Ice Cream makers make hay as sun shines brighter

After a dull summer season last year, this year ice cream makers are back in action; as the nation battles against the soaring mercury, ice cream companies stand true to the old adage, make hay while the sun shines. On an average, companies have reported 25 per cent value growth this summer, not only in ice creams, but also in milk-based beverages.

The country's market leader in ice creams (around 38 per cent share), home-grown Gujarat Cooperative Milk Marketing Federation (GCMMF) which sells Amul ice creams, has seen an 18-20 per cent rise in ice creams in terms of volumes. "When it comes to ice-creams, the sales have increased by 18 to 20 per cent in volumes terms, while in terms of value the growth has been 26 to 27 per cent in the last three months”, said R S Sodhi, managing director, GCMMF.

Add to this, another 50-60 per cent rise in demand for milk-beverages like Amul cool, buttermilk and flavoured milk. "We are selling two million packs per day of milk based beverages,” he said.

In contrast, in 2013, the prolonged winters and early monsoons had affected demand for ice creams and other summer beverages. Nearly, 40 per cent of annual sales happen during the four summer months (between March to June), and this year, even after raising prices around February, manufacturers have seen good traction for the products and expect the demand to continue until the rains come. Amul is running its ice cream processing units in full capacity. It has an installed capacity to process 8 lakh litres of ice cream per day.

Subhashis Basu, business head, dairy products, Mother Dairy Fruit & Vegetable Pvt. Ltd, said, "All summer products are doing well, and we have seen a good traction for value-added products especially in the ice creams category.” Mother Dairy has decided to focus more on consumer packs this summer, as against the gallon packs or party packs. "These are just hollow volumes, no branding, not much impact on bottomline. It is more like an unbranded commodity business, and hence, we are not interested in these business-to-business (B2B) packs,” Basu said adding that with a focus on consumer packs its transactions are growing at over 25 per cent. As for growth in fresh dairy products, it is in the range of 40 per cent.

Ahmedabad-based Vadilal Industries, which enjoys 15 per cent pan-India market share says that value growth has been over 20 per cent this summer, while volumes have risen by 11 per cent. The company is using 85 per cent of its capacity of 3.5 lakh litres per day. Also, in the milk based beverage space, like Power Sip flavoured milk, etc., the company has seen some 15-20 per cent growth this year. For Vadilal, these beverages account for about 10 per cent of its turnover of around Rs 500 crore. Input costs, too, have risen simultaneously, claim players.

As Basu pointed out, "Overall input costs have risen by 25 per cent compared to last year. This includes rise in milk prices, cocoa butter, milk fat, skimmed milk powder etc. We are trying to drive traction out of the high value packs and driving more productivity into our system to maintain healthy bottomlines.”