The ice cream market in India is estimated to be around INR 2,000 crores, of which over 40% belongs to the organized sector growing at about 15% Y-o-Y. Amul leads the pack with about 36-38% market share (5% of its total revenues), followed by Kwality Walls & Vadilal with about 12-14% share each. These players not only have to fight the small local and cottage industry players, but also the fact that the Indian cuisine itself offers a large variety of desserts which are still preferred by most Indians. Due to this reason, the per capita consumption of ice creams in India is about 300ml per annum, 1.4% of that in US, and 13% of the world average, which can be seen as a huge opportunity in this sector in India attracting new regional and national entrants. However, an issue is the seasonal nature of this industry in India, especially true for the northern parts of the country. Bulk of the sales happen during the summer months of April-July, while the sales witness a significant dip during winter months of November-February. Additionally, the seasonality of events like marriages affects sales in a big way, although institutional sales provide some cushion. But what makes the situation worse is low supply of electricity, especially during the high demand summer months that affects the ice cream stocks. Once the ice cream melts, it is non-saleable, and drives retailers not to carry enough stocks – not an optimal situation given the not so favourable situation of cold chain in India. With the latest mandate for HUL to increase its foods revenue, they might also be focussing on out-of-home footprint through ice cream parlours, ice creams being a high growth category for HUL growing at about 31% last year. On one hand where Amul is trying to increase its reach by adding retail outlets to the tune of 15k to its base of 70k outlets, on the other hand HUL is focussing on new product launches and television campaigns for consumer activation. Half the market is driven by impulse purchase, and rest by family consumption at home and in-parlour sales. There are niche players in the parlour business, with Nirula’s being an established player in the north, and Naturals in the west; and then there are premium players like Baskin Robbins. Location is key here like in any retail business, to ensure enough footfalls and an optimal rental profile for sustained outlet level profitability. Brands are coming out with pro-biotic and low fat ice creams targeting the health conscious consumers, and also new manufacturing processes which reduce air content in ice creams giving more value for money to the consumers; but the acceptance for such products is still to be put to a proper test in the market. Overall, the ice cream market is heating up. What is to be seen is that for whom this heat helps in increasing revenues & profitability of players, or melts the aspirations in the sector.
- Anurag Garg, TradeBriefs
[Transfreez Mobile Refrigeration-Name stands for Refrigerated Trucks of India]
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