ICE CREAM WAR

Nestl vs. Unilever

2007
Presentation Outline
1. Case Abstract
2. Key points
3. Discussion Questions
4. Recommendation


Case abstract
Case abstract
USD57 billion industry
Nestle & Unilever account for 1/3 of the market, the
rest are highly fragmented
Growing and profitable industry with increasing sales
in different markets
2 giants started their head-to-head war since the
1990s

Key points
Acquisition Campaigns
Nestle Unilever
obtained the rights to sell
Hagen-Dazs in the U.S.
and Canada; bought
Mvenpick

17.5% share of the world
market
gobbled up Ben & Jerry's;
acquired Breyers Ice
Cream


16% share of the world
market
Similarities
Super premium products
Health consciousness
Asia Pacific region: the biggest growth prospect
Discussion questions
1)Why is the ice cream business so
attractive for Nestle and Unilever?
The ice cream sale in the world is $59 billion, Western Europe: $21.5 billion, North
Americans: $16.3 billion worth
Ice cream business is in a growing and profitable business
Global ice cream sales are rising 2.5% annually and will hit $65 billion in 2010.
In China and Brazil, the annual sales are soaring 8.5% and 8%, respectively.
Nestl took over Hagen-Dazs, Dreyer's, and Swiss brand Mvenpick. Unilever
bought Breyers Ice Cream and Ben & Jerry's. Today, Nestl reached a 17.5% share
of the world market, while Unilever is close behind with 16%.
Profit in first-half 2007
Nestle Unilever
nearly 20% of its $42
billion revenues come from
milk products and ice
cream division
$900 million in profits
ice cream and beverages
division supplied just over
20% of its $26.7 billion\

ice cream alone accounted
for 10% of Unilever's $3
billion
2)What are the pros and cons of focusing on
the super premium ice cream category?
Benefits
Highly fragmented market
=> boost differentiation of products
Dreyers Grand Ice (Nestl); Ben & Jerrys
(Unilever) are famous for lower-fat and lower-
calories
=> fit for Health Consciousness trend
Better reputation
Take advantage of existed customers


Problems
Highly fragmented market, there are too many competitors
=> customer loyalty is not high, can not satisfy every nations
demand, esp. Chinese market
Hidden competitors occupy nearly 65% of the market
=> high risk of losing customers
Huge profit and revenue come from super premium ice-cream
=> high financial risk
3)What attraction does Asia have for Nestle
and Unilever?
Asian market penetration remains low

The increasing globalization

Tropical climate countries

High young population
Recommendation
For supper premium ice-cream segment
- New types
- Focus differentiation
- New supplier & technology to reduce cost
For expanding in Asian market
- New flavour
- Acquire local business
Q & A
Thank you