Academic Year 2010-2012

III Semester
Subject: - Product Management Topic: - FMCG Ice-cream Industry
Project submitted to Prof. Nikhil Rao

Group No. 1

Team Members:
Sr No 1. 2. 3. 4. 5. 6. Name Kishore Acharya Ankit Dalal Omkar Dalvi Vishal Mankar Amar Poojari Rai Manipat Ray Roll No. A-1 A-14 A-15 A-35 A-45 MKt-53

Introduction
Ice cream is a frozen dessert usually made from dairy products, such as milk and cream, and often combined with fruits or other ingredients and flavours. Most varieties contain sugar, although some are made with other sweeteners. In some cases, artificial flavourings and colourings are used in addition to (or in replacement of) the natural ingredients. This mixture is stirred slowly while cooling to prevent large ice crystals from forming; the result is a smoothly textured ice cream. The meaning of the term ice cream varies from one country to another. Terms like frozen custard, frozen yogurt, sorbet, gelato and others are used to distinguish different varieties and styles. In some countries, like the USA, the term ice cream applies only to a specific variety, and their governments regulate the commercial use of all these terms based on quantities of ingredients. In others, like Italy and Argentina, one word is used for all the variants. Analogs made from dairy alternatives such as non-bovine milks or milk substitutes are available for those who are lactose intolerant, allergic to dairy protein, and/or vegan. Though India has a low per capita ice cream consumption of 300 ml per annum, the trend is slowly changing due to a number of reasons. The ice cream industry in India is worth Rs. 2,000 cr. The industry can be divided into the branded market and the unbranded market. The branded market at present is 100 million liters per annum valued at Rs. 800 cr. In 2008-09, in the branded ice cream market, Amul held the number one spot, with a market share or 38%, followed by Kwality Walls at 14%, Vadilal at 12% and Mother Diary at 8%. The per capita consumption of ice cream in India is approximately 300 ml, as against the world average of 2.3 liters per annum. Vanilla, Strawberry and Chocolate together constitute approximately 60% of the market. The ice cream industry has traditionally grown at a healthy rate of 12% yearon-year. The growth in Ice cream industry has been primarily due to strengthening of distribution network and cold chain infrastructure. Channels such as Mobile Vending Units have been increasing year on year to reach out to a larger set of consumers. Besides, consumers also have the choice of trying out varied product offerings from different brands to keep them excited.

Product Management

FMCG market
FMCG are products that have a quick shelf turnover, at relatively low cost and don't require a lot of thought, time and financial investment to purchase. Everything from toothpaste to processed foods and health drinks to body care products comes from FMCG or alternatively called as consumer packed goods. Three of the largest and best known examples of Fast Moving Consumer Goods companies are Nestle, Unilever and Procter & Gamble. The Indian FMCG sector is an important contributor to the country's GDP. It is the fourth largest sector in the economy and is responsible for 5% of the total factory employment in India and captures a market capitalization of around 60,000 crore rupees .This has been due to liberalization, urbanization and increase in the disposable incomes and altered lifestyle of the people. The lowermiddle income group accounts for over 60% of the sector's sales and rural markets account for 56% of the total domestic FMCG demand. FMCG sector is expected to grow by over 60% by 2011 and by 2015, the sector is predicted to scale up to US$33.4 billion.

Product Management

Ice cream market in India

Indian summers are synonymous with ice

creams. Come summers, and a number of colorful pushcarts are seen selling the choicest of ice creams in numerous flavors from the traditional vanilla and chocolate to unusual varieties like Mother Diarys Shahi Nazrana. If that doesnt baffle us then the ice cream range definitely would, for example the ice cream range for the children would be entirely different from that for the teenagers or for that matter adults. Or, for those who like to have ice cream in peace, there are a number of ice cream parlors that are opening shop. The ice cream market in India is estimated to be around INR 2,000 crores, of which over 40% belongs to the organized sector growing at about 15% per year. Amul leads the pack with about 36-38% market share (5% of its total revenues), followed by Kwality Walls & Vadilal with about 12-14% share each. These players not only have to fight the small local and cottage industry players, but also the fact that the Indian cuisine itself offers a large variety of desserts which are still preferred by most Indians. Due to this reason, the per capita consumption of ice creams in India is about 300ml per annum, 1.4% of that in US, and 13% of the world average, which can be seen as a huge opportunity in this sector in India attracting new regional and national entrants. However, an issue is the seasonal nature of this industry in India, especially true for the northern parts of the country. Bulk of the sales happen during the summer months of April-July, while the sales witness a significant dip during winter months of November-February. Additionally, the seasonality of events like marriages Product Management 4

affects sales in a big way, although institutional sales provide some cushion. But what makes the situation worse is low supply of electricity, especially during the high demand summer months that affects the ice cream stocks. Once the ice cream melts, it is non-saleable, and drives retailers not to carry enough stocks not an optimal situation given the not so favorable situation of cold chain in India. Half the market is driven by impulse purchase, and rest by family consumption at home and in-parlour sales. There are niche players in the parlour business, with Naturals in the west; and then there are premium players like Baskin Robbins and Gelato. Brands are coming out with pro-biotic and low fat ice creams targeting the health conscious consumers, and also new manufacturing processes which reduce air content in ice creams giving more value for money to the consumers; but the acceptance for such products is still to be put to a proper test in the market. What exactly is defined as ice cream under the guidelines? The Prevention of Food Adulteration (PFA) Rules, 1955 define ice cream as a frozen product that contains not less than 10% milk fat, 3.5% protein, 36.0% total solids, and 0.5% permitted stabilizer and emulsifier. The basic steps in the manufacturing of ice cream are generally first blending the ingredients, pasteurization, and homogenization, aging the mix, freezing, and hardening. Now, during the hardening process, the ice cream mixture is incorporated with air. This is done to make the product light and creamy. This is necessary as without air, ice cream would be like frozen ice. Now the ice cream can contain a considerable quantity of air, even up to half of its volume. This perhaps makes ice cream a business with high profit margin. There are several challenges that affect the industry adversely. As mentioned earlier, the industry players not only face competition from their competitors, but also from other like foods. Though changing, consumers still consider ice cream as a dessert and a side item. Moreover, of the ice cream consumption in India, nearly 60% is accounted to by three flavors of vanilla, strawberry and chocolate. And to be on the safer side, major players tend play around these flavors only. For big players, regional competition from smaller players is another major issue. Another major problem faced by the industry players, especially while expansion, is poor infrastructure such lack of cold storage and in case of rural penetration, even erratic power supply becomes an issue. Product Management 5

As the industry, evaluation would indicate the competition is significant. The 70,000 participants is a large number but the more serious challenge comes from the top six national firms; Amul, Kwality Walls, Havmor, Dinshaw, Vadilal and Mother Dairy. These top six firms dominate the market and essentially control the organized market. Detail statistics are not available to indicate market share and these six firms control 40% to 50% of the urban market. Historically MNCs have not achieved much success in penetrating the Indian market. There are a number of possible explanations for this; the relative embryonic and disorganized nature of the market, excessive government regulation that included excessive tariffs and the restriction that imported ice cream could only be sold in hotels, and a highly fragmented and ineffective media.

Take-Home Ice Cream Market in India to 2014 (Ice Cream) is a comprehensive resource for take-home ice cream market data from 2004 to 2014 and market/company shares for 2008-09.This report also provides data on expenditure and consumption as well as key distribution channels, and reveals the leading companies in the Indian take-home ice cream market.

Product Management

Features and Benefits:

Identify key market segments by analyzing market size data (value & volume) for the take-home ice cream market

Design business strategies by gaining insight into quantitative market trends over 2004-09 and expectations for 2010-14

Identify key companies in the take-home ice cream market in India and design M&A strategies by analyzing market share data

Predict how consumer preferences will change in the future by analysis of expenditure and consumption information from 2004 to 2014

Highlights

The take-home ice cream market in India increased at a compound annual growth rate of 14.1% between 2004 and 2009.

The dairy-based ice cream segment led the take-home ice cream market in India in 2009, with a share of 94.6%.

The leading player in take-home ice cream market in India is Gujarat Cooperative Milk Marketing Federation Ltd.

Product Management

Key player
Amul Ice cream For any new player to enter this market, three things are critical: 1) Decentralized manufacturing facilities 2) Efficient cold chain 3) Growing market

Amul Ice Cream was launched on 10th March, 1996 in Gujarat. The portfolio consisted of impulse products like sticks, cones, cups as well as take home packs and institutional/catering packs. Amul ice cream was launched on the platform of Real Milk. Real Ice Cream given that it is a milk company and the wholesomeness of its products gives it a competitive advantage. In 1997, Amul ice creams entered Mumbai followed by Chennai in 1998 and Kolkata and Delhi in 2002. Nationally it was rolled out across the country in 1999. It has combated competition like Walls, Mother Dairy and achieved the No 1 position in the country. This position was achieved in 2001 and it has continued to remain at the top. Today the market share of Amul ice cream is 38% share against the 12% market share of HLL, thus making it 4 times larger than its closest competitor. Not only has it grown at a phenomenal rate but has added a vast variety of flavours to its ever growing range. Currently it offers a selection of 220 products. Amul has always brought newness in its products and the same applies for ice creams. In January 2007, Amul introduced SUGAR FREE & ProLife Probiotic Wellness Ice Cream, which was a first in India. This range of SUGAR FREE, LOW FAT Diabetic Delight & ProLife Probiotic Wellness Ice Cream is created for the health conscious. Amuls entry into ice creams is regarded as successful due to the large market share it was able to capture within a short period of time due to price differential, quality of products and of course the brand name. Product Management 8

Kwality Walls Kwality Ice Cream is the pioneer in the Indian ice-cream manufacturing industry and in 1956 became the first company in the country to use imported technology for manufacturing icecream on a commercial scale. As the ice-cream industry exploded in India, in 1995 Kwality Group joined hands with Hindustan Lever Limited and then there was no looking back. The Indian consumer market was introduced to KWALITY WALLS the result of a collaboration between global brand Walls and the leading Indian ice-cream brand Kwality. Though the two giants eventually parted ways, the collaboration made Kwality a household name and created deep in roads for the brand in the consumer market. Today, Kwality is not just a brand it is the ice-cream associated with the Indian summer; its the first choice in ice-cream for any child or adult during the scorching Indian summers. Kwality ice-creams are trusted not only for their rich, creamy flavours, but also for their trusted quality and nutritious food value.

Product Management

Market size

Cream Bell 75

Mother Dairy 325 Amul 925

Havmor 125 Vadilal 300

Pastonji 125

Kwality Walls 625

Amul

Kwality Walls

Pastonji

Vadilal

Havmor

Cream Bell

Mother Dairy

Market size
Values above are in Crores

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Market share
Cream Bell 3% Havmor 5% Vadilal 12% Mother Dairy 13% Amul 37%

Pastonji 5%

Kwality Walls 25% Kwality Walls Pastonji Vadilal Havmor Cream Bell Mother Dairy

Amul

Market

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Brand - Motherdairy

Mother Dairy is Delhi was set up in 1974 under the Operation Flood Programme. It is now a wholly owned company of the National Dairy Development Board (NDDB). Mother Dairy markets & sells dairy products under the Mother Dairy brand (like Liquid Milk, Dahi, Ice creams, Cheese and Butter), Dhara range of edible oils and the Safal range of fresh fruits & vegetables, frozen vegetables and fruit juices at a national level through its sales and distribution networks for marketing food-items. Mother Dairy sources significant part of its requirement of liquid milk from dairy cooperatives. Similarly, Mother Dairy sources fruits and vegetables from farmers / growers associations. Mother Dairy also contributes to the cause of oilseeds grower cooperatives that manufacture/ pack the Dhara range of edible oils by undertaking to nationally market all Dhara products. It is Mother Dairys constant endeavor to (a) Ensure that milk producers and farmers regularly and continually receive market prices by offering quality milk, milk products and other food products to consumers at competitive, prices. (b) Uphold institutional structures that empower milk producers and farmers through processes that are equitable. At Mother Dairy, processing of milk is controlled by process automation whereby state-of-the-art microprocessor technology is adopted to integrate and completely automate all functions of the milk processing areas to ensure high product quality/

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reliability and safety. Mother Dairy is an ISO 9001:2008 (QMS), ISO 22000:2005 (FSMS) and ISO 14001:2004 (EMS) certified organization. Mother Dairy has Certificate of Approval from Export Inspection Council of India also. Moreover, its Quality Assurance Laboratory is certified by National Accreditation Board for Testing and Calibration Laboratory (NABL)-Department of Science and Technology, Government of India. Mother Dairy markets approximately 2.8 million liters of milk daily in the markets of Delhi, Mumbai, Saurashtra and Hyderabad. Mother Dairy Milk has a market share of 66% in the branded sector in Delhi where it sells 2.3 million liters of milk daily and undertakes its marketing operations through around 14,000 retail outlets and 845 exclusive outlets of Mother Dairy. The companys derives significant competitive advantage from its unique distribution network of bulk vending booths, retail outlets and mobile units. Mother Dairy ice creams launched in the year 1995 have shown continuous growth over the years and today boasts of approximately 62% market share in Delhi and NCR. Mother Dairy also manufactures and markets a wide range of dairy products that include Butter, Dahi, Ghee, Cheese, UHT Milk, Lassi & Flavored Milk and most of these products are available across the country.

The company markets an array of fresh and frozen fruit and vegetable products under the brand name SAFAL through a chain of 400+ own Fruit and Vegetable shops and more than 20,000 retail outlets in various parts of the country. Fresh produce from the producers is handled at the Companys modern distribution facility in Delhi with an annual capacity of 200,000 MT. An IQF facility with capacity of around 75 MT per day is also operational in Delhi. A state-of-the-art fruit processing plant of fruit handling capacity of 120 MT per day, a 100 percent EOU, setup in 1996 at Mumbai supplies quality products in the international market. With increasing demand another state-of-the-art fruit processing plant has been set up at Bangalore with fruit handling capacity of around 250 MT per day.

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Mother Dairy has also been marketing the Dhara range of edible oils for the last few years. Today it is a leading brand of edible oils and is available across the country in over 2,00,000 outlets. The brand is currently available in the following variants: Refined Vegetable Oil, Refined Soybean Oil, Refined Sunflower Oil, Refined Rice Bran Oil, Kachi Ghani Mustard Oil and Filtered Groundnut Oil. Mother Dairy MOTHERDAIRY PRODUCT Olive Oil under the has also launched extra virgin Daroliva brand

Milk

Curd

Ice -Cream Lic Lolly Cassata Drinking Water

Cow Full Cream

Butter

Ghee Kulfi Toned Cup Double Toned Skimmed Sunday Magic Fruit Classic Brick Diets

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SWOT Analysis of Mother Dairy Ice-Creams Strengths: 1) Established company with a sound foundation 2) Government owned and supported 3) Good Quality products and wide product range 4) Experienced employees 5) Established and recognized sister brands like Safal, Dhara, Chillz etc 6) Strong Market presence in Delhi and northern regions of the country Weaknesses: 1) Not ventured into other parts of the country as quickly as competitors 2) Lack of ready infrastructure in other parts of country 3) Brand is not well recognized in ice-cream segment in Southern parts of country 4) Products priced higher than competitors 5) Factory is too far away from the market 6) Supply is frequently low 7) Lack of Manpower

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Opportunities: 1) General slack in the market due to non-peak season allow for growing at par with competition 2) Competition has become passive due to elevated status 3) Better technology available to reduce costs 4) New systems can be applied to reduce time and cost, giving a competitive advantage

Threats: 1) Emergence of new private players 2) Competitors employing newer systems

3) Competitors have better distribution network

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4 p of marketing
The term marketing mix was coined in the early 1950s by Neil Borden in his American Marketing Association presidential address. This is one of the preliminary knowledge every marketer must have and is considered to be the basics of every marketing theory, which emerged henceforth.

The basic major marketing management decisions can be classified in one of the following four categories, namely Product, Price, Place (distribution)

and Promotion.

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Product: It is the tangible object or an intangible service that is getting marketed through the program. Tangible products may be items like consumer goods (Toothpaste, Soaps, Shampoos) or consumer durables (Watches, IPods). Intangible products are service based like the tourism industry and information technology based services or codes-based products like cellphone load and credits. Product design which leads to the product attributes is the most important factor. However packaging also needs to be taken into consideration while deciding this factor. Every product is subject to a life-cycle including a growth phase followed by an eventual period of decline as the product approaches market saturation. To retain its competitiveness in the market, continuous product extensions though innovation and thus differentiation is required and is one of the strategies to differentiate a product from its competitors. Price: The price is the simply amount a customer pays for the product. If the price outweigh the perceived benefits for an individual, the perceived value of the offering will be low and it will be unlikely to be adopted, but if the benefits are perceived as greater than their costs, chances of trial and adoption of the product is much greater. Place: Place represents the location where a product can be purchased. It is often referred to as the distribution channel. This may include any physical store (supermarket, departmental stores) as well as virtual stores (e-markets and e-malls) on the Internet. This is crucial as this provides the place utility to the consumer, which often becomes a deciding factor for the purchase of many products across multiple product categories. Promotion: This represents all of the communications that a marketer may use in the marketplace to increase awareness about the product and its benefits to the target segment. Promotion has four distinct elements: advertising, public relations, personal selling and sales promotion. A certain amount of crossover occurs when promotion uses the four principal elements together (e.g in film promotion). Sales staff often play a major role in promotion of a product So how does a marketer strategize to attain success in a marketing program, using these 4 Ps?

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Brand Personality
A set of human characteristics that are attributed to a brand name. A brand personality is something to which the consumer can relate, and an effective brand will increase its brand equity by having a consistent set of traits. This is the addedvalue that a brand gains, aside from its functional benefits. There are five main types of brand personalities: excitement, sincerity, ruggedness, competence and sophistication.

Available outlines 1. 2. 3. 4. 5. 6. 7. 8. Rationale of Visual Branding Creating a Brand Personality Company types: Originals & Professionals Company types: Wanters & Dreamers Fighting fragmentation The comprehensive idea of Visual Branding Business professionals and designers Visual Branding & business

So what is the main difference between identity and personality? Lets set the record straight: of course they are not complete opposites, like Mars and Venus. It has to do with a fundamentally different approach. Identity as a term refers to background and facts in most languages. Your identity is about characteristics you share with others, like the country and culture you come from, your race, your religion, and facts, like the place where you live. In communication it mostly refers to your true inner self - as a company or a brand. To quote Kapferer: Having an identity means being who you are, following your own, determined, but individual path. Be who you are. This is the paradigm of identity. The concept of brand personality combines inside-out and outside-in; identity and image. A personality has its roots in the identity but is strongly externally focused. It is not be who your are. Personality is: Become who you should be. Product Management 20

In the words of Carl Jung: Personality is the supreme realisation of the innate idiosyncrasy of a living being. It is an act of courage flung in the face of life, the absolute affirmation of all that constitutes the individual, the most successful adaptation to the universal conditions of existence, coupled with the greatest possible freedom of self-determination. [C.G. Jung, 1875-1961] In psychology, three elements are defined as a part of personality: -private personality (thoughts, feelings, fantasies, ambitions, talents) -public personality (how you want others to see you) -attributed personality (how others see you) The private personality overlaps identity; the public and attributed personalities indicate the external aim and nature of personality.

Identity -> Personality In historic perspective, the shift from identity to personality was organic and logical. Identity-based thinking was a logical reaction to marketing-based thinking. Forgive me for dropping names, but in many dynamic processes, I use the theory of dialectic development of the German philosopher Georg Hegels to explain the developments that took place: thesis -> antithesis -> synthesis. It also applies in this matter: the thesis is marketing (outside-in), the antithesis is identity (inside-out), the synthesis is personality. This is an ongoing process that, fortunately, never stops. I am curious to see what will come next.

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Brand Equity: Brand Equity:

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Brand Repositioning:
Brand Repositioning is changing the positioning of a brand. A particular positioning statement may not work with a brand. For instance, Dettol toilet soap was positioned as a beauty soap initially. This was not in line with its core values. Dettol, the parent brand (anti-septic liquid) was known for its ability to heal cuts and gashes. The extension's 'beauty' positioning was not in tune with the parents germ-kill positioning. The soap, therefore, had to be repositioned as a germ-kill soap (bath for grimy occasions'') and it fared extremely well after repositioning. Here, the soap had to be repositioned for image mismatch. There are several other reasons for repositioning. Often falling or stagnant sales is responsible for repositioning exercises. After examining the repositioning of several brands from the Indian market, the following 9 types of repositioning have been identified. These are: 1. 2. 3. 4. 5. 6. 7. 8. Increasing relevance to the consumer Increasing occasions for use Making the brand serious Falling sales Bringing in new customers Making the brand contemporary Differentiate from other brands Changed market conditions.

Decision to consolidate brand position as The Taste of India in 1995 Umbrella Branding Strategy for its products Amuls Response to challenges Launched Amul Ice Cream 1996 with the tag Real Milk. Real Ice Cream Challenging Cadbury Occasion Based products Nuts bout u Kite Bite Amul Rejoice Challenging the Premium Ice Cream Brands Product Management 24

Value for Money .. Impulse Buying (Dollies for kids, teens and couples) to Sophisticated products (Party Packs etc.) Digital Advertising Amul Cyber Store Amul in Social Networking Amul Indulges in Second Life marketing Advergaming

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Laws of Branding:
The 22 Immutable Laws of Branding How to Build a Product or Service into a WorldClass Brand by Al Ries The Law of Expansion The power of a brand is inversely proportional to its scope. When you put your brand name on everything, that name loses its power The Law of Contraction A brand becomes stronger when you narrow its focus. A powerful branding program always starts by contracting the category, not expanding it. The Law of Publicity The birth of a brand is achieved with publicity, not advertising. The best way to generate publicity is by being first the first brand in a new category The Law of Advertising Once born, a brand needs advertising to stay healthy. Brand leaders advertise their leadership. Leadership is the single most important motivating factor in customer behavior The Law of the Word A brand should strive to own a word in the mind of the consumer FedEx = Overnight delivery Kleenex = Tissue Xerox = Copy The Law of Credential The crucial ingredient in the success of any brand is its claim to authenticity. Customers are suspicious. Coke Its the real thing The Law of Quality Quality is important, but brands are not built on quality alone. Sometimes expressed through a higher price and accompanying feature that seems to justify the price Rolex wrist bands Montblac fat pens The Law of the Category A leading brand should promote the category, not the brand The Law of the Name In the long run, a brand is nothing more than a name. The difference between brands is not in the products, but in the product names the perception of the names Product Management 26

Laws of Branding

The Law of Extensions The easiest way to destroy a brand is to put its name on everything The Law of Fellowship To build the category, a brand should welcome other brands Healthy competition brings more customers to the category The Law of Generic One of the fastest routes to failure is giving a brand a generic name. (National, General, Natures.) Hard to differentiate a generic-named brand from competition The Law of the Company Brands are brands. Companies are companies. There is a difference The Law of Sub brands What branding builds, sub branding can destroy The Law of Siblings There is a time and a place to launch a second brand A&E > History Channel The Law of Shape A brands logo should be designed to fit the eyes both eyes. Horizontal shape provides maximum impact The Law of Color A brand should use a color that is the opposite of its major competitors The Law of Borders There are no barriers to global branding. A brand should know no borders. Crossing a border often does add value to a brand. The perception of where the brand comes from can add or subtract value The Law of Consistency A brand is not built overnight. Success is measured in decades, not years The Law of Change Brands can be changed, but only infrequently and only very carefully The Law of Mortality No brand will live forever. Euthanasia is often the best solution The Law of Singularity The most important aspect of a brand is its single-mindedness. A brand is a singular idea or concept that you own inside the mind of the prospect. A brand is a proper noun that can be used in place of a common word

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