In the early 1900s, salespeople delivered Wall’s ice cream on tricycles. Today, the concept is resurrected.
Thomas Wall started selling ice cream as a seasonal product designed to offset slumping sausage sales during the summer. Lever Brothers bought Wall’s company; it later merged with Maragarine Unie to become Unilever, a multinational corporation now known as the “king of ice cream.” Sold in 63 countries, its ice cream brand portfolio now accounts for 19% of the global market. In 2020, as the pandemic lingered on and people spent more time at home, the company brought back the old concept of delivering ice cream on wheels, but this time directly to consumers’ homes. The company constantly innovates. Nevertheless, uncertainty about future lockdowns in 2021 makes the next big idea a little elusive.
Video Spotlight: How a Viennetta Is Made
This post is based on the CNN article, This Company Conquered the Ice Cream Market. Home Delivery Is the Final Frontier, by H. Ziadi, November 14, 2020, and the YouTube video, How a Viennetta Is Made, by d100965, November 17, 2013. Image source: M. Unal Ozmen / Shutterstock.
1. Describe the evolution of ice cream to adapt to changing consumer tastes? From a production process standpoint, how can Unilever respond quickly to those changes?
Guidance: Ice cream started as a seasonal product targeted at children. It then evolved into a treat for adults that could be consumed everywhere. Premium ice cream brands with higher butterfat content proliferated, and recently, vegan alternatives have become popular. A company’s ability to respond quickly to changes in demand and even anticipate them is flexibility. Unilever does not target a particular market; it tries to cover all markets. As a result, it needs to produce a very broad mix of products that is continuously evolving. At the Unilever plants, ice cream is mass produced. Cream, milk, and sugar are blended together, but dedicated lines with highly automated equipment and customized features are used to produce different products. The pursuit of a broad mix of products therefore requires considerable investments that can only be justified by production in huge volumes to cover the fixed costs.
2. What is Unilever’s distribution strategy? How is it implemented?
Guidance: Unilever’s distribution strategy is to make ice cream ubiquitous. Therefore, Unilever is trying to grow its retail presence from grocery stores and convenience stores to other points of sale (restaurants and cloud kitchens) from which the ice cream can be delivered to people’s houses within 30 minutes. It now has 11,000 pickup points around the world and has partnered with Uber Eats, DoorDash, Grubhub, Just Eat, and Domino’s Pizza to deliver the ice cream.
3. What planning challenges does the company face in 2021?
Guidance: Although vaccines are becoming available, it is unclear how the pandemic will affect consumer behavior in 2021. If lockdowns persist, sales of ice cream tubs will increase or at least remain stable. If, on the other hand, life goes back to normal, sales of single portion products to be consumed on the go will increase. The difficulty of forecasting demand complicates aggregate planning, i.e. setting output levels for product families, and capacity planning. Furthermore, the uncertainty and lack of interaction in the office may limit the scope and effectiveness of strategic planning.