most frequent daily rituals of busy lives of consumers

652 Frequency of Ice cream Consumption

Respondents were asked to mention ldquoconsumption pattern of ice cream during the identified

occasionrdquo on a scale of 1-5 depicting frequencies like ldquo(5) always (4) most of the times (3)

about half of the times (2) sometimes (1) never do not knowrdquo The responses are depicted in

the following table

Evaluation of Entry into Ice cream Business for Bangladesh Limited 47

444474544655555566756665775967779991011101111101210111110101113111412131314161

011121411131216181519181518211817171719181718201721222130303434253437403741394

046383944464746453745414641374638504843414839373030292726232725222020201926202

21722221317Midmorning

breakWhile clubbing at aAt the cinemaSpecial eventNormal lunch out ofA night in with

friendsNormal dinner atInformal dinner out ofAt home by myselfAt home by myself inOut

shoppingSpecial lunch atDay out with SpouseWatching TVAlwaysmost of the timesAbout half

of the timesSometimesneverdo not know

Figure 14 Frequency of Ice cream Consumption

As it can be seen ldquoDay out with Spouse Special lunch at home Special dinner at home

Watching TV Family day out Celebrationrdquo are the occasions where most frequently ice cream is

consumed

653 Market Character Mapping Relevant Occasions vs Frequency of Consumption

If we plot frequency of consumption on the X-axis of a chart and relevance of occasion

occurrence on the Y-axis taking the above mentioned values as cut-off values we get four

quadrants in the chart depicting four market scenarios that any ice cream manufacturer in

Bangladesh market might encounter given the current market situation This market

segmentation is based on frequency of ice cream consumption in daily occasions of consumer

lives

The segments are

1048766 OPPORTUNITY MARKET High Relevant Occasions-Low Ice cream Frequency

1048766 QUESTION MARKET Less Relevant Occasions-Low Ice cream Frequency

1048766 HIGH FREQUENCY MARKET Relevant Occasions-High Ice cream Frequency

1048766 CAPTIVE MARKET Less Relevant Occasions-High Ice cream Frequency

The chart looks as follows Evaluation of Entry into Ice cream Business for Bangladesh Limited

48

Figure 15 Relevance of Occasion-Frequency of Consumption Mapping

As it can be seen from the above chart Bangladesh Market still lies in the Opportunity and

Question market zone with a pull towards High frequency and Captive Market zones This is

evident from market data as penetration of ice cream still remains at Thana headquarters levels

Also this explains the high market growth rate of 17 as market is yet under developed and

branded quality ice cream has yet not reached all levels of consumers especially rural level that

constitutes around 75 of Bangladeshi market

From the above analysis we can establish that target of ice cream manufacturers should be to

penetrate more into the Bangladeshi market to create higher frequency of ice cream

consumption The following chart shows the strategies to follow for ice cream manufacturers

Figure 16 Required Market Strategy for Bangladesh

Evaluation of Entry into Ice cream Business for Bangladesh Limited 49

As relevance of ice cream consumption occasions can hardly be controlled by marketers their

endeavour should be to create more ldquoemotional and functionalrdquo attachment to ice cream in less

frequent occasions through ldquomarket developmentrdquo strategy to earn share from overall food

expenditure of consumers and at the same time make them consume more ice cream in highly

relevant occasions through ldquopenetrationrdquo strategy

654 Consumersrsquo Emotional Requirements and Product Attributes

All consumers under these clusters also identify the emotional requirements and the significant

product attributes they seek from their current preferred and future desired ice creams These are

provided below

Cluster

Emotional Functional Requirement

Product Attributes

Enjoyment

Flavour Variety

1048766 Combination of different flavours

1048766 Combination of different textures

1048766 Very sweet

1048766 With wafer or biscuit

1048766 With chocolate

1048766 Of a well known brand

Socially Involved

Spoonable Rich

1048766 Very creamy

1048766 Only natural ingredients

1048766 No mess

Care

Size Creaminess

1048766 Big

1048766 Rich full taste

1048766 Smooth

1048766 Value for money

1048766 No mess

Unwind amp Escape

Economy

1048766 Crunchy

1048766 Economic

1048766 Of a well known brand

1048766 Nutritious

Balanced Convenience

Health Conscious

1048766 Of a well known brand

1048766 Nutritious

1048766 Milk based

1048766 Low sugar

1048766 Low carbohydrates

1048766 Filling

Active Self-Grooming

Fruit Vitamins

1048766 Healthy

1048766 Fruit based

1048766 Low fat

1048766 Liquid or drinkable

1048766 Nutritious

1048766 Of a well known brand

Confidence

Drinkable Light

1048766 Low calories

1048766 Light on the stomach

1048766 Chewy or gooey

1048766 Not so sweet

1048766 Natural appearance

Sensual

Appeal or image

1048766 No artificial additives

Evaluation of Entry into Ice cream Business for Bangladesh Limited 50

1048766 Natural appearance

1048766 Melting slowly

1048766 Attractive packaging

1048766 High quality ingredients

1048766 Of a well known brand

Table 29 Requirements amp Product Attributes Desired by Consumer Clusters

Of these findings we see that the identified highlighted barriers to ice cream consumption are

pretty evident among the consumers Mostly people want products of a reliable source or a well

known brand low calories quality ingredients value for money economic type

Evaluation of Entry into Ice cream Business for Bangladesh Limited 51

70 INDUSTRY ATTRACTIVENESS AND ENTRY PROSPECTS

71 Driving Forces of Growth

As identified in the earlier sections there are several driving forces behind the growth of ice-

cream industry in Bangladesh

712 Trade and Infrastructural Level

1048766 As a result of globalization newer varieties have been introduced to the local products Many

foreign companies are also coming as franchise so there has been increased competition and

these boutiques are setting higher standards for the local producers

1048766 The present market growth rate is 18-19 which is being influenced by larger players like

Igloo who are expanding their distribution nation wide with expansion of national electricity

grid

1048766 With entry of Modern Trade and recent organized business approach of retailers has made it

possible for ice cream manufacturers to penetrate into shops even without providing them with

branded freezers

1048766 Weather change has increased ldquosummerrdquo season in our country which has reduced negative

seasonal impact on ice cream

1048766 Large companies like Igloo have taken global learning of using carts as an effective tool of

availability and visibility for ice cream

1048766 New and improved technologies are being used in the production process This technological

advancement has improved quality increased speed of production and made the process more

cost effective

713 Consumer Level

1048766 Only a few years back rich people could afford the luxury of having ice-cream but now it has

become a common product for everybody Ice-cream companies are producing different products

with a wide price range for consumers of every class and status

1048766 Nowadays companies are doing promotional campaigns more frequently the customers get to

know about the product which makes it easier for them to buy the best one

1048766 The improved standard of life and more modernized lifestyle of people is an important reason

for the increased consumption thus growth of the ice-cream industry

Evaluation of Entry into Ice cream Business for Bangladesh Limited 52

72 Prospects of Entry

The ice-cream industry of Bangladesh is an attractive one for the investors because there is a

huge market but number of producers is very small The major reasons behind industry

attractiveness are as follows

1048766 The industryrsquos current growth potential is very high with opportunity for market development

1048766 The competition currently permits adequate profitability and the competitive forces are

becoming stronger with time

1048766 Boutique segment is at a very high growth stage but no operator is currently operating with a

mid price range of BDT 100-400 Ice cream kiosks and small scooping boutiques can operate

within that range

1048766 Current industry driving forces are favourable for the future industry profitability

1048766 Globally oriented consumers look for variety in ice cream that is currently not available

Latest innovations came in the market in 2002 People would welcome new variety and flavours

1048766 There is a gap in the market for balanced convenience through ice cream where consumers can

get nutritional benefits for ice cream Also emotional attachment to ice cream could further be

improvised in promotional campaigns

1048766 There is high scope for market penetration and development to increase frequency of ice

cream consumption

1048766 Level of risk or uncertainty is very low in ice-cream industry because the consumer market is

so huge any product with a standard quality and careful pricing will be able to make significant

profit

1048766 As for geographic reach of the industry 60 market is still in Dhaka There is scope of

expansion and a new entrant can easily capture market share within Dhaka using carts even if

they do not want nation wide cold chain distribution

1048766 The production process is very complex and capital requirements are also high So before

going into production any company should know about their capabilities and weaknesses and

then start the business or else they might suffer huge loss at a certain level

1048766 Unilever can acquire the required resource and use existing multi-national multi-cultural

expertise to enter the market in a grand way

1048766 With high probability of entry from DANONE with more products like the ISIS diabetic ice

cream Unilever should consider entering in this industry as soon as possible

Evaluation of Entry into Ice cream Business for Bangladesh Limited 53

80 ENTRY STRATEGY FOR UNILEVER

While describing the suggested entry strategy for UBL certain issues have been kept

confidential and some issues have been touched but not explained to keep consistency with UBL

confidentiality policy

81 Suggested Entry Areas for UBL

1048766 Boutique segment of the Bangladesh ice cream is only 5 of the branded market UBL needs

to pursue a larger scope to make the entry viable

1048766 UBL cannot fight with unbranded segment as global product quality mandate of Unilever does

not allow UBL to fight in low price-low quality segment

1048766 Recommend entry should be in the common format segment with both single and multiple

servings and in the boutique segment with a different brand name (if possible BEN amp JERRYrsquoS)

1048766 UBL should build up state-of-art modern factory for manufacturing and establish cold chain

facilities initially focusing on metro cities

1048766 Investment issues are required to be addressed for building factory and cold chain and capital

requirement needs to be identified for that purpose4

1048766 UBL may have boutiques for driving image selective top-end offering

1048766 Kiosks can be setup near universities and shopping malls

1048766 Boutiques should be concentrated in Dhaka and Chittagong

1048766 Ice cream for boutiques and kiosks would be produced in factory as institutional packs of 9-10

litres

82 Products

1048766 As a Brand Building country in global Unilever operating framework UBL is entitled only to

bring products developed by the Brand Development countries

1048766 Unilever should focus on serving products that have nutritional benefits (already available

globally) along with usual satisfactions of sensual pleasure functional attributes etc

1048766 Current existent players especially Igloo and Kwality have extensively copied global and

regionally available Unilever products eg Cornelli is same as Wallrsquos Cornetto Vinetta is similar

to Vienetta Mega is similar to Magnum etc UBL needs to differentiate these to consumers on

the ldquotaste the originalrdquo platform where global quality is focused regarding the products

1048766 UBL should also bring regionally famous brands like Moo or Max to create image

differentiation

1048766 Magnum or Moo should be used as premium end ice cream to generate more profit margin

Evaluation of Entry into Ice cream Business for Bangladesh Limited 54

83 Placement

1048766 Distribution focus should be in Dhaka for entry as Dhaka contributes more than 60 of total

ice cream sales in the country

1048766 Company may use carts as distribution method They serve as good source of visibility and

availability It would help in increasing impulse purchase

1048766 At least 1500 outlets in Dhaka and Chittagong needs to be actively served using dedicated

branded refrigerators to generate sales

1048766 50 carts should operate in Dhaka and Chittagong

84 Price

1048766 UBL products should be priced at par with Igloo pricing for the common format ice creams

1048766 UBL can bring in premium single-serve SKUS for the higher economic classes in the price

range of BDT 60-80

1048766 Smaller SKUs (small lolly stick) can be introduced in the price range of BDT 10-15

1048766 In the boutique segment UBL should price products above the semi-premium segment

(Gelateria Igloo Sub Zero or Andersenrsquos) but lower than that of Club Gelato or MoumlvenPick

85 Promotion

1048766 UBL would require strong marketing campaign (As high as 50 of sales) to have a grand

entry in the market

1048766 Presence in the television media would be of utmost importance More than 50 of

promotional expense should be made here initially Gradually it can be reduced

1048766 Newspaper would serve as the second most important option

1048766 Billboards should also be used

1048766 Activations (similar to Lux Channel i Super Star or Igloo Festival) should be done to generate

trial

86 Scope of Opportunity

Table 30 Value and Volume Based Scope of Opportunity for UBL

Value (BDT Cr)

Volume (Tons)

Market

131

7835

Common

121

7600

Boutique

98

235

Evaluation of Entry into Ice cream Business for Bangladesh Limited 55

861 Geographic Contribution

1048766 Dhaka (61)

1048766 Chittagong (19)

1048766 Sylhet (10)

862 UBL objectives

Common Format Ice Creams

1048766 Target 10 Market share in 1st year operation

1048766 Value BDT 11 Cr

1048766 Production capacity required 21 Tons day

1048766 Freezer Placement 1500 freezers

1048766 Cart operation At least 50 carts

Boutiques

1048766 Target Further develop the market

1048766 Focus Dhaka Chittagong and Sylhet Metro

1048766 Franchise At least 20 franchisee operations nation wide in divisional towns

1048766 Pricing Below imported parlours above common formats with around BDT 400 per Litre

87 Critical Success Factors

1048766 UBL is considered as a high profile company in Bangladesh and thus they cannot operate in

the market only with common products like choc-bars and cups They must have premium

products (these require extrusion line) also to carry their brand image Otherwise UBL would not

be able to charge usual premium over competition products

1048766 Launch of ice cream would require huge promotional and activation support in order to gain

customers from Igloo People want novelty regarding ice cream and UBL have to let them know

about their products and create hype

1048766 Cart should be used as a source of distribution Recent successes of Unilever companies like

Indonesia shows that carts can generate more sales and can be used as source of visibility in the

minds of both retail traders and consumers Carts can also provide incremental sales to the

company

1048766 UBL have to create a strong cold chain for ice cream (initially in Dhaka and Chittagong) to

ensure quality products for consumers

1048766 UBL have to build capacity very rapidly to meet consumer demand if the launch is successful

Evaluation of Entry into Ice cream Business for Bangladesh Limited 56

90 BUSINESS PROJECTION

91 Basic Assumptions

Business projection for ice cream business was made based on a conservative approach UBL

would require spending significantly on production capacity and factory dedicated to ice cream

Thus to analyse business possibilities of ice cream certain assumptions were made and collected

data were used These are

1048766 Production equipments and cabinets would cost approximately BDT 55 crores

1048766 Production equipments 45

1048766 Packaging Equipments 15

1048766 Storage Facility 20

1048766 Branded Freezers 10

1048766 Distribution Investment 10 (Distributors would also invest themselves)

1048766 Ice cream factory with a floor size of 20000 sqft would cost BDT 25 crores

1048766 Objective is to capture 10 market share in Dhaka and Chittagong in the first year

1048766 Business would grow by 50 in year 2 and 3 30 in year 4 and 25 in year 5

1048766 Weighted price per litre is BDT 170 according to volume share of single serve ice cream

multiple serve ice cream and boutique ice cream

1048766 Other financial assumptions were also made List of them are provided below but amount has

been removed for confidentiality issues

Assumptions

Trade Margin

Distributors Margin

DutyVAT Rate

Trade Terms Expense of NPS

Trade Terms Expense of NSV

Advertising ampPromotion of NPS

Indirects (Salaries Wages etc)

Trading Tax

Table 31 Assumptions for Business Projection

Evaluation of Entry into Ice cream Business for Bangladesh Limited 57

100 CONCLUSION

Ice cream has good prospect in Bangladesh It is still a growing market with opportunities for big

new entrants With the barriers of entry UBL needs to consider its priorities UBL being an HPC

company traditionally needs to acquire expertise in cold chain distribution and has to invest a lot

of money to rip the benefits of the industry However to initiate company can take regional

support and acquire resource expertise The company should enter the business as soon as

possible since there is potential threat from DANONE to introduce more ice creams after ISIS

diabetic ice cream and also with potential of the industry arch rival Nestlersquo might consider

entering into the industry too

Evaluation of Entry into Ice cream Business for Bangladesh Limited 58

References

Web References

1 wwwunilevercom

2 wwwunilevercombd

3 wwwhllcom

4 wwwunilevercompk

5 wwwthedailystarcom - Life Style Magazine

6 wwwreuterscouk

Evaluation of Entry into Ice cream Business for Bangladesh Limited 59

Page 50: Square Ice cream

Another unique target group for boutique format are the foreigners who live in Bangladesh

These people tend to visit the parlours to have ice cream as dessert especially after dinner

62 Ice cream in Consumer Lifestyle

Figure 12 Ice cream in Consumer Life style

This simple overview of ice cream in consumer lifestyle was determined based on in-depth

research analysis of UBL and validated through qualitative group discussions by the author

However detail of in-depth research is provided in a later section of this chapter

Evaluation of Entry into Ice cream Business for Bangladesh Limited 43

63 Highlights of Purchase Habit of Ice cream

631 Common Habits across Target Groups

There are some common habits that were identified in earlier researches and group discussions

with consumers Common habits mean the consumer approach towards ice cream that is seen

across all target groups eg kids youth and adult purchasers These are outlined below

1048766 Ice cream is mainly seen as a dessert or a snack Impulse ice cream is seen as a quick snack

that is consumed when it is in sight Visibility plays a big role here Regarding family packs

people see it as a post-food dessert

1048766 Ice cream purchase is commonly a planned event When the contexts arise people generally

take a bit of time to decide whether or not to have ice cream or when they want to go to a

boutique they make due considerations regarding which boutique to visit

1048766 Ice cream purchase decision is taken based on favourite flavour People tend to try out new

variants and flavours when they first see it They compare the taste with earlier experience and

when they purchase later they choose the flavour they have liked most

1048766 For In-Home segment decision is mostly taken on the flavour Generally people come up with

different flavours of choice and most voted flavour is chosen

1048766 People become aware of new variants or flavours mainly through word-of-mouth

Advertisement (new launches special offers and festivals) in newspaper is another source of

awareness

1048766 People are currently indifferent towards the price level of premium flavours However some

feel that price of Choc-bar or water ice creams (lolly) is a bit much If less they would have

consumed more Some also feel that companies should come up with branded ice cream in the

price range of BDT 5-8

1048766 Ice cream is purchased from nearby shops If required brand and flavour is not available 2-3

shops will be visited and then available flavour will be selected even if the required one is not

found This is done mainly not to ruin the mood for ice cream

1048766 People are very open to try new brands and flavours especially if it comes from a credible

source They would try new flavours and if they are satisfied with the taste they would repeat

purchase

1048766 Regarding boutique visits people feel that boutiques need to have a proper environment

enough flavours and other snacks

1048766 While visiting boutique with family or companion they want variation in flavours so that

they would order different flavours and taste each otherrsquos ice cream It is seen as a sign of

togetherness

1048766 Frequency of ice cream purchase varies among people It depends on peer pressure collective

family decision summer heat and attitude towards ldquoice creamrdquo itself as a product Evaluation of

Entry into Ice cream Business for Bangladesh Limited 44

632 Habits of Kids

1048766 Kids choose ice cream flavours by the look of the product (generally pictures shown in POS

materials and carts) They love colour and designs of the products let it be a common format or a

boutique ice cream

1048766 Kids (when in house) would go with the housemaid to the nearby shop choose the flavour

they want (within range of the amount given to the maid) and buy it

1048766 When with parents they would take the product they like even if the price is lower than some

other product However mothers play a role in this decision They would want their children not

to choose too high priced a product or coloured products

633 Habits of Youth

1048766 Young people are the main consumer of impulse ice cream They also are one of the major

consumers in the boutique segment

1048766 Young people love to try out new products that come into the market Another side of the coin

is that they are not very loyal to a brand or a flavour and tend to switch a lot

1048766 Regarding boutique visits young people go to boutiques to have an ldquoice cream hang outrdquo with

peer groups They would stay there for a longer period of time while they have their ice cream

1048766 Some times young people make milk shakes and other ice cream based desserts

634 Habits of Mothers

1048766 Mothers worry about their childrenrsquos health and they prefer ldquovanillardquo type of brands

However when price constraint occurs they go for water ice creams for their children They try

to convince their kidrsquos purchase decision

1048766 Regarding family purchase motherrsquos decision is sometimes prioritized by the whole family

64 Barriers to Ice cream Consumption

641 Emotional Barriers

1048766 Overindulge (close to sinful)

1048766 Undisciplined (no control)

1048766 Childish (licking)

1048766 Artificial Image

642 Functional Barriers

1048766 People of SEC B feel that ice cream is an expensive dessert (If less expensive would consume

more often)

1048766 It leads to cold cough - especially in winter rainy season

1048766 It contains artificial additives preservatives

1048766 It is very high in calories that lead to fattening

Evaluation of Entry into Ice cream Business for Bangladesh Limited 45

1048766 It does not quench ldquothirstrdquo

1048766 Less convenient (portable immediate eat)

1048766 Messy Dripping

65 Research Findings

The highlights regarding purchase habits triggers and barriers of ice cream consumption provide

a glimpse into the consumer world of ice cream industry However UBL CMI conducted a

formal research exclusively on ice cream consumers to identify

1048766 Occasions of ice cream

1048766 Frequency of ice cream consumption

1048766 Expectations from ice cream occasions

1048766 Personalities that they desire from ice cream

651 Relevant Occasions in Daily Lives of Consumers

Research question regarding ldquousual occasions of life that occurred most frequently in day-to-day

lives of the respondentsrdquo generated the following replies

Occasion

of Respondents saying Yes

Watching TV

93

Normal Dinner At Home

91

Normal Lunch At Home

89

At Home While ReadingMusicSurfing

86

Informal Family Get Together

85

Out Of Home Hanging Out With Friends

84

Out Shopping

84

Mid-Afternoon Break At Home

83

At Home By Myself During The Day

82

Special Dinner At Home

82

Informal Dinner Out Of Home

82

Normal Lunch Out Of Home

82

Leisure Walk

79

Coming Home From WorkSchool

78

Special Dinner Out Of Home

78

Celebration

78

A Night In With Friends

77

At Home By Myself In The Evening

77

Special Lunch Out Of Home

76

Mid-Afternoon Break Out Of Home

75

Special Lunch At Home

73

Day out with Partner

72

Midmorning Break

70

At Breakfast

68

Family Day Out

68

During Work Or At School

65

Evaluation of Entry into Ice cream Business for Bangladesh Limited 46

Travelling ToFrom WorkSchool

65

At The Cinema

61

Special Event

56

Clubbing At A Party

50

Post GymSports

48

Table 28 Relevant Occasions in Consumersrsquo Lives

Respondents were then asked to mention ldquofrequency of occurrence of the identified occasionsrdquo

The identified replies are as follows Normal dinner at homenormal lunch at homeComing home

from workschoolTraveling tofrom workschoolDay out with Partner SpouseMid-afternoon

break at homeOut of home hanging out with friendsLeisure walkMid-afternoon break out of

homeA night in with friendsSpecial dinner at homeSpecial lunch out of homeFamily day

outSpecial eventPost gymsportsDaily2-3 Times A WeekWeekly2-3 Times A MonthOnce A

MonthEvery 2-3 MonthsLess OftenNever Figure 13 Frequency of Occurrence of Occasions

This shows that ldquoNormal dinner at home Watching TV Normal Lunch At Home At Home

While ReadingMusicSurfing Coming Home From WorkSchool During Work Or At School

Travelling ToFrom WorkSchool Midmorning Break Day Out With Partner Spouse At Home

By Myself During The Dayrdquo are the most frequent daily rituals of busy lives of consumers

652 Frequency of Ice cream Consumption

Respondents were asked to mention ldquoconsumption pattern of ice cream during the identified

occasionrdquo on a scale of 1-5 depicting frequencies like ldquo(5) always (4) most of the times (3)

about half of the times (2) sometimes (1) never do not knowrdquo The responses are depicted in

the following table

Evaluation of Entry into Ice cream Business for Bangladesh Limited 47

444474544655555566756665775967779991011101111101210111110101113111412131314161

011121411131216181519181518211817171719181718201721222130303434253437403741394

046383944464746453745414641374638504843414839373030292726232725222020201926202

21722221317Midmorning

breakWhile clubbing at aAt the cinemaSpecial eventNormal lunch out ofA night in with

friendsNormal dinner atInformal dinner out ofAt home by myselfAt home by myself inOut

shoppingSpecial lunch atDay out with SpouseWatching TVAlwaysmost of the timesAbout half

of the timesSometimesneverdo not know

Figure 14 Frequency of Ice cream Consumption

As it can be seen ldquoDay out with Spouse Special lunch at home Special dinner at home

Watching TV Family day out Celebrationrdquo are the occasions where most frequently ice cream is

consumed

653 Market Character Mapping Relevant Occasions vs Frequency of Consumption

If we plot frequency of consumption on the X-axis of a chart and relevance of occasion

occurrence on the Y-axis taking the above mentioned values as cut-off values we get four

quadrants in the chart depicting four market scenarios that any ice cream manufacturer in

Bangladesh market might encounter given the current market situation This market

segmentation is based on frequency of ice cream consumption in daily occasions of consumer

lives

The segments are

1048766 OPPORTUNITY MARKET High Relevant Occasions-Low Ice cream Frequency

1048766 QUESTION MARKET Less Relevant Occasions-Low Ice cream Frequency

1048766 HIGH FREQUENCY MARKET Relevant Occasions-High Ice cream Frequency

1048766 CAPTIVE MARKET Less Relevant Occasions-High Ice cream Frequency

The chart looks as follows Evaluation of Entry into Ice cream Business for Bangladesh Limited

48

Figure 15 Relevance of Occasion-Frequency of Consumption Mapping

As it can be seen from the above chart Bangladesh Market still lies in the Opportunity and

Question market zone with a pull towards High frequency and Captive Market zones This is

evident from market data as penetration of ice cream still remains at Thana headquarters levels

Also this explains the high market growth rate of 17 as market is yet under developed and

branded quality ice cream has yet not reached all levels of consumers especially rural level that

constitutes around 75 of Bangladeshi market

From the above analysis we can establish that target of ice cream manufacturers should be to

penetrate more into the Bangladeshi market to create higher frequency of ice cream

consumption The following chart shows the strategies to follow for ice cream manufacturers

Figure 16 Required Market Strategy for Bangladesh

Evaluation of Entry into Ice cream Business for Bangladesh Limited 49

As relevance of ice cream consumption occasions can hardly be controlled by marketers their

endeavour should be to create more ldquoemotional and functionalrdquo attachment to ice cream in less

frequent occasions through ldquomarket developmentrdquo strategy to earn share from overall food

expenditure of consumers and at the same time make them consume more ice cream in highly

relevant occasions through ldquopenetrationrdquo strategy

654 Consumersrsquo Emotional Requirements and Product Attributes

All consumers under these clusters also identify the emotional requirements and the significant

product attributes they seek from their current preferred and future desired ice creams These are

provided below

Cluster

Emotional Functional Requirement

Product Attributes

Enjoyment

Flavour Variety

1048766 Combination of different flavours

1048766 Combination of different textures

1048766 Very sweet

1048766 With wafer or biscuit

1048766 With chocolate

1048766 Of a well known brand

Socially Involved

Spoonable Rich

1048766 Very creamy

1048766 Only natural ingredients

1048766 No mess

Care

Size Creaminess

1048766 Big

1048766 Rich full taste

1048766 Smooth

1048766 Value for money

1048766 No mess

Unwind amp Escape

Economy

1048766 Crunchy

1048766 Economic

1048766 Of a well known brand

1048766 Nutritious

Balanced Convenience

Health Conscious

1048766 Of a well known brand

1048766 Nutritious

1048766 Milk based

1048766 Low sugar

1048766 Low carbohydrates

1048766 Filling

Active Self-Grooming

Fruit Vitamins

1048766 Healthy

1048766 Fruit based

1048766 Low fat

1048766 Liquid or drinkable

1048766 Nutritious

1048766 Of a well known brand

Confidence

Drinkable Light

1048766 Low calories

1048766 Light on the stomach

1048766 Chewy or gooey

1048766 Not so sweet

1048766 Natural appearance

Sensual

Appeal or image

1048766 No artificial additives

Evaluation of Entry into Ice cream Business for Bangladesh Limited 50

1048766 Natural appearance

1048766 Melting slowly

1048766 Attractive packaging

1048766 High quality ingredients

1048766 Of a well known brand

Table 29 Requirements amp Product Attributes Desired by Consumer Clusters

Of these findings we see that the identified highlighted barriers to ice cream consumption are

pretty evident among the consumers Mostly people want products of a reliable source or a well

known brand low calories quality ingredients value for money economic type

Evaluation of Entry into Ice cream Business for Bangladesh Limited 51

70 INDUSTRY ATTRACTIVENESS AND ENTRY PROSPECTS

71 Driving Forces of Growth

As identified in the earlier sections there are several driving forces behind the growth of ice-

cream industry in Bangladesh

712 Trade and Infrastructural Level

1048766 As a result of globalization newer varieties have been introduced to the local products Many

foreign companies are also coming as franchise so there has been increased competition and

these boutiques are setting higher standards for the local producers

1048766 The present market growth rate is 18-19 which is being influenced by larger players like

Igloo who are expanding their distribution nation wide with expansion of national electricity

grid

1048766 With entry of Modern Trade and recent organized business approach of retailers has made it

possible for ice cream manufacturers to penetrate into shops even without providing them with

branded freezers

1048766 Weather change has increased ldquosummerrdquo season in our country which has reduced negative

seasonal impact on ice cream

1048766 Large companies like Igloo have taken global learning of using carts as an effective tool of

availability and visibility for ice cream

1048766 New and improved technologies are being used in the production process This technological

advancement has improved quality increased speed of production and made the process more

cost effective

713 Consumer Level

1048766 Only a few years back rich people could afford the luxury of having ice-cream but now it has

become a common product for everybody Ice-cream companies are producing different products

with a wide price range for consumers of every class and status

1048766 Nowadays companies are doing promotional campaigns more frequently the customers get to

know about the product which makes it easier for them to buy the best one

1048766 The improved standard of life and more modernized lifestyle of people is an important reason

for the increased consumption thus growth of the ice-cream industry

Evaluation of Entry into Ice cream Business for Bangladesh Limited 52

72 Prospects of Entry

The ice-cream industry of Bangladesh is an attractive one for the investors because there is a

huge market but number of producers is very small The major reasons behind industry

attractiveness are as follows

1048766 The industryrsquos current growth potential is very high with opportunity for market development

1048766 The competition currently permits adequate profitability and the competitive forces are

becoming stronger with time

1048766 Boutique segment is at a very high growth stage but no operator is currently operating with a

mid price range of BDT 100-400 Ice cream kiosks and small scooping boutiques can operate

within that range

1048766 Current industry driving forces are favourable for the future industry profitability

1048766 Globally oriented consumers look for variety in ice cream that is currently not available

Latest innovations came in the market in 2002 People would welcome new variety and flavours

1048766 There is a gap in the market for balanced convenience through ice cream where consumers can

get nutritional benefits for ice cream Also emotional attachment to ice cream could further be

improvised in promotional campaigns

1048766 There is high scope for market penetration and development to increase frequency of ice

cream consumption

1048766 Level of risk or uncertainty is very low in ice-cream industry because the consumer market is

so huge any product with a standard quality and careful pricing will be able to make significant

profit

1048766 As for geographic reach of the industry 60 market is still in Dhaka There is scope of

expansion and a new entrant can easily capture market share within Dhaka using carts even if

they do not want nation wide cold chain distribution

1048766 The production process is very complex and capital requirements are also high So before

going into production any company should know about their capabilities and weaknesses and

then start the business or else they might suffer huge loss at a certain level

1048766 Unilever can acquire the required resource and use existing multi-national multi-cultural

expertise to enter the market in a grand way

1048766 With high probability of entry from DANONE with more products like the ISIS diabetic ice

cream Unilever should consider entering in this industry as soon as possible

Evaluation of Entry into Ice cream Business for Bangladesh Limited 53

80 ENTRY STRATEGY FOR UNILEVER

While describing the suggested entry strategy for UBL certain issues have been kept

confidential and some issues have been touched but not explained to keep consistency with UBL

confidentiality policy

81 Suggested Entry Areas for UBL

1048766 Boutique segment of the Bangladesh ice cream is only 5 of the branded market UBL needs

to pursue a larger scope to make the entry viable

1048766 UBL cannot fight with unbranded segment as global product quality mandate of Unilever does

not allow UBL to fight in low price-low quality segment

1048766 Recommend entry should be in the common format segment with both single and multiple

servings and in the boutique segment with a different brand name (if possible BEN amp JERRYrsquoS)

1048766 UBL should build up state-of-art modern factory for manufacturing and establish cold chain

facilities initially focusing on metro cities

1048766 Investment issues are required to be addressed for building factory and cold chain and capital

requirement needs to be identified for that purpose4

1048766 UBL may have boutiques for driving image selective top-end offering

1048766 Kiosks can be setup near universities and shopping malls

1048766 Boutiques should be concentrated in Dhaka and Chittagong

1048766 Ice cream for boutiques and kiosks would be produced in factory as institutional packs of 9-10

litres

82 Products

1048766 As a Brand Building country in global Unilever operating framework UBL is entitled only to

bring products developed by the Brand Development countries

1048766 Unilever should focus on serving products that have nutritional benefits (already available

globally) along with usual satisfactions of sensual pleasure functional attributes etc

1048766 Current existent players especially Igloo and Kwality have extensively copied global and

regionally available Unilever products eg Cornelli is same as Wallrsquos Cornetto Vinetta is similar

to Vienetta Mega is similar to Magnum etc UBL needs to differentiate these to consumers on

the ldquotaste the originalrdquo platform where global quality is focused regarding the products

1048766 UBL should also bring regionally famous brands like Moo or Max to create image

differentiation

1048766 Magnum or Moo should be used as premium end ice cream to generate more profit margin

Evaluation of Entry into Ice cream Business for Bangladesh Limited 54

83 Placement

1048766 Distribution focus should be in Dhaka for entry as Dhaka contributes more than 60 of total

ice cream sales in the country

1048766 Company may use carts as distribution method They serve as good source of visibility and

availability It would help in increasing impulse purchase

1048766 At least 1500 outlets in Dhaka and Chittagong needs to be actively served using dedicated

branded refrigerators to generate sales

1048766 50 carts should operate in Dhaka and Chittagong

84 Price

1048766 UBL products should be priced at par with Igloo pricing for the common format ice creams

1048766 UBL can bring in premium single-serve SKUS for the higher economic classes in the price

range of BDT 60-80

1048766 Smaller SKUs (small lolly stick) can be introduced in the price range of BDT 10-15

1048766 In the boutique segment UBL should price products above the semi-premium segment

(Gelateria Igloo Sub Zero or Andersenrsquos) but lower than that of Club Gelato or MoumlvenPick

85 Promotion

1048766 UBL would require strong marketing campaign (As high as 50 of sales) to have a grand

entry in the market

1048766 Presence in the television media would be of utmost importance More than 50 of

promotional expense should be made here initially Gradually it can be reduced

1048766 Newspaper would serve as the second most important option

1048766 Billboards should also be used

1048766 Activations (similar to Lux Channel i Super Star or Igloo Festival) should be done to generate

trial

86 Scope of Opportunity

Table 30 Value and Volume Based Scope of Opportunity for UBL

Value (BDT Cr)

Volume (Tons)

Market

131

7835

Common

121

7600

Boutique

98

235

Evaluation of Entry into Ice cream Business for Bangladesh Limited 55

861 Geographic Contribution

1048766 Dhaka (61)

1048766 Chittagong (19)

1048766 Sylhet (10)

862 UBL objectives

Common Format Ice Creams

1048766 Target 10 Market share in 1st year operation

1048766 Value BDT 11 Cr

1048766 Production capacity required 21 Tons day

1048766 Freezer Placement 1500 freezers

1048766 Cart operation At least 50 carts

Boutiques

1048766 Target Further develop the market

1048766 Focus Dhaka Chittagong and Sylhet Metro

1048766 Franchise At least 20 franchisee operations nation wide in divisional towns

1048766 Pricing Below imported parlours above common formats with around BDT 400 per Litre

87 Critical Success Factors

1048766 UBL is considered as a high profile company in Bangladesh and thus they cannot operate in

the market only with common products like choc-bars and cups They must have premium

products (these require extrusion line) also to carry their brand image Otherwise UBL would not

be able to charge usual premium over competition products

1048766 Launch of ice cream would require huge promotional and activation support in order to gain

customers from Igloo People want novelty regarding ice cream and UBL have to let them know

about their products and create hype

1048766 Cart should be used as a source of distribution Recent successes of Unilever companies like

Indonesia shows that carts can generate more sales and can be used as source of visibility in the

minds of both retail traders and consumers Carts can also provide incremental sales to the

company

1048766 UBL have to create a strong cold chain for ice cream (initially in Dhaka and Chittagong) to

ensure quality products for consumers

1048766 UBL have to build capacity very rapidly to meet consumer demand if the launch is successful

Evaluation of Entry into Ice cream Business for Bangladesh Limited 56

90 BUSINESS PROJECTION

91 Basic Assumptions

Business projection for ice cream business was made based on a conservative approach UBL

would require spending significantly on production capacity and factory dedicated to ice cream

Thus to analyse business possibilities of ice cream certain assumptions were made and collected

data were used These are

1048766 Production equipments and cabinets would cost approximately BDT 55 crores

1048766 Production equipments 45

1048766 Packaging Equipments 15

1048766 Storage Facility 20

1048766 Branded Freezers 10

1048766 Distribution Investment 10 (Distributors would also invest themselves)

1048766 Ice cream factory with a floor size of 20000 sqft would cost BDT 25 crores

1048766 Objective is to capture 10 market share in Dhaka and Chittagong in the first year

1048766 Business would grow by 50 in year 2 and 3 30 in year 4 and 25 in year 5

1048766 Weighted price per litre is BDT 170 according to volume share of single serve ice cream

multiple serve ice cream and boutique ice cream

1048766 Other financial assumptions were also made List of them are provided below but amount has

been removed for confidentiality issues

Assumptions

Trade Margin

Distributors Margin

DutyVAT Rate

Trade Terms Expense of NPS

Trade Terms Expense of NSV

Advertising ampPromotion of NPS

Indirects (Salaries Wages etc)

Trading Tax

Table 31 Assumptions for Business Projection

Evaluation of Entry into Ice cream Business for Bangladesh Limited 57

100 CONCLUSION

Ice cream has good prospect in Bangladesh It is still a growing market with opportunities for big

new entrants With the barriers of entry UBL needs to consider its priorities UBL being an HPC

company traditionally needs to acquire expertise in cold chain distribution and has to invest a lot

of money to rip the benefits of the industry However to initiate company can take regional

support and acquire resource expertise The company should enter the business as soon as

possible since there is potential threat from DANONE to introduce more ice creams after ISIS

diabetic ice cream and also with potential of the industry arch rival Nestlersquo might consider

entering into the industry too

Evaluation of Entry into Ice cream Business for Bangladesh Limited 58

References

Web References

1 wwwunilevercom

2 wwwunilevercombd

3 wwwhllcom

4 wwwunilevercompk

5 wwwthedailystarcom - Life Style Magazine

6 wwwreuterscouk

Evaluation of Entry into Ice cream Business for Bangladesh Limited 59

Page 51: Square Ice cream

1048766 People become aware of new variants or flavours mainly through word-of-mouth

Advertisement (new launches special offers and festivals) in newspaper is another source of

awareness

1048766 People are currently indifferent towards the price level of premium flavours However some

feel that price of Choc-bar or water ice creams (lolly) is a bit much If less they would have

consumed more Some also feel that companies should come up with branded ice cream in the

price range of BDT 5-8

1048766 Ice cream is purchased from nearby shops If required brand and flavour is not available 2-3

shops will be visited and then available flavour will be selected even if the required one is not

found This is done mainly not to ruin the mood for ice cream

1048766 People are very open to try new brands and flavours especially if it comes from a credible

source They would try new flavours and if they are satisfied with the taste they would repeat

purchase

1048766 Regarding boutique visits people feel that boutiques need to have a proper environment

enough flavours and other snacks

1048766 While visiting boutique with family or companion they want variation in flavours so that

they would order different flavours and taste each otherrsquos ice cream It is seen as a sign of

togetherness

1048766 Frequency of ice cream purchase varies among people It depends on peer pressure collective

family decision summer heat and attitude towards ldquoice creamrdquo itself as a product Evaluation of

Entry into Ice cream Business for Bangladesh Limited 44

632 Habits of Kids

1048766 Kids choose ice cream flavours by the look of the product (generally pictures shown in POS

materials and carts) They love colour and designs of the products let it be a common format or a

boutique ice cream

1048766 Kids (when in house) would go with the housemaid to the nearby shop choose the flavour

they want (within range of the amount given to the maid) and buy it

1048766 When with parents they would take the product they like even if the price is lower than some

other product However mothers play a role in this decision They would want their children not

to choose too high priced a product or coloured products

633 Habits of Youth

1048766 Young people are the main consumer of impulse ice cream They also are one of the major

consumers in the boutique segment

1048766 Young people love to try out new products that come into the market Another side of the coin

is that they are not very loyal to a brand or a flavour and tend to switch a lot

1048766 Regarding boutique visits young people go to boutiques to have an ldquoice cream hang outrdquo with

peer groups They would stay there for a longer period of time while they have their ice cream

1048766 Some times young people make milk shakes and other ice cream based desserts

634 Habits of Mothers

1048766 Mothers worry about their childrenrsquos health and they prefer ldquovanillardquo type of brands

However when price constraint occurs they go for water ice creams for their children They try

to convince their kidrsquos purchase decision

1048766 Regarding family purchase motherrsquos decision is sometimes prioritized by the whole family

64 Barriers to Ice cream Consumption

641 Emotional Barriers

1048766 Overindulge (close to sinful)

1048766 Undisciplined (no control)

1048766 Childish (licking)

1048766 Artificial Image

642 Functional Barriers

1048766 People of SEC B feel that ice cream is an expensive dessert (If less expensive would consume

more often)

1048766 It leads to cold cough - especially in winter rainy season

1048766 It contains artificial additives preservatives

1048766 It is very high in calories that lead to fattening

Evaluation of Entry into Ice cream Business for Bangladesh Limited 45

1048766 It does not quench ldquothirstrdquo

1048766 Less convenient (portable immediate eat)

1048766 Messy Dripping

65 Research Findings

The highlights regarding purchase habits triggers and barriers of ice cream consumption provide

a glimpse into the consumer world of ice cream industry However UBL CMI conducted a

formal research exclusively on ice cream consumers to identify

1048766 Occasions of ice cream

1048766 Frequency of ice cream consumption

1048766 Expectations from ice cream occasions

1048766 Personalities that they desire from ice cream

651 Relevant Occasions in Daily Lives of Consumers

Research question regarding ldquousual occasions of life that occurred most frequently in day-to-day

lives of the respondentsrdquo generated the following replies

Occasion

of Respondents saying Yes

Watching TV

93

Normal Dinner At Home

91

Normal Lunch At Home

89

At Home While ReadingMusicSurfing

86

Informal Family Get Together

85

Out Of Home Hanging Out With Friends

84

Out Shopping

84

Mid-Afternoon Break At Home

83

At Home By Myself During The Day

82

Special Dinner At Home

82

Informal Dinner Out Of Home

82

Normal Lunch Out Of Home

82

Leisure Walk

79

Coming Home From WorkSchool

78

Special Dinner Out Of Home

78

Celebration

78

A Night In With Friends

77

At Home By Myself In The Evening

77

Special Lunch Out Of Home

76

Mid-Afternoon Break Out Of Home

75

Special Lunch At Home

73

Day out with Partner

72

Midmorning Break

70

At Breakfast

68

Family Day Out

68

During Work Or At School

65

Evaluation of Entry into Ice cream Business for Bangladesh Limited 46

Travelling ToFrom WorkSchool

65

At The Cinema

61

Special Event

56

Clubbing At A Party

50

Post GymSports

48

Table 28 Relevant Occasions in Consumersrsquo Lives

Respondents were then asked to mention ldquofrequency of occurrence of the identified occasionsrdquo

The identified replies are as follows Normal dinner at homenormal lunch at homeComing home

from workschoolTraveling tofrom workschoolDay out with Partner SpouseMid-afternoon

break at homeOut of home hanging out with friendsLeisure walkMid-afternoon break out of

homeA night in with friendsSpecial dinner at homeSpecial lunch out of homeFamily day

outSpecial eventPost gymsportsDaily2-3 Times A WeekWeekly2-3 Times A MonthOnce A

MonthEvery 2-3 MonthsLess OftenNever Figure 13 Frequency of Occurrence of Occasions

This shows that ldquoNormal dinner at home Watching TV Normal Lunch At Home At Home

While ReadingMusicSurfing Coming Home From WorkSchool During Work Or At School

Travelling ToFrom WorkSchool Midmorning Break Day Out With Partner Spouse At Home

By Myself During The Dayrdquo are the most frequent daily rituals of busy lives of consumers

652 Frequency of Ice cream Consumption

Respondents were asked to mention ldquoconsumption pattern of ice cream during the identified

occasionrdquo on a scale of 1-5 depicting frequencies like ldquo(5) always (4) most of the times (3)

about half of the times (2) sometimes (1) never do not knowrdquo The responses are depicted in

the following table

Evaluation of Entry into Ice cream Business for Bangladesh Limited 47

444474544655555566756665775967779991011101111101210111110101113111412131314161

011121411131216181519181518211817171719181718201721222130303434253437403741394

046383944464746453745414641374638504843414839373030292726232725222020201926202

21722221317Midmorning

breakWhile clubbing at aAt the cinemaSpecial eventNormal lunch out ofA night in with

friendsNormal dinner atInformal dinner out ofAt home by myselfAt home by myself inOut

shoppingSpecial lunch atDay out with SpouseWatching TVAlwaysmost of the timesAbout half

of the timesSometimesneverdo not know

Figure 14 Frequency of Ice cream Consumption

As it can be seen ldquoDay out with Spouse Special lunch at home Special dinner at home

Watching TV Family day out Celebrationrdquo are the occasions where most frequently ice cream is

consumed

653 Market Character Mapping Relevant Occasions vs Frequency of Consumption

If we plot frequency of consumption on the X-axis of a chart and relevance of occasion

occurrence on the Y-axis taking the above mentioned values as cut-off values we get four

quadrants in the chart depicting four market scenarios that any ice cream manufacturer in

Bangladesh market might encounter given the current market situation This market

segmentation is based on frequency of ice cream consumption in daily occasions of consumer

lives

The segments are

1048766 OPPORTUNITY MARKET High Relevant Occasions-Low Ice cream Frequency

1048766 QUESTION MARKET Less Relevant Occasions-Low Ice cream Frequency

1048766 HIGH FREQUENCY MARKET Relevant Occasions-High Ice cream Frequency

1048766 CAPTIVE MARKET Less Relevant Occasions-High Ice cream Frequency

The chart looks as follows Evaluation of Entry into Ice cream Business for Bangladesh Limited

48

Figure 15 Relevance of Occasion-Frequency of Consumption Mapping

As it can be seen from the above chart Bangladesh Market still lies in the Opportunity and

Question market zone with a pull towards High frequency and Captive Market zones This is

evident from market data as penetration of ice cream still remains at Thana headquarters levels

Also this explains the high market growth rate of 17 as market is yet under developed and

branded quality ice cream has yet not reached all levels of consumers especially rural level that

constitutes around 75 of Bangladeshi market

From the above analysis we can establish that target of ice cream manufacturers should be to

penetrate more into the Bangladeshi market to create higher frequency of ice cream

consumption The following chart shows the strategies to follow for ice cream manufacturers

Figure 16 Required Market Strategy for Bangladesh

Evaluation of Entry into Ice cream Business for Bangladesh Limited 49

As relevance of ice cream consumption occasions can hardly be controlled by marketers their

endeavour should be to create more ldquoemotional and functionalrdquo attachment to ice cream in less

frequent occasions through ldquomarket developmentrdquo strategy to earn share from overall food

expenditure of consumers and at the same time make them consume more ice cream in highly

relevant occasions through ldquopenetrationrdquo strategy

654 Consumersrsquo Emotional Requirements and Product Attributes

All consumers under these clusters also identify the emotional requirements and the significant

product attributes they seek from their current preferred and future desired ice creams These are

provided below

Cluster

Emotional Functional Requirement

Product Attributes

Enjoyment

Flavour Variety

1048766 Combination of different flavours

1048766 Combination of different textures

1048766 Very sweet

1048766 With wafer or biscuit

1048766 With chocolate

1048766 Of a well known brand

Socially Involved

Spoonable Rich

1048766 Very creamy

1048766 Only natural ingredients

1048766 No mess

Care

Size Creaminess

1048766 Big

1048766 Rich full taste

1048766 Smooth

1048766 Value for money

1048766 No mess

Unwind amp Escape

Economy

1048766 Crunchy

1048766 Economic

1048766 Of a well known brand

1048766 Nutritious

Balanced Convenience

Health Conscious

1048766 Of a well known brand

1048766 Nutritious

1048766 Milk based

1048766 Low sugar

1048766 Low carbohydrates

1048766 Filling

Active Self-Grooming

Fruit Vitamins

1048766 Healthy

1048766 Fruit based

1048766 Low fat

1048766 Liquid or drinkable

1048766 Nutritious

1048766 Of a well known brand

Confidence

Drinkable Light

1048766 Low calories

1048766 Light on the stomach

1048766 Chewy or gooey

1048766 Not so sweet

1048766 Natural appearance

Sensual

Appeal or image

1048766 No artificial additives

Evaluation of Entry into Ice cream Business for Bangladesh Limited 50

1048766 Natural appearance

1048766 Melting slowly

1048766 Attractive packaging

1048766 High quality ingredients

1048766 Of a well known brand

Table 29 Requirements amp Product Attributes Desired by Consumer Clusters

Of these findings we see that the identified highlighted barriers to ice cream consumption are

pretty evident among the consumers Mostly people want products of a reliable source or a well

known brand low calories quality ingredients value for money economic type

Evaluation of Entry into Ice cream Business for Bangladesh Limited 51

70 INDUSTRY ATTRACTIVENESS AND ENTRY PROSPECTS

71 Driving Forces of Growth

As identified in the earlier sections there are several driving forces behind the growth of ice-

cream industry in Bangladesh

712 Trade and Infrastructural Level

1048766 As a result of globalization newer varieties have been introduced to the local products Many

foreign companies are also coming as franchise so there has been increased competition and

these boutiques are setting higher standards for the local producers

1048766 The present market growth rate is 18-19 which is being influenced by larger players like

Igloo who are expanding their distribution nation wide with expansion of national electricity

grid

1048766 With entry of Modern Trade and recent organized business approach of retailers has made it

possible for ice cream manufacturers to penetrate into shops even without providing them with

branded freezers

1048766 Weather change has increased ldquosummerrdquo season in our country which has reduced negative

seasonal impact on ice cream

1048766 Large companies like Igloo have taken global learning of using carts as an effective tool of

availability and visibility for ice cream

1048766 New and improved technologies are being used in the production process This technological

advancement has improved quality increased speed of production and made the process more

cost effective

713 Consumer Level

1048766 Only a few years back rich people could afford the luxury of having ice-cream but now it has

become a common product for everybody Ice-cream companies are producing different products

with a wide price range for consumers of every class and status

1048766 Nowadays companies are doing promotional campaigns more frequently the customers get to

know about the product which makes it easier for them to buy the best one

1048766 The improved standard of life and more modernized lifestyle of people is an important reason

for the increased consumption thus growth of the ice-cream industry

Evaluation of Entry into Ice cream Business for Bangladesh Limited 52

72 Prospects of Entry

The ice-cream industry of Bangladesh is an attractive one for the investors because there is a

huge market but number of producers is very small The major reasons behind industry

attractiveness are as follows

1048766 The industryrsquos current growth potential is very high with opportunity for market development

1048766 The competition currently permits adequate profitability and the competitive forces are

becoming stronger with time

1048766 Boutique segment is at a very high growth stage but no operator is currently operating with a

mid price range of BDT 100-400 Ice cream kiosks and small scooping boutiques can operate

within that range

1048766 Current industry driving forces are favourable for the future industry profitability

1048766 Globally oriented consumers look for variety in ice cream that is currently not available

Latest innovations came in the market in 2002 People would welcome new variety and flavours

1048766 There is a gap in the market for balanced convenience through ice cream where consumers can

get nutritional benefits for ice cream Also emotional attachment to ice cream could further be

improvised in promotional campaigns

1048766 There is high scope for market penetration and development to increase frequency of ice

cream consumption

1048766 Level of risk or uncertainty is very low in ice-cream industry because the consumer market is

so huge any product with a standard quality and careful pricing will be able to make significant

profit

1048766 As for geographic reach of the industry 60 market is still in Dhaka There is scope of

expansion and a new entrant can easily capture market share within Dhaka using carts even if

they do not want nation wide cold chain distribution

1048766 The production process is very complex and capital requirements are also high So before

going into production any company should know about their capabilities and weaknesses and

then start the business or else they might suffer huge loss at a certain level

1048766 Unilever can acquire the required resource and use existing multi-national multi-cultural

expertise to enter the market in a grand way

1048766 With high probability of entry from DANONE with more products like the ISIS diabetic ice

cream Unilever should consider entering in this industry as soon as possible

Evaluation of Entry into Ice cream Business for Bangladesh Limited 53

80 ENTRY STRATEGY FOR UNILEVER

While describing the suggested entry strategy for UBL certain issues have been kept

confidential and some issues have been touched but not explained to keep consistency with UBL

confidentiality policy

81 Suggested Entry Areas for UBL

1048766 Boutique segment of the Bangladesh ice cream is only 5 of the branded market UBL needs

to pursue a larger scope to make the entry viable

1048766 UBL cannot fight with unbranded segment as global product quality mandate of Unilever does

not allow UBL to fight in low price-low quality segment

1048766 Recommend entry should be in the common format segment with both single and multiple

servings and in the boutique segment with a different brand name (if possible BEN amp JERRYrsquoS)

1048766 UBL should build up state-of-art modern factory for manufacturing and establish cold chain

facilities initially focusing on metro cities

1048766 Investment issues are required to be addressed for building factory and cold chain and capital

requirement needs to be identified for that purpose4

1048766 UBL may have boutiques for driving image selective top-end offering

1048766 Kiosks can be setup near universities and shopping malls

1048766 Boutiques should be concentrated in Dhaka and Chittagong

1048766 Ice cream for boutiques and kiosks would be produced in factory as institutional packs of 9-10

litres

82 Products

1048766 As a Brand Building country in global Unilever operating framework UBL is entitled only to

bring products developed by the Brand Development countries

1048766 Unilever should focus on serving products that have nutritional benefits (already available

globally) along with usual satisfactions of sensual pleasure functional attributes etc

1048766 Current existent players especially Igloo and Kwality have extensively copied global and

regionally available Unilever products eg Cornelli is same as Wallrsquos Cornetto Vinetta is similar

to Vienetta Mega is similar to Magnum etc UBL needs to differentiate these to consumers on

the ldquotaste the originalrdquo platform where global quality is focused regarding the products

1048766 UBL should also bring regionally famous brands like Moo or Max to create image

differentiation

1048766 Magnum or Moo should be used as premium end ice cream to generate more profit margin

Evaluation of Entry into Ice cream Business for Bangladesh Limited 54

83 Placement

1048766 Distribution focus should be in Dhaka for entry as Dhaka contributes more than 60 of total

ice cream sales in the country

1048766 Company may use carts as distribution method They serve as good source of visibility and

availability It would help in increasing impulse purchase

1048766 At least 1500 outlets in Dhaka and Chittagong needs to be actively served using dedicated

branded refrigerators to generate sales

1048766 50 carts should operate in Dhaka and Chittagong

84 Price

1048766 UBL products should be priced at par with Igloo pricing for the common format ice creams

1048766 UBL can bring in premium single-serve SKUS for the higher economic classes in the price

range of BDT 60-80

1048766 Smaller SKUs (small lolly stick) can be introduced in the price range of BDT 10-15

1048766 In the boutique segment UBL should price products above the semi-premium segment

(Gelateria Igloo Sub Zero or Andersenrsquos) but lower than that of Club Gelato or MoumlvenPick

85 Promotion

1048766 UBL would require strong marketing campaign (As high as 50 of sales) to have a grand

entry in the market

1048766 Presence in the television media would be of utmost importance More than 50 of

promotional expense should be made here initially Gradually it can be reduced

1048766 Newspaper would serve as the second most important option

1048766 Billboards should also be used

1048766 Activations (similar to Lux Channel i Super Star or Igloo Festival) should be done to generate

trial

86 Scope of Opportunity

Table 30 Value and Volume Based Scope of Opportunity for UBL

Value (BDT Cr)

Volume (Tons)

Market

131

7835

Common

121

7600

Boutique

98

235

Evaluation of Entry into Ice cream Business for Bangladesh Limited 55

861 Geographic Contribution

1048766 Dhaka (61)

1048766 Chittagong (19)

1048766 Sylhet (10)

862 UBL objectives

Common Format Ice Creams

1048766 Target 10 Market share in 1st year operation

1048766 Value BDT 11 Cr

1048766 Production capacity required 21 Tons day

1048766 Freezer Placement 1500 freezers

1048766 Cart operation At least 50 carts

Boutiques

1048766 Target Further develop the market

1048766 Focus Dhaka Chittagong and Sylhet Metro

1048766 Franchise At least 20 franchisee operations nation wide in divisional towns

1048766 Pricing Below imported parlours above common formats with around BDT 400 per Litre

87 Critical Success Factors

1048766 UBL is considered as a high profile company in Bangladesh and thus they cannot operate in

the market only with common products like choc-bars and cups They must have premium

products (these require extrusion line) also to carry their brand image Otherwise UBL would not

be able to charge usual premium over competition products

1048766 Launch of ice cream would require huge promotional and activation support in order to gain

customers from Igloo People want novelty regarding ice cream and UBL have to let them know

about their products and create hype

1048766 Cart should be used as a source of distribution Recent successes of Unilever companies like

Indonesia shows that carts can generate more sales and can be used as source of visibility in the

minds of both retail traders and consumers Carts can also provide incremental sales to the

company

1048766 UBL have to create a strong cold chain for ice cream (initially in Dhaka and Chittagong) to

ensure quality products for consumers

1048766 UBL have to build capacity very rapidly to meet consumer demand if the launch is successful

Evaluation of Entry into Ice cream Business for Bangladesh Limited 56

90 BUSINESS PROJECTION

91 Basic Assumptions

Business projection for ice cream business was made based on a conservative approach UBL

would require spending significantly on production capacity and factory dedicated to ice cream

Thus to analyse business possibilities of ice cream certain assumptions were made and collected

data were used These are

1048766 Production equipments and cabinets would cost approximately BDT 55 crores

1048766 Production equipments 45

1048766 Packaging Equipments 15

1048766 Storage Facility 20

1048766 Branded Freezers 10

1048766 Distribution Investment 10 (Distributors would also invest themselves)

1048766 Ice cream factory with a floor size of 20000 sqft would cost BDT 25 crores

1048766 Objective is to capture 10 market share in Dhaka and Chittagong in the first year

1048766 Business would grow by 50 in year 2 and 3 30 in year 4 and 25 in year 5

1048766 Weighted price per litre is BDT 170 according to volume share of single serve ice cream

multiple serve ice cream and boutique ice cream

1048766 Other financial assumptions were also made List of them are provided below but amount has

been removed for confidentiality issues

Assumptions

Trade Margin

Distributors Margin

DutyVAT Rate

Trade Terms Expense of NPS

Trade Terms Expense of NSV

Advertising ampPromotion of NPS

Indirects (Salaries Wages etc)

Trading Tax

Table 31 Assumptions for Business Projection

Evaluation of Entry into Ice cream Business for Bangladesh Limited 57

100 CONCLUSION

Ice cream has good prospect in Bangladesh It is still a growing market with opportunities for big

new entrants With the barriers of entry UBL needs to consider its priorities UBL being an HPC

company traditionally needs to acquire expertise in cold chain distribution and has to invest a lot

of money to rip the benefits of the industry However to initiate company can take regional

support and acquire resource expertise The company should enter the business as soon as

possible since there is potential threat from DANONE to introduce more ice creams after ISIS

diabetic ice cream and also with potential of the industry arch rival Nestlersquo might consider

entering into the industry too

Evaluation of Entry into Ice cream Business for Bangladesh Limited 58

References

Web References

1 wwwunilevercom

2 wwwunilevercombd

3 wwwhllcom

4 wwwunilevercompk

5 wwwthedailystarcom - Life Style Magazine

6 wwwreuterscouk

Evaluation of Entry into Ice cream Business for Bangladesh Limited 59

Page 52: Square Ice cream

1048766 When with parents they would take the product they like even if the price is lower than some

other product However mothers play a role in this decision They would want their children not

to choose too high priced a product or coloured products

633 Habits of Youth

1048766 Young people are the main consumer of impulse ice cream They also are one of the major

consumers in the boutique segment

1048766 Young people love to try out new products that come into the market Another side of the coin

is that they are not very loyal to a brand or a flavour and tend to switch a lot

1048766 Regarding boutique visits young people go to boutiques to have an ldquoice cream hang outrdquo with

peer groups They would stay there for a longer period of time while they have their ice cream

1048766 Some times young people make milk shakes and other ice cream based desserts

634 Habits of Mothers

1048766 Mothers worry about their childrenrsquos health and they prefer ldquovanillardquo type of brands

However when price constraint occurs they go for water ice creams for their children They try

to convince their kidrsquos purchase decision

1048766 Regarding family purchase motherrsquos decision is sometimes prioritized by the whole family

64 Barriers to Ice cream Consumption

641 Emotional Barriers

1048766 Overindulge (close to sinful)

1048766 Undisciplined (no control)

1048766 Childish (licking)

1048766 Artificial Image

642 Functional Barriers

1048766 People of SEC B feel that ice cream is an expensive dessert (If less expensive would consume

more often)

1048766 It leads to cold cough - especially in winter rainy season

1048766 It contains artificial additives preservatives

1048766 It is very high in calories that lead to fattening

Evaluation of Entry into Ice cream Business for Bangladesh Limited 45

1048766 It does not quench ldquothirstrdquo

1048766 Less convenient (portable immediate eat)

1048766 Messy Dripping

65 Research Findings

The highlights regarding purchase habits triggers and barriers of ice cream consumption provide

a glimpse into the consumer world of ice cream industry However UBL CMI conducted a

formal research exclusively on ice cream consumers to identify

1048766 Occasions of ice cream

1048766 Frequency of ice cream consumption

1048766 Expectations from ice cream occasions

1048766 Personalities that they desire from ice cream

651 Relevant Occasions in Daily Lives of Consumers

Research question regarding ldquousual occasions of life that occurred most frequently in day-to-day

lives of the respondentsrdquo generated the following replies

Occasion

of Respondents saying Yes

Watching TV

93

Normal Dinner At Home

91

Normal Lunch At Home

89

At Home While ReadingMusicSurfing

86

Informal Family Get Together

85

Out Of Home Hanging Out With Friends

84

Out Shopping

84

Mid-Afternoon Break At Home

83

At Home By Myself During The Day

82

Special Dinner At Home

82

Informal Dinner Out Of Home

82

Normal Lunch Out Of Home

82

Leisure Walk

79

Coming Home From WorkSchool

78

Special Dinner Out Of Home

78

Celebration

78

A Night In With Friends

77

At Home By Myself In The Evening

77

Special Lunch Out Of Home

76

Mid-Afternoon Break Out Of Home

75

Special Lunch At Home

73

Day out with Partner

72

Midmorning Break

70

At Breakfast

68

Family Day Out

68

During Work Or At School

65

Evaluation of Entry into Ice cream Business for Bangladesh Limited 46

Travelling ToFrom WorkSchool

65

At The Cinema

61

Special Event

56

Clubbing At A Party

50

Post GymSports

48

Table 28 Relevant Occasions in Consumersrsquo Lives

Respondents were then asked to mention ldquofrequency of occurrence of the identified occasionsrdquo

The identified replies are as follows Normal dinner at homenormal lunch at homeComing home

from workschoolTraveling tofrom workschoolDay out with Partner SpouseMid-afternoon

break at homeOut of home hanging out with friendsLeisure walkMid-afternoon break out of

homeA night in with friendsSpecial dinner at homeSpecial lunch out of homeFamily day

outSpecial eventPost gymsportsDaily2-3 Times A WeekWeekly2-3 Times A MonthOnce A

MonthEvery 2-3 MonthsLess OftenNever Figure 13 Frequency of Occurrence of Occasions

This shows that ldquoNormal dinner at home Watching TV Normal Lunch At Home At Home

While ReadingMusicSurfing Coming Home From WorkSchool During Work Or At School

Travelling ToFrom WorkSchool Midmorning Break Day Out With Partner Spouse At Home

By Myself During The Dayrdquo are the most frequent daily rituals of busy lives of consumers

652 Frequency of Ice cream Consumption

Respondents were asked to mention ldquoconsumption pattern of ice cream during the identified

occasionrdquo on a scale of 1-5 depicting frequencies like ldquo(5) always (4) most of the times (3)

about half of the times (2) sometimes (1) never do not knowrdquo The responses are depicted in

the following table

Evaluation of Entry into Ice cream Business for Bangladesh Limited 47

444474544655555566756665775967779991011101111101210111110101113111412131314161

011121411131216181519181518211817171719181718201721222130303434253437403741394

046383944464746453745414641374638504843414839373030292726232725222020201926202

21722221317Midmorning

breakWhile clubbing at aAt the cinemaSpecial eventNormal lunch out ofA night in with

friendsNormal dinner atInformal dinner out ofAt home by myselfAt home by myself inOut

shoppingSpecial lunch atDay out with SpouseWatching TVAlwaysmost of the timesAbout half

of the timesSometimesneverdo not know

Figure 14 Frequency of Ice cream Consumption

As it can be seen ldquoDay out with Spouse Special lunch at home Special dinner at home

Watching TV Family day out Celebrationrdquo are the occasions where most frequently ice cream is

consumed

653 Market Character Mapping Relevant Occasions vs Frequency of Consumption

If we plot frequency of consumption on the X-axis of a chart and relevance of occasion

occurrence on the Y-axis taking the above mentioned values as cut-off values we get four

quadrants in the chart depicting four market scenarios that any ice cream manufacturer in

Bangladesh market might encounter given the current market situation This market

segmentation is based on frequency of ice cream consumption in daily occasions of consumer

lives

The segments are

1048766 OPPORTUNITY MARKET High Relevant Occasions-Low Ice cream Frequency

1048766 QUESTION MARKET Less Relevant Occasions-Low Ice cream Frequency

1048766 HIGH FREQUENCY MARKET Relevant Occasions-High Ice cream Frequency

1048766 CAPTIVE MARKET Less Relevant Occasions-High Ice cream Frequency

The chart looks as follows Evaluation of Entry into Ice cream Business for Bangladesh Limited

48

Figure 15 Relevance of Occasion-Frequency of Consumption Mapping

As it can be seen from the above chart Bangladesh Market still lies in the Opportunity and

Question market zone with a pull towards High frequency and Captive Market zones This is

evident from market data as penetration of ice cream still remains at Thana headquarters levels

Also this explains the high market growth rate of 17 as market is yet under developed and

branded quality ice cream has yet not reached all levels of consumers especially rural level that

constitutes around 75 of Bangladeshi market

From the above analysis we can establish that target of ice cream manufacturers should be to

penetrate more into the Bangladeshi market to create higher frequency of ice cream

consumption The following chart shows the strategies to follow for ice cream manufacturers

Figure 16 Required Market Strategy for Bangladesh

Evaluation of Entry into Ice cream Business for Bangladesh Limited 49

As relevance of ice cream consumption occasions can hardly be controlled by marketers their

endeavour should be to create more ldquoemotional and functionalrdquo attachment to ice cream in less

frequent occasions through ldquomarket developmentrdquo strategy to earn share from overall food

expenditure of consumers and at the same time make them consume more ice cream in highly

relevant occasions through ldquopenetrationrdquo strategy

654 Consumersrsquo Emotional Requirements and Product Attributes

All consumers under these clusters also identify the emotional requirements and the significant

product attributes they seek from their current preferred and future desired ice creams These are

provided below

Cluster

Emotional Functional Requirement

Product Attributes

Enjoyment

Flavour Variety

1048766 Combination of different flavours

1048766 Combination of different textures

1048766 Very sweet

1048766 With wafer or biscuit

1048766 With chocolate

1048766 Of a well known brand

Socially Involved

Spoonable Rich

1048766 Very creamy

1048766 Only natural ingredients

1048766 No mess

Care

Size Creaminess

1048766 Big

1048766 Rich full taste

1048766 Smooth

1048766 Value for money

1048766 No mess

Unwind amp Escape

Economy

1048766 Crunchy

1048766 Economic

1048766 Of a well known brand

1048766 Nutritious

Balanced Convenience

Health Conscious

1048766 Of a well known brand

1048766 Nutritious

1048766 Milk based

1048766 Low sugar

1048766 Low carbohydrates

1048766 Filling

Active Self-Grooming

Fruit Vitamins

1048766 Healthy

1048766 Fruit based

1048766 Low fat

1048766 Liquid or drinkable

1048766 Nutritious

1048766 Of a well known brand

Confidence

Drinkable Light

1048766 Low calories

1048766 Light on the stomach

1048766 Chewy or gooey

1048766 Not so sweet

1048766 Natural appearance

Sensual

Appeal or image

1048766 No artificial additives

Evaluation of Entry into Ice cream Business for Bangladesh Limited 50

1048766 Natural appearance

1048766 Melting slowly

1048766 Attractive packaging

1048766 High quality ingredients

1048766 Of a well known brand

Table 29 Requirements amp Product Attributes Desired by Consumer Clusters

Of these findings we see that the identified highlighted barriers to ice cream consumption are

pretty evident among the consumers Mostly people want products of a reliable source or a well

known brand low calories quality ingredients value for money economic type

Evaluation of Entry into Ice cream Business for Bangladesh Limited 51

70 INDUSTRY ATTRACTIVENESS AND ENTRY PROSPECTS

71 Driving Forces of Growth

As identified in the earlier sections there are several driving forces behind the growth of ice-

cream industry in Bangladesh

712 Trade and Infrastructural Level

1048766 As a result of globalization newer varieties have been introduced to the local products Many

foreign companies are also coming as franchise so there has been increased competition and

these boutiques are setting higher standards for the local producers

1048766 The present market growth rate is 18-19 which is being influenced by larger players like

Igloo who are expanding their distribution nation wide with expansion of national electricity

grid

1048766 With entry of Modern Trade and recent organized business approach of retailers has made it

possible for ice cream manufacturers to penetrate into shops even without providing them with

branded freezers

1048766 Weather change has increased ldquosummerrdquo season in our country which has reduced negative

seasonal impact on ice cream

1048766 Large companies like Igloo have taken global learning of using carts as an effective tool of

availability and visibility for ice cream

1048766 New and improved technologies are being used in the production process This technological

advancement has improved quality increased speed of production and made the process more

cost effective

713 Consumer Level

1048766 Only a few years back rich people could afford the luxury of having ice-cream but now it has

become a common product for everybody Ice-cream companies are producing different products

with a wide price range for consumers of every class and status

1048766 Nowadays companies are doing promotional campaigns more frequently the customers get to

know about the product which makes it easier for them to buy the best one

1048766 The improved standard of life and more modernized lifestyle of people is an important reason

for the increased consumption thus growth of the ice-cream industry

Evaluation of Entry into Ice cream Business for Bangladesh Limited 52

72 Prospects of Entry

The ice-cream industry of Bangladesh is an attractive one for the investors because there is a

huge market but number of producers is very small The major reasons behind industry

attractiveness are as follows

1048766 The industryrsquos current growth potential is very high with opportunity for market development

1048766 The competition currently permits adequate profitability and the competitive forces are

becoming stronger with time

1048766 Boutique segment is at a very high growth stage but no operator is currently operating with a

mid price range of BDT 100-400 Ice cream kiosks and small scooping boutiques can operate

within that range

1048766 Current industry driving forces are favourable for the future industry profitability

1048766 Globally oriented consumers look for variety in ice cream that is currently not available

Latest innovations came in the market in 2002 People would welcome new variety and flavours

1048766 There is a gap in the market for balanced convenience through ice cream where consumers can

get nutritional benefits for ice cream Also emotional attachment to ice cream could further be

improvised in promotional campaigns

1048766 There is high scope for market penetration and development to increase frequency of ice

cream consumption

1048766 Level of risk or uncertainty is very low in ice-cream industry because the consumer market is

so huge any product with a standard quality and careful pricing will be able to make significant

profit

1048766 As for geographic reach of the industry 60 market is still in Dhaka There is scope of

expansion and a new entrant can easily capture market share within Dhaka using carts even if

they do not want nation wide cold chain distribution

1048766 The production process is very complex and capital requirements are also high So before

going into production any company should know about their capabilities and weaknesses and

then start the business or else they might suffer huge loss at a certain level

1048766 Unilever can acquire the required resource and use existing multi-national multi-cultural

expertise to enter the market in a grand way

1048766 With high probability of entry from DANONE with more products like the ISIS diabetic ice

cream Unilever should consider entering in this industry as soon as possible

Evaluation of Entry into Ice cream Business for Bangladesh Limited 53

80 ENTRY STRATEGY FOR UNILEVER

While describing the suggested entry strategy for UBL certain issues have been kept

confidential and some issues have been touched but not explained to keep consistency with UBL

confidentiality policy

81 Suggested Entry Areas for UBL

1048766 Boutique segment of the Bangladesh ice cream is only 5 of the branded market UBL needs

to pursue a larger scope to make the entry viable

1048766 UBL cannot fight with unbranded segment as global product quality mandate of Unilever does

not allow UBL to fight in low price-low quality segment

1048766 Recommend entry should be in the common format segment with both single and multiple

servings and in the boutique segment with a different brand name (if possible BEN amp JERRYrsquoS)

1048766 UBL should build up state-of-art modern factory for manufacturing and establish cold chain

facilities initially focusing on metro cities

1048766 Investment issues are required to be addressed for building factory and cold chain and capital

requirement needs to be identified for that purpose4

1048766 UBL may have boutiques for driving image selective top-end offering

1048766 Kiosks can be setup near universities and shopping malls

1048766 Boutiques should be concentrated in Dhaka and Chittagong

1048766 Ice cream for boutiques and kiosks would be produced in factory as institutional packs of 9-10

litres

82 Products

1048766 As a Brand Building country in global Unilever operating framework UBL is entitled only to

bring products developed by the Brand Development countries

1048766 Unilever should focus on serving products that have nutritional benefits (already available

globally) along with usual satisfactions of sensual pleasure functional attributes etc

1048766 Current existent players especially Igloo and Kwality have extensively copied global and

regionally available Unilever products eg Cornelli is same as Wallrsquos Cornetto Vinetta is similar

to Vienetta Mega is similar to Magnum etc UBL needs to differentiate these to consumers on

the ldquotaste the originalrdquo platform where global quality is focused regarding the products

1048766 UBL should also bring regionally famous brands like Moo or Max to create image

differentiation

1048766 Magnum or Moo should be used as premium end ice cream to generate more profit margin

Evaluation of Entry into Ice cream Business for Bangladesh Limited 54

83 Placement

1048766 Distribution focus should be in Dhaka for entry as Dhaka contributes more than 60 of total

ice cream sales in the country

1048766 Company may use carts as distribution method They serve as good source of visibility and

availability It would help in increasing impulse purchase

1048766 At least 1500 outlets in Dhaka and Chittagong needs to be actively served using dedicated

branded refrigerators to generate sales

1048766 50 carts should operate in Dhaka and Chittagong

84 Price

1048766 UBL products should be priced at par with Igloo pricing for the common format ice creams

1048766 UBL can bring in premium single-serve SKUS for the higher economic classes in the price

range of BDT 60-80

1048766 Smaller SKUs (small lolly stick) can be introduced in the price range of BDT 10-15

1048766 In the boutique segment UBL should price products above the semi-premium segment

(Gelateria Igloo Sub Zero or Andersenrsquos) but lower than that of Club Gelato or MoumlvenPick

85 Promotion

1048766 UBL would require strong marketing campaign (As high as 50 of sales) to have a grand

entry in the market

1048766 Presence in the television media would be of utmost importance More than 50 of

promotional expense should be made here initially Gradually it can be reduced

1048766 Newspaper would serve as the second most important option

1048766 Billboards should also be used

1048766 Activations (similar to Lux Channel i Super Star or Igloo Festival) should be done to generate

trial

86 Scope of Opportunity

Table 30 Value and Volume Based Scope of Opportunity for UBL

Value (BDT Cr)

Volume (Tons)

Market

131

7835

Common

121

7600

Boutique

98

235

Evaluation of Entry into Ice cream Business for Bangladesh Limited 55

861 Geographic Contribution

1048766 Dhaka (61)

1048766 Chittagong (19)

1048766 Sylhet (10)

862 UBL objectives

Common Format Ice Creams

1048766 Target 10 Market share in 1st year operation

1048766 Value BDT 11 Cr

1048766 Production capacity required 21 Tons day

1048766 Freezer Placement 1500 freezers

1048766 Cart operation At least 50 carts

Boutiques

1048766 Target Further develop the market

1048766 Focus Dhaka Chittagong and Sylhet Metro

1048766 Franchise At least 20 franchisee operations nation wide in divisional towns

1048766 Pricing Below imported parlours above common formats with around BDT 400 per Litre

87 Critical Success Factors

1048766 UBL is considered as a high profile company in Bangladesh and thus they cannot operate in

the market only with common products like choc-bars and cups They must have premium

products (these require extrusion line) also to carry their brand image Otherwise UBL would not

be able to charge usual premium over competition products

1048766 Launch of ice cream would require huge promotional and activation support in order to gain

customers from Igloo People want novelty regarding ice cream and UBL have to let them know

about their products and create hype

1048766 Cart should be used as a source of distribution Recent successes of Unilever companies like

Indonesia shows that carts can generate more sales and can be used as source of visibility in the

minds of both retail traders and consumers Carts can also provide incremental sales to the

company

1048766 UBL have to create a strong cold chain for ice cream (initially in Dhaka and Chittagong) to

ensure quality products for consumers

1048766 UBL have to build capacity very rapidly to meet consumer demand if the launch is successful

Evaluation of Entry into Ice cream Business for Bangladesh Limited 56

90 BUSINESS PROJECTION

91 Basic Assumptions

Business projection for ice cream business was made based on a conservative approach UBL

would require spending significantly on production capacity and factory dedicated to ice cream

Thus to analyse business possibilities of ice cream certain assumptions were made and collected

data were used These are

1048766 Production equipments and cabinets would cost approximately BDT 55 crores

1048766 Production equipments 45

1048766 Packaging Equipments 15

1048766 Storage Facility 20

1048766 Branded Freezers 10

1048766 Distribution Investment 10 (Distributors would also invest themselves)

1048766 Ice cream factory with a floor size of 20000 sqft would cost BDT 25 crores

1048766 Objective is to capture 10 market share in Dhaka and Chittagong in the first year

1048766 Business would grow by 50 in year 2 and 3 30 in year 4 and 25 in year 5

1048766 Weighted price per litre is BDT 170 according to volume share of single serve ice cream

multiple serve ice cream and boutique ice cream

1048766 Other financial assumptions were also made List of them are provided below but amount has

been removed for confidentiality issues

Assumptions

Trade Margin

Distributors Margin

DutyVAT Rate

Trade Terms Expense of NPS

Trade Terms Expense of NSV

Advertising ampPromotion of NPS

Indirects (Salaries Wages etc)

Trading Tax

Table 31 Assumptions for Business Projection

Evaluation of Entry into Ice cream Business for Bangladesh Limited 57

100 CONCLUSION

Ice cream has good prospect in Bangladesh It is still a growing market with opportunities for big

new entrants With the barriers of entry UBL needs to consider its priorities UBL being an HPC

company traditionally needs to acquire expertise in cold chain distribution and has to invest a lot

of money to rip the benefits of the industry However to initiate company can take regional

support and acquire resource expertise The company should enter the business as soon as

possible since there is potential threat from DANONE to introduce more ice creams after ISIS

diabetic ice cream and also with potential of the industry arch rival Nestlersquo might consider

entering into the industry too

Evaluation of Entry into Ice cream Business for Bangladesh Limited 58

References

Web References

1 wwwunilevercom

2 wwwunilevercombd

3 wwwhllcom

4 wwwunilevercompk

5 wwwthedailystarcom - Life Style Magazine

6 wwwreuterscouk

Evaluation of Entry into Ice cream Business for Bangladesh Limited 59

Page 53: Square Ice cream

1048766 People of SEC B feel that ice cream is an expensive dessert (If less expensive would consume

more often)

1048766 It leads to cold cough - especially in winter rainy season

1048766 It contains artificial additives preservatives

1048766 It is very high in calories that lead to fattening

Evaluation of Entry into Ice cream Business for Bangladesh Limited 45

1048766 It does not quench ldquothirstrdquo

1048766 Less convenient (portable immediate eat)

1048766 Messy Dripping

65 Research Findings

The highlights regarding purchase habits triggers and barriers of ice cream consumption provide

a glimpse into the consumer world of ice cream industry However UBL CMI conducted a

formal research exclusively on ice cream consumers to identify

1048766 Occasions of ice cream

1048766 Frequency of ice cream consumption

1048766 Expectations from ice cream occasions

1048766 Personalities that they desire from ice cream

651 Relevant Occasions in Daily Lives of Consumers

Research question regarding ldquousual occasions of life that occurred most frequently in day-to-day

lives of the respondentsrdquo generated the following replies

Occasion

of Respondents saying Yes

Watching TV

93

Normal Dinner At Home

91

Normal Lunch At Home

89

At Home While ReadingMusicSurfing

86

Informal Family Get Together

85

Out Of Home Hanging Out With Friends

84

Out Shopping

84

Mid-Afternoon Break At Home

83

At Home By Myself During The Day

82

Special Dinner At Home

82

Informal Dinner Out Of Home

82

Normal Lunch Out Of Home

82

Leisure Walk

79

Coming Home From WorkSchool

78

Special Dinner Out Of Home

78

Celebration

78

A Night In With Friends

77

At Home By Myself In The Evening

77

Special Lunch Out Of Home

76

Mid-Afternoon Break Out Of Home

75

Special Lunch At Home

73

Day out with Partner

72

Midmorning Break

70

At Breakfast

68

Family Day Out

68

During Work Or At School

65

Evaluation of Entry into Ice cream Business for Bangladesh Limited 46

Travelling ToFrom WorkSchool

65

At The Cinema

61

Special Event

56

Clubbing At A Party

50

Post GymSports

48

Table 28 Relevant Occasions in Consumersrsquo Lives

Respondents were then asked to mention ldquofrequency of occurrence of the identified occasionsrdquo

The identified replies are as follows Normal dinner at homenormal lunch at homeComing home

from workschoolTraveling tofrom workschoolDay out with Partner SpouseMid-afternoon

break at homeOut of home hanging out with friendsLeisure walkMid-afternoon break out of

homeA night in with friendsSpecial dinner at homeSpecial lunch out of homeFamily day

outSpecial eventPost gymsportsDaily2-3 Times A WeekWeekly2-3 Times A MonthOnce A

MonthEvery 2-3 MonthsLess OftenNever Figure 13 Frequency of Occurrence of Occasions

This shows that ldquoNormal dinner at home Watching TV Normal Lunch At Home At Home

While ReadingMusicSurfing Coming Home From WorkSchool During Work Or At School

Travelling ToFrom WorkSchool Midmorning Break Day Out With Partner Spouse At Home

By Myself During The Dayrdquo are the most frequent daily rituals of busy lives of consumers

652 Frequency of Ice cream Consumption

Respondents were asked to mention ldquoconsumption pattern of ice cream during the identified

occasionrdquo on a scale of 1-5 depicting frequencies like ldquo(5) always (4) most of the times (3)

about half of the times (2) sometimes (1) never do not knowrdquo The responses are depicted in

the following table

Evaluation of Entry into Ice cream Business for Bangladesh Limited 47

444474544655555566756665775967779991011101111101210111110101113111412131314161

011121411131216181519181518211817171719181718201721222130303434253437403741394

046383944464746453745414641374638504843414839373030292726232725222020201926202

21722221317Midmorning

breakWhile clubbing at aAt the cinemaSpecial eventNormal lunch out ofA night in with

friendsNormal dinner atInformal dinner out ofAt home by myselfAt home by myself inOut

shoppingSpecial lunch atDay out with SpouseWatching TVAlwaysmost of the timesAbout half

of the timesSometimesneverdo not know

Figure 14 Frequency of Ice cream Consumption

As it can be seen ldquoDay out with Spouse Special lunch at home Special dinner at home

Watching TV Family day out Celebrationrdquo are the occasions where most frequently ice cream is

consumed

653 Market Character Mapping Relevant Occasions vs Frequency of Consumption

If we plot frequency of consumption on the X-axis of a chart and relevance of occasion

occurrence on the Y-axis taking the above mentioned values as cut-off values we get four

quadrants in the chart depicting four market scenarios that any ice cream manufacturer in

Bangladesh market might encounter given the current market situation This market

segmentation is based on frequency of ice cream consumption in daily occasions of consumer

lives

The segments are

1048766 OPPORTUNITY MARKET High Relevant Occasions-Low Ice cream Frequency

1048766 QUESTION MARKET Less Relevant Occasions-Low Ice cream Frequency

1048766 HIGH FREQUENCY MARKET Relevant Occasions-High Ice cream Frequency

1048766 CAPTIVE MARKET Less Relevant Occasions-High Ice cream Frequency

The chart looks as follows Evaluation of Entry into Ice cream Business for Bangladesh Limited

48

Figure 15 Relevance of Occasion-Frequency of Consumption Mapping

As it can be seen from the above chart Bangladesh Market still lies in the Opportunity and

Question market zone with a pull towards High frequency and Captive Market zones This is

evident from market data as penetration of ice cream still remains at Thana headquarters levels

Also this explains the high market growth rate of 17 as market is yet under developed and

branded quality ice cream has yet not reached all levels of consumers especially rural level that

constitutes around 75 of Bangladeshi market

From the above analysis we can establish that target of ice cream manufacturers should be to

penetrate more into the Bangladeshi market to create higher frequency of ice cream

consumption The following chart shows the strategies to follow for ice cream manufacturers

Figure 16 Required Market Strategy for Bangladesh

Evaluation of Entry into Ice cream Business for Bangladesh Limited 49

As relevance of ice cream consumption occasions can hardly be controlled by marketers their

endeavour should be to create more ldquoemotional and functionalrdquo attachment to ice cream in less

frequent occasions through ldquomarket developmentrdquo strategy to earn share from overall food

expenditure of consumers and at the same time make them consume more ice cream in highly

relevant occasions through ldquopenetrationrdquo strategy

654 Consumersrsquo Emotional Requirements and Product Attributes

All consumers under these clusters also identify the emotional requirements and the significant

product attributes they seek from their current preferred and future desired ice creams These are

provided below

Cluster

Emotional Functional Requirement

Product Attributes

Enjoyment

Flavour Variety

1048766 Combination of different flavours

1048766 Combination of different textures

1048766 Very sweet

1048766 With wafer or biscuit

1048766 With chocolate

1048766 Of a well known brand

Socially Involved

Spoonable Rich

1048766 Very creamy

1048766 Only natural ingredients

1048766 No mess

Care

Size Creaminess

1048766 Big

1048766 Rich full taste

1048766 Smooth

1048766 Value for money

1048766 No mess

Unwind amp Escape

Economy

1048766 Crunchy

1048766 Economic

1048766 Of a well known brand

1048766 Nutritious

Balanced Convenience

Health Conscious

1048766 Of a well known brand

1048766 Nutritious

1048766 Milk based

1048766 Low sugar

1048766 Low carbohydrates

1048766 Filling

Active Self-Grooming

Fruit Vitamins

1048766 Healthy

1048766 Fruit based

1048766 Low fat

1048766 Liquid or drinkable

1048766 Nutritious

1048766 Of a well known brand

Confidence

Drinkable Light

1048766 Low calories

1048766 Light on the stomach

1048766 Chewy or gooey

1048766 Not so sweet

1048766 Natural appearance

Sensual

Appeal or image

1048766 No artificial additives

Evaluation of Entry into Ice cream Business for Bangladesh Limited 50

1048766 Natural appearance

1048766 Melting slowly

1048766 Attractive packaging

1048766 High quality ingredients

1048766 Of a well known brand

Table 29 Requirements amp Product Attributes Desired by Consumer Clusters

Of these findings we see that the identified highlighted barriers to ice cream consumption are

pretty evident among the consumers Mostly people want products of a reliable source or a well

known brand low calories quality ingredients value for money economic type

Evaluation of Entry into Ice cream Business for Bangladesh Limited 51

70 INDUSTRY ATTRACTIVENESS AND ENTRY PROSPECTS

71 Driving Forces of Growth

As identified in the earlier sections there are several driving forces behind the growth of ice-

cream industry in Bangladesh

712 Trade and Infrastructural Level

1048766 As a result of globalization newer varieties have been introduced to the local products Many

foreign companies are also coming as franchise so there has been increased competition and

these boutiques are setting higher standards for the local producers

1048766 The present market growth rate is 18-19 which is being influenced by larger players like

Igloo who are expanding their distribution nation wide with expansion of national electricity

grid

1048766 With entry of Modern Trade and recent organized business approach of retailers has made it

possible for ice cream manufacturers to penetrate into shops even without providing them with

branded freezers

1048766 Weather change has increased ldquosummerrdquo season in our country which has reduced negative

seasonal impact on ice cream

1048766 Large companies like Igloo have taken global learning of using carts as an effective tool of

availability and visibility for ice cream

1048766 New and improved technologies are being used in the production process This technological

advancement has improved quality increased speed of production and made the process more

cost effective

713 Consumer Level

1048766 Only a few years back rich people could afford the luxury of having ice-cream but now it has

become a common product for everybody Ice-cream companies are producing different products

with a wide price range for consumers of every class and status

1048766 Nowadays companies are doing promotional campaigns more frequently the customers get to

know about the product which makes it easier for them to buy the best one

1048766 The improved standard of life and more modernized lifestyle of people is an important reason

for the increased consumption thus growth of the ice-cream industry

Evaluation of Entry into Ice cream Business for Bangladesh Limited 52

72 Prospects of Entry

The ice-cream industry of Bangladesh is an attractive one for the investors because there is a

huge market but number of producers is very small The major reasons behind industry

attractiveness are as follows

1048766 The industryrsquos current growth potential is very high with opportunity for market development

1048766 The competition currently permits adequate profitability and the competitive forces are

becoming stronger with time

1048766 Boutique segment is at a very high growth stage but no operator is currently operating with a

mid price range of BDT 100-400 Ice cream kiosks and small scooping boutiques can operate

within that range

1048766 Current industry driving forces are favourable for the future industry profitability

1048766 Globally oriented consumers look for variety in ice cream that is currently not available

Latest innovations came in the market in 2002 People would welcome new variety and flavours

1048766 There is a gap in the market for balanced convenience through ice cream where consumers can

get nutritional benefits for ice cream Also emotional attachment to ice cream could further be

improvised in promotional campaigns

1048766 There is high scope for market penetration and development to increase frequency of ice

cream consumption

1048766 Level of risk or uncertainty is very low in ice-cream industry because the consumer market is

so huge any product with a standard quality and careful pricing will be able to make significant

profit

1048766 As for geographic reach of the industry 60 market is still in Dhaka There is scope of

expansion and a new entrant can easily capture market share within Dhaka using carts even if

they do not want nation wide cold chain distribution

1048766 The production process is very complex and capital requirements are also high So before

going into production any company should know about their capabilities and weaknesses and

then start the business or else they might suffer huge loss at a certain level

1048766 Unilever can acquire the required resource and use existing multi-national multi-cultural

expertise to enter the market in a grand way

1048766 With high probability of entry from DANONE with more products like the ISIS diabetic ice

cream Unilever should consider entering in this industry as soon as possible

Evaluation of Entry into Ice cream Business for Bangladesh Limited 53

80 ENTRY STRATEGY FOR UNILEVER

While describing the suggested entry strategy for UBL certain issues have been kept

confidential and some issues have been touched but not explained to keep consistency with UBL

confidentiality policy

81 Suggested Entry Areas for UBL

1048766 Boutique segment of the Bangladesh ice cream is only 5 of the branded market UBL needs

to pursue a larger scope to make the entry viable

1048766 UBL cannot fight with unbranded segment as global product quality mandate of Unilever does

not allow UBL to fight in low price-low quality segment

1048766 Recommend entry should be in the common format segment with both single and multiple

servings and in the boutique segment with a different brand name (if possible BEN amp JERRYrsquoS)

1048766 UBL should build up state-of-art modern factory for manufacturing and establish cold chain

facilities initially focusing on metro cities

1048766 Investment issues are required to be addressed for building factory and cold chain and capital

requirement needs to be identified for that purpose4

1048766 UBL may have boutiques for driving image selective top-end offering

1048766 Kiosks can be setup near universities and shopping malls

1048766 Boutiques should be concentrated in Dhaka and Chittagong

1048766 Ice cream for boutiques and kiosks would be produced in factory as institutional packs of 9-10

litres

82 Products

1048766 As a Brand Building country in global Unilever operating framework UBL is entitled only to

bring products developed by the Brand Development countries

1048766 Unilever should focus on serving products that have nutritional benefits (already available

globally) along with usual satisfactions of sensual pleasure functional attributes etc

1048766 Current existent players especially Igloo and Kwality have extensively copied global and

regionally available Unilever products eg Cornelli is same as Wallrsquos Cornetto Vinetta is similar

to Vienetta Mega is similar to Magnum etc UBL needs to differentiate these to consumers on

the ldquotaste the originalrdquo platform where global quality is focused regarding the products

1048766 UBL should also bring regionally famous brands like Moo or Max to create image

differentiation

1048766 Magnum or Moo should be used as premium end ice cream to generate more profit margin

Evaluation of Entry into Ice cream Business for Bangladesh Limited 54

83 Placement

1048766 Distribution focus should be in Dhaka for entry as Dhaka contributes more than 60 of total

ice cream sales in the country

1048766 Company may use carts as distribution method They serve as good source of visibility and

availability It would help in increasing impulse purchase

1048766 At least 1500 outlets in Dhaka and Chittagong needs to be actively served using dedicated

branded refrigerators to generate sales

1048766 50 carts should operate in Dhaka and Chittagong

84 Price

1048766 UBL products should be priced at par with Igloo pricing for the common format ice creams

1048766 UBL can bring in premium single-serve SKUS for the higher economic classes in the price

range of BDT 60-80

1048766 Smaller SKUs (small lolly stick) can be introduced in the price range of BDT 10-15

1048766 In the boutique segment UBL should price products above the semi-premium segment

(Gelateria Igloo Sub Zero or Andersenrsquos) but lower than that of Club Gelato or MoumlvenPick

85 Promotion

1048766 UBL would require strong marketing campaign (As high as 50 of sales) to have a grand

entry in the market

1048766 Presence in the television media would be of utmost importance More than 50 of

promotional expense should be made here initially Gradually it can be reduced

1048766 Newspaper would serve as the second most important option

1048766 Billboards should also be used

1048766 Activations (similar to Lux Channel i Super Star or Igloo Festival) should be done to generate

trial

86 Scope of Opportunity

Table 30 Value and Volume Based Scope of Opportunity for UBL

Value (BDT Cr)

Volume (Tons)

Market

131

7835

Common

121

7600

Boutique

98

235

Evaluation of Entry into Ice cream Business for Bangladesh Limited 55

861 Geographic Contribution

1048766 Dhaka (61)

1048766 Chittagong (19)

1048766 Sylhet (10)

862 UBL objectives

Common Format Ice Creams

1048766 Target 10 Market share in 1st year operation

1048766 Value BDT 11 Cr

1048766 Production capacity required 21 Tons day

1048766 Freezer Placement 1500 freezers

1048766 Cart operation At least 50 carts

Boutiques

1048766 Target Further develop the market

1048766 Focus Dhaka Chittagong and Sylhet Metro

1048766 Franchise At least 20 franchisee operations nation wide in divisional towns

1048766 Pricing Below imported parlours above common formats with around BDT 400 per Litre

87 Critical Success Factors

1048766 UBL is considered as a high profile company in Bangladesh and thus they cannot operate in

the market only with common products like choc-bars and cups They must have premium

products (these require extrusion line) also to carry their brand image Otherwise UBL would not

be able to charge usual premium over competition products

1048766 Launch of ice cream would require huge promotional and activation support in order to gain

customers from Igloo People want novelty regarding ice cream and UBL have to let them know

about their products and create hype

1048766 Cart should be used as a source of distribution Recent successes of Unilever companies like

Indonesia shows that carts can generate more sales and can be used as source of visibility in the

minds of both retail traders and consumers Carts can also provide incremental sales to the

company

1048766 UBL have to create a strong cold chain for ice cream (initially in Dhaka and Chittagong) to

ensure quality products for consumers

1048766 UBL have to build capacity very rapidly to meet consumer demand if the launch is successful

Evaluation of Entry into Ice cream Business for Bangladesh Limited 56

90 BUSINESS PROJECTION

91 Basic Assumptions

Business projection for ice cream business was made based on a conservative approach UBL

would require spending significantly on production capacity and factory dedicated to ice cream

Thus to analyse business possibilities of ice cream certain assumptions were made and collected

data were used These are

1048766 Production equipments and cabinets would cost approximately BDT 55 crores

1048766 Production equipments 45

1048766 Packaging Equipments 15

1048766 Storage Facility 20

1048766 Branded Freezers 10

1048766 Distribution Investment 10 (Distributors would also invest themselves)

1048766 Ice cream factory with a floor size of 20000 sqft would cost BDT 25 crores

1048766 Objective is to capture 10 market share in Dhaka and Chittagong in the first year

1048766 Business would grow by 50 in year 2 and 3 30 in year 4 and 25 in year 5

1048766 Weighted price per litre is BDT 170 according to volume share of single serve ice cream

multiple serve ice cream and boutique ice cream

1048766 Other financial assumptions were also made List of them are provided below but amount has

been removed for confidentiality issues

Assumptions

Trade Margin

Distributors Margin

DutyVAT Rate

Trade Terms Expense of NPS

Trade Terms Expense of NSV

Advertising ampPromotion of NPS

Indirects (Salaries Wages etc)

Trading Tax

Table 31 Assumptions for Business Projection

Evaluation of Entry into Ice cream Business for Bangladesh Limited 57

100 CONCLUSION

Ice cream has good prospect in Bangladesh It is still a growing market with opportunities for big

new entrants With the barriers of entry UBL needs to consider its priorities UBL being an HPC

company traditionally needs to acquire expertise in cold chain distribution and has to invest a lot

of money to rip the benefits of the industry However to initiate company can take regional

support and acquire resource expertise The company should enter the business as soon as

possible since there is potential threat from DANONE to introduce more ice creams after ISIS

diabetic ice cream and also with potential of the industry arch rival Nestlersquo might consider

entering into the industry too

Evaluation of Entry into Ice cream Business for Bangladesh Limited 58

References

Web References

1 wwwunilevercom

2 wwwunilevercombd

3 wwwhllcom

4 wwwunilevercompk

5 wwwthedailystarcom - Life Style Magazine

6 wwwreuterscouk

Evaluation of Entry into Ice cream Business for Bangladesh Limited 59

Page 54: Square Ice cream

Watching TV

93

Normal Dinner At Home

91

Normal Lunch At Home

89

At Home While ReadingMusicSurfing

86

Informal Family Get Together

85

Out Of Home Hanging Out With Friends

84

Out Shopping

84

Mid-Afternoon Break At Home

83

At Home By Myself During The Day

82

Special Dinner At Home

82

Informal Dinner Out Of Home

82

Normal Lunch Out Of Home

82

Leisure Walk

79

Coming Home From WorkSchool

78

Special Dinner Out Of Home

78

Celebration

78

A Night In With Friends

77

At Home By Myself In The Evening

77

Special Lunch Out Of Home

76

Mid-Afternoon Break Out Of Home

75

Special Lunch At Home

73

Day out with Partner

72

Midmorning Break

70

At Breakfast

68

Family Day Out

68

During Work Or At School

65

Evaluation of Entry into Ice cream Business for Bangladesh Limited 46

Travelling ToFrom WorkSchool

65

At The Cinema

61

Special Event

56

Clubbing At A Party

50

Post GymSports

48

Table 28 Relevant Occasions in Consumersrsquo Lives

Respondents were then asked to mention ldquofrequency of occurrence of the identified occasionsrdquo

The identified replies are as follows Normal dinner at homenormal lunch at homeComing home

from workschoolTraveling tofrom workschoolDay out with Partner SpouseMid-afternoon

break at homeOut of home hanging out with friendsLeisure walkMid-afternoon break out of

homeA night in with friendsSpecial dinner at homeSpecial lunch out of homeFamily day

outSpecial eventPost gymsportsDaily2-3 Times A WeekWeekly2-3 Times A MonthOnce A

MonthEvery 2-3 MonthsLess OftenNever Figure 13 Frequency of Occurrence of Occasions

This shows that ldquoNormal dinner at home Watching TV Normal Lunch At Home At Home

While ReadingMusicSurfing Coming Home From WorkSchool During Work Or At School

Travelling ToFrom WorkSchool Midmorning Break Day Out With Partner Spouse At Home

By Myself During The Dayrdquo are the most frequent daily rituals of busy lives of consumers

652 Frequency of Ice cream Consumption

Respondents were asked to mention ldquoconsumption pattern of ice cream during the identified

occasionrdquo on a scale of 1-5 depicting frequencies like ldquo(5) always (4) most of the times (3)

about half of the times (2) sometimes (1) never do not knowrdquo The responses are depicted in

the following table

Evaluation of Entry into Ice cream Business for Bangladesh Limited 47

444474544655555566756665775967779991011101111101210111110101113111412131314161

011121411131216181519181518211817171719181718201721222130303434253437403741394

046383944464746453745414641374638504843414839373030292726232725222020201926202

21722221317Midmorning

breakWhile clubbing at aAt the cinemaSpecial eventNormal lunch out ofA night in with

friendsNormal dinner atInformal dinner out ofAt home by myselfAt home by myself inOut

shoppingSpecial lunch atDay out with SpouseWatching TVAlwaysmost of the timesAbout half

of the timesSometimesneverdo not know

Figure 14 Frequency of Ice cream Consumption

As it can be seen ldquoDay out with Spouse Special lunch at home Special dinner at home

Watching TV Family day out Celebrationrdquo are the occasions where most frequently ice cream is

consumed

653 Market Character Mapping Relevant Occasions vs Frequency of Consumption

If we plot frequency of consumption on the X-axis of a chart and relevance of occasion

occurrence on the Y-axis taking the above mentioned values as cut-off values we get four

quadrants in the chart depicting four market scenarios that any ice cream manufacturer in

Bangladesh market might encounter given the current market situation This market

segmentation is based on frequency of ice cream consumption in daily occasions of consumer

lives

The segments are

1048766 OPPORTUNITY MARKET High Relevant Occasions-Low Ice cream Frequency

1048766 QUESTION MARKET Less Relevant Occasions-Low Ice cream Frequency

1048766 HIGH FREQUENCY MARKET Relevant Occasions-High Ice cream Frequency

1048766 CAPTIVE MARKET Less Relevant Occasions-High Ice cream Frequency

The chart looks as follows Evaluation of Entry into Ice cream Business for Bangladesh Limited

48

Figure 15 Relevance of Occasion-Frequency of Consumption Mapping

As it can be seen from the above chart Bangladesh Market still lies in the Opportunity and

Question market zone with a pull towards High frequency and Captive Market zones This is

evident from market data as penetration of ice cream still remains at Thana headquarters levels

Also this explains the high market growth rate of 17 as market is yet under developed and

branded quality ice cream has yet not reached all levels of consumers especially rural level that

constitutes around 75 of Bangladeshi market

From the above analysis we can establish that target of ice cream manufacturers should be to

penetrate more into the Bangladeshi market to create higher frequency of ice cream

consumption The following chart shows the strategies to follow for ice cream manufacturers

Figure 16 Required Market Strategy for Bangladesh

Evaluation of Entry into Ice cream Business for Bangladesh Limited 49

As relevance of ice cream consumption occasions can hardly be controlled by marketers their

endeavour should be to create more ldquoemotional and functionalrdquo attachment to ice cream in less

frequent occasions through ldquomarket developmentrdquo strategy to earn share from overall food

expenditure of consumers and at the same time make them consume more ice cream in highly

relevant occasions through ldquopenetrationrdquo strategy

654 Consumersrsquo Emotional Requirements and Product Attributes

All consumers under these clusters also identify the emotional requirements and the significant

product attributes they seek from their current preferred and future desired ice creams These are

provided below

Cluster

Emotional Functional Requirement

Product Attributes

Enjoyment

Flavour Variety

1048766 Combination of different flavours

1048766 Combination of different textures

1048766 Very sweet

1048766 With wafer or biscuit

1048766 With chocolate

1048766 Of a well known brand

Socially Involved

Spoonable Rich

1048766 Very creamy

1048766 Only natural ingredients

1048766 No mess

Care

Size Creaminess

1048766 Big

1048766 Rich full taste

1048766 Smooth

1048766 Value for money

1048766 No mess

Unwind amp Escape

Economy

1048766 Crunchy

1048766 Economic

1048766 Of a well known brand

1048766 Nutritious

Balanced Convenience

Health Conscious

1048766 Of a well known brand

1048766 Nutritious

1048766 Milk based

1048766 Low sugar

1048766 Low carbohydrates

1048766 Filling

Active Self-Grooming

Fruit Vitamins

1048766 Healthy

1048766 Fruit based

1048766 Low fat

1048766 Liquid or drinkable

1048766 Nutritious

1048766 Of a well known brand

Confidence

Drinkable Light

1048766 Low calories

1048766 Light on the stomach

1048766 Chewy or gooey

1048766 Not so sweet

1048766 Natural appearance

Sensual

Appeal or image

1048766 No artificial additives

Evaluation of Entry into Ice cream Business for Bangladesh Limited 50

1048766 Natural appearance

1048766 Melting slowly

1048766 Attractive packaging

1048766 High quality ingredients

1048766 Of a well known brand

Table 29 Requirements amp Product Attributes Desired by Consumer Clusters

Of these findings we see that the identified highlighted barriers to ice cream consumption are

pretty evident among the consumers Mostly people want products of a reliable source or a well

known brand low calories quality ingredients value for money economic type

Evaluation of Entry into Ice cream Business for Bangladesh Limited 51

70 INDUSTRY ATTRACTIVENESS AND ENTRY PROSPECTS

71 Driving Forces of Growth

As identified in the earlier sections there are several driving forces behind the growth of ice-

cream industry in Bangladesh

712 Trade and Infrastructural Level

1048766 As a result of globalization newer varieties have been introduced to the local products Many

foreign companies are also coming as franchise so there has been increased competition and

these boutiques are setting higher standards for the local producers

1048766 The present market growth rate is 18-19 which is being influenced by larger players like

Igloo who are expanding their distribution nation wide with expansion of national electricity

grid

1048766 With entry of Modern Trade and recent organized business approach of retailers has made it

possible for ice cream manufacturers to penetrate into shops even without providing them with

branded freezers

1048766 Weather change has increased ldquosummerrdquo season in our country which has reduced negative

seasonal impact on ice cream

1048766 Large companies like Igloo have taken global learning of using carts as an effective tool of

availability and visibility for ice cream

1048766 New and improved technologies are being used in the production process This technological

advancement has improved quality increased speed of production and made the process more

cost effective

713 Consumer Level

1048766 Only a few years back rich people could afford the luxury of having ice-cream but now it has

become a common product for everybody Ice-cream companies are producing different products

with a wide price range for consumers of every class and status

1048766 Nowadays companies are doing promotional campaigns more frequently the customers get to

know about the product which makes it easier for them to buy the best one

1048766 The improved standard of life and more modernized lifestyle of people is an important reason

for the increased consumption thus growth of the ice-cream industry

Evaluation of Entry into Ice cream Business for Bangladesh Limited 52

72 Prospects of Entry

The ice-cream industry of Bangladesh is an attractive one for the investors because there is a

huge market but number of producers is very small The major reasons behind industry

attractiveness are as follows

1048766 The industryrsquos current growth potential is very high with opportunity for market development

1048766 The competition currently permits adequate profitability and the competitive forces are

becoming stronger with time

1048766 Boutique segment is at a very high growth stage but no operator is currently operating with a

mid price range of BDT 100-400 Ice cream kiosks and small scooping boutiques can operate

within that range

1048766 Current industry driving forces are favourable for the future industry profitability

1048766 Globally oriented consumers look for variety in ice cream that is currently not available

Latest innovations came in the market in 2002 People would welcome new variety and flavours

1048766 There is a gap in the market for balanced convenience through ice cream where consumers can

get nutritional benefits for ice cream Also emotional attachment to ice cream could further be

improvised in promotional campaigns

1048766 There is high scope for market penetration and development to increase frequency of ice

cream consumption

1048766 Level of risk or uncertainty is very low in ice-cream industry because the consumer market is

so huge any product with a standard quality and careful pricing will be able to make significant

profit

1048766 As for geographic reach of the industry 60 market is still in Dhaka There is scope of

expansion and a new entrant can easily capture market share within Dhaka using carts even if

they do not want nation wide cold chain distribution

1048766 The production process is very complex and capital requirements are also high So before

going into production any company should know about their capabilities and weaknesses and

then start the business or else they might suffer huge loss at a certain level

1048766 Unilever can acquire the required resource and use existing multi-national multi-cultural

expertise to enter the market in a grand way

1048766 With high probability of entry from DANONE with more products like the ISIS diabetic ice

cream Unilever should consider entering in this industry as soon as possible

Evaluation of Entry into Ice cream Business for Bangladesh Limited 53

80 ENTRY STRATEGY FOR UNILEVER

While describing the suggested entry strategy for UBL certain issues have been kept

confidential and some issues have been touched but not explained to keep consistency with UBL

confidentiality policy

81 Suggested Entry Areas for UBL

1048766 Boutique segment of the Bangladesh ice cream is only 5 of the branded market UBL needs

to pursue a larger scope to make the entry viable

1048766 UBL cannot fight with unbranded segment as global product quality mandate of Unilever does

not allow UBL to fight in low price-low quality segment

1048766 Recommend entry should be in the common format segment with both single and multiple

servings and in the boutique segment with a different brand name (if possible BEN amp JERRYrsquoS)

1048766 UBL should build up state-of-art modern factory for manufacturing and establish cold chain

facilities initially focusing on metro cities

1048766 Investment issues are required to be addressed for building factory and cold chain and capital

requirement needs to be identified for that purpose4

1048766 UBL may have boutiques for driving image selective top-end offering

1048766 Kiosks can be setup near universities and shopping malls

1048766 Boutiques should be concentrated in Dhaka and Chittagong

1048766 Ice cream for boutiques and kiosks would be produced in factory as institutional packs of 9-10

litres

82 Products

1048766 As a Brand Building country in global Unilever operating framework UBL is entitled only to

bring products developed by the Brand Development countries

1048766 Unilever should focus on serving products that have nutritional benefits (already available

globally) along with usual satisfactions of sensual pleasure functional attributes etc

1048766 Current existent players especially Igloo and Kwality have extensively copied global and

regionally available Unilever products eg Cornelli is same as Wallrsquos Cornetto Vinetta is similar

to Vienetta Mega is similar to Magnum etc UBL needs to differentiate these to consumers on

the ldquotaste the originalrdquo platform where global quality is focused regarding the products

1048766 UBL should also bring regionally famous brands like Moo or Max to create image

differentiation

1048766 Magnum or Moo should be used as premium end ice cream to generate more profit margin

Evaluation of Entry into Ice cream Business for Bangladesh Limited 54

83 Placement

1048766 Distribution focus should be in Dhaka for entry as Dhaka contributes more than 60 of total

ice cream sales in the country

1048766 Company may use carts as distribution method They serve as good source of visibility and

availability It would help in increasing impulse purchase

1048766 At least 1500 outlets in Dhaka and Chittagong needs to be actively served using dedicated

branded refrigerators to generate sales

1048766 50 carts should operate in Dhaka and Chittagong

84 Price

1048766 UBL products should be priced at par with Igloo pricing for the common format ice creams

1048766 UBL can bring in premium single-serve SKUS for the higher economic classes in the price

range of BDT 60-80

1048766 Smaller SKUs (small lolly stick) can be introduced in the price range of BDT 10-15

1048766 In the boutique segment UBL should price products above the semi-premium segment

(Gelateria Igloo Sub Zero or Andersenrsquos) but lower than that of Club Gelato or MoumlvenPick

85 Promotion

1048766 UBL would require strong marketing campaign (As high as 50 of sales) to have a grand

entry in the market

1048766 Presence in the television media would be of utmost importance More than 50 of

promotional expense should be made here initially Gradually it can be reduced

1048766 Newspaper would serve as the second most important option

1048766 Billboards should also be used

1048766 Activations (similar to Lux Channel i Super Star or Igloo Festival) should be done to generate

trial

86 Scope of Opportunity

Table 30 Value and Volume Based Scope of Opportunity for UBL

Value (BDT Cr)

Volume (Tons)

Market

131

7835

Common

121

7600

Boutique

98

235

Evaluation of Entry into Ice cream Business for Bangladesh Limited 55

861 Geographic Contribution

1048766 Dhaka (61)

1048766 Chittagong (19)

1048766 Sylhet (10)

862 UBL objectives

Common Format Ice Creams

1048766 Target 10 Market share in 1st year operation

1048766 Value BDT 11 Cr

1048766 Production capacity required 21 Tons day

1048766 Freezer Placement 1500 freezers

1048766 Cart operation At least 50 carts

Boutiques

1048766 Target Further develop the market

1048766 Focus Dhaka Chittagong and Sylhet Metro

1048766 Franchise At least 20 franchisee operations nation wide in divisional towns

1048766 Pricing Below imported parlours above common formats with around BDT 400 per Litre

87 Critical Success Factors

1048766 UBL is considered as a high profile company in Bangladesh and thus they cannot operate in

the market only with common products like choc-bars and cups They must have premium

products (these require extrusion line) also to carry their brand image Otherwise UBL would not

be able to charge usual premium over competition products

1048766 Launch of ice cream would require huge promotional and activation support in order to gain

customers from Igloo People want novelty regarding ice cream and UBL have to let them know

about their products and create hype

1048766 Cart should be used as a source of distribution Recent successes of Unilever companies like

Indonesia shows that carts can generate more sales and can be used as source of visibility in the

minds of both retail traders and consumers Carts can also provide incremental sales to the

company

1048766 UBL have to create a strong cold chain for ice cream (initially in Dhaka and Chittagong) to

ensure quality products for consumers

1048766 UBL have to build capacity very rapidly to meet consumer demand if the launch is successful

Evaluation of Entry into Ice cream Business for Bangladesh Limited 56

90 BUSINESS PROJECTION

91 Basic Assumptions

Business projection for ice cream business was made based on a conservative approach UBL

would require spending significantly on production capacity and factory dedicated to ice cream

Thus to analyse business possibilities of ice cream certain assumptions were made and collected

data were used These are

1048766 Production equipments and cabinets would cost approximately BDT 55 crores

1048766 Production equipments 45

1048766 Packaging Equipments 15

1048766 Storage Facility 20

1048766 Branded Freezers 10

1048766 Distribution Investment 10 (Distributors would also invest themselves)

1048766 Ice cream factory with a floor size of 20000 sqft would cost BDT 25 crores

1048766 Objective is to capture 10 market share in Dhaka and Chittagong in the first year

1048766 Business would grow by 50 in year 2 and 3 30 in year 4 and 25 in year 5

1048766 Weighted price per litre is BDT 170 according to volume share of single serve ice cream

multiple serve ice cream and boutique ice cream

1048766 Other financial assumptions were also made List of them are provided below but amount has

been removed for confidentiality issues

Assumptions

Trade Margin

Distributors Margin

DutyVAT Rate

Trade Terms Expense of NPS

Trade Terms Expense of NSV

Advertising ampPromotion of NPS

Indirects (Salaries Wages etc)

Trading Tax

Table 31 Assumptions for Business Projection

Evaluation of Entry into Ice cream Business for Bangladesh Limited 57

100 CONCLUSION

Ice cream has good prospect in Bangladesh It is still a growing market with opportunities for big

new entrants With the barriers of entry UBL needs to consider its priorities UBL being an HPC

company traditionally needs to acquire expertise in cold chain distribution and has to invest a lot

of money to rip the benefits of the industry However to initiate company can take regional

support and acquire resource expertise The company should enter the business as soon as

possible since there is potential threat from DANONE to introduce more ice creams after ISIS

diabetic ice cream and also with potential of the industry arch rival Nestlersquo might consider

entering into the industry too

Evaluation of Entry into Ice cream Business for Bangladesh Limited 58

References

Web References

1 wwwunilevercom

2 wwwunilevercombd

3 wwwhllcom

4 wwwunilevercompk

5 wwwthedailystarcom - Life Style Magazine

6 wwwreuterscouk

Evaluation of Entry into Ice cream Business for Bangladesh Limited 59

Page 55: Square Ice cream

82

Normal Lunch Out Of Home

82

Leisure Walk

79

Coming Home From WorkSchool

78

Special Dinner Out Of Home

78

Celebration

78

A Night In With Friends

77

At Home By Myself In The Evening

77

Special Lunch Out Of Home

76

Mid-Afternoon Break Out Of Home

75

Special Lunch At Home

73

Day out with Partner

72

Midmorning Break

70

At Breakfast

68

Family Day Out

68

During Work Or At School

65

Evaluation of Entry into Ice cream Business for Bangladesh Limited 46

Travelling ToFrom WorkSchool

65

At The Cinema

61

Special Event

56

Clubbing At A Party

50

Post GymSports

48

Table 28 Relevant Occasions in Consumersrsquo Lives

Respondents were then asked to mention ldquofrequency of occurrence of the identified occasionsrdquo

The identified replies are as follows Normal dinner at homenormal lunch at homeComing home

from workschoolTraveling tofrom workschoolDay out with Partner SpouseMid-afternoon

break at homeOut of home hanging out with friendsLeisure walkMid-afternoon break out of

homeA night in with friendsSpecial dinner at homeSpecial lunch out of homeFamily day

outSpecial eventPost gymsportsDaily2-3 Times A WeekWeekly2-3 Times A MonthOnce A

MonthEvery 2-3 MonthsLess OftenNever Figure 13 Frequency of Occurrence of Occasions

This shows that ldquoNormal dinner at home Watching TV Normal Lunch At Home At Home

While ReadingMusicSurfing Coming Home From WorkSchool During Work Or At School

Travelling ToFrom WorkSchool Midmorning Break Day Out With Partner Spouse At Home

By Myself During The Dayrdquo are the most frequent daily rituals of busy lives of consumers

652 Frequency of Ice cream Consumption

Respondents were asked to mention ldquoconsumption pattern of ice cream during the identified

occasionrdquo on a scale of 1-5 depicting frequencies like ldquo(5) always (4) most of the times (3)

about half of the times (2) sometimes (1) never do not knowrdquo The responses are depicted in

the following table

Evaluation of Entry into Ice cream Business for Bangladesh Limited 47

444474544655555566756665775967779991011101111101210111110101113111412131314161

011121411131216181519181518211817171719181718201721222130303434253437403741394

046383944464746453745414641374638504843414839373030292726232725222020201926202

21722221317Midmorning

breakWhile clubbing at aAt the cinemaSpecial eventNormal lunch out ofA night in with

friendsNormal dinner atInformal dinner out ofAt home by myselfAt home by myself inOut

shoppingSpecial lunch atDay out with SpouseWatching TVAlwaysmost of the timesAbout half

of the timesSometimesneverdo not know

Figure 14 Frequency of Ice cream Consumption

As it can be seen ldquoDay out with Spouse Special lunch at home Special dinner at home

Watching TV Family day out Celebrationrdquo are the occasions where most frequently ice cream is

consumed

653 Market Character Mapping Relevant Occasions vs Frequency of Consumption

If we plot frequency of consumption on the X-axis of a chart and relevance of occasion

occurrence on the Y-axis taking the above mentioned values as cut-off values we get four

quadrants in the chart depicting four market scenarios that any ice cream manufacturer in

Bangladesh market might encounter given the current market situation This market

segmentation is based on frequency of ice cream consumption in daily occasions of consumer

lives

The segments are

1048766 OPPORTUNITY MARKET High Relevant Occasions-Low Ice cream Frequency

1048766 QUESTION MARKET Less Relevant Occasions-Low Ice cream Frequency

1048766 HIGH FREQUENCY MARKET Relevant Occasions-High Ice cream Frequency

1048766 CAPTIVE MARKET Less Relevant Occasions-High Ice cream Frequency

The chart looks as follows Evaluation of Entry into Ice cream Business for Bangladesh Limited

48

Figure 15 Relevance of Occasion-Frequency of Consumption Mapping

As it can be seen from the above chart Bangladesh Market still lies in the Opportunity and

Question market zone with a pull towards High frequency and Captive Market zones This is

evident from market data as penetration of ice cream still remains at Thana headquarters levels

Also this explains the high market growth rate of 17 as market is yet under developed and

branded quality ice cream has yet not reached all levels of consumers especially rural level that

constitutes around 75 of Bangladeshi market

From the above analysis we can establish that target of ice cream manufacturers should be to

penetrate more into the Bangladeshi market to create higher frequency of ice cream

consumption The following chart shows the strategies to follow for ice cream manufacturers

Figure 16 Required Market Strategy for Bangladesh

Evaluation of Entry into Ice cream Business for Bangladesh Limited 49

As relevance of ice cream consumption occasions can hardly be controlled by marketers their

endeavour should be to create more ldquoemotional and functionalrdquo attachment to ice cream in less

frequent occasions through ldquomarket developmentrdquo strategy to earn share from overall food

expenditure of consumers and at the same time make them consume more ice cream in highly

relevant occasions through ldquopenetrationrdquo strategy

654 Consumersrsquo Emotional Requirements and Product Attributes

All consumers under these clusters also identify the emotional requirements and the significant

product attributes they seek from their current preferred and future desired ice creams These are

provided below

Cluster

Emotional Functional Requirement

Product Attributes

Enjoyment

Flavour Variety

1048766 Combination of different flavours

1048766 Combination of different textures

1048766 Very sweet

1048766 With wafer or biscuit

1048766 With chocolate

1048766 Of a well known brand

Socially Involved

Spoonable Rich

1048766 Very creamy

1048766 Only natural ingredients

1048766 No mess

Care

Size Creaminess

1048766 Big

1048766 Rich full taste

1048766 Smooth

1048766 Value for money

1048766 No mess

Unwind amp Escape

Economy

1048766 Crunchy

1048766 Economic

1048766 Of a well known brand

1048766 Nutritious

Balanced Convenience

Health Conscious

1048766 Of a well known brand

1048766 Nutritious

1048766 Milk based

1048766 Low sugar

1048766 Low carbohydrates

1048766 Filling

Active Self-Grooming

Fruit Vitamins

1048766 Healthy

1048766 Fruit based

1048766 Low fat

1048766 Liquid or drinkable

1048766 Nutritious

1048766 Of a well known brand

Confidence

Drinkable Light

1048766 Low calories

1048766 Light on the stomach

1048766 Chewy or gooey

1048766 Not so sweet

1048766 Natural appearance

Sensual

Appeal or image

1048766 No artificial additives

Evaluation of Entry into Ice cream Business for Bangladesh Limited 50

1048766 Natural appearance

1048766 Melting slowly

1048766 Attractive packaging

1048766 High quality ingredients

1048766 Of a well known brand

Table 29 Requirements amp Product Attributes Desired by Consumer Clusters

Of these findings we see that the identified highlighted barriers to ice cream consumption are

pretty evident among the consumers Mostly people want products of a reliable source or a well

known brand low calories quality ingredients value for money economic type

Evaluation of Entry into Ice cream Business for Bangladesh Limited 51

70 INDUSTRY ATTRACTIVENESS AND ENTRY PROSPECTS

71 Driving Forces of Growth

As identified in the earlier sections there are several driving forces behind the growth of ice-

cream industry in Bangladesh

712 Trade and Infrastructural Level

1048766 As a result of globalization newer varieties have been introduced to the local products Many

foreign companies are also coming as franchise so there has been increased competition and

these boutiques are setting higher standards for the local producers

1048766 The present market growth rate is 18-19 which is being influenced by larger players like

Igloo who are expanding their distribution nation wide with expansion of national electricity

grid

1048766 With entry of Modern Trade and recent organized business approach of retailers has made it

possible for ice cream manufacturers to penetrate into shops even without providing them with

branded freezers

1048766 Weather change has increased ldquosummerrdquo season in our country which has reduced negative

seasonal impact on ice cream

1048766 Large companies like Igloo have taken global learning of using carts as an effective tool of

availability and visibility for ice cream

1048766 New and improved technologies are being used in the production process This technological

advancement has improved quality increased speed of production and made the process more

cost effective

713 Consumer Level

1048766 Only a few years back rich people could afford the luxury of having ice-cream but now it has

become a common product for everybody Ice-cream companies are producing different products

with a wide price range for consumers of every class and status

1048766 Nowadays companies are doing promotional campaigns more frequently the customers get to

know about the product which makes it easier for them to buy the best one

1048766 The improved standard of life and more modernized lifestyle of people is an important reason

for the increased consumption thus growth of the ice-cream industry

Evaluation of Entry into Ice cream Business for Bangladesh Limited 52

72 Prospects of Entry

The ice-cream industry of Bangladesh is an attractive one for the investors because there is a

huge market but number of producers is very small The major reasons behind industry

attractiveness are as follows

1048766 The industryrsquos current growth potential is very high with opportunity for market development

1048766 The competition currently permits adequate profitability and the competitive forces are

becoming stronger with time

1048766 Boutique segment is at a very high growth stage but no operator is currently operating with a

mid price range of BDT 100-400 Ice cream kiosks and small scooping boutiques can operate

within that range

1048766 Current industry driving forces are favourable for the future industry profitability

1048766 Globally oriented consumers look for variety in ice cream that is currently not available

Latest innovations came in the market in 2002 People would welcome new variety and flavours

1048766 There is a gap in the market for balanced convenience through ice cream where consumers can

get nutritional benefits for ice cream Also emotional attachment to ice cream could further be

improvised in promotional campaigns

1048766 There is high scope for market penetration and development to increase frequency of ice

cream consumption

1048766 Level of risk or uncertainty is very low in ice-cream industry because the consumer market is

so huge any product with a standard quality and careful pricing will be able to make significant

profit

1048766 As for geographic reach of the industry 60 market is still in Dhaka There is scope of

expansion and a new entrant can easily capture market share within Dhaka using carts even if

they do not want nation wide cold chain distribution

1048766 The production process is very complex and capital requirements are also high So before

going into production any company should know about their capabilities and weaknesses and

then start the business or else they might suffer huge loss at a certain level

1048766 Unilever can acquire the required resource and use existing multi-national multi-cultural

expertise to enter the market in a grand way

1048766 With high probability of entry from DANONE with more products like the ISIS diabetic ice

cream Unilever should consider entering in this industry as soon as possible

Evaluation of Entry into Ice cream Business for Bangladesh Limited 53

80 ENTRY STRATEGY FOR UNILEVER

While describing the suggested entry strategy for UBL certain issues have been kept

confidential and some issues have been touched but not explained to keep consistency with UBL

confidentiality policy

81 Suggested Entry Areas for UBL

1048766 Boutique segment of the Bangladesh ice cream is only 5 of the branded market UBL needs

to pursue a larger scope to make the entry viable

1048766 UBL cannot fight with unbranded segment as global product quality mandate of Unilever does

not allow UBL to fight in low price-low quality segment

1048766 Recommend entry should be in the common format segment with both single and multiple

servings and in the boutique segment with a different brand name (if possible BEN amp JERRYrsquoS)

1048766 UBL should build up state-of-art modern factory for manufacturing and establish cold chain

facilities initially focusing on metro cities

1048766 Investment issues are required to be addressed for building factory and cold chain and capital

requirement needs to be identified for that purpose4

1048766 UBL may have boutiques for driving image selective top-end offering

1048766 Kiosks can be setup near universities and shopping malls

1048766 Boutiques should be concentrated in Dhaka and Chittagong

1048766 Ice cream for boutiques and kiosks would be produced in factory as institutional packs of 9-10

litres

82 Products

1048766 As a Brand Building country in global Unilever operating framework UBL is entitled only to

bring products developed by the Brand Development countries

1048766 Unilever should focus on serving products that have nutritional benefits (already available

globally) along with usual satisfactions of sensual pleasure functional attributes etc

1048766 Current existent players especially Igloo and Kwality have extensively copied global and

regionally available Unilever products eg Cornelli is same as Wallrsquos Cornetto Vinetta is similar

to Vienetta Mega is similar to Magnum etc UBL needs to differentiate these to consumers on

the ldquotaste the originalrdquo platform where global quality is focused regarding the products

1048766 UBL should also bring regionally famous brands like Moo or Max to create image

differentiation

1048766 Magnum or Moo should be used as premium end ice cream to generate more profit margin

Evaluation of Entry into Ice cream Business for Bangladesh Limited 54

83 Placement

1048766 Distribution focus should be in Dhaka for entry as Dhaka contributes more than 60 of total

ice cream sales in the country

1048766 Company may use carts as distribution method They serve as good source of visibility and

availability It would help in increasing impulse purchase

1048766 At least 1500 outlets in Dhaka and Chittagong needs to be actively served using dedicated

branded refrigerators to generate sales

1048766 50 carts should operate in Dhaka and Chittagong

84 Price

1048766 UBL products should be priced at par with Igloo pricing for the common format ice creams

1048766 UBL can bring in premium single-serve SKUS for the higher economic classes in the price

range of BDT 60-80

1048766 Smaller SKUs (small lolly stick) can be introduced in the price range of BDT 10-15

1048766 In the boutique segment UBL should price products above the semi-premium segment

(Gelateria Igloo Sub Zero or Andersenrsquos) but lower than that of Club Gelato or MoumlvenPick

85 Promotion

1048766 UBL would require strong marketing campaign (As high as 50 of sales) to have a grand

entry in the market

1048766 Presence in the television media would be of utmost importance More than 50 of

promotional expense should be made here initially Gradually it can be reduced

1048766 Newspaper would serve as the second most important option

1048766 Billboards should also be used

1048766 Activations (similar to Lux Channel i Super Star or Igloo Festival) should be done to generate

trial

86 Scope of Opportunity

Table 30 Value and Volume Based Scope of Opportunity for UBL

Value (BDT Cr)

Volume (Tons)

Market

131

7835

Common

121

7600

Boutique

98

235

Evaluation of Entry into Ice cream Business for Bangladesh Limited 55

861 Geographic Contribution

1048766 Dhaka (61)

1048766 Chittagong (19)

1048766 Sylhet (10)

862 UBL objectives

Common Format Ice Creams

1048766 Target 10 Market share in 1st year operation

1048766 Value BDT 11 Cr

1048766 Production capacity required 21 Tons day

1048766 Freezer Placement 1500 freezers

1048766 Cart operation At least 50 carts

Boutiques

1048766 Target Further develop the market

1048766 Focus Dhaka Chittagong and Sylhet Metro

1048766 Franchise At least 20 franchisee operations nation wide in divisional towns

1048766 Pricing Below imported parlours above common formats with around BDT 400 per Litre

87 Critical Success Factors

1048766 UBL is considered as a high profile company in Bangladesh and thus they cannot operate in

the market only with common products like choc-bars and cups They must have premium

products (these require extrusion line) also to carry their brand image Otherwise UBL would not

be able to charge usual premium over competition products

1048766 Launch of ice cream would require huge promotional and activation support in order to gain

customers from Igloo People want novelty regarding ice cream and UBL have to let them know

about their products and create hype

1048766 Cart should be used as a source of distribution Recent successes of Unilever companies like

Indonesia shows that carts can generate more sales and can be used as source of visibility in the

minds of both retail traders and consumers Carts can also provide incremental sales to the

company

1048766 UBL have to create a strong cold chain for ice cream (initially in Dhaka and Chittagong) to

ensure quality products for consumers

1048766 UBL have to build capacity very rapidly to meet consumer demand if the launch is successful

Evaluation of Entry into Ice cream Business for Bangladesh Limited 56

90 BUSINESS PROJECTION

91 Basic Assumptions

Business projection for ice cream business was made based on a conservative approach UBL

would require spending significantly on production capacity and factory dedicated to ice cream

Thus to analyse business possibilities of ice cream certain assumptions were made and collected

data were used These are

1048766 Production equipments and cabinets would cost approximately BDT 55 crores

1048766 Production equipments 45

1048766 Packaging Equipments 15

1048766 Storage Facility 20

1048766 Branded Freezers 10

1048766 Distribution Investment 10 (Distributors would also invest themselves)

1048766 Ice cream factory with a floor size of 20000 sqft would cost BDT 25 crores

1048766 Objective is to capture 10 market share in Dhaka and Chittagong in the first year

1048766 Business would grow by 50 in year 2 and 3 30 in year 4 and 25 in year 5

1048766 Weighted price per litre is BDT 170 according to volume share of single serve ice cream

multiple serve ice cream and boutique ice cream

1048766 Other financial assumptions were also made List of them are provided below but amount has

been removed for confidentiality issues

Assumptions

Trade Margin

Distributors Margin

DutyVAT Rate

Trade Terms Expense of NPS

Trade Terms Expense of NSV

Advertising ampPromotion of NPS

Indirects (Salaries Wages etc)

Trading Tax

Table 31 Assumptions for Business Projection

Evaluation of Entry into Ice cream Business for Bangladesh Limited 57

100 CONCLUSION

Ice cream has good prospect in Bangladesh It is still a growing market with opportunities for big

new entrants With the barriers of entry UBL needs to consider its priorities UBL being an HPC

company traditionally needs to acquire expertise in cold chain distribution and has to invest a lot

of money to rip the benefits of the industry However to initiate company can take regional

support and acquire resource expertise The company should enter the business as soon as

possible since there is potential threat from DANONE to introduce more ice creams after ISIS

diabetic ice cream and also with potential of the industry arch rival Nestlersquo might consider

entering into the industry too

Evaluation of Entry into Ice cream Business for Bangladesh Limited 58

References

Web References

1 wwwunilevercom

2 wwwunilevercombd

3 wwwhllcom

4 wwwunilevercompk

5 wwwthedailystarcom - Life Style Magazine

6 wwwreuterscouk

Evaluation of Entry into Ice cream Business for Bangladesh Limited 59

Page 56: Square Ice cream

Day out with Partner

72

Midmorning Break

70

At Breakfast

68

Family Day Out

68

During Work Or At School

65

Evaluation of Entry into Ice cream Business for Bangladesh Limited 46

Travelling ToFrom WorkSchool

65

At The Cinema

61

Special Event

56

Clubbing At A Party

50

Post GymSports

48

Table 28 Relevant Occasions in Consumersrsquo Lives

Respondents were then asked to mention ldquofrequency of occurrence of the identified occasionsrdquo

The identified replies are as follows Normal dinner at homenormal lunch at homeComing home

from workschoolTraveling tofrom workschoolDay out with Partner SpouseMid-afternoon

break at homeOut of home hanging out with friendsLeisure walkMid-afternoon break out of

homeA night in with friendsSpecial dinner at homeSpecial lunch out of homeFamily day

outSpecial eventPost gymsportsDaily2-3 Times A WeekWeekly2-3 Times A MonthOnce A

MonthEvery 2-3 MonthsLess OftenNever Figure 13 Frequency of Occurrence of Occasions

This shows that ldquoNormal dinner at home Watching TV Normal Lunch At Home At Home

While ReadingMusicSurfing Coming Home From WorkSchool During Work Or At School

Travelling ToFrom WorkSchool Midmorning Break Day Out With Partner Spouse At Home

By Myself During The Dayrdquo are the most frequent daily rituals of busy lives of consumers

652 Frequency of Ice cream Consumption

Respondents were asked to mention ldquoconsumption pattern of ice cream during the identified

occasionrdquo on a scale of 1-5 depicting frequencies like ldquo(5) always (4) most of the times (3)

about half of the times (2) sometimes (1) never do not knowrdquo The responses are depicted in

the following table

Evaluation of Entry into Ice cream Business for Bangladesh Limited 47

444474544655555566756665775967779991011101111101210111110101113111412131314161

011121411131216181519181518211817171719181718201721222130303434253437403741394

046383944464746453745414641374638504843414839373030292726232725222020201926202

21722221317Midmorning

breakWhile clubbing at aAt the cinemaSpecial eventNormal lunch out ofA night in with

friendsNormal dinner atInformal dinner out ofAt home by myselfAt home by myself inOut

shoppingSpecial lunch atDay out with SpouseWatching TVAlwaysmost of the timesAbout half

of the timesSometimesneverdo not know

Figure 14 Frequency of Ice cream Consumption

As it can be seen ldquoDay out with Spouse Special lunch at home Special dinner at home

Watching TV Family day out Celebrationrdquo are the occasions where most frequently ice cream is

consumed

653 Market Character Mapping Relevant Occasions vs Frequency of Consumption

If we plot frequency of consumption on the X-axis of a chart and relevance of occasion

occurrence on the Y-axis taking the above mentioned values as cut-off values we get four

quadrants in the chart depicting four market scenarios that any ice cream manufacturer in

Bangladesh market might encounter given the current market situation This market

segmentation is based on frequency of ice cream consumption in daily occasions of consumer

lives

The segments are

1048766 OPPORTUNITY MARKET High Relevant Occasions-Low Ice cream Frequency

1048766 QUESTION MARKET Less Relevant Occasions-Low Ice cream Frequency

1048766 HIGH FREQUENCY MARKET Relevant Occasions-High Ice cream Frequency

1048766 CAPTIVE MARKET Less Relevant Occasions-High Ice cream Frequency

The chart looks as follows Evaluation of Entry into Ice cream Business for Bangladesh Limited

48

Figure 15 Relevance of Occasion-Frequency of Consumption Mapping

As it can be seen from the above chart Bangladesh Market still lies in the Opportunity and

Question market zone with a pull towards High frequency and Captive Market zones This is

evident from market data as penetration of ice cream still remains at Thana headquarters levels

Also this explains the high market growth rate of 17 as market is yet under developed and

branded quality ice cream has yet not reached all levels of consumers especially rural level that

constitutes around 75 of Bangladeshi market

From the above analysis we can establish that target of ice cream manufacturers should be to

penetrate more into the Bangladeshi market to create higher frequency of ice cream

consumption The following chart shows the strategies to follow for ice cream manufacturers

Figure 16 Required Market Strategy for Bangladesh

Evaluation of Entry into Ice cream Business for Bangladesh Limited 49

As relevance of ice cream consumption occasions can hardly be controlled by marketers their

endeavour should be to create more ldquoemotional and functionalrdquo attachment to ice cream in less

frequent occasions through ldquomarket developmentrdquo strategy to earn share from overall food

expenditure of consumers and at the same time make them consume more ice cream in highly

relevant occasions through ldquopenetrationrdquo strategy

654 Consumersrsquo Emotional Requirements and Product Attributes

All consumers under these clusters also identify the emotional requirements and the significant

product attributes they seek from their current preferred and future desired ice creams These are

provided below

Cluster

Emotional Functional Requirement

Product Attributes

Enjoyment

Flavour Variety

1048766 Combination of different flavours

1048766 Combination of different textures

1048766 Very sweet

1048766 With wafer or biscuit

1048766 With chocolate

1048766 Of a well known brand

Socially Involved

Spoonable Rich

1048766 Very creamy

1048766 Only natural ingredients

1048766 No mess

Care

Size Creaminess

1048766 Big

1048766 Rich full taste

1048766 Smooth

1048766 Value for money

1048766 No mess

Unwind amp Escape

Economy

1048766 Crunchy

1048766 Economic

1048766 Of a well known brand

1048766 Nutritious

Balanced Convenience

Health Conscious

1048766 Of a well known brand

1048766 Nutritious

1048766 Milk based

1048766 Low sugar

1048766 Low carbohydrates

1048766 Filling

Active Self-Grooming

Fruit Vitamins

1048766 Healthy

1048766 Fruit based

1048766 Low fat

1048766 Liquid or drinkable

1048766 Nutritious

1048766 Of a well known brand

Confidence

Drinkable Light

1048766 Low calories

1048766 Light on the stomach

1048766 Chewy or gooey

1048766 Not so sweet

1048766 Natural appearance

Sensual

Appeal or image

1048766 No artificial additives

Evaluation of Entry into Ice cream Business for Bangladesh Limited 50

1048766 Natural appearance

1048766 Melting slowly

1048766 Attractive packaging

1048766 High quality ingredients

1048766 Of a well known brand

Table 29 Requirements amp Product Attributes Desired by Consumer Clusters

Of these findings we see that the identified highlighted barriers to ice cream consumption are

pretty evident among the consumers Mostly people want products of a reliable source or a well

known brand low calories quality ingredients value for money economic type

Evaluation of Entry into Ice cream Business for Bangladesh Limited 51

70 INDUSTRY ATTRACTIVENESS AND ENTRY PROSPECTS

71 Driving Forces of Growth

As identified in the earlier sections there are several driving forces behind the growth of ice-

cream industry in Bangladesh

712 Trade and Infrastructural Level

1048766 As a result of globalization newer varieties have been introduced to the local products Many

foreign companies are also coming as franchise so there has been increased competition and

these boutiques are setting higher standards for the local producers

1048766 The present market growth rate is 18-19 which is being influenced by larger players like

Igloo who are expanding their distribution nation wide with expansion of national electricity

grid

1048766 With entry of Modern Trade and recent organized business approach of retailers has made it

possible for ice cream manufacturers to penetrate into shops even without providing them with

branded freezers

1048766 Weather change has increased ldquosummerrdquo season in our country which has reduced negative

seasonal impact on ice cream

1048766 Large companies like Igloo have taken global learning of using carts as an effective tool of

availability and visibility for ice cream

1048766 New and improved technologies are being used in the production process This technological

advancement has improved quality increased speed of production and made the process more

cost effective

713 Consumer Level

1048766 Only a few years back rich people could afford the luxury of having ice-cream but now it has

become a common product for everybody Ice-cream companies are producing different products

with a wide price range for consumers of every class and status

1048766 Nowadays companies are doing promotional campaigns more frequently the customers get to

know about the product which makes it easier for them to buy the best one

1048766 The improved standard of life and more modernized lifestyle of people is an important reason

for the increased consumption thus growth of the ice-cream industry

Evaluation of Entry into Ice cream Business for Bangladesh Limited 52

72 Prospects of Entry

The ice-cream industry of Bangladesh is an attractive one for the investors because there is a

huge market but number of producers is very small The major reasons behind industry

attractiveness are as follows

1048766 The industryrsquos current growth potential is very high with opportunity for market development

1048766 The competition currently permits adequate profitability and the competitive forces are

becoming stronger with time

1048766 Boutique segment is at a very high growth stage but no operator is currently operating with a

mid price range of BDT 100-400 Ice cream kiosks and small scooping boutiques can operate

within that range

1048766 Current industry driving forces are favourable for the future industry profitability

1048766 Globally oriented consumers look for variety in ice cream that is currently not available

Latest innovations came in the market in 2002 People would welcome new variety and flavours

1048766 There is a gap in the market for balanced convenience through ice cream where consumers can

get nutritional benefits for ice cream Also emotional attachment to ice cream could further be

improvised in promotional campaigns

1048766 There is high scope for market penetration and development to increase frequency of ice

cream consumption

1048766 Level of risk or uncertainty is very low in ice-cream industry because the consumer market is

so huge any product with a standard quality and careful pricing will be able to make significant

profit

1048766 As for geographic reach of the industry 60 market is still in Dhaka There is scope of

expansion and a new entrant can easily capture market share within Dhaka using carts even if

they do not want nation wide cold chain distribution

1048766 The production process is very complex and capital requirements are also high So before

going into production any company should know about their capabilities and weaknesses and

then start the business or else they might suffer huge loss at a certain level

1048766 Unilever can acquire the required resource and use existing multi-national multi-cultural

expertise to enter the market in a grand way

1048766 With high probability of entry from DANONE with more products like the ISIS diabetic ice

cream Unilever should consider entering in this industry as soon as possible

Evaluation of Entry into Ice cream Business for Bangladesh Limited 53

80 ENTRY STRATEGY FOR UNILEVER

While describing the suggested entry strategy for UBL certain issues have been kept

confidential and some issues have been touched but not explained to keep consistency with UBL

confidentiality policy

81 Suggested Entry Areas for UBL

1048766 Boutique segment of the Bangladesh ice cream is only 5 of the branded market UBL needs

to pursue a larger scope to make the entry viable

1048766 UBL cannot fight with unbranded segment as global product quality mandate of Unilever does

not allow UBL to fight in low price-low quality segment

1048766 Recommend entry should be in the common format segment with both single and multiple

servings and in the boutique segment with a different brand name (if possible BEN amp JERRYrsquoS)

1048766 UBL should build up state-of-art modern factory for manufacturing and establish cold chain

facilities initially focusing on metro cities

1048766 Investment issues are required to be addressed for building factory and cold chain and capital

requirement needs to be identified for that purpose4

1048766 UBL may have boutiques for driving image selective top-end offering

1048766 Kiosks can be setup near universities and shopping malls

1048766 Boutiques should be concentrated in Dhaka and Chittagong

1048766 Ice cream for boutiques and kiosks would be produced in factory as institutional packs of 9-10

litres

82 Products

1048766 As a Brand Building country in global Unilever operating framework UBL is entitled only to

bring products developed by the Brand Development countries

1048766 Unilever should focus on serving products that have nutritional benefits (already available

globally) along with usual satisfactions of sensual pleasure functional attributes etc

1048766 Current existent players especially Igloo and Kwality have extensively copied global and

regionally available Unilever products eg Cornelli is same as Wallrsquos Cornetto Vinetta is similar

to Vienetta Mega is similar to Magnum etc UBL needs to differentiate these to consumers on

the ldquotaste the originalrdquo platform where global quality is focused regarding the products

1048766 UBL should also bring regionally famous brands like Moo or Max to create image

differentiation

1048766 Magnum or Moo should be used as premium end ice cream to generate more profit margin

Evaluation of Entry into Ice cream Business for Bangladesh Limited 54

83 Placement

1048766 Distribution focus should be in Dhaka for entry as Dhaka contributes more than 60 of total

ice cream sales in the country

1048766 Company may use carts as distribution method They serve as good source of visibility and

availability It would help in increasing impulse purchase

1048766 At least 1500 outlets in Dhaka and Chittagong needs to be actively served using dedicated

branded refrigerators to generate sales

1048766 50 carts should operate in Dhaka and Chittagong

84 Price

1048766 UBL products should be priced at par with Igloo pricing for the common format ice creams

1048766 UBL can bring in premium single-serve SKUS for the higher economic classes in the price

range of BDT 60-80

1048766 Smaller SKUs (small lolly stick) can be introduced in the price range of BDT 10-15

1048766 In the boutique segment UBL should price products above the semi-premium segment

(Gelateria Igloo Sub Zero or Andersenrsquos) but lower than that of Club Gelato or MoumlvenPick

85 Promotion

1048766 UBL would require strong marketing campaign (As high as 50 of sales) to have a grand

entry in the market

1048766 Presence in the television media would be of utmost importance More than 50 of

promotional expense should be made here initially Gradually it can be reduced

1048766 Newspaper would serve as the second most important option

1048766 Billboards should also be used

1048766 Activations (similar to Lux Channel i Super Star or Igloo Festival) should be done to generate

trial

86 Scope of Opportunity

Table 30 Value and Volume Based Scope of Opportunity for UBL

Value (BDT Cr)

Volume (Tons)

Market

131

7835

Common

121

7600

Boutique

98

235

Evaluation of Entry into Ice cream Business for Bangladesh Limited 55

861 Geographic Contribution

1048766 Dhaka (61)

1048766 Chittagong (19)

1048766 Sylhet (10)

862 UBL objectives

Common Format Ice Creams

1048766 Target 10 Market share in 1st year operation

1048766 Value BDT 11 Cr

1048766 Production capacity required 21 Tons day

1048766 Freezer Placement 1500 freezers

1048766 Cart operation At least 50 carts

Boutiques

1048766 Target Further develop the market

1048766 Focus Dhaka Chittagong and Sylhet Metro

1048766 Franchise At least 20 franchisee operations nation wide in divisional towns

1048766 Pricing Below imported parlours above common formats with around BDT 400 per Litre

87 Critical Success Factors

1048766 UBL is considered as a high profile company in Bangladesh and thus they cannot operate in

the market only with common products like choc-bars and cups They must have premium

products (these require extrusion line) also to carry their brand image Otherwise UBL would not

be able to charge usual premium over competition products

1048766 Launch of ice cream would require huge promotional and activation support in order to gain

customers from Igloo People want novelty regarding ice cream and UBL have to let them know

about their products and create hype

1048766 Cart should be used as a source of distribution Recent successes of Unilever companies like

Indonesia shows that carts can generate more sales and can be used as source of visibility in the

minds of both retail traders and consumers Carts can also provide incremental sales to the

company

1048766 UBL have to create a strong cold chain for ice cream (initially in Dhaka and Chittagong) to

ensure quality products for consumers

1048766 UBL have to build capacity very rapidly to meet consumer demand if the launch is successful

Evaluation of Entry into Ice cream Business for Bangladesh Limited 56

90 BUSINESS PROJECTION

91 Basic Assumptions

Business projection for ice cream business was made based on a conservative approach UBL

would require spending significantly on production capacity and factory dedicated to ice cream

Thus to analyse business possibilities of ice cream certain assumptions were made and collected

data were used These are

1048766 Production equipments and cabinets would cost approximately BDT 55 crores

1048766 Production equipments 45

1048766 Packaging Equipments 15

1048766 Storage Facility 20

1048766 Branded Freezers 10

1048766 Distribution Investment 10 (Distributors would also invest themselves)

1048766 Ice cream factory with a floor size of 20000 sqft would cost BDT 25 crores

1048766 Objective is to capture 10 market share in Dhaka and Chittagong in the first year

1048766 Business would grow by 50 in year 2 and 3 30 in year 4 and 25 in year 5

1048766 Weighted price per litre is BDT 170 according to volume share of single serve ice cream

multiple serve ice cream and boutique ice cream

1048766 Other financial assumptions were also made List of them are provided below but amount has

been removed for confidentiality issues

Assumptions

Trade Margin

Distributors Margin

DutyVAT Rate

Trade Terms Expense of NPS

Trade Terms Expense of NSV

Advertising ampPromotion of NPS

Indirects (Salaries Wages etc)

Trading Tax

Table 31 Assumptions for Business Projection

Evaluation of Entry into Ice cream Business for Bangladesh Limited 57

100 CONCLUSION

Ice cream has good prospect in Bangladesh It is still a growing market with opportunities for big

new entrants With the barriers of entry UBL needs to consider its priorities UBL being an HPC

company traditionally needs to acquire expertise in cold chain distribution and has to invest a lot

of money to rip the benefits of the industry However to initiate company can take regional

support and acquire resource expertise The company should enter the business as soon as

possible since there is potential threat from DANONE to introduce more ice creams after ISIS

diabetic ice cream and also with potential of the industry arch rival Nestlersquo might consider

entering into the industry too

Evaluation of Entry into Ice cream Business for Bangladesh Limited 58

References

Web References

1 wwwunilevercom

2 wwwunilevercombd

3 wwwhllcom

4 wwwunilevercompk

5 wwwthedailystarcom - Life Style Magazine

6 wwwreuterscouk

Evaluation of Entry into Ice cream Business for Bangladesh Limited 59

Page 57: Square Ice cream

Table 28 Relevant Occasions in Consumersrsquo Lives

Respondents were then asked to mention ldquofrequency of occurrence of the identified occasionsrdquo

The identified replies are as follows Normal dinner at homenormal lunch at homeComing home

from workschoolTraveling tofrom workschoolDay out with Partner SpouseMid-afternoon

break at homeOut of home hanging out with friendsLeisure walkMid-afternoon break out of

homeA night in with friendsSpecial dinner at homeSpecial lunch out of homeFamily day

outSpecial eventPost gymsportsDaily2-3 Times A WeekWeekly2-3 Times A MonthOnce A

MonthEvery 2-3 MonthsLess OftenNever Figure 13 Frequency of Occurrence of Occasions

This shows that ldquoNormal dinner at home Watching TV Normal Lunch At Home At Home

While ReadingMusicSurfing Coming Home From WorkSchool During Work Or At School

Travelling ToFrom WorkSchool Midmorning Break Day Out With Partner Spouse At Home

By Myself During The Dayrdquo are the most frequent daily rituals of busy lives of consumers

652 Frequency of Ice cream Consumption

Respondents were asked to mention ldquoconsumption pattern of ice cream during the identified

occasionrdquo on a scale of 1-5 depicting frequencies like ldquo(5) always (4) most of the times (3)

about half of the times (2) sometimes (1) never do not knowrdquo The responses are depicted in

the following table

Evaluation of Entry into Ice cream Business for Bangladesh Limited 47

444474544655555566756665775967779991011101111101210111110101113111412131314161

011121411131216181519181518211817171719181718201721222130303434253437403741394

046383944464746453745414641374638504843414839373030292726232725222020201926202

21722221317Midmorning

breakWhile clubbing at aAt the cinemaSpecial eventNormal lunch out ofA night in with

friendsNormal dinner atInformal dinner out ofAt home by myselfAt home by myself inOut

shoppingSpecial lunch atDay out with SpouseWatching TVAlwaysmost of the timesAbout half

of the timesSometimesneverdo not know

Figure 14 Frequency of Ice cream Consumption

As it can be seen ldquoDay out with Spouse Special lunch at home Special dinner at home

Watching TV Family day out Celebrationrdquo are the occasions where most frequently ice cream is

consumed

653 Market Character Mapping Relevant Occasions vs Frequency of Consumption

If we plot frequency of consumption on the X-axis of a chart and relevance of occasion

occurrence on the Y-axis taking the above mentioned values as cut-off values we get four

quadrants in the chart depicting four market scenarios that any ice cream manufacturer in

Bangladesh market might encounter given the current market situation This market

segmentation is based on frequency of ice cream consumption in daily occasions of consumer

lives

The segments are

1048766 OPPORTUNITY MARKET High Relevant Occasions-Low Ice cream Frequency

1048766 QUESTION MARKET Less Relevant Occasions-Low Ice cream Frequency

1048766 HIGH FREQUENCY MARKET Relevant Occasions-High Ice cream Frequency

1048766 CAPTIVE MARKET Less Relevant Occasions-High Ice cream Frequency

The chart looks as follows Evaluation of Entry into Ice cream Business for Bangladesh Limited

48

Figure 15 Relevance of Occasion-Frequency of Consumption Mapping

As it can be seen from the above chart Bangladesh Market still lies in the Opportunity and

Question market zone with a pull towards High frequency and Captive Market zones This is

evident from market data as penetration of ice cream still remains at Thana headquarters levels

Also this explains the high market growth rate of 17 as market is yet under developed and

branded quality ice cream has yet not reached all levels of consumers especially rural level that

constitutes around 75 of Bangladeshi market

From the above analysis we can establish that target of ice cream manufacturers should be to

penetrate more into the Bangladeshi market to create higher frequency of ice cream

consumption The following chart shows the strategies to follow for ice cream manufacturers

Figure 16 Required Market Strategy for Bangladesh

Evaluation of Entry into Ice cream Business for Bangladesh Limited 49

As relevance of ice cream consumption occasions can hardly be controlled by marketers their

endeavour should be to create more ldquoemotional and functionalrdquo attachment to ice cream in less

frequent occasions through ldquomarket developmentrdquo strategy to earn share from overall food

expenditure of consumers and at the same time make them consume more ice cream in highly

relevant occasions through ldquopenetrationrdquo strategy

654 Consumersrsquo Emotional Requirements and Product Attributes

All consumers under these clusters also identify the emotional requirements and the significant

product attributes they seek from their current preferred and future desired ice creams These are

provided below

Cluster

Emotional Functional Requirement

Product Attributes

Enjoyment

Flavour Variety

1048766 Combination of different flavours

1048766 Combination of different textures

1048766 Very sweet

1048766 With wafer or biscuit

1048766 With chocolate

1048766 Of a well known brand

Socially Involved

Spoonable Rich

1048766 Very creamy

1048766 Only natural ingredients

1048766 No mess

Care

Size Creaminess

1048766 Big

1048766 Rich full taste

1048766 Smooth

1048766 Value for money

1048766 No mess

Unwind amp Escape

Economy

1048766 Crunchy

1048766 Economic

1048766 Of a well known brand

1048766 Nutritious

Balanced Convenience

Health Conscious

1048766 Of a well known brand

1048766 Nutritious

1048766 Milk based

1048766 Low sugar

1048766 Low carbohydrates

1048766 Filling

Active Self-Grooming

Fruit Vitamins

1048766 Healthy

1048766 Fruit based

1048766 Low fat

1048766 Liquid or drinkable

1048766 Nutritious

1048766 Of a well known brand

Confidence

Drinkable Light

1048766 Low calories

1048766 Light on the stomach

1048766 Chewy or gooey

1048766 Not so sweet

1048766 Natural appearance

Sensual

Appeal or image

1048766 No artificial additives

Evaluation of Entry into Ice cream Business for Bangladesh Limited 50

1048766 Natural appearance

1048766 Melting slowly

1048766 Attractive packaging

1048766 High quality ingredients

1048766 Of a well known brand

Table 29 Requirements amp Product Attributes Desired by Consumer Clusters

Of these findings we see that the identified highlighted barriers to ice cream consumption are

pretty evident among the consumers Mostly people want products of a reliable source or a well

known brand low calories quality ingredients value for money economic type

Evaluation of Entry into Ice cream Business for Bangladesh Limited 51

70 INDUSTRY ATTRACTIVENESS AND ENTRY PROSPECTS

71 Driving Forces of Growth

As identified in the earlier sections there are several driving forces behind the growth of ice-

cream industry in Bangladesh

712 Trade and Infrastructural Level

1048766 As a result of globalization newer varieties have been introduced to the local products Many

foreign companies are also coming as franchise so there has been increased competition and

these boutiques are setting higher standards for the local producers

1048766 The present market growth rate is 18-19 which is being influenced by larger players like

Igloo who are expanding their distribution nation wide with expansion of national electricity

grid

1048766 With entry of Modern Trade and recent organized business approach of retailers has made it

possible for ice cream manufacturers to penetrate into shops even without providing them with

branded freezers

1048766 Weather change has increased ldquosummerrdquo season in our country which has reduced negative

seasonal impact on ice cream

1048766 Large companies like Igloo have taken global learning of using carts as an effective tool of

availability and visibility for ice cream

1048766 New and improved technologies are being used in the production process This technological

advancement has improved quality increased speed of production and made the process more

cost effective

713 Consumer Level

1048766 Only a few years back rich people could afford the luxury of having ice-cream but now it has

become a common product for everybody Ice-cream companies are producing different products

with a wide price range for consumers of every class and status

1048766 Nowadays companies are doing promotional campaigns more frequently the customers get to

know about the product which makes it easier for them to buy the best one

1048766 The improved standard of life and more modernized lifestyle of people is an important reason

for the increased consumption thus growth of the ice-cream industry

Evaluation of Entry into Ice cream Business for Bangladesh Limited 52

72 Prospects of Entry

The ice-cream industry of Bangladesh is an attractive one for the investors because there is a

huge market but number of producers is very small The major reasons behind industry

attractiveness are as follows

1048766 The industryrsquos current growth potential is very high with opportunity for market development

1048766 The competition currently permits adequate profitability and the competitive forces are

becoming stronger with time

1048766 Boutique segment is at a very high growth stage but no operator is currently operating with a

mid price range of BDT 100-400 Ice cream kiosks and small scooping boutiques can operate

within that range

1048766 Current industry driving forces are favourable for the future industry profitability

1048766 Globally oriented consumers look for variety in ice cream that is currently not available

Latest innovations came in the market in 2002 People would welcome new variety and flavours

1048766 There is a gap in the market for balanced convenience through ice cream where consumers can

get nutritional benefits for ice cream Also emotional attachment to ice cream could further be

improvised in promotional campaigns

1048766 There is high scope for market penetration and development to increase frequency of ice

cream consumption

1048766 Level of risk or uncertainty is very low in ice-cream industry because the consumer market is

so huge any product with a standard quality and careful pricing will be able to make significant

profit

1048766 As for geographic reach of the industry 60 market is still in Dhaka There is scope of

expansion and a new entrant can easily capture market share within Dhaka using carts even if

they do not want nation wide cold chain distribution

1048766 The production process is very complex and capital requirements are also high So before

going into production any company should know about their capabilities and weaknesses and

then start the business or else they might suffer huge loss at a certain level

1048766 Unilever can acquire the required resource and use existing multi-national multi-cultural

expertise to enter the market in a grand way

1048766 With high probability of entry from DANONE with more products like the ISIS diabetic ice

cream Unilever should consider entering in this industry as soon as possible

Evaluation of Entry into Ice cream Business for Bangladesh Limited 53

80 ENTRY STRATEGY FOR UNILEVER

While describing the suggested entry strategy for UBL certain issues have been kept

confidential and some issues have been touched but not explained to keep consistency with UBL

confidentiality policy

81 Suggested Entry Areas for UBL

1048766 Boutique segment of the Bangladesh ice cream is only 5 of the branded market UBL needs

to pursue a larger scope to make the entry viable

1048766 UBL cannot fight with unbranded segment as global product quality mandate of Unilever does

not allow UBL to fight in low price-low quality segment

1048766 Recommend entry should be in the common format segment with both single and multiple

servings and in the boutique segment with a different brand name (if possible BEN amp JERRYrsquoS)

1048766 UBL should build up state-of-art modern factory for manufacturing and establish cold chain

facilities initially focusing on metro cities

1048766 Investment issues are required to be addressed for building factory and cold chain and capital

requirement needs to be identified for that purpose4

1048766 UBL may have boutiques for driving image selective top-end offering

1048766 Kiosks can be setup near universities and shopping malls

1048766 Boutiques should be concentrated in Dhaka and Chittagong

1048766 Ice cream for boutiques and kiosks would be produced in factory as institutional packs of 9-10

litres

82 Products

1048766 As a Brand Building country in global Unilever operating framework UBL is entitled only to

bring products developed by the Brand Development countries

1048766 Unilever should focus on serving products that have nutritional benefits (already available

globally) along with usual satisfactions of sensual pleasure functional attributes etc

1048766 Current existent players especially Igloo and Kwality have extensively copied global and

regionally available Unilever products eg Cornelli is same as Wallrsquos Cornetto Vinetta is similar

to Vienetta Mega is similar to Magnum etc UBL needs to differentiate these to consumers on

the ldquotaste the originalrdquo platform where global quality is focused regarding the products

1048766 UBL should also bring regionally famous brands like Moo or Max to create image

differentiation

1048766 Magnum or Moo should be used as premium end ice cream to generate more profit margin

Evaluation of Entry into Ice cream Business for Bangladesh Limited 54

83 Placement

1048766 Distribution focus should be in Dhaka for entry as Dhaka contributes more than 60 of total

ice cream sales in the country

1048766 Company may use carts as distribution method They serve as good source of visibility and

availability It would help in increasing impulse purchase

1048766 At least 1500 outlets in Dhaka and Chittagong needs to be actively served using dedicated

branded refrigerators to generate sales

1048766 50 carts should operate in Dhaka and Chittagong

84 Price

1048766 UBL products should be priced at par with Igloo pricing for the common format ice creams

1048766 UBL can bring in premium single-serve SKUS for the higher economic classes in the price

range of BDT 60-80

1048766 Smaller SKUs (small lolly stick) can be introduced in the price range of BDT 10-15

1048766 In the boutique segment UBL should price products above the semi-premium segment

(Gelateria Igloo Sub Zero or Andersenrsquos) but lower than that of Club Gelato or MoumlvenPick

85 Promotion

1048766 UBL would require strong marketing campaign (As high as 50 of sales) to have a grand

entry in the market

1048766 Presence in the television media would be of utmost importance More than 50 of

promotional expense should be made here initially Gradually it can be reduced

1048766 Newspaper would serve as the second most important option

1048766 Billboards should also be used

1048766 Activations (similar to Lux Channel i Super Star or Igloo Festival) should be done to generate

trial

86 Scope of Opportunity

Table 30 Value and Volume Based Scope of Opportunity for UBL

Value (BDT Cr)

Volume (Tons)

Market

131

7835

Common

121

7600

Boutique

98

235

Evaluation of Entry into Ice cream Business for Bangladesh Limited 55

861 Geographic Contribution

1048766 Dhaka (61)

1048766 Chittagong (19)

1048766 Sylhet (10)

862 UBL objectives

Common Format Ice Creams

1048766 Target 10 Market share in 1st year operation

1048766 Value BDT 11 Cr

1048766 Production capacity required 21 Tons day

1048766 Freezer Placement 1500 freezers

1048766 Cart operation At least 50 carts

Boutiques

1048766 Target Further develop the market

1048766 Focus Dhaka Chittagong and Sylhet Metro

1048766 Franchise At least 20 franchisee operations nation wide in divisional towns

1048766 Pricing Below imported parlours above common formats with around BDT 400 per Litre

87 Critical Success Factors

1048766 UBL is considered as a high profile company in Bangladesh and thus they cannot operate in

the market only with common products like choc-bars and cups They must have premium

products (these require extrusion line) also to carry their brand image Otherwise UBL would not

be able to charge usual premium over competition products

1048766 Launch of ice cream would require huge promotional and activation support in order to gain

customers from Igloo People want novelty regarding ice cream and UBL have to let them know

about their products and create hype

1048766 Cart should be used as a source of distribution Recent successes of Unilever companies like

Indonesia shows that carts can generate more sales and can be used as source of visibility in the

minds of both retail traders and consumers Carts can also provide incremental sales to the

company

1048766 UBL have to create a strong cold chain for ice cream (initially in Dhaka and Chittagong) to

ensure quality products for consumers

1048766 UBL have to build capacity very rapidly to meet consumer demand if the launch is successful

Evaluation of Entry into Ice cream Business for Bangladesh Limited 56

90 BUSINESS PROJECTION

91 Basic Assumptions

Business projection for ice cream business was made based on a conservative approach UBL

would require spending significantly on production capacity and factory dedicated to ice cream

Thus to analyse business possibilities of ice cream certain assumptions were made and collected

data were used These are

1048766 Production equipments and cabinets would cost approximately BDT 55 crores

1048766 Production equipments 45

1048766 Packaging Equipments 15

1048766 Storage Facility 20

1048766 Branded Freezers 10

1048766 Distribution Investment 10 (Distributors would also invest themselves)

1048766 Ice cream factory with a floor size of 20000 sqft would cost BDT 25 crores

1048766 Objective is to capture 10 market share in Dhaka and Chittagong in the first year

1048766 Business would grow by 50 in year 2 and 3 30 in year 4 and 25 in year 5

1048766 Weighted price per litre is BDT 170 according to volume share of single serve ice cream

multiple serve ice cream and boutique ice cream

1048766 Other financial assumptions were also made List of them are provided below but amount has

been removed for confidentiality issues

Assumptions

Trade Margin

Distributors Margin

DutyVAT Rate

Trade Terms Expense of NPS

Trade Terms Expense of NSV

Advertising ampPromotion of NPS

Indirects (Salaries Wages etc)

Trading Tax

Table 31 Assumptions for Business Projection

Evaluation of Entry into Ice cream Business for Bangladesh Limited 57

100 CONCLUSION

Ice cream has good prospect in Bangladesh It is still a growing market with opportunities for big

new entrants With the barriers of entry UBL needs to consider its priorities UBL being an HPC

company traditionally needs to acquire expertise in cold chain distribution and has to invest a lot

of money to rip the benefits of the industry However to initiate company can take regional

support and acquire resource expertise The company should enter the business as soon as

possible since there is potential threat from DANONE to introduce more ice creams after ISIS

diabetic ice cream and also with potential of the industry arch rival Nestlersquo might consider

entering into the industry too

Evaluation of Entry into Ice cream Business for Bangladesh Limited 58

References

Web References

1 wwwunilevercom

2 wwwunilevercombd

3 wwwhllcom

4 wwwunilevercompk

5 wwwthedailystarcom - Life Style Magazine

6 wwwreuterscouk

Evaluation of Entry into Ice cream Business for Bangladesh Limited 59

Page 58: Square Ice cream

Figure 14 Frequency of Ice cream Consumption

As it can be seen ldquoDay out with Spouse Special lunch at home Special dinner at home

Watching TV Family day out Celebrationrdquo are the occasions where most frequently ice cream is

consumed

653 Market Character Mapping Relevant Occasions vs Frequency of Consumption

If we plot frequency of consumption on the X-axis of a chart and relevance of occasion

occurrence on the Y-axis taking the above mentioned values as cut-off values we get four

quadrants in the chart depicting four market scenarios that any ice cream manufacturer in

Bangladesh market might encounter given the current market situation This market

segmentation is based on frequency of ice cream consumption in daily occasions of consumer

lives

The segments are

1048766 OPPORTUNITY MARKET High Relevant Occasions-Low Ice cream Frequency

1048766 QUESTION MARKET Less Relevant Occasions-Low Ice cream Frequency

1048766 HIGH FREQUENCY MARKET Relevant Occasions-High Ice cream Frequency

1048766 CAPTIVE MARKET Less Relevant Occasions-High Ice cream Frequency

The chart looks as follows Evaluation of Entry into Ice cream Business for Bangladesh Limited

48

Figure 15 Relevance of Occasion-Frequency of Consumption Mapping

As it can be seen from the above chart Bangladesh Market still lies in the Opportunity and

Question market zone with a pull towards High frequency and Captive Market zones This is

evident from market data as penetration of ice cream still remains at Thana headquarters levels

Also this explains the high market growth rate of 17 as market is yet under developed and

branded quality ice cream has yet not reached all levels of consumers especially rural level that

constitutes around 75 of Bangladeshi market

From the above analysis we can establish that target of ice cream manufacturers should be to

penetrate more into the Bangladeshi market to create higher frequency of ice cream

consumption The following chart shows the strategies to follow for ice cream manufacturers

Figure 16 Required Market Strategy for Bangladesh

Evaluation of Entry into Ice cream Business for Bangladesh Limited 49

As relevance of ice cream consumption occasions can hardly be controlled by marketers their

endeavour should be to create more ldquoemotional and functionalrdquo attachment to ice cream in less

frequent occasions through ldquomarket developmentrdquo strategy to earn share from overall food

expenditure of consumers and at the same time make them consume more ice cream in highly

relevant occasions through ldquopenetrationrdquo strategy

654 Consumersrsquo Emotional Requirements and Product Attributes

All consumers under these clusters also identify the emotional requirements and the significant

product attributes they seek from their current preferred and future desired ice creams These are

provided below

Cluster

Emotional Functional Requirement

Product Attributes

Enjoyment

Flavour Variety

1048766 Combination of different flavours

1048766 Combination of different textures

1048766 Very sweet

1048766 With wafer or biscuit

1048766 With chocolate

1048766 Of a well known brand

Socially Involved

Spoonable Rich

1048766 Very creamy

1048766 Only natural ingredients

1048766 No mess

Care

Size Creaminess

1048766 Big

1048766 Rich full taste

1048766 Smooth

1048766 Value for money

1048766 No mess

Unwind amp Escape

Economy

1048766 Crunchy

1048766 Economic

1048766 Of a well known brand

1048766 Nutritious

Balanced Convenience

Health Conscious

1048766 Of a well known brand

1048766 Nutritious

1048766 Milk based

1048766 Low sugar

1048766 Low carbohydrates

1048766 Filling

Active Self-Grooming

Fruit Vitamins

1048766 Healthy

1048766 Fruit based

1048766 Low fat

1048766 Liquid or drinkable

1048766 Nutritious

1048766 Of a well known brand

Confidence

Drinkable Light

1048766 Low calories

1048766 Light on the stomach

1048766 Chewy or gooey

1048766 Not so sweet

1048766 Natural appearance

Sensual

Appeal or image

1048766 No artificial additives

Evaluation of Entry into Ice cream Business for Bangladesh Limited 50

1048766 Natural appearance

1048766 Melting slowly

1048766 Attractive packaging

1048766 High quality ingredients

1048766 Of a well known brand

Table 29 Requirements amp Product Attributes Desired by Consumer Clusters

Of these findings we see that the identified highlighted barriers to ice cream consumption are

pretty evident among the consumers Mostly people want products of a reliable source or a well

known brand low calories quality ingredients value for money economic type

Evaluation of Entry into Ice cream Business for Bangladesh Limited 51

70 INDUSTRY ATTRACTIVENESS AND ENTRY PROSPECTS

71 Driving Forces of Growth

As identified in the earlier sections there are several driving forces behind the growth of ice-

cream industry in Bangladesh

712 Trade and Infrastructural Level

1048766 As a result of globalization newer varieties have been introduced to the local products Many

foreign companies are also coming as franchise so there has been increased competition and

these boutiques are setting higher standards for the local producers

1048766 The present market growth rate is 18-19 which is being influenced by larger players like

Igloo who are expanding their distribution nation wide with expansion of national electricity

grid

1048766 With entry of Modern Trade and recent organized business approach of retailers has made it

possible for ice cream manufacturers to penetrate into shops even without providing them with

branded freezers

1048766 Weather change has increased ldquosummerrdquo season in our country which has reduced negative

seasonal impact on ice cream

1048766 Large companies like Igloo have taken global learning of using carts as an effective tool of

availability and visibility for ice cream

1048766 New and improved technologies are being used in the production process This technological

advancement has improved quality increased speed of production and made the process more

cost effective

713 Consumer Level

1048766 Only a few years back rich people could afford the luxury of having ice-cream but now it has

become a common product for everybody Ice-cream companies are producing different products

with a wide price range for consumers of every class and status

1048766 Nowadays companies are doing promotional campaigns more frequently the customers get to

know about the product which makes it easier for them to buy the best one

1048766 The improved standard of life and more modernized lifestyle of people is an important reason

for the increased consumption thus growth of the ice-cream industry

Evaluation of Entry into Ice cream Business for Bangladesh Limited 52

72 Prospects of Entry

The ice-cream industry of Bangladesh is an attractive one for the investors because there is a

huge market but number of producers is very small The major reasons behind industry

attractiveness are as follows

1048766 The industryrsquos current growth potential is very high with opportunity for market development

1048766 The competition currently permits adequate profitability and the competitive forces are

becoming stronger with time

1048766 Boutique segment is at a very high growth stage but no operator is currently operating with a

mid price range of BDT 100-400 Ice cream kiosks and small scooping boutiques can operate

within that range

1048766 Current industry driving forces are favourable for the future industry profitability

1048766 Globally oriented consumers look for variety in ice cream that is currently not available

Latest innovations came in the market in 2002 People would welcome new variety and flavours

1048766 There is a gap in the market for balanced convenience through ice cream where consumers can

get nutritional benefits for ice cream Also emotional attachment to ice cream could further be

improvised in promotional campaigns

1048766 There is high scope for market penetration and development to increase frequency of ice

cream consumption

1048766 Level of risk or uncertainty is very low in ice-cream industry because the consumer market is

so huge any product with a standard quality and careful pricing will be able to make significant

profit

1048766 As for geographic reach of the industry 60 market is still in Dhaka There is scope of

expansion and a new entrant can easily capture market share within Dhaka using carts even if

they do not want nation wide cold chain distribution

1048766 The production process is very complex and capital requirements are also high So before

going into production any company should know about their capabilities and weaknesses and

then start the business or else they might suffer huge loss at a certain level

1048766 Unilever can acquire the required resource and use existing multi-national multi-cultural

expertise to enter the market in a grand way

1048766 With high probability of entry from DANONE with more products like the ISIS diabetic ice

cream Unilever should consider entering in this industry as soon as possible

Evaluation of Entry into Ice cream Business for Bangladesh Limited 53

80 ENTRY STRATEGY FOR UNILEVER

While describing the suggested entry strategy for UBL certain issues have been kept

confidential and some issues have been touched but not explained to keep consistency with UBL

confidentiality policy

81 Suggested Entry Areas for UBL

1048766 Boutique segment of the Bangladesh ice cream is only 5 of the branded market UBL needs

to pursue a larger scope to make the entry viable

1048766 UBL cannot fight with unbranded segment as global product quality mandate of Unilever does

not allow UBL to fight in low price-low quality segment

1048766 Recommend entry should be in the common format segment with both single and multiple

servings and in the boutique segment with a different brand name (if possible BEN amp JERRYrsquoS)

1048766 UBL should build up state-of-art modern factory for manufacturing and establish cold chain

facilities initially focusing on metro cities

1048766 Investment issues are required to be addressed for building factory and cold chain and capital

requirement needs to be identified for that purpose4

1048766 UBL may have boutiques for driving image selective top-end offering

1048766 Kiosks can be setup near universities and shopping malls

1048766 Boutiques should be concentrated in Dhaka and Chittagong

1048766 Ice cream for boutiques and kiosks would be produced in factory as institutional packs of 9-10

litres

82 Products

1048766 As a Brand Building country in global Unilever operating framework UBL is entitled only to

bring products developed by the Brand Development countries

1048766 Unilever should focus on serving products that have nutritional benefits (already available

globally) along with usual satisfactions of sensual pleasure functional attributes etc

1048766 Current existent players especially Igloo and Kwality have extensively copied global and

regionally available Unilever products eg Cornelli is same as Wallrsquos Cornetto Vinetta is similar

to Vienetta Mega is similar to Magnum etc UBL needs to differentiate these to consumers on

the ldquotaste the originalrdquo platform where global quality is focused regarding the products

1048766 UBL should also bring regionally famous brands like Moo or Max to create image

differentiation

1048766 Magnum or Moo should be used as premium end ice cream to generate more profit margin

Evaluation of Entry into Ice cream Business for Bangladesh Limited 54

83 Placement

1048766 Distribution focus should be in Dhaka for entry as Dhaka contributes more than 60 of total

ice cream sales in the country

1048766 Company may use carts as distribution method They serve as good source of visibility and

availability It would help in increasing impulse purchase

1048766 At least 1500 outlets in Dhaka and Chittagong needs to be actively served using dedicated

branded refrigerators to generate sales

1048766 50 carts should operate in Dhaka and Chittagong

84 Price

1048766 UBL products should be priced at par with Igloo pricing for the common format ice creams

1048766 UBL can bring in premium single-serve SKUS for the higher economic classes in the price

range of BDT 60-80

1048766 Smaller SKUs (small lolly stick) can be introduced in the price range of BDT 10-15

1048766 In the boutique segment UBL should price products above the semi-premium segment

(Gelateria Igloo Sub Zero or Andersenrsquos) but lower than that of Club Gelato or MoumlvenPick

85 Promotion

1048766 UBL would require strong marketing campaign (As high as 50 of sales) to have a grand

entry in the market

1048766 Presence in the television media would be of utmost importance More than 50 of

promotional expense should be made here initially Gradually it can be reduced

1048766 Newspaper would serve as the second most important option

1048766 Billboards should also be used

1048766 Activations (similar to Lux Channel i Super Star or Igloo Festival) should be done to generate

trial

86 Scope of Opportunity

Table 30 Value and Volume Based Scope of Opportunity for UBL

Value (BDT Cr)

Volume (Tons)

Market

131

7835

Common

121

7600

Boutique

98

235

Evaluation of Entry into Ice cream Business for Bangladesh Limited 55

861 Geographic Contribution

1048766 Dhaka (61)

1048766 Chittagong (19)

1048766 Sylhet (10)

862 UBL objectives

Common Format Ice Creams

1048766 Target 10 Market share in 1st year operation

1048766 Value BDT 11 Cr

1048766 Production capacity required 21 Tons day

1048766 Freezer Placement 1500 freezers

1048766 Cart operation At least 50 carts

Boutiques

1048766 Target Further develop the market

1048766 Focus Dhaka Chittagong and Sylhet Metro

1048766 Franchise At least 20 franchisee operations nation wide in divisional towns

1048766 Pricing Below imported parlours above common formats with around BDT 400 per Litre

87 Critical Success Factors

1048766 UBL is considered as a high profile company in Bangladesh and thus they cannot operate in

the market only with common products like choc-bars and cups They must have premium

products (these require extrusion line) also to carry their brand image Otherwise UBL would not

be able to charge usual premium over competition products

1048766 Launch of ice cream would require huge promotional and activation support in order to gain

customers from Igloo People want novelty regarding ice cream and UBL have to let them know

about their products and create hype

1048766 Cart should be used as a source of distribution Recent successes of Unilever companies like

Indonesia shows that carts can generate more sales and can be used as source of visibility in the

minds of both retail traders and consumers Carts can also provide incremental sales to the

company

1048766 UBL have to create a strong cold chain for ice cream (initially in Dhaka and Chittagong) to

ensure quality products for consumers

1048766 UBL have to build capacity very rapidly to meet consumer demand if the launch is successful

Evaluation of Entry into Ice cream Business for Bangladesh Limited 56

90 BUSINESS PROJECTION

91 Basic Assumptions

Business projection for ice cream business was made based on a conservative approach UBL

would require spending significantly on production capacity and factory dedicated to ice cream

Thus to analyse business possibilities of ice cream certain assumptions were made and collected

data were used These are

1048766 Production equipments and cabinets would cost approximately BDT 55 crores

1048766 Production equipments 45

1048766 Packaging Equipments 15

1048766 Storage Facility 20

1048766 Branded Freezers 10

1048766 Distribution Investment 10 (Distributors would also invest themselves)

1048766 Ice cream factory with a floor size of 20000 sqft would cost BDT 25 crores

1048766 Objective is to capture 10 market share in Dhaka and Chittagong in the first year

1048766 Business would grow by 50 in year 2 and 3 30 in year 4 and 25 in year 5

1048766 Weighted price per litre is BDT 170 according to volume share of single serve ice cream

multiple serve ice cream and boutique ice cream

1048766 Other financial assumptions were also made List of them are provided below but amount has

been removed for confidentiality issues

Assumptions

Trade Margin

Distributors Margin

DutyVAT Rate

Trade Terms Expense of NPS

Trade Terms Expense of NSV

Advertising ampPromotion of NPS

Indirects (Salaries Wages etc)

Trading Tax

Table 31 Assumptions for Business Projection

Evaluation of Entry into Ice cream Business for Bangladesh Limited 57

100 CONCLUSION

Ice cream has good prospect in Bangladesh It is still a growing market with opportunities for big

new entrants With the barriers of entry UBL needs to consider its priorities UBL being an HPC

company traditionally needs to acquire expertise in cold chain distribution and has to invest a lot

of money to rip the benefits of the industry However to initiate company can take regional

support and acquire resource expertise The company should enter the business as soon as

possible since there is potential threat from DANONE to introduce more ice creams after ISIS

diabetic ice cream and also with potential of the industry arch rival Nestlersquo might consider

entering into the industry too

Evaluation of Entry into Ice cream Business for Bangladesh Limited 58

References

Web References

1 wwwunilevercom

2 wwwunilevercombd

3 wwwhllcom

4 wwwunilevercompk

5 wwwthedailystarcom - Life Style Magazine

6 wwwreuterscouk

Evaluation of Entry into Ice cream Business for Bangladesh Limited 59

Page 59: Square Ice cream

From the above analysis we can establish that target of ice cream manufacturers should be to

penetrate more into the Bangladeshi market to create higher frequency of ice cream

consumption The following chart shows the strategies to follow for ice cream manufacturers

Figure 16 Required Market Strategy for Bangladesh

Evaluation of Entry into Ice cream Business for Bangladesh Limited 49

As relevance of ice cream consumption occasions can hardly be controlled by marketers their

endeavour should be to create more ldquoemotional and functionalrdquo attachment to ice cream in less

frequent occasions through ldquomarket developmentrdquo strategy to earn share from overall food

expenditure of consumers and at the same time make them consume more ice cream in highly

relevant occasions through ldquopenetrationrdquo strategy

654 Consumersrsquo Emotional Requirements and Product Attributes

All consumers under these clusters also identify the emotional requirements and the significant

product attributes they seek from their current preferred and future desired ice creams These are

provided below

Cluster

Emotional Functional Requirement

Product Attributes

Enjoyment

Flavour Variety

1048766 Combination of different flavours

1048766 Combination of different textures

1048766 Very sweet

1048766 With wafer or biscuit

1048766 With chocolate

1048766 Of a well known brand

Socially Involved

Spoonable Rich

1048766 Very creamy

1048766 Only natural ingredients

1048766 No mess

Care

Size Creaminess

1048766 Big

1048766 Rich full taste

1048766 Smooth

1048766 Value for money

1048766 No mess

Unwind amp Escape

Economy

1048766 Crunchy

1048766 Economic

1048766 Of a well known brand

1048766 Nutritious

Balanced Convenience

Health Conscious

1048766 Of a well known brand

1048766 Nutritious

1048766 Milk based

1048766 Low sugar

1048766 Low carbohydrates

1048766 Filling

Active Self-Grooming

Fruit Vitamins

1048766 Healthy

1048766 Fruit based

1048766 Low fat

1048766 Liquid or drinkable

1048766 Nutritious

1048766 Of a well known brand

Confidence

Drinkable Light

1048766 Low calories

1048766 Light on the stomach

1048766 Chewy or gooey

1048766 Not so sweet

1048766 Natural appearance

Sensual

Appeal or image

1048766 No artificial additives

Evaluation of Entry into Ice cream Business for Bangladesh Limited 50

1048766 Natural appearance

1048766 Melting slowly

1048766 Attractive packaging

1048766 High quality ingredients

1048766 Of a well known brand

Table 29 Requirements amp Product Attributes Desired by Consumer Clusters

Of these findings we see that the identified highlighted barriers to ice cream consumption are

pretty evident among the consumers Mostly people want products of a reliable source or a well

known brand low calories quality ingredients value for money economic type

Evaluation of Entry into Ice cream Business for Bangladesh Limited 51

70 INDUSTRY ATTRACTIVENESS AND ENTRY PROSPECTS

71 Driving Forces of Growth

As identified in the earlier sections there are several driving forces behind the growth of ice-

cream industry in Bangladesh

712 Trade and Infrastructural Level

1048766 As a result of globalization newer varieties have been introduced to the local products Many

foreign companies are also coming as franchise so there has been increased competition and

these boutiques are setting higher standards for the local producers

1048766 The present market growth rate is 18-19 which is being influenced by larger players like

Igloo who are expanding their distribution nation wide with expansion of national electricity

grid

1048766 With entry of Modern Trade and recent organized business approach of retailers has made it

possible for ice cream manufacturers to penetrate into shops even without providing them with

branded freezers

1048766 Weather change has increased ldquosummerrdquo season in our country which has reduced negative

seasonal impact on ice cream

1048766 Large companies like Igloo have taken global learning of using carts as an effective tool of

availability and visibility for ice cream

1048766 New and improved technologies are being used in the production process This technological

advancement has improved quality increased speed of production and made the process more

cost effective

713 Consumer Level

1048766 Only a few years back rich people could afford the luxury of having ice-cream but now it has

become a common product for everybody Ice-cream companies are producing different products

with a wide price range for consumers of every class and status

1048766 Nowadays companies are doing promotional campaigns more frequently the customers get to

know about the product which makes it easier for them to buy the best one

1048766 The improved standard of life and more modernized lifestyle of people is an important reason

for the increased consumption thus growth of the ice-cream industry

Evaluation of Entry into Ice cream Business for Bangladesh Limited 52

72 Prospects of Entry

The ice-cream industry of Bangladesh is an attractive one for the investors because there is a

huge market but number of producers is very small The major reasons behind industry

attractiveness are as follows

1048766 The industryrsquos current growth potential is very high with opportunity for market development

1048766 The competition currently permits adequate profitability and the competitive forces are

becoming stronger with time

1048766 Boutique segment is at a very high growth stage but no operator is currently operating with a

mid price range of BDT 100-400 Ice cream kiosks and small scooping boutiques can operate

within that range

1048766 Current industry driving forces are favourable for the future industry profitability

1048766 Globally oriented consumers look for variety in ice cream that is currently not available

Latest innovations came in the market in 2002 People would welcome new variety and flavours

1048766 There is a gap in the market for balanced convenience through ice cream where consumers can

get nutritional benefits for ice cream Also emotional attachment to ice cream could further be

improvised in promotional campaigns

1048766 There is high scope for market penetration and development to increase frequency of ice

cream consumption

1048766 Level of risk or uncertainty is very low in ice-cream industry because the consumer market is

so huge any product with a standard quality and careful pricing will be able to make significant

profit

1048766 As for geographic reach of the industry 60 market is still in Dhaka There is scope of

expansion and a new entrant can easily capture market share within Dhaka using carts even if

they do not want nation wide cold chain distribution

1048766 The production process is very complex and capital requirements are also high So before

going into production any company should know about their capabilities and weaknesses and

then start the business or else they might suffer huge loss at a certain level

1048766 Unilever can acquire the required resource and use existing multi-national multi-cultural

expertise to enter the market in a grand way

1048766 With high probability of entry from DANONE with more products like the ISIS diabetic ice

cream Unilever should consider entering in this industry as soon as possible

Evaluation of Entry into Ice cream Business for Bangladesh Limited 53

80 ENTRY STRATEGY FOR UNILEVER

While describing the suggested entry strategy for UBL certain issues have been kept

confidential and some issues have been touched but not explained to keep consistency with UBL

confidentiality policy

81 Suggested Entry Areas for UBL

1048766 Boutique segment of the Bangladesh ice cream is only 5 of the branded market UBL needs

to pursue a larger scope to make the entry viable

1048766 UBL cannot fight with unbranded segment as global product quality mandate of Unilever does

not allow UBL to fight in low price-low quality segment

1048766 Recommend entry should be in the common format segment with both single and multiple

servings and in the boutique segment with a different brand name (if possible BEN amp JERRYrsquoS)

1048766 UBL should build up state-of-art modern factory for manufacturing and establish cold chain

facilities initially focusing on metro cities

1048766 Investment issues are required to be addressed for building factory and cold chain and capital

requirement needs to be identified for that purpose4

1048766 UBL may have boutiques for driving image selective top-end offering

1048766 Kiosks can be setup near universities and shopping malls

1048766 Boutiques should be concentrated in Dhaka and Chittagong

1048766 Ice cream for boutiques and kiosks would be produced in factory as institutional packs of 9-10

litres

82 Products

1048766 As a Brand Building country in global Unilever operating framework UBL is entitled only to

bring products developed by the Brand Development countries

1048766 Unilever should focus on serving products that have nutritional benefits (already available

globally) along with usual satisfactions of sensual pleasure functional attributes etc

1048766 Current existent players especially Igloo and Kwality have extensively copied global and

regionally available Unilever products eg Cornelli is same as Wallrsquos Cornetto Vinetta is similar

to Vienetta Mega is similar to Magnum etc UBL needs to differentiate these to consumers on

the ldquotaste the originalrdquo platform where global quality is focused regarding the products

1048766 UBL should also bring regionally famous brands like Moo or Max to create image

differentiation

1048766 Magnum or Moo should be used as premium end ice cream to generate more profit margin

Evaluation of Entry into Ice cream Business for Bangladesh Limited 54

83 Placement

1048766 Distribution focus should be in Dhaka for entry as Dhaka contributes more than 60 of total

ice cream sales in the country

1048766 Company may use carts as distribution method They serve as good source of visibility and

availability It would help in increasing impulse purchase

1048766 At least 1500 outlets in Dhaka and Chittagong needs to be actively served using dedicated

branded refrigerators to generate sales

1048766 50 carts should operate in Dhaka and Chittagong

84 Price

1048766 UBL products should be priced at par with Igloo pricing for the common format ice creams

1048766 UBL can bring in premium single-serve SKUS for the higher economic classes in the price

range of BDT 60-80

1048766 Smaller SKUs (small lolly stick) can be introduced in the price range of BDT 10-15

1048766 In the boutique segment UBL should price products above the semi-premium segment

(Gelateria Igloo Sub Zero or Andersenrsquos) but lower than that of Club Gelato or MoumlvenPick

85 Promotion

1048766 UBL would require strong marketing campaign (As high as 50 of sales) to have a grand

entry in the market

1048766 Presence in the television media would be of utmost importance More than 50 of

promotional expense should be made here initially Gradually it can be reduced

1048766 Newspaper would serve as the second most important option

1048766 Billboards should also be used

1048766 Activations (similar to Lux Channel i Super Star or Igloo Festival) should be done to generate

trial

86 Scope of Opportunity

Table 30 Value and Volume Based Scope of Opportunity for UBL

Value (BDT Cr)

Volume (Tons)

Market

131

7835

Common

121

7600

Boutique

98

235

Evaluation of Entry into Ice cream Business for Bangladesh Limited 55

861 Geographic Contribution

1048766 Dhaka (61)

1048766 Chittagong (19)

1048766 Sylhet (10)

862 UBL objectives

Common Format Ice Creams

1048766 Target 10 Market share in 1st year operation

1048766 Value BDT 11 Cr

1048766 Production capacity required 21 Tons day

1048766 Freezer Placement 1500 freezers

1048766 Cart operation At least 50 carts

Boutiques

1048766 Target Further develop the market

1048766 Focus Dhaka Chittagong and Sylhet Metro

1048766 Franchise At least 20 franchisee operations nation wide in divisional towns

1048766 Pricing Below imported parlours above common formats with around BDT 400 per Litre

87 Critical Success Factors

1048766 UBL is considered as a high profile company in Bangladesh and thus they cannot operate in

the market only with common products like choc-bars and cups They must have premium

products (these require extrusion line) also to carry their brand image Otherwise UBL would not

be able to charge usual premium over competition products

1048766 Launch of ice cream would require huge promotional and activation support in order to gain

customers from Igloo People want novelty regarding ice cream and UBL have to let them know

about their products and create hype

1048766 Cart should be used as a source of distribution Recent successes of Unilever companies like

Indonesia shows that carts can generate more sales and can be used as source of visibility in the

minds of both retail traders and consumers Carts can also provide incremental sales to the

company

1048766 UBL have to create a strong cold chain for ice cream (initially in Dhaka and Chittagong) to

ensure quality products for consumers

1048766 UBL have to build capacity very rapidly to meet consumer demand if the launch is successful

Evaluation of Entry into Ice cream Business for Bangladesh Limited 56

90 BUSINESS PROJECTION

91 Basic Assumptions

Business projection for ice cream business was made based on a conservative approach UBL

would require spending significantly on production capacity and factory dedicated to ice cream

Thus to analyse business possibilities of ice cream certain assumptions were made and collected

data were used These are

1048766 Production equipments and cabinets would cost approximately BDT 55 crores

1048766 Production equipments 45

1048766 Packaging Equipments 15

1048766 Storage Facility 20

1048766 Branded Freezers 10

1048766 Distribution Investment 10 (Distributors would also invest themselves)

1048766 Ice cream factory with a floor size of 20000 sqft would cost BDT 25 crores

1048766 Objective is to capture 10 market share in Dhaka and Chittagong in the first year

1048766 Business would grow by 50 in year 2 and 3 30 in year 4 and 25 in year 5

1048766 Weighted price per litre is BDT 170 according to volume share of single serve ice cream

multiple serve ice cream and boutique ice cream

1048766 Other financial assumptions were also made List of them are provided below but amount has

been removed for confidentiality issues

Assumptions

Trade Margin

Distributors Margin

DutyVAT Rate

Trade Terms Expense of NPS

Trade Terms Expense of NSV

Advertising ampPromotion of NPS

Indirects (Salaries Wages etc)

Trading Tax

Table 31 Assumptions for Business Projection

Evaluation of Entry into Ice cream Business for Bangladesh Limited 57

100 CONCLUSION

Ice cream has good prospect in Bangladesh It is still a growing market with opportunities for big

new entrants With the barriers of entry UBL needs to consider its priorities UBL being an HPC

company traditionally needs to acquire expertise in cold chain distribution and has to invest a lot

of money to rip the benefits of the industry However to initiate company can take regional

support and acquire resource expertise The company should enter the business as soon as

possible since there is potential threat from DANONE to introduce more ice creams after ISIS

diabetic ice cream and also with potential of the industry arch rival Nestlersquo might consider

entering into the industry too

Evaluation of Entry into Ice cream Business for Bangladesh Limited 58

References

Web References

1 wwwunilevercom

2 wwwunilevercombd

3 wwwhllcom

4 wwwunilevercompk

5 wwwthedailystarcom - Life Style Magazine

6 wwwreuterscouk

Evaluation of Entry into Ice cream Business for Bangladesh Limited 59

Page 60: Square Ice cream

1048766 Of a well known brand

Socially Involved

Spoonable Rich

1048766 Very creamy

1048766 Only natural ingredients

1048766 No mess

Care

Size Creaminess

1048766 Big

1048766 Rich full taste

1048766 Smooth

1048766 Value for money

1048766 No mess

Unwind amp Escape

Economy

1048766 Crunchy

1048766 Economic

1048766 Of a well known brand

1048766 Nutritious

Balanced Convenience

Health Conscious

1048766 Of a well known brand

1048766 Nutritious

1048766 Milk based

1048766 Low sugar

1048766 Low carbohydrates

1048766 Filling

Active Self-Grooming

Fruit Vitamins

1048766 Healthy

1048766 Fruit based

1048766 Low fat

1048766 Liquid or drinkable

1048766 Nutritious

1048766 Of a well known brand

Confidence

Drinkable Light

1048766 Low calories

1048766 Light on the stomach

1048766 Chewy or gooey

1048766 Not so sweet

1048766 Natural appearance

Sensual

Appeal or image

1048766 No artificial additives

Evaluation of Entry into Ice cream Business for Bangladesh Limited 50

1048766 Natural appearance

1048766 Melting slowly

1048766 Attractive packaging

1048766 High quality ingredients

1048766 Of a well known brand

Table 29 Requirements amp Product Attributes Desired by Consumer Clusters

Of these findings we see that the identified highlighted barriers to ice cream consumption are

pretty evident among the consumers Mostly people want products of a reliable source or a well

known brand low calories quality ingredients value for money economic type

Evaluation of Entry into Ice cream Business for Bangladesh Limited 51

70 INDUSTRY ATTRACTIVENESS AND ENTRY PROSPECTS

71 Driving Forces of Growth

As identified in the earlier sections there are several driving forces behind the growth of ice-

cream industry in Bangladesh

712 Trade and Infrastructural Level

1048766 As a result of globalization newer varieties have been introduced to the local products Many

foreign companies are also coming as franchise so there has been increased competition and

these boutiques are setting higher standards for the local producers

1048766 The present market growth rate is 18-19 which is being influenced by larger players like

Igloo who are expanding their distribution nation wide with expansion of national electricity

grid

1048766 With entry of Modern Trade and recent organized business approach of retailers has made it

possible for ice cream manufacturers to penetrate into shops even without providing them with

branded freezers

1048766 Weather change has increased ldquosummerrdquo season in our country which has reduced negative

seasonal impact on ice cream

1048766 Large companies like Igloo have taken global learning of using carts as an effective tool of

availability and visibility for ice cream

1048766 New and improved technologies are being used in the production process This technological

advancement has improved quality increased speed of production and made the process more

cost effective

713 Consumer Level

1048766 Only a few years back rich people could afford the luxury of having ice-cream but now it has

become a common product for everybody Ice-cream companies are producing different products

with a wide price range for consumers of every class and status

1048766 Nowadays companies are doing promotional campaigns more frequently the customers get to

know about the product which makes it easier for them to buy the best one

1048766 The improved standard of life and more modernized lifestyle of people is an important reason

for the increased consumption thus growth of the ice-cream industry

Evaluation of Entry into Ice cream Business for Bangladesh Limited 52

72 Prospects of Entry

The ice-cream industry of Bangladesh is an attractive one for the investors because there is a

huge market but number of producers is very small The major reasons behind industry

attractiveness are as follows

1048766 The industryrsquos current growth potential is very high with opportunity for market development

1048766 The competition currently permits adequate profitability and the competitive forces are

becoming stronger with time

1048766 Boutique segment is at a very high growth stage but no operator is currently operating with a

mid price range of BDT 100-400 Ice cream kiosks and small scooping boutiques can operate

within that range

1048766 Current industry driving forces are favourable for the future industry profitability

1048766 Globally oriented consumers look for variety in ice cream that is currently not available

Latest innovations came in the market in 2002 People would welcome new variety and flavours

1048766 There is a gap in the market for balanced convenience through ice cream where consumers can

get nutritional benefits for ice cream Also emotional attachment to ice cream could further be

improvised in promotional campaigns

1048766 There is high scope for market penetration and development to increase frequency of ice

cream consumption

1048766 Level of risk or uncertainty is very low in ice-cream industry because the consumer market is

so huge any product with a standard quality and careful pricing will be able to make significant

profit

1048766 As for geographic reach of the industry 60 market is still in Dhaka There is scope of

expansion and a new entrant can easily capture market share within Dhaka using carts even if

they do not want nation wide cold chain distribution

1048766 The production process is very complex and capital requirements are also high So before

going into production any company should know about their capabilities and weaknesses and

then start the business or else they might suffer huge loss at a certain level

1048766 Unilever can acquire the required resource and use existing multi-national multi-cultural

expertise to enter the market in a grand way

1048766 With high probability of entry from DANONE with more products like the ISIS diabetic ice

cream Unilever should consider entering in this industry as soon as possible

Evaluation of Entry into Ice cream Business for Bangladesh Limited 53

80 ENTRY STRATEGY FOR UNILEVER

While describing the suggested entry strategy for UBL certain issues have been kept

confidential and some issues have been touched but not explained to keep consistency with UBL

confidentiality policy

81 Suggested Entry Areas for UBL

1048766 Boutique segment of the Bangladesh ice cream is only 5 of the branded market UBL needs

to pursue a larger scope to make the entry viable

1048766 UBL cannot fight with unbranded segment as global product quality mandate of Unilever does

not allow UBL to fight in low price-low quality segment

1048766 Recommend entry should be in the common format segment with both single and multiple

servings and in the boutique segment with a different brand name (if possible BEN amp JERRYrsquoS)

1048766 UBL should build up state-of-art modern factory for manufacturing and establish cold chain

facilities initially focusing on metro cities

1048766 Investment issues are required to be addressed for building factory and cold chain and capital

requirement needs to be identified for that purpose4

1048766 UBL may have boutiques for driving image selective top-end offering

1048766 Kiosks can be setup near universities and shopping malls

1048766 Boutiques should be concentrated in Dhaka and Chittagong

1048766 Ice cream for boutiques and kiosks would be produced in factory as institutional packs of 9-10

litres

82 Products

1048766 As a Brand Building country in global Unilever operating framework UBL is entitled only to

bring products developed by the Brand Development countries

1048766 Unilever should focus on serving products that have nutritional benefits (already available

globally) along with usual satisfactions of sensual pleasure functional attributes etc

1048766 Current existent players especially Igloo and Kwality have extensively copied global and

regionally available Unilever products eg Cornelli is same as Wallrsquos Cornetto Vinetta is similar

to Vienetta Mega is similar to Magnum etc UBL needs to differentiate these to consumers on

the ldquotaste the originalrdquo platform where global quality is focused regarding the products

1048766 UBL should also bring regionally famous brands like Moo or Max to create image

differentiation

1048766 Magnum or Moo should be used as premium end ice cream to generate more profit margin

Evaluation of Entry into Ice cream Business for Bangladesh Limited 54

83 Placement

1048766 Distribution focus should be in Dhaka for entry as Dhaka contributes more than 60 of total

ice cream sales in the country

1048766 Company may use carts as distribution method They serve as good source of visibility and

availability It would help in increasing impulse purchase

1048766 At least 1500 outlets in Dhaka and Chittagong needs to be actively served using dedicated

branded refrigerators to generate sales

1048766 50 carts should operate in Dhaka and Chittagong

84 Price

1048766 UBL products should be priced at par with Igloo pricing for the common format ice creams

1048766 UBL can bring in premium single-serve SKUS for the higher economic classes in the price

range of BDT 60-80

1048766 Smaller SKUs (small lolly stick) can be introduced in the price range of BDT 10-15

1048766 In the boutique segment UBL should price products above the semi-premium segment

(Gelateria Igloo Sub Zero or Andersenrsquos) but lower than that of Club Gelato or MoumlvenPick

85 Promotion

1048766 UBL would require strong marketing campaign (As high as 50 of sales) to have a grand

entry in the market

1048766 Presence in the television media would be of utmost importance More than 50 of

promotional expense should be made here initially Gradually it can be reduced

1048766 Newspaper would serve as the second most important option

1048766 Billboards should also be used

1048766 Activations (similar to Lux Channel i Super Star or Igloo Festival) should be done to generate

trial

86 Scope of Opportunity

Table 30 Value and Volume Based Scope of Opportunity for UBL

Value (BDT Cr)

Volume (Tons)

Market

131

7835

Common

121

7600

Boutique

98

235

Evaluation of Entry into Ice cream Business for Bangladesh Limited 55

861 Geographic Contribution

1048766 Dhaka (61)

1048766 Chittagong (19)

1048766 Sylhet (10)

862 UBL objectives

Common Format Ice Creams

1048766 Target 10 Market share in 1st year operation

1048766 Value BDT 11 Cr

1048766 Production capacity required 21 Tons day

1048766 Freezer Placement 1500 freezers

1048766 Cart operation At least 50 carts

Boutiques

1048766 Target Further develop the market

1048766 Focus Dhaka Chittagong and Sylhet Metro

1048766 Franchise At least 20 franchisee operations nation wide in divisional towns

1048766 Pricing Below imported parlours above common formats with around BDT 400 per Litre

87 Critical Success Factors

1048766 UBL is considered as a high profile company in Bangladesh and thus they cannot operate in

the market only with common products like choc-bars and cups They must have premium

products (these require extrusion line) also to carry their brand image Otherwise UBL would not

be able to charge usual premium over competition products

1048766 Launch of ice cream would require huge promotional and activation support in order to gain

customers from Igloo People want novelty regarding ice cream and UBL have to let them know

about their products and create hype

1048766 Cart should be used as a source of distribution Recent successes of Unilever companies like

Indonesia shows that carts can generate more sales and can be used as source of visibility in the

minds of both retail traders and consumers Carts can also provide incremental sales to the

company

1048766 UBL have to create a strong cold chain for ice cream (initially in Dhaka and Chittagong) to

ensure quality products for consumers

1048766 UBL have to build capacity very rapidly to meet consumer demand if the launch is successful

Evaluation of Entry into Ice cream Business for Bangladesh Limited 56

90 BUSINESS PROJECTION

91 Basic Assumptions

Business projection for ice cream business was made based on a conservative approach UBL

would require spending significantly on production capacity and factory dedicated to ice cream

Thus to analyse business possibilities of ice cream certain assumptions were made and collected

data were used These are

1048766 Production equipments and cabinets would cost approximately BDT 55 crores

1048766 Production equipments 45

1048766 Packaging Equipments 15

1048766 Storage Facility 20

1048766 Branded Freezers 10

1048766 Distribution Investment 10 (Distributors would also invest themselves)

1048766 Ice cream factory with a floor size of 20000 sqft would cost BDT 25 crores

1048766 Objective is to capture 10 market share in Dhaka and Chittagong in the first year

1048766 Business would grow by 50 in year 2 and 3 30 in year 4 and 25 in year 5

1048766 Weighted price per litre is BDT 170 according to volume share of single serve ice cream

multiple serve ice cream and boutique ice cream

1048766 Other financial assumptions were also made List of them are provided below but amount has

been removed for confidentiality issues

Assumptions

Trade Margin

Distributors Margin

DutyVAT Rate

Trade Terms Expense of NPS

Trade Terms Expense of NSV

Advertising ampPromotion of NPS

Indirects (Salaries Wages etc)

Trading Tax

Table 31 Assumptions for Business Projection

Evaluation of Entry into Ice cream Business for Bangladesh Limited 57

100 CONCLUSION

Ice cream has good prospect in Bangladesh It is still a growing market with opportunities for big

new entrants With the barriers of entry UBL needs to consider its priorities UBL being an HPC

company traditionally needs to acquire expertise in cold chain distribution and has to invest a lot

of money to rip the benefits of the industry However to initiate company can take regional

support and acquire resource expertise The company should enter the business as soon as

possible since there is potential threat from DANONE to introduce more ice creams after ISIS

diabetic ice cream and also with potential of the industry arch rival Nestlersquo might consider

entering into the industry too

Evaluation of Entry into Ice cream Business for Bangladesh Limited 58

References

Web References

1 wwwunilevercom

2 wwwunilevercombd

3 wwwhllcom

4 wwwunilevercompk

5 wwwthedailystarcom - Life Style Magazine

6 wwwreuterscouk

Evaluation of Entry into Ice cream Business for Bangladesh Limited 59

Page 61: Square Ice cream

1048766 Of a well known brand

1048766 Nutritious

1048766 Milk based

1048766 Low sugar

1048766 Low carbohydrates

1048766 Filling

Active Self-Grooming

Fruit Vitamins

1048766 Healthy

1048766 Fruit based

1048766 Low fat

1048766 Liquid or drinkable

1048766 Nutritious

1048766 Of a well known brand

Confidence

Drinkable Light

1048766 Low calories

1048766 Light on the stomach

1048766 Chewy or gooey

1048766 Not so sweet

1048766 Natural appearance

Sensual

Appeal or image

1048766 No artificial additives

Evaluation of Entry into Ice cream Business for Bangladesh Limited 50

1048766 Natural appearance

1048766 Melting slowly

1048766 Attractive packaging

1048766 High quality ingredients

1048766 Of a well known brand

Table 29 Requirements amp Product Attributes Desired by Consumer Clusters

Of these findings we see that the identified highlighted barriers to ice cream consumption are

pretty evident among the consumers Mostly people want products of a reliable source or a well

known brand low calories quality ingredients value for money economic type

Evaluation of Entry into Ice cream Business for Bangladesh Limited 51

70 INDUSTRY ATTRACTIVENESS AND ENTRY PROSPECTS

71 Driving Forces of Growth

As identified in the earlier sections there are several driving forces behind the growth of ice-

cream industry in Bangladesh

712 Trade and Infrastructural Level

1048766 As a result of globalization newer varieties have been introduced to the local products Many

foreign companies are also coming as franchise so there has been increased competition and

these boutiques are setting higher standards for the local producers

1048766 The present market growth rate is 18-19 which is being influenced by larger players like

Igloo who are expanding their distribution nation wide with expansion of national electricity

grid

1048766 With entry of Modern Trade and recent organized business approach of retailers has made it

possible for ice cream manufacturers to penetrate into shops even without providing them with

branded freezers

1048766 Weather change has increased ldquosummerrdquo season in our country which has reduced negative

seasonal impact on ice cream

1048766 Large companies like Igloo have taken global learning of using carts as an effective tool of

availability and visibility for ice cream

1048766 New and improved technologies are being used in the production process This technological

advancement has improved quality increased speed of production and made the process more

cost effective

713 Consumer Level

1048766 Only a few years back rich people could afford the luxury of having ice-cream but now it has

become a common product for everybody Ice-cream companies are producing different products

with a wide price range for consumers of every class and status

1048766 Nowadays companies are doing promotional campaigns more frequently the customers get to

know about the product which makes it easier for them to buy the best one

1048766 The improved standard of life and more modernized lifestyle of people is an important reason

for the increased consumption thus growth of the ice-cream industry

Evaluation of Entry into Ice cream Business for Bangladesh Limited 52

72 Prospects of Entry

The ice-cream industry of Bangladesh is an attractive one for the investors because there is a

huge market but number of producers is very small The major reasons behind industry

attractiveness are as follows

1048766 The industryrsquos current growth potential is very high with opportunity for market development

1048766 The competition currently permits adequate profitability and the competitive forces are

becoming stronger with time

1048766 Boutique segment is at a very high growth stage but no operator is currently operating with a

mid price range of BDT 100-400 Ice cream kiosks and small scooping boutiques can operate

within that range

1048766 Current industry driving forces are favourable for the future industry profitability

1048766 Globally oriented consumers look for variety in ice cream that is currently not available

Latest innovations came in the market in 2002 People would welcome new variety and flavours

1048766 There is a gap in the market for balanced convenience through ice cream where consumers can

get nutritional benefits for ice cream Also emotional attachment to ice cream could further be

improvised in promotional campaigns

1048766 There is high scope for market penetration and development to increase frequency of ice

cream consumption

1048766 Level of risk or uncertainty is very low in ice-cream industry because the consumer market is

so huge any product with a standard quality and careful pricing will be able to make significant

profit

1048766 As for geographic reach of the industry 60 market is still in Dhaka There is scope of

expansion and a new entrant can easily capture market share within Dhaka using carts even if

they do not want nation wide cold chain distribution

1048766 The production process is very complex and capital requirements are also high So before

going into production any company should know about their capabilities and weaknesses and

then start the business or else they might suffer huge loss at a certain level

1048766 Unilever can acquire the required resource and use existing multi-national multi-cultural

expertise to enter the market in a grand way

1048766 With high probability of entry from DANONE with more products like the ISIS diabetic ice

cream Unilever should consider entering in this industry as soon as possible

Evaluation of Entry into Ice cream Business for Bangladesh Limited 53

80 ENTRY STRATEGY FOR UNILEVER

While describing the suggested entry strategy for UBL certain issues have been kept

confidential and some issues have been touched but not explained to keep consistency with UBL

confidentiality policy

81 Suggested Entry Areas for UBL

1048766 Boutique segment of the Bangladesh ice cream is only 5 of the branded market UBL needs

to pursue a larger scope to make the entry viable

1048766 UBL cannot fight with unbranded segment as global product quality mandate of Unilever does

not allow UBL to fight in low price-low quality segment

1048766 Recommend entry should be in the common format segment with both single and multiple

servings and in the boutique segment with a different brand name (if possible BEN amp JERRYrsquoS)

1048766 UBL should build up state-of-art modern factory for manufacturing and establish cold chain

facilities initially focusing on metro cities

1048766 Investment issues are required to be addressed for building factory and cold chain and capital

requirement needs to be identified for that purpose4

1048766 UBL may have boutiques for driving image selective top-end offering

1048766 Kiosks can be setup near universities and shopping malls

1048766 Boutiques should be concentrated in Dhaka and Chittagong

1048766 Ice cream for boutiques and kiosks would be produced in factory as institutional packs of 9-10

litres

82 Products

1048766 As a Brand Building country in global Unilever operating framework UBL is entitled only to

bring products developed by the Brand Development countries

1048766 Unilever should focus on serving products that have nutritional benefits (already available

globally) along with usual satisfactions of sensual pleasure functional attributes etc

1048766 Current existent players especially Igloo and Kwality have extensively copied global and

regionally available Unilever products eg Cornelli is same as Wallrsquos Cornetto Vinetta is similar

to Vienetta Mega is similar to Magnum etc UBL needs to differentiate these to consumers on

the ldquotaste the originalrdquo platform where global quality is focused regarding the products

1048766 UBL should also bring regionally famous brands like Moo or Max to create image

differentiation

1048766 Magnum or Moo should be used as premium end ice cream to generate more profit margin

Evaluation of Entry into Ice cream Business for Bangladesh Limited 54

83 Placement

1048766 Distribution focus should be in Dhaka for entry as Dhaka contributes more than 60 of total

ice cream sales in the country

1048766 Company may use carts as distribution method They serve as good source of visibility and

availability It would help in increasing impulse purchase

1048766 At least 1500 outlets in Dhaka and Chittagong needs to be actively served using dedicated

branded refrigerators to generate sales

1048766 50 carts should operate in Dhaka and Chittagong

84 Price

1048766 UBL products should be priced at par with Igloo pricing for the common format ice creams

1048766 UBL can bring in premium single-serve SKUS for the higher economic classes in the price

range of BDT 60-80

1048766 Smaller SKUs (small lolly stick) can be introduced in the price range of BDT 10-15

1048766 In the boutique segment UBL should price products above the semi-premium segment

(Gelateria Igloo Sub Zero or Andersenrsquos) but lower than that of Club Gelato or MoumlvenPick

85 Promotion

1048766 UBL would require strong marketing campaign (As high as 50 of sales) to have a grand

entry in the market

1048766 Presence in the television media would be of utmost importance More than 50 of

promotional expense should be made here initially Gradually it can be reduced

1048766 Newspaper would serve as the second most important option

1048766 Billboards should also be used

1048766 Activations (similar to Lux Channel i Super Star or Igloo Festival) should be done to generate

trial

86 Scope of Opportunity

Table 30 Value and Volume Based Scope of Opportunity for UBL

Value (BDT Cr)

Volume (Tons)

Market

131

7835

Common

121

7600

Boutique

98

235

Evaluation of Entry into Ice cream Business for Bangladesh Limited 55

861 Geographic Contribution

1048766 Dhaka (61)

1048766 Chittagong (19)

1048766 Sylhet (10)

862 UBL objectives

Common Format Ice Creams

1048766 Target 10 Market share in 1st year operation

1048766 Value BDT 11 Cr

1048766 Production capacity required 21 Tons day

1048766 Freezer Placement 1500 freezers

1048766 Cart operation At least 50 carts

Boutiques

1048766 Target Further develop the market

1048766 Focus Dhaka Chittagong and Sylhet Metro

1048766 Franchise At least 20 franchisee operations nation wide in divisional towns

1048766 Pricing Below imported parlours above common formats with around BDT 400 per Litre

87 Critical Success Factors

1048766 UBL is considered as a high profile company in Bangladesh and thus they cannot operate in

the market only with common products like choc-bars and cups They must have premium

products (these require extrusion line) also to carry their brand image Otherwise UBL would not

be able to charge usual premium over competition products

1048766 Launch of ice cream would require huge promotional and activation support in order to gain

customers from Igloo People want novelty regarding ice cream and UBL have to let them know

about their products and create hype

1048766 Cart should be used as a source of distribution Recent successes of Unilever companies like

Indonesia shows that carts can generate more sales and can be used as source of visibility in the

minds of both retail traders and consumers Carts can also provide incremental sales to the

company

1048766 UBL have to create a strong cold chain for ice cream (initially in Dhaka and Chittagong) to

ensure quality products for consumers

1048766 UBL have to build capacity very rapidly to meet consumer demand if the launch is successful

Evaluation of Entry into Ice cream Business for Bangladesh Limited 56

90 BUSINESS PROJECTION

91 Basic Assumptions

Business projection for ice cream business was made based on a conservative approach UBL

would require spending significantly on production capacity and factory dedicated to ice cream

Thus to analyse business possibilities of ice cream certain assumptions were made and collected

data were used These are

1048766 Production equipments and cabinets would cost approximately BDT 55 crores

1048766 Production equipments 45

1048766 Packaging Equipments 15

1048766 Storage Facility 20

1048766 Branded Freezers 10

1048766 Distribution Investment 10 (Distributors would also invest themselves)

1048766 Ice cream factory with a floor size of 20000 sqft would cost BDT 25 crores

1048766 Objective is to capture 10 market share in Dhaka and Chittagong in the first year

1048766 Business would grow by 50 in year 2 and 3 30 in year 4 and 25 in year 5

1048766 Weighted price per litre is BDT 170 according to volume share of single serve ice cream

multiple serve ice cream and boutique ice cream

1048766 Other financial assumptions were also made List of them are provided below but amount has

been removed for confidentiality issues

Assumptions

Trade Margin

Distributors Margin

DutyVAT Rate

Trade Terms Expense of NPS

Trade Terms Expense of NSV

Advertising ampPromotion of NPS

Indirects (Salaries Wages etc)

Trading Tax

Table 31 Assumptions for Business Projection

Evaluation of Entry into Ice cream Business for Bangladesh Limited 57

100 CONCLUSION

Ice cream has good prospect in Bangladesh It is still a growing market with opportunities for big

new entrants With the barriers of entry UBL needs to consider its priorities UBL being an HPC

company traditionally needs to acquire expertise in cold chain distribution and has to invest a lot

of money to rip the benefits of the industry However to initiate company can take regional

support and acquire resource expertise The company should enter the business as soon as

possible since there is potential threat from DANONE to introduce more ice creams after ISIS

diabetic ice cream and also with potential of the industry arch rival Nestlersquo might consider

entering into the industry too

Evaluation of Entry into Ice cream Business for Bangladesh Limited 58

References

Web References

1 wwwunilevercom

2 wwwunilevercombd

3 wwwhllcom

4 wwwunilevercompk

5 wwwthedailystarcom - Life Style Magazine

6 wwwreuterscouk

Evaluation of Entry into Ice cream Business for Bangladesh Limited 59

Page 62: Square Ice cream

Sensual

Appeal or image

1048766 No artificial additives

Evaluation of Entry into Ice cream Business for Bangladesh Limited 50

1048766 Natural appearance

1048766 Melting slowly

1048766 Attractive packaging

1048766 High quality ingredients

1048766 Of a well known brand

Table 29 Requirements amp Product Attributes Desired by Consumer Clusters

Of these findings we see that the identified highlighted barriers to ice cream consumption are

pretty evident among the consumers Mostly people want products of a reliable source or a well

known brand low calories quality ingredients value for money economic type

Evaluation of Entry into Ice cream Business for Bangladesh Limited 51

70 INDUSTRY ATTRACTIVENESS AND ENTRY PROSPECTS

71 Driving Forces of Growth

As identified in the earlier sections there are several driving forces behind the growth of ice-

cream industry in Bangladesh

712 Trade and Infrastructural Level

1048766 As a result of globalization newer varieties have been introduced to the local products Many

foreign companies are also coming as franchise so there has been increased competition and

these boutiques are setting higher standards for the local producers

1048766 The present market growth rate is 18-19 which is being influenced by larger players like

Igloo who are expanding their distribution nation wide with expansion of national electricity

grid

1048766 With entry of Modern Trade and recent organized business approach of retailers has made it

possible for ice cream manufacturers to penetrate into shops even without providing them with

branded freezers

1048766 Weather change has increased ldquosummerrdquo season in our country which has reduced negative

seasonal impact on ice cream

1048766 Large companies like Igloo have taken global learning of using carts as an effective tool of

availability and visibility for ice cream

1048766 New and improved technologies are being used in the production process This technological

advancement has improved quality increased speed of production and made the process more

cost effective

713 Consumer Level

1048766 Only a few years back rich people could afford the luxury of having ice-cream but now it has

become a common product for everybody Ice-cream companies are producing different products

with a wide price range for consumers of every class and status

1048766 Nowadays companies are doing promotional campaigns more frequently the customers get to

know about the product which makes it easier for them to buy the best one

1048766 The improved standard of life and more modernized lifestyle of people is an important reason

for the increased consumption thus growth of the ice-cream industry

Evaluation of Entry into Ice cream Business for Bangladesh Limited 52

72 Prospects of Entry

The ice-cream industry of Bangladesh is an attractive one for the investors because there is a

huge market but number of producers is very small The major reasons behind industry

attractiveness are as follows

1048766 The industryrsquos current growth potential is very high with opportunity for market development

1048766 The competition currently permits adequate profitability and the competitive forces are

becoming stronger with time

1048766 Boutique segment is at a very high growth stage but no operator is currently operating with a

mid price range of BDT 100-400 Ice cream kiosks and small scooping boutiques can operate

within that range

1048766 Current industry driving forces are favourable for the future industry profitability

1048766 Globally oriented consumers look for variety in ice cream that is currently not available

Latest innovations came in the market in 2002 People would welcome new variety and flavours

1048766 There is a gap in the market for balanced convenience through ice cream where consumers can

get nutritional benefits for ice cream Also emotional attachment to ice cream could further be

improvised in promotional campaigns

1048766 There is high scope for market penetration and development to increase frequency of ice

cream consumption

1048766 Level of risk or uncertainty is very low in ice-cream industry because the consumer market is

so huge any product with a standard quality and careful pricing will be able to make significant

profit

1048766 As for geographic reach of the industry 60 market is still in Dhaka There is scope of

expansion and a new entrant can easily capture market share within Dhaka using carts even if

they do not want nation wide cold chain distribution

1048766 The production process is very complex and capital requirements are also high So before

going into production any company should know about their capabilities and weaknesses and

then start the business or else they might suffer huge loss at a certain level

1048766 Unilever can acquire the required resource and use existing multi-national multi-cultural

expertise to enter the market in a grand way

1048766 With high probability of entry from DANONE with more products like the ISIS diabetic ice

cream Unilever should consider entering in this industry as soon as possible

Evaluation of Entry into Ice cream Business for Bangladesh Limited 53

80 ENTRY STRATEGY FOR UNILEVER

While describing the suggested entry strategy for UBL certain issues have been kept

confidential and some issues have been touched but not explained to keep consistency with UBL

confidentiality policy

81 Suggested Entry Areas for UBL

1048766 Boutique segment of the Bangladesh ice cream is only 5 of the branded market UBL needs

to pursue a larger scope to make the entry viable

1048766 UBL cannot fight with unbranded segment as global product quality mandate of Unilever does

not allow UBL to fight in low price-low quality segment

1048766 Recommend entry should be in the common format segment with both single and multiple

servings and in the boutique segment with a different brand name (if possible BEN amp JERRYrsquoS)

1048766 UBL should build up state-of-art modern factory for manufacturing and establish cold chain

facilities initially focusing on metro cities

1048766 Investment issues are required to be addressed for building factory and cold chain and capital

requirement needs to be identified for that purpose4

1048766 UBL may have boutiques for driving image selective top-end offering

1048766 Kiosks can be setup near universities and shopping malls

1048766 Boutiques should be concentrated in Dhaka and Chittagong

1048766 Ice cream for boutiques and kiosks would be produced in factory as institutional packs of 9-10

litres

82 Products

1048766 As a Brand Building country in global Unilever operating framework UBL is entitled only to

bring products developed by the Brand Development countries

1048766 Unilever should focus on serving products that have nutritional benefits (already available

globally) along with usual satisfactions of sensual pleasure functional attributes etc

1048766 Current existent players especially Igloo and Kwality have extensively copied global and

regionally available Unilever products eg Cornelli is same as Wallrsquos Cornetto Vinetta is similar

to Vienetta Mega is similar to Magnum etc UBL needs to differentiate these to consumers on

the ldquotaste the originalrdquo platform where global quality is focused regarding the products

1048766 UBL should also bring regionally famous brands like Moo or Max to create image

differentiation

1048766 Magnum or Moo should be used as premium end ice cream to generate more profit margin

Evaluation of Entry into Ice cream Business for Bangladesh Limited 54

83 Placement

1048766 Distribution focus should be in Dhaka for entry as Dhaka contributes more than 60 of total

ice cream sales in the country

1048766 Company may use carts as distribution method They serve as good source of visibility and

availability It would help in increasing impulse purchase

1048766 At least 1500 outlets in Dhaka and Chittagong needs to be actively served using dedicated

branded refrigerators to generate sales

1048766 50 carts should operate in Dhaka and Chittagong

84 Price

1048766 UBL products should be priced at par with Igloo pricing for the common format ice creams

1048766 UBL can bring in premium single-serve SKUS for the higher economic classes in the price

range of BDT 60-80

1048766 Smaller SKUs (small lolly stick) can be introduced in the price range of BDT 10-15

1048766 In the boutique segment UBL should price products above the semi-premium segment

(Gelateria Igloo Sub Zero or Andersenrsquos) but lower than that of Club Gelato or MoumlvenPick

85 Promotion

1048766 UBL would require strong marketing campaign (As high as 50 of sales) to have a grand

entry in the market

1048766 Presence in the television media would be of utmost importance More than 50 of

promotional expense should be made here initially Gradually it can be reduced

1048766 Newspaper would serve as the second most important option

1048766 Billboards should also be used

1048766 Activations (similar to Lux Channel i Super Star or Igloo Festival) should be done to generate

trial

86 Scope of Opportunity

Table 30 Value and Volume Based Scope of Opportunity for UBL

Value (BDT Cr)

Volume (Tons)

Market

131

7835

Common

121

7600

Boutique

98

235

Evaluation of Entry into Ice cream Business for Bangladesh Limited 55

861 Geographic Contribution

1048766 Dhaka (61)

1048766 Chittagong (19)

1048766 Sylhet (10)

862 UBL objectives

Common Format Ice Creams

1048766 Target 10 Market share in 1st year operation

1048766 Value BDT 11 Cr

1048766 Production capacity required 21 Tons day

1048766 Freezer Placement 1500 freezers

1048766 Cart operation At least 50 carts

Boutiques

1048766 Target Further develop the market

1048766 Focus Dhaka Chittagong and Sylhet Metro

1048766 Franchise At least 20 franchisee operations nation wide in divisional towns

1048766 Pricing Below imported parlours above common formats with around BDT 400 per Litre

87 Critical Success Factors

1048766 UBL is considered as a high profile company in Bangladesh and thus they cannot operate in

the market only with common products like choc-bars and cups They must have premium

products (these require extrusion line) also to carry their brand image Otherwise UBL would not

be able to charge usual premium over competition products

1048766 Launch of ice cream would require huge promotional and activation support in order to gain

customers from Igloo People want novelty regarding ice cream and UBL have to let them know

about their products and create hype

1048766 Cart should be used as a source of distribution Recent successes of Unilever companies like

Indonesia shows that carts can generate more sales and can be used as source of visibility in the

minds of both retail traders and consumers Carts can also provide incremental sales to the

company

1048766 UBL have to create a strong cold chain for ice cream (initially in Dhaka and Chittagong) to

ensure quality products for consumers

1048766 UBL have to build capacity very rapidly to meet consumer demand if the launch is successful

Evaluation of Entry into Ice cream Business for Bangladesh Limited 56

90 BUSINESS PROJECTION

91 Basic Assumptions

Business projection for ice cream business was made based on a conservative approach UBL

would require spending significantly on production capacity and factory dedicated to ice cream

Thus to analyse business possibilities of ice cream certain assumptions were made and collected

data were used These are

1048766 Production equipments and cabinets would cost approximately BDT 55 crores

1048766 Production equipments 45

1048766 Packaging Equipments 15

1048766 Storage Facility 20

1048766 Branded Freezers 10

1048766 Distribution Investment 10 (Distributors would also invest themselves)

1048766 Ice cream factory with a floor size of 20000 sqft would cost BDT 25 crores

1048766 Objective is to capture 10 market share in Dhaka and Chittagong in the first year

1048766 Business would grow by 50 in year 2 and 3 30 in year 4 and 25 in year 5

1048766 Weighted price per litre is BDT 170 according to volume share of single serve ice cream

multiple serve ice cream and boutique ice cream

1048766 Other financial assumptions were also made List of them are provided below but amount has

been removed for confidentiality issues

Assumptions

Trade Margin

Distributors Margin

DutyVAT Rate

Trade Terms Expense of NPS

Trade Terms Expense of NSV

Advertising ampPromotion of NPS

Indirects (Salaries Wages etc)

Trading Tax

Table 31 Assumptions for Business Projection

Evaluation of Entry into Ice cream Business for Bangladesh Limited 57

100 CONCLUSION

Ice cream has good prospect in Bangladesh It is still a growing market with opportunities for big

new entrants With the barriers of entry UBL needs to consider its priorities UBL being an HPC

company traditionally needs to acquire expertise in cold chain distribution and has to invest a lot

of money to rip the benefits of the industry However to initiate company can take regional

support and acquire resource expertise The company should enter the business as soon as

possible since there is potential threat from DANONE to introduce more ice creams after ISIS

diabetic ice cream and also with potential of the industry arch rival Nestlersquo might consider

entering into the industry too

Evaluation of Entry into Ice cream Business for Bangladesh Limited 58

References

Web References

1 wwwunilevercom

2 wwwunilevercombd

3 wwwhllcom

4 wwwunilevercompk

5 wwwthedailystarcom - Life Style Magazine

6 wwwreuterscouk

Evaluation of Entry into Ice cream Business for Bangladesh Limited 59

Page 63: Square Ice cream

1048766 The present market growth rate is 18-19 which is being influenced by larger players like

Igloo who are expanding their distribution nation wide with expansion of national electricity

grid

1048766 With entry of Modern Trade and recent organized business approach of retailers has made it

possible for ice cream manufacturers to penetrate into shops even without providing them with

branded freezers

1048766 Weather change has increased ldquosummerrdquo season in our country which has reduced negative

seasonal impact on ice cream

1048766 Large companies like Igloo have taken global learning of using carts as an effective tool of

availability and visibility for ice cream

1048766 New and improved technologies are being used in the production process This technological

advancement has improved quality increased speed of production and made the process more

cost effective

713 Consumer Level

1048766 Only a few years back rich people could afford the luxury of having ice-cream but now it has

become a common product for everybody Ice-cream companies are producing different products

with a wide price range for consumers of every class and status

1048766 Nowadays companies are doing promotional campaigns more frequently the customers get to

know about the product which makes it easier for them to buy the best one

1048766 The improved standard of life and more modernized lifestyle of people is an important reason

for the increased consumption thus growth of the ice-cream industry

Evaluation of Entry into Ice cream Business for Bangladesh Limited 52

72 Prospects of Entry

The ice-cream industry of Bangladesh is an attractive one for the investors because there is a

huge market but number of producers is very small The major reasons behind industry

attractiveness are as follows

1048766 The industryrsquos current growth potential is very high with opportunity for market development

1048766 The competition currently permits adequate profitability and the competitive forces are

becoming stronger with time

1048766 Boutique segment is at a very high growth stage but no operator is currently operating with a

mid price range of BDT 100-400 Ice cream kiosks and small scooping boutiques can operate

within that range

1048766 Current industry driving forces are favourable for the future industry profitability

1048766 Globally oriented consumers look for variety in ice cream that is currently not available

Latest innovations came in the market in 2002 People would welcome new variety and flavours

1048766 There is a gap in the market for balanced convenience through ice cream where consumers can

get nutritional benefits for ice cream Also emotional attachment to ice cream could further be

improvised in promotional campaigns

1048766 There is high scope for market penetration and development to increase frequency of ice

cream consumption

1048766 Level of risk or uncertainty is very low in ice-cream industry because the consumer market is

so huge any product with a standard quality and careful pricing will be able to make significant

profit

1048766 As for geographic reach of the industry 60 market is still in Dhaka There is scope of

expansion and a new entrant can easily capture market share within Dhaka using carts even if

they do not want nation wide cold chain distribution

1048766 The production process is very complex and capital requirements are also high So before

going into production any company should know about their capabilities and weaknesses and

then start the business or else they might suffer huge loss at a certain level

1048766 Unilever can acquire the required resource and use existing multi-national multi-cultural

expertise to enter the market in a grand way

1048766 With high probability of entry from DANONE with more products like the ISIS diabetic ice

cream Unilever should consider entering in this industry as soon as possible

Evaluation of Entry into Ice cream Business for Bangladesh Limited 53

80 ENTRY STRATEGY FOR UNILEVER

While describing the suggested entry strategy for UBL certain issues have been kept

confidential and some issues have been touched but not explained to keep consistency with UBL

confidentiality policy

81 Suggested Entry Areas for UBL

1048766 Boutique segment of the Bangladesh ice cream is only 5 of the branded market UBL needs

to pursue a larger scope to make the entry viable

1048766 UBL cannot fight with unbranded segment as global product quality mandate of Unilever does

not allow UBL to fight in low price-low quality segment

1048766 Recommend entry should be in the common format segment with both single and multiple

servings and in the boutique segment with a different brand name (if possible BEN amp JERRYrsquoS)

1048766 UBL should build up state-of-art modern factory for manufacturing and establish cold chain

facilities initially focusing on metro cities

1048766 Investment issues are required to be addressed for building factory and cold chain and capital

requirement needs to be identified for that purpose4

1048766 UBL may have boutiques for driving image selective top-end offering

1048766 Kiosks can be setup near universities and shopping malls

1048766 Boutiques should be concentrated in Dhaka and Chittagong

1048766 Ice cream for boutiques and kiosks would be produced in factory as institutional packs of 9-10

litres

82 Products

1048766 As a Brand Building country in global Unilever operating framework UBL is entitled only to

bring products developed by the Brand Development countries

1048766 Unilever should focus on serving products that have nutritional benefits (already available

globally) along with usual satisfactions of sensual pleasure functional attributes etc

1048766 Current existent players especially Igloo and Kwality have extensively copied global and

regionally available Unilever products eg Cornelli is same as Wallrsquos Cornetto Vinetta is similar

to Vienetta Mega is similar to Magnum etc UBL needs to differentiate these to consumers on

the ldquotaste the originalrdquo platform where global quality is focused regarding the products

1048766 UBL should also bring regionally famous brands like Moo or Max to create image

differentiation

1048766 Magnum or Moo should be used as premium end ice cream to generate more profit margin

Evaluation of Entry into Ice cream Business for Bangladesh Limited 54

83 Placement

1048766 Distribution focus should be in Dhaka for entry as Dhaka contributes more than 60 of total

ice cream sales in the country

1048766 Company may use carts as distribution method They serve as good source of visibility and

availability It would help in increasing impulse purchase

1048766 At least 1500 outlets in Dhaka and Chittagong needs to be actively served using dedicated

branded refrigerators to generate sales

1048766 50 carts should operate in Dhaka and Chittagong

84 Price

1048766 UBL products should be priced at par with Igloo pricing for the common format ice creams

1048766 UBL can bring in premium single-serve SKUS for the higher economic classes in the price

range of BDT 60-80

1048766 Smaller SKUs (small lolly stick) can be introduced in the price range of BDT 10-15

1048766 In the boutique segment UBL should price products above the semi-premium segment

(Gelateria Igloo Sub Zero or Andersenrsquos) but lower than that of Club Gelato or MoumlvenPick

85 Promotion

1048766 UBL would require strong marketing campaign (As high as 50 of sales) to have a grand

entry in the market

1048766 Presence in the television media would be of utmost importance More than 50 of

promotional expense should be made here initially Gradually it can be reduced

1048766 Newspaper would serve as the second most important option

1048766 Billboards should also be used

1048766 Activations (similar to Lux Channel i Super Star or Igloo Festival) should be done to generate

trial

86 Scope of Opportunity

Table 30 Value and Volume Based Scope of Opportunity for UBL

Value (BDT Cr)

Volume (Tons)

Market

131

7835

Common

121

7600

Boutique

98

235

Evaluation of Entry into Ice cream Business for Bangladesh Limited 55

861 Geographic Contribution

1048766 Dhaka (61)

1048766 Chittagong (19)

1048766 Sylhet (10)

862 UBL objectives

Common Format Ice Creams

1048766 Target 10 Market share in 1st year operation

1048766 Value BDT 11 Cr

1048766 Production capacity required 21 Tons day

1048766 Freezer Placement 1500 freezers

1048766 Cart operation At least 50 carts

Boutiques

1048766 Target Further develop the market

1048766 Focus Dhaka Chittagong and Sylhet Metro

1048766 Franchise At least 20 franchisee operations nation wide in divisional towns

1048766 Pricing Below imported parlours above common formats with around BDT 400 per Litre

87 Critical Success Factors

1048766 UBL is considered as a high profile company in Bangladesh and thus they cannot operate in

the market only with common products like choc-bars and cups They must have premium

products (these require extrusion line) also to carry their brand image Otherwise UBL would not

be able to charge usual premium over competition products

1048766 Launch of ice cream would require huge promotional and activation support in order to gain

customers from Igloo People want novelty regarding ice cream and UBL have to let them know

about their products and create hype

1048766 Cart should be used as a source of distribution Recent successes of Unilever companies like

Indonesia shows that carts can generate more sales and can be used as source of visibility in the

minds of both retail traders and consumers Carts can also provide incremental sales to the

company

1048766 UBL have to create a strong cold chain for ice cream (initially in Dhaka and Chittagong) to

ensure quality products for consumers

1048766 UBL have to build capacity very rapidly to meet consumer demand if the launch is successful

Evaluation of Entry into Ice cream Business for Bangladesh Limited 56

90 BUSINESS PROJECTION

91 Basic Assumptions

Business projection for ice cream business was made based on a conservative approach UBL

would require spending significantly on production capacity and factory dedicated to ice cream

Thus to analyse business possibilities of ice cream certain assumptions were made and collected

data were used These are

1048766 Production equipments and cabinets would cost approximately BDT 55 crores

1048766 Production equipments 45

1048766 Packaging Equipments 15

1048766 Storage Facility 20

1048766 Branded Freezers 10

1048766 Distribution Investment 10 (Distributors would also invest themselves)

1048766 Ice cream factory with a floor size of 20000 sqft would cost BDT 25 crores

1048766 Objective is to capture 10 market share in Dhaka and Chittagong in the first year

1048766 Business would grow by 50 in year 2 and 3 30 in year 4 and 25 in year 5

1048766 Weighted price per litre is BDT 170 according to volume share of single serve ice cream

multiple serve ice cream and boutique ice cream

1048766 Other financial assumptions were also made List of them are provided below but amount has

been removed for confidentiality issues

Assumptions

Trade Margin

Distributors Margin

DutyVAT Rate

Trade Terms Expense of NPS

Trade Terms Expense of NSV

Advertising ampPromotion of NPS

Indirects (Salaries Wages etc)

Trading Tax

Table 31 Assumptions for Business Projection

Evaluation of Entry into Ice cream Business for Bangladesh Limited 57

100 CONCLUSION

Ice cream has good prospect in Bangladesh It is still a growing market with opportunities for big

new entrants With the barriers of entry UBL needs to consider its priorities UBL being an HPC

company traditionally needs to acquire expertise in cold chain distribution and has to invest a lot

of money to rip the benefits of the industry However to initiate company can take regional

support and acquire resource expertise The company should enter the business as soon as

possible since there is potential threat from DANONE to introduce more ice creams after ISIS

diabetic ice cream and also with potential of the industry arch rival Nestlersquo might consider

entering into the industry too

Evaluation of Entry into Ice cream Business for Bangladesh Limited 58

References

Web References

1 wwwunilevercom

2 wwwunilevercombd

3 wwwhllcom

4 wwwunilevercompk

5 wwwthedailystarcom - Life Style Magazine

6 wwwreuterscouk

Evaluation of Entry into Ice cream Business for Bangladesh Limited 59

Page 64: Square Ice cream

1048766 The industryrsquos current growth potential is very high with opportunity for market development

1048766 The competition currently permits adequate profitability and the competitive forces are

becoming stronger with time

1048766 Boutique segment is at a very high growth stage but no operator is currently operating with a

mid price range of BDT 100-400 Ice cream kiosks and small scooping boutiques can operate

within that range

1048766 Current industry driving forces are favourable for the future industry profitability

1048766 Globally oriented consumers look for variety in ice cream that is currently not available

Latest innovations came in the market in 2002 People would welcome new variety and flavours

1048766 There is a gap in the market for balanced convenience through ice cream where consumers can

get nutritional benefits for ice cream Also emotional attachment to ice cream could further be

improvised in promotional campaigns

1048766 There is high scope for market penetration and development to increase frequency of ice

cream consumption

1048766 Level of risk or uncertainty is very low in ice-cream industry because the consumer market is

so huge any product with a standard quality and careful pricing will be able to make significant

profit

1048766 As for geographic reach of the industry 60 market is still in Dhaka There is scope of

expansion and a new entrant can easily capture market share within Dhaka using carts even if

they do not want nation wide cold chain distribution

1048766 The production process is very complex and capital requirements are also high So before

going into production any company should know about their capabilities and weaknesses and

then start the business or else they might suffer huge loss at a certain level

1048766 Unilever can acquire the required resource and use existing multi-national multi-cultural

expertise to enter the market in a grand way

1048766 With high probability of entry from DANONE with more products like the ISIS diabetic ice

cream Unilever should consider entering in this industry as soon as possible

Evaluation of Entry into Ice cream Business for Bangladesh Limited 53

80 ENTRY STRATEGY FOR UNILEVER

While describing the suggested entry strategy for UBL certain issues have been kept

confidential and some issues have been touched but not explained to keep consistency with UBL

confidentiality policy

81 Suggested Entry Areas for UBL

1048766 Boutique segment of the Bangladesh ice cream is only 5 of the branded market UBL needs

to pursue a larger scope to make the entry viable

1048766 UBL cannot fight with unbranded segment as global product quality mandate of Unilever does

not allow UBL to fight in low price-low quality segment

1048766 Recommend entry should be in the common format segment with both single and multiple

servings and in the boutique segment with a different brand name (if possible BEN amp JERRYrsquoS)

1048766 UBL should build up state-of-art modern factory for manufacturing and establish cold chain

facilities initially focusing on metro cities

1048766 Investment issues are required to be addressed for building factory and cold chain and capital

requirement needs to be identified for that purpose4

1048766 UBL may have boutiques for driving image selective top-end offering

1048766 Kiosks can be setup near universities and shopping malls

1048766 Boutiques should be concentrated in Dhaka and Chittagong

1048766 Ice cream for boutiques and kiosks would be produced in factory as institutional packs of 9-10

litres

82 Products

1048766 As a Brand Building country in global Unilever operating framework UBL is entitled only to

bring products developed by the Brand Development countries

1048766 Unilever should focus on serving products that have nutritional benefits (already available

globally) along with usual satisfactions of sensual pleasure functional attributes etc

1048766 Current existent players especially Igloo and Kwality have extensively copied global and

regionally available Unilever products eg Cornelli is same as Wallrsquos Cornetto Vinetta is similar

to Vienetta Mega is similar to Magnum etc UBL needs to differentiate these to consumers on

the ldquotaste the originalrdquo platform where global quality is focused regarding the products

1048766 UBL should also bring regionally famous brands like Moo or Max to create image

differentiation

1048766 Magnum or Moo should be used as premium end ice cream to generate more profit margin

Evaluation of Entry into Ice cream Business for Bangladesh Limited 54

83 Placement

1048766 Distribution focus should be in Dhaka for entry as Dhaka contributes more than 60 of total

ice cream sales in the country

1048766 Company may use carts as distribution method They serve as good source of visibility and

availability It would help in increasing impulse purchase

1048766 At least 1500 outlets in Dhaka and Chittagong needs to be actively served using dedicated

branded refrigerators to generate sales

1048766 50 carts should operate in Dhaka and Chittagong

84 Price

1048766 UBL products should be priced at par with Igloo pricing for the common format ice creams

1048766 UBL can bring in premium single-serve SKUS for the higher economic classes in the price

range of BDT 60-80

1048766 Smaller SKUs (small lolly stick) can be introduced in the price range of BDT 10-15

1048766 In the boutique segment UBL should price products above the semi-premium segment

(Gelateria Igloo Sub Zero or Andersenrsquos) but lower than that of Club Gelato or MoumlvenPick

85 Promotion

1048766 UBL would require strong marketing campaign (As high as 50 of sales) to have a grand

entry in the market

1048766 Presence in the television media would be of utmost importance More than 50 of

promotional expense should be made here initially Gradually it can be reduced

1048766 Newspaper would serve as the second most important option

1048766 Billboards should also be used

1048766 Activations (similar to Lux Channel i Super Star or Igloo Festival) should be done to generate

trial

86 Scope of Opportunity

Table 30 Value and Volume Based Scope of Opportunity for UBL

Value (BDT Cr)

Volume (Tons)

Market

131

7835

Common

121

7600

Boutique

98

235

Evaluation of Entry into Ice cream Business for Bangladesh Limited 55

861 Geographic Contribution

1048766 Dhaka (61)

1048766 Chittagong (19)

1048766 Sylhet (10)

862 UBL objectives

Common Format Ice Creams

1048766 Target 10 Market share in 1st year operation

1048766 Value BDT 11 Cr

1048766 Production capacity required 21 Tons day

1048766 Freezer Placement 1500 freezers

1048766 Cart operation At least 50 carts

Boutiques

1048766 Target Further develop the market

1048766 Focus Dhaka Chittagong and Sylhet Metro

1048766 Franchise At least 20 franchisee operations nation wide in divisional towns

1048766 Pricing Below imported parlours above common formats with around BDT 400 per Litre

87 Critical Success Factors

1048766 UBL is considered as a high profile company in Bangladesh and thus they cannot operate in

the market only with common products like choc-bars and cups They must have premium

products (these require extrusion line) also to carry their brand image Otherwise UBL would not

be able to charge usual premium over competition products

1048766 Launch of ice cream would require huge promotional and activation support in order to gain

customers from Igloo People want novelty regarding ice cream and UBL have to let them know

about their products and create hype

1048766 Cart should be used as a source of distribution Recent successes of Unilever companies like

Indonesia shows that carts can generate more sales and can be used as source of visibility in the

minds of both retail traders and consumers Carts can also provide incremental sales to the

company

1048766 UBL have to create a strong cold chain for ice cream (initially in Dhaka and Chittagong) to

ensure quality products for consumers

1048766 UBL have to build capacity very rapidly to meet consumer demand if the launch is successful

Evaluation of Entry into Ice cream Business for Bangladesh Limited 56

90 BUSINESS PROJECTION

91 Basic Assumptions

Business projection for ice cream business was made based on a conservative approach UBL

would require spending significantly on production capacity and factory dedicated to ice cream

Thus to analyse business possibilities of ice cream certain assumptions were made and collected

data were used These are

1048766 Production equipments and cabinets would cost approximately BDT 55 crores

1048766 Production equipments 45

1048766 Packaging Equipments 15

1048766 Storage Facility 20

1048766 Branded Freezers 10

1048766 Distribution Investment 10 (Distributors would also invest themselves)

1048766 Ice cream factory with a floor size of 20000 sqft would cost BDT 25 crores

1048766 Objective is to capture 10 market share in Dhaka and Chittagong in the first year

1048766 Business would grow by 50 in year 2 and 3 30 in year 4 and 25 in year 5

1048766 Weighted price per litre is BDT 170 according to volume share of single serve ice cream

multiple serve ice cream and boutique ice cream

1048766 Other financial assumptions were also made List of them are provided below but amount has

been removed for confidentiality issues

Assumptions

Trade Margin

Distributors Margin

DutyVAT Rate

Trade Terms Expense of NPS

Trade Terms Expense of NSV

Advertising ampPromotion of NPS

Indirects (Salaries Wages etc)

Trading Tax

Table 31 Assumptions for Business Projection

Evaluation of Entry into Ice cream Business for Bangladesh Limited 57

100 CONCLUSION

Ice cream has good prospect in Bangladesh It is still a growing market with opportunities for big

new entrants With the barriers of entry UBL needs to consider its priorities UBL being an HPC

company traditionally needs to acquire expertise in cold chain distribution and has to invest a lot

of money to rip the benefits of the industry However to initiate company can take regional

support and acquire resource expertise The company should enter the business as soon as

possible since there is potential threat from DANONE to introduce more ice creams after ISIS

diabetic ice cream and also with potential of the industry arch rival Nestlersquo might consider

entering into the industry too

Evaluation of Entry into Ice cream Business for Bangladesh Limited 58

References

Web References

1 wwwunilevercom

2 wwwunilevercombd

3 wwwhllcom

4 wwwunilevercompk

5 wwwthedailystarcom - Life Style Magazine

6 wwwreuterscouk

Evaluation of Entry into Ice cream Business for Bangladesh Limited 59

Page 65: Square Ice cream

1048766 With high probability of entry from DANONE with more products like the ISIS diabetic ice

cream Unilever should consider entering in this industry as soon as possible

Evaluation of Entry into Ice cream Business for Bangladesh Limited 53

80 ENTRY STRATEGY FOR UNILEVER

While describing the suggested entry strategy for UBL certain issues have been kept

confidential and some issues have been touched but not explained to keep consistency with UBL

confidentiality policy

81 Suggested Entry Areas for UBL

1048766 Boutique segment of the Bangladesh ice cream is only 5 of the branded market UBL needs

to pursue a larger scope to make the entry viable

1048766 UBL cannot fight with unbranded segment as global product quality mandate of Unilever does

not allow UBL to fight in low price-low quality segment

1048766 Recommend entry should be in the common format segment with both single and multiple

servings and in the boutique segment with a different brand name (if possible BEN amp JERRYrsquoS)

1048766 UBL should build up state-of-art modern factory for manufacturing and establish cold chain

facilities initially focusing on metro cities

1048766 Investment issues are required to be addressed for building factory and cold chain and capital

requirement needs to be identified for that purpose4

1048766 UBL may have boutiques for driving image selective top-end offering

1048766 Kiosks can be setup near universities and shopping malls

1048766 Boutiques should be concentrated in Dhaka and Chittagong

1048766 Ice cream for boutiques and kiosks would be produced in factory as institutional packs of 9-10

litres

82 Products

1048766 As a Brand Building country in global Unilever operating framework UBL is entitled only to

bring products developed by the Brand Development countries

1048766 Unilever should focus on serving products that have nutritional benefits (already available

globally) along with usual satisfactions of sensual pleasure functional attributes etc

1048766 Current existent players especially Igloo and Kwality have extensively copied global and

regionally available Unilever products eg Cornelli is same as Wallrsquos Cornetto Vinetta is similar

to Vienetta Mega is similar to Magnum etc UBL needs to differentiate these to consumers on

the ldquotaste the originalrdquo platform where global quality is focused regarding the products

1048766 UBL should also bring regionally famous brands like Moo or Max to create image

differentiation

1048766 Magnum or Moo should be used as premium end ice cream to generate more profit margin

Evaluation of Entry into Ice cream Business for Bangladesh Limited 54

83 Placement

1048766 Distribution focus should be in Dhaka for entry as Dhaka contributes more than 60 of total

ice cream sales in the country

1048766 Company may use carts as distribution method They serve as good source of visibility and

availability It would help in increasing impulse purchase

1048766 At least 1500 outlets in Dhaka and Chittagong needs to be actively served using dedicated

branded refrigerators to generate sales

1048766 50 carts should operate in Dhaka and Chittagong

84 Price

1048766 UBL products should be priced at par with Igloo pricing for the common format ice creams

1048766 UBL can bring in premium single-serve SKUS for the higher economic classes in the price

range of BDT 60-80

1048766 Smaller SKUs (small lolly stick) can be introduced in the price range of BDT 10-15

1048766 In the boutique segment UBL should price products above the semi-premium segment

(Gelateria Igloo Sub Zero or Andersenrsquos) but lower than that of Club Gelato or MoumlvenPick

85 Promotion

1048766 UBL would require strong marketing campaign (As high as 50 of sales) to have a grand

entry in the market

1048766 Presence in the television media would be of utmost importance More than 50 of

promotional expense should be made here initially Gradually it can be reduced

1048766 Newspaper would serve as the second most important option

1048766 Billboards should also be used

1048766 Activations (similar to Lux Channel i Super Star or Igloo Festival) should be done to generate

trial

86 Scope of Opportunity

Table 30 Value and Volume Based Scope of Opportunity for UBL

Value (BDT Cr)

Volume (Tons)

Market

131

7835

Common

121

7600

Boutique

98

235

Evaluation of Entry into Ice cream Business for Bangladesh Limited 55

861 Geographic Contribution

1048766 Dhaka (61)

1048766 Chittagong (19)

1048766 Sylhet (10)

862 UBL objectives

Common Format Ice Creams

1048766 Target 10 Market share in 1st year operation

1048766 Value BDT 11 Cr

1048766 Production capacity required 21 Tons day

1048766 Freezer Placement 1500 freezers

1048766 Cart operation At least 50 carts

Boutiques

1048766 Target Further develop the market

1048766 Focus Dhaka Chittagong and Sylhet Metro

1048766 Franchise At least 20 franchisee operations nation wide in divisional towns

1048766 Pricing Below imported parlours above common formats with around BDT 400 per Litre

87 Critical Success Factors

1048766 UBL is considered as a high profile company in Bangladesh and thus they cannot operate in

the market only with common products like choc-bars and cups They must have premium

products (these require extrusion line) also to carry their brand image Otherwise UBL would not

be able to charge usual premium over competition products

1048766 Launch of ice cream would require huge promotional and activation support in order to gain

customers from Igloo People want novelty regarding ice cream and UBL have to let them know

about their products and create hype

1048766 Cart should be used as a source of distribution Recent successes of Unilever companies like

Indonesia shows that carts can generate more sales and can be used as source of visibility in the

minds of both retail traders and consumers Carts can also provide incremental sales to the

company

1048766 UBL have to create a strong cold chain for ice cream (initially in Dhaka and Chittagong) to

ensure quality products for consumers

1048766 UBL have to build capacity very rapidly to meet consumer demand if the launch is successful

Evaluation of Entry into Ice cream Business for Bangladesh Limited 56

90 BUSINESS PROJECTION

91 Basic Assumptions

Business projection for ice cream business was made based on a conservative approach UBL

would require spending significantly on production capacity and factory dedicated to ice cream

Thus to analyse business possibilities of ice cream certain assumptions were made and collected

data were used These are

1048766 Production equipments and cabinets would cost approximately BDT 55 crores

1048766 Production equipments 45

1048766 Packaging Equipments 15

1048766 Storage Facility 20

1048766 Branded Freezers 10

1048766 Distribution Investment 10 (Distributors would also invest themselves)

1048766 Ice cream factory with a floor size of 20000 sqft would cost BDT 25 crores

1048766 Objective is to capture 10 market share in Dhaka and Chittagong in the first year

1048766 Business would grow by 50 in year 2 and 3 30 in year 4 and 25 in year 5

1048766 Weighted price per litre is BDT 170 according to volume share of single serve ice cream

multiple serve ice cream and boutique ice cream

1048766 Other financial assumptions were also made List of them are provided below but amount has

been removed for confidentiality issues

Assumptions

Trade Margin

Distributors Margin

DutyVAT Rate

Trade Terms Expense of NPS

Trade Terms Expense of NSV

Advertising ampPromotion of NPS

Indirects (Salaries Wages etc)

Trading Tax

Table 31 Assumptions for Business Projection

Evaluation of Entry into Ice cream Business for Bangladesh Limited 57

100 CONCLUSION

Ice cream has good prospect in Bangladesh It is still a growing market with opportunities for big

new entrants With the barriers of entry UBL needs to consider its priorities UBL being an HPC

company traditionally needs to acquire expertise in cold chain distribution and has to invest a lot

of money to rip the benefits of the industry However to initiate company can take regional

support and acquire resource expertise The company should enter the business as soon as

possible since there is potential threat from DANONE to introduce more ice creams after ISIS

diabetic ice cream and also with potential of the industry arch rival Nestlersquo might consider

entering into the industry too

Evaluation of Entry into Ice cream Business for Bangladesh Limited 58

References

Web References

1 wwwunilevercom

2 wwwunilevercombd

3 wwwhllcom

4 wwwunilevercompk

5 wwwthedailystarcom - Life Style Magazine

6 wwwreuterscouk

Evaluation of Entry into Ice cream Business for Bangladesh Limited 59

Page 66: Square Ice cream

1048766 As a Brand Building country in global Unilever operating framework UBL is entitled only to

bring products developed by the Brand Development countries

1048766 Unilever should focus on serving products that have nutritional benefits (already available

globally) along with usual satisfactions of sensual pleasure functional attributes etc

1048766 Current existent players especially Igloo and Kwality have extensively copied global and

regionally available Unilever products eg Cornelli is same as Wallrsquos Cornetto Vinetta is similar

to Vienetta Mega is similar to Magnum etc UBL needs to differentiate these to consumers on

the ldquotaste the originalrdquo platform where global quality is focused regarding the products

1048766 UBL should also bring regionally famous brands like Moo or Max to create image

differentiation

1048766 Magnum or Moo should be used as premium end ice cream to generate more profit margin

Evaluation of Entry into Ice cream Business for Bangladesh Limited 54

83 Placement

1048766 Distribution focus should be in Dhaka for entry as Dhaka contributes more than 60 of total

ice cream sales in the country

1048766 Company may use carts as distribution method They serve as good source of visibility and

availability It would help in increasing impulse purchase

1048766 At least 1500 outlets in Dhaka and Chittagong needs to be actively served using dedicated

branded refrigerators to generate sales

1048766 50 carts should operate in Dhaka and Chittagong

84 Price

1048766 UBL products should be priced at par with Igloo pricing for the common format ice creams

1048766 UBL can bring in premium single-serve SKUS for the higher economic classes in the price

range of BDT 60-80

1048766 Smaller SKUs (small lolly stick) can be introduced in the price range of BDT 10-15

1048766 In the boutique segment UBL should price products above the semi-premium segment

(Gelateria Igloo Sub Zero or Andersenrsquos) but lower than that of Club Gelato or MoumlvenPick

85 Promotion

1048766 UBL would require strong marketing campaign (As high as 50 of sales) to have a grand

entry in the market

1048766 Presence in the television media would be of utmost importance More than 50 of

promotional expense should be made here initially Gradually it can be reduced

1048766 Newspaper would serve as the second most important option

1048766 Billboards should also be used

1048766 Activations (similar to Lux Channel i Super Star or Igloo Festival) should be done to generate

trial

86 Scope of Opportunity

Table 30 Value and Volume Based Scope of Opportunity for UBL

Value (BDT Cr)

Volume (Tons)

Market

131

7835

Common

121

7600

Boutique

98

235

Evaluation of Entry into Ice cream Business for Bangladesh Limited 55

861 Geographic Contribution

1048766 Dhaka (61)

1048766 Chittagong (19)

1048766 Sylhet (10)

862 UBL objectives

Common Format Ice Creams

1048766 Target 10 Market share in 1st year operation

1048766 Value BDT 11 Cr

1048766 Production capacity required 21 Tons day

1048766 Freezer Placement 1500 freezers

1048766 Cart operation At least 50 carts

Boutiques

1048766 Target Further develop the market

1048766 Focus Dhaka Chittagong and Sylhet Metro

1048766 Franchise At least 20 franchisee operations nation wide in divisional towns

1048766 Pricing Below imported parlours above common formats with around BDT 400 per Litre

87 Critical Success Factors

1048766 UBL is considered as a high profile company in Bangladesh and thus they cannot operate in

the market only with common products like choc-bars and cups They must have premium

products (these require extrusion line) also to carry their brand image Otherwise UBL would not

be able to charge usual premium over competition products

1048766 Launch of ice cream would require huge promotional and activation support in order to gain

customers from Igloo People want novelty regarding ice cream and UBL have to let them know

about their products and create hype

1048766 Cart should be used as a source of distribution Recent successes of Unilever companies like

Indonesia shows that carts can generate more sales and can be used as source of visibility in the

minds of both retail traders and consumers Carts can also provide incremental sales to the

company

1048766 UBL have to create a strong cold chain for ice cream (initially in Dhaka and Chittagong) to

ensure quality products for consumers

1048766 UBL have to build capacity very rapidly to meet consumer demand if the launch is successful

Evaluation of Entry into Ice cream Business for Bangladesh Limited 56

90 BUSINESS PROJECTION

91 Basic Assumptions

Business projection for ice cream business was made based on a conservative approach UBL

would require spending significantly on production capacity and factory dedicated to ice cream

Thus to analyse business possibilities of ice cream certain assumptions were made and collected

data were used These are

1048766 Production equipments and cabinets would cost approximately BDT 55 crores

1048766 Production equipments 45

1048766 Packaging Equipments 15

1048766 Storage Facility 20

1048766 Branded Freezers 10

1048766 Distribution Investment 10 (Distributors would also invest themselves)

1048766 Ice cream factory with a floor size of 20000 sqft would cost BDT 25 crores

1048766 Objective is to capture 10 market share in Dhaka and Chittagong in the first year

1048766 Business would grow by 50 in year 2 and 3 30 in year 4 and 25 in year 5

1048766 Weighted price per litre is BDT 170 according to volume share of single serve ice cream

multiple serve ice cream and boutique ice cream

1048766 Other financial assumptions were also made List of them are provided below but amount has

been removed for confidentiality issues

Assumptions

Trade Margin

Distributors Margin

DutyVAT Rate

Trade Terms Expense of NPS

Trade Terms Expense of NSV

Advertising ampPromotion of NPS

Indirects (Salaries Wages etc)

Trading Tax

Table 31 Assumptions for Business Projection

Evaluation of Entry into Ice cream Business for Bangladesh Limited 57

100 CONCLUSION

Ice cream has good prospect in Bangladesh It is still a growing market with opportunities for big

new entrants With the barriers of entry UBL needs to consider its priorities UBL being an HPC

company traditionally needs to acquire expertise in cold chain distribution and has to invest a lot

of money to rip the benefits of the industry However to initiate company can take regional

support and acquire resource expertise The company should enter the business as soon as

possible since there is potential threat from DANONE to introduce more ice creams after ISIS

diabetic ice cream and also with potential of the industry arch rival Nestlersquo might consider

entering into the industry too

Evaluation of Entry into Ice cream Business for Bangladesh Limited 58

References

Web References

1 wwwunilevercom

2 wwwunilevercombd

3 wwwhllcom

4 wwwunilevercompk

5 wwwthedailystarcom - Life Style Magazine

6 wwwreuterscouk

Evaluation of Entry into Ice cream Business for Bangladesh Limited 59

Page 67: Square Ice cream

1048766 Smaller SKUs (small lolly stick) can be introduced in the price range of BDT 10-15

1048766 In the boutique segment UBL should price products above the semi-premium segment

(Gelateria Igloo Sub Zero or Andersenrsquos) but lower than that of Club Gelato or MoumlvenPick

85 Promotion

1048766 UBL would require strong marketing campaign (As high as 50 of sales) to have a grand

entry in the market

1048766 Presence in the television media would be of utmost importance More than 50 of

promotional expense should be made here initially Gradually it can be reduced

1048766 Newspaper would serve as the second most important option

1048766 Billboards should also be used

1048766 Activations (similar to Lux Channel i Super Star or Igloo Festival) should be done to generate

trial

86 Scope of Opportunity

Table 30 Value and Volume Based Scope of Opportunity for UBL

Value (BDT Cr)

Volume (Tons)

Market

131

7835

Common

121

7600

Boutique

98

235

Evaluation of Entry into Ice cream Business for Bangladesh Limited 55

861 Geographic Contribution

1048766 Dhaka (61)

1048766 Chittagong (19)

1048766 Sylhet (10)

862 UBL objectives

Common Format Ice Creams

1048766 Target 10 Market share in 1st year operation

1048766 Value BDT 11 Cr

1048766 Production capacity required 21 Tons day

1048766 Freezer Placement 1500 freezers

1048766 Cart operation At least 50 carts

Boutiques

1048766 Target Further develop the market

1048766 Focus Dhaka Chittagong and Sylhet Metro

1048766 Franchise At least 20 franchisee operations nation wide in divisional towns

1048766 Pricing Below imported parlours above common formats with around BDT 400 per Litre

87 Critical Success Factors

1048766 UBL is considered as a high profile company in Bangladesh and thus they cannot operate in

the market only with common products like choc-bars and cups They must have premium

products (these require extrusion line) also to carry their brand image Otherwise UBL would not

be able to charge usual premium over competition products

1048766 Launch of ice cream would require huge promotional and activation support in order to gain

customers from Igloo People want novelty regarding ice cream and UBL have to let them know

about their products and create hype

1048766 Cart should be used as a source of distribution Recent successes of Unilever companies like

Indonesia shows that carts can generate more sales and can be used as source of visibility in the

minds of both retail traders and consumers Carts can also provide incremental sales to the

company

1048766 UBL have to create a strong cold chain for ice cream (initially in Dhaka and Chittagong) to

ensure quality products for consumers

1048766 UBL have to build capacity very rapidly to meet consumer demand if the launch is successful

Evaluation of Entry into Ice cream Business for Bangladesh Limited 56

90 BUSINESS PROJECTION

91 Basic Assumptions

Business projection for ice cream business was made based on a conservative approach UBL

would require spending significantly on production capacity and factory dedicated to ice cream

Thus to analyse business possibilities of ice cream certain assumptions were made and collected

data were used These are

1048766 Production equipments and cabinets would cost approximately BDT 55 crores

1048766 Production equipments 45

1048766 Packaging Equipments 15

1048766 Storage Facility 20

1048766 Branded Freezers 10

1048766 Distribution Investment 10 (Distributors would also invest themselves)

1048766 Ice cream factory with a floor size of 20000 sqft would cost BDT 25 crores

1048766 Objective is to capture 10 market share in Dhaka and Chittagong in the first year

1048766 Business would grow by 50 in year 2 and 3 30 in year 4 and 25 in year 5

1048766 Weighted price per litre is BDT 170 according to volume share of single serve ice cream

multiple serve ice cream and boutique ice cream

1048766 Other financial assumptions were also made List of them are provided below but amount has

been removed for confidentiality issues

Assumptions

Trade Margin

Distributors Margin

DutyVAT Rate

Trade Terms Expense of NPS

Trade Terms Expense of NSV

Advertising ampPromotion of NPS

Indirects (Salaries Wages etc)

Trading Tax

Table 31 Assumptions for Business Projection

Evaluation of Entry into Ice cream Business for Bangladesh Limited 57

100 CONCLUSION

Ice cream has good prospect in Bangladesh It is still a growing market with opportunities for big

new entrants With the barriers of entry UBL needs to consider its priorities UBL being an HPC

company traditionally needs to acquire expertise in cold chain distribution and has to invest a lot

of money to rip the benefits of the industry However to initiate company can take regional

support and acquire resource expertise The company should enter the business as soon as

possible since there is potential threat from DANONE to introduce more ice creams after ISIS

diabetic ice cream and also with potential of the industry arch rival Nestlersquo might consider

entering into the industry too

Evaluation of Entry into Ice cream Business for Bangladesh Limited 58

References

Web References

1 wwwunilevercom

2 wwwunilevercombd

3 wwwhllcom

4 wwwunilevercompk

5 wwwthedailystarcom - Life Style Magazine

6 wwwreuterscouk

Evaluation of Entry into Ice cream Business for Bangladesh Limited 59

Page 68: Square Ice cream

Boutique

98

235

Evaluation of Entry into Ice cream Business for Bangladesh Limited 55

861 Geographic Contribution

1048766 Dhaka (61)

1048766 Chittagong (19)

1048766 Sylhet (10)

862 UBL objectives

Common Format Ice Creams

1048766 Target 10 Market share in 1st year operation

1048766 Value BDT 11 Cr

1048766 Production capacity required 21 Tons day

1048766 Freezer Placement 1500 freezers

1048766 Cart operation At least 50 carts

Boutiques

1048766 Target Further develop the market

1048766 Focus Dhaka Chittagong and Sylhet Metro

1048766 Franchise At least 20 franchisee operations nation wide in divisional towns

1048766 Pricing Below imported parlours above common formats with around BDT 400 per Litre

87 Critical Success Factors

1048766 UBL is considered as a high profile company in Bangladesh and thus they cannot operate in

the market only with common products like choc-bars and cups They must have premium

products (these require extrusion line) also to carry their brand image Otherwise UBL would not

be able to charge usual premium over competition products

1048766 Launch of ice cream would require huge promotional and activation support in order to gain

customers from Igloo People want novelty regarding ice cream and UBL have to let them know

about their products and create hype

1048766 Cart should be used as a source of distribution Recent successes of Unilever companies like

Indonesia shows that carts can generate more sales and can be used as source of visibility in the

minds of both retail traders and consumers Carts can also provide incremental sales to the

company

1048766 UBL have to create a strong cold chain for ice cream (initially in Dhaka and Chittagong) to

ensure quality products for consumers

1048766 UBL have to build capacity very rapidly to meet consumer demand if the launch is successful

Evaluation of Entry into Ice cream Business for Bangladesh Limited 56

90 BUSINESS PROJECTION

91 Basic Assumptions

Business projection for ice cream business was made based on a conservative approach UBL

would require spending significantly on production capacity and factory dedicated to ice cream

Thus to analyse business possibilities of ice cream certain assumptions were made and collected

data were used These are

1048766 Production equipments and cabinets would cost approximately BDT 55 crores

1048766 Production equipments 45

1048766 Packaging Equipments 15

1048766 Storage Facility 20

1048766 Branded Freezers 10

1048766 Distribution Investment 10 (Distributors would also invest themselves)

1048766 Ice cream factory with a floor size of 20000 sqft would cost BDT 25 crores

1048766 Objective is to capture 10 market share in Dhaka and Chittagong in the first year

1048766 Business would grow by 50 in year 2 and 3 30 in year 4 and 25 in year 5

1048766 Weighted price per litre is BDT 170 according to volume share of single serve ice cream

multiple serve ice cream and boutique ice cream

1048766 Other financial assumptions were also made List of them are provided below but amount has

been removed for confidentiality issues

Assumptions

Trade Margin

Distributors Margin

DutyVAT Rate

Trade Terms Expense of NPS

Trade Terms Expense of NSV

Advertising ampPromotion of NPS

Indirects (Salaries Wages etc)

Trading Tax

Table 31 Assumptions for Business Projection

Evaluation of Entry into Ice cream Business for Bangladesh Limited 57

100 CONCLUSION

Ice cream has good prospect in Bangladesh It is still a growing market with opportunities for big

new entrants With the barriers of entry UBL needs to consider its priorities UBL being an HPC

company traditionally needs to acquire expertise in cold chain distribution and has to invest a lot

of money to rip the benefits of the industry However to initiate company can take regional

support and acquire resource expertise The company should enter the business as soon as

possible since there is potential threat from DANONE to introduce more ice creams after ISIS

diabetic ice cream and also with potential of the industry arch rival Nestlersquo might consider

entering into the industry too

Evaluation of Entry into Ice cream Business for Bangladesh Limited 58

References

Web References

1 wwwunilevercom

2 wwwunilevercombd

3 wwwhllcom

4 wwwunilevercompk

5 wwwthedailystarcom - Life Style Magazine

6 wwwreuterscouk

Evaluation of Entry into Ice cream Business for Bangladesh Limited 59

Page 69: Square Ice cream

1048766 UBL is considered as a high profile company in Bangladesh and thus they cannot operate in

the market only with common products like choc-bars and cups They must have premium

products (these require extrusion line) also to carry their brand image Otherwise UBL would not

be able to charge usual premium over competition products

1048766 Launch of ice cream would require huge promotional and activation support in order to gain

customers from Igloo People want novelty regarding ice cream and UBL have to let them know

about their products and create hype

1048766 Cart should be used as a source of distribution Recent successes of Unilever companies like

Indonesia shows that carts can generate more sales and can be used as source of visibility in the

minds of both retail traders and consumers Carts can also provide incremental sales to the

company

1048766 UBL have to create a strong cold chain for ice cream (initially in Dhaka and Chittagong) to

ensure quality products for consumers

1048766 UBL have to build capacity very rapidly to meet consumer demand if the launch is successful

Evaluation of Entry into Ice cream Business for Bangladesh Limited 56

90 BUSINESS PROJECTION

91 Basic Assumptions

Business projection for ice cream business was made based on a conservative approach UBL

would require spending significantly on production capacity and factory dedicated to ice cream

Thus to analyse business possibilities of ice cream certain assumptions were made and collected

data were used These are

1048766 Production equipments and cabinets would cost approximately BDT 55 crores

1048766 Production equipments 45

1048766 Packaging Equipments 15

1048766 Storage Facility 20

1048766 Branded Freezers 10

1048766 Distribution Investment 10 (Distributors would also invest themselves)

1048766 Ice cream factory with a floor size of 20000 sqft would cost BDT 25 crores

1048766 Objective is to capture 10 market share in Dhaka and Chittagong in the first year

1048766 Business would grow by 50 in year 2 and 3 30 in year 4 and 25 in year 5

1048766 Weighted price per litre is BDT 170 according to volume share of single serve ice cream

multiple serve ice cream and boutique ice cream

1048766 Other financial assumptions were also made List of them are provided below but amount has

been removed for confidentiality issues

Assumptions

Trade Margin

Distributors Margin

DutyVAT Rate

Trade Terms Expense of NPS

Trade Terms Expense of NSV

Advertising ampPromotion of NPS

Indirects (Salaries Wages etc)

Trading Tax

Table 31 Assumptions for Business Projection

Evaluation of Entry into Ice cream Business for Bangladesh Limited 57

100 CONCLUSION

Ice cream has good prospect in Bangladesh It is still a growing market with opportunities for big

new entrants With the barriers of entry UBL needs to consider its priorities UBL being an HPC

company traditionally needs to acquire expertise in cold chain distribution and has to invest a lot

of money to rip the benefits of the industry However to initiate company can take regional

support and acquire resource expertise The company should enter the business as soon as

possible since there is potential threat from DANONE to introduce more ice creams after ISIS

diabetic ice cream and also with potential of the industry arch rival Nestlersquo might consider

entering into the industry too

Evaluation of Entry into Ice cream Business for Bangladesh Limited 58

References

Web References

1 wwwunilevercom

2 wwwunilevercombd

3 wwwhllcom

4 wwwunilevercompk

5 wwwthedailystarcom - Life Style Magazine

6 wwwreuterscouk

Evaluation of Entry into Ice cream Business for Bangladesh Limited 59

Page 70: Square Ice cream

1048766 Branded Freezers 10

1048766 Distribution Investment 10 (Distributors would also invest themselves)

1048766 Ice cream factory with a floor size of 20000 sqft would cost BDT 25 crores

1048766 Objective is to capture 10 market share in Dhaka and Chittagong in the first year

1048766 Business would grow by 50 in year 2 and 3 30 in year 4 and 25 in year 5

1048766 Weighted price per litre is BDT 170 according to volume share of single serve ice cream

multiple serve ice cream and boutique ice cream

1048766 Other financial assumptions were also made List of them are provided below but amount has

been removed for confidentiality issues

Assumptions

Trade Margin

Distributors Margin

DutyVAT Rate

Trade Terms Expense of NPS

Trade Terms Expense of NSV

Advertising ampPromotion of NPS

Indirects (Salaries Wages etc)

Trading Tax

Table 31 Assumptions for Business Projection

Evaluation of Entry into Ice cream Business for Bangladesh Limited 57

100 CONCLUSION

Ice cream has good prospect in Bangladesh It is still a growing market with opportunities for big

new entrants With the barriers of entry UBL needs to consider its priorities UBL being an HPC

company traditionally needs to acquire expertise in cold chain distribution and has to invest a lot

of money to rip the benefits of the industry However to initiate company can take regional

support and acquire resource expertise The company should enter the business as soon as

possible since there is potential threat from DANONE to introduce more ice creams after ISIS

diabetic ice cream and also with potential of the industry arch rival Nestlersquo might consider

entering into the industry too

Evaluation of Entry into Ice cream Business for Bangladesh Limited 58

References

Web References

1 wwwunilevercom

2 wwwunilevercombd

3 wwwhllcom

4 wwwunilevercompk

5 wwwthedailystarcom - Life Style Magazine

6 wwwreuterscouk

Evaluation of Entry into Ice cream Business for Bangladesh Limited 59

Page 71: Square Ice cream

Ice cream has good prospect in Bangladesh It is still a growing market with opportunities for big

new entrants With the barriers of entry UBL needs to consider its priorities UBL being an HPC

company traditionally needs to acquire expertise in cold chain distribution and has to invest a lot

of money to rip the benefits of the industry However to initiate company can take regional

support and acquire resource expertise The company should enter the business as soon as

possible since there is potential threat from DANONE to introduce more ice creams after ISIS

diabetic ice cream and also with potential of the industry arch rival Nestlersquo might consider

entering into the industry too

Evaluation of Entry into Ice cream Business for Bangladesh Limited 58

References

Web References

1 wwwunilevercom

2 wwwunilevercombd

3 wwwhllcom

4 wwwunilevercompk

5 wwwthedailystarcom - Life Style Magazine

6 wwwreuterscouk

Evaluation of Entry into Ice cream Business for Bangladesh Limited 59