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Consulting Report
____________________________________________________________________________

April 10, 2018

Sweet Tooth Consulting

Is proud to partner with

BYU Dining Services

&

BYU Creamery
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Table of Contents

Title Page 1

Table of Contents 2

BYU Dining Services Letter 3

Background and Problem 4

Purpose and Methodology 4

Analysis 5
Thailand 5
Indonesia 7
Comparison 9

Conclusions and Recommendations 11

Works Cited 1​3
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Sweet Tooth Consulting
B.H.B.S.B. Associates
583 N 750 E
Provo, UT 84602

April 10, 2018

BYU Dining Services

180 USB, Brigham Young University
Provo, UT 84602
Telephone: (801) 422-2571
Fax: (801) 422-0715

Dear BYU Dining Services,

Sweet Tooth Consulting is proud to partner with BYU Dining Services and BYU Creamery in
their upcoming expansion into foreign markets. We are grateful to have been chosen as BYU
Creamery’s consultants of choice. We very much appreciate the opportunity to have worked with
you and hope you will find our recommendations both satisfactory and helpful as you best decide
how to expand into Southeast Asia.

As will be explained in the pages that follow, we analyzed and evaluated market conditions,
trends, competitors, consumer preferences, and other economic factors. Our analysis was data
driven and thorough. Most notably, we compared past economic forecasts to actual results and
analyzed the causes of any differences. We evaluated the validity of current forecasts over a
five-year period, trying to determine the speed of BYU Creamery’s international expansion. We
discovered consumer preferences regarding ice cream and frozen dairy flavors and have included
our findings in the following report.

We sincerely hope you will find our analysis useful in facilitating your decision making. We are
more than happy to provide additional assistance and/or explanations regarding our report.
Please do not hesitate to contact us with any questions you may have.

As always, thanks for choosing Sweet Tooth Consulting!

Best,

Joshua Burr 
 

Joshua Burr, CEO

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Background and Problem

The Southeast Asian market is marginally below average in dairy consumption per capita;
however, forecasting shows that the market will rise by 3% in upcoming years. BYU Creamery,
hoping to expand into Southeast Asia, is considering and comparing Indonesia and
Thailand—two of the highest dairy consumers in the Southeast Asia region.

BYU Creamery has been eyeing the dairy market of Southeast Asia for more than three years,
waiting for the right time to capitalize and flourish in a foreign market. BYU Creamery,
however, is a localized brand in Provo, Utah. Many of the challenges with expanding into a new
foreign market will be with brand recognition and awareness as well as adapting flavors and taste
to local consumers in Southeast Asia.

Asia has proven to be one of the hardest markets for American businesses to break into. Many
large companies such as Best Buy, eBay, Walmart, Taco Bell, and Wendy’s have struggled in
various areas in the Asia market due to the many differences in culture, people, national customs,
and consumer preferences.

In order to ensure that BYU Creamery meshes and succeeds in this challenging international
market, we have been hired to 1) analyze the market focusing on Thailand and Indonesia and 2)
determine where the BYU Creamery brand will be most accepted and have the highest chance
for success.

Purpose and Methodology

Through extensive exploration and research in Southeast Asian dairy markets, we are able to
make the most accurate recommendations possible to BYU Creamery with regard to their desires
to expand into this region of the world.

We feel the most effective way of conducting research regarding new markets is to spend time in
those markets. Our purpose in doing this, though a bit more expensive approach, is to allow us to
base our recommendations on real and current market trends, consumer preferences, and
economic stability.

As in any consulting project we undertake, we have pursued all necessary and reasonable steps to
ensure and support our findings with professional, data-backed research. We subscribe to the
anonymous statement “In God we trust—all others bring data.” With regard to this project, we
have earnestly and thoroughly pursued any and all data and research sources, both primary and
secondary.
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Although secondary research can be cited and rehearsed (as shown below) to present necessary
facts and important information, our recommendations are based on primary research we have
conducted. Our methods included the following:

● Time spent in region and country analyzing markets first hand

● Witnessing and recording real transactions in stores, both wholesale and retail, in country
● Accessing transaction history from stores willing to participate
● Interviews with government and economic experts in each country
● Gathering of information through interviews from suppliers and manufacturers already in
the market
● Preparation of studies while in country
● Extensive, face-to-face consumer research conducted through written and verbal surveys,
interviews, and other empirical tests
● Six months living time spent in the region

In the course of this research, we have gathered, produced, and created the most reliable,
accurate, and current report using data to justify and guide BYU Creamery expansion into
Southeast Asia.

Analysis
The following analysis compares the markets of Thailand and Indonesia to determine which one
is better suited for BYU Creamery to enter.

Thailand
We found the overall attractiveness of Thailand as a Creamery market to be good, but not ideal.
Ice cream and frozen desserts registered slightly slower current retail value growth in 2017 than
in 2016. Consumers’ rising health consciousness limited the overall growth potential of ice
cream and frozen desserts, particularly in light of the high fat content. Thailand has undertaken
major government sanctions against high fat and processed food from the United States and
China. However, the effect was not highly pronounced as a large majority, nearly 76% of
consumers in our survey, still turned to ice cream and frozen desserts due to the tropical climate.

Our analysis showed that single-serve dairy ice cream saw the highest retail value growth in
2017, coming in at 9%. This is due to the balancing interests of health-conscious consumers
wanting to cool down with a fresh dessert such as ice cream but with controlled portions. The
trend toward greater urbanization in Thailand has increased the number of small households that
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generally prefer small pack sizes such as single portion dairy ice cream. In addition, most Thai
customers prefer ice cream on a stick to ice cream in a cone.

As of December 2017, chocolate, chocolate chip, and strawberry remain the top three flavors in
ice cream and frozen desserts in Thailand.

Frozen desserts have seen fairly consistent growth since 2003. Figure 1 below depicts this
growth from 2003–2017, with the five-year forecast included at the right.

Retail Value RSP - THB million - Current - 2003–2022

Figure 1. Sales of Frozen Desserts in Thailand

Similarly, the overall growth rate of both ice cream and frozen desserts from 2003–2017, with a
five-year forecast, is depicted in Figure 2 below.
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Percent Y-O-Y Growth 2003–2022

Figure 2. Growth Rate of Ice Cream and Frozen Desserts in Thailand

Of particular interest are the two major drops in growth: one during the global recession of
2008–2010 and the other in 2014. We feel the risks of a global recession are known and planned
for. However, the decline in 2014 concerns us; such a drop in the ice cream and frozen desserts
growth rate appears unique to Thailand and raises flags about its viability as a potential market
for BYU Creamery to enter.

Currently, Unilever Thai Holding Co., Ltd, is the market leader in Thailand, controlling 60% of
the retail value. This market dominance has been tempered, however, by competition from other
key players such as Glico Frozen (Thailand) Co., Ltd; Nestlé (Thai) Ltd; and F&N Dairies
(Thailand) Ltd. In 2016, Glico launched a variety of innovative products that enthralled
consumers including, for example, a parfait ice cream called Panapp that has captured some of
the market share previously held by Unilever.

Given consumers’ rising health consciousness, the retail value of frozen desserts is set to
underperform according to the industry’s compound annual growth rate (CAGR). We expect
Thailand to always retain a demand for frozen desserts, but at a questionable growth rate.

Indonesia
We found Indonesia to be a very attractive place for BYU Creamery to consider. Thanks to
stable demand, wide distribution, and new product development in 2017, the ice cream and
frozen dessert industry experienced nearly 16% growth. Because Indonesia is on the equator, hot
and humid weather has significantly boosted ice cream sales. The rapid expansion of
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convenience stores has further contributed to the ability of ice cream producers to sell their
products.

Similar to Thailand, Indonesia has seen an increase in the number of health-conscious

individuals who prefer lower fat ice cream, though the effect of this on ice cream producers was
much more moderate compared to Thailand. Single-portion dairy-based ice cream also had the
highest growth in 2017 as a result of impulse purchases by Indonesian customers. With overall
growth figures above 15%, this represents more than double the rate experienced in Thailand.

Indonesian consumers prefer slightly different flavors and styles as compared with Thailand. For
example, the four favorite flavors of ice cream in 2017 in Thailand were chocolate, vanilla,
strawberry, and OREO®. Additionally, Indonesian consumers opt more often for ice cream on a
stick than in a cone. In fact, as much as 69% of impulse ice cream purchases are in stick format.
Our research revealed this trend results from several factors: 1) sticks are cheaper than cones to
produce, 2) stick ice cream is easier to design in playful colors and patterns, making it more
eye-catching, and 3) Indonesia has a very large base of children who tend to prefer stick ice
cream.

Overall ice cream sales in Indonesia have been lower than sales in Thailand. However, the
potential for growth in Indonesia is far greater—nearly double—than that of Thailand. Figure 3
below shows the level of ice cream sales from 2003–2017, with the five-year forecast at the
right.

Retail Value RSP - IDR billion - Current - 2003–2022

Figure 3. Sales of Ice Cream in Indonesia
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While the growth in ice cream has been somewhat variable in the last 15 years, recent growth has
averaged nearly 17% per year. Figure 4 below depicts this growth in ice cream sales.

% Y-O-Y Growth 2003–2022

Figure 4. Growth Rate of Ice Cream and Frozen Desserts in Indonesia

Worth noting in the graph above is that the three lowest years, 2008–2010, were during the peak
of the global recession. At the very worst of the recession, ice cream growth rates never fell
below 5%. Removing these outlying years from the data, ice cream growth has remained
consistently on an upward trajectory.

A significant cause of the market growth in ice cream and frozen desserts is the rapid expansion
of Indonesian convenience stores such as Indomaret and Alfamart. These stores have focused at
a corporate level on rural areas where a low household penetration of home freezers exists.

Competition will certainly be a factor for BYU Creamery to consider as it expands into
Southeast Asia. Unilever Indonesia remains the dominant market power in Indonesia holding
about 67% of the market share of desserts. The ice cream industry also faces competition from
snacks and other dairy products. For example, the increase in health consciousness has caused
yogurt and flavored skim/low-fat milk to become a popular substitute to ice cream and other
frozen desserts that are viewed as having a higher fat and sugar content.

Comparison
Comparing Thailand and Indonesia to each other, we observed that many similarities exist. Both
countries have a consistent demand for ice cream and frozen desserts due to the hot, humid
climates found in each country. Both countries have shown an uptick in the number of
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health-conscious consumers, which impact Thailand’s ice cream sales to a greater extent than
Indonesia’s. Both prefer single-serve portions, preferably on a stick instead of a cone.

While similar favorite flavors exist between the two countries (namely, chocolate and
strawberry), Thailand also prefers chocolate chip while Indonesia also prefers vanilla and
OREO®. Both countries have shown a willingness to try new and interesting flavors. We believe
BYU Creamery will do well to focus on traditional flavors such as chocolate, vanilla, and
strawberry, but also experiment with some of its signature flavors that have fared well in Provo,
Utah. After interviewing hundreds of Indonesian consumers, four BYU Creamery flavors stood
out to them: Graham Canyon, Cookie Dough, Roasted Almond Fudge, and Mint Brownie.

We further analyzed the national ice cream profits for both Thailand and Indonesia. In U.S.
dollars, Thailand’s ice cream industry brought in $498 million in 2017 compared with
Indonesia’s $474 million. While Thailand’s ice cream industry earned $24 million more than
Indonesia’s, Indonesia’s growth rates solidly doubled Thailand’s—15.7% in Indonesia compared
to 7.4% in Thailand. This number gives us great confidence in BYU Creamery’s ability to
achieve higher profits by choosing to expand into Indonesia.

Further, we compared both Thailand’s and Indonesia’s population growth rates compared with
Asian Pacific countries and the world. Figure 5 provides Thailand’s growth index, while Figure 6
shows Indonesia’s growth index.

Figure 5. Thailand’s Growth Index 2001–2030

We were interested to find that Thailand’s population growth rate (in blue, above), has
significantly decreased in recent years and is forecasted to be nearly completely flat by 2030.
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Many economists are concerned about the implications this will have on Thailand’s economic
outlook.

Figure 6. Indonesia’s Growth Index 2001–2030

We were also interested to find that Indonesia (in blue, above) is actually experiencing higher
population growth rates than both Asia Pacific and the world. In fact, Indonesia has one of the
fastest growing populations in the world. Targeting the younger generation of the Indonesian
people could be a way for BYU Creamery to gain an excellent foothold on the market. The most
influential marketing techniques in Indonesia have been television commercials and social media
including YouTube, Instagram, Twitter, and Facebook.

Conclusions and Recommendations

As stated above, expanding into Indonesia is most likely to produce profit margins for BYU
Creamery which far exceed the cost. BYU Creamery was visited last year alone an estimated
50,000 times by people from Southeast Asia. This astonishing number is 32% of the total people
to visit the store in the 2017 financial year. Their percentage of total contributed revenue (CR)
was also 46%, leading to a CR ratio of 1.44. A shocking 22,500 of those from Southeast Asia
were from Indonesia. This is 45% of all people from Southeast Asia. This statistic is 20% greater
than the runner-up, Cambodia. Thailand, for comparison, made up just 13% of those visitors.

Based on the analysis of ice cream sales in both Thailand and Indonesia, BYU Creamery is
uniquely designed to offer a valid consumer package to the people of Indonesia. We believe
BYU Creamery should focus its ice cream flavors on the traditional chocolate, vanilla, and
strawberry, while launching new BYU favorites such as Graham Canyon, Cookie Dough,
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Roasted Almond Fudge, and Mint Brownie. The American mix with those traditional flavors
should produce expected margins of 32% before we factor in mixing Cadbury® chocolate with
OREO®.

Our analysis reveals that by targeting convenience stores in Indonesia, BYU Creamery can
penetrate more than 20% of the market share by 2022. The chain reaction caused by even these
modest projections of growth will increase BYU Creamery profits by approximately $37 million
over the next four years. Additionally, establishing a brand in Indonesia is the first step in
spreading BYU Creamery market share throughout all of Asia. We recommend placing
single-serve plastic cups with small logoed spoons in convenience stores across Indonesia. We
also recommend that each serving of ice cream within store locations be on a stick rather than
placed within a cone. This will enable BYU Creamery to push out Nestlé ice cream and create
the above mentioned 20% of market space. In all, Indonesia provides a sweet market share for
BYU Creamery expansion.
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Works Cited
International Business Degree Guide. ​10 Successful American Businesses That Have Failed
Overseas.​ April 7, 2018. Web. https://www.internationalbusinessguide.org/10-successful-
american-businesses-that-have-failed-overseas/

Southeast Asia Globe. ​Got milk? Demand for dairy soars in Southeast Asia.​ April 7, 2018. Web.
http://sea-globe.com/got-milk-demand-dairy-soars-southeast-asia/