 "If power situation improves, ice cream sales can grow at 25%: Vadilal")
With the onset of summer, ice creams are back in focus. Makers like Vadilal Industries, that enjoy an all-India market share of 15-20%, feel that while the entry-level products help to bring in new customers, the growth comes from the 'value' segment or slightly premium ice creams. Vadilal itself is eying an 18-20% growth rate over the next few years to touch a turnover of Rs 1,000 crore in the next three years or so. Talking to Sohini Das, Vadilal Industries managing director Rajesh Gandhi says that if the power situation of the country improves, retail sales of ice creams could clock 25% growth rate for the next few years. Edited excerpts.
What is the focus category in ice-creams, mass market products or the premium ones?
There is focus on the volume category, as it makes up most of the market. Of the overall Rs 7,000-crore ice cream market, mass market products comprise nearly 90%, and the remaining 10% only are premium products.
As a company, we have presence across all categories (Ice Trooper range for kids, Bada Bite for the Youth, Gourmet and Artisan range for premium customers), but we would obviously focus on the mass category as bulk of the market lies there, starting from Rs 5 products to around Rs 35-40 products.
While the growth rate in the premium segment is higher, the size is small. We have actually started focussing on our Rs 5 products range, as today a cup of tea by the roadside stall is more expensive. We have added new customers through such products, which we launched around two years back.
How much does the parlours business contribute to overall sales? Any plans of expansion?
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Happinezz Parlours account for only about 2-3% of our overall business. We are present in 16 states, but Happiness is not present in all states, and all locations. But when it comes to these Rs 5 products, they are available across 60,000 outlets in India. We produce more than 300 SKUs, and a retail outlet would trypically not store more than 30-40 SKUs, depending on what is popular. We as such haven't launched new territory in the last ten years.
The Vadilal family separation means that the Southern market is not there with us, which is handled by my elder brother. We are there in Cooch Behar, Arunachal Pradesh and Jammu and Kashmir as well. We are thus present across the spectrum, and no new territory expansion is planned. We will consolidate in areas we are present in.
What is the overall growth in demand in the ice cream market? What are your plans as a company?
The ice cream market is clocking an average growth rate of 15-17% at the moment, and is pegged to be around Rs 4,000-5,000 crore. Considering consumer prices, the market size would be around Rs 7,000 crore.
If the power situation in the country improves, be it in terms of power availability where it has not yet reached, or in terms of longer periods of availability, we believe the retail sales can grow at 25% rate for the next few years. However, as such the cold chain infrastructure has improved in the last few years, thus reducing damages for players like us.
We have expanded our production capacity to 375,000 litres per day (lpd) at two plants by investing Rs 150 crore in the past few years from a 200,000 lpd capacity. Our Ahmedabad facility with 210,000 lpd capacity is the largest such facility in India at a single location.
We are eying an 18-20% growth for the next five years. It means that we would touch a turnover of Rs 1,000 crore in the next three years or so from a current Rs 560 crore.