After the acquisition of seven decades-old Havmor Ice Creams from an Ahmedabad-based entrepreneur for ₹1,020 crore in 2017, South Korean food giant LOTTE Confectionery Ltd is now pumping additional ₹450 crore towards capacity addition to match the growing ice cream appetite of Indian consumers and retain its leading position in the 100% dairy ice cream category. Komal Anand, MD, Havmor Ice Cream shares insights about the future roadmap for Havmor and ice cream market in India. Edited excerpts:

Q

What necessitated you to set up new facility in Talegaon, Pune?

We have a factory in Ahmedabad and in Faridabad (Haryana). We were short of capacity in Gujarat and there is capacity expansion and investment going on at Faridabad facility, which is a third-party manufacturing facility. We wanted to set up a big state-of-the art facility. The Talegaon facility is very large compared to total land mass we have in Ahmedabad and Faridabad. The location of Pune, Maharashtra is strategic from supply-chain point of view. It will give us access to South for our future market expansions and also cater to our immediate requirements in our existing markets. The facility is currently under construction and by the first quarter of 2024 it will go on stream for commercial production. We will see exponential increase in our capacities after commissioning of Talegaon facility, broadly, doubling it from the existing capacity.

Q

As a South Korean owner, how do you see India as a market and what is your growth strategy?

LOTTE sees India as a strategic market. Their commitment of investing ₹450 crore over the next five years comes after having invested already over ₹1,000 crore in 2017. So, additional investment within a short span of time reflects company’s commitment to India and the growth potential that we see in this category. The average per capita ice cream consumption in India is about 300-350 millilitre, whereas in China it is 5-7 times more and in countries like Japan or New Zealand it is about 20 times more. The headroom to grow is huge in India and the demographic profile is also favourable.

Q

What is your presence in India and how do you plan to expand?

We are present in all parts of the country barring Kerala in South and few states in North and North-East. This is because of the supply-chain and cold-chain is very expensive to serve these markets. In terms of prioritisation, we are trying to cover the Western market, followed by North, South and East. Supply-chain determines where we will reach when. Already, we have started expanding in Jharkhand, Bihar and West Bengal. North is a very attractive market too. We are also present in markets like Delhi NCR, Uttar Pradesh, and in Jammu & Kashmir. There are not many players who have distribution infrastructure in J&K. We find J&K a promising market. In South, Tamil Nadu is also responding very well.

Q

What are your future plans for Havmor ice cream products?

The ₹450-crore investment will be made through next 5 years in a phased manner. We have a clear demand projection and accordingly we will expand the manufacturing. For those stock-keeping units (SKU) where we expect to run short of capacity, will have immediate expansion there in first phase. LOTTE Korea is driving us with technical inputs for production and expansion. This facility will allow to fast-track the launch of the LOTTE portfolio in India.

Q

What are your plans about bringing LOTTE portfolio to India?

The first from the portfolio was launched in 2021, the World Cone, which is doing very well. We are testing one more right now. This may not be fast enough, but we would like to operate with a bigger portfolio of LOTTE range in India. And we see that happening once we have the state-of-the-art new technology and the new factory. We would like to offer at least 2-3 new products from LOTTE portfolio every year.

Q

Are there non-ice cream products in LOTTE portfolio that you plan to bring to India?

Lotte has a diverse portfolio in Korea and we will look at options. Wherever there is a synergy and consumer need, we will experiment and will try to bring it. As of now, we will only focus on ice creams. It is a very large category of about ₹12,000-crore branded ice cream market in India. There is a huge headroom to grow, so our focus will continue to be on ice creams.

Q

The ice cream market has been reeling under multiple challenges, how do you manage inflationary pressures?

The fuel costs impact our supply-chain-heavy business. Also being pure dairy product, the rising dairy prices does impact. We can’t pass-on the entire inflationary pressure to the consumers. So, we take a hit on profits to a large extent. And we try and mitigate some of it through our cost optimisation measures. We revise our prices just once a year, unless the environment changes drastically. The consumer is very price sensitive and this category is very competitive.

comment COMMENT NOW