1 - How attractive is the Russian ice cream industry in 2002?
The main data about the attractiveness of this market are:
- The consumption is about 6 times lower than in France, Canada, US because of a different mode of consumption. Indeed, Russians consider Ice Cream as an “on the go” snack and not as a dessert they can have at home. - producing in Russia implies a certain adaptability of recipes since traditional Russian ice creams contain less fat and are made with natural ingredients plus one must take into account the high seasonality of consumption. - While the demand for beer, soft drink and confectionary industries is increasing, the demand for ice cream and therefore its production keep on decreasing.
2 - What are the key trends affecting the attractiveness of the Russian ice-cream market over the next five years?
We chose to answer this question through the five forces analysis of Porter.
BARRIERS TO ENTRY: The ease with which a new business can enter the Russian Ice cream market is affected by: ¤ Product differentiation : Brands that entered the market earlier have an advantage as they already have loyal customers. It will cost a lot to a new brand to convince customer to choose their products instead of those he was used to buy. In another hand we can think that advertising expenses being very low, the brand differentiation is not very effective in Russia concerning Ice Cream and especially for producers as Ice-Fili whose less renowned than Nestlé for instance. ¤ Access to distribution channels: it should not be a barrier as we saw in the exhibit 10 that each channel of distribution have different brands. It seems quite easy to gain access to distribution channels. INTENSITY OF RIVALRY: The strength of the competition between firms already in the industry is affected by: ¤ Rate of industry growth : Ice cream is a shrinking industry whereas soda, beer etc. are experiencing high growth. ¤...
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