Published on 16/03/2016 by Punchmedia

Global Ice Cream Chain Eyes Sweet Return

Global ice cream sensation Haagen-Dazs is again set to hit Australian shores after a successful pop up store trial in Melbourne's Federation Square recently. Haagen-Dazs is sold in more than 80 countries worldwide and was first introduced to Australia in 1999 but the high-end ice-cream sold poorly and it withdrew from the market five years later. Now its owner, American food giant General Mills, says Australian palates are ready for what it has to offer. General Mills Australasia's general manager, Jo Ens said simplicity was a major selling point for consumers seeking authenticity in what they buy and eat and predicted a warm reception in Australia. Haagen-Dazs stakes its global footprint through grocery retailers and its own sit-down stores, which are littered in prominent locations worldwide. In Australia however, Haagen-Dazs will initially sell only through supermarkets, with 12 varieties hitting shelves around July or August this year.

Ice Cream Stores in Australia

The Ice Cream Stores industry has shown steady overall growth in the five years through 2015-16. This has been driven by increased franchising activity, steady demand for industry products and growth in new product segments. Some industry operators, such as Sydney-based Gelato Messina, have increasingly focused on developing premium ice creams and a sleek environment for ice cream consumption, which has increased the profile of the industry.

Revenue and Profit Growth

IBISWorld expects that industry revenue will increase at an annualised 2.5% in the five years through 2015-16, to reach $549.7 million. As in the wider takeaway food-services subsector, industry revenue declined in 2010-11 and 2011-12 due to economic uncertainty, high final prices and weaker demand. However, a return to revenue growth in the following year was the result of ice cream stores maintaining their prices as milk and sugar input prices fell and as consumer sentiment improved.

Franchise Popularity

Ice cream franchises account for a high proportion of industry establishments and revenue. IBISWorld expects that the four largest companies operating in the industry, which have extensive franchising networks, will account for 41.0% of industry revenue in 2015-16. This gives the industry a medium concentration level and strong brand recognition among consumers. However, the overall market share of these four companies has declined in the past five years due to an increase in the number of smaller franchise operations, particularly for gelato, frozen yoghurt and niche products like fat-free ice cream.

Milk and Input Pricing

Milk is the main raw material in ice cream making, accounting for up to two-thirds of the industry's raw material inputs. Therefore, milk pricing and production volumes can have a significant effect on industry revenue and profit. After two years of declines, higher milk prices in 2010-11 contributed to higher costs for ice cream stores, with industry revenue declining for the year and profit weakening. Following moderate price declines in 2011-12 and 2012-13, prices surged again in 2013-14 as milk demand increased across Australia. A large price decrease in 2014-15 on higher production volumes is expected to be followed by higher milk prices in 2015-16.

Enterprise and Employment

The number of enterprises operating in the industry is expected to increase at an annualised 2.5% in the five years through 2015-16, to total 892 individual companies. This includes estimated growth of 1.8% in 2015-16 as industry conditions remain stable. Some of these new entrants are expected to be franchise outlets, while others operate single stores. With franchise numbers increasing at a slower rate since 2012-13, the proportion of establishments to enterprises operating in the industry has declined. Therefore, growth in establishment numbers is expected to be increasing at a slower rate than enterprise numbers, at an annualised 2.2% in the five years through 2015-16.  

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Curtis is a leading expert in the business-for-sale industry, serving as a senior content creator at anybusiness.com.au.

With a career spanning over fifteen years, Curtis has accumulated extensive knowledge in the domain of business sales, acquisitions, and valuations. His deep understanding of market dynamics and his ability to translate complex industry jargon into accessible insights make him a trusted resource for entrepreneurs and business owners looking to buy or sell businesses.

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