Industry description
The ice cream industry in India is in many ways, reflective of the overall population distribution. The
country’s population is primarily rural with approximately 65% of the population living in villages with a
population of less than 5,000; this means there are well over 150,000 villages with a combined population
in excess of 650 million. This has contributed to a highly fragmented industry that by many estimates has
over 70,000 ice cream entities. Many of these are single family operations where the product is made
either in the home or in very small factories and sold on the streets. The 350 million remaining people are
concentrated in the cities where the industry is reasonably concentrated in the hands of a few international
and domestic firms. It is estimated that only 30% of the entire market is “organized” and the industry
meets the classic definition of a fragmented industry, that is, one where there is an absence of market
leaders with the power to shape industry events.
Ben & Jerrys has prepared a detailed analysis of the industry following the pattern established by Michael
Porter, the complete study is included as Appendix A with a brief description of the major forces as
follows.
vBarriers to entry – The two favorable factors are the opportunity for product
differentiation within the super premium segment and the importance of corporate
experience in all phases of the operation (production, distribution, and marketing). The
most important down side factor is that consumer switching cost is nil.
vPower of buyers – With ice cream there are virtually no important end consumers.
However if one focuses on the consumer as retailer then the importance of the few
powerful and growing grocery chains represents a significant hurdle. This is offset by
the almost complete lack of potential for backward integration and the relative
insignificance of ice cream to this customer group.
vPower of suppliers – The most important factor here is the importance of quality. The
agribusiness in India is still very much in the developmental stage and there is little
concern, at present, over the dairy producers moving into ice cream production.
vAvailability of substitutes – The concept of comfort foods in India is still very much
in the incubation stage; as such the primary role of ice cream is that of a sweet desert
with little or no emotional value. Accordingly, there is a wide variety of alternative
