Ice-cream sales will sizzle despite higher prices

| Updated on: Mar 26, 2014
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Producers betting the long, torrid summer ahead will boost demand

Ice-cream prices are rising with the temperature.

With manufacturers such as Amul, Mother Dairy and Vadilal deciding to pass on the increase in cost to consumers, ice-cream prices have gone up 10-20 per cent.

Yet, ice-cream makers are betting on higher sales this year with the forecast of a prolonged summer due to El Nino . “We increased prices in January by 10-13 per cent due to rise in input prices, mainly milk,” said RS Sodhi, Managing Director of Gujarat Co-operative Milk Marketing Federation, which owns the Amul brand.

Sodhi said Amul uses fresh milk to make ice-creams and claimed a market share of 40 per cent across India.

The price of milk powder, a key ingredient, has almost doubled over last year to around ₹280 a kg, forcing ice-cream makers to hike prices, while other input costs have also risen.

Vadilal Industries has hiked prices by 7-9 per cent, said Managing Director, Rajesh Gandhi. For products on which prices cannot be raised, the company has tweaked its packs by reducing volume and size.

“The summer is expected to be normal and estimates are that the industry is expected to see 20 per cent growth, which will be good since last year the early monsoons had impacted the growth of the ice-cream industry,” Gandhi added.

Ice-cream consumption is much lower in India compared to developed countries. Indians, on an average, eat about 400 ml of ice-cream annually, while Americans consume 14 litres and the Chinese, 2.2 litres.

By Euromonitor estimates, the ice-cream market is expected to touch $1.1 billion (around ₹6,100 crore) by 2017. The current market size of the organised sector is estimated at ₹3,500 crore.

Subhasis Basu, Head of Dairy Products at Mother Dairy, said his company has hiked prices for some categories while it is considering increasing for others soon. “We have tried to absorb much of the input costs,” Basu said, adding that price hike was 15-20 per cent depending on products.

Creambell, owned by the Ravi Jaipuria promoted RJ Corp, also raised prices 8-10 per cent at the strat of the year. “If the weather patterns are not erratic, we expect the industry to grow at 15-20 per cent this year,” said Nitin Arora, CEO.

Published on March 26, 2014

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