Ice Fili Strategy - Russian Ice Cream Market

Ice Fili Strategy - Russian Ice Cream Market

Michael Sherry
T-Bird ID #1453086
In terms of the 5 forces from the Michael Porter article, the Russian ice cream market poses both attractive and challenging attributes for both domestic and foreign producers. First, in terms of threat of new entrants, we see that Russians prefer their ice cream to be less sweet and more aerated than both the U.S. and European consumers. As a result, this does create a barrier to entry for foreign producers, as their competitive advantage lies mainly with their ability to produce a sweeter brand of ice cream, homogenized for the tastes of the rest of the global ice cream market, produced en-masse due to their economies of scale. In order to compete within the Russian markets, they would have to create a new line of ice cream, more in line with the cultural consumption norms of this market. In addition, the domestic Russian market actually has more rivals than in other countries’ markets, as they are also directly competing with other consumer food and beverage products, such as beer, soda, yogurts, chocolate and candies. The inherent challenge for Russian producers lies in trying to compete with the other food products, yet with a much smaller budget for branding and advertising. According to the Ice-Fili case, Russian ice cream producers spent less than $5 million, while Russian beer producers had spent $90 million, and soda manufacturers spent $175 million. The liberalization of the Russian economy after the collapse of the Soviet Union led to even more challenges, namely from new entrants and substitute brands entering the market from abroad, in order to capitalize on the emerging consumer market, in the absence of state-set prices and nationalistic policies to protect the domestic brands. However, as a result of the Russian financial crisis of 1998, further evolution and external forces took hold of the already challenging marketplace. Specifically, the ruble was devalued by two-thirds, meaning that many Russian...

Similar Essays