3 The market for impulse ice cream [per] - Competition Commission

DemandMarket size3.45. The market for impulse ice cream can be measured by value and volume with the latter either in litons(thousand litres) or portions (units sold). By value the size of the UK market for wrapped impulse ice cream wasestimated by BEW in 1992 to be £233 million at retail prices including VAT. Sales of scoop ice cream were putat £42 million and soft mix ice cream at £56 million although the latter is not part of the reference market.Wrapped and scoop sales together were £275 million. If soft mix is included the combined retail sales of £331million of impulse ice cream form about 42 per cent of the total ice cream market by value. Figure 3.1 shows thaton a volume basis the impulse share of the total ice cream market, including take-home and multi-packs, is muchlower. Measured by litons wrapped impulse, scoop and soft mix together accounted for 15 per cent of the icecream market.3.46. Demand for impulse ice cream is much influenced by the weather, with the result that there are markedfluctuations in sales from year to year (and also within a year-see paragraphs 3.49 and 3.50). It is therefore noteasy to determine longer-term trends in demand given the importance of a relatively warm or cool summerseason.3.47. In nominal terms, the retail value of the impulse ice cream market increased by nearly 40 per centbetween 1988 and 1992, both years when the summer season was relatively poor. But in real terms, that is to sayafter allowing for inflation, the increase in the market came to only 7.5 per cent (see Table 3.3) with sales at firstrising quite rapidly but then falling back. In volume terms the market declined by 3 per cent over the period as awhole. The share of the market in volume terms accounted for by wrapped impulse products rose from 62 percent in 1988 to 68 per cent in 1992.TABLE 3.3 The impulse ice cream marketRetail sales at constant 1992 prices, £ million*1988 1989 1990 1991 1992 1993†Wrapped impulse 196 250 260 254 233 248Scoop 60 69 60 50 42 103Soft mix 53 58 55 56 56 }Total 308 377 375 360 331 351Volume, litons ('000)Wrapped impulse 38.7 51.0 49.8 44.4 41.3 41.4Scoop 12.5 14.3 12.8 10.0 8.2 19.5Soft mix 11.1 12.7 11.8 10.5 10.9 }Total 62.3 78.0 74.4 64.9 60.4 60.9Source: MMC based on data supplied by BEW.*Adjusted by the retail price index (RPI).†Estimate.3.48. Table 3.4 shows that the impulse market grew very rapidly in 1989, in both value and volume terms,with growth particularly marked in wrapped products. There was a good summer in both 1989-the year that Marsentered the impulse market on a national basis-and in 1990 but in the next two years the mean maximum airtemperature was markedly lower and gave the industry two poor seasons though the recession in the UKeconomy may have been a contributory factor. Table 3.5 shows that the total ice cream market, including takehomeand multi-pack, also contracted in 1991 and was flat in 1992.23