ICE-CREAM MARKET INDIA

December 2008
 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

Drivers & sales
Challenges – Challenges: Competition with the unorganised sector on price and quality, and lack of
well-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
• Market Overview
• Advertising Trends
• Competition
• Factors – External & Internal
• Key Developments
 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 200 182
148 155
– Forecast to increase by 15% to reach 150
USD 240 mn in 2009 100
• 50
Characteristics
0
– Northern and western regions together
account for 70% of total market 2005 2006 2007 2008 e 2009 f
consumption
– Profit margins range from 30% to 50% Geographic Distribution
depending on the product segment
– 60% of ice cream sales occur during the North
summer months of April-June
30%
– 80% of sales is through street vendors
– Vanilla is the highest selling flavour and
West 40%
together with strawberry and chocolate it
10%
accounts for 70% of the market East

20%
South

Source: The Economic Times “Showers upset regional sales targets of marketers”, May 2007; IBEF “FMCG companies target consumers
in summer”, March 2008; India Environment Portal “Is our ice cream natural or synthetic?, August 2007; The Financial Express “Fire & Ice”,
June 2008; 51Rainbow company website
• Market Overview
• Advertising Trends
• Competition
• Factors – External & Internal
• Key Developments
Key Trends

Large scale advertising Product diversification to

target specific segments

Trend
s
Benefits derived from falling Franchises and strategic
costs partnerships to enhance
distribution
 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 9% Hatsun Agro
Kwality Walls
– Kwality Walls Almond Praline 78% 4% Metro Daily Ltd
– Kwality Walls Paddle Pop
•(HUL) 2%
7% Karnataka Milk

– 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%
Others
– Mini –metros: 16%

Advertising is the primary method to increase consumption and penetration levels

Source: exchange4media.com “Snapshot of advertising by Ice Cream category in Print during Jan-Apr’ 08”; Indiatelevision.com “Snapshot of
advertising by Ice Cream category in January-April 2008”, June 2008
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
•

Naturally flavoured ice cream i.e. without any artificial or synthetic flavour has been introduced for the premium segment
•

Players are capitalizing on the market which has become extremely health conscious
•

Capitalizing on
demand from a
niche markets

Company Product Health Benefits

Hindustan Unilever (HUL) Moo High calcium content, low calorie and
fat

GCMMF Probiotic range – Increases immunity, help in digestion,

Amul Prolife prevents diarrhoea and growth of
colon cancer
Mother Dairy Diet Low sugar and fat content

Source: Financial Express “Ice cream war begins as HUL, Amul oil plans”, February 2008
Enhancing network through franchises and strategic partnerships
Strengthens marketing, sales and distribution.
Company Projects
HUL Kiosks - Swirls
GCMMF Increase Amul Parlours from 1,800 to 3,000 in 2008 and 10,000 by 2009, Cyber stores in 100
cities, Cyber clubs in 125 cities
Franchising

Hatsun Agro Premium ice cream outlet – Arun Ice Cream Unlimited
Milkway Express 1000 outlets in southern and central India by 2009, counters at corporate campuses

Baskin Robbins Outlets in malls and multiplexes

Company Affiliation Purpose

HUL Indian Oil Corporation (IOC) Retail stores at petrol stations
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 Exclusive retailing
& Kings
Milkway Express Spencer Retail Ltd and Foodworld Targeting the southern market

Movenpick Rhapsody Foods & Beverages Re-launch brand in Mumbai, Delhi, Bangalore,
Hyderabad, Kolkata and Chennai

Source: FnBnews “Coops, the mainstay of India's dairy model”, October 2008; Business Standard “Ice-cream makers add
healthy flavours”, April 2008; FoodIndustryIndia “Gelato ice creams is a hit at AAHAR”, March 2008
• Market Overview
• Advertising Trends
• Competition
• Factors – External & Internal
• Key Developments
16%

Market
Major Players Market share
• Fiercely competitive due to attractive economics
with profit margins ranging between 30-50%
• Organized sector comprises GCMMF’s Amul,
HUL’s Kwality Walls, Mother Diary, Baskin 55%
Unorganized
Robbins and a number of regional brands
• Amul is the market leader and is at the forefront of
targeting the rural market
• For most national players viz. GCMMF, HUL and
Mother Diary, revenue from ice cream accounts for a
small portion of their total revenues Organized
45%
• Premium segment:
– Baskin Robbins is the single largest premium Vadilal
ice cream brand GCMMF 15%
– New entrants include Amul, Movenpick, 37%
Haagen Dazs and Snowberry
14% Mother Diary

13%
16%
5% HUL
Others
Baskin Robbins

A well established unorganized sector creates a fiercely competitive environment for the
larger players
Source: Business Line “Bringing in the creamy layer”, August 2008; magindia.com “Amul to launch new ice cream range”, October 2008
• Market Overview
• Advertising Trends
• Competition
• Factors – External & Internal
• Key Developments
Drivers & Challenges

Challenges
Low quality products and
competitive pricing from
unorganized sector
Drivers
Low consumption levels Lack of cold chain facilities

Developing institutional
channel
 External Factors
ECONOMIC FACTOR - Low consumption
ml levels

• Per capita consumption levels are very low at 200-250 ml while penetration rate is estimated at 15%

Significant scope for market growth by increasing either consumption levels or market penetration, or both 300 250 250
•
200
National players are focusing on increasing per capita consumption or penetration to grow the market 106
• 100

2000 2004 2008

Source: Economic Times “Vanilla prices shoot up on short supply”, October 2008; Business Today “The Branded Ice-Cream Tango
Begins”, July 2000; Rediff “The ice-cream war hots up”, March 2004; Vadilal Annual Reports; Hindu “The Ice-cream Punch”, June 2004
 External Factors
SOCIETAL FACTOR - Low quality products and competitive pricing in
the unorganized sector
The market faces a threat from low-quality products
•

Price difference between large and small players

•

Large players are at a competitive disadvantage compared to the unorganized players due to the low quality and pricing of the unorganized sector
•
External Factors
TECHNOLOGICAL FACTOR - 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

•

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
Internal Factors - SWOT