Evaluation of Entry into Ice cream Business - BRAC University ...

5.1 Market Description
5.0 MARKET & COMPETITION ANALYSIS
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 Unilever’s portfolio does not match the characteristics and price level of this category.
5.1.1 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 Tk.1 to Tk.5 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 “Baarfi”, 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