NATURAL ICE-CREAM

POPOULARITY WITHOUT PROMOTION

INTRODUCTION

The all-time-favourite Natural Ice Creams, is the sweet baby of Mulky Raghunandan Srinivas
Kamath. This Founder Director comes from a tiny village called Mulki in the Puttur taluka of
Mangalore, Karnataka. Raghunandan’s father earned all of Rs 100 a month from leasing trees
and selling fruit. Curry, coffee and jackfruit was all that Raghunandan’s mother could afford
to feed her seven children. The children would routinely roam around bare-bodied. “In our
village that implied one was yet to take a bath and put on fresh clothes,”

Raghunandan along with the rest of the family moved to Mumbai when he was 15-years-old
to start work alongside his brother, twenty years his senior, in an eatery. The family lived in a
12 by 12 foot room (kholi) in a chawl at Juhu Koliwada. Being the youngest, Raghunandan
had to sleep under a cot.

In a report by The Telegraph, Raghunandan’s ice cream odyssey began about forty years ago
with a simple question. “If ice cream can have fruit flavours, why can’t it have real fruits
instead?” That thought led to Natural’s launch in 1984 in Mumbai with four staffers and 10
flavours like strawberry, mango and custard apple. Today, all Natural parlours serve 150
flavours ranging from litchi and mango to custard apples. Raghunandan says tender coconut
and chikoo are the hotsellers. And every weekend a new flavour’s introduced. Some exotic
fruits on the menu include jackfruit, muskmelon, papaya-pineapple and mulberry. Others like
litchi, custard apple, guava and kala jamun are available during winter.

Raghunandan goes to great lengths to maintain quality and picks only the best ingredients for
his ice creams and buys from the most trusted suppliers. Milk comes from Mumbai’s Noble
Dairy and only pharma-grade sugar is used. As for the fruit, Kamath says: “Since my
childhood, I’ve had great knowledge of fruit. I can identify the exact fruit that should be used
for making pulp.”

Story Behind Natural Ice Cream

It's natural. It's yummy. Those who have tasted it, swear by it. The unique feature of the ice
creams manufactured by Natural Ice Cream is that they contain no artificial flavors, no
preservatives or stabilizers, only fresh fruit pulp or dry fruits.

Started as a 300-sq-ft ice cream parlor at Juhu, a northwest Mumbai suburb, in 1984, the
brand is a runaway success. It now has 89 franchise outlets across West and South India: 47
in Mumbai, 29 in the neighboring urban clusters of Navi Mumbai, Thane and Pune, and the
rest scattered across select cities of Maharashtra and neighboring states. Ten more will be
opened in the current financial year. Natural's revenues have grown from Rs 14 lakh in 1986
to Rs 40 crore in 2010/11. The franchises may be many, but the manufacturing hub is just
one, located in another Mumbai suburb, Kandivali. Every morning, a fleet of trucks rolls out
from the factory carrying the ice cream to all the Natural outlets, thus ensuring quality is not
compromised.

On a May morning, the air around the factory is thick with the aroma of Maharashtra's most
prized summer fruit - the Alphonso mango. Mango pulp is being extracted in the fruit
processing unit by rows of uniformed workers. All surfaces are sanitised, but there are no
machines in sight. The fruit is peeled manually, de-seeded by hand, chopped and pureed.
Similarly, for the dry fruit flavours, freshly bought dry fruits are peeled, crushed and pulped.

"Machine-made fruit ice cream needs additional artificial flavours and colouring in the final
product," says Chairman, Managing Director and Founder of Natural, R.S. Kamath, 56. "That
is something that I fundamentally disagree with."

The store at Juhu has been renovated and expanded repeatedly, and is now more than three
times its original size. "It is a landmark in the area," says a beaming Kamath. It all began after
Kamath broke away from his elder brother's ice cream business, Gokul Ice Cream, in 1983. "I
took my share of the inheritance and set up Natural," says Kamath. From the start he was at
enormous pains to keep to quality - a trait he maintains to this day. Seasonal fruits are bought
in bulk daily from the market, with only the best quality ones being chosen. The extracted
pulp is heated, to get rid of unwanted bacteria, and then stored in aluminium-sealed packages.

Kamath, who from the start involved himself in every aspect of manufacture and distribution,
says he has experimented with 60 different kinds of fruit. (In case of non-seasonal fruits,
however, Kamath has no choice but to buy pulp and get it machine processed.)
The atmosphere at the factory is taut and business like. "We handle eight hours of high
pressure to produce 14 tonnes of ice cream daily so that others can cool off," says Girish Pai,
who heads both retail and production. (The factory's capacity is 20 tonnes.)"I credit my team
entirely for the brand's ever growing popularity," Pai adds.

Natural is equally careful with the quality of the milk it uses. Buffalo milk brought daily to
the factory in tankers undergoes elaborate treatment to maintain the prescribed bacteria count,
and is then thickened by reducing the water content. The process, called Falling Film
Evaporation, uses a triple cylinder machine to bring the milk's temperature to 30 degree C,
before cooling it down to four degrees and then heating it to 90 degree C in four minutes.
Cooled again to 4 degree C, it turns into condensed milk - the way it is needed for ice cream
production.

Condensed milk, fruit puree and ice churn together in a machine freezes the ice cream to
minus 4 degree C within six minutes. The temperature is then lowered to minus 18 degree C
using a spiral freezer. Finally the ice cream is packed in boxes and loaded into crates along
with plenty of dry ice to keep it from melting, before being carried away in temperature-
controlled trucks for the day's consumption.

The means Natural uses to enforce quality control, however, impose their own limits on the
brand's expansion. All the temperature control in the world cannot preserve the taste - and
more importantly the freshness - of ice cream beyond a specified number of hours, during
which Natural's trucks can cover only a finite distance. This explains why Natural's outlets
are largely in Western India, and it has no outlet yet in the national capital, despite the
obvious business opportunity Delhi presents. "The National Capital Region has remained an
elusive destination," admits Pai.

But the scenario may soon change. Though Natural officials are reluctant to share details of
their financial relationship with the franchises, they do reveal that plans are afoot for a major
change in operational strategy. The man responsible is Kamath's son, Srinivas, who was
inducted into the business in 2009. Srinivas, 27, believes that since it is dealing in perishable
products such as ice cream, Natural has to set up manufacturing units in other locations, if it
wants to keep expanding.

Srinivas wants to set up 'mega shops' in faraway cities and towns, which will both
manufacture Natural ice cream and sell it. "Raw material will be supplied from here, as well
as trained workers who will make the ice cream at the mega shops," says Srinivas. "Frozen,
non-perishable fruit pulp and processed milk can be stored for a maximum of four days
without harm. That is enough time to transport them to wherever the mega shops are opened."
Machine-made fruit ice cream needs additional artificial flavours and colouring in the final
product. That is something that I disagree with: R.S. Kamath, Chairman and Founder, Natural
Ice Cream

Again, in a change of strategy, Natural intends to open only one shop in these faraway areas.
"Instead of investing in multiple franchises, Natural will have just one mega shop per town,"
Srinivas adds.

Natural will also impose its conditions: the outlet must have at least 2,000 square feet floor
space and must be located in a central area. The first such outlet is set to open later this year
in Chandigarh; depending on its success, more such shops will follow.

Natural is in no hurry to get to Delhi, but it has big plans when it does. "Delhi is a very big
market. To meet its demand, we'll have to double our existing capacity," says Pai. Natural's
ambitions go even further. "Our founder wants Delhi to be the launchpad for Natural's global
ventures, especially in West Asia," he adds.

Indian Ice Cream market

Globally, ice cream is the most popular dessert. Since the industry is marginally capital
intensive, it is very competitive. In 2014, China took over the United States as the largest ice
cream market globally. In 2015, United states, New Zealand, Australia, Denmark and
Belgium dominated the global ice cream market in terms of consumption. On the basis of
product, the global ice cream market can be segmented into impulse ice cream, take-home ice
cream and artisanal ice cream.

Indian ice cream industry is one of the fastest growing segments of the dairy or food
processing industry. India has a low per capita ice cream consumption of ice cream at 400 ml
as compared with per capita consumption of ice cream of 22,000 ml in the United States and
3,000 ml in China. With the improving cold chain infrastructure in the country coupled with
increasing disposable income and the changing lifestyle, the sector has great potential for
growth.
The ice cream industry in India generated revenue of more than USD 1.5 billion in 2016 and
is projected to generate revenue of approximately USD 3.4 billion by 2021. Lately, frozen
desserts which are made out of vegetable oils have been eating into the market share of ice
cream. Key players offering frozen desserts in India are Kwality Walls, Vadilal, and Cream
Bell.

In India the ice cream industry is mostly regional and there is a multitude of brands focusing
on only one or two districts or in some case only one state. There are very few national
brands and the major reason behind slow growth of the smaller players is the high
perishability of ice cream products.

Indian Ice Cream Market ( 2020 )

Although it is a leading producer of dairy in the world, the ice cream industry in India is
largely underdeveloped.

Why?

We spoke to Ravi Menon, Director of Blendhub India, shortly after the Indian Ice Cream
Exhibition (IICE) to discuss the boons and challenges for India’s ice cream and frozen
desserts market.

Ravi went on to explain the current national consumer trends, what can be expected in the
next few years and what differentiates Blendhub  from the rest

In this article, we will give a complete overview on the ice cream industry in India based on
Ravi Menon’s expertise, trends witnessed during he 2019 Indian Ice Cream Exhibition (IICE)
along with research studies from Global Data.

 
About Blendhub India and the Indian Ice Cream Exhibition

Blendhub’s presence in India goes back to 2011 when the first powder-based food production
hub in Sri City’s Special Economic Zone (SEZ) was deployed under the name of Premium
Ingredients India. This hub is dedicated to export and serves customers especially in the Gulf
Cooperation Council (GCC) and other parts of Asia. In 2017, a second hub was opened in Sri
City’s Domestic Tariff Area, this time focusing on the Indian market.

Ravi Menon has been leading Blendhub’s operations as Director of Blendhub India since
2017. With over a decade of experience in the agri-food industry, Ravi has his finger on the
pulse of the ice cream industry in Asia.
The 9th Indian Ice Cream Exhibition (IICE) took place in Gandhinagar from the 19th to the
21st of September 2019. IICE has been bringing ice cream producers and vendors of all sizes
under one roof for 15 years, and this year was by far the largest with more than 4000 visitors
making it the largest trade fair for the ice cream industry in South Asia.
The exhibition provided Blendhub with the opportunity to connect with a wide variety of
players in the industry. We were witnesses of the increasing demand for raw materials and
ingredients to processing and automating technologies, up to food safety systems.

An Overview of the Global Ice Cream Market

As the world population grows, urbanization rates rise and global economies improve, the
demand for indulgence products like ice cream and frozen desserts have been steady and the
forecasts are promising.

The global ice cream market is forecasted to record a CAGR of 4.7% and reach US$73.2
billion by 2022.

Macroeconomic factors such as increasing disposable incomes and a growing desire for
indulgence treats are driving the ice cream sector to grow rapidly and strongly worldwide.

However, no region is expected to witness a larger increase in growth like the Asia-Pacific.

The Frozen Desserts and Ice Cream Industry in India

Led by India and Thailand, Asia-Pacific is forecasted to see an increase of CAGR of 4.1% by
2022, specifically due to an expanding middle-income socioeconomic class and a large youth
population who enjoy and seek out novelties, especially Western-like.

Specifically, the Indian market is expected to register the overall value growth of over 50 %
from 2019 to 2022.

 
Source: Global Data
 

Interestingly enough, the ice cream consumption per capita in India is currently very low
when compared to global consumption and considering the amount of dairy India is
producing for the world. The yearly ice cream consumption in India is currently 400
millilitres per capita. Meanwhile in the USA, it is 22,000 millilitres and 3,000 millilitres in
China (Smart Research Insights).
Yet, according to Ravi that is exactly where the great opportunity lies going ahead into 2020.

Forecasts expect Indian consumption to catch up with China and see nearly a seven-fold
increase in the market. While the global ice cream market is forecasted to record a CAGR of
4.7% by 2020, the Indian ice cream sector is expected to grow up at a CAGR of 12.4% by
2022.

The Indian Ice Cream Consumer Trends

According to research by Global Data, there are 4 key trends in the Indian ice cream market:

Innovate with Ingredients

In a GlobalData survey, 85% of respondents in India said that they often/sometimes try new
or different varieties when purchasing ice cream products. While classic and fruity flavours
continue to hold their appeal, consumers are curious to experiment with new tastes –
especially millennials in the Asia-Pacific.

In India, youth under 26 years old account for 53% of the population, making them the key
demographic for the ice cream and frozen dessert sector.
This appetite for diversity is leading a trend in the use of novel and unusual ingredients such
as hot sauces, salted caramel, cheddar cheese, and rosemary.

Health Concerns

Although the Indian population seeks out indulgences, more consumers are becoming aware
of the high fat and high sugar content of ice cream. Indians consumers want the best of both
worlds and specifically, look for ‘low fat’ health claims.

In India, the standard fat content in ice cream has decreased to as low as 5%. Consumers are
looking for even lower percentages and ice cream manufacturers are actively looking for
solutions to respond to the trends but to also reduce the production costs. Ravi predicts this to
be one of the strongest consumer trends in India.

Though sugar-free ice creams have been launched in India, Ravi explains that for the time
being the awareness of sugar content is low compared to other countries. Sugar content in
desserts is generally quite high throughout India, and consumers enjoy their sweet flavours
but he is sure that it will not be long enough when sugar content will also become an
important parameter in ice creams.

Transparent Labelling

In continuation of health concerns, consumers expect transparent labels as a standard and

increasingly prefer products with few and easy-to-pronounce ingredients.

Flexible Packaging
Ice cream and frozen desserts are commonly consumed as a take-home product or as a single-
serve product, and consumers look for packaging that enhances convenience but is also
compact and encourage portion control.

Barriers for Manufacturers in the Indian Ice Cream Market

Despite the opportunities and growing demand, poor supply chain management paired with
the technology to assure quality and consistency are some of the setbacks the country
experiences.

According to research by Global Data and Ravi Menon’s firsthand experience, the global ice
cream market will see 3 key inhibitors:
Competition
As Ravi Menon explains, everyone in India has a sweet tooth. There is a very wide variety of
desserts available in the country, and ice cream is just one option out of many.

As per Indian regulations, ice cream that does contains non-dairy fat is categorized and
labelled as “frozen dessert”. In addition to being a cheaper option, frozen desserts and frozen
yogurt are positioned as sector competitors in the Indian market and are often attractive to
consumers. These desserts are marketed as guilt-free indulgences especially the low-fat
versions.

Source: Global Data

 

The ice cream sector in India is moderately consolidated and competitive, with the top six
companies accounting for 68% value share in 2017. GCMMF, Unilever, Wells Enterprises
Inc., Devyani Foods Industries Pvt. Ltd, Hatsun Agro and Havmor Ice Cream Limited are the
largest players in the market. The remaining 32% of the market is extremely fragmented in
small and local companies.

Sustaining Health Claims

The growing demand for healthy products has led to a rise in claims such as ‘no artificial
ingredients’, ‘all-natural’, and ‘organic’. However, it has been a challenge for manufacturers
to sustain these claims due to the complicated nature of supply chains. Manufacturers,
therefore, struggle to ensure the transparency and traceability of products.

Inadequate Logistics and Technology

Manufacturers in the Indian ice cream sector face a major barrier when it comes to providing
efficient cold storage and logistics. Tier-II cities in India experience frequent power outages
 and voltage fluctuations which alter the temperature at which the ice cream can be stored.
Also, transportation costs inside the country are very high.

The same is true regarding quality assurance. Due to a lack of access to the latest technology,
manufacturers struggle to find solutions that ensure consistency and high-quality products.
 

Blendhub’s Capabilities in India

Up until now, the India hubs in Sri City have operated as Premium Ingredients India but at
the beginning of 2020, the hubs will match the entire organization as Blendhub India.

A key differentiator of Blendhub is our ability to provide a Made in India blend while
guaranteeing safety, quality and consistency.

Expand Your Business with the Highest Quality Standards

Many domestic ice-cream producers in India use either imported or locally blended products.
In the case of locally blended products, there is often a lack of consistency because quality
controls and systems are not in place to ensure consistency from blend to blend.

 All our hubs have the internationally recognized, Food Safety System Certification
(FSSC) 22000. Our teams are trained accordingly, and we are regularly audited to uphold the
FSSC 22000 standards.
 Blendhub uses proprietary technology in blending and quality control. We have
complete control over our processes, and the ability to customize recipes and production
according to our customer’s needs.
 Our Portable Powder Blending factories are not only identical in every hub around the
world, but they are also cloud-connected factories. No matter where you are in the world,
you can check in on your production and make decisions through the cloud.
 

Whether we are blending an ingredient mixer a finished product, we have an absolute and
robust quality control system in place. With two hubs in India, all uncertainties are reduced to
a minimum.  As an all India team, you are not vulnerable to changes in fiscal duties, delays in
shipping, statutory clearances or political tensions.

We take care of the consistency and quality of your product so that you can keep up with big
players, attend to your consumers’ needs and expand your business.