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Unilever Ice Cream Strategic Issues Report (Assessment)

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Updated: Jan 24th, 2021

Brief Background

Margarine Unie, a Dutch margarine manufacturer, and Lever Brothers, a UK-based enterprise specializing in soap, created Unilever in 1930. From the 50s and further, the company extended the range of its products. The company has made many acquisitions, but we are interested in those of ice-cream persuasion. The first one occurred in the 1920s when Margarine Unie and Lever Brothers bought Wall’s meat business. The idea to produce ice-cream for summer proved a success. In the 60s, Unilever acquired Good Humor, US. By the late 70s, Unilever had acquired a third of the ice-cream market in Western Europe and became the biggest ice-cream manufacturer in the US. The acquisitions continue into the 21st century: in 2010, Unilever acquired EVGA, Greece, and in October 2015, it acquired GROM, Italy (Landini 2015).

Mission

Unilever prides itself on its remarkable understanding of the consumers’ needs. It engages itself in producing consumer-oriented goods that consist of food and beauty products. The ultimate social goal that Unilever tries to achieve is improving the life quality on a local and global scale. Thus, it deploys an unambiguously stated mission concerning the quality of its products. It agrees and undertakes the obligation to distribute ice-cream made of the finest-quality ingredients. It also claims to adopt environment-friendly technologies and business practices (Sustainable Living n.d.).

Strategies in Action

Currently, the company adopts the strategy of product development that presumes to improve the characteristics of a product to meet the market’s needs. The company continuously monitors the demand to decide whether the product brings profit or the line should be called back. Also, Unilever tracks the competitors’ products to ensure its leading positions in the market. About human resources, the company manages the recruitment of staff members to make sure the workplaces suit the workers and vice versa. All new employees are trained and surveyed for the salaries to be adjusted. The company maintains its financial operations relying on the resources it accommodates. They do their best to mitigate post-trade risks through the adoption of practices deployed by ICAP and are the world leaders in sustainability (In search of the good business 2014).

Leaders in Sustainability, %
Unilever
Patagonia
Interface
Marks & Spenser
Nestle
Natura
Nike
GE
Walmart
Puma
IKEA
Coca-Cola
32.5
9
7
6
4
4
4
4
3
3
3
3

The acquisitions have an undeniably important part of Unilever’s success. Through acquisitions, the Wall’s company started its growth from a soap-and-margarine joint business towards a global ice-cream manufacturer. With time, the acquisitions became an indispensable resource of the local market information concerning the needs of the consumers. Locally, the needs mainly correspond with national and culture-specific concepts (Jones & Miskell 2007).

The strengths and weaknesses of the company can be presented in the SWOT chart as follows:

Strengths Weaknesses
  • Undeniable influence in the market
  • Although it produces food, Wall’s has become the most profitable branch of Unilever
  • Catchy ice-cream packages appeal to consumers
  • Technologies speed up the process of production
  • No artificial ingredients are used
  • Division of products by class of consumers: products are oriented at the upper class, but they nevertheless are bought by lower-income persons who consider it on the border of discrimination
  • Too hot or too cold and generally unhealthy weather conditions possibly affect the manufacture
  • Certain ingredients cost more than others, thus increasing the price of the product
Opportunities Threats
  • Children-orientedness in terms of flavors
  • Adult-orientedness: using non-fruit flavors and adult images in advertising (not necessarily sexual, but sensual)
  • Local ice-cream manufacturers
  • Other emerging ice-cream manufacturers
  • Health-conscious persons claiming for milk fat and against vegetable fat
Leading brands in the US, 2015, as per sales (bln. USD$).
Private enterprises
Blue Bell
Häagen-Dazs
Breyers
Ben & Jerry’s
Dreyer’s / Edy’s Slowchurned
Dreyer’s / Edy’s Grand
Turkey Hill
Talenti
Wells Blue Bunny
1,069.4
570
382.2
356.8
349.9
263.4
232.6
218.9
164.9
163.3
Unilever brands combined 706.7
Ice Cream Global Market Share 2015 (%)
Private enterprises
Unilever
Nestle
General Mills
Lotte
Mars
R & R
59.2
22.8
10.8
3
2.1
1.3
0.8

Strategic issues

The main problems discovered are the way the Unilever ice-cream growth could be increased and expanded worldwide; at that, the company should not sacrifice its ethics. Furthermore, like health- and environment-related issues emerge, the company ought to manifest a healthy attitude towards production. Besides, although the company advocated for customer-orientedness, the customers’ feedback and the ways of its reception should be brought to the agenda.

In 2013, the per capita Wall’s ice-cream consumption around the world looks promising:

Wall’s Ice-cream Per Capita Consumption Worldwide, 2013 (liters yearly)
New Zealand
Unites States
Australia
Finland
Sweden
Canada
Denmark
Ireland
Italy
United Kingdom
Singapore
Malaysia
Thailand
China
Philippines
Pakistan
Indonesia
India
28.4
20.8
18
14.2
12
10.6
9.8
8.4
8.0
7.0
2.4
1.9
1.5
1
0.8
0.4
0.1
0.1

As can be seen, Wall’s has expanded all around Europe, but developing countries remain an issue, as well as, paradoxically, the UK with its stale ice cream market:

UK Ice-cream Market 2010
Market penetration >80%
Market segmentation

Super Premium and Luxury Brands

Premium brands

Others

2 Sectors: take-home and wrapped impulse
Ben & Jerry’s (Unilever) and Häagen-Dazs
Carte D’Or (Unilever) and Wall’s (also Unilever)
Kelly’s Cornwall (R & R Ice Cream), Make’s (Mackie’s of Scotland), Baskin Robbins, Farmhouse Fair, Frederick’s Dairies, Premier Foods, and Youmoo
Market Shares as per Brand (%)
Ben & Jerry’s (Unilever)
Carte D’Or (Unilever)
Häagen-Dazs
Wall’s (Unilever)
Private enterprise
Other
19%
13%
11%
8%
31%
19%
Unilever market shares combined 40%

Ice-cream as a product is quite profitable in countries with a tropical climate, i.e., Indonesia and India.

In Indonesia, Wall’s share in the ice-cream market has experienced an unbelievable boom in 2008-2014, practically swallowing all other ice-cream producers, except Campina (Ice Cream in Indonesia 2015).

Ice-cream Industry Market Shares (%) in Indonesia, 2008-2014
2008
  • Walls
  • Campina
  • Diamond
  • Indo Eskrim
  • Others
  • 57.6%
  • 19.9%
  • 4%
  • 12.5%
  • 6%
2011
  • Walls
  • Campina
  • Diamond
  • Others
  • 70.7%
  • 26.1%
  • 0.9 %
  • 3%
2014
  • Walls
  • Campina
  • Others
  • 72%
  • 26%
  • 2%

However, the market share of Wall’s (known in India as Kwality Wall’s) is humbling, considering the size of the industry (Ice Cream in India 2015).

Ice-cream Industry Market Shares (%) in India, 2015
Amul
Kwality Wall’s
Vadilal
Mother Dairy
Cream Bell
Local manufacturers
38%
14%
12%
8%
6%
22%

The situation in the UAE does not prove better, and the situation has been stable for three years, 2008-2010.

Ice-cream Market Company Shares (%) in the UAE, 2008-2010
2008
  • Private Enterprise
  • United Kaipara Dairies
  • Unilever
  • Artisanal products
  • IFFCO Group
  • Other
  • 6%
  • 7%
  • 7%
  • 15%
  • 39%
  • 12%
2009
  • Private Enterprise
  • United Kaipara Dairies
  • Unilever
  • Artisanal products
  • IFFCO Group
  • Other
  • 6%
  • 7%
  • 7%
  • 15%
  • 39%
  • 12%
2010
  • Private Enterprise
  • United Kaipara Dairies
  • Unilever
  • Artisanal products
  • IFFCO Group
  • Other
  • 6%
  • 7%
  • 7%
  • 15%
  • 39%
  • 12%

In 2011, Unilever’s ice-cream gained a few percent, but not many (Ice Cream in the United Arab Emirates 2014).

Ice-cream Market Company Shares (%) in the UAE, 2011
IFFCO Group
Unilever
BR IP Holder
General Mills
Nestle
United Kaipara Dairies Company
Glace Quality Ice Cream and Sorbet
Saudi Brothers’ Commercial Company
Private Enterprises
Other
42%
13%
11%
9%
5%
4%
3%
1%
2%
10%

In Pakistan, Unilever has a considerable amount of market share, but the consumption is still too low (Ice Cream in Pakistan 2015).

Ice-cream Industry Market Share, Pakistan 2015
Wall’s
More
Igloo
Others
68%
16%
7%
9%

In Singapore, Unilever has two companies that proved stable in the ice-cream market in recent years (Ice Cream in Singapore 2015).

Brand Company 2007 2008 2009 2010
Wall’s Unilever Singapore Pte Ltd 12.8% 12.8% 13% 12.7%
Magnolia F&N Foods (S) Pte Ltd 13.3% 13.3% 12.7% 13.3%
Häagen-Dazs General Mills Asia Pte Ltd 10.1% 10.1% 10.3% 10.5%
Ben&Jerry’s Unilever Singapore Pte Ltd 5.4% 5.4% 5.6% 5.7%

The fall of consumption can be explained by health issues concerning the abundance of milk fat in the ice-cream industry as opposed to more expensive milk fat, which is, nevertheless, considered healthier.

The organization’s response to market conditions is the modification of their areas of expertise, i.e., internal abilities, contact with the providers, and the company’s disposition as opposed to the competitors’. It is important to understand the connections between the company’s actions since it might conduce to the most appropriate decision-making leading to the advantage in price or specialty. Thus, we suggest the following strategies: the evaluation of the stakeholder interests and shares and the enhancement of the evaluation of the company’s financial standing.

To correctly evaluate the stakeholders’ disposition, the Unilever’s managers must have a clear understanding of what is most important for the stakeholders, from what point they view the company’s activities, and what are their estimated prospects for the company’s further endeavors. Besides, Unilever should expand their target audience, which is an essential element of the company’s development. For that purpose, the consumers’ feedback should be accessible to the management. Having accessed the feedback, the company will have an opportunity to deploying more active contact with providers and increasing the market share.

As to financial management, the very nature of it implies that the managers have to put up with risky decision-making and challenge the possible negative outcomes. Unilever should ensure that operational expenditures remain within the corporate funds to be able to budget the company’s follow-up activities. The decision-making in the area of financial management should be kept an eye on: the managers should be trained in real conditions of investment projects.

Thus, regarding the recent practices of Unilever, it is possible to state that although the company prides itself on its sensitiveness to the consumers’ needs, it currently experiences difficulties in establishing good interaction with consumers, especially in UAE and India. Even though the company already is firmly imposed in the said countries’ markets, it should maintain and enhance its credibility. Thus, the strategy that includes gathering customers’ feedback and enhancing financial management is highly recommendable.

References

2015, Web.

2015, Web.

Ice Cream in Pakistan 2015, Web.

2015, Web.

2014, Web.

2014, Web.

Jones, G & Miskell, P 2007, ‘Acquisitions and firm growth: Creating Unilever’s ice cream and tea business’, Business History, vol. 49, no. 1, pp. 8-28.

Landini, F 2015, , Reuters, Web.

n.d., Web.

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