FOOD AND BEVERAGES

Frozen Dessert

In a hot country like India, ice cream fails to melt hearts

SHALINI S. SHARMA
05 June 2009

Dieter Lengauer, the executive chef at Delhi’s Hyatt Regency hotel, was
brimming with plans and confidence when he took up his assignment last
October. Most of his plans worked, including reopening the hotel’s café, and
introducing four interactive kitchens offering an array of dishes that changed
frequently. One area, though, where the master chef had to accept defeat
was ice creams. His initial list of 12 flavours a week — three new options
every day with the cycle repeating after every four days — was cut down to
three (vanilla, mango and strawberry) in no time because there were no
takers for the fancy new offerings. “The Indian consumer is unwilling to
experiment as far as ice cream is concerned,” laments Lengauer.

Despite being a hot country with a young population, India has never made
(Bloomberg)
ice-cream culture its own, unlike in the West. In his home country Austria,
says Lengauer, every “second person can be seen having an ice cream from
a roadside kiosk or cart”. A look at the charts (see ‘Not Moving’) shows that since 1996, ice cream’s share of like
foodstuffs in India has remained stagnant, even as soft drinks’ share has grown exponentially. India’s low per capita
ice cream consumption — a mere 250 ml, compared to 23 litres in the US, 18 litres in Australia, 14 litres in Sweden
and 800 ml even in neighbouring Pakistan — has contributed to the segment remaining a tiny Rs 1,000-crore market
(taking into account organised players only), according to CMIE. On the other hand, coffee is a Rs 6,000-crore
industry, confectionery Rs 3,400 crore, and soft drinks, Rs 3,000 crore.

Ice cream is growing at a leisurely 12-15 per cent, according to R.S. Sodhi, chief general manager of Gujarat Co-
operative Milk Marketing Federation (GCMMF), makers of Amul — the market leader with about 40 per cent share.
The pace of growth, admits Sodhi, is not in line with “the expectations of industry players”. While Indians’ preference
for other snack items has played its part in stunting growth, industry players have also failed to create the all-
important ‘buzz’ around its consumption. The companies blame everything, from the niche positioning of ice cream to
supply-chain bottlenecks to even power cuts for the lack of traction in the segment.

Cold Shoulder
Most companies go on the defensive when asked about ice-cream’s laggard status, saying it cannot be compared
with other foods. “Ice cream is still not an everyday item of consumption in India,” says Paul Thachil, CEO of Mother
Dairy, which dominates the Delhi and NCR market with 62 per cent market share. “It has to compete with an array of
other options including even a spoonful of sugar.” Adds Sodhi: “It is still associated with special occasions,
celebrations and seasons, and is definitely not something you could hang out over with friends, unlike coffee or
pizza.” A spokesperson of Hindustan Unilever (HUL), India’s No. 2 player in ice cream, says much the same thing.
Ice cream also has the unappetising fate of having to compete with occasion-specific and region-specific sweetmeats
and delicacies. On push carts, desi flavours such as kesar pista, kulfi and elaichi are still the most sought after. Given
Indians’ disinclination to try anything new, companies have tend to ‘innovate’ around these tastes only. Mother Dairy’s
new fruit-based ice cream, which is vanilla ice cream garnished with fruit pieces, is a prime example.

There are genuine problems, too. For one thing, demand for ice cream is seasonal, and it also requires specific
infrastructure. Mother Dairy’s Thachil explains: “Any retailer with a tub full of ice can sell soft drinks, but for ice cream
he has to have proper refrigeration.” For that, one requires proper power supply, which India doesn’t have, and which
Thachil blames for take-home ice cream not taking off in the country. Transporting ice cream across India requires
massive infrastructure, because of which “supplies over long distances are irregular”, says Madhu Parikh, CEO of
Universal Dairy, owners of Cream Bell brand.

Net effect: ice cream has remained a local product, with regional companies dominating. If the west has Dinshaw and
Havmore, the north has Dairy Fun and Cream Bell, while the south has Hatsun Agro’s Arun and Sarvana Stores’
Jamaai ice cream. This regional dominance has splintered the market, and ice cream still forms a minuscule portion
of a big company’s brand portfolio. HUL, for instance, which owns Kwality Walls brand, sold Rs 160 crore worth ice
cream in January-December 2007, while its entire food business is worth more than Rs 2,000 crore. And Mother
Dairy has only Rs 150 crore worth ice cream business in a total business of Rs 3,000 crore.

Trying, Trying, Trying...

Still, companies are trying to cut through the customer intransigence. Kwality Walls is targeting three consumer
segments through specific sub-brands: Cornetto for youth, Paddlepop for children aged 8-12, and Selection for in-
home consumption. GCMMF has been adding deep freezers in the market, providing two-litre take-home packs, and
opening Amul preferred outlets and scoop parlours. Mother Dairy has introduced vitamin-C laced ice lollies.

Low-fat and low-sugar alternatives are also being increasingly

offered. Ice cream parlours — not too successful so far — are
increasingly being relied on to woo consumers.

However, a concerted effort to give the consumer reason to

consume more ice cream is missing. Individual companies do
advertise in summers, especially during high-visibility sports
events, but the initiatives lack imagination. No company, for
instance, has tied up with coffee chains or liquor companies to offer
ice cream-based cold coffees or cocktails, respectively. Sodhi of
GCMMF feels such tie-ups would also cater to only a minuscule
population. Instead, he advocates lowering of prices, cut in taxes
and reduction in margins to attract consumers.
Some initiatives don’t work on a large scale. Baskin Robbins, for instance, occasionally ties up with film distribution
companies and names a flavour after a movie as it did with Lovestory 2050 or Shah Rukh Khan-starrer television
show Panchvi Pass last year, but its products are expensive — two scoops of Baskin Robbins’ exotic ice creams cost
Rs 90, while two litres of Vadilal’s vanilla flavour cost Rs 80 — and are confined to a niche segment of the market.

How a ‘summer’ product such as ice cream has become a craze in cold countries such as Austria and not in India
remains a mystery that even Indian companies are unable to fathom. Even while comparing like to like, how Pakistan,
which is probably hotter and has worse infrastructure, can have three times India’s per capita ice cream consumption
is another riddle that companies here admit to not having an answer to. Unless industry players can generate a
burning desire for the product among consumers, ice cream looks set to remain in deep freeze.

(Businessworld Issue Dated 9-15 June 2009)