March 9, 2021
Already warm February brings joy to the ice-cream makers in India. Almost nearly 90 percent drop in sales last year due to pandemic, ice-cream manufacturers are holding high hopes for a strong summer season this year, and have lined up new launches in product variants.
The lockdown dampened peak season for ice-cream in terms of sales. This year, with demand setting in early, ice-cream makers are hoping to make up for lost business from 2020. Companies such as Amul, Vadilal, Hindustan Unilever, Mother Dairy and Havmor have already experienced nearly double-digit growth in February’21.
Rajesh Gandhi, MD of Vadilal Industries said that the industry is gearing up for ‘bumper sales’ this year. “The industry is observing an early onset in demand. Everyone is bullish on demand, which they expect to be upwards of 20-30 percent compared to last year and it seems like whatever sales we lost partially last year, could be recovered this season,” informed Gandhi.
Vadilal saw about 18-20 percent growth in February in 2021 and expects 20 percent more sales by March’21.
By February 2021, Amul said that it witnessed at least 20-25 percent higher demand compared to the same month last year and it expects demand to double this year. Amul expects about 30 percent higher demand. For the current fiscal (FY21), it anticipates sales to fall by 30 percent compared to FY20. In FY22, it is hoping to make up for the 30 percent fall, and further registering a 30 percent growth.
Mother Dairy too is seeing about 25 percent growth over last Feb thanks to rising temperatures, especially in northern states of India, while Havmor saw 8-10 percent year-on-year growth this February. Havmor is expecting to clock early double-digit growth during the summer months i.e. March-May.
Hindustan Unilever, which is one of the largest players in the segment — with its Kwality Wall’s brand – said that it is seeing a resurgence in demand across price points. “During the lockdown, while it did suffer a setback, with the recent increase in mobility, we are seeing significant improvement in discretionary and out-of-home categories. In this context, we believe our ice cream portfolio is well-positioned. We will continue to drive innovation in the category. Our new premium flavour in Cornetto is receiving a fabulous response across markets,” a company spokesperson said.
Ice-cream makers line up new launches
In a attempt to encash in on the early-onset of demand and recover the lost sales, ice-cream makers have queued several new products, variants, and flavors of ice-creams to cash in on the increased demand in pandemic time and have geared up immunity-booster products to increase distribution and earn benefits during this summer season.
Amul has lined up a major expansion plan for its kulfi range with new flavours such as Mumbai Kulfi, Rasgulla Kulfi, Kesar Haldi Kulfi among others, along with three new flavours in the cone range. “We are also launching several new flavors in the carry-home segment. All these were developed over the last few months and will hit the market in the next 1-2 weeks,” said R.S. Sodhi, MD, Amul.
Vadilal, on the other hand, will be launching around 20 new products across ice cream categories. Out of these new ranges, two-three will be premium products, while the rest would be in mass-market segments.
The major focus for ice-cream makers is basically on in-home consumption (family packs, tubs) categories, which they saw as a growing trend over the past year. “We saw consumers moving towards tubs during the pandemic so the take-home and in-home portfolio is where we are launching products. These are ice-cream tubs, typically 750ml to 1 litre tubs in both Indian and western flavours. We want to strengthen this portfolio with about 40-50 SKUs,” said Sanjay Sharma, Business Head India — Value Added Dairy Products — Mother Dairy Fruits and Vegetables said.
Havmor too, will be launching about 12 new in-home and online-only products.
Rising input costs can dampen sales
There is a threat of high input costs which hangs over the heads of ice-cream companies that can dampen their sales-growth plans, especially in the unorganized sector.
Anuvrat Pabrai of the Indian Ice-cream Manufacturers Association (IICMA) said, “The unorganized sector is a worried lot because they operate in a price-sensitive market and therefore is likely to be impacted more due to rising raw material costs. Apart from raw material, logistics and energy make up a large chunk of costs for ice-cream makers. With the current rising crude oil and domestic fuel prices, the transportation costs have gone up 15-16 percent, packaging costs by 35 percent while energy costs — cold chain and deep-freezer storage — by 30 percent”.
Amul is seeing an overall increase of 10 percent in costs.
Vadilal’s Gandhi highlighted that prices of dairy products are up substantially. “There has been a lot of pricing pressures over the last two-three months. Skimmed milk powder prices went up from Rs. 200 to Rs. 280-300, while the price of fat has gone up from Rs. 260-280 to Rs. 300-360. Plastic and paper are in shortage. I was told waste paper import is also not coming in, which is further creating a shortage,” he said.
Vadilal is currently reviewing the cost pressures before it takes a call on rising prices. According to Gandhi, “A price correction would be apt before the peak season sets in. However, the company has not yet taken a decision and is likely to do so in another 15 days”.Amul’s Sodhi and Mother Dairy’s Sharma addressed that they have no plans of increasing prices of ice-creams and will absorb the costs as they want to focus on catering to the demand during the season. In meantime, in the peak summer season, if input cost pressures sustain then they are likely to review the situation and take decisions accordingly.