April 25, 2020
Big brands of Ice-cream like Amul, Vadilal, Hindustan Unilever Ltd (HUL), Havmor and Mother Dairy customarily make about 40 percent of their annual ice-cream business in sales in the heat-emanating summers.
The Indian Ice-cream Manufacturers Association (IICMA) has given their written plea to both the central as well as state governments seeking relief on several challenges it has been facing lately.
It is definitely going to be a washout summer for India’s Rs. 10,000 crore ice-cream industry due to the coronavirus outbreak in India. This situation has resulted in an 80-85 percent drop in sales against March-April 2019. Big brands of Ice-cream like Amul, Vadilal, Hindustan Unilever Ltd (HUL), Havmor and Mother Dairy customarily make about 40 percent of their annual ice-cream business in sales in the heat-emanating summers. This summer season is turning out to be the most “no chill summer” for most of the manufacturers.
“Our revenues have almost come to a standstill, while we are hopeful as a country that we will fare much better in the war against the pandemic. Although a large part of the season is over and it will definitely affect a sizeable part of the revenue,” said Anindya Dutta, MD, Havmor Ice-creams.
Consumption of ice cream out-of-home (outdoor consumption) and impulse buying categories, is practically at zero level, said industry officials. This category of sales is one of the biggest categories for ice-cream producers, contributing to over half of their overall sales.
“Demand from the institutional segment like HoReCa is at virtually nothing,” said an industry official. The institutional segment contributes about 25 percent of sales for the ice-cream and the only sales that are coming through are sales from the in-home segment. “We are seeing good demand for in-home consumption. People are buying ice-cream tubs and bricks during the lockdown,” said R.S. Sodhi, MD, Amul.
Majority of the stocks in circulation are the products that were manufactured in January-February 2020 and now most factory units have been non-operational during the lockdown. Summers are the best season for ice-cream manufacturers and often make ice cream 2-3 months well in advance for upcoming the summer season. As the transport and logistics went off road, ice cream players could not but brood over the huge non-moving inventory. In addition to these inventory storage costs, ice-cream makers have been paying other fixed costs such as high electricity bills and rents for warehousing facilities.
The IICMA has sought “50 percent waive off on the electricity bills of all ice Cream & frozen dessert manufacturers and Cold storage units from March 2020 to July-2020”. The IICMA has also sought a relief package for the dairy and dairy products from the government to meet their financial obligations in such chaotic time.
In this backdrop, companies are working on aligning their supply chains so that products can reach the market over the next 30-40 days as the lockdown gradually lifts. A large number of ice-cream makers like Mother Dairy have decided to go ahead with the pre-planned summer launches but are pushing these new launches to end of May or June. Most ice-cream makers launch at least 14-15 new products every summer.