The North-East region of India has been in the news consistently for various reasons like politics, sports, business, infrastructure developments, the North Eastern Region Power System Improvement Project (NERPSIP), etc.
New projects launched by the Indian government, like new rail tracks, new highways, and new waterways, have opened new channels of improvised connectivity to far and remote regions of the north-eastern region. This has given rise to new business opportunities and avenues that were unexplored earlier. The North-East region is a fast-growing market with major investments flowing in from different business conglomerates, and the scope of opportunities is giving a boost to the development of sectors that have been lying low or have been neglected until now.
The ice cream industry is one such sector that feels triggered by the new developments happening in the eastern region. East India has 12 months of conducive weather for the ice cream market, unlike the north of India, where the graph of ice cream sales starts dipping as the temperature starts dropping. Eastern India has fewer power disruptions now than compared to a few years earlier, and its road network is more connected than it was in the past. This has now enhanced the efforts of ice cream manufacturers, suppliers, and dealers to maintain the product’s shelf life and transport ice cream in its original shape and size. This has made the sustainability of the item easier now, and the range of the market is far wider now than before.
The ice cream industry feels more optimistic than ever before; the renewed vigour is obvious in the statements made by the manufacturers. The growth prediction for this industry is likely to be 30 to 35% in the financial year 2023–24.
Seeing the rapid growth in ice cream sector, Ice Cream Times spoke to some eastern manufacturers of ice cream. Excerpts from the one-on-one discussion between the players in this industry are certainly a good read.
Performance in Easter Region
From Bihar, we spoke to Neeraj Tahalani, Director of Golden Dairy Products Pvt. Ltd. He said, “Business is so far so good. Everything is good right now. Moreover, sales have increased. This time, I believe there is a good, straight explanation why the sales have kicked off well from January on. Since the summer season has begun, normally the sales don’t pick up so rapidly, yet everything is going smoothly for us, and we anticipate a pleasant summer. The wedding season and festivals in January and February have greatly increased commerce. Although phenomenally, the other regions are about 10% higher, but the eastern market is currently increasing sales much more quickly.”
“Eastern India is booming in the ice cream sector. West Bengal is experiencing very good growth, and with the post-pandemic, the markets are growing very rapidly”, replied Anuvrat Pabrai, founder of Pabrai’s Ice Creams. “As a brand, we are expecting a minimum of 35–40% growth in 2023–24 compared to 2022–23.” Pertaining to the new store openings, we will finish this financial year with 20+ new stores, and in 2023-24, we expect new store openings to go up to at least 30+ over our store count as of March 31st, 2023”.
Finding the ice cream business perturbing, Swarup Goswami, founder of Hertiz Ice Cream, said, “Discussing the ice cream industry after COVID, it has become a sick industry because the government is imposing fines on the micro industry and the kutir (cottage) industry in the name of annual returns, and many micro industries are unaware of this. Besides, the 18% tax has affected the product, causing the industry to go limp. There was a slight improvement when the market opened after the lockdown, but it wasn’t a sustainable improvement”.
Being very positive in his approach towards the sale, Hitesh Sharma, distributor of Vadilal Ice Cream, says, “We have been distributors in this industry for the past 30 years.” “We are indeed very hopeful to see more growth in sales this summer season compared to the previous year.”
East India is a bit slow in the ice cream business, but Hasan Akbar Ali, MD, of Frosty Ice Cream, Cuttack, is very optimistic about the increase in sales. He said, “As of now, the ice cream industry in the eastern part of India is lagging behind. Hopefully, within the coming years, it will rise up and be on par with the rest of India”.
Looking forward to a better season, Shibasish Paul, Manager of Bappa IceFactory, sounds gleeful: “Last year’s business performance was very good. Relatively, the business has increased considerably. We are trying to expand our business and are hopeful to start manufacturing in the eastern region. We cover the states and cities around Assam, Manipur, and Mizoram.”
“Ice cream sales are growing by a margin of roughly 40% per year”, says Siddharth Karnany from S.M. Ice Cream Mart. “The production is increasing, and likewise, the market is seeing an uplift of 40% every year, and this figure also reflects the rural penetration”.
Manager of Goldy Enterprises, Creambell Ice Cream distributor, Nishant Burman, said, “The scope seems good, and we are witnessing good sales too.”
Improving sales in the eastern marketPresently, in the eastern region of India, the ice cream industry business is at the fourth level compared to the other regions. Seeking an answer on the same line, Neeraj Tahalani replied, “We had already planned our expansion for August–September 2022 prior to the Indian Ice Cream Expo (IICE), which was held in Hyderabad in 2022. We placed our orders for the machines and equipment the same year, in October. By the end of December or early January 2023, most of the installations would have been complete. So, 40–50% of the plant expansion is now complete. Hopefully, by February, the remaining commissioning will be done, and by March, we will be ready for the peak season. The eastern front has changed now. The ice cream industry has been busy for all 12 months of the year. There is no lag period in the east anymore”.
Adding an enthusiastic comment, Anuvrat Pabrai said, “We need to acknowledge that Eastern India is the largest consumer of milk and milk products in India. Bengalis love sweets like no one else does in India. If we are able to channelize the consumption towards ice creams, Eastern India could become No. 1 in the entire country for ice cream consumption.”
“I don’t foresee any improvement right now”, admits Swarup Goswami. “Until there is economic development and an increase in income with new employment being drawn, progress is not likely. Especially, the micro-small industry’s tax slab of 18% is not reduced until the raw material purchase tax slab is reduced, and there is no scope for development for this industry. The electricity price and raw material prices have gone up, and the co-content price hike has affected the industry. If you notice, the ice cream price has not increased, but the material prices have. It has been noted that the multinational companies have increased their product prices, but the small-scale industry is still facing many difficultiesrecently,”
Hitesh Sharma informed us about gradual progress. “We are expanding slowly. If you notice, ten years ago, there was no market for this industry in the north-eastern states. But gradually, the industry has seen expansion. Earlier, our business was around 20 lakhs per year, and now the business has reached four crores. This is a huge difference that has come around now. It is certainly a growth of the ice cream market.”
Electricity is a prime necessity to maintain ice cream’s texture and taste. Explaining the situation of the city’s power consumption, Hasan Akbar Ali replied. “We are expanding our business in the surrounding village area by introducing a new variety of items. Earlier, the power sector of the state was insufficient to support the ice cream industry. Due to frequent power failures, there were ice cream storage issues. Without the required refrigeration temperature, it was impossible to maintain the format and shape of the ice cream. Now in the current scenario, the situation has become much better with improved power sector and road connectivity. Business is likely to shoot up in this region”.
Expressing forthcoming sales, Shibasish Paul reverted, “Certainly, the sales should increase this year, because there has been a lot of improvement this year. Last year there was a shortage, which will now be taken care of as most of the establishments have increased their capacity from this year onwards.”
Thinking of expanding his boundaries, Siddharth Karnany narrates, “I’m looking at a very good market. In the next five years, the ice cream industry in eastern India is going to boom. We are already working in eastern India, and again, our focus is on Kolkata, Bangladesh, and Nepal as well. This is leading us to expand our business”.
Giving a frank input, Nishant Burman accepted that they are actually the distributors and the growth of the industry depends on the company’s strategies and new policies the firm implements for the growth of the business. It also depends on how the company capitalizes on the market. This change differs from company to company. As far as I’m aware, in the eastern region, the ice cream industry is doing well compared to the rest of the region. But I’m not aware of the exact data”.
Better connectivity leads to growth Expressing his limitation, Neeraj Tahalani said, “At the moment, we are limited to only Bihar now. There are a lot of pockets in Bihar that we would like to cover first and establish ourselves in the distant regions of Bihar. Once we cover the market, we will move to Jharkhand, and later, we will further move to the far eastern side. Definitely, the infrastructure has grown, and because of this, we will be going further east in the next five years”.
Announcing the future plans, Anuvrat Pabrai has a positive approach. “West Bengal has the largest number of MSME industrial units in the country. The government is actively promoting new industrial estates in various parts of the state and also improving infrastructure across the state. Private industrial estates are also coming up with premium facilities. As a matter of fact, Pabrai’s Ice Cream is opening a new factory in one such private industrial complex on Bombay Road. The project is a greenfield manufacturing facility for manufacturing 100% natural ice creams with a capacity of 5 million litres of ice cream per year. The project cost is Rs. 12 crores, and it is fully funded from internal resources. It is expected to be operational by the end of December 2023.”
Showing concern over the issue, Swarup Goswam said, “The new infrastructure will bring profit to the government but will not benefit the industry in Jharkhand. These things won’t help the ice cream industry. There has to be a development within people as such; new employment has to be created; business has gone down because of the GST, demonetizations, and the biggest reason being COVID. Covid brought about the downward trend of the ice cream industry. There were false rumours that ice cream could spread COVID; besides, the tax hike impacted the industry. It was winter when COVID began, and ice cream is a cold item. I agree that the government has given a discount of up to Rs. 40 lacs, but there is no benefit given to the raw materials of the ice cream industry. We have to procure raw materials and packaging material from neighbouring states by paying 18% GST, which adds burden to the business”.
Much of the problem with road connectivity and electricity has improved. Hitesh Sharma affirms, “Yes, unlike before, definitely there has been an improvement.
Earlier, we had issues with the supply of electricity, but now there’s round-the-clock supply. The connectivity has improved too. Earlier, it was difficult to reach out to the farther-off places, but now we are able to work in different areas easily”.
Balancing is a must in business. Hasan Akbar Ali has greater plans for the year 2024, with more distributors to endorse their products in the villages and small towns. “There is more availability than demand; when you see it, you buy it. So, the market has to be created first to increase demand,” he added.
“There has been a gap between demand and supply,” confirmed Shibasish Paul. “Certainly, the sales should increase this year, because there has been a lot of improvement this year. Most of the establishments have increased their capacity this year”.
“We are looking at a bigger margin,” eyes Siddharth Karnany. “With new and improved infrastructure, more money is now available. The ice cream market is growing, with more and more people now preferring ice cream in the summer. It is definitely going to be a bigger margin. As demand increases, the manufacturers will be compelled to improve the quality. A better-quality product will definitely go to a better market, and this will be beneficial for all.”
“The new infrastructural enhancements will allow the larger brands to profit since they will greatly help the factory owners. The large brands may boost their profit margins or expand their operations if the cost of transportation decreases. Since we are the intermediaries, we can anticipate making money whenever new entrepreneurs join us and start an ice cream company,” addressed Nishant Burman.
Challenges this season:There are possibilities for progress when there are problems, according to Neeraj Tahalani. Without difficulties, progress would not occur at all. The contestants could also face difficulties, and so forth. It is intriguing when there are obstacles on our path, since that is when we have a chance to reach the goal. Skimmed milk powder (SMP) was formerly thought to be in low supply, but as of right now, we have pre-purchased the product in anticipation of the expected sales throughout the summer. So, it is unlikely that there would be a scarcity of skim milk powder. We won’t likely encounter any difficulties with raw supplies or packaging materials because we previously prepared for and bought them.
Anuvrat Pabrai shared his worries about the challenges on the way, “This year, summer has arrived early, and we anticipate a long and sweltering summer. All manufacturers predict soaring sales as a result of the early start to summer.
The following problems are envisioned:1. The high cost of SMP, which is probably going to reach an all-time high this year,2. The suppliers’ capacity to handle pre-orders for additional quantities of packaging supplies and dry raw materials3. Lack of available completed products Storage space prevents pre-stocking of items.4. State governments’ capacity to deliver consistent power throughout the busiest summer months
It is a matter of great concern when there is power shunting. Swarup Goswami is worried about certain issues. According to him, “A very big challenge is that the small-scale industry or the “cottage” industry cannot collect GST, whereas the multinational company, private limited company, or large company are able to charge GST, unlike the small-scale industry. The business practises of global corporations and small-scale industries differ significantly. The cost of electricity has increased, and since ice cream requires a constant supply of electricity, Jharkhand frequently has power outages. If any infrastructure fails, the harm might be quite severe. So, we are forced to deploy enormous generators to supply power. The cost of production rises with plant size.”
Hitesh Sharma has a real positive approach to this year’s business: “There are no challenges, I would say. The only challenge now, I believe, is that there is strong competition.”
With meagre challenges to face, Hasan Akbar Ali enunciated, “Previously, there was a shortage of power supply. But now there is a power supply around the clock. Raw materials and packing materials are available all over India; there is no shortage. But local cups, spoons, and packaging materials are not readily available locally; we have to procure them from Ahmedabad, Gujarat, or other dealers across the country. This definitely impacts the manufacturers’ margins.”.
“Apart from connectivity, there is no other major challenge. Earlier, we had electricity issues,” said Shibasish Paul. “Now the electricity shortage has been resolved. There is no load shedding happening now; earlier, we had a power supply for every alternate hour. I may sound politically inclined, but the fact is that there has been some improvement under the Modi government. We work for the regular supply of raw materials. Hence, there is no shortage of raw materials as such.”
“Except for the raw material prices going up, we don’t see any challenges. Of course, other than labour and governmental prices going up, we don’t foresee any challenges,” worded Siddharth Karnany.
Straight and to-the-point replied Nishant Burman, “Other than general business competition, there is no other challenge to worry about”.
Growth Expectations in 2023Being optimistic about the business in the forthcoming years, Neeraj Tahalani articulated, “The improved infrastructure has given a boost to sales already. The ice cream market is likely to close the gap, and it will be on par with the other regions across India. In four to five years, there will be more business expansion in this region”.
Anuvrat Pabrai announced, “We are envisioning at least a 25–30% increase in sales over last year this year.”
“I see little progress unless the government makes any significant efforts to revive the ice cream business. The government doesn’t award subsidies in the electricity sector, and it doesn’t give a discount or erase fines for the small-scale industry. Besides, the raw material is the main ingredient, and the average price of the material has increased from the previous year. For example. The average price of skimmed milk powder was between 6 and 7 thousand/25 kg of different brands, but this year the price is 9 thousand. Such changes are required in the ice cream sector for improvement,” pronounced Swarup Goswami.
Hitesh Sharma is hopeful about his business: “We are expecting 30% growth from the previous year. The growth will keep happening every year”.
“I’m expecting a 20 to 25 percent growth leap in 2023,” said Hasan Akbar Ali.
Giving his input, Shibasish Paul said, “I expect between 30 and 40% growth in the business in 2023. In the coming three to four years, we are hopeful for the growth of this industry by up to 40%.”
With confidence, Siddharth Karnany puts forward, “As I stated earlier, I assume the growth is likely to increase by a margin of roughly 40% per year.”
Concluding the story, Nishant Burman shared, ‘Higher expectations are determined by the growth of new areas, as well as the population of the new region and their purchasing power. If new locations are established, numerous enterprises will launch their products there. As a result, the ice cream sector in small communities will develop. Yet, ice cream is a costly commodity, and sales are determined by people’s buying power”.