Teenagers, young couples and tiny tots along with their parents flock to an ice cream parlour in a leafy Mumbai neighbourhood late into the evening. Nothing remarkable about the event but for one small thing. Down the same street is another parlour selling ice creams. But apart from the bored store attendants, there is just one solitary customer in sight, vehemently scrolling down his smartphone while dipping into his bowl of vanilla ice cream from time to time.
While the near-empty parlour, belonging to national ice cream brand, sells the usual flavours, the one drawing in the crowds is a local unit which has an array of flavours such as watermelon and sitaphal with nuggets of the seasonal fruits embedded in its ice cream tubs. This brand —Natural ice creams, to cut to the chase —sans preservatives and stabilisers, sells at a premium over the ones available at the next parlour.
The knack for such organic fare has caught the national brands’ attention too. Going organic — and, by corollary, premium — is one of the ways ice cream brands are looking to differentiate their offerings this summer, a season that sees 90 per cent of their yearly sales.
The Rs 1,500-crore branded ice cream market (60 per cent of the Rs 2,500 crore market) has been evolving beyond the impulse purchases of stick, cups and cones. Excitement has come in the form of ice cream parlours on the one hand, and take-home packs of exotic flavours, on the other. But the per capita consumption of ice cream in Indian still lags many other countries, including its neighbours. On an average India consumes 0.3 litre per individual per annum compared to 0.6 litres in Pakistan and 26 litres in the US. The most promising markets for growth, analysts say, are in emerging economies such as China and Brazil, where annual sales are soaring above 8 per cent. In contrast, the demand in India remains seasonal, the supply chain patchy and the purchases largely impulse-driven.
Compare this to the market for coffee chains, which stands at Rs 1,000 crore currently, or the chocolates and confectionery market that is valued at Rs 4,500-crore and the carbonated soft drinks market in India is estimated at Rs 13,000 crore. While economists say discretionary spending is typically a good measure of where the economy is headed, the fact remains even before the economy softened, ice creams were no easy business to play in. While companies put the blame at the doors of the product itself — it has a short shelf life and demands an expensive cold chain-to this day ice creams are seen as pure indulgence and with little product differentiation there’s a huge question mark over brand loyalty.
Cold comfort
But the recent moves by ice cream companies suggest they see a sweeter future. For one, segmenting their offerings could be one way for these brands to develop a better margin model. Amul, which has the largest share of the market among national players (25 per cent of Rs 1,500 crore in 2011-12, according to industry analysts), is trying on new formats this season. It has readied a frozen yoghurt product which will ride its ice cream network to retail at Rs 90 for 500 ml. RS Sodhi, managing director, Gujarat Cooperative Milk Marketing Federation (GCMMF), which owns the Amul brand, says, “It is a probiotic desert with fruit nuggets and will be positioned as a healthier option because of its low fat content.”
Amul is also going exotic offering variants such as tubs of Morroccan Dry Fruit. It will have a cone with a chocolate top with sauces down its middle, much like Hindustan Unilever’s (HUL) Kwality Wall’s Cornetto. Mother Dairy and Vadilal too have lined up their natural products. Vadilal which is neck and neck with HUL in some markets had launched a premium ice-cream stick, investing in a technology that made for a smoother and creamier texture of the product. Its Gourmet tubs are its high-end offering with flavours such as Belgian Chocolate and JavaChips, reminiscent of the Häagen-Dazs tubs that dot modern retail shops these days.
To stoke growth, most companies are trying to get consumers to pay more for their frozen treats. Subhashis Basu, head of dairy and frozen products at Mother Dairy, says, “Apart from linear growth, the exotic flavours help to retain existing customers and move them up the value chain. We have seen a predilection for natural juices over carbonated drinks. We will have ice creams made out of natural fruit pulp to tap into this trend, skipping emulsifiers altogether. A case in point our Strawberry Crush.” Its Classics range of ice creams incorporates western, Indian and fruity flavours not commonly found. Mother Dairy also underlines that it is the only brand whose entire range is made of ice cream from milk fat, which is costlier than vegetable fat used by some others, and makes for a richer flavour. Its Paan and Rose kulfis weave in Indian flavours.
Daring flavours are also being infused into the low ticket ice candy segment that spurs impulse purchases. So while a Mother Dairy has a savoury gol gappa candy stick, Amul is set to launch a cola-based stick. Of course, none of these players will give short shrift to the staple flavours for a more premium play.
| HOW THE PLAYERS STAND | |
| BRANDS | TRADE VALUE* |
| Amul | 380 |
| Vadilal | 275 |
| Kwality Walls | 275 |
| Mother Dairy | 170 |
| Lazza | 150 |
| Baskin Robbins | 75-80 |
| Natural | 40 |
| Others | 135 |
| * In Rs crore, year: 2010-11 Source: Market analysts | |
Besides playing around with flavours, most players are taking advantage of falling commercial rents. To put it straight, they are expanding their network of parlours aggressively; some are venturing into the space for the first time.
In fact, HUL’s ice cream division is banking on its parlours to bring in the premium crowd. Sapan Sharma, general manager, ice cream, Hindustan Unilever Ltd, says, “At Swirls, we get the consumers to experience our different brands in different formats. They can see the brands they know such as a Cornetto, Selection, Paddle-Pop coming alive. It adds a lot of value to the brand.” Rajesh Gandhi, managing director of Vadilal Industries, agrees, “Our parlours give a huge boost to the parent brand. Apart from our Gourmet tubs, the range at our Happiness parlours is different from that in the general trade. The Happiness range of ice cream is milk cream-based and more premium.”
Be it a shop in shop in hypermarkets, a kiosk in a mall or a high street outlet, HUL incorporates some live action to engage the consumers through a chill-grille (an ice slab to mix flavours), swirl machine and myriad toppings. It is adding to its count of 202 Swirl Outlets — that logged Rs 7.2 million in purchases last year — almost every week. The number of ‘happiness parlours’ from Vadilal will go up to 300 by the end of this year from 200, while Amul will add 500 ‘scooping parlours’ to its existing 1,000 that offer a range of products including sundaes and milkshakes besides the regular scoops.
Footprint matters
With 70 per cent of the market still hinging on impulse purchase, distribution remains a deal clincher. The numbers speak for themselves. Mother Dairy is stepping into Bangalore, while other players plan to add to their network. Amul spans 75,000 kirana stores and plans to add 15,000 more by September. Vadilal has 55,000 retail outlets while Mother Dairy will take its outlets from 3,500 to 6,000.
Kiosks in high footfall areas such as amusement parks are also being set up by players such as Hindustan Unilever and Mother Dairy. Basu of Mother Dairy says, “With general trade, players can be at an arm’s reach away from consumers.”
Natural, which began selling hand churned ice cream made from milk, sugar and seasonal fruits (calling it artisan’s ice cream) 25 years back is reaching out beyond Maharashtra this season, besides beefing up its supply chain. “Our ice creams have to be consumed within 10 days of manufacturing and the ones with fruits within a day. So, our supply chain and network are different from the national players,” says Srinivas Kamath, director, Kamaths Ourtimes Ice Creams. Natural ice creams are transported in dry ice because the number of parlours doesn’t call for huge investment in a temperature-controlled logistics system. Its new stores in Kochi and Jaipur have to receive the stocks manufactured and mailed in the evening, the next morning.
While indiscriminate expansion is not possible because manufacturing is done out of a single factory and the stores require trained staff to handle the delicate churned ice creams, Natural is ensuring that it has the back-end in order this summer. It has entered into contracts with dry ice suppliers for smoother deliveries. It also controls the processing of even the fruits that go into its ice creams; it buys jackfruits from Kerala vendors, coconut from Coimbatore and strawberries from Mahabaleshwar and cuts these at its factory in Mumbai. As a result, Kamath points out, “Such a close grip over the supply chain is difficult for national brands and even if they enter organic ice creams, they would tend to stick to mango and strawberry rather than more niche flavours like kala jamun.”
Vadilal’s Gandhi agrees that such flexibility is possible for local layers while national brands would have to gear up for launches at the start of the season to build excitement.
