Though India has a low per capita ice cream consumption of 300 ml per annum, the trend is slowly

changing due to a number of reasons. DARE explores the dynamics of the business. Indian summers are synonymous with ice creams. Come summers, and you will see a number of colorful pushcarts selling the choicest of ice creams in numerous flavors from the traditional vanilla and chocolate to unusual varieties like Mother Diarys Shahi Nazrana. If that doesnt baffle you then the ice cream range definitely would, for example the ice cream range for the children would be entirely different from that for the teenagers or for that matter adults. Or, for those who like to have ice cream in peace, there are a number of ice cream parlors that are opening shop.

But did you know that a 100 ml scoop of your favorite ice cream that you ordered may contain upto 50% air! This makes the business a highly profitable venture to get into sometimes, the profits can go upto 100%! However, there are several challenges to this business as well. In this story, DARE attempts to find out the dynamics of the business. The Ice Cream Industry: An Overview Looking at some industry facts first. In 2007, the global market of ice creams was pegged at $61.6 billion in terms of retail value or 15 billion liters in terms of volume. Of this, the Asia-Pacific ice cream market was worth $13 billion in terms of retail value and 5,128 million liters in terms of volume. Coming to India, the Indian ice cream industry is currently estimated to be worth Rs. 2,000 crores, growing at a rate of approximately 12%. RS Sodhi, Chief General Manager of Gujarat Co-operative Milk Marketing (GCMMF), the makers of Amul, explains, The ice cream market in India can be divided into: the branded market and the grey market. The branded market at present is 100 million liters per annum valued at Rs. 800 crores. The grey market consists of small local players and cottage industry players. In 2008-09, in the branded ice cream market, Amul held the number one spot, with a market share or 38%, followed by Kwality Walls at 14%, Vadilal at 12% and Mother Diary at 8%. Despite a decent growth rate, the ice cream industry faces the challenge of low per capita consumption. Industry at a glance The ice cream industry in India is worth Rs. 2,000 crores The industry can be divided into the branded market and the unbranded market. The branded market at present is 100 million liters per annum valued at Rs. 800 crores In 2008-09, in the branded ice cream market, Amul held the number one spot, with a market

share or 38%, followed by Kwality Walls at 14%, Vadilal at 12% and Mother Diary at 8% The per capita consumption of ice cream in India is approximately 300 ml, as against the world average of 2.3 liters per annum Vanilla, Strawberry and Chocolate together constitute approximately 60% of the market. The per capita consumption of ice creams in India is just 300 ml per annum, compared to 22 liters in the US, 18 liters in Australia, 14 liters in Sweden. India is a way too far behind even in terms of the world average per capita ice cream consumption of 2.3 liters per annum. This when India is a country with hot climate with a young population. Pankaj Chaturvedi, Executive Director of Baskin Robins, explains Indian cuisine has a huge range of desserts in its mix. Ice cream always competes against these for attention. Besides desserts, ice cream also vies for attention with other like foods for example in summers with cold drinks, coffee, juice, etc. Another trend that is witnessing a change is the seasonal nature of the industry. Having said that, the peak season for ice cream still remains the summer months of April-June and dips in the months of November-February. According to the industry players, this trend especially holds true for the North and the Western parts of India. According to Pankaj Chaturvedi, The variation in sales for Baskin Robins can range from 1530% from season to off season depending on geography and brand.

The Ice Cream Business The ice cream industry has traditionally grown at a healthy rate of 12% year-on-year. The growth in Ice cream industry has been primarily due to strengthening of distribution network and cold chain infrastructure. Channels such as Mobile Vending Units have been increasing year on year to reach out to a larger set of consumers. Besides, consumers also have the choice of trying out varied product offerings from different brands to keep them excited, Paul Thachil, CEO Dairy & Foods, Mother Dairy Fruit & Vegetable. What exactly is defined as ice cream under the guidelines? The Prevention of Food Adulteration (PFA) Rules, 1955 define ice cream as a frozen product that contains not less than 10% milk fat, 3.5% protein, 36.0% total solids, and 0.5% permitted stabilizer and emulsifier. Players who deviate from these norms tactfully call their product "frozen dessert. However, it is illegal to sell ice cream which have contents below these specified standards. The basic steps in the manufacturing of ice cream are generally first blending the ingredients, pasteurization, homogenization, aging the mix, freezing, and hardening. Now, during the hardening process, the ice cream mixture is incorporated with air. This is done to make the product light and creamy. This is necessary as without air, ice cream would be like frozen ice. Now the ice cream can contain a considerable quantity of air, even up to half of its volume. This perhaps makes ice cream a business with high profit margin. Manish Vithalani of Space Dotz informs, A ice cream mix (consisting of milk, emulsifier, sugar and so on) costs about Rs. 60-65 a liter. And in one liter you can add up to one litre of air. Therefore, per liter the mix would cost you approximately Rs 32. If you take an 150 ml cup, you can make 13 cups of ice cream from one liter of mixture. Calculating on that basis, the per cup costing comes to about Rs 5. Now add to that Rs 5 worth of packaging cost, electricity, labor, transportation, advertisement cost etc. It comes to approximately Rs 10 per cup. Depending on the variety, the profit margin therefore can go up to even 100%. While for bigger players, the distribution and advertising costs eats into the profit margins, for smaller players, it is the volumes that matter.