Icecream Industry

The origins of ice cream go way back to the 4th century B.C. In the 13th century, Marco Polo learned of the Chinese method of creating ice and milk mixtures and brought it back to Europe. It became a fashionable treat in Italy and France.
Definition of an ice cream
To call a product "ice cream," two basic requirements must be met:
• The treat must be at least 10-percent milk fat
• Use sugar as the sweetener.
Though there is a potential market for fat-free and sugar-free ice creams, the country's food laws don't permit them yet.
Types of Ice creams
Indian Ice Cream market can be segmented in three different ways, namely on the basis of flavors; on the basis of stock keeping units / packaging and on the basis of consumer segments. On the basis of flavors the market today has a number of flavors like vanilla, strawberry, chocolate, mango, butterscotch a number of fruit flavors, dry fruit flavors traditional flavors like Kesar-Pista, Kaju-Draksh etc. The market is totally dominated by Vanilla, Strawberry and chocolate, which together account for more than 70% of the market followed by butterscotch and other fruit flavors.
Ice –cream industry scenario in India
The ice cream market growth picked up after de-reservation of the sector in 1997. Of the total size of Rs 15-16bn, around 30-32% is in the hands of organized sector valued at Rs 4.9bn, rest all is with the unorganized sector. Among the major players in this industry Hindustan Lever has a market share of around 50%, represented mainly by Kwality Walls brand. Amul with an estimated market share of 35% is rapidly gaining market share and lastly Vadilal is the player in the national market with 8-9% of the market share.
With India's per capita consumption of ice-cream - at 200 ml - against 22 litres in markets like the US, being among the lowest in the world, opportunity for ice-cream marketers is abundant
India's ice cream industry offers a potentially lucrative market for US agricultural and food exporters. Trade liberalization in the country is driving the growth and diversification of the sector, with consumers given a wide range of ice cream flavors such as vanilla, strawberry, butterscotch and chocolate. High tariff rates and inefficient distribution systems continue to hamper the import market, but an increasingly affluent younger generation of consumers will likely boost the ice cream sales.
The frozen treats usually are packaged and sold three ways:
• Cups holding 100 to 150 ml.
• Bars, sticks and cones
• Family packs of 1 liter in wax- coated paper or plastic cartons.
Though still limited mostly to urban areas during the summer, the ice cream market is already showing signs of diversification:
• With a 30-percent market share, vanilla is still the preferred flavor, but strawberry, chocolate and butterscotch are available.
• Manufacturers are catering to the low-end market with cheaper sherbets.
• Importers catering to high-end consumers are selling U.S. ice cream to hotels, supermarkets and upscale shopping outlets.
High tariffs and inefficient distribution systems will continue to bottleneck the import market for the short term, but an increasingly affluent younger generation wants to try new tastes. Manufacturers should keep an eye out for market changes and opportunities as India's consumers demand diversity in their food choices.
Distribution Channel
Ice cream distribution in India usually involves a distributor, wholesaler and retailer. Because of chinks in the cold storage chain, most brands have small regional operations with production facilities located near major markets.
The domestic dairy cooperative sector entered the market in late 1996, launching a price war that caused many small and medium-sized businesses to leave the market or merge with large-scale producers. These larger companies expanded their distribution networks and broadened offerings.
Recently, multinational brands, most notably Wells' Blue Bunny, hopped into the market. Baskin-Robbins and Walls/Qwality established joint venture relationships with Indian companies.

Various players in the market

India as the market continues to be ruled by Indian brands such as Amul, Kwality Walls, Mother Dairy, Vadilal and several regional ones.
Both Hindustan Lever Ltd (HLL) and Gujarat Cooperative Milk Marketing Federation (GMCCF) have already locked horns over their respective brands, Kwality Wall's and Amul, claiming to be market leaders in the Rs 1,000-crore domestic ice-cream business, of which the organised sector accounts for Rs 650 crore.
Amul's strategy to grow in a difficult market this summer has been to offer international variety at prices in tune with the Indian market. Sodhi claims Amul is up to 50 per cent cheaper than other brands such as Kwality Walls. And the company is not pausing for breath but has begun introducing a host of flavours this summer.
Fashioned on the super premium ice-cream range Dreyer TM, Ben & Jerry and Haagen-Dazs, Amul's offering comes in 100 ml packs in several flavours such as Alphonso Mango, Date with Honey, Fig, Cheese with Almonds and even Rajbhog!
Hindustan Lever, which restructured its ice-cream business during the late '90s by merging several brands with Kwality Walls, has decided to concentrate on only six metros in the country, having realised the returns from servicing other smaller markets were inadequate
The third contender in the Big Fight, National Dairy Development Board's (NDDB's) Mother Dairy, is engaged in a pitched battle with erstwhile associate GCMMF. Mother Dairy milk booths are not selling competing Amul's products any more. Also, NDDB has decided to float a subsidiary marketing company, Mother Dairy Foods Ltd, to partner with State dairy co-operative federations in the form of joint ventures. NDDB is further strengthening its marketing and finance divisions, has been in expansion mode on the product front for Mother Dairy ice-creams, and has undertaken a large-scale exercise to revamp its ice-cream push-carts.
HLL, which is expected to turn around its Rs 210-crore ice-cream business in 2003, recently announced its decision to focus on six cities - the four metros and Bangalore and Hyderabad. HLL, explains, "Two-thirds of our ice-cream turnover comes from these six cities."
Attributing the expected turnaround next year to a `radically new strategy', Mehta observes, "Our strategy in 2002 focused on one of our power brands, Kwality Wall's, supported by appropriate communication and activation, launch of differentiated innovations, focus on six citadels and aligning of our cost structure to the new strategy."
HLL managed to halve its losses in ice-creams last year, which the company attributes predominantly to the decision to shift its business from commodity to product model and working on supply chain efficiencies. HLL's ice-cream business losses were reduced to Rs 6 crore in the April-December 2002 period, from the Rs 20-crore figure the previous year.
Meanwhile, Kwality Wall's' Rs 80-crore Max sub-brand - which accounts for one-fifth of the company's ice-cream business turnover - was recently re-launched.
GCMMF - or Amul - has projected that it will end the April-March 2002-03 period with ice-cream sales of 24.5 million litres, valued at around Rs 150 crore, against 18 million litres (Rs 115 crore) the previous year. While GCMMF says it has become the country's leading ice-cream seller in both value and volume terms, HLL disputes this by quoting A.C. Nielsen data, according to which Kwality Wall's had an overall market share of 38.3 per cent by value in 2002, against Amul's 16.7 per cent. Says an HLL spokesperson, "In individual cities, our share was 36.9 per cent in Mumbai (against 35 per cent for Amul), 36.3 per cent in Delhi (9.7 per cent), 30.5 per cent in Bangalore (15.2 per cent) and 54.1 per cent in Hyderabad (13.2 per cent). Amul's claim is, therefore, absolutely incorrect."
Market share apart, each of the Big Three are busy generating consumer pull necessary for both out-of-home and in-home consumption, by broadbasing their products across various price points.
GCMMF is now gearing to introduce super-premium ice-creams at `value-for-money' prices, some of which are already in the market. Analysts expect that Amul's move will give the HLL ice-cream management more sleepless nights.
Regional-level players, meanwhile, aren't giving way easily.
Ahmedabad-based Vadilal Industries Ltd (VIL), which has earmarked an investment of about Rs 7 crore for the current fiscal to consolidate and expand operations, in addition to strengthening its cold chain network. Vadilal currently has three manufacturing bases - two in Gujarat and one in Uttar Pradesh.
Vadilal's other summer plans include setting up an additional five, franchisee-operated ice-cream parlours (branded Happinezz) within this calendar year in Delhi alone. Vadilal's Happinezz parlours currently exist in Gujarat, Rajasthan, Uttar Pradesh and Madhya Pradesh.
A cause of concern in the ice-cream industry is the sharp increase in prices of milk, milk fats and other raw materials, which have resulted in further squeezing margins. The early monsoons in most parts of the country too have affected ice-cream sales