With the summer season approaching fast, consumers in Bulgaria become hungry for the sweet summer refreshment – the ice cream. In response, producers try to answer to their expectations by offering more products, with more flavors and in more retail locations. However, the market is still unstable after the shock of the global financial crisis.

According to Euromonitor International’s research, the market growth for ice cream in Bulgaria showed weak performance in 2008 and 2009, in line with all the other packaged foods sectors, affected by the crisis. The year 2010 was more favorable for the sector, however bad weather conditions in the beginning of the summer and the late start of the touristic season prevented full scale recovery. The total volume sales of ice creams in Bulgaria grew by 2.8% in 2010.

The Bulgarian market was not isolated from the rest of the countries in the Balkan region. For example, in Romania the slowdown of ice cream sales was felt even stronger, mainly because of the overall worse economic conditions in the country and the increase of the VAT form 19% to 24% in the summer of 2010. In Serbia, the overall ice cream sales declined significantly in volume terms with the hit of the crisis in 2008 and the sharp decrease of purchasing power of the local consumers. Still, the market managed to achieve diffident growth in 2010. Similar is the situation in Macedonia. Because of the larger number of tourists, the ice cream market declined only marginally in 2008, and recovered completely in 2009. The ice cream market grew by further 2%in volume terms in 2010.

The market growth in value terms was more confident. The main reason for this is that all major producers and distributors of ice cream in Bulgaria index their unit prices each year in the beginning of the new summer season.  Despite the relatively low overall packaged food inflation, the Bulgarian producers increased ice cream prices by average of 2% in 2010. The unit prices are expected to record further growth in 2011, following the overall commodities unit prices increase.

The largest share of ice cream sold in Bulgaria in 2010 holds the take home ice cream sector with 49% volume share, followed by impulse ice creams with 42% and artisanal ice creams with 9%. In terms of packaging, almost half of all value sales are for ice creams on sticks, followed by the ice creams in cones, and the other formats such as sandwiches, cups, etc. The most popular flavors in turn are vanilla and chocolate, followed by flavors typical for the chocolate confectionery such as toffee and caramel.

Nestle Ice cream remains the undisputed market leader in Bulgaria. The company was steadily losing position over the recent years with the growing popularity of its competitors, but its marketing efforts and the new product launches in 2010 managed to retain its position as a top market player. Nestle was followed by a group of domestic producers, such as Darko, Fenix, Izida, Deni and Jimmy’s.  Strong among the artisanal market distributors are Raffy and Gelateria Parmalat.

An emerging market player is Unilever with its brand line Algida. Unilever recently acquired the Greek ice cream manufacturer Evga, which gives them a good starting point for increasing their sales across the Balkan markets.

There are several major trends that modeled the development of the Bulgarian ice cream market in 2010. The main trend, as in many other countries, is the seasonal character of the product. Ice cream sales are closely related to the summer weather and the touristic season in the country. In 2010, the beginning of the summer was rainy and the touristic season started later, which drove volume sales to decline. However with the strong end of the season and the long warm autumn the sales managed to recover. Couple of ice cream producers also attempted to escape from the image of ice cream as a seasonal product. For example, Nestle Bulgaria launched very successful winter variant of its Familia take home ice creams, called Familia Christmas Pie. The launch was supported by wide TV ads campaign, linking the ice cream as part of the winter holidays.

The economic crisis undoubtedly still had effect over the ice cream sales in 2010 despite the slow recovery of the Bulgarian market. Most consumers restructured their budgets and permanently oriented towards more economy products. This brought stronger growth of the economy take home ice creams in larger packaging, while the more expensive impulse products and the premium segment of the artisanal ice creams suffered declines. This process is expected to speed up further in 2011 with the growth of the global commodities prices.

The third major factor impacting the sales in 2010 was the innovations in terms of flavors, launched by the leading producers. Although Vanilla and Chocolate remained the most popular flavors on the Bulgarian market, the growth of the sales was driven by new exotic flavor additions like the Magnum Mojito, launched by Nestle, or the Iceline Biscotino by Darko. Consumers however search not only for new flavors, but also products that are healthier (although there is still little or no offer of organic products in the ice cream segment). Products with reduced fat also managed to attract heath concerned consumers.

The future of the ice cream industry in Bulgaria is brighter than its current state. The market is expected to grow annually by average of 3% in volume terms over the coming five years. The main driver for this growth will remain the take home ice creams, which will increase in popularity because of the growing offer in modern retail channels, especially discounters, hypermarkets and supermarkets.  In short term the impulse ice cream will also grow strong. The main reason is that with the unstable situation in the Middle East and Africa, many tourists are expected to change their vacation plans and visit Bulgaria. As the result, the tourist seasons in 2011 and 2012 are expected to be very successful, and consequently bring growth in the ice cream sales.

Ivan Uzunov, Senior Research Analyst,

Euromonitor International