Tuesday, 25 April 2017

Ice Cream Industry 2016


       Global ice cream market is worth USD 54.6 Billion. Market grew at CAGR of 3.49% since 2011 and reached USD 54.6 billion by 2016. Expected to grow further to reach USD 89 billion by 2022. It reached volume of 19.7 Million Metric Tons in 2016. Uniliver dominates the global market with 8 of the 15 top selling brands and a 22% share followed by Nestle with 18% market share. Nestle is the closest corporate rival of Unilever with 4 brands in the top 15. The sales of low-quality ice cream have been declining due to the increased preference for premium ice cream. Population growth, increasing disposable incomes, innovative flavors with added nutrients, increasing popularity as an addition to other foods and beverages such as milk shakes, smoothies, brownies, etc., are some of the key factors that are currently driving the growth of the global ice cream market.
       Europe dominated the market with more than 40% share. China and Brazil together accounts 2/5th of the global ice cream sales.Major trend is the growth of organic ice cream and Low Fat. It is supported by various technological advancements in the field of cold chain infrastructure, refrigerated transport systems, storage facilities and equipment. Magnum is the most popular brand worldwide followed by Haagen-Dazs, Cornetto and Ben & Jerry’s. 
        Europe dominates the market with more than 40% share.New Zealand has highest per capita ice cream consumption of 28.4 liters. China and Brazil together accounts 2/5th of the global ice cream sales. Growth of organic ice cream and Low Fat supported by various technological advancements in the field of cold chain infrastructure, refrigerated transport systems, storage facilities and equipment. Emergence of private label brands has reduced the price of Ice cream( e.g- Kroger ).The market can be segmented into impulsive, take-home, and artisanal ice cream. The impulse segment dominated with market share of 39%.
        Indian ice cream industry was valued USD 0.9 Billion in 2014 expected to reach $1.7bln by 2018. It is a promising category projected to grow at a CAGR of 17% or even more. It is a promising category projected to grow at a CAGR of 17% or even more. Ice cream segment accounts for just 1% of the total dairy products market in India. Market in India grew at a moderate pace over the past few years, on account of increasing number of international ice cream brands entering the Indian market, improving cold storage facilities, coupled with changing consumer taste. Moreover, India is the largest producer of milk, as the country accounts for over 1/5th of global milk production, thereby offering ice cream market in the country with large volume of raw material for manufacturing of ice creams. Ice cream in India is mostly consumed in cups, bars, bricks and tubs. Bricks and tubs are popular for occasions like marriages and gathering while sticks and cones are popular otherwise ,as these products offer portioned packaging and have wide variety of flavors.
         Amul is the market leader in organized category having 18% share followed by HUL. Including HUL it covers almost 1/3rd of the organised market. Domestic market is dominated by impulse category of ice creams owing to growing demand for premium ice creams and changing consumer taste. Vadilal has the largest range of ice creams in the country with 150 plus flavors, sold in a variety of more than 300 packs and forms. Chocolate, Vanilla, Strawberry ,Mango are most popular flavors i n India. Major companies offer same flavor throughout the countries. However recently companies are developing flavors to target specific regions ( e.g-Mother Dairy’s Nolen Gur Flavor for Bengali community) Gourmet flavors are gaining in popularity and are the triggers for brands seeking premium positioning..
        Western region has highest 35% share in domestic market ;Gujurat alone contributes 12% of countries ‘sales. Gujarat stands number one consumer accounts for more than 12% of countries ‘ sales. Gujurat and Delhi together contribute approx. 30% of sales in this category. Northern and western India are the highest consumption centres accounting for close to 70 % of the market. UP, Delhi (NCR), Uttarakhand, Punjab and Haryana are some of the best markets for ice cream. North India due to hot climate during summers leads the turnovers during this period. Increasing number of metropolitan cities in South India, increasing young crowd in cities like Chennai, Hyderabad and Bangalore, is adding to its growth. Increasing presence of international brands driving consumption in metros and mini-metros.
        Per capita consumption of Indian consumers has double in the last 4 years from 200ML to 400ML.and is expected to reach 1L in the next 5 years. This growth will bring huge opportunities to the entire allied sectors which include processing and packaging machinery manufacturers, packaging materials, ingredients and raw material suppliers and cold chain solution providers. GDP per capita of India is increased from USD1390 in 2010 to 1580 in 2015, which is positively impacting the ice cream market in India. Increasing incomes, a burgeoning middle class, contributes in making ice-cream more affordable and acceptable among Indian masses. Monthly spending on ice cream by household is below potential. Rural consumer spend 0.12% on ice cream out of spending on total milk and milk products while urban household spend just 0.85% on ice cream out of spending on total milk and milk products
          Overall world Export of ice cream in 2016 was 3.3bln USD, India accounted 0.08% of the total exports(2.9 Million USD ). USA has been the key destination for ice cream exports. Apart from the huge Indian population in the US, it is the popular destination to acquire a large number of customers from other countries. Total Indian import of ice cream was 4 Million USD which is only 0.12% of the world import in this category. Thailand is the key sourcing destination for India . It is mainly due to reduced tariff rates that applies because of educed as ASEAN-India (AIFTA) free trade agreement.
          Ice cream industry is the biggest victim of bad infrastructure of road and power supply. Due to this, rural India where power comes just for few hours in a day and where more than 50% of the country’s population resides is not able to store ice cream .This industry is short of cold chain by about 50%. Also, No. of household possessing refrigerator per 1000 household is very low;658 for urban and 252 for rural. This is another hurdle. Increasing dairy costs are ramping up transaction costs for traditional ice-cream players which are in turn pushing up prices at the consumer end. Due to rising prices of raw material many companies are switching to cheaper substitute which can be an issue as government has imposed strict restrictions on composition of the raw material of the ice cream. Lastly, Unorganized sector is much bigger than organized sector. Therefore ,Companies entering this market have to deal with unorganized sector which is hard to track

(See Below for detail power point presentation)



Don't forget to share your remarks in comment box

Wednesday, 12 April 2017

Trans Pacific Partnership (TPP)

    The ‘Trans-Pacific Partnership Agreement ‘(TPP) is a free trade agreement concluded on October 5, 2015 by 12 Pacific Rim nations – Australia, Brunei, Darussalam, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, United States, and Vietnam. It includes 30 chapters covering wide sourcing, manufacturing and retailing in the Asia-Pacific region. 
    Elimination or reduction of tariff-non tariff barriers of trade, development of production & supply chain, cross border economic integration integration ,opening up of domestic markets, promoting innovation ,productivity, competitiveness by addressing new issues  of digital economy &role of state owned enterprise in global economy  are some of the key features of TPP agreement. TPP agreement cab be classified into 3 groups.viz, Trade in goods ,trade in services and other  policies that includes labour, Intellectual property, competition policy,, policy for state owned enterprises , SMEs  and also environment relate policies. Some of the highlights of TPP are as follows 
         Under the 'trade in goods' category elimination of  98% of all tariffs on products including beef, dairy, wine, sugar, rice, horticulture and seafood. It also extends to manufactured goods, resources and energy, and services has been proposed. On agricultural products, TPP parties agreed to eliminate or reduce tariffs and other restrictive policies. They will also promote policy reforms, including by eliminating agricultural export subsidies and working together in the WTO to develop disciplines on export state trading enterprises, export credits, and the time frames allowed for restrictions on food exports. For textiles ad apparels,there will be elimination all tariffs, mostly immediately with some special exception for longer-time-frame.‘Yarn forward rule’ requires clothing to be made from yarn and fabric manufactured in one of the free trade partners to qualify for duty-free treatment. ‘Short supply list’ mechanism that allows use of certain yarns and fabrics not widely available in the region.Rules of Origin has been introduced under TPP which might have significant impact on global trade as well as nation to nation relations. It means single set of rules of origin to define whether a particular good is ‘originating’ and therefore eligible for preferential tariff benefits. It includes product-specific rules of origin (PSRs) that are based on the “tariff-shift” approach, which clearly sets out the non-originating materials that may be used in production
      Under the 'trade in services' category, TPP includes core obligations found in the WTO other obligations such as Most Favoured Nations (MFN), national treatment, market access. no quantitative limitation on supply of services, requirement on specific type of legal entity or joint venture and requirement on local presence has been proposed. For Financial Services No member country may require a supplier from another  member country to establish an office or affiliate, or to be resident, in its territory to supply a service. TPP parties adopted a negative list approach to investment, meaning that their markets are fully open to foreign investors except where they have taken an exception in one of two country-specific annexes. The agreement also provides for neutral and transparent international arbitration of investment disputes. I t also advocates ‘minimum standard of treatment’,Prohibition on ‘performance requirement’ such as  local content or technology localization requirements and f ree transfer of fund on investment unless in BOP crisis.
      Various measures has been suggested for E-commerce as well. Free flow of information and data across borders.  No customs duties on electronic Transmission.No favouring of national producers or suppliers through discriminatory measure. There are provisions encouraging TPP parties to promote paperless trading between businesses and the government, such as electronic customs forms, and providing for electronic authentication and signatures for commercial transactions.
     For Intellectual Property related issues TPP establishes standards for patents based on the WTO’s TRIPS Agreement . On trademarks, it provides protections of brand names and other signs that businesses and individuals use to distinguish their products in the marketplace. Specially for pharmaceuticals it provides commitments relating to the protection of undisclosed test and other data submitted to obtain marketing approval of a new pharmaceutical or agricultural chemicals product.
In copyright, the IP chapter establishes commitments requiring protection for works, performances and phonograms such as songs, movies, books and software.inally, TPP parties agreed to provide strong enforcement systems for commercial-scale trademark counterfeiting and copyright or related rights piracy. It will provide the legal means to prevent the misappropriation of trade secrets and establish criminal procedures and penalties for trade secret theft, including by means of cybertheft, and for camcording.
     Other Policies includes Open and transparent policy for visa (labour),To make commercial purchases and sales based on commercial considerations for State owned enterprises (SOEs). It also provides A minimum period for data exclusivity was agreed for biological pharmaceuticals Commitment to protect and enforce copyrights ,patents and related rights, Dispute Settlement mechanism among Parties to resolve conflict.
The following chart shows  key Commitments in TPP agreement . 

Category
Chapter
Key policies








Trade in Goods
Overall
Ø  Eliminate 98% of all tariffs on products including beef, dairy, wine, sugar, rice, horticulture and seafood. It also extends to manufactured goods, resources and energy, and services.
Textile and Apparel
Ø  Eliminate all tariffs, mostly immediately with some special exception for longer-time-frame
Ø  ‘Yarn forward rule’ requires clothing to be made from yarn and fabric manufactured in one of the free trade partners to qualify for duty-free treatment.
Ø  ‘Short supply list’ mechanism that allows use of certain yarns and fabrics not widely available in the region.
Rules of Origin
Ø  Single set of rules of origin to define whether a particular good is ‘originating’ and therefore eligible for preferential tariff benefits.
Ø  Inputs from one TPP Party are treated the same as materials from any other TPP Party
Ø  Include product-specific rules of origin (PSRs) that are based on the “tariff-shift” approach, which clearly sets out the non-originating materials that may be used in production
Other chapters
Ø  Customs Facilitation – improve transparency of customs procedures
Ø  Technical Barriers to Trade (TBT) –transparent, non-discriminatory rules for developing technical regulations, standard and conformity procedures with public participation




Trade in Services
Overall
Ø  Include obligations such as Most Favoured Nations (MFN), national treatment, market access
Ø  No quantitative limitation on supply of services, requirement on specific type of legal entity or joint venture and requirement on local presence.
Ø  Except sectors taken in exception, all other sectors are open to all TPP Party
Financial Services
Ø  No member country may require a supplier from another  member country to establish an office or affiliate, or to be resident, in its territory to supply a service
E-commerce
Ø  Free flow of information and data across borders. 
Ø  No customs duties on electronic Transmission
Ø  No favouring of national producers or suppliers through discriminatory measure

Investment
Overall
Ø  Include  obligations such as MFN, national treatment, ‘minimum standard of treatment’
Ø  Prohibition on ‘performance requirement’ such as local content or technology localization requirements. Free transfer of fund on investment unless in BOP crisis










Other
Policies

Labour
Ø  Open and transparent policy for visa
Ø  All labour laws to be consistent with the International Labour Organization (ILO)
Competition policy
Ø  National  law that prohibit anticompetitive business conduct and apply to all commercial activities in their territories
State owned enterprises (SOEs)
Ø  To make commercial purchases and sales based on commercial considerations.
Ø  National treatment and non-discriminatory to other parties of the TPP
Ø  Does opportunity to favour their domestic SOEs in instances where the SOE is providing a public service.
Intellectual
Properties

Ø  A minimum period for data exclusivity was agreed for biological pharmaceuticals
Ø  Commitment to protect and enforce copyrights ,patents and related rights
Ø  Commitment to provide strong enforcement systems
Environment
Ø  Commitment to work together to address environmental challenges, including
        pollution, illegal wildlife trafficking, illegal logging, illegal fishing and protection of
        marine environment
SMEs
Ø  To create user-friendly websites targeted at SME users to provide easily accessible information on the TPP and ways they can take advantage of it
Other chapters
Ø  Encourage development by regional integration
Ø  Promote transparency in government administration
Ø  Dispute Settlement mechanism among Parties to resolve conflic





Don't forget to share your remarks in comment box