Formal Business Report on Baskin-Robbins Ice Cream

Brazil

Brazil is a country that is located in the Eastern South America which borders the Atlantic Ocean.  With its population of 198,739,269, it is currently one of the more populous nations in South America. (“Brazil” 2) Its population growth is estimate at 1.199%.  It also has a warm climate.   Because of its warm tropical climate, it is not surprising that Brazilians love ice cream. In fact, Brazilians love the taste of their ice cream which is made with tropical fruits like cashews and other fruits like coconut, avocado and even corn. Since Brazilians love ice cream it has become of the leading producers of ice cream in the world.  In 2003 alone Brazil produced 533 million litres of ice cream. (Alexandre Rocha, 2004) It is currently ranked as the #12 of the world’s largest producers of ice cream.  (Alexandre Rocha, 2004)

The love for ice cream has led many multi-national companies to take interest in investing in the ice cream market in Brazil. In 2001, several multinational companies have invested in Brazil’s ice cream market. One of these companies is Unilever which in 1997 acquired Kibon, Brazil’s biggest ice cream maker, after purchasing it from Philip Morris Companies. (“Unilever Competes in Ice Cream Deal”, 1997)   Before Unilever’s acquisition of Kibon, it was selling at an estimated amount of $332 million and operating at a profit of $74 million. 

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Other companies operating in Brazil are: Pillsbury, Nestle, Parmalat and 4D.  Together, they control over 85% of the ice cream market Brazil. (“Brazil: Ice Cream Producers Invest 2001) Figure No. 1 below shows that the competition in Brazil among multi-national companies is rather stiff.  It is currently being led by Kibon and closely followed by Nestle. 

Figure No. 1

Competition in the Ice Cream Market in Brazil

Source: http://www.highbeam.com/doc/1G1-66235146.html

What attracts these companies to invest in Brazil is Brazil’s innate love for their ice cream.  Currently, the ice cream market continues in Brazil continues to grow compared to its other countries.  While it is true that Brazilians actually spend very little on their consumption of ice cream, the sheer size of the population of Brazil makes its ice cream market one of the potential and emerging markets in the world.  According to industry experts, the ice cream market continues to grow in Brazil as it continuously increases by 8% annually.  Other companies are also focusing on other emerging ice cream markets such as China which posted an annual sales growth of 8.5%.  Figure No. 2 below shows that the annual growth of ice cream market in Brazil is comparable to that of China.

Figure No.2

Annual Sales Growth in Brazil and China

Source: http://www.highbeam.com/doc/1G1-168739121.html

Baskin-Robbins Ice Cream

There are companies which are known for their aggressive business strategies and anti-union and anti-employee policies.  At the forefront of these companies are companies like Wal-Mart.  There are also companies which strive to give back something to its employees, the community and to the environment as well.  At the forefront of these companies are companies like Ben & Jerry Homemade Inc.  When it comes to taste and flavor, no other company comes to mind except Baskin-Robbins Ice Cream. 

“We sell fun, not just ice cream.” (“Baskin-Robbins”)This perhaps sums up the corporate philosophy, mission and vision of Baskin-Robbins Ice Cream.  Since its creation over sixty (60) years ago, Baskin-Robbins has been delighting its customers with its irresistible ice cream flavors.  With more than 6,000 stores worldwide in 35 countries, Baskin-Robbins has become one of the world’s most recognizable ice cream brands.

The company name was derived from the names of its two founders.  Burton Baskin and Irvine Robbins were brothers-in-law who shared a mutual love for old-fashioned ice cream and mutual desire to delight people with a variety of their ice cream flavors.  The two owners first started their own businesses with Robbins opening his first Snowbird Ice Cream in Glendale, California where he started with 21 flavors.  The following year, Baskin opened his Burton’s Ice Cream in Pasadena California.  After just three years of operation, they were able to open six (6) stores until they started to become Baskin-Robbins in 1953.

In 1967, Baskin-Robbins was purchased by the United Brands Company.  By 1973, it once again changed ownership when it was acquired by J Lyons and Co.  Baskin- Robbins was acquired by other companies because of several changes in ownership.  It is presently under Dunkin’ Brands Inc.  

Baskin Robbins has three concepts which continue to attract the attention of its customers worldwide.  The first is the basic Baskin Robbins ice cream store.  The second is the Café 31 which is a high end desert bar with ice cream and coffee products.  The third is the BR express which is mostly found in venues like airports and shopping malls.

With its emphasis on fun, flavor and taste, it has become of the most recognized brand not only in the United States but in other countries as well.  It has opened stores in Australia, Canada, Japan Korea, India, Malaysia, Russia, UK and the Middle East.  Because of its strong brand recognition and high demand from its customers, it has kept on growing.  To meet the demand, however, Baskin-Robbins has always accepted the help of its franchisees. Baskin Robbins also continues to take care of its franchisees.  As proof to its dedication to store management, it has been recognized as #1 in ice cream and frozen desert franchise category and #16 in the Franchise 500.

With its continued success, Baskin Robbins plans to open more stores in key locations in the United States and abroad before the end of this year (“Baskin-Robbins seeks to expand in Louisville area” 2009)

Two of the important concerns when eating ice cream are health and diet.  There are misconceptions that ice cream is bad for a person’s health and it may cause weight gain.  Baskin Robbins Ice cream is aware of these concerns.  It is also aware that while people are becoming conscious about their diet and their health, there is the natural tendency for people to pig out when they see ice cream in front of them.  This is a reality.  According to Susan Luke, a registered dietitian in Boston and one of the national spokeswomen for the American Dietetic Association, people ordinarily make low-fat choices but they also instinctively turn around and eat ice cream. Baskin Robbins is aware of these concerns.  Consequently, it has made a reasonable effort to provide nutritional and ingredient information on its website so that the public may be made aware of the ingredients of its products.

Baskin-Robbins Ice Cream in Brazil

 Growth has always been one of the goals of Baskin-Robbins.  This is evident by its continued acceptance of franchisees.  Recent news reports say that Baskin-Robbins is interested in expanding its business in China.  In January 2009, it opened its first two stores in Shanghai.  The two stores in Shanghai, China are just the first of its plan to open 100 new stores in China over the next 10 years. 

Presently, there are no official statements coming from Baskin-Robbins about its expansion in Brazil. In view however of the strong market for ice cream in Brazil, the top management of Dunkin Brands, Inc. should consider investing in the ice cream industry in Brazil.  There are several reasons why investment in Brazil is a sound business decision.  First, Brazil has one of the biggest populations in South America. It has a young population with 26.7% of its population being composed of children between the ages of 0 and 14 and 66.8% of its population is composed of individuals between the ages of 15 and 64.  The age composition of the population makes Brazil an attractive place to invest in for Dunkin’ Brands Inc. Second, Unilever and Nestle will not be competing in Brazil for no reason.  These two biggest companies in the ice cream industry are out there in Brazil because of its realization that this country is an emerging market for ice cream.  Unlike in the United States where competition is stiff, the market in Brazil is still very young.  Third, Brazil posted an annual sales growth of 8%.  With its growing population and the continued growth of the ice cream industry, Brazil is a good location for investment.  Fourth, Brazilians already love their ice cream.  Introducing a new brand in Brazil is only a matter of finding the right balance between an ice cream taste that they have been accustomed to and retaining Baskiin-Robbins taste that people all around are already familiar with.

Conclusion

Based on the data presented, the conclusion that can be drawn is that in addition to China, Brazil offers a good opportunity for business expansion.  It has a young population which is suited for the market of Baskin-Robbins.  It is an emerging market for ice cream.  It also has a steady annual sales growth which is comparable to a country like China.

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