After announcing its plan to revive the iconic soft drink Campa-Cola, to expand its presence in India’s soft drinks market, Reliance Industries-backed Reliance Consumer Products is all set to enter the dairy market that includes Amul. And brands like Mother Dairy are already there.
Reliance Industries’ foray into the Indian ice cream market will primarily benefit the industry by giving it a much-needed boost. The Indian ice cream market is now controlled by a limited number of major firms, and the industry is extremely fragmented, with many small players finding it difficult to compete.
Due to Reliance’s introduction into the market, the industry may see a rise in size, investment, and consolidation, all of which can help make it more competitive. Reliance Industries Limited (RIL) has made an entry into the ice cream market with its brand ‘Independence’ is likely to impact the Indian ice cream market in various ways. Reliance is a global giant with a strong presence in several businesses, including retail, telecommunications, and mass media.
The company’s entry into the ice cream market is expected to intensify competition and result in a shift in consumer preferences. Currently, the Indian ice cream market is dominated by players such as Amul, Vadilal, Mother Dairy, Creambell, Havmor, and Kwality Walls. According to a report by Research and Markets, the Indian ice cream market is expected to grow at a CAGR of 17.03% during the period 2020–2025, with turnover touching $25,000 crore in the year 2022. The report cites factors such as rising disposable incomes, changing consumer preferences, longer summer seasons, and increasing urban mobilization as the key drivers of growth.
With Reliance’s entry into the market, competition is likely to intensify. The company’s strong distribution network and retail presence can give it an edge over competitors. Reliance Retail operates over 15,000 stores across 7,000+ cities in India, which can provide a strong platform for the company to launch and promote its ice cream brand. Moreover, Reliance has a strong online presence, and it can leverage this to reach out to customers and promote its ice cream brand.
Reliance’s foray into the ice cream market can also lead to a shift in consumer preferences. The company has a reputation for offering high-quality products at competitive prices. With its focus on innovation and product differentiation, Reliance can introduce new flavours and varieties, which can attract customers who are looking for something new and different. Reliance can also use its financial muscle to invest in research and development to come up with new products and flavours.
The company can also use its experience in the retail industry to improve the packaging and presentation of its ice cream products, which can appeal to customers who value aesthetics.Another aspect of Reliance’s entry into the ice cream market is the impact it can have on the employment scenario. The Indian ice cream industry is highly fragmented and dominated by small and medium enterprises.
Reliance’s entry into the market can lead to consolidation, with smaller players struggling to compete with the global giant. However, Reliance’s entry can also create new job opportunities in the manufacturing and retail sectors. The impact of Reliance’s entry into the ice cream market can also be felt by consumers. The company’s strong brand image and reputation for quality can lead to higher expectations from consumers.
Reliance’s pricing strategy can also impact the market. The company is known for its aggressive pricing, and this can lead to price wars with other players in the market. Moreover, Reliance’s entry into the ice cream market can lead to a change in the marketing and advertising strategies of other players. Companies will need to come up with innovative strategies to retain their market share and differentiate themselves from Reliance.
Reliance’s entry into the ice cream market is likely to have a significant impact on the Indian ice cream market. The company’s strong distribution network, retail presence, and focus on innovation and product differentiation can give it an edge over competitors. Reliance’s entry can also lead to a shift in consumer preferences and impact the employment scenario. The Indian ice cream market is likely to witness interesting times ahead with the entry of a global giant like Reliance.
The firm may profit from expanded coverage benefits as a result of Dr. Rupinder Singh Sodhi’s recent appointment as RIL’s MD and former MD of AMUL. Dr. Sodhi has worked with AMUL for 41 years, resigned from the GCMMF in January of this year, and is reportedly assisting Reliance’s food business in functioning smoothly. RIL may also create its dairy product using their experience and skills. In addition to Dr. Sodhi, Reliance has named Sandipan Ghosh as the business leader for the Reliance Retail segment of dairy and frozen goods. He has done work for Lactalis India and Milk Mantra.
Will it help?
Reliance Industries is a global conglomerate with a strong presence in various businesses, including energy, petrochemicals, natural gas, retail, telecommunications, mass media, and textiles. The company has a proven track record of successfully launching and scaling businesses in different industries, and its entry into the ice cream market is likely to bring in significant investment and growth opportunities for the category. Moreover, Reliance’s focus on innovation and product differentiation can help expand the range and variety of ice cream products in India. This can lead to a shift in consumer preferences towards premium and differentiated ice cream products, which can benefit the entire category.
In conclusion, the entry of Reliance Industries into the Indian ice cream segment is likely to help the category in India. The company’s strong distribution network, retail presence, and focus on innovation and product differentiation can help expand the reach and range of ice cream products in India. This can lead to increased investment, growth, and competitiveness in the sector, benefiting both large and small players in the market.
History of similar entries in the ice cream vertical
There are several examples of global companies that have entered and disrupted the ice cream market in different countries. One of the most notable examples is Nestle, a Swiss multinational food and beverage company that is one of the largest players in the global ice cream market. Nestle has a strong presence in the ice cream market in different countries, and its entry has often led to significant changes and disruptions in the local market.
For instance, in 2014, Nestle entered the Indian ice cream market with its brand ‘Dairy Rich’. The company leveraged its existing distribution network and marketing expertise to quickly gain market share and become a major player in the Indian ice cream market. Nestle’s entry into the market led to increased competition and innovation as other players tried to match its product range and quality. Another example is Unilever, a British-Dutch multinational consumer goods company that owns brands such as Magnum, Cornetto, and Ben & Jerry’s. Unilever is one of the largest players in the global ice cream market and has a strong presence in different countries.
The company has been successful in using its global brand recognition and marketing expertise to introduce new products and flavours in different markets, driving growth and innovation in the sector. There are several examples of global companies that have entered and disrupted the ice cream market in different countries, including Nestle and Unilever. These companies have leveraged their existing strengths, such as distribution networks, marketing expertise, and product innovation, to gain market share and drive growth in the local market.
Impact on smaller brands
The entry of a big company like Reliance Industries into the ice cream vertical is likely to have both positive and negative impacts on smaller ice cream brands that are regional and city-based. Additionally, Reliance Industries’ focus on product innovation and differentiation can lead to a shift in consumer preferences towards premium and differentiated ice cream products, creating new opportunities for smaller brands to offer unique flavours and products.
This can lead to a concentration of power in the hands of a few large players, which can limit consumer choice and lead to reduced innovation and product diversity in the market.The entry of Reliance Industries into the ice cream vertical is likely to have both positive and negative impacts on smaller ice cream brands that are regional and city-based.
Benefit for the overall category
The entry of a large player like Reliance Industries in the Indian ice cream market can help improve the overall category and address some of the challenges that the sector currently faces. One of the biggest challenges that the Indian ice cream market faces is the lack of a robust cold chain and supply chain management system. This has led to issues such as product spoilage, supply chain inefficiencies, and high logistics costs, which have hampered the growth and development of the sector.
With its strong financial resources and expertise in retail, logistics, and supply chain management, Reliance Industries can help address these challenges and create a more efficient and reliable supply chain for the ice cream market. The company can invest in building a robust cold chain infrastructure, which can help ensure the quality and freshness of ice cream products and improve the availability of ice cream in different parts of the country. This can benefit both large and small ice cream brands, as it can help them reach new markets and improve their product quality and reliability.
Moreover, Reliance Industries’ entry can also help improve the overall perception and awareness of the ice cream category in India. The company’s strong marketing and branding expertise can help create a more positive image of ice cream as a healthy and indulgent snack, which can drive consumption and growth in the sector. Additionally, its focus on product innovation and differentiation can help introduce new flavours and formats, which can create new opportunities and drive growth in the market.
In conclusion, the entry of Reliance Industries in the Indian ice cream market can help improve the overall category by addressing challenges such as cold chain and supply chain management and improving perception and awareness of the category.
Scenario of a price war
A price war in the ice cream market can have negative consequences for both the market and the players involved. A price war typically occurs when competing brands aggressively lower their prices in an effort to gain market share or to compete with a new entrant like Reliance Industries. This can lead to a downward spiral of prices as each brand tries to undercut the other, leading to a loss of profitability and, in some cases, financial ruin.
A price war can have several negative impacts on the ice cream market as a whole. First, it can lead to a decline in product quality, as brands may cut corners and use cheaper ingredients to keep their costs low. This can compromise the taste and texture of the ice cream, which can lead to a decline in demand and, ultimately, a decline in the overall market.
Second, a price war can lead to a concentration of power in the hands of a few large players who have the financial resources to sustain low prices over the long term. This can lead to a reduction in competition and product diversity, which can harm consumers who are left with fewer options to choose from.
Third, a price war can lead to a decline in profitability for all players involved, which can harm the growth and development of the sector. This can lead to a reduction in investment, research and development, and marketing, which can limit innovation and stifle the growth of the market.
In conclusion, a price war in the ice cream market can have negative consequences for both the market and the players involved. While lower prices can benefit consumers in the short term, they can harm the quality, diversity, and innovation of the market in the long term. Therefore, it is important for players in the ice cream market to focus on creating value through product innovation, quality, and marketing rather than engaging in a race to the bottom in terms of pricing.