Ice-cream or frozen dessert, both to burn your pocket

With commodity prices soaring, most ice-cream companies have hiked rates 4-8 per cent. But companies believe this is unlikely to impact sales as they have largely maintained the prices of the entry-level products; only the premium offerings have got expensive.

Subhashis Basu, Business Head - Dairy Products, Mother Dairy Fruit and Vegetables Pvt Ltd, said: “Commodity prices have gone up by about 10 per cent. We have been working on improving efficiencies across our supply chain and have tried absorbing a large portion of these costs. But we have had to increase prices by 3-4 per cent.” He said the company does not believe this will impact consumption and expects to continue growing in high double-digits.

Most manufacturers have worked around costs to maintain entry-level price points — ₹5 to ₹20 — unchanged. The price increase comes at a time when the battle between the biggies Amul and HUL regarding the goodness of ice-creams versus frozen desserts is hotting up and even taken a legal twist.

According to experts, while it is up to five times cheaper to make frozen desserts compared to ice-creams, the former category is priced comparably or at a higher level than ice-creams. This makes frozen desserts a higher-margin product putting pure play ice-cream companies at a disadvantage.

RS Sodhi, Managing Director, Gujarat Co-operative Milk Marketing Federation Ltd, which makes Amul products, said that the company’s intention with its marketing campaign is to make consumers aware of the milk base of ice-creams and the vegetable oil base of frozen desserts. The company has been focussing on such kind of consumer awareness marketing for some time, now. According to estimates by Euromonitor, the ice-cream/frozen dessert segment registered a 20 per cent increase in retail sales value in 2016, slightly higher than vaerage CAGR of the last five years. Given the low per capita consumption of ice-creams in India, companies this season are focussing on strengthening distribution across geographies, bringing in new value-added offerings and focussing on extruded products. Price will form a part of their gameplan too

The leading brand in the ice-cream segment, Amul, has hiked prices of its ice-creams by 8-10 per cent.

Nitin Arora, CEO, Creambell Ice Cream, which makes both ice-creams and frozen desserts, said: “Input costs have been going up for some time which has led us to increase prices of our products by about 8 per cent. But we have kept the entry-level impulse category prices largely unchanged, increasing prices more for the premium products.”

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