 "Ice cream makers turn to fresh milk as powder prices pinch")
Ice cream makers are increasing the procurement of fresh milk. That isn’t likely to impact the availability of milk during the summer, when production traditionally falls as fodder is scarce
Prices of skimmed milk powder (SMP), a key ingredient of ice creams, have soared, hitting ice cream manufacturers hard. Now, many of these companies are now increasing the procurement of fresh milk to cut costs without compromising taste.
While Vadilal has already increased the procurement of fresh milk by about 20 per cent, Havmor, another Gujarat-based ice cream company, expects to raise its fresh milk procurement by a similar quantum. Premium ice cream maker Baskin Robbins said if SMP prices continued to rise, it might have to consider other options.
Earlier, Vadilal required about 100,000 litres of fresh milk a day; now, this has risen about 20 per cent. Compared to the rise in SMP prices, prices of fresh milk have increased 12-13 per cent on a year-on-year basis.
R S Sodhi, managing director, Gujarat Cooperative Milk Marketing Federation, which markets milk and milk products such as ice cream under the Amul brand, said, “We raised prices 10-13 per cent in January, and prices of fresh milk and cream have also increased by that much. In comparison, SMP prices have almost doubled — from about Rs 150 a kg a year ago to Rs 280-290 a kg now.”
SMP is critical for making ice creams, says Pradeep Chona, chairman, Havmor Ice Cream. “One has to put in a certain amount of SMP to get the right flavour and texture. Currently, our SMP consumption is about four tonnes a day. In contrast, we use 46,000-50,000 litres of milk a day.” Havmor manufactures 150,000-200,000 litres of ice cream a day. This year, it expects its volumes to rise 20 per cent. Recently, the company had raised prices seven-eight per cent.
Some companies had bought substantial stocks of SMP, especially during the winter months.
Premium ice cream maker Baskin Robbins continues to use SMP. “We have to follow international standards and specifications and, therefore, cannot alter our ingredients at wish. However, SMP prices have shot through the roof and if prices increase any further, we might have to look at other options,” said Sanjay Coutinho, chief executive officer, Graviss Foods Pvt Ltd (master licensee of Baskin Robbins Ice creams).
While ice cream makers are increasing the procurement of fresh milk, this isn’t likely to impact the availability of milk during the summer, when production traditionally falls, as fodder is scarce. Kuldeep Saluja, managing director, Sterling Agro Industries, a Delhi-based dairy, said, “Production of SMP is already down 30 per cent, while liquid milk production is down 20 per cent. However, all ice cream together do not account for more than five per cent of milk and SMP consumption. Therefore, a slight increase in their demand will not have any substantial impact.”
RG Chandramogan, chairman and managing director of Hatsun Agro, agreed. He said all dairies that manufactured ice cream already used fresh milk for their products. “It is only non-dairy players who use SMP, and a slight increase in demand for liquid milk from them will not impact the overall dynamics,” he said.
Milk accounts for about 20 per cent of the input cost for ice cream. While sugar accounts for two-three per cent and fat 18 per cent, the rest is accounted for by cocoa, fruits, nuts, vanilla, etc.
Prices of skimmed milk powder (SMP), a key ingredient of ice creams, have soared, hitting ice cream manufacturers hard. Now, many of these companies are now increasing the procurement of fresh milk to cut costs without compromising taste.
While Vadilal has already increased the procurement of fresh milk by about 20 per cent, Havmor, another Gujarat-based ice cream company, expects to raise its fresh milk procurement by a similar quantum. Premium ice cream maker Baskin Robbins said if SMP prices continued to rise, it might have to consider other options.
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Though overall input costs have increased 20-25 per cent, these companies have been able to pass on only a part of this rise to customers, and this is taking a toll on their margins. Rajesh Gandhi, managing director of Vadilal Industries, said, “We raised prices seven-nine per cent in January this year. Input costs, however, have increased 20-25 per cent. Of this, a large proportion is due to; on a year-on-year basis, SMP prices have risen 80-90 per cent.”
Earlier, Vadilal required about 100,000 litres of fresh milk a day; now, this has risen about 20 per cent. Compared to the rise in SMP prices, prices of fresh milk have increased 12-13 per cent on a year-on-year basis.
R S Sodhi, managing director, Gujarat Cooperative Milk Marketing Federation, which markets milk and milk products such as ice cream under the Amul brand, said, “We raised prices 10-13 per cent in January, and prices of fresh milk and cream have also increased by that much. In comparison, SMP prices have almost doubled — from about Rs 150 a kg a year ago to Rs 280-290 a kg now.”
SMP is critical for making ice creams, says Pradeep Chona, chairman, Havmor Ice Cream. “One has to put in a certain amount of SMP to get the right flavour and texture. Currently, our SMP consumption is about four tonnes a day. In contrast, we use 46,000-50,000 litres of milk a day.” Havmor manufactures 150,000-200,000 litres of ice cream a day. This year, it expects its volumes to rise 20 per cent. Recently, the company had raised prices seven-eight per cent.
Some companies had bought substantial stocks of SMP, especially during the winter months.
Premium ice cream maker Baskin Robbins continues to use SMP. “We have to follow international standards and specifications and, therefore, cannot alter our ingredients at wish. However, SMP prices have shot through the roof and if prices increase any further, we might have to look at other options,” said Sanjay Coutinho, chief executive officer, Graviss Foods Pvt Ltd (master licensee of Baskin Robbins Ice creams).
While ice cream makers are increasing the procurement of fresh milk, this isn’t likely to impact the availability of milk during the summer, when production traditionally falls, as fodder is scarce. Kuldeep Saluja, managing director, Sterling Agro Industries, a Delhi-based dairy, said, “Production of SMP is already down 30 per cent, while liquid milk production is down 20 per cent. However, all ice cream together do not account for more than five per cent of milk and SMP consumption. Therefore, a slight increase in their demand will not have any substantial impact.”
RG Chandramogan, chairman and managing director of Hatsun Agro, agreed. He said all dairies that manufactured ice cream already used fresh milk for their products. “It is only non-dairy players who use SMP, and a slight increase in demand for liquid milk from them will not impact the overall dynamics,” he said.
Milk accounts for about 20 per cent of the input cost for ice cream. While sugar accounts for two-three per cent and fat 18 per cent, the rest is accounted for by cocoa, fruits, nuts, vanilla, etc.