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"There has been reduction in market size, owing to closures"
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Tuesday, 16 September, 2014, 08 : 00 AM [IST]
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fiogf49gjkf0d  Cocoberry is one of India’s most popular brands of frozen yoghurt. Most of its outlets are owned by the brand’s parent company, Cocoberry Restaurants and Distributors Pvt. Ltd.
It is one of the leading players in Delhi and the National Capital Region (NCR), Mumbai and Pune, and has outlets in Surat and Dehradun. Further, it is planning to open stores in Kanpur and Guwahati.
In an e-mail interaction with Harcha Bhaskar, Rahul Deans, the company’s chief executive officer, spoke about the company’s offerings, expansion plans and the reasons for short-term decline in the frozen yoghurts market. Excerpts:
What is the size of the Indian frozen yoghurt market? Tell us about the growth. How much yoghurt is consumed in India, vis-a-vis other countries?
The frozen yoghurt market in India is currently very small. I would estimate it to be under Rs 40 crore. At such a small base, the growth rate depends on the number of outlets that open.
In 2012, a large number of new brands and outlets entered the market. Thus, there was very high growth then. However, in the past year, there has been a reduction in the market size, owing to a number of closures.
To what factors can the growth (or decline) be attributed?
I believe the market would grow at a compounded annual growth rate (CAGR) of over 15 per cent over the next few years. However, in the short term, the decline may continue, as some of the weaker players exit.
Owing to the high potential everyone saw in this market a couple of years ago, several brands entered this market through the franchise route.
In many cases, they did not either have a viable business model, or understand the characteristics of the Indian market. Hence, they have been incurring losses at the store level, leading to closures.
However, for serious players who have invested in this market, the future is bright.
What are the factors contributing to the growth of the frozen yoghurt industry in India? Has it replaced ice cream to a certain extent?
The frozen yoghurt market in India is growing, because people are increasingly becoming health-conscious and have the willingness to try something new and trendy.
The increased consumption of premium ice creams is also a catalyst for its growth.
Frozen yoghurt would not replace ice cream. Both categories co-exist even in countries where the former has been present for decades.
Typically, the frozen yoghurt category in mature markets is about ten per cent of the ice cream market. But in India, it is a fraction of that, so we do expect frozen yoghurt to grow relative to ice cream.
However, the ice cream category itself would enjoy double-digit growth in India.
Does frozen yoghurt have a cultural origin connection, or is it the outcome of food innovations?
Indians have been consuming dahi for centuries, so the concept of frozen yoghurt is not alien to them.
As Cocoberry owns the brand and runs its own outlets, we are free to customise our products for this market, and are not bound by a rigid formula imposed by an international franchisor.
What are the various products offered by your company?
We offer frozen yoghurt with toppings, either in a cup or as a smoothie or parfait.
Our yoghurt is low-calorie and low-fat, and would shortly be gluten-free.
In addition, we have a sugar-free yoghurt, sugar-free chocolates and yoghurt-based energy bars.
Our products are customised for the Indian palette.
How many Cocoberry stores are currently running in Tier-II and Tier-III cities? How strong is your distribution to other retail stores? Has the demand for your offerings grown or declined in the last two years?
We are present in Surat, Pune, Goa and Dehradun, and would continue to expand in Tier-II locations.
The demand for frozen yoghurt keeps growing, but this is also a function of the number of stores opened by us and our competitors.
Our focus is on store profitability, rather than the number of stores.
Are you planning to introduce any new variants in your products, or having any expansion plans for your outlets?
Innovation is an ongoing process at Cocoberry.
Since we own the brand and are possibly the only Indian brand in this space, we are the best placed to offer relevant new products to our customers.
We also have the scale to offer our local vendors.
We plan to expand our outlets, and currently have six outlets in various stages of completion. All are run by us.
What are the various ways to serve and consume frozen yoghurt?
Frozen yoghurt can either be a dessert or a meal substitute. It can either be consumed plain/flavoured or with toppings.
What is the difference between frozen yoghurt and ice cream?
Frozen yoghurt, typically, has only a third of the calories a premium ice cream contains.
Is it necessary that frozen yoghurt has to be a dairy product? Is a non-dairy version available in the market? How different are the dairy and non-dairy versions of yoghurt?
By definition, yogurt is a dairy product.
There are so-called non-dairy options available in mature markets, but even there these are only a fraction of the frozen yoghurt market.
In India, the overall market is too small to offer niche variants of yoghurt.
Is a sour version of frozen yoghurt available? Is the bacteria content in regular yoghurt and frozen yoghurt the same? Are there any health benefits of frozen yoghurt? If yes, what are they? Is it healthier than ice cream?
Frozen yogurt has a characteristic tart or sour taste. However, it is the flavour and the product formula that influences the degree of tartness or sweetness.
We offer a variety of flavours to cater to different tastes.
In this context, I must mention that some dubious brands which claim to be frozen yoghurt are really just ice cream mixed with yoghurt powder.
It is also prepared fresh from a machine, in front of the customer, unlike ice cream, which can remain in frozen form in a container for a long period, until it is scooped out for the customer.
What are the obstacles to the growth of frozen yoghurt? What do you suggest to overcome the same?
Apart from low category awareness, the obstacles are no different from those faced by the organised retail or quick service restaurant (QSR) industry. These include high rentals, a shortage of employable people and a difficult regulatory regime.
What are the future prospects of this industry in India?
They are bright for several reasons. Notwithstanding the past year, expenditure on eating out is increasing, particularly eating between meals, which helps this category.
The ice cream industry is itself at an inflexion point and is poised for high growth. This would only have a positive impact on frozen yoghurt.
Several major cities are almost unrepresented by frozen yoghurt outlets. Also, as a result of a lot of churn, exacerbated by the recent slowdown, the weaker players are exiting the category, while the stronger ones have learnt a lot and are better placed to participate in the growth story that the next few years would bring.
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