“Dip in ice-cream sales largely due to external environment, not dip in consumption”

With the peak summer season starting, in normal times ice-cream sales would be at very high levels. From the local kulfi and ice ‘chuski’ wala to global brands like Baskin Robbins and Haagen Dazs, with consumer favourites like Kwality, Amul, Vadilal, Mother Dairy, Havmor, Creambell, along with specialty brands offering gelato, gluten-free and artisan frozen desserts – there is something to satisfy every tastebud and pocket.

However with the global pandemic, this is the second consecutive year that ice-cream brands are staring at very challenging times. While IPL 2021 had provided a strong platform for brands, with the suspension of the tournament, that avenue has ended. Restrictions on travel, dining out, remaining confined to one’s home and the overall sombre consumer sentiment are taking a toll on ice-cream consumption during the pandemic times.

Moreover, institutional sales to the hotel industry and marriage celebrations, which are other avenues for ice-cream consumption, are also seeing a significant downswing.

The market environment

While around 60% of the total ice cream sales take place during the summer months, the industry shrunk by 60-70% in 2020, according to some industry reports. The overall category would be in the range of Rs 12,000 crore, with at least 40% coming from the unorganised sector or local brands. Until 2019 before the pandemic struck, the ice-cream industry was growing at a healthy rate of 12-14%. In India, it is mostly the youth under the age of 26 years who account for 53% of the consumer base for ice-creams and frozen desserts. Also, a growing appetite for diversity is leading to a trend of using novel and unusual ingredients such as hot sauces, salted caramel, cheddar cheese, and even rosemary. While some of the brands have introduced sugar-free ice-cream for the health-conscious, they only come in very limited flavours as of now.

The challenges

With the devastating second wave of COVID-19 sweeping through India, lockdowns, curfews and strict restrictions have been imposed across the country. With several state governments allowing the sale of only essential commodities and consumers, too, curtailing impulsive purchases, retail outlets are stocking up more of the essential goods and fast moving consumer goods. Impulsive commodities or slow moving goods are being pushed to the backburner for now.

Home delivery of ice-cream poses the major challenge of maintaining the cold temperature required during transportation to keep the ice-cream from melting in the sweltering heat.

Consumption pattern and changing trends

According to some studies, the youth prefer ice-cream cones, while the family packs are generally targeted towards the housewives. The teens show a high preference for ice cream cakes. The per capita consumption of ice-cream in India is a low 350-400 ml, which is 1/4th the consumption in Pakistan and 1/50th the consumption in the US or Russia.

Chocolate is the most preferred flavour in ice-creams. Ice-cream cake is another trend that is gaining in popularity as it caters to the craving for both cake and ice-cream. People are also beginning to experiment with home delivery of ice-cream, which is making manufacturers come up with innovative packaging solutions to preserve the ice-cream for a longer period.

Speaking about the various challenges faced by the ice-cream industry, Harish Bijoor, Brand Guru & Founder, Harish Bijoor Consults Inc, said, “The ice-cream market has received a double whammy. Last year, the pandemic hit was the worst during the summer months and so is it this year. In the case of many market players, I work with, 65% of all sales for the ice-cream category comes in the summer months. If summer is a washout, so is the industry. The industry is going through really tough times.”

Continuing further, he said, “There are solutions, but the industry by and large is slow to react to the market needs of new distribution. It is important to remember that consumption attitude, habits and locations are changing for ice-cream as well, as is the case with many other product lines. There is an immediate need to attend to this gap in the business plans of most players.”

On the other hand, Vincent Noronha, Marketing Head, Havmor Ice Creams, is more confident about growth in the market. He said “In the last 12 months, we have witnessed significant growth in the take-home category as consumers are more comfortable within the confines of their home than making a visit to an ice-cream store. Havmor launched #MOR2GO, a new range of products in January, which is specifically designed for in-home/ family consumption. Simultaneously, we have also improved our online store network to ensure ice-creams can be accessible in restrictive environments. Our partnerships with Dunzo, Swiggy and Zomato ensure we have maximum geographic coverage for our products and are able to service the consumer needs even in such tough moments.”

While Noronha admitted that there is still an uncertainty of what may happen in the coming weeks, he add that as an organisation, Havmore has been cautious in its approach and has ensured it has the right strategies in place for any eventuality. “We are witnessing a dip in sales largely due to the external environment forcing the trade to behave in a certain manner and not as a result of decline in consumption. Hence, we are hopeful that as soon the restrictions are lifted, the category will bounce back. Our campaign – ‘Havmor Khao World Cup Jao’ – was already out in the market while the second COVID-19 wave hit us. We are continuing with the offer on our retail packs, both on take-home and single serve categories. Also, we are running attractive promotional offers for all purchases made using the online food aggregators.”