On the one hand, ice cream is hot this summer, with healthy sales growth of 15 to 20 per cent being projected as the mercury rises to unprecedented levels in parts of the country.
According to data from market intelligence firm Kantar, sales of ice cream and kulfi skyrocketed in April this year, experiencing 58 per cent volume growth. According to Statista, the Indian ice cream market amounts to $2.32 billion in 2024, and is expected to grow at a compound annual rate of 4.53 per cent until 2028.
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Not surprisingly, new and creative flavours are descending on shops. A report in the South China Morning Post last month spoke of artisanal ice cream in “creative flavours”— such as betel leaf, chilli basil, sesame candy, and masala chai – being launched in India.
On the other hand, India is proving to be tricky terrain for ice cream sellers, with one large company “evaluating its options”.
Amid this shifting landscape, the one constant is Amul.
Gujarat Cooperative Milk Marketing Federation, the cooperative that markets brand Amul, lords it over the ice cream market with a share of more than 55 per cent.
What is it that has worked for it?
End to end
“Since the launch of our ice cream business in 1996, and its subsequent expansion from the next year itself, we realise that the only way to grow is to operate on both ends of the market — simultaneous expansion of both production capacities and distribution channels,” says Jayen Mehta, managing director, Amul India.
Distribution, in particular, is critical here, requiring an extensive cold chain network if a brand wants to go national.
“Ensuring end-to-end cold chain infrastructure is also a huge factor impacting operation and profitability in the category. Distribution is an expensive proposition in the market and it needs significant capex for manufacturing and distribution,” says Soumya Dwibedi, partner, Consulting, Deloitte India.
Amul operates as many as four main distribution highways: One for ambient products such as milk powder at room temperature, one at 0 to 4 degree Celsius for cold products (cheese and chocolates), and a third for fresh products (milk, curd) with a shelf life of 48 hours. The fourth, for ice cream, is the most challenging, because it has to be maintained at minus 20 degree Celsius.
It has helped that Amul is huge in milk. What has also helped is the rapid electrification and uninterrupted power supply.
“The integrated dairy players have an advantage in this difficult category, as they already control a significant part of the value supply chain the business requires,” Dwibedi adds.
Companies in the fray have been able to address the cold chain storage issue by using the same chain for other products from the brand. This is visible in Amul’s portfolio expansion beyond milk to food products, such as diced cheese, paneer, frozen pizzas, and ice cream.
“Anyone who buys a deep freezer, knows that there is an assured business at the end of it. It is not just ice cream they will be storing and selling, but the entirety of our frozen food portfolio,” Mehta says.
The farmer-owned cooperative has expanded capacity to address the growing category demand. After 19 operational ice cream plants until last year, Amul has added six more this year, taking the total to 25.
“We have invested over Rs 1,000 crore this year to expand our capacities. With a robust supply chain of more than 18,000 distributors, we are now able to reach more than 1 million retail outlets across the length and breadth of the country, including towns and cities with a population of just 5,000,” Mehta says.
The plans for the future are equally promising: Amul aims to double its ice cream capacity in the next two years.
Not for all seasons
While the ice cream category provides a huge potential, it comes with challenges.
In March this year, London-based Unilever — the maker of ice cream brands like Ben & Jerry’s and Magnum —announced its intention to transform itself into a simpler, more focused, and higher performing company by separating the ice cream business.
Following this, its Indian subsidiary, Hindustan Unilever — which owns Kwality Wall’s and Magnum — said it was evaluating options in the light of this announcement.
“Within the realm of fast-moving consumer goods, the profitability of the ice cream category is relatively low, as it comes with a host of challenges. One of the biggest challenges is the seasonality factor.
And while the summer months have expanded from February to July, there are still seasons, which are cut short by the early onset of monsoon — like last year — which makes demand prediction difficult,” says Dwibedi, adding,…
Read More: How Amul navigated the tricky terrains of India’s ice cream market | Company