ECONOMY

Ice-cream companies targeting broader distribution channels

Ice-cream producers are targeting new distribution channels and opportunities for expansion abroad, as strong competition and the small size of the domestic market limit growth prospects. The ambitious Greek ice-cream industries are now focusing on quality, variety, new products capable of rejuvenating consumer interest, and distribution channels, which are a crucial factor in determining market shares. Every year, the different companies launch at least five new products each, backed by strong advertising. The Greek market today for pre-packed ice cream is growing at annual rates of 2-3 percent but annual consumption per head, at about 5 liters, is still only half the average in Europe. If ice cream sold by the scoop or by the kilo is also taken into account, consumption rises to 8.5 liters per head, still significantly behind the 23 liters in the USA, 18 in Australia and 14 in Sweden. Greeks are estimated to spend about 300 million euros on ice cream annually; about 85 percent of sales take place in small shops, kiosks or bakeries, with the rest sold in supermarkets. In fact, about 55,000 kiosks account for 70 percent of total sales. For this reason, weather conditions play an important role in sales; sales lost through bad weather are not made up for later in the season. Extending the ice-cream consumption period into winter has long been looked at by the manufacturing firms. They have found that any strategy to that end has a very high cost and that the main obstacle is a negative response by consumers and retailers. Given such constraints, the search for new distribution channels and expansion abroad appear as the strongest propositions for augmenting sales. The case of Delta Ice Cream, which leads in the domestic market with a share of more than 40 percent, is characteristic. It has factories in Serbia, Romania and Bulgaria, which export to the Former Yugoslav Republic of Macedonia (FYROM) and Albania, while exports are also scheduled to begin this year to Croatia, Georgia and Ukraine. The acquisition of the Goody’s fast-food chain last year is projected to give a significant boost to Delta Ice Cream’s sales network. The group also holds a 25-percent interest in the ice-cream chain Dodoni. According to the ICAP business research company, ice-cream chains are expected to grow at rates of 10-15 percent in the next three years. EVGA, a subsidiary of the FAGE group and the second most prominent firm in the ice-cream business, last year launched its new ultramodern factory in Cape Town, South Africa, through its affiliate Cas Ice Cream, which plans to expand to other categories of products. EVGA recently assumed the management of the ice-cream and patisserie chain Igloo, adding to its own distribution network. Unilever’s Algida is the third major seller of ice cream in Greece. After the closure of its factory in Patras three years ago, it has been importing its goods from Italy. This oligopolistic structure of the market, the mediocre growth rates and the seasonal cycle of sales in Greece leave little leeway for the entry of new firms in the sector. This did not deter Nestle, which decided two years ago to venture into the Greek market, mainly in the provinces. Its ice creams are imported and its presence has not brought about any significant realignment of market shares. As regards consumers’ preferences, ice cream on a «stick» is by far the most popular variety, with a market share of 42 percent, followed by ice-cream cones, cups, chocolate cones, family-sized packaged ice cream and by the kilo from small producers. According to a research study by MRB, the most popular brands are Delta’s Boss, Nirvana, Magnum and Aloman, EVGA’s Status, Scandal and Variette, and Algida’s Magic, Cornetto and Carte D’Or. – Panamaxes in the East with a mixed picture. There is a number of high and low fixtures as well as back hauls. T/C short periods are still paying a premium. Cosco for 4-6 months trading has fixed M/V «Alpha Melody» 74,000 dwt, at USD 8,250 daily.