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Organised ice cream mkt worth Rs 3,500 cr; Growing at 20-25% per annum
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Friday, 15 May, 2015, 08 : 00 AM [IST]
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Harcha Bhaskar, Mumbai
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fiogf49gjkf0d The ice-cream industry is one of the significant industries across the world, and is slowly growing in India.
“There are several factors that contribute to its growth. These include innovations in flavours, technology and expertise to create ice cream for different consumer segments (for example, low-fat ice cream for chocolate lovers),” said Aziz Hafizi, president, Pastonji Brand and Holding Pvt Ltd.
Rajesh Gandhi, chairman and managing director, Vadilal Industries Ltd, said, “As of now, the organised ice cream sector in India is pegged at Rs 3,500 crore, and growing at 20-25 per cent annually.”
“The sales of ice cream doubled between 2007 and 2012, and are expected to do so again in the five years ending 2017, reaching $1.1 billion. The ice cream industry is seeing double-digit growth year-on-year,” Hafizi said.
Currently, the share of the organised frozen dessert market is close to 50 per cent. Fifteen years ago, frozen desserts worth merely Rs 100 crore were sold annually.
There is a multitude of factors affecting the sector’s growth. These include the increasing disposable incomes; changing lifestyles (wherein more people are consuming on-the-go food at quick service restaurants [QSR]); improvements in roads, electricity and infrastructure, and an increasing preference towards consuming branded products.
The Indian ice cream industry is going through enormous transformations, be it in terms of flavour, the availability of the product in the market, packaging or the mode of distribution, to connect to the consumers.
Ice cream, traditionally perceived either as a summer treat or a treat for special occasions, is becoming accepted as a year-round indulgence, especially in India’s urban markets.
“The consumer trends are changing towards ice cream. They are opting for new flavours and also indulging more in ice cream than in other kinds of desserts,” Hafizi said.
“Moreover, the packaging styles are changing to convince them of a better quality and to improve the product life,” he added.
“Nowadays, consumers treat themselves and their loved ones on a number of occasions. Desserts are mainly consumed on weekends and in the evenings,” Hafizi added.
No stone has been left unturned by the leading ice cream manufacturers, who offer 100 variants or flavours, ranging from traditional Indian flavours like matka kulfi, rabdi malai and shahi kheer to international ones such as blueberry yoghurt, mango sorbet and French vanilla. These companies’ menus have managed to cater to every consumer’s taste buds.
Creambell Ice Cream, which is expecting to close 2014-15 with a sales turnover of Rs 500 crore for the year 2014-15, recently launched a number of new flavours that have caught the imagination of the market.
These include Double Crush (the country’s first ice cream candy moulded in the shape of a heart with a white chocolate coating and a mixture of vanilla and strawberry flavour).
The company was first to offer ice cream smoothies in two flavours (mango and strawberry).
Its range also includes Choco Brownie, Kulfi and Kiwi Passion, sugar-free probiotic tubs and frozen yoghurt in three exciting flavours.
Hafizi said, “Our unique selling proposition (USP) is the wide range of novelties we offer. Our product range includes 76 flavours of ice cream, in the forms of bars, cones and candies. Each variant of novelty ice cream is made in adherence to a time-honoured tradition.”
“Some of our unique flavours include the traditional Matka Kulfi (which is stored in a matka made from the soils of Kolkata to retain its authenticity); Classic Cassata; Chic Choc Slice, Black Magic Pastry and Pineapple Roll,” he added.
With the purview of the potential growth in the ice cream segment, Nitin Arora, chief executive officer, Creambell Ice Cream, said, “We are not restricting ourselves to the state capital and the top three cities. We are now targeting eastern markets for further expansion, particularly to select Tier-II and III markets.”
“In addition to this, we are looking at increasing our number of static outlets to 45,000 from the current 37,000. Also, we are planning to set up a new plant in the eastern region,” he added.
Hafizi said, “Pastoniji has plans to expand at the national level in 2015-16. We would, however, continue to target western India (as we have a significant presence in the region, and consumption is high in Mumbai).”
He added that despite the fluctuations, they did not compromise on the quality, as they tried not to increase the price. “However, there may be minor hikes,” Hafizi said.
Frozen dessert versus ice cream
Ice cream, in layman’s terms, is defined as a smooth sweet frozen mixture containing milk, sugars and flavours, whereas a frozen dessert mixture is made of vegetable oil or milk fats.
There is ongoing controversy about nutrition facts, calories involved, labelling in India which consumer should be aware of . Though there are several companies who are manufacturer of both frozen dessert and ice cream.
Gandhi said, “Frozen desserts, made out of vegetable fats, have no cholesterol, no trans-fat, and no hydrogenated fats. They also contain the goodness of milk solids, including calcium, vitamins and proteins, and are considered healthier source of energy.”
“However, in India, the regulatory mandates for the declaration of frozen desserts have been misused by a few competitive brands to show frozen desserts as being inferior. This misleads the consumer,” he added.
VAT a challenge
Like any other industry, this industry too has its challenges, and there is lot of scope for its development. India, which is among the leading dairy producers and consumers, has the potential to be the top producer and consumer of ice cream.
But for the development of the latterly-named sector, it is mandatory that the infrastructure, cold chain, transportation and electricity be strengthened.
In the current scenario infrastructure and technology, developing and maintaining an effective cold chain infrastructure right from the manufacturing station to the consumer touch point is still a major concern and invites huge investments.
Adding to the same, power shortage and alternate power arrangements has burdened the sector with more need of funds.
“In India the major challenges faced by us are in terms of the infrastructure. Due to the lack of uninterrupted power supply and good roads, it becomes very difficult to have the last-mile availability of ice cream,” Gandhi said.
“In terms of regulations, we face a huge challenge of high taxes. We pay 17 per cent value-added tax (VAT), which is very high. In the case of the food and pharmaceutical sectors, the VAT should be around 4-5 per cent. Also, frequent changes in the regulations lead to a lot of wastage and dead stock,” he added.
Subhasis Basu, who heads Mother Dairy’s dairy products business, said, “On the regulatory front, a number of ice cream brands have taken sufficient time to comply with the food safety regulations.”
“Microbiological standards of the Food Safety and Standards Association of India (FSSAI) are getting more robust, and hence, meeting those requirements with old infrastructure and systems is really a challenge to speed up the market placement,” he added.
Arora stated, “The problems of infrastructure and electricity must be solved by the government, but as manufacturers, we are looking forward to technologies that can be adopted in power-deficient areas.”
Hafizi said, “We are facing challenges with regards to the technology used to make novelty ice cream, as we have to use semi-automatic methods to make it. In Mumbai, we have to manage with a space crunch and high electricity rates.”
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