June 24, 2020
The attack of the deadly virus CORONA has gripped this world in its tight claws bringing the entire planet to a great halt. Every economy and every business has seen a tremendous loss since the total lockdown throughout the world. Food industry has been the worst hit industry as one cannot lockdown hunger pangs. The basic necessary food items went off shelves before the announcement of the governments ended.
Ice cream industry isn’t left behind, it too struck the chord of suspension. The strike of the virus came at a peak time when the summers have just begin. Due to some misconception and rumors, Indian ice cream industry suffered a setback and is passing through a very critical stage at the moment. This milieu has never been witnessed by any country in the world separating the whole humanity from each other in the modern history.
Coming back to Indian ice cream industry, the summer delight has lost all its light this year. All ice cream manufacturers, raw material suppliers, people from allied sectors are in doldrums and are not able to decide what further steps to be taken to attain sustainability.
With these reservations and indecisions, Ice cream Times Editor, Firoz H. Naqvi hosted a live talk show through videoconferencing with some of the stalwarts of the industry. Industry leaders like Rajesh Gandhi of Vadilal Ice cream, Prakash Sanghvi of Delta Nutritives Mumbai, Puneet Duggal of Kapcon Group Delhi and Jasvir Singh of DuPont India were part of this discussion.
The discussion held the views of the leaders about the challenges faced by the industry with the spread Covid-19 in the world. Gandhi said he has an experience of 42 years in this industry and has never seen such challenges that the industry faces today. He said to stabilize the demand of ice cream, we have to come out with new variants of ice creams to address the present demand and trends.
Sanghvi gave an assessment of Italian industry where as Duggal spoke about China and its present status post corona spread. Jasvir gave a view about global conditions and assured DuPont’s support to this industry.
At the start of the panel discussion Naqvi expressed his views with the dilemma what the world faces today. After World War II, this is the first instance where we are experiencing lockdown with not a business of single rupee. Today more than 100 countries are at war against coronavirus. This is a serious and grave situation that people have not heard of.
After a brief introduction Naqvi turned his attention to the first member of the panel Rajesh Gandhi. Naqvi went on to ask Gandhi that going back to the start of this year, ice cream manufacturers have made certain production before lockdown and had maintained stocks. Did these stocks had any momentum or are they considered as dead stock?
“This year sales has been absolutely negligible frankly to say which actually cannot be considered as sales. The situation is very grave from business outlook. It’s just wait and watch situation till the lockdown is lifted. We are just waiting for guidelines to be followed”, replied Gandhi.
Holding vast experience in ice cream industry, Puneet is the 3rd generation businessman from his family. Puneet, you hold the pulse of the ice cream industry as you supply lots of raw material and packaging material, what is your take on the industry, what is ice cream industry going through?
For me the peak season starts from March until June. We give 60% – 70% service to the industry and as Rajesh ji said this season the sales are almost negligible. To get few points for my analytical data, I spoke to my contacts in China to get a feel about their status of ice cream industry and effect of Covid on it. One thing is clear that ice cream industry, the way ithas hit Indian industry is not the case with the Chinese counterpart because in China, peak season for ice cream starts in April and ends in July. In China, they start preparation as soon as their new year is over. So this year they could not start with stock and any new production this year.
As of today China says that it is producing 60% ice cream because of shortage of labour. They are not able to achieve 100% result.Another big ice cream sales platforms in China are the universities. Ice cream is most consumed outside and within universities. Due to Corona, the universities are closed till May end as per the guideline they have. The reason why I am quoting China is because Covid first originated there.Thus, what has happened in China, will be repeated here in India. Infact it is already happening in India. But our Ice cream industry has been hit the most because virus has attacked our industry during peak time. I could never imagine that the sale would go so low that it will give zero percent performance not even 2% or 3%.
In China, online sale has shown upward growth to around 11% – 12%. The take home sale has increased with 5%-6% from online platform. Take home orders are increasing for sure. On the contrary, pulse purchaser have decreased. I believe similar thing is going to happen in India too. In pulse-we decrease and take home-we increase but marginally. India is facing yet another hit which is the rumoured news through WhatsApp about the consumption of ice cream spreading coronavirus. Rumour is that eating ice cream will cause sore throat and that will aid to spread covid 19. This has happened in China as well. I think that industry should do something to educate the citizens that eating ice cream do not cause Covid 19 and this will definitely help.
Jasvir as you are having presence in more than 100 countries of the world, you are involved in ice cream industry very closely, and how do you see this situation globally like in India same is for Pakistan, Bangladesh, Gulf countries, African Continent, Americas. Does the same conditions of sales persist there too?
The information that we are getting is that impact is quite similar in many countries and it is expected to be same because for a month or two when businesses are shutdown. Obviously the impact is bound to be similar in every country which has actually happened. What differentiates India is the whole information that is reaching or it will be right to say misinformation that is reaching consumers through social media is creating a sense of doubt for the safety of the products. It is not only about ice cream but all kind of cold and frozen products because there is these information being spread that these products are not safe for consumption during outbreak of coronavirus.
And a lack of credible answer to that misinformation is actually creating multiple issues one level of business is shut down because of health crisis and on the other side demand is itself is low as consumer doesn’t seems to be having that confidence. But if we look at the example of China where they have more or less have recovered from outbreak, these are temporary situations and can return to normalcy , yes it may take little bit longer or shorter time depending on the response to it but return to normalcy is bound to come.
Sanghvi has a big basket to cater and he is more focused on European products especially from Italy. Italy is the second most affected country by COVID-19 after China, otherwise America has crossed all the limits followed by other countries. Let our readers know how Italy is faring because through an Italian acquaintance we found that industries and factories are functioning. And ice cream sales has not gone so low even though there is the struggle in the country. There are consumers who are ordering ice cream from online e-platforms. What is your view on it with your experiences of Italian companies?
Italy had a winter phase when this outbreak took place. In winters, lot of places are closed, many outlets, restaurants are open but not fully functional to that level of working capacity. Their summers starts around June and peaks in September, so August and Sept are peak months. Whole of Italy is on the road and travelling as it’s basically holiday time there. When you talk of Italy not getting affected, it’s yes to an extent. Particularly industry-wise,Italian companies are not affected because a lot of their manufacturing is automized and computerized. There are actually very less number of people working in factories. They have factories that produces 10 lakh litres of ice cream per day, so they have hardly 20-30 people working in the factory.
This is a price of Automation. The effect is not so much on production due to automation and computerization where no-hands-touch machines are functioning. But on admin side, yes it has its effects but despite that they were working on 40-50%. Of course the Lombardy region around Milan and Venice was very much affected.
Rajesh ji, trend of sales is on way and still little bit of season is left to get over. Do you think post-lockdown ice cream industry might gain any momentum and this year can we expect some kind of business, or we have lost all hopes?
What I understand is that government is giving certain relaxation or to put this way-it is in process right now. They are dividing the regions into zone-wise namely red, orange and green. Unfortunately all metro and mini-metro cities are falling under red zone. We are hopeful once the lockdown is lifted we might gain something in business but fear factor is still going on among the consumer because whether you are allowed to do business is another serious consequence which is omnipresent. We are expecting some movement in May or end of May.
One more question Rajesh ji, if we provide adequate information to the consumer that icecream is not harmful to consume in COVID-19 times, do you think this strategy will work and prove beneficial through social media and make them aware that consumption is not harmful. Will this work?
We are working with analysts and experts as to how to break this myth which is not so simple and easy but we are definitely working on trying to send information to the consumer through variety of social media. We have to break the myth just like drinking warm water to help prevent COVID-19 (which is anyway good) but eating frozen treats, ice cream or drinking cold drinks does not spread corona. It is tough but we will gradually overcome it. Our association is definitely working to buzz off these myths but when to start campaigning is an issue. And we are debating on it as to what will be the right time to start the campaign. Atleast not before the market opens up.
Puneet lockdown is for all the industries not alone for ice cream. Like all ice cream factories are closed so is yours. If by May or mid –May, things jump back to normalcy, are you prepared to tackle sales if the orange and green zones open up or will the industry face setback due to lack of raw material and ingredients? Do you have that much back up or your supply chain has been disrupted and will face certain challenges?
Challenges are bound to come 100%. The big challenges that I see is some of our materials are indigenous and some are imported. But the biggest challenge is the labour. Already in our area, my workers have left for hometown. They are not available. If orders are passed to open up the factories, we may not be immediately in position to function on the spot. For that, it will take couple of weeks to streamline industry and start from where we left. Raw materials will be affected. Like any other business, we too were prepared for the best season which of course did not go well. We are related with ice cream industry; if ice cream industry prospers, we prosper.
Same question to Prakash, we have good relations with Italy not only in terms of raw materials and ingredients but also in terms of importing Italian machineries. As we are closely associated with Italian trends,what is your say about the supply chain issue, will it be stagnant or will it be managed efficiently?
I strongly believe that this can be managed, nevertheless, there will be some difficulties. We were on a paused situation and suddenly we are on standstill platform. To restart the industry, atleast 15 days will be required to get the industry rolling. In my view, it will take a month and a half to revive the situation, for the sentimentsto get back as everyone is in the depressed state. Somewhere down the dark alley, there is light of hope, a sense of positivity. The urban sector will start sooner that the rural.
Jasvir, since company like DuPont, has big scientific support, do you think all the stake holders of similar companies like yours viz DSM and KERRY should come together and prove scientifically to the consumer and share their global experience so that we can correct this misconception from the mind of consumer?
I think that is one of the first things that is required and all of us should come together whether it is an industry or an independent scientist, as well as govt. institution should come together and share the facts with the people so that they get confidence from health perspective that there is no harm to consume these products and DuPont is always there for any support that is required by the industry.
Rajesh ji, if we talk about real facts, financial situation has deteriorated. Because of this gap, MSME are the one who faces tremendous load as it is the peak time of their business too. Even big players are facing grim situation. In future if such conditions prevail for a longer time, sustainability for next year will prove fatal. Don’t you think that governmentshouldstep forward and support the industry? Are you expecting any relief from the government?
As everyone knows that ice cream is seasonal industry and majority of sales comes in from summer months and the entire year’s profit comes from these months. So, if these months slow down, then the entire year is a lost game. Rentals, salaries, interests, all fixed expenditures will remain same without revenue generation.
IICMA has written to RBI and central govt. about situation and have urged to give reasonable relief in terms of additional funding for this period. Many developed countries have given such types of packages where you cannot retrench the workers.With similar reference, we have spoken to the authorities on these grounds and they have understood the subject how other countries are treating this issue. We had to take the issue to the government because industry cannot bear the burden in general, especially seasonal industry like ours. We are hoping that government will come forward with alike package which will supportand save the ice cream industry at this unusual hour. The govt. officials were also made aware that this willdefinitely affect MSME for sure.
From now on, whenever any matter which will be discussed, will always be referred as pre-corona or post-corona. The perspective of the world has changed. What has this lockdown taught us as an ice cream industry to the manufacturer if you can give some tips?
Suggesting anything on behalf of ice cream industry is bit difficult as it is too premature a thought. But the whole world must look into the ways to come out of this crisis and do away with such situation as early as possible because necessity is the mother of invention. The situation has created the scene of survival of the fittest for everybody. There are poor people who are suffering,multiple kind of crisis has been created and in midst of all that, will spring innovations with this the industry must give a thought to come out of this with flying colours and bright ideas which will see changes in method of business.
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