Natural Ice Cream - Popularity without

promotion

Dr Amit Rangnekar

Case learnings
Ice cream market- dynamics, competition, consumer
behaviour

NPD of Natural Ice cream

Scaling up strategies of a local brand
Marketing and brand building strategies, sans
promotion

Case analysis

Defining moments
Raghunandan
Srinivas Kamath

1994- Lost
everything in tax
arrears to IT Dept,
lesson learnt led to
expansion

Indian Ice cream market

Rs2,500cr @15%, Mithai Rs 20,000cr
Scope- Ice cream PC consumption India 300ml, Pakistan 800 ml,
Sweden 14L, US 22 L, World 2L

Organised 45% MS (Rs 1125cr), unorganised- Kulfi, candy, ice fruit

Gujarat 18% MS- Rs 200cr, Ahmedabad Rs 86cr
Highly seasonal, Cold storage due to power failures, low stocking
Key- post dinner, movies, malls; home delivery, marriages

map
Industrial

Afordable

Premium

Traditional

Amul

Reach

Amul 5500 pushcarts, 2400 scooping parlours

Vadilal 150 Happinezz retail outlets
Kwality Walls 200 Swirls parlours

Competition
Top-3 70%, Others 30%- Local, regional, national, international
Jan12 prices increased @ Rs 1 to 10 across product categories
Regional flavours, distribution network, retail expansion
Price insensitive, VFM pricing, differentiated brand
Purchases- 50% impulse, 50% family + in-parlour sales
Parlour location- key to footfalls and profitability
Trend- health conscious pro-biotic, low fat ice creams

Competitive Advantage
Mumbaikars like to try out new things, but they are also
very loyal customers. Even though the market is flooded
with new products, there will always be customers,
including new ones everyday. Many try to imitate us. We
stay ahead by continuously launching new flavours,
innovative combinations, convenient packaging, and
efficient service. Our unique taste, preservative free ice
creams and affordable prices helps us retain loyal
customers. RSK

Amul
Indias largest food brand
1996 NPL, 2001- No 1 in India, 40% NMS, 4X Walls
220 SKU- flavours, pack sizes, sticks, cones, cups
Penetrative price + relentless promotion+ Amul brand equity
Positioning- Real Milk. Real Ice Cream
Competitive advantage- milk, national cold chain
Penetration- 75k retail outlets, add 15k annually

Walls
Kwality- National leader, acquired by Walls (HUL)1995
Kwality- in-depth knowledge of Indian market
Unilever- largest global ice cream maker- $6bn
Promoted as frozen desserts to be competitively
priced, no milk

Batterred by Amul on price & milk front

HUL- promotion- NPL and TVC

Vadilal
2010 Rs190 cr, net Rs 6 cr, 20% MS, 25% by 2015, Ice cream
focus

Daily capacity- 2.25L lpd to 3.25 lakh lpd

Reasonable prices, exclusive ingredients, easily available
200 products (flavours, candies, cones, cups, party, family, bulk)
NPL low fat desserts, premium - Badabite, Flingo, Gourmet
Hapinezz outlets- 200 to 400 by 2014- franchisees

Mother
Dairy
Mother Dairy growing @30%
NDDB subsidiary, milk & curd major
Economy- North, AP, Mumbai and Kolkata- penetration
Own retails outlets, booths, carts and kiosks
Traditional flavours- Firdausi Kaju Kishmish, Zafrani Kesar
Pista andShahi Meva Malai(mix ofkheerand
basundiflavours)

Natural- Origins
1960s- Failed Class VII, in Mangalore, packed off to Mumbai
1984- Fell out with brothers, opted out of Gokulsice-cream
Industrial ice creams- 2 key players- Kwality & Vadilal
Focus- traditional ice cream, natural, no preservatives / flavours
Investment- Rs 3L (Settlement+ Own+ friends), Juhu outlet
3 employees, just married wife + RSK
I kept my outlet simple, had faith my products would speak for me

Progress
1984 300-sq-ft outlet at JuhuY1 turnover Rs 1L, 5-6 staff
1986 Rs 14L, top movie and TV celebrities as clients
1995 Rs 65L factory loan (Saraswat Bank), 15-20 employees
1995 5 Mumbai franchises, turnover Rs 3 cr
2009 50 outlets Rs 25 cr
2011 100 outlets, 100 varieties, Rs50 cr

Ice cream insights

When Indians want to embellish a seasonal fruit,
they often pour milk on it. Why not do the opposite,
embellish my traditional milky ice cream with fruit? I
knew how to check ripeness and quality of fruits, as
my father dealt in fresh seasonal fruits. So I decided
to add slivers of whichever fruit customer asked for,
to my traditional, natural ice cream, in effect, kulfi +
fruit. Thus the brand Natural was born.

Operations
Factory- Charkop- 4500 sqft, produce 14T ice cream v capacity 20T
60 different fruits- peeled, de-seeded, chopped and pureed
Seasonal fruits- extract pulp, heat, store in aluminium-sealed packs
Dry fruits- peeled, crushed and pulped
Milk- thicken by reducing water, condense
Condensed milk+ fruit puree+ ice, churned, frozen to -4C in 6
minutes, temperature lowered to -18C using spiral freezer

Ice cream packed in boxes, loaded into crates with dry ice

Creams
Mangoes peeled
before pulping

Ice Cream
bulk churned

Almonds crushed
before use

Condensed milk

Ice Cream boxes labeled Ice Cream packs brought

before packaging
out of spiral freezer

Challenges
No equipment to make traditional ice cream or peel fruit, developed
One person can manually deseed only 2 kg Sitafal in a day. We
developed a machine to deseed, now we deseed 600 kg sitafal daily.

We use lots of fresh fruits but no preservatives, so distribution is a

key challenge as fresh stocks only have to available at our outlets.

Batch production to ensure freshness

Outlet delivery by small temperature-controlled trucks daily
Freshness preserved only for limited time, so careful expansion

Manufacturing sweetness
Traditional ice cream making- manual, slow &
laborious

3 steps- Boil milk in a kadai, make rabri and cool it

TQT method- taste, quality and traditional method
No stabilisers or artificial colours
Challenge- consistency, taste
Resistors- automation and scaling up

Sourcing
Dedicated suppliers- milk, sugar, dry fruits
Exotic fruits from fruit orchards /growers
Sitaphal /custard-apple- Saswad, near Pune (Jul-Nov)
Litchis- Dehradun (May-Jun)
Strawberries- Mahabaleshwar (Dec-Mar), Jackfruits/VanillaMangalore

Kala Jamun- Sawantwadi (Apr-May)

Alphonso Mango- Devgadh (Mar-May)

Quality pickings

Flavours
Super hit- traditional ice cream + fruit
Instant hit- Sitafal, first sunday after launch- 300 scoops
Round the year- chocolate, dry fruits, tender coconut
Seasonal- chickoo, sitafal, pineapple, Lichee, jack fruit, mango
"We became popular purely by word of mouth
2010- 100 natural flavours, now combinations
Consistency in flavours- biggest challenge

Spreading sweetness
"The customer is a good teacher, they suggest
flavours, even tell me how people innovative with
fruits and ice creams globally. I take all the
suggestions seriously.

"Machine-made fruit ice cream needs additional

artificial flavours and colours in the final product,
something I fundamentally disagree with R.S.
Kamath

Pricing
strategy
1984- Value for money pricing
Rs 8 for 2 scoops, high value
2009- Rs 25/cup, Rs 28 a scoop, kg Tubs @Rs 135
Waffle cone- Rs 4, Amul Rs 4, Baskin Robbins Rs 11
All flavours priced the same, except for fresh fruit
toppings

SKUs
Special packs
litre packs
Cups, cones , waffles
Seasonal sundaes
No Family Packs, Candies
Scope for value addition

Service
Tasters
Friendly service, ambience
Home delivery- Numbers to avoid delays
Special storage boxes for trips & picnics
Crowds- cues

 1984- Rs 3L investment

Financials

Lean set up helped

manage initial hiccups

1st Sunday- Rs1400 from

300 scoops (12kg)
Sitafal ice-cream sold

2011- Sales Rs
50 cr
Rs 10L from 3.5T
ice cream daily
Net profit Rs 4.5

Geo-Spread
Franchisee model, 100 outlets, 60+ in MMR
Expansion- Pan India, SL, Nepal, Gulf
Juhu branch- biggest @ Rs 3.5 crore pa, 3X size
Home delivery- 33% sales
Maharashtra
Mumbai
45
Thane

Navi
Mumbai
Panvel

6
1

Kolhapur

Ahmedaba 1
d
Aurangab 1
ad
Ahmedna 1

Karnataka
Bangalor 8
e
Belgaum 1
Udipi

Mangalor 1

Others
Goa

Hyderaba
d
Raipur

Kochi

Natural Outlet

Franchising
Exclusive outlets, faster
penetration

More management focus on

key areas

Rs 12-15L deposit +
commission

Jaipur, Bangalore (airlifting)

Ahmedabad (train)

Mega Shop concept

Plans- 'mega shops- manufacture and sell Natural ice cream
"Raw material + trained workers from Mumbai will help set up
"Frozen, non-perishable fruit pulp, processed milk can be stored
for 4 days, enough time to transport to mega shops

Only 1 mega-shop per far away town, 2,000 sqft, central area
2012- Chandigarh as test market
Future- Delhi as launch pad for global ventures

Key drivers
Traditionally hand-made, distinctly Indian taste
Creamier and richer
100% vegetarian ice creams- pan community acceptance
Eatable any day of the year
Natural (sans preservatives)- appeals better
Fruity flavours instant acceptance
Constant innovation with fruits & combinations

Limca Book of Records

Ice cream slab (strawberry)
12 feet L*12 feetW*5 feet
height*2.5 feet thickness,
weighing 3,000 kg

To celebrate silver jubilee

anniversary of Naturals

NPL jack fruit to celebrate

Mangalores contribution to
Naturals

Idol
Dr TMA Pai of Manipal
Dr Pai collected small
savings from every
household, even 50
paise, and promised a
Medical College and a
bank (Syndicate Bank)
in return. His vision was
so clear from the point
he decided to
undertake the journey.

Sweet ambitions
Now called Our Times Ice Cream Pvt Ltd
Ice cream focus, penetration, NPL- Sugar-free kulfi ice creams
25 years to open 50 outlets, 50 in 2010
Factory- 4,500 to 20,000 sqf, 10,000 to 15,000 Lpd daily
Being a technical person, it is not very difficult for me to
supervise such an expansion, we are ready to take the next step
forward.

Son Shrinivas joined the family business

Diversification

"For the past 5 years, I have been successful. I

have learnt several lessons, and now know whom
to trust. I have developed a resort at Mangalore,
where I have recreated the life of south India and
the rich traditions of Mangalore. Spread on a 5
acre plot, the resort is set in a natural habitat.
Fruit trees and vegetables grown everywhere. It
will be open soon.

Nature lover, Lands Flavour Resort, MangaloreBantwal national highway in Adyar village

4Ps
Product- Fresh and pure,
traditionally made ice cream
Price- VFM
Promotion- Word of Mouth

Place- Franchised
outlets

Natural- STPD

Segment

Urban middle+ fly

who celebrates

Target

Traditional &
fruity ice
cream lovers

Positioning

Fresh, natural &

fruity ice creams

Differentiation

Unique taste,
exotic fruity
flavours

proposition
Emotional- pure & natural

EconomicVFM

Functionalfresh, taste,
quality

Brand personalitysimple, fun, innovative, specialist

Brand Identity & Image

Position

Natural,
fruity,
ice
creamunique
taste

Image
(Perceptio
n)

Natural
Fruity
Fresh

Identity

Traditiona
l
Fruity
100% Veg

Customers Mind

POP & POD

POP
Ice cream
Milk rich
Dry fruit flavours
Regular flavours
Multi packs
Waffle cone
Own outlets

POD
Traditionally made
No preservatives
Fresh
Fruit combinations

Aakers Model- Naturals

Extended
sh
e
r
F

Av
ail
ab
ilit
y

Core

Value

Brand Essence:

Taste

Traditional, pure ice

cream
Quality

Sp
ec
ia

lis

Fruits
tic
o
Ex

Natural- Kapferers Brand Identity Prism

Relationship
(Brand to customer)Social, family,

Reflection (Customer
identifies wrt brand)Value oriented,

Personality (Soul)Pure, Traditional, Fresh

Culture (Brand in
customers conscience)
Sharing, Indian,

Self-Image (Customer
identifies brand wrt self)Natural

Internalisation

Externalisation

Physique (Purpose)Taste, Quality, Fruity

on
ne
ct

Kellers CBBE /
Building blocks
Brand Equity Pyramid
R
Br elat
an ion
dc s
us hip
tom
er
c

Int
en
se
loy
alt
Active loyalty, connect,
y

Po

Re
W spo
ha n
t a se
bo
ut
yo
u

engagement, attachment

ive
sit

M
W ean
ho in
ar g
ey
ou

Identity

Awareness

High recall, awareness, range, reach

OD
/P

Pure, natural, fresh, traditional

P
PO

Fruity, tasty, value, exotic flavours,

good service, satisfaction

Cool, fun, excitement

ns
tio
ac
re

Quality, credibility, innovation

Testimonials
Natural Icecreams is an all time favouriteSanjeev Kapoor
I recommend anjeer, dry fruits and sitaphal flavoured
icecreams from NaturalsAnup Jalota

Naturals tender coconut icecream with hot rasgullas - thats

my recommendation to the truly recklessBipasha Basu

My fridge is incomplete without icecreams from Naturals

Shilpa Shetty

Natural icecreams; every flavour you can think of, plus

several you never dreamt even existedBusybee

I like Chickoo & Custard Apple icecream at Naturals, Juhu

Viv Richards

Case questions
Word of mouth publicity (buzz) made them popular, would
advertising help penetrate deeper and wider

Traditional ice cream making method made them

acceptable, would expanding scale and scope affect quality
and consistency

Would exclusive outlet franchising be a hurdle to deeper

penetration, are they missing out on MBOs

Should they leverage popularity at high footfall placesmalls, multiplexes, railway stations and airports- through
bare formats

Tapping the Indian diaspora in UAE, UK & US?

References

Nuzhat Aziz, Hindustan Times, Mumbai, July 15, 2008 http://www.hindustantimes.com/StoryPage/Print.aspx?

Id=db0863ac-c29e-4587-8e1a-379dc0af5f6fSmallideasbigchanges_Special

Cold is gold November 27, 2008 India Today UNUSUAL ENTREPRENEURSTRAIL BLAZERS- Jhilmil Motihar
http://indiatoday.intoday.in/index.php?
issueid=112&id=21118&option=com_content&task=view&sectionid=34

MEDIA articles link http://www.naturalicecreams.in/company/media.asp

Recession will not melt ice cream sales Ankur Parikh / DNA Monday, April 6, 2009 11:01 IST

Mother Dairy aims for Kolkata ice cream market, western India 2007-05-09
http://www.mangalorean.com/news.php?newsid=104990&newstype=local

NMIMS website- VC Cases Natural ice cream

http://www.nmims.edu/whats_new/VC_CS_Natural_Ice_cream.pdf

Ice Cream Market in India: Opportunities & Challenges, India Food Brief, March 30, 2011,
TradeBriefs: Anurag Garg

Ice Cream Cos Await a Sultry Summer Season ET 27Feb11 P17MADHVI SALLY AHMEDABAD
The . 2,500-crore industry is on an expansion drive, eyes 15% growth this year