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

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Introduction3.1. This chapter describes the market for impulse ice cream, that is to say ice cream bought for immediateconsumption. The feature of the market which distinguishes it from confectionery and other impulse products isthat it requires a specialized infrastructure. Ice cream must be kept at a low temperature at all stages ofproduction and distribution from factory to final consumer. This means that manufacturers must have access to aspecialized distribution network, including cold stores, depots and refrigerated delivery vehicles, and retailersmust have freezer cabinets to store, display and sell from. The industry must finance the substantial amount ofcapital necessary to support this infrastructure.The reference products3.2. The goods defined by the reference include water ices, ice lollies, frozen yoghurt and ice cream to whichcan be added fruit, fruit pulp, fruit puree, fruit juice, chocolate, nuts or any other substance. It does not includesoft ice cream mix. The definition relates to one way in which ice cream is consumed, namely after purchase forimmediate consumption. We refer to all these goods as being part of the impulse ice cream market. A secondway in which ice cream is consumed is in the home, for example as part of a meal. The relevant purchase istypically made in food stores and grocery outlets several days prior to the ice cream products being consumed,and from a very different range of retail outlets. One- or two-litre packs of ice cream are typically bought from asupermarket whereas CTNs and beach kiosks are major sources of custom for impulse ice cream.3.3. This distinction between the two sectors of the ice cream market-impulse and take-home-reflects notonly the timing of consumption but also the unit quantity bought. The purchase of impulse products relates toindividual portions or products for consumption at the time of purchase whereas the take-home market includesbulk products for storage in freezers requiring slicing or serving within the home as appropriate. However, thedistinction is not a rigid one for two reasons. First, bulk ice cream is bought not only by individuals but also byretailers for scooping to meet impulse demand as well as by caterers for use as a dessert. Secondly, an increasingrange of impulse products are now sold in multi-packs in retail grocery outlets. Thus choc bars are obtainable inmulti-packs for consumption at home to meet an `impulse' demand for a snack, a refreshment or a dessert. Thetime of consumption of one choc bar from the multi-pack is deferred from the time of purchase in contrast withthe situation when an individual choc bar is eaten immediately. But in both situations the decision to eat istypically taken on the spur of the moment. In practice some major manufacturers classify the sale of multi-packproducts as a separate part of the total ice cream market (see Figure 3.1, following paragraph 3.45).3.4. The impulse ice cream market includes the following product types:(a) Wrapped hand-held ice cream products including chocolate bars, ice cream cones, chocolate stickproducts, tubs and cups. Also for inclusion here are pure milk products and pure ice cream bars. Thesebranded items have been the subject of considerable product innovation in recent years. Water ices andice lollies are not, strictly speaking, `ice cream' but are generally regarded as such and thus are anotherpart of the hand-held section of the impulse market.(b) Bulk scoop ice cream. This is normally sold in containers for dispensing by the retail outlet. Scoop icecream is not a wrapped, self-service product. Some outlets for wrapped impulse ice cream also stockscoop ice cream but it is rare for both types of ice cream to be stored in the same freezer.(c) Certain other products. These include individual bricks and frozen yoghurt even though the latter, likewater ices and ice lollies, may not consist of ice cream strictly defined.15
Other ice cream products3.5. Soft mix ice cream is not part of our inquiry since our terms of reference exclude it and also direct ourattention to the question of freezer exclusivity. Soft mix ice cream is not stored in a freezer and can be consideredas a raw material which only becomes a finished product after processing through a retailer's equipment.However, soft mix, scoop ice cream and wrapped impulse are substitutes from the perspective of the consumer.A feature of soft mix and scoop ice cream is that both are supplied by a large number of small, regionally-basedfirms, often on an unbranded basis typically in locations with a heavy density of customer traffic such as beachesplanades through a personal service system. In this way these products differ from wrapped impulse productswhere self-service is typically the mode of purchase.3.6. There are a number of products just beyond the margin of what would usually be considered as icecream. These include ice pops which are sachets of juice sold at ambient temperature for home freezing. Sinceice pops are often also obtainable from a freezer cabinet alongside impulse ice cream they are similar to waterices. `Slush Puppy' refreshment would also be excluded from most definitions of ice cream. Individual frozendessert products such as frozen mousses and frozen cake products are sold alongside ice cream products in someimpulse outlets. Whilst some of these branded products actually include ice cream, such as arctic rolls, they aremore properly described as part of the frozen dessert market than a substitute for a hand-held ice cream boughtfor immediate refreshment. A wide range of chilled products including yoghurt desserts, mousses and drinksoffer an alternative to the consumer of ice cream when refreshment is sought on a hot day. These are not icecream products but, like soft drinks and snack foods such as crisps and sweet confectionery, are available, oftenin the same location, to the consumer buying on impulse.The production of ice creamRaw materials3.7. The basic raw materials from which ice cream is produced are milk, skimmed milk, fat and sugar.Skimmed milk is generally obtained either as a powder or liquid concentrate; the fat is milk fat or vegetable oil(eg coconut or hardened palm kernel oil). British ice cream historically has differed from that in most countriesin that it is mainly made up of non-dairy products containing vegetable fat. The reason for this can be traced backto the Second World War when the British Government curtailed the sale of butterfat milk to ice creammanufacturers, who turned to vegetable fat instead. In addition to fat, there is a mixture of sugars (sucrose andglucose syrup solids). Other materials such as permitted emulsifying and stabilizing agents may be present in thebasic mix. During the later stages in the process, chocolate, flavouring and colouring materials can be added, andalso nuts, fruit, fruit pulp, concentrate and puree etc.Process of manufacture 13.8. The production process for all ice cream consists of three principal stages. The ingredients are mixed,then they are frozen and formed, and finally packed and cartoned, before being placed in cold storage. Themixing process involves blending the basic materials together with water to produce a homogeneous mixture ofthe required flavour. After filtration to remove any foreign matter, the prepared mix is usually subjected topreheating and homogenization to ensure the dispersal of the fat particles in the mix. This treatment is followedby a final heat treatment as legally specified 2 to remove any possibility of microbiological contamination (amatter of crucial concern at all stages) and cooling. After processing and the addition of any further flavouring orcolouring materials the mix is passed through a freezer, where it is whipped and frozen. During this process air isinjected to give the required texture. The amount of air injected proportionate to the combined volume of solidsand water is known as overrun and can vary substantially according to the recipe, the machinery used and thetype of ice cream the manufacturer intends to produce.1For further details see Ice Cream by K A Hyde and J Rothwell, Churchill Livingstone (1973).2The Ice Cream (Heat Treatment) Regulations 1959 as amended in 1963.16
Page 1: 3 The market for impulse ice creamC
Page 5 and 6: The structure of the industryThe MM
Page 7 and 8: 3.28. Treats seeks to compete with
Page 9 and 10: Small-scale manufacturers3.39. Tabl
Page 12 and 13: TABLE 3.4 Annual rates of change in
Page 15 and 16: (o)Cups comprise paper or plastic c
Page 17 and 18: mobile ice cream vans which are ser
Page 19 and 20: 3.70. Less than one-fifth of respon
Page 21 and 22: TABLE 3.8 1993 RRPs of brands of im
Page 23 and 24: TABLE 3.9 Recommended retail sellin
Page 25 and 26: 3.89. Table 3.11 indicates that in
Page 27 and 28: £3 million marketing support for t
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