Ice Lyli
...Churchill
To survive in Russia’s ice cream industry during the 11 years since the collapse of the former
Soviet Union was no small feat (see Exhibits 1 and 2). To be successful in these turbulent times was
nothing short of amazing to industry observers. In 2002, Ice-Fili, a midsized Russian company with
more than $25 million in sales, was Russia’s top ice cream producer. Surprisingly, it had outlasted
several well-known international companies such as Ben & Jerry’s, which exited the Russian market
in 1997, and Unilever, which left in 2001. Ice-Fili had not only successfully transitioned from the tight
controls of the Soviet regime to the infant Russian open-market economy in 1992, but it had also
successfully navigated its way through the difficult times of Russia’s 1998 financial crisis.
Ice-Fili was fighting to maintain its market share leadership in the increasingly competitive
Russian ice cream market, which had decreased over the past few years to about a half-billion dollars
in sales. Nestlé, which advertised heavily, was Ice-Fili’s fiercest competitor. While most ice cream
producers were left to fight in an already saturated ice cream kiosk system, Baskin & Robbins and
Haagen-Dazs1 had positioned themselves as premium ice cream producers, distributing through
franchised restaurant and café networks. At the other end of the competitive spectrum, the small
regional ice cream producers, which were believed to have lower production costs than Ice-Fili and
other Moscow-based producers, were now making strong inroads in the major metropolitan markets.
Anatoliy Shamanov, Ice-Fili’s CEO, wrestled with some fundamental strategic questions: Could
Ice-Fili maintain its market lead over Nestlé? Should Ice-Fili invest in its own chain of cafés in order
to find new retail avenues for its ice cream products? How could Ice-Fili compete with regional...
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