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1. Ice Cream Market ‐
Ice Cream Market India
December 2008

2. Executive Summary
 Estimated worth USD 209 mn in 2008, expected to grow to USD 240 mn in 2009
Market  North and west account for 70% of total sales
 High profit margins ranging between 30‐50%
 Drivers: Opportunity to capitalize on low consumption levels; growing institutional sales
Drivers &
 Challenges: Competition with the unorganised sector on price and quality, and lack of well‐
Challenges developed cold chain facilities
 Large investments in advertising
 Diversification of product portfolio targeting specific consumer segments
Trends  Partnerships and franchises pursued to boost distribution
 Falling costs of raw materials offsetting rising milk and sugar prices
 GCMMF’s Amul brand is the market leader
Competition  Mother Diary and Hindustan Unilever’s Kwality brand are other strong players
 The premium segment is dominated by Baskin Robbins
The premium segment is dominated by Baskin Robbins
ICE CREAM MARKET – INDIA.PPT 2

3. •Market Overview
•Drivers & Challenges
Drivers & Challenges
•Trends
•Competition
•Key Developments
ICE CREAM MARKET – INDIA.PPT 3

4. The industry is growing steadily with the northern and western
regions accounting for the largest consumption
Overview Size and Growth
•Size and Growth
USD mn
 Worth USD 209 mn in 2008 +12% 240
250 209
 Growing at 12% p.a. in 2005‐2008 182
200
 Forecast to increase by 15% to reach USD 240 148 155
150
mn in 2009 100
•Characteristics 50
 Northern and western regions together 0
account for 70% of total market consumption 2005 2006 2007 2008 e 2009 f
 Profit margins range from 30% to 50%
depending on the product segment Geographic Distribution
 60% of ice cream sales occur during the
summer months of April‐June North
 80% of sales is through street vendors 30%
 Vanilla is the highest selling flavour and
together with strawberry and chocolate it West 40%
accounts for 70% of the market 10%
East
20%
South
ICE CREAM MARKET – INDIA.PPT 4

5. •Market Overview
•Drivers & Challenges
Drivers & Challenges
•Trends
•Competition
•Key Developments
ICE CREAM MARKET – INDIA.PPT 5

6. Drivers & Challenges
Challenges
Low quality products and competitive
pricing from unorganized sector
Drivers
Lack of cold chain facilities
Lack of cold chain facilities
Low consumption levels
Developing institutional channel
l i i i i l h l
ICE CREAM MARKET – INDIA.PPT 6

7. Low consumption levels and penetration, and a lucrative
institutional sales channel are key growth drivers
Low consumption levels Impact
• Per capita consumption levels are very low at 200‐250 ml while
penetration rate is estimated at 15% ml
• Significant scope for market growth by increasing either consumption 300 250 250
levels or market penetration, or both
200
• National players are focusing on increasing per capita consumption or 106
penetration to grow the market 100
 Vadilal is minimizing price using promotions and marketing while HUL’s
Vadilal is minimizing price, using promotions and marketing while HUL s
Kwality Walls specifically targets metros to increase per capita consumption 0
2000 2004 2008
 Amul and Mother Dairy are increasing penetration by targeting rural markets,
making their product more widely available, and minimizing price
Developing institutional channel
• Catering and institutional customers are identified as a growing opportunity
• Players are capitalizing on the revenue potential of impulse sales, which is an established trend
in institutions such as malls and multiplexes
• Catering services and hotels are also a lucrative business opportunity for manufacturers
ICE CREAM MARKET – INDIA.PPT 7

8. Low quality products and price competition from unorganized
players and lack of cold chain facilities hampering industry
Low quality products and competitive pricing in the unorganized sector Impact
• The market faces a threat from low‐quality products
 Many regional players use synthetic substitutes and incorrectly label their products e.g. vanilla ice cream
instead of artificially flavoured vanilla ice cream
i t d f tifi i ll fl d ill i
 Smaller players have started injecting a higher percentage of air into ice cream thus compromising on quality
• Price difference between large and small players
 Small players rely on a volume‐based, low price strategy, by taking advantage of strong distribution within a
g
regional market
• Large players are at a competitive disadvantage compared to the unorganized players due to
the low quality and pricing of the unorganized sector
Lack of cold chain facilities
• The lack of good cold chain facilities for transportation and storage is an impediment towards
increasing market access and penetration
• Cold chain also constitutes the most to the total cost
y g pp
• Players have been taking different approaches to address this issue:
 Baskin Robbins has outsourced its distribution and logistics
 Amul, through self financing schemes, has made refrigerators available to shops in rural areas
• Developing cold chain infrastructure is extremely crucial to increase market penetration and
the challenge is shared by many other industries in the food & beverage sector
ICE CREAM MARKET – INDIA.PPT 8

9. •Market Overview
•Drivers & Challenges
Drivers & Challenges
•Trends
•Competition
•Key Developments
ICE CREAM MARKET – INDIA.PPT 9

10. Key Trends
Product diversification to target
Large scale advertising
specific segments
Trends
Franchises and strategic
Benefits derived from falling
partnerships to enhance
costs
distribution
ICE CREAM MARKET – INDIA.PPT 10

11. Large‐scale advertising geared towards brand building and sales
promotion
Advertising on Television: Jan‐Apr 2008 Share of TV advertising
• Grew by 15% rise in 2008 compared to 2007
• Average number of ads per day increased by 45%
• The top 3 ice cream brands advertised Hatsun Agro
9%
 Kwality Walls Almond Praline Kwality Walls
78% 2% 4% Metro Daily Ltd
(HUL)
 Kwality Walls Paddle Pop Karnataka Milk
7%
 Arun Ice Cream Federation
Others
Advertising in Print: Jan‐Apr 2008 Share of Print advertising
• Grew by 58% rise since 2005
GCMMF
• Gujarat accounted for 25% of the total advertising
14%
• Maximum advertising in non‐metros in the
Havmor
newspaper medium indicates organized sector’s 9%
targeting of rural areas and unorganized sector Vadilal 52% 3% Dinshaws
 Non‐metros: 57%
22%
 Metros: 26%
 Mini –metros: 16% Others
Advertising is the primary method to increase consumption and penetration levels
Advertising is the primary method to increase consumption and penetration levels
ICE CREAM MARKET – INDIA.PPT 11

12. New products such as traditional dessert, natural flavours and low‐
sugar ice cream is being used to target specific consumer segments
Product diversification to target specific segments
• Producers have launched flavoured “kulfi” – the traditional Indian dessert – ice cream which is
the favoured dessert in the non‐metros
Capitalizing on
p g
 Mother Dairy’s initiated their kulfi range with flavours such as Kesar, Pista, Badam and Mango
demand from a
 Amul is planning to introduce new brands such as Dates with Honey, “Koolfi cone”
niche markets
• Naturally flavoured ice cream i.e. without any artificial or synthetic flavour has been introduced
for the premium segment
 Mother Dairy launched the Fruit Classic range which is ice cream without any artificial flavours as well as two
Mother Dairy launched the Fruit Classic range which is ice cream without any artificial flavours as well as two
Natural Vanilla flavours – Choco Fudge Cake and 100 percent Natural Vanilla
 Gelato, an ice cream produced only using natural ingredients, introduced for the premium segment. The
primary difference being that the ratio of ice cream and air is 70:30 in Gelato vs.30:70 in other ice cream
• Players are capitalizing on the market which has become extremely health conscious
Company Product Health Benefits
Hindustan Unilever (HUL)
Moo High calcium content, low calorie and fat
Increases immunity, help in digestion,
Probiotic range –
GCMMF prevents diarrhoea and growth of colon
Amul Prolife
cancer
Mother Dairy
Diet
Diet Low sugar and fat content
Low sugar and fat content
ICE CREAM MARKET – INDIA.PPT 12

13. Companies are setting up franchises or entering into partnership
to develop their distributional network
Enhancing network through franchises and strategic partnerships
Company Projects
HUL Kiosks
Kiosks ‐ Swirls
Franchising
g
Increase Amul Parlours from 1,800 to 3,000 in 2008 and 10,000 by 2009, Cyber stores in 100 cities, Cyber clubs
GCMMF
in 125 cities
Hatsun Agro Premium ice cream outlet – Arun Ice Cream Unlimited
Milkway Express
Milkway Express 1000 outlets in southern and central India by 2009, counters at corporate campuses
1000 outlets in southern and central India by 2009 counters at corporate campuses
Baskin Robbins Outlets in malls and multiplexes
Company Affiliation Purpose
Indian Oil Corporation (IOC)
p ( ) Retail stores at petrol stations
p
HUL
Partnerships
Oxicash Marketing via scratch and win contests
GCMMF Bharat Petroleum Corporation Ltd (BPCL) Mobile kiosks at petrol stations
Baskin Robbins Lifestyle, Coca‐Cola, ICICI credit cards and Cox & Kings Exclusive retailing
P
Milkway Express Spencer Retail Ltd and Foodworld Targeting the southern market
Re‐launch brand in Mumbai, Delhi, Bangalore,
Movenpick Rhapsody Foods & Beverages
Hyderabad, Kolkata and Chennai
Strengthens marketing, sales and distribution.
Strengthens marketing sales and distribution
ICE CREAM MARKET – INDIA.PPT 13

14. Falling prices of raw materials reducing production costs assisted
by government policy has benefited the players
Falling input costs offsetting milk and sugar price rises
• Vanilla prices have fallen drastically to INR 100 per kg from INR 3500 per kg in 2003
 Vanilla being the most preferred flavour in the market allows players to maximise profits
Cost incentives
has made
has made
• In February 2006, the government removed the 16% excise duty on ice cream, which offset the
investments
rise in milk and sugar prices in 2006 and 2007
attractive
Prices of Sugar Medium grade: Delhi Milk Prices
2500 40
35
er Litre
Quintal
2000
30
1500 25
INR/Q
20
INR pe
1000
15
500
10
0 5
0
04
05
06
07
08
5
6
7
8
‐0
‐0
‐0
‐0
p‐
p‐
p‐
p‐
p‐
0
1
2
3
4
5
6
7
8
ar
ar
ar
ar
‐0
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Se
Se
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Prices of Sugar Medium grade: Delhi MRP of GCMMF's Amul Gold Milk MRP of GCMMF's Amul Taaza Milk
ICE CREAM MARKET – INDIA.PPT 14

15. •Market Overview
•Drivers & Challenges
Drivers & Challenges
•Trends
•Competition
•Key Developments
ICE CREAM MARKET – INDIA.PPT 15

16. GCMMF is the market leader with strong competition from HUL,
Vadilal and Mother Dairy
Major Players Market share
• Fiercely competitive due to attractive economics
with profit margins ranging between 30‐50% 55%
Unorganized
• Organized sector comprises GCMMF’s Amul,
HUL’s Kwality Walls, Mother Diary, Baskin
Robbins and a number of regional brands
• Amul is the market leader and is at the forefront
of targeting the rural market
ft ti th l k t i d
Organized
45%
• For most national players viz. GCMMF, HUL and
Mother Diary, revenue from ice cream accounts Vadilal
for a small portion of their total revenues
GCMMF 15%
• Premium segment:
Premium segment: 37%
 Baskin Robbins is the single largest premium ice
cream brand 14% Mother Diary
 New entrants include Amul, Movenpick, Haagen Dazs
and Snowberry
13%
16%
5% HUL
Others
Baskin Robbins
A well established unorganized sector creates a fiercely competitive environment for the
larger players
ICE CREAM MARKET – INDIA.PPT 16

17. •Market Overview
•Drivers & Challenges
Drivers & Challenges
•Trends
•Competition
•Key Developments
ICE CREAM MARKET – INDIA.PPT 17

18. Key Developments
Date Development
15‐Dec‐ 08 Snowberry USA, an American ice cream retailer, is planning to enter the Indian ice cream industry with an investment of
USD 50 mn in 2010 through a franchise known as Snowberry India Private Limited.
23‐July‐08 In July 2008 Devyani Food International, owned by RJ Corp, acquired Cream Bell. Cream Bell which was valued at USD 29
In July 2008 Devyani Food International owned by RJ Corp acquired Cream Bell Cream Bell which was valued at USD 29
million in 2007 today stands at around USD 95–106 million. Cream Bell has launched four new flavours in 2008 namely
Belgian Chocolate, Chocolate Coffee, Almond Fudge and Strawberry. RJ Corp has decided to set up a production facility in
Goa with an investment of USD 8.5 million. The plant will have a capacity of 6 million litres. This will allow them to cater to
the southern and western markets in the country. They have invested USD 21.3 million towards capacity creation this year.
24‐June‐08 Dairy Foods set up the first ever ice cream factory in the Kashmir Valley. They have invested USD 0.5 million on this project.
y p y y y p j
13‐May‐08 Movenpick, a Switzerland‐based company, through a distribution arrangement with Rhapsody Foods & Beverages, re‐
launched their brand in Mumbai, Delhi, Bangalore, Hyderabad, Kolkata and Chennai. They are planning to develop retail or
kiosk outlets in other cities by 2009.
31‐July‐07 Dominoes Pizza is also planning to enter the ice cream segment in India. The company will introduce ice creams in vanilla,
strawberry and chocolate flavours. Their product will be made available in dining and home delivery concepts.
strawberry and chocolate flavours. Their product will be made available in dining and home delivery concepts.
18‐June‐07 New Zealand Natural, a global ice cream parlour chain, has tied up with Manju Enterprises to launch 100 outlets in the
country by 2009. Taking an aggressive strategy, New Zealand Natural is offering its franchisees a margin of 50 per cent.
ICE CREAM MARKET – INDIA.PPT 18

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ICE CREAM MARKET – INDIA.PPT 19