The ice making industry can be lucrative but competitive, here are a few business models to look at and what to potentially avoid.
Before you even enter this industry you need to figure out your business model: anybody can buy an ice maker, plastic bags and an heat sealer and sell ice from their garage. But will this be a viable strategy? Probably not. Here are a few business models to look at:
1. Make square cubes and sell it via a retail channel: shops, garages
2. Make round ice cubes and sell it to pubs and bars or the hospitality industry (hotels)
3. Produce ice flakes and sell it to the medical or packaging industry (e.g. fishing)
4. Produce crushed ice and sell it to cocktail and slush makers
5. Make and sell dry use to be used for preserving food for longer periods of time such as when exporting.
Business Model Analysis
1. Square ice cubes retail business (produce bags of ice and sell it to shops who will in turn sell it to consumers)
Let me first address the elephant in the room, that is often not addressed by suppliers of ice machines: If you are a small business owner thinking of entering the mainstream retail ice business, you need to sit down and think for a moment. You will have well-funded competitors who are vertically integrated: they have their own water purification facilities, industrial ice makers, cold storage facilities, refrigerated vehicles and they own the fridges on the shop floor. To enter this niche will be very hard, unless you have a lot of money, and even then there will be better ways to invest that money than into the retail ice industry. Yes, there is nothing proprietary about your competitors, ice is ice, frozen water, but your competitors have the distribution channel, they have the vehicles on the road and they have the economies of scale to succeed.
- Round ice cubes (used in drinks in pubs and hotel bars)
These are roundish ice cubes, what is also sometimes called “gourmet ice cubes”, it’s not round like a ball it’s more roundish than a cube, but it is crystal clear. Some machines produce an ice cube that is more white like ice than clear like water, this ice block is clear and used in bars. There is an opportunity to enter this market at the lower end like the township market. The high-end bars and hotels often have long standing suppliers and are less open to change suppliers even if you have a better price. You can also look at supplying this kind of ice to events.
- Ice flakes (used to keep things cold, often times in cooler or other types of boxes)
Unlike the two above ice flakes also known as flake ice is not all the same size, the pieces are irregular in size. This type of ice comes in two varieties: chip flake ice and scale flake ice. Chip flake is often used in packaging such as fish and can help preserve the fish freshness and flavour. Ice keeps the chilled fish cold, moist and glossy and prevents the dehydration that could accompany other methods of cooling, such as refrigerated storage without ice. This business you also might be better off looking at the lower end of the market: large hospitals often have what is called “flake laboratory ice makers” while large factories will also often have ice flake machines. What do I mean by lower end here? Informal traders are a good example, if you can deliver ice flakes to a location where there are many traders, they often sell their cooldrinks out of large cooler boxes (some are shaped as cans), then in the morning, you park and they fill up their cooler boxes – for a fee of course – before they start their day. This is a convenient service for them, it’s not like these guys have ice makers at home, park close to where they sell and they can get ice from you. It goes without saying that you will need a bakkie or truck with a refrigerated or insulated body. You would also need to get up very early to start your day. Make the ice (or make it the night before and keep it in bags), fill your bakkie or truck with ice and deliver it (scoop it into their cooler boxes).
- Crushed ice
Your market here is similar to number 2 (round ice cubes), but they use a different technique (machine) to produce the crushed ice.
Getting your business model right is very important in this industry. You would need to find the right one before you start. The manufacturing process is not the problem, getting the clients and distribution is. You need to think outside of the box, all the easy low hanging fruit is already taken. Look at where the various types of ice are used and look for new opportunities. Also advertise in local classifieds such as Gumtree as people use the internet as the yellow pages these days.
Try to enter a niche if you can and a one that consistently needs ice, big events are great but they are few and few between, but a fisheries will need ice on a almost daily basis to keep their fish fresh while on display and in the long run will be better, if you can sign up a few daily users of ice in close proximity you can have a great business.
Image credits: uline, Amazon, cnhima, drinksmeister