Profile

Shri. R.G.Chandramogan Hatsun http://www.hatsun.com

Profile Interview In the early 70's, Hatsun Milk Food was formed as a small partnership firm, marketing the brand Arun Ice Creams. The surprise element started even back then, as manufacturing and marketing ice creams was considered a luxury and entry into this area seemed a risky proposition. But a few years and several successes later, the company surprised everyone again by spearheading an ice cream revolution in the South. And becoming a household name. A surprise with every flavour and soon, Arun Ice Creams was proud to present the consumer with 80 delightful flavours. Another surprising leap in terms of growth from Rs.4.25 lakh in 1981 to Rs.1841 lakhs in 1997. Arun surprised the ice cream industry itself by overtaking the industry growth rate of 12% by growing at a rate of 30%. And commanding an astounding market share of 34% in the entire Southern market.And thus, not surprisingly, Arun Ice Creams came to be the undisputed No. 1 ice cream brand in the South. And a strong network too600 exclusive retail outlets all across South India (and increasing, too!). The network reaches out to all the urban regions and even small towns with populations of 30,000. Thereby, giving lakhs and lakhs of families a delightful and affordable 'ice cream outing'. The company is making inroads into the West Indian markets and has some ambitious surprises up its sleeve for the next few years - that are definitely worth looking out for! Arun Icecream Arun Ice creams is the No. 1 ice cream brand in South India. There are over 70 unforgettable varieties, each distinct in taste with regular additions to the range. Arun has over 1000 exclusive parlours. To the ice cream lovers in South India, Arun offers fascinating flavours & combinations. Among these, many of them are India's first & trendsetters in their category. Like the amazing 'Color Magic' an ice cream that changes colors. Arokya milk Arokya is India's first bacteria clarified milk. Arokya uses German technology to remove the dead pathogenic bacteria completely from milk. This helps to retain the natural taste & flavour of milk. Using American technology, the butterfat globules are broken into smaller particles making Arokya wholesome to the last drop. Komatha milk Komatha milk is another product in the Hatsun stable. Komatha Milk is homogenised toned milk. With sales of over 90,000 litres per day, Komatha has added to Hatsun's market share in the packed milk segment, Today Komatha has become an integral part of the Hatsun stable carrying forward Hatsun's focus on customer satisfaction. A Range of Dairy Products Hatsun also has a wide range of milk-based products like Komatha Butter, Curd, Ghee and Kool More.

Arun Ice Creams, the feather in the cap of Hatsun is a brand leader in the ice cream market. Today Arun Ice cream is the largest selling brand in India through exclusive parlours. Arun has over 1000 exclusive parlours. There are over 70 unforgettable varieties, each distinct in taste with regular additions to the range. Arun ice creams are manufactured using state-of the-art technology from Germany, Denmark and Italy in an ISO 9001 certified plant. The success of the brand Arun is that quality of the highest standard is maintained throughout, right from the raw materials to the manufacturing process at par with the best of international to the quality of packaging. Arun ice creams has a low over-run (meaning more delicious ice cream for the same volume). This is the reason why Arun ice creams are so rich & creamy. Arun ice creams are 100% vegetarian and is made from pure milk/milk fat. The reason why Arun ice creams are extremely delicious. Towards excellence in parlour functioning, Hatsun has introduced the New Parlour Decor, which would help the parlours to maintain a distinct identity. The uniform and elegant identity of all Arun Ice cream Parlours will enhance the brand image leading to increased popularity of the products as well as the company. The phenomenal success of Arun ice creams can be attributed to its impeccable marketing strategy. All marketing strategies are extremely customer focused. An aggressive publicity campaign, regular sales promotion activities such as sales schemes, contests like the 'Singapore Delight Contest & the 'Malaysian Delight Contest' for dealers and various contests for consumers etc., have all contributed to the brand's overwhelming success. Another factor that has contributed to Arun's success is its exemplary logistics network and infrastructure. Arun has a vast dealer & distribution network with an efficient and trained sales force. Today Hatsun's sales account for over 20,000 litres of Ice creams per day.

business & economy ICE CREAMS

INDIA TODAY Delicious Growth Amul steals a march over deep-pocketed MNCs to become the largest selling icecream brand in the organised sector The ice-cream market is set to sizzle this SUCCESS RECIPE summer. At least 10 ice-cream makers armed with over 125 flavours will try to freeze the attention of the Indian consumer. The somewhat surprise winner of the cold warAmul-is ready to launch over 20 new varieties this summer. Hindustan Lever Ltd's (HLL) Kwality Walls has already unveiled 10 new flavours. The company that has scooped a coup is Amul. In a market invaded by big companies and brands (HLL, Baskin Robbins, Movenpic) and swarming with regional and local players, Amul has emerged as the largest selling brand in the organised sector (see chart). CANDY FOR THE MASSES: Affordability is the USP. Kwality Walls' 1 litre vanilla costs Rs 75, Amul's just Rs 40. COOL PACKAGING: Santra Mantra in orange-shaped container, vanilla in plastic ball attract extra buyers. Amul's success is reflective of the fundamental changes taking place in the ice- MAXIMUM FLAVOURS: Date with cream market. Till 2000, the Rs 1,000-crore Honey, Alphanso, Cappachino, Anjir and other exotic flavours. industry was dominated by small AGGRESSIVE LAUNCHES: Over manufacturers, with organised players 20 varieties will be added to the accounting for just one fourth of the total. existing 70 this summer. Today, the market has grown to over Rs GOOD REACH: Available in 1,000 1,500 crore to which organised players cities; Kwality Walls in six. contribute 40 per cent. But beneath this consolidation, the big plans 27% of organised marketshare is with Amul. of deep-pocketed MNCs like HLL and Baskin Robbins seem to have melted even as cooperatives like Amul and Mother Dairy have tightened their hold on the market. The going has been particularly rough for HLL. Forced on the backfoot by the low prices of the cooperative cousins, the company had skimmed its ambitions two years ago and decided to be content with being a niche player focusing on only the six metros. Says J.H. Mehta, executive director, ice creams, HLL: "A large chunk of the business was not commercially

viable. So we decided to cut down our portfolio and focus on profitability." Just as HLL was shrinking its presence to consolidate, Amul was charting out a national footprint. Today, its ice creams are available at 25,000 outlets in 1,000 cities across India and the cooperative has plans to add another 5,000 outlets. Luckily, many of its competitors were happy focussing on regional markets like Arun in the south, Mother Dairy in the north and Metro in the east. "By 2010, we will have a Rs 1,000-crore ice-cream business," says B.M. Vyas, managing director, Gujarat Cooperative Milk Marketing Federation, which markets the Amul brand. In 2003, its ice cream sales were Rs 160 crore, almost three times the Rs 55 crore sales in 1998. Amul's impressive growth is rooted in its savvy marketing. The price warrior launched its ice creams in 1998 at prices 40-70 per cent lower and pried open a market that was till then considered elite. The wide options-over 70 flavours packaged in various sizes-added punch to its low-price strategy. The price-sensitive Indian consumer has lapped it all up. Amul ice candies and lollies, priced at Rs 3 upwards, have managed to lure new customers from the unorganised sector. This has been buttressed by innovative products, attractive packaging and unique flavours (see box). One of the reasons why Amul can afford to be a price warrior is because it is a dairy cooperative. With no middle men at any stage, its costs are 8-10 per cent lower than that of an MNC. It is now taking the battle into the MNC camp by launching a premium range of ice creams. Clearly, the cold war in the ice-cream market is heating up. By Malini Goyal

GENERAL INFORMATION ABOUT THE ICECREAM MARKET COURTESY- MANAGEMENTPARADISE

Indian Ice Cream Market Industry Snapshot Market Size - 800 Crores Ice Cream market is growing at 10 to 12% Ice creams traditionally are a low volume business Players 1. Amul - Market Leader with share of 36% 2. HLL - Kwality Walls - 2nd biggest player 3. Mother Diary 4. Arun - Chennai Based Hatsun Agro Product 5. Metro Daily - Kolkata based 6. Aavin - Tamil Nadu based Recent Happenings 1. HLL's Moo (Nutritional Ice Cream) - targeted at Kids 2. As Mother Dairy has competency cold chain distribution as they have Safal brand ( frozen peas, corn, juices and mixed vegetables) under their portfolio, they have expanded from Delhi to Bangalore, Hyderabad, Chennai, Punjab, Rajasthan, UP & Uttaranchal. Due to this and other brand extensions in the pipeline, Mother Diary expects their turnov er by 20% this year over their present size of Rs. 2800 Rs. Cr. 3. Aavin, the cooperative sector milk and dairy products marketer in Tamil Nadu, has launched a low sugar variant of ice creams in the market. According to an official press release, the ice cream `without added sugar' is ideal for diabetics and safe for children and mothers-to-be. This variant has just 80 calories and has 16 mg of sweetener against 8,000 mg of sugar in the traditional ice creams. The ice cream conforms to the US and domestic food regulations, the release said 4. GCMMF launched its pro-biotic ice creams that have live beneficial culture that confer beneficial health effects such as improving immunity and digestion and strengthening bones. It also introduced a sugar-free ice cream range and is planning a Web site on ice creams. There two ranges are - Amul Prolife and Amul Sugarfree. According to Mr. R.S. Sodhi, GM Marketing, Amul, Amul hopes to build the pro-biotic range into a Rs 100- crore brand within the next twothree years. While Amul had earlier tested this market segment through the launch of an isabgol-enriched ice cream, this is company's first full-fledged attempt at capturing a good share of the pro-biotic enriched foods market in India. Both the brands are available in 125 ml (Rs 15), 500 ml and 1.25 litre (Rs 120) packs in five flavours,

vanilla with chocolate sauce, strawberry, chocolate, shahi anjir and fresh litchi. On the retail front, it intends to hike its Amul parlours from 600 to 10,000 by 2010 5. Arun Ice Creams, the ice cream brand from Hatsun Agro Product Ltd, is launching a new range of ice cream outlets, Arun Ice Creams Unlimited. Hatsun Agro, which is the largest private dairy in India, plans to make available its range of dairy products at the conventional Arun ice cream outlets operated through franchisees. This network will also be expanded. The new range of outlets will sell ice cream by the scoop, `aggressively priced' at Rs 20 a scoop of 100 gm, Mr Chandramogan said. A feature of these parlours will be the wide selection of flavours, over 25 flavours with five new substituted for the existing ones each month to ensure more variety. The company is investing over Rs 15 lakh in each of these outlets. Few Brands/ Target Consumers 1. YOuth Centric - Chillz 2. Kids - Moo 3. Teenagers - Cornetto 4. Health COnscious - Amul Sugarfree & ProLife This summer mother diary targeted children with the baseline `Jagaye Andar ka Bandar' while it is luring adults with the message `Give In'. Interesting piece of information: Hawking is not allowed in Mumbai which makes 1/3rd of business for HLL. Rest is contributed by retail outlets Future of Ice Cream Market in India Ice Cream market will expand with increase in number of malls - HLL has been increasing their ice cream outlets - Swirl. Few years consumers use to go out for walk after dinner and use to buy ice creams from hawkers. But now consumer who often visit malls for entertainment prefer to buy ice creams during different times of the day as it is visible upfront and feel like spending Rs. 50 for that tasty chocolate swirl with cake and nuts. As marketers are understanding the different needs of consumers, be it health conscious people, kids, youngsters, young etc, and coming up with products specific for them... with portfolio of flavors, consumer today has plethora of options at hand to choose from and therefore high probability of buying one more scoop of ice cream. Also with increasing wallet size and innovative modern retail formats, it has definately given a philip to the ice cream industry in India.

Ice-cream Introduction

The ice cream market growth picked up after de-reservation of the sector in 1997. Of the total size of Rs 15-16bn, around 30-32% is in the hands of organized sector valued at Rs 4.9bn, rest all is with the unorganized sector. Among the major players in this industry Hindustan Lever has a market share of around 50%, represented mainly by Kwality Walls brand. Amul with an estimated market share of 35% is rapidly gaining market share and lastly Vadilal is the player in the national market with 8-9% of the market share. Production area In rural areas, kulfis / ice creams made by small / cottage industry are popular. The market for organized sector is restricted to large metropolitan cities. In small towns and villages, there are thousands of small players who produce ice- creams / kulfis in their home backyard and cater to the local market. Almost 40% of the ice creams sold in the country are consumed in the western region with Mumbai being the main market, followed by 30% in the north and 20% in the south. Growth promotional activities The Indian government adopted the policy of liberalization regarding the ice cream industry also and it is since then that this sector has shown an annual growth ranging from 15- 20% per annum for last 1- 2 year. Presently in 1999- 00 it is estimated at worth of Rs15- 16bn. This growth rate is expected to continue for another next 2- 3 years because of lower base. Types Indian Ice Cream market can be segmented in three different ways, namely on the basis of flavors; on the basis of stock keeping units / packaging and on the basis of consumer segments. On the basis of flavors the market today has a number of flavors like vanilla, strawberry, chocolate, mango, butterscotch a number of fruit flavors, dry fruit flavors traditional flavors like Kesar- Pista, Kaju- Draksh etc. The market is totally dominated by Vanilla, Strawberry and chocolate, which together account for more than 70% of the market followed by butterscotch and other fruit flavors.

PRESS RELEASES BY HUL

February 2004 ICE CREAM BUSINESS IMPROVES COST BASE FURTHER Hindustan Lever Limited's (HLL) Ice Cream business launched a slew of differentiated products backed by aggressive innovation and activation in 2003. Simultaneously it sustained its focus on the supply chain, further improving the cost base. This is in line with HLL's strategy, launched in 2002 with encouraging success, for the business's turn-around through focus on the Power Brand Kwality Walls, differentiated products, concentration on key markets of the major metros, and a reengineered supply chain. Among the major launches of the year were premium products, like Viennetta Cappucino Nut, Double Sundaes, Super Cornetto Triple Choc, and Feast Almond Fudge. Kwality Wall's Max, for children, was relaunched with exciting offerings, like Rainbow and Twister, supported by a new look Max lion, new advertising and an innovative activation, 'Bano Toonstar'. The market responded well to the innovations. Max Twister is produced in India with the help of a unique patented Unilever technology. The entire Ice Cream industry, however, was impacted by a severe winter in the North at the beginning of the year and the nationwide transport strike in the peak season of April. HLL's Ice Cream business also faced these adversities. The business responded back in the second half with another exciting range of innovative eats, coinciding with the festival season. Among them is Vanilla Surprise, strongly differentiated from the low-price commodity vanilla products. New Sundaes include Kool Khubani, Choco Dry Fruit Dhamaka and Kamaal Karamel, along with other offerings, like Max Rocket, Max Chakri, Cornetto Honey Fudge and a Kulfi stick. These launches, supported by an aggressive 'Teen Vardaan' activation programme, have helped the business leverage emerging trends in the second half of 2003.