Tuesday, October 8, 2013

Did Arctic Glacier buy Polar Ice, the same company that sued Arctic in 2007?

For anyone who has ever been really bored and researched the wonderful world of bagged ice, they likely ran into one of the many articles talking about Polar Ice suing "Arctic [Glacier] for breaching the Competition Act and unlawfully interfering with Polar Ice’s existing and potential clients."  In the Edmonton ice industry it was well known that Polar Ice and Arctic Glacier did not get along which is why it is somewhat of a surprise to hear Arctic Glacier purchasing Polar Ice.

Arctic Glaciers new ice plant.
No more Polar Ice.
I say somewhat of a surprise because much has changed since 2007.  Antitrust issues in 2009 forced Arctic to change the way Arctic did business, along with costing the company a small fortune, leading to bankruptcy protection.  This resulted in Arctic Glacier, a once proud Canadian company donning stars and stripes after they got bought out from bankruptcy by an American investment firm H.I.G. Capital in 2012.  Even though things began to look up for the beleaguered company, life got worse in Arctic's Edmonton plant which literally went up with smoke right before the summer rush in 2013, from an ammonia leak.  Polar Ice, a small ice company during the same time had been trying to sell as the owner Jerry Antoniuk wanted to get out of the ice industry.  Thus even though Polar Ice and Arctic Glacier were bitter enemies in 2007, circumstance had created a scenario by which Arctic could purchase Polar.

If you are wondering why Arctic didn't simply rebuild, the answer is time and money.  Even though they got a credit-line for a $150 million dollars, years of not having money while facing anti-trust issues likely had left many of the plants needing upgrades.  Logically that money would of been earmarked for Arctic's larger US markets which dwarf the Canadian ones.  Furthermore, building an ice plant from scratch does not happen quickly.  At Columbia Ice, through the ice maker's grapevine, we heard time estimates from many months to 2 years to build another 100 ton plant.  Buying Polar Ice was really Arctic's only option in Edmonton if they wanted to stop shipping ice from across the country, killing profits and start producing packaged ice locally.  Even then the purchase of Polar is more of a stop gap than a long term solution as Arctic still needs to make up approximately 60 tons of production.  Likely in the future they will have to build another plant, but until then they can make some ice here in Edmonton.

What does this mean for consumers in Edmonton and Alberta?  It means higher prices across the board as there is one less ice company in the Edmonton market, less ice being made locally along with an increase of demand from places like Fort McMurray and Fort Saskatchewan.  It is just simple supply and demand.  The supply of ice drops, the demand rises causing the price of ice to go up.  For larger companies who have price locked in this likely won't be an issue for a few years.  However for people who are throwing smaller parties, having weddings or even the non-big brand liquor stores things could get a lot more expensive as options and supply for bagged ice dwindle.  Expect to pay more for packaged ice in Edmonton next summer.  Until then as we say in the ice business.  Stay cool.

*Update:  It is 2015 now, two years since this article was written.  Since then Arctic Glacier purchased Western Ice which had large ice factories in Calgary and British Columbia.  As predicted the Polar solution was short lived as Arctic Glacier gutted Polar's old plant, using it instead to house ice shipped from Calgary much like a distributor would.

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does local matter to liquor stores in Edmonton?
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