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Hot and Cold of Ice Cream Market
Economy, Business And Markets

Hot and Cold of Ice Cream Market

Imports are almost nonexistent in Iran’s ice cream market, due mainly to the availability of domestic products in a variety of flavors and forms, suggests a report by Persian economic daily Forsat-e Emruz.  
Iranians first became familiar with ice cream during the rule of Mozaffareddin Shah of Qajar (king of Persia from 1896 to 1907) when ice cream found its way from the royal kitchen to the local markets.

 History of Ice Cream in Iran
Nassereddin Shah of Qajar dynasty (reigning from 1848 to 1896) first fell in love with ice cream when he tried it in one of his trips to France. But all his attempts to bring ice cream to Iran failed. It was only during the rule of his successor, Mozaffareddin Shah, that ice cream became a regular chilled delicacy at the palace.
The recipe for traditional Iranian ice cream, made with milk, eggs, sugar, rose water, saffron, vanilla and pistachio, was apparently created by Akbar Mashhadi Malayeri who worked in the king’s palace.
After he was fired from the palace, he used his small savings to set up a small ice cream parlor near Rah-Ahan (railroad) square in southern Tehran. Since refrigerators were not developed, Malayeri used the snow saved in the cool-keeping underground chambers or taken from snowfall that remained at the top of mountains around Tehran to make ice cream.
Ice cream quickly gained popularity among Iranians. Today, a number of large dairy factories and many small-sized suppliers produce a wide variety of products both in single portion and take-home ice cream.
Kaleh, Mihan, Pak and Domino are some of the major domestic producers. These suppliers have succeeded in increasing their products’ diversity over the past years, having established a strong distribution network that delivers products even to remote parts of the country. They also enjoy good visibility in stores in the form of in-store activities such as posters, sunshields and freezers, which persuade many consumers to try their products.

 Ice Cream Market  
According to Reza Bakeri, the secretary of Iranian Dairy Industries Union, about 350,000 tons of ice cream were produced in the country during the past Iranian year (ended March 20), of which about 40,000 tons were exported, valued at $81.9 million.
This means that nearly 90% of total ice cream production was sold in the domestic market. Dividing the figure by Iran’s population of nearly 80 million indicates that per capita ice cream consumption in Iran is about 3.5 kilograms.
Comparing last year’s export data with its preceding year indicates that ice cream exports reduced by 11% in terms of weight, while dropping more than 72% in terms of value.  Ice cream exports stood at 45,100 tons, valued at $141 million during the Iranian year that ended March 20, 2014. Bakeri noted that the sharp decline in revenues generated from ice cream exports is due to reduced prices.
According to data released by Iran Customs Administration, the price of Iranian ice cream in the export markets has reduced from $3.1 per kilogram in 2013 to $2 per kilogram, leading to lower hard currency income for the country.
According to the official, ice cream is one of the few products not imported by the country, except for an insignificant quantity in border cities.

 Challenges
Iraq is currently the major buyer of Iranian ice cream, while exports to other target markets such as Kuwait, Saudi Arabia, Qatar, Bahrain and the United Arab Emirates have declined drastically due to various reasons, points out the manager of an ice cream factory, Farhad Azmoodeh.
“As ice cream needs to be exported using specially designed freezer trucks, distribution costs are relatively high. Moreover, customs delays and holidays pose a challenge to delivery and export of ice cream as it is a highly perishable commodity,” he noted.
Advancements in transportation techniques and extension of facilities can help improve the export market
While ice cream is not imported, ice cream making machines, raw material such as flavors and stabilizers, and even ice cream sticks are mostly imported. While some domestic factories have tried producing ice cream machines and equipment in recent years, their products cannot rival their foreign counterparts in terms of quality and cost competitiveness.
Therefore, the domestic ice cream sector is not yet self-sufficient and relies on imports for manufacturing. This causes fluctuations in price and productivity of domestic industries, leading to lower competitiveness in the global market.
Analysts predict that the ice cream market will continue to grow in the coming years, as the sector is not hit by recessions. While sales are higher during the hot season ice cream is also consumed in winters, particularly in coffee shops. The hot weather of Iran and its relatively young population are other reasons for the growing demand.

 

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