Storm in an ice cream cup

The market leader in ice creams, Amul, has stirred up some cold war in a cup, as it launched its super-premium range, Creme Rich, earlier this month. But staying true to the brand philosophy, Amul has priced the range 'affordably'.

But if you want to position a brand as super premium, the first task is to add some snob value to it, and this is usually done through pricing. Amul plans to buck the trend. Its range starts from Rs 30 for a 125-ml pack, and goes up to Rs 120 for a 500-ml tub.

Amul says Creme Rich has lower amount of aeration and higher fat content (16 per cent) than regular ice cream, giving it a rich taste and more ice cream. It also has premium nuts and fruits embedded. The competitive pricing is likely to start a price war in the segment with other major players vying to garner more market share.

Rival Hindustan Unilever (HUL), which has the Magnum range of premium ice creams, prices its products higher, with its three flavours (Classic, Almond and Truffle) priced at Rs 85. US-based Haagen Dazs and Nestle's Movenpick cost even more, above Rs 150 per scoop, and are available in select markets.

Industry insiders feel that Amul being a late entrant in premium category, has consciously chosen to stick to a low pricing to capture the market at a faster rate. Rajesh Gandhi, managing director of Vadilal, which enjoys a 17-18 per cent market share in premium ice creams, says, "When we launched our Gourmet range three years back, there were hardly any Indian player who was focusing on this. And now, the premium range contributes to nearly 7-8 per cent of our sales in volumes and about 11 per cent in value." Vadilal's turnover in 2013-14 was around Rs 500 crore. He admits that pricing can be a game-changer.

"Being the market leader, we have to keep delivering new products," says Rs Sodhi, managing director, Gujarat Co-operative Milk Marketing Federation (GCMMF) which owns the Amul brand. According to Sodhi the premium ice cream segment constitutes around 5 to 10 per cent of the total ice-cream market.

"Our ice-cream revenue is around 1,000 crore and the premium ice-cream is likely to add 5-10 per cent to our total ice cream sales," Sodhi adds. The premium segment is estimated to be around Rs 500 crore in a Rs 3,000 crore branded ice cream market, and is growing at a faster rate compared to the regular segment. The country's ice cream market is clocking an average growth of about 19 per cent per year, in comparison, the premium range is clocking a 22-25 per cent growth.

Another early entrant in the market, Mother Dairy, too, is upbeat on the segment. Subhashis Basu, business head - dairy products, Mother Dairy Fruit & Vegetable, says, "We launched our premium range under the brand 'Classics' in 2007 and ever since we have been consistently growing in this category by about two-three times as compared to the growth of our regular ice creams year on year. Our premium range today accounts for about 15 per cent of our total ice cream business and is one of the fastest growing brands in this space." An HUL spokesperson says that after the launch of Magnum earlier this year, it has is ahead of its internal targets.

Trying to cash in on this fast growing space, Vadilal launched its 'Artisan' range this year, and is also toying with the idea of smaller pack sizes.

Amul, however, is almost certain to cash in on its new launch - it has the advantage of a pan-India reach, brand recall as well as economically priced packs. "I think the strategy will work for Amul. Every palate has a definition of premium, and by catering to a wide range of customers, Amul will definitely enhance its penetration," says Harish Bijoor, CEO of Harish Bijoor Consults.

But, will an economic pricing strategy work for a super premium product? Bijoor says it will. "Amul has stayed true to its core philosophy of affordable products, and it should work for them."

Basu, too, feels the same, "Most of the international brands operate in super premium space. However, the Indian brands who can meet the international standards with competitive pricing will surely drive the maximum business."