Ice cream business in India staring at a loss of Rs 2,000 cr in lockdown

The ice cream business in India is staring at a loss of Rs 2,000 crore this summer season owing to t…

The ice cream business in India is staring at a loss of Rs 2,000 crore this summer season owing to the prevailing lockdown due to Covid-19 pandemic, according to an initial indication obtained from a market analysis carried out by renowned industry experts.
As per industry experts, the summer season this year started on a bad note due to extended winter season followed by the pandemic and if the situation persists for a longer period, the losses could mount further.

Making a similar observation, a spokesperson for the Indian Ice Cream Manufacturers Association (IICMA), stated, “The industry will lose more than 20% sale this season - over Rs 2,000 crore due to lockdown.”

According to the spokesperson, the factors that are affecting the ice cream business include manpower crunch as labourers migrated from industrial hubs to their hometowns, and interstate transportation is still very limited along with availability of raw material like for packaging.

The lockdown started at the beginning of the peak season and presently 90% of the operation is held up. “However, all the manufacturers have stocked up the ingredients for the making of ice cream but the industry couldn’t operate due to lockdown,” said the spokesperson.

He explained that earlier it were the higher prices of skimmed milk powder that went up to Rs 350 per kg plus GST, which normally stand around Rs 150-170 per kg, due to lower production by dairy companies in the winters and now the lockdown has affected the industry operations severely. However, the cold storage is still running and the industry is incurring the cost.

“Since the stocks of skimmed milk powder were low in January, we had also petitioned the Union government to allow imports of the skimmed milk but of no avail. In the previous year the country had a stock of 1,20,000 tonne of skimmed milk powder (SMP) but the country had only 20,000 tonne of SMP for this season and as a result prices soared,” said the spokesperson.

The industry is of the opinion that post-lockdown, it would take couple of months before the industry stands on its feet again and therefore the government needs to give a stimulus package to the industry.

Meanwhile, in an email response, Mother Dairy explains the situation vis-a-vis ice cream business:
What is the impact of lockdown on ice cream business of Mother Dairy
April to June is the peak season and contributes about 40% of total ice cream business. Incidentally, this is the period which has been impacted the most and therefore has led to drastic reduction in point of sales such as closure of general trade and vending carts are not operational. However, in our case more than 25% of ice cream business comes from our own milk booths and we are not seeing any drop in ice cream demand from these stores.

Do you see any loss of revenue in the peak season, if yes, can you put a value?
As a leading industry player, we are geared up to meet any surge in demand for our ice creams as soon as the lockdown restrictions are over. We are witnessing growth in demand for ice cream in our own channels for the take home category, which has led to initiate production of key products in our dairy integrated plant. We had planned for a robust growth of 25% over the last year and with the trends that we experienced from our booth network, we are preparing ourselves and are hopeful that we will be able to secure at least 80% of our annual business post the lockdown period.

How are you maintaining operations for ice cream business during lockdown?
Like mentioned, we are witnessing surge in demand for our take home ice cream category through our dedicated network of over 1,600 outlets across Delhi NCR, we have also ensured requisite inventories are maintained to serve the demand. We have also initiated production for some of our categories which are high in demand and are preferred by our consumers.

What is the plan of recovery post-lockdown?
At Mother Dairy, we are all geared up to entice consumption and excite consumers and to support the same we have plans to introduce new products in and around June. Additionally, our channel partners are also aligned to meet any surge in demand to ensure seamless continuity in the supply chain. We are hopeful that we will be able to secure at least 80% of our annual business post the lockdown period is over in the balance year.