Cold war — the sequel

It was only launched a decade ago. But serial-entrepreneur Ravi Jaipuria owned Cream Bell has been growing at a blistering pace. Among the youngest pan-India players, it has already broken into the league of the country’s top five organised ice-cream brands.

Nitin Arora, CEO of Cream Bell, says, “In early 2013, we made it to the No. 5 position in India as we completed ten years of inception.” In the quarter ending September 2013, Cream Bell’s share was around 14-15 per cent in the branded ice-cream market.

But it is craving for more. “Our vision is to be among the top three ice-cream brands by the end of financial year 2017,” says Arora. “We aim to increase our market share to about 18-20 per cent,” he adds.  At 30 per cent, the company is growing at a faster rate than the industry’s 20-25 per cent. It hopes to end the current financial year with a turnover of ₹400 crore.

Started in 2003 under a technical partnership with French company Candia, Cream Bell gradually gained core competence to develop its own brand. Having perfected the strategy of collaborating with international brands in other segments, RJ Corp — the biggest PepsiCo bottlers, which runs brand Costa Coffee and Pizza Hut in collaboration — chose to develop its own brand for ice creams.                                   

The estimated ₹3,500-crore branded ice-cream market is fairly fragmented with big national players such as Amul and Hindustan Unilever and fairly strong regional players. Cream Bell believes it has several aces up its sleeve to grow its market share.

First it is looking to expand  production by 25 per cent. It has three plants at Baddi (Himachal Pradesh), Goa and one near Agra in Uttar Pradesh. “Our Goa plant caters to the West and the South. While our plants at Baddi and Kosi near Agra cater to the North. …we will look at a new production capacity to cater to the demand in the East,” he said. 

The product is available across most States. However, it has no presence in some markets such as Tamil Nadu and Kerala in the South and Gujarat in the West. Gujarat is a huge market for ice creams and Amul lords over it, while in Tamil Nadu Arun is still a dominant force.

Cream Bell executives say they will take the challenge to these markets at the right time. “For now we are looking to consolidate our position where we are present. But in the next 2-3 years, we are looking to enter these three States too,” says Arora.

 Last year, the year-on-year growth of ice creams was lower owing to erratic weather trends and early monsoons. However, overall, ice-cream consumption in India lags global averages. According to industry estimates, each year Indians on average eat 200-300 ml of ice cream compared with 14 litres in the US and 2.2 litres in China. That’s one reason why most people vouch for the market’s potential. After nearly doubling in 2007-12, the market is expected to touch $1.1 billion by 2017, according to Euromonitor estimates in 2013.

 All the players believe that the summer of 2014 would shine brighter for them.  Subhashish Basu, Business Head — Dairy Products, Mother Dairy Fruit and Vegetable, said, “Our ice creams are present in the top 25 cities now, and this year we will be focusing on enhancing our market share.” The company is investing in cold-storage infrastructure and expanding in the 25 cities where it is present.

 Basu expects a higher CAGR this year compared to last. Euromonitor had noted that ice creams were the fastest growing category in packaged food in 2012, although it slowed in 2013 according to other industry estimates. But a lot depends on the warm summers, as ice creams are a seasonal product and an entirely impulse purchase, he added. Mother Dairy executives say they have an impressive line-up of innovative products for launch, but are understandably tight-lipped about the details.

 Similarly, HUL is reportedly planning to expand the presence of its premium ice-cream brand Magnum beyond Chennai. Other international brands such as London Dairy, Häagen-Dazs and Baskin Robbins are trying to make a dent in the ice-cream market.

 Ice-cream sales are largely driven by impulse buying, and a big chunk comes from out-of-home purchase.

 To tickle the imagination and taste buds of this set of consumers, Cream Bell executives are relying on new flavours, and innovative and premium products.

The company introduced more than 18 new products during the scorching 2013 summer. To appeal to the calorie-counting, health-conscious set, it introduced the Sach Much (means ‘genuine’ in Hindi) brand. On offer is fruit pulp, as opposed to flavoured ice, in an ice-cream candy format in mango, strawberry, litchi and raspberry variants.  Also on offer are ice-cream cakes and smoothies, besides a premium range sold under sub-brand Maxxum (not Magnum, sold by Hindustan Unilever).

 As the concept of frozen yoghurt is gaining ground, the company has launched pro-biotic products such as Zero Vanilla and Strawberry, which have no added sugar for the health-conscious. According to consultancy Technopak’s estimates, frozen yoghurts now constitute 10-12 per cent of frozen dessert sales, and this is expected to more than double in the next five years. 

 Cream Bell believes its products are in line with rapidly changing consumer preferences. It will invest about ₹275 crore during 2010-15. “We have already invested about ₹200 crore in capacity expansion and R&D,” says Arora, adding, “We believe having an in-house production facility as well as research and development gives us an edge and is our core competence.”

Beyond India, the company has international ambitions too. In Africa, it has a major interest in the dairy market and is using those credentials to introduce its ice cream in that continent. “We are gradually introducing brand Cream Bell in countries like Uganda, Kenya, Zambia and Tanzania,” he says.

Besides bigger packs and tubs in premium flavours, the company has set its sights on experimenting with the home delivery format in places like Gurgaon. “In Gurgaon, we have nearly 600 households which regularly order ice creams from us. We will focus on growing the model there before introducing it in other metros,” says Arora. 

From parlours to home deliveries, what will be the next step in selling ice creams? Cold calls? Pardon the pun.