Premium Ice Cream Brands example essay topic

A few years ago, the frozen dairy segment was populated by family-owned businesses, and a couple of big American companies that focused on certain regions. In 2003 the segment is becoming an arena for two huge international consumer products companies seeking to control a bigger chunk of the branded ice cream business. Nestle S.A. of Switzerland, the world's largest food outfit with more than $46 billion in annual sales, and Unilever PLC, of London and Rotterdam, with over $26 billion in annual receipts, now own or are involved with several of the best known brand names in the ice cream aisle -- Nestle, Haagen-Dazs, Dreyer's / Edy's, Good Humor, Breyer's, Ben & Jerry's, Godiva and Starbucks. With $750 million in annual sales, Marigold Foods is competing with its Kemp's premium ice cream line for a share of this market. What are they "playing" for? This year's Ice Cream Industry trends show a continuation on the increasing demand for premium products (44% of the total sales) 5 FORCES ANALYSIS OF THE PREMIUM ICE CREAM INDUSTRY Alternatives Available To The Consumer Now, And In The Foreseeable Future (Threats Of Substitutes) Premium ice cream undoubtedly has substitutes although not so much in comparison to the quality of the products.

There are two main competitive arenas that exist: 1. The first would be other ice creams not in the premium category and the now, very popular, frozen yogurt lines which target the same audience. 2. The second, the expensive (or not) chocolate, cakes, croissants and other post meal consumable that are realistic options for the consumer. For instance, Ferrero Roche will assure you that their product is the perfect accompaniment to any meal.

These brands need to be wary of how the customers make their choice for ice cream, as opposed to chocolate etc, and then premium ice cream, as opposed to the regular kind. The threat of substitutes in this industry is a negative force. Industry Competitors (Intensity Of Rivalry) Ben & Jerry exist in a consolidated market place with 3 major players. The others are Haagen-Dazs and Kemps. There is severe competition between the 3 players and as a result significant price competition including price wars have occurred.

Price competition limits profitability by reducing the margins that can be earned on sales, which could push the industry profits down in the process. Ice Cream main ingredient is milk, which is a commodity and that, is why over the last year 3 the price war has been vicious. The intensity of rivalry in this industry is predicted to decline since these 3 companies owned almost all the premium ice cream brands and there is also and increases in the demand of this ice cream category. This force is a "weak" positive one right now but it will be strongly positive in the very near future. New Entrants (Barriers To Entry In To The Premium Ice Cream Industry) The possibility of new entrants in this market place is confined by two major problems: brands and distribution. Remembering that these are up-market consumers where by cheap alternatives is not necessarily sought for them, the key element is the brand.

This is an industry dominated by top brands. It is a question of, I wouldn't be seen dead eating another ice cream! as opposed to, this is cheaper and tastes just like my brand I'll buy this from now on! The other barrier concerns distribution. With ice cream the idea of selling products through the Internet, despite the dried ice, which may accompany it, is not likely to be an option, consequently distribution to stores around the USA and globally will be expensive and require partners with extensive transportation network. With both the above barriers the key entrants could be other ice cream manufacturers in regular ice cream market, because they already have the distribution network as well as the know how but all 3 companies are leaders in this segment of the market as well.

The launch of another premium brand by any of these companies will still take a large investment for these manufacturers to sell their image. A new entrant is a positive force in this industry. Buyers (Bargaining Power Of Buyers) The customers have no switching costs. Therefore all companies should be aware of upcoming price wars, to avoid losing customers to their rival.

Hence customers have high bargaining power. For example, during economic instability consumers are reluctant to spend their money on luxury products such as super premium ice creams. Suppliers (Bargaining Power Of The Suppliers) In this industry the suppliers could have great power of bargaining, even more the milk and cream suppliers. That is why the big players in this industry have conducted there business through vertical integration where they acquire other firms that supply them with the inputs needed such as raw materials or with the customers for outputs such as warehouses for finished products. They have also operated in backward integration by acquiring firms that are assets to the production process of the products to be sold. Also by purchasing in great quantities, all 3 companies have established a sense of loyalty, trust and commitment between them which it is extremely beneficial to the companies as far as mass production and the quality of the product.

The bargaining power of the suppliers in this industry was great when the industry was composed of many small companies but nowadays the bargaining power of the suppliers is a positive force. STRATEGIES & RECOMMENDATION Kemps For nearly a century, Minnesota has known that Kemps brand stands for quality dairy products and in the last 20 years it has blossomed. They started with a strong in-state brand presence and in the 80's, Marigold Foods took a more daring approach with constant product innovation, savvy marketing and joint ventures. They are now part of National Dairy Holding which amongst other things allowed Marigold to expand their distribution channels and grow from a regional player to a national one. The Kemps brand was created by a small family-owned creamery in Southern Minnesota.

In 1961, slightly ahead of the mergers and acquisitions that have reshaped the recently, Kemps Ice Cream Co. and two other dairies, one in St. Paul and one in Wisconsin merged to form Marigold Foods. After six years of growth, Marigold merged with Ward Foods. Ten years later, Ward Foods sold Marigold to Wessanen. Over the next 22 years the company grew substantially through acquisition and in 1979 it entered a joint venture with Associated Milk Producers Inc., a partnership, which stands today. As Marigold Foods grew larger under the charge of Wessanen, it also became more sophisticated. While much of the industry was looking for efficiencies of scale Marigold Foods was reinvesting in capital improvements and in marketing and R&D which resulted in distinctive packaging and point-of-sale marketing and innovative advertising campaigns like the latest " It's the Cows" outdoor advertising with an animated cow donning a variety of accessories to suit a particular product and flavor.

What Marigold does today with product development, packaging and marketing, makes it look like a company with a 10-year head-start on the competition. National Dairy is partnered with Dairy Farmers of America which is of great importance from an operations perspective because it provides Marigold with a partner for raw milk and access to dairy R&D. For a Midwest dairy, being involved in a partnership with a farmer cooperative is a real benefit, considering the shrinking regional milk supply. Haagen Dazs The origin of H"aagen-Dazs dates back to the early 1920's when Reuben Mattus insisted on only using only the finest, purest ingredients to produce ice cream that he would sell from a horse drawn wagon in the streets of New York. The family business grew and by 1961 Mr. Mattus decided to form a new company dedicated to his ice cream vision.

His strategy was differentiation through product leadership and he succeeded because the brand quickly developed a loyal following. Its early success was created by word of mouth and praise. In 1976 his daughter opened the first H"aagen-Dazs store and it was an immediate success. Haagen Dazs attained a real competitive advantage by offering one of the best premium ice creams in the market and through out the years the kept the same business model.

Seven years later The Pillsbury Company bought Haagen-Dazs but they remained committed to the tradition of superior quality and innovation on which this ice cream was created. Through out the different merges and acquisitions Haagen Dazs has maintain its competitive advantage and this is why it over 80 years after its creation this brand is recognize as a premium ice cream with top quality ingredients and wide range of innovative flavors. Ben and Jerry's If Uniliver wants to remain a key player in the premium ice cream industry with the Ben and Jerry's brand, they have to carefully analyze the mistakes made by Ben & Jerry's over the last five years. At one stage, Ben & Jerry's pricing strategy worked really well but the demand over recent years shifted towards lower priced products, leaving pricing strategies being a big issue for the company. All of Ben & Jerry's promotions were gained through the company's socially conscious practices but price wars with main competitors left the company having to pull funds off advertising campaigns to fund price discounts. Due to the fact that imitations for the product were being developed more rapidly, Ben & Jerry changed their primary marketing goal to establish products that cannot be imitated, but the technological developments of the company did not allowed them to launch the products within a decent time limit.

It will be for Unilever key to introduce new flavors quickly. Research will be key in identifying the market in any region or country B&J wishes to operate, especially into consumers' needs and wants. Ben & Jerry was proud of the success rate of their relaxed, casual culture and having employees involved in the decision making. However this policy needs to be reviewed as decisions are taking too long to be made due to large staffing numbers. Ben and Jerry's also faced some economic and social factors that affected them. In 1994, sales were flat, profits were down.

The coming of the baby boom in the 1990's meant a middle class society that was more health conscious. Ben & Jerry's realizing its fall in sales, quickly responded to the changes in consumer demands and introduced Ben & Jerry Lite. This line failed because they didn't forecast and acknowledge the changes in consumer tastes, and was faced with increasing competition with Haagen-Dazs. Their social commitments to their customer's community and suppliers have contributed to a successful and unique image. Ben & Jerry donated a portion of their sales from their "Rainforest Ice Cream" back into environmental preservation causes in South America. Such efforts had contributed to winning over certain consumers, however we don't know to what extent this will have on winning the hearts of international consumers.

There are a few things that Ben and Jerry's could possibly do to improve their success in the near future. In today's environment, change, rather than stability, is necessary. One of the reasons why B&J lost market share is because they failed to change themselves and adapt to a new competitive environment. To overcome this, Ben & Jerry need to identify the main barrier to change such as consumer tastes.

This can be overcome through the development of a marketing plan, as there seems to be no real evidence that Ben & Jerry have done this. Employee productivity is one of the key components of a company's efficiency and cost structure, so this needs to be improved upon in order to make the company more competitive, although I suspect since Uniliver bought them this not as big of an issue any more. In conclusion, I think that Ben & Jerry has the potential to prosper as long as they are prepared for upcoming changes in consumer needs and wants, compromise between maintaining their company image and satisfying their investors needs, and try to reduce their costs by considering all of their other options.