Dr Amit Rangnekarwww.dramitrangnekar.com

Popularity without

promotion

Case learnings

• Marketing strategies of a local brand going national

• NPD of Natural• Scaling up strategies• Insights into the dynamics, competition and

consumer behaviour in the ice cream market

Defining moments

• Raghunandan Srinivas Kamath

• 1960s- Failed Class VII, in Mangalore, packed off to Mumbai

• 1984- Fell out with brothers, opted out of ice-cream business ‘Gokul's’

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

Indian Ice cream market• Indian ice cream market Rs 2,000 crore @ 20%• India PC ice-cream consumption 106 ml pa, US 22

liters, scope • Organised players 45% share (Rs 900 crore)• Gujarat 18% share- Rs 162 crore, Ahmedabad Rs70

crore• Vanilla+strawberry+chocolate=70%;

Butterscotch+dryfruits= 20% • Catchment- After dinner, movies, malls; home

delivery growing• Unorganised sector- Kulfi, candy, ice fruit reign

Players

• West 39%, North 28%, South 18% and East 15% • Highly seasonal- Apr-Jun 47%, winter sharp fall• Maximum promotional campaigns • Takeaway and impulse (spot buying) segment• Mothers Dairy 10 crore ad spend, 2000 TV spots• National majors- Amul (39%), Walls (11%), Mother

Dairy (10%), Vadilal (9%), Baskin Robbins (3%)• Regional majors- Pastonji & Dinshaw- Maharshtra,

Havmor- Gujarat, Arun- South, Nirula’s- North• Metro majors- Natural, Gelato• Price insensitive

Amul• 1996 Gujarat, 97 Mumbai, 98 Chennai, 02 National• 2001- No 1 in India, now 39% NMS, 4X Walls• 220 products (flavours, packs, SKU)• Positioning- Real Milk. Real Ice Cream • SKU- sticks, cones, cups, family packs,

catering/institutional pack• Competitive advantage- cost leader in milk, national cold

chain • Penetrative price + relentless promotion+ Amul brand

equity• 2007- Sugar free & ProLife Probiotic Wellness Ice Cream• India’s largest food brand

Walls

• Kwality- National leader, acquired by Walls (HUL)1995

• Kwality- in-depth knowledge of Indian market• Unilever- largest global ice cream maker- $5bn• Promoted as frozen desserts to be competitively

priced, no milk• Batterred by Amul on price & milk front• The Global Scoop• Unilever is the world's biggest ice cream

manufacturer, with an annual turnover of €5 billion

Vadilal• Focus on ice creams• Gujarat based, local to national player• Reasonable prices, exclusive ingredients, easily

available• Daily production capacity 1-lakh liters• 200 products (flavours, candies, cones, cups, party

and family packs and bulk packs SKUs). • Launch 1 new flavour every month• NPL- low fat desserts • Flavors- regular strawberry, vanilla, butterscotch and

chocolate, + exotic Fresh Fruit Fantasies, Nutty Delights and Romantic Ripples

Mother Dairy

• Mother Dairy growing @30%• NDDB subsidiary, milk & curd major• Focus on premium range of ice-cream Rs 170-210

for 1-litre tubs• North, AP, Mumbai and Kolkata• Own retails outlets, booths, carts and kiosks.• Traditional flavours- Firdausi Kaju Kishmish, Zafrani

Kesar Pista and Shahi Meva Malai (mix of kheer and basundi flavours)

• NPL- vitamin C-enriched Lic Lolleez• Penetrating distribution and cold chain

Ice creams- perceptual mapExp

en

siv

e

Traditional Industrial

Aff

ord

ab

le

Amul

Mother Dairy

Natural

WallsVadilal

Baskin Robbins

Pastonji DinshawHavmorArun

Nirula’s

Gelato

Haagen Dazs

Natural- Origins• 1984- Fell out with brothers, opted out of Gokul’s• On his own, focus on traditionally made ice creams• Completely natural, no artificial flavours or

preservatives• Industrial ice creams- 2 key players- Kwality & Vadilal• Investment- Rs 3L (Settlement+ Own+ friends), Juhu

outlet• "Mumbai gives everyone a chance, so I was not scared

to experiment here. I hired 3 people and insisted my just married wife also join me in the business. I did not spend too much doing up the interiors; I kept my outlet simple. I had faith that my products would speak for me.”

Ice cream insights• ‘Whenever Indians wanted to

embellish a seasonal fruit, they often poured milk on it. Why not do the opposite, embellish my traditional milky ice cream with fruit? I knew about fruit, and it was easy for me to choose the best ones as my father dealt in fresh seasonal fruits and had taught me about the fruit trade- how to check fruit ripeness, where to get quality fruits. So I decided to add slivers of whichever fruit the customer asked for, to my traditional, natural ice cream, in effect, kulfi + fruit. Thus the brand ‘Natural’ was born.”

Spreading sweetness

• 1994, decade of success, expansion• Childhood friend, Girish Mallya (SBI) joined• "The customer is a good teacher. Some of my

customers would give suggestions about flavours, even tell me how people are getting innovative with fruits and ice creams in places like Africa and Singapore. I took all the suggestions seriously.”

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

Manufacturing facility

• Sole factory- Charkop, Kandivili- 4500 sqf• No equipment to make traditional ice cream or peel fruit• Developed equipment to enhance the process• “Sitafal was the biggest challenge as it has to be

manually deseeded. One person can deseed only 2 kgs in a day manually. Eventually, we developed a machine to do it, and now we deseed over 500 kg sitafal everyday.”

• “As we use lots of fresh fruits in our ice cream but do not use any preservatives, distribution is a key challenge as fresh stocks only have to available at our outlets.”

• Batch production to ensure freshness

Sourcing

• Dedicated suppliers for milk and sugar

• Exotic fruits from fruit growers

• Sitafal-Saswad, Mango-Ratnagiri

• Regular fruits and dry fruits from major markets

• Local sourcing

Flavours

• 15 fruit flavours in 3 months• Combining traditional ice cream with fruit- super hit• Instant hit- Sitafal, first sunday after launch- 300 scoops• Extension- tender coconut, chikoo, jamun, musk-melon,

papaya, apricot, water melon, melon, pineapple, jack fruit• "We became popular purely by word of mouth”• 2009- 100 natural flavours, now combinations• NPL- raw mango flavour 'Pickle‘- lapped up• Consistency in flavours- biggest challenge

Pricing strategy

• 1984- Value for money pricing• Rs 8 for 2 scoops, high value• 2009- Rs 25/cup, Rs 28 a scoop, VFM• ½ kg Tubs @Rs 135• Waffle cone- Rs 4, Amul Rs 4, Baskin Robbins Rs 11 • Round the year flavours- chocolate & dry fruit range,

badam, kesar pista and anjeer, apricot, tender coconut

• Seasonal flavours- chickoo, sitaphal, pineapple, Lichee, jack fruit, mango & water melon

• All flavours priced the same, except for fresh fruit toppings

SKUs (Check Menu)

• Special packs• Tubs• ½ litre packs• Cups, cones , waffles• Seasonal sundaes• No Family Packs, Candies• Scope for value addition

Service

• Tasters• Friendly service • ‘Happening’ ambience• Home delivery- Numbers to avoid delays• Special storage boxes for trips & picnics• Crowds- cues

Franchising• For faster expansion, better

penetration• Less investment ensures more

management focus on key areas• Exclusive outlets• Rs 12-15L deposit + commission• Mumbai/ Maha outlets catered

from Mumbai facility• Ahmedabad outlet- special

packaging (Railways)• Delhi, Bangalore (airlifting

explored)

Key drivers

• Unique traditionally hand-made taste• Creamier and richer but distinctly Indian taste• 100% vegetarian ice creams- pan community

acceptance• Eatable any day of the year• Fruity flavours– instant acceptance• Natural (sans preservatives) appeals better• Constant innovation with fruits & combinations

Competition

• Differentiated brand• VFM pricing• No advertising, pure WoM• “When Natural came on the scene, Yankee Doodle and

Vadilal were already established players. We created a stable niche. Mumbai is receptive to changes, they 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 but we stay ahead by continuously launching new flavours, innovative and convenient packaging, and efficient service.”

Financials• 1984- Rs 3L

investment• Lean set up

helped manage initial hiccups

• 1st Sunday- Rs1400 from 1st 300 scoops (12kg) Sitafal ice-cream sold

• 2009- Sales Rs 25 cr

• Rs 10L from 3.5T ice cream daily

• Net profit Rs 1.5 cr, to double to Rs 3 cr in 2010

Geo-Spread

• Franchisee model • 52 branches- Mumbai,

Pune, Thane and Ahmedabad

• 2010- Delhi and Bangalore• Juhu Scheme branch still

big money-spinner, Rs 3.5 crore pa

• Tap home delivery- 33% sales

• Start all-India phone/net service

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 Natural’s

• NPL jack fruit to celebrate Mangalore’s contribution to Natural’s

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 • Stay focussed on ice creams• 25 years to open 50 outlets, now opening 50 in 2010• Penetrate most Indian cities• Scale up factory from 4,500 to 20,000 sqf• From 10,000 to 15,000L daily in 2010• “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.“

• NPL- Sugar-free kulfi ice creams• 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’, Mangalore-Bantwal national highway in Adyar village

4Ps

Place- Franchised outlets

Product- Fresh and pure, traditionally made ice cream

Price- VFM

Promotion- Word of Mouth

Natural- STPD

Traditional &

fruity ice

cream loversFresh, natural &

fruity ice creams

Target

Positioning

Differentiation

Unique taste, exotic fruity flavours

Urban middle+ fly

who celebrates

Segment

Brand Natural- value proposition

Functional- fresh, taste, quality

Economic- VFM

Emotional- pure & natural

Brand personality- simple, fun, innovative, specialist

Brand Identity & Image

Brand

Customer’s Mind

Identity

Image (Perception)

TraditionalFruity

100% Veg

NaturalFruityFresh

Position

Natural, fruity, ice

cream- unique taste

POP & POD

POPIce cream

Milk rich Dry fruit flavoursRegular flavours

Multi packsWaffle coneOwn outlets

PODTraditionally

madeNo preservativesFreshFruit

combinations

Aaker’s Model- Natural’s

Extended

Availability

Exotic

Brand Essence:

CoreFresh

Taste

FruitsQuality

Value

Specialist

Traditional, pure ice cream

Natural- Kapferer’s Brand Identity Prism

Ext

ern

alis

atio

n Intern

alisation

Physique (Purpose)- Taste, Quality

Personality (Soul)-Pure, Traditional, Fresh

Culture (Brand in customer’s conscience)Sharing, Indian, unique

Relationship (Brand to customer)-Social, family, ethical

Reflection (Customer identifies wrt brand)-Value oriented, focused

Self-Image (Customer identifies brand wrt self)- Cool, Fun

Keller’s CBBE / Brand Equity Pyramid

Active loyalty, connect, engagement, attachment

Quality, credibility, innovation Cool, fun, excitement

Fruity, tasty, value, exotic flavours,good service, satisfaction

Pure, natural, fresh, traditional

High recall, awareness, range, reach

Meaning

Who ar

e you

Respo

nse

What a

bout

you

Relatio

nship

Brand c

ustom

er co

nnec

t

POP / POD

Positive reactionsIntense loyalty

Aw

arenessIden

tity

Building blocks

Testimonials

• “Natural Icecreams is an all time favourite” Sanjeev Kapoor

• “I recommend anjeer, dry fruits and sitaphal flavoured icecreams from Naturals” Anup Jalota

• “Naturals tender coconut icecream with hot rasgullas - that’s my recommendation to the truly reckless” Bipasha 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 existed” Busybee

• “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 places- malls, 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 ENTREPRENEURS—TRAIL 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