The ice cream industry of Bangladesh: An overview
The ice cream industry in Bangladesh is a well established and a prospering sector. It began its journey about 40 years ago with the establishment of the ‘Igloo’ ice cream unit in 1964 under the umbrella of the AML Constructions. Since then this sector has been growing. In 2014 this was a 6.5 Billion Taka industry and is expected to rise to an approximate 8.5 Billion Taka industry in 2015 (AMLBD, 2014). This industry is in a robust growth stage as evident by the observed growth rate last year of about 24% and the companies operating in the market estimate the rate to be around 28% in 2015 (AMLBD, 2014). Ice cream industry can be segmented into two categories based on the type/quality of the products that are available in the market. One is General market and another is the Premium market segment. Most of the present companies in the market are competing in the General market (97% of the industry) while only three companies are currently operating to gain the Premium market share (3%). The chart below depicts the major players in the industry and their respective market shares (AMLBD, 2014) (approximately):
Chart 1: Market Shares of the major players of the sector in 2014.
Source: AMLBD, 2014 Ice cream is a pure impulse product. The customer does not put much planning on purchasing it before hand. This consumption depends on a few factors which in turns affect the industry. One is the temperature of the South East Asia region. Temperatures in this part of the world are usually very hot and humid as it is close to the earth’s equator. So naturally there is a demand for cold items to combat the heat. Another reason this industry is growing is the taste pallet of the South East Asian people. They have a traditional inkling towards sweet products. The growth of this sector in Bangladesh can also be traced back to the constant rise in population and the increase in disposable income of the general public (Parvez, 2013). Due to the innate cold property of the product the industry experiences a peak demand in March till August. The rest of the year the demand is significantly low in comparison. As a result the industry mostly employs contractual seasonal workers, according to the market leader Igloo. They employ around 500 workers to work in their factories seasonally but the quality controllers, production managers and other office personal are employed year long. (K. Bashar, personal communication, August 1st, 2015). According to the Brand manager of Igloo, Mr. Ahad, the threat of new entrances in this industry are high. As it is a constantly growing, lucrative and well established market companies are willing to take the risk and make the initial investment to enter the market. Golden Harvest, an established brand in the frozen and processed foods industry, recently entered the market with their product line “Bloop” in aims to operate both in the general and premium segment of the industry (Parvez, 2013). Another giant company, Pran, is also set to enter the market in late 2015. As competition increases the profit margin of the companies decrease which makes the industry less profitable. The manufacturers of the product rely on many suppliers for their raw materials and their packaging needs. The domestic suppliers are the non-key suppliers who supply with less significant items like cardboard boxes or plastic spoons. They do not have any real power to negotiate with the companies about the price as there are a lot substitutes in the country. The key suppliers are the foreign companies, who supply the major and critical components of the product, e.g.: dried milk, machinery, cocoa for the chocolate, essential chemicals etc. These suppliers are few in numbers and they have more of a power to force the manufacturers to pay their asking price. Manufacturing companies supply the product to the market through designated dealers and super dealers (a concept...
References: AMLBD. (2014). Time Line of Abdul Monem Ltd. Retrieved from http://amlbd.com/timeline
AMLBD Internal audit (Igloo ice cream unit), 2014
AMLBD Annual Report, 2014
Parvez, S. (2013, April 17). ‘Brand Wars Heating up in the ice Cream Industry’. The Daily Star. Retrieved from http://archive.thedailystar.net
Parvez, S. (2008, September 26). ‘Polar ice cream to bring back chill next summer’. The Daily Star. Retrieved from http://news.org.bd/news/business/polar-ice-cream-to-bring-back-chill-next-summer/
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