Early onset of summer a boon for ice-cream industry in 2022; 45% hike seen in sales

“Life is like an ice-cream cone, you have to lick it one day at a time” – American cartoonist Charles M Schulz.

No matter what googlies life might throw at us, it all seems bearable if we treat ourselves to an ice-cold sweet and creamy indulgence. As summer temperatures soar, demand for juices, cold beverages and cold desserts like ice-creams and gelatos reach a peak. For the last two years, such cold indulgence had remained subdued, due to the pandemic. In 2022, as the country not just returns to normalcy, but gets busy making up for all the time lost, the ice-cream market is upbeat.

Over the years, different ice-cream brands have been using various plugs in their communication – while Kwality Wall’s has positioned itself as ‘A treat for every occasion’, Amul has stood up for its ‘Real Milk, Real Ice-cream’ proposition. Vadilal stresses on being ‘Happinezz ka swad’. The Indian market is a mix of big national brands, numerous small and local brands, niche and specialty brands of select outlets and a humongous unbranded market. Apart from Kwality Walls, Amul, Vadilal, other national ice-cream brands include Mother Diary, Havmor, Baskin Robbins, Haagen Daaz, among others. Some of the bigger local brands include Rollicks, Creambell, Dinshaw’s, Top’N Town, etc. Actors such as Alia Bhatt, Parineeti Chopra, Ratna Pathak, and Kriti Sanon, among others, have been seen endorsing brands such as Kwality Wall’s, Vadilal, Amul.

Increasing demand for ice-cream in the ongoing summer of 2022, has led to heavy shortages in supply, leading ice-cream companies to increase production by more than 30%. According to industry reports, sales of ice-cream have increased by nearly 45% due to an early onset of summer.

R S Sodhi, MD, Gujarat Cooperative Milk Marketing Federation, stated that the demand for value-added dairy products such as buttermilk, lassi, and for ice-cream has doubled over the last year. According to Indian Ice-cream Manufacturers Association, the escalated demand in 2022 is going to help the Rs 9,000 crore ice-cream industry to reach Rs 11,000 crore in valuation. As stated by Manish Bandlish, MD, Mother Dairy Fruit & Vegetable, the ensuing demand for ice-cream is due to the onset of early summers, increased number of distribution assets along with the opening up of the cafes, restaurants, educational institutions and offices. The ice-cream market was also hit by the pandemic, where the sales were halved in 2020 following recovery in the consequent years. This year also witnesses an increase in offline as well as online demand for the consumption of ice-cream. Due to increasing input costs, most of the ice-cream brands have raised the prices by 5-10%.

“After two subdued years due to known reasons, 2022 has turned out to be a phenomenal year for the overall ice creams industry. The category is now back on its feet, probably clocking the highest demand ever. Testament to the fact are the 4 months of the current season. For Mother Dairy, we recorded a significant growth this season (March-June 2022) vi-a-vis the same period in the pre-Covid season,” said Manish Bandlish, Managing Director, Mother Dairy Fruit & Vegetable Pvt Ltd.

He added, “While the consumers made a comeback by re-indulging in their favorite flavours, given the ease in restrictions vis-à-vis the last 2 years, the rise in demand was also on account of early onset of summer, subsequent rise in temperatures, enhanced network of distribution channels and asset placement coupled with new products and engaging consumer connect initiatives.”

According to Bandlish, the entire ice cream industry across the country witnessed the slowdown in demand due to varied reasons, prominently being the lockdown restrictions and other health concerns. The lockdown restrictions also impacted the manufacturing setup as well as distribution for many of the brands. He said, “As part of our business strategy to expand our footprint through parlours and dark kitchens, we have been expanding to smaller cities over the last year and this year the consumer response has been very encouraging and welcoming – by introducing international flavours of ice creams and other dessert-based products. Thanks to strong digital connectivity and Internet penetration, consumers in Tier 2 cities are as tech savvy as their metro counterparts in ordering ice cream online.”

Similarly, a Baskin Robbins India spokesperson stated, “The early onset of summer has caught a lot of ice cream manufactures by surprise. The demand has outstripped the supply, and we’ve seen that the entire industry has grown during this period, as compared to last summer. The demand has been coming from across different regions for the category – whether it’s the impulse range, or dine-in.”

Commenting on the ice-cream market’s performance in the summer of 2022, Anuvrat Pabrai, Founder, Pabrai's Fresh & Naturelle Ice Creams, sounded upbeat as he called it “fantastic” and added that the ice cream market has boomed in FY2022-23. “In the last 3 months, the sales have crossed 2019 summer sales by about 35-50%. Out of this, price increase would account for about 10-15% increase over the last 3 years, so you have a net increase of about 25-40% increase in sales,” he added.

The Pandemic Impact

For Baskin Robbins India, the pandemic tested not just marketers and manufacturers, but also consumers. Various restrictions that were imposed impeded supplies as well as physical consumer transactions. The pandemic tested every brand on its adaptability and willingness to change. It noted, “We were fortunate that we had already built a robust equity and team to manage our digital- first platforms (Swiggy, Zomato, etc.) by the time the pandemic hit. This helped us in a big way to tide over the unprecedented circumstances and face new realities perhaps stronger than several other brands. So, while our sales in 20-21 were lower than earlier years, the recovery in 21-22 has been both spectacular and also immensely satisfying. We are back on the fast track to high double digit growth.”

Pabrai added here, “When the pandemic struck in end of March 2020, there was virtually zero sales for April 2020. Sales started picking up to about 15-20% of the pre-pandemic sales – mainly through online purchases. During September 2020 and February 2021, they had risen to about 40-50% of the pre-pandemic levels. Then the second wave struck and sales again dropped, but recovered by September 2021 onwards till the third wave came in December 2021. However, by March 2022, the pandemic cases dropped to miniscule levels and sales started booming thereafter.”

“As we all know, the summer of 2022 has been harsh because of the onset of early heat wave and temperatures soaring higher than usual. In such situations, people look for relief and we are happy to provide such products to them. The sales in 2022 summer have been good so far. The ice-cream industry, like other industries, suffered a huge setback during the pandemic period because of a sudden drop in consumption. The losses were huge, but we are now recovering strongly from it. This season has aided the ice cream industry's recovery” said Sanjiv Shah, Director of Walko Food Company Pvt Ltd.

He added, “It was not just the ice-cream industry, but most of the industries suffered during the pandemic. Except for a few sectors, everyone faced similar challenges; supply chain disruptions, falling consumer demand, uncertainty, etc. On an average, the ice-cream sales in 2020-21 saw a drop of nearly 50%. This is a massive number, which meant that losses were piling up. Even though we are now moving towards normalcy, some of the challenges remain. Inflation has made a dent in consumer demand, supply chain is still reeling through the setbacks, and the 18% GST is not helping the situation. Having said that, the industry will overcome these challenges and we can expect to be back on track in a couple of years”.

On the other hand, Pabrai is confident about sales continuing to rise as the virus has become mild and people do not fear Covid anymore. “With vaccinations covering nearly the entire population, the effect of Covid-led disruptions are a thing of the past, unless we get hit by a more severe strain,” he noted.

Speaking about the post-pandemic scenario, the Baskin Robbins India spokesperson said, “While the consumers made a comeback by re-indulging in their favourite flavours given the ease in restrictions vis-à-vis the last 2 years, the rise in demand was also on account of early onset of summer, subsequent rise in temperatures, enhanced network of distribution channels and asset placement coupled with new products and engaging consumer connect initiatives.”

Mother Dairy’s Manish Bandlish said, “While we saw a spike in demand for take-home consumption packs earlier, but the current season has been phenomenal for out-of-home consumption with soaring temperatures, ease in restrictions and opening up of restaurants, offices, institutions, etc.”

He further noted, “Even though the surge in demand was across categories, for us, it was more skewed towards impulse category this season, and therefore, we have been actively pursuing to enhance our recall amongst our consumers by focusing with a dedicated strategy, that is:

• Introduction of new products to keep the consumers excited.
• Enhancing our distribution network and point of sales in existing markets.
• Expanding our geographical reach by adding new towns across key regions.
• Connecting consistently with our consumers through engaging communications, led by a high decibel media campaign to generate top of mind recall”.

“For Mother Dairy, our areas of operations, including the metro cities and Tier 2 cities, have delivered beyond our expectations resulting in exceeding our planned production targets in both impulse and take-home categories. While metro cities have been one of the focal points for consumption, we are buoyed by the demand in other regions predominantly due to improved electricity availability, asset placement, penetration of e-commerce and rising aspiration level for branded categories. The early onset of summer and extended season across markets has fuelled the soaring demand. Along-with uplifting the consumer sentiments, these factors have also assisted in evolving the entire market dynamics for the ice creams segment,” said Bandlish.

Elaborating on the summer season strategy, he said, “This summer, we introduced a very exciting assortment of new and innovative products. Our marketing campaigns were tailored around each one of them, and there is an on-going special emphasis on expanding our portfolio beyond ice creams. Our consumers are seeing us introduce not just new ice cream flavours through our associations with leading international brands, but also through icy slushes, drool worthy sundaes, and a lot more! Our marketing campaigns for each category aim to familiarise customers with these new offerings and create excitement and interest around them. Additionally, our approach on media spending has been more holistic this summer. From looking at only a few options, we are now exploring more platforms to reach our consumers. Our approach encompasses presence across digital and social media platforms, physically at a catchment level and through local activations as well.”

While agreeing that the ice-cream category is largely impulse led, Sanjiv Shah said, “We are seeing that consumers are now actively choosing what they want to consume. As we move forward, the consumer taste will evolve, and they will seek brands which are offering unique and good quality products. This is why we see the growing popularity of gourmet products. NIC Honestly Natural Ice Creams has been establishing itself as a brand which offers something new to the customers. They want to give it a try and when they do, the product builds loyal consumers (see the difference, they stick around). Inspite of being a young brand in the market (only 6 years since launch) we have done well so far. This is because we have focused on some precise things – we offer great quality ice creams made from natural and healthy ingredients; our category of Indian flavors are a huge hit among the consumers.”

He further noted “We have a pan-India reach and to be self reliant, we are continuously developing and improving our in-house cold chain management facility. Our marketing is still in a nascent stage, but we are evolving fast and are ready to reach the customers across the country.  In the coming years, we expect to have parlors across India, offering an unforgettable experience to the consumers.”

Shah informed that NIC Honestly Natural Ice Creams is well positioned in the Metros, larger cities, as well as Tier 2 cities. He added, “Our social media channels help us in connecting with the customers in several regions of the country and we are also penetrating the Tier 3 market slowly. It might take some time, but we will definitely expand across the regions. As far as rural areas are concerned, we are present in a couple of areas. In many cases, the sales of our products exceed our expectations and this is giving us confidence. I think consumer preferences have changed a lot in the last two years and the consumption pattern of urban demographics has also extended to the tier 2 and 3 cities. It will further evolve, and this will be a major advantage for us. We are a unique brand, and we stand out among others. We are working towards expanding in all the areas in the near future.”

Elaborating on how Brand Pabrai’s is strategising to increase market presence and be on top of mind in a category that is largely impulse-led, Anuvrat Pabrai said that the brand is working to recover and reopen the outlets it had lost during the pandemic. “We lost nearly 50% of our outlets during pandemic,” he admitted, but at the same time added that with hard work and positive public response, the company hopes to be back to its pre-pandemic levels as far as stores are concerned by March 2023. “Same store sales and HoReCa sales have also recovered and we expect them to be better than pre-pandemic levels in coming months.”

Adding further, he said, “To be top of mind in an impulse category, one has to create an emotional bond with the consumer. Our taste and quality have always been so great that once a customer has had our ice creams, they will get drawn to have it again and again.”

“We are presently located mainly in Tier 1 and 2 cities. These are presently performing very well. Our Tier 1 cities perform better than Tier 2 cities. Also, we have realised that opening multiple stores in a city boosts the sales of each outlet as we have seen in Kolkata, where we increased our stores from 3 to 14 during the pandemic,” Pabrai said.

He observed that the most conspicuous impact of pandemic on consumer behaviour has been the increase in home consumption. He expects this to continue as people have become accustomed to ordering for home consumption and will continue doing so even in the post-pandemic times.