Rising temperatures can sap everyone’s energy but the ice-cream makers’. The more the heat, the higher their energy level. But the weather’s been peculiar of late. Rather cool in the usually sweltering capital, atypically hot in the normally pleasant Bangalore. Still, if El Nino weather phenomenon prolongs the summer as anticipated, ice-cream sales will see a boost notwithstanding the recent hike in ice-cream prices, making the manufacturer-marketers’ business prospects all the sweeter. Summer is the most crucial season for these companies, with over 40 per cent of their annual sales occurring in the 3-4 month window.
In 2013, when both the winter and monsoon were extended, summer sales of the organized ice-cream sector grew by just 10-15 per cent over the previous year instead of the usual 20-25 per cent. Gujarat Co-operative Milk Marketing Federation’s Amul continued to be the category leader with an anticipated retail value share of 31 per cent in 2012-2013. During the year, the company’s Amul Parlor network expanded at a rate of three stores a day taking the total number of exclusive stores to 7,000. While most of the store additions were in the Amul Preferred Outlet format, the company also made significant strides in its ice-cream scooping parlour format wherein the company added 276 stores, taking the total to 800. The company plans to reach its exclusive store count to 10,000 by end of 2015. Hindustan Unilever, with an anticipated retail value share of 21 per cent, and Mother Dairy Fruit & Vegetable with a value share of 13 per cent, were the next big players.
“There was not much price increase in 2013 but nevertheless, the industry witnessed a decline in growth due to unexpected weather conditions,” explains Devanshu L Gandhi, managing director of Vadilal Industries. His brand enjoys a 14 per cent market share nationally and generates revenues of about `400 crore. “This time, summer is already delayed. It should have started by now. If the weather continues to be unpredictable and the climate unseasonal, it may not be good for the business. But if El Nino does prolong summer, as previously predicted, it will boost sales,” Gandhi adds.
Meteorologists say El Nino causes droughts and floods. In India, it coincided with droughts in 2002 and 2004, and the driest monsoon in four decades in 2009. According to Chinese and Japanese forecasters, El Nino will affect rainfall this year across the world, thereby prolonging summer.
“Last year, there were challenges due to weather patterns and macroeconomic conditions. This year, we hope the summer is going to be longer and sales better,” says Nitin Arora, CEO, Creambell, which is owned by the Ravi Jaipuria-promoted RJ Corp. The company was launched in 2003 but is already present in 19 states with plans to enter Gujarat, Tamil Nadu and Kerala in the near future. Arora says the company hopes to be among the top three ice-cream brands in India by the end of 2017.
In Ahmedabad, Pradeep Chona, chairman of Havmor Ice Creams, is also looking forward to a more lucrative summer. “We anticipate 15 per cent growth this summer if the weather doesn’t become unpredictable,” says the chairman.
Traditionally, India is one of the world’s lowest ice-cream consuming nations. An Indian, on an average, consumes 400 ml of ice-cream annually, compared to an American’s 14 litres and a Chinese citizen’s 2.2 litres. Research firm Euromonitor says this is likely to change and estimates that India’s `3,500-crore organized market (today) will touch `6,100 crore by 2017.
The optimism comes despite the hike in ice-cream prices between October and January by Amul, Vadilal, Mother Dairy, CreamBell and Havmore. The hike was reportedly sparked by the increased cost of ingredients such as milk, milk powder, sugar and dry fruits. As per Vadilal, milk prices constitute 18-20 per cent of cost of raw material for ice creams, sugar accounts for 2-3 per cent and dairy fat about 18 per cent. Then there are the additional ingredients like vanilla, chocolates, fruits and nuts. “Milk prices have gone up by 20-25 per cent over last year, while the price of milk powder has skyrocketed by about 50 per cent. There was an issue with the import of dry fruits like cashew and prices of almonds soared globally. All this has caused an increase of over 10-12 per cent in ice cream prices,” says Gandhi.
Still, all the organized players anticipate high double-digit growth this summer. “We expect growth of 20 per cent despite the increase in prices,” says RS Sodhi, managing director of Gujarat Co-operative Milk Marketing Federation, which owns Amul. Confident as they are of enhanced sales this summer, almost all the players are putting their best foot forward to attract consumers. While some are introducing new flavours and products, others are re-inventing their packaging to make their offerings more affordable–like the introduction of 40-ml cups in lieu of the 50-ml ones, and 85- and 135-ml sizes in place of the 100- and 150-ml packs.
Hindustan Unilever’s Kwality Walls has rolled out Magnum, a premium Belgian chocolate bar priced at a rather expensive `85 in the five cities of Chennai, Mumbai, Hyderabad, Bangalore and Pune. “Our new offering is pure pleasure from its first distinctive crack to the last bite. We are confident that Magnum will appeal to young adults who are eager to indulge in a unique experience,” says Geetu Verma, director, Food and Refreshments, HUL. The company has roped in actors Kareena Kapoor and Trisha Krishnan to act as ambassadors for its big-ticket item, which it is aggressively pushing on social media.
Havmore, which so far was confined to Gujarat, MP, Rajasthan and Maharashtra, is now set to enter Punjab and Goa with plans to hit South India next year. The company is also working to increase its product portfolio. “We are launching new flavours like fresh mango, pistoria, caramel biscoti, Tiranga ice candy, pink currant and a truffle bar (like Magnum) plus turbo cones and flavours with white chocolate,” says Chona. The brand’s other USP? Reusable packaging for its sundaes and double sundaes.
Market leader Amul too is launching new flavours to retain its customer base. “We are the only company with a pan-India presence. We have a market share of over 40 per cent of the total market and our ice-creams division enjoys revenues of approximately `500 crore,” says Sodhi. “This summer, we will step up the marketing as we are launching some premium ice-creams.”