The Indian ice cream industry

India’s ice cream market is valued at Rs 4,300 crore per annum of which the organised sector accounts for Rs 1700 crore. It has emerged as the fastest growing dairy favourite in the Asia Pacific region. The major players in India are: GCMMF’s Amul, NDDB’s Mother Dairy, Hindustan Lever’s Kwality Walls, Vadilal, Baskin Robbins, Dinshaw and Hatsun’s Arun. The rest of the State Cooperative Dairy Federations in the country are also manufacturing and marketing ice cream under their own brand names. The import of ice cream is permitted unrestricted but attracts duty.

Ahmedabad-based Havmor Ice Cream is considering overseas expansion for its chain of restaurants and ice cream parlours. The largest ice cream manufacturers in Western India are looking at enquiries for setting up franchises in the US and Dubai. The company which has come up with novel ice creams, including the non-alcoholic whisky-flavoured ice cream for premium clientele for parties or weddings last years, is also experimenting on diet ice creams. The company aims to a turnover of Rs 175 crore by manufacturing 1.5 crore litres of ice cream this year. The company is seeing a growth of 25-30 per cent every year.

American ice cream brand Swensen’s has opened its first outlet in Bangalore, at what is purportedly the largest mall in India, The Manti Square. The Swensen’s franchise for South India is held by the Ravi Jaipuria (RJ Group)-owned Devyani International Limited (DIL). On the anvil over the next few months are a Swensen’s outlet at the international airport in New Delhi, three more outlets in malls and one in a high street in Bangalore. DIL is also scouting for suitable locations at malls and streets in other major South Indian towns and cities to bring the count to over 80 during the next five years.

Ice cream is available in various forms such as cones, cups, bars (candy) and party packs. Candy sticks account for about 25 to 30 per cent of total volume, whereas cups and other novelties contribute the rest. Looking at flavours, vanilla, strawberry and chocolate predominate and together account for more than 70 per cent of the market, followed by butterscotch and fruit flavours. Population of thick milk shakes, softy mixes, sherbets, syrups and special toppings for ice creams by ice cream parlours and fast food outlets offers new business prospects. These item’s volume may be limited at present but, measured in terms of value, their contribution is significant to many entrepreneurs’ bottomlines. Industry experts predict a big spurt in their popular appeal in the near future.

The non-organised sector though accounts for 60% pf the Indian ice cream market, it is shrinking considerably in the urban areas. However, in rural areas, kulfis/ice creams made by small/cottage industry are popular. In small towns and villages, there are thousands of small players who produce ice creams/kulfis and cater to the local demand.

The market for the organised sector is restricted to large cities. Eight cities account for 60 per cent of India’s total ice cream consumption. One notable shift in the consumption pattern is from impulse purchase by youngsters as fun food to its regular use as dessert. Thus, the sale of ice cream bricks is increasing.

The share of take-home sector over five years has increased from 50 per cent to 60 per cent.

However, India’s per capita consumption of ice cream is just 750 ml compared to an estimated 30 litres in the US and 1.2 litres in China. So, in India there is enough scope for more growth than the 15% observed over the past few years.

The Government of India dereserved the production of ice cream in 1996-97. Earlier the manufacture of ice cream was reserved for the small-scale sector. This move has encouraged high investment from medium and largescale sector and helped the market grow.

The country’s western region has a much higher consumption than the all-India average. Almost 35 per cent of the ice creams sold in the country are consumed in the western region with Ahmedabad being the main market, followed by 30 per cent in the north, 20 per cent in the south and 15 per cent in the eastern and central India. Delhi and Gujarat together account for 30 per cent of the country’s ice cream market. The Kolkata market is the largest for ice cream in the eastern region.The ice cream prices in India are reported to be three times higher than the prices prevailing in America. One reason is the legal requirement in India stipulating at least 10 per cent milk fat in ice cream. This standard needs to be reviewed to bring down the ice cream prices for increasing its consumption. Another inflationary factor is the high cost of transportation, particularly the refrigerated type. Taxes also contribute to high prices of ice cream. Absence of a nationwide efficient and reliable cold chain distribution restricts the ice cream sales to the bigger cities. A strong distribution network, including retail chain with supporting infrastructure of refrigerated transport, cold storage and freezer cabinets is a must for the healthy growth of the ice cream industry.

Extended season
Though April to June is the peak season for the organised ice cream market, 50 per cent of the sales are taking place during the rest of the year. In fact, October-November festival season is being considered as good season. This festive season contributes 15-20 per cent to annual sales volumes. Manufacturers undertake various brand-building activities through on ground promotions around specific festival events. Winter is not really strong in the western and southern parts of the country. Thus it makes sense to launch aggressive marketing campaigns throughout the year.

Popularisation of thick milk shakes, softy mixes, sherbets, syrups and special toppings for ice creams by the ice cream parlours and fast food joints opens a new business prospect. Presently, their volume may be limited, but by value their contribution is significant to the bottomlines of entrepreneurs. Industry experts predict a big spurt in their popular appeal in the near future.

As is evident from the low per capita consumption level, India’s ice cream market is on the threshold of registering an unprecedented growth. Some essential policy changes by the government, as desired by the industry, would facilitate and accelerate this growth. On their part, the entrepreneurs must bring in the latest technology and launch innovative products to capitalize on the business prospects offered by the ice cream marketing.

Free flowing Ice Cream
An in-house product of Space Dots Foods Pvt. Ltd, Dotz claims to be the next generation ice cream free from the hassle of dripping – free flowing ice cream. It comes in tiny dot-shaped beads and being kept at -40°C and served at -35°C. Dotz is the world’s coldest ice cream. Pune is the second place in the world where Dotz is being manufactured with the other location being USA. To make it appealing, it has been made in the form of dots appropriately called Dotz. Soft and hard ice creams contain an air content of 40 per cent to 100 per cent whereas Dotz has no air content. It’s all ice cream. Also a fat content of 14 per cent makes Dotz one of the richest quality ice creams in the world. The technology that has gone behind this new product is cryogenic technology (used in rockets) and the dots are flash frozen to maintain the individual dot consistency and locks in the flavour.

Take a small ice cream unit with the production capacity of 500 litres of ice cream and 1,000 pieces of water ices per shift of eight hours. The capital investment for such a unit totals Rs 35 lakh. Such a unit can in the first year expect to generate annual sales exceeding Rs 75 lakh, assuming 100 per cent sales for only five months in a year, diminishing sales for five months and no sales for the remaining two months of winter. In the case of a larger unit of 150 litres per hour capacity, the capital investment required would be around 60 lakh. Such a unit can be expected to generate Rs 150 lakh of gross sales, assuming 100 per cent sales for five months in a year and declining sales rest of the year. An ice cream unit includes one pasteurizer, aging vat homogenizer, continuous freezer, cooler, deep freezers, Lolly tanks etc.