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Unilever Tops Locals With Non-Dairy Ice Cream in India

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Sept. 26 (Bloomberg) -- Real ice cream contains milk. That’s the message India’s biggest dairy producer is trying to hammer home as it loses ground to Unilever in the country’s booming frozen-treats market.

Ice cream without milk is like cricket without world-beating batsman Sachin Tendulkar, Diwali without firecrackers, or a wedding without dancing, Gujarat Co-operative Milk Marketing Federation Ltd. claims in radio ads for its Amul brand. The campaign seeks to highlight the lack of a key input in most of its global rival’s Indian products: cream, or any other dairy fat.

“Let the consumer decide and make an informed choice that ‘Yes, I’m buying frozen dessert which has got vegetable oil,’” said R.S. Sodhi, managing director of Gujarat Co-operative, which has 3.2 million dairy farmers as members.

Indian consumers have decided they’re happy with frozen desserts using fats derived from cheaper sources such as palm oil. In the five years to 2012, Amul’s share of the market for frozen treats fell to 31 percent from 35 percent while Unilever’s rose to 21 percent from 17 percent, according to researcher Euromonitor.

Chocolate Cornetto

“Unless there is greater awareness among consumers that frozen desserts don’t contain milk, Unilever will continue to grow,” said Swati Gupta, an analyst at AC Choksi Share Brokers Pvt. in Mumbai.

Sales of the desserts more than doubled from 2007 to 2012 and will do so again in the five years to 2017, reaching 68.6 billion rupees ($1.1 billion), Euromonitor predicts. There’s ample room for growth: the industry researcher says Indians eat an average of 200 milliliters of ice cream each year, versus 14 liters in the U.S. and 2.2 liters in China.

Since March, Gujarat Co-operative has been urging consumers to check labels for the words “ice cream” before they buy. They won’t find them on the Double Chocolate Cornetto sold in New Delhi by Unilever. Described on the wrapper as a medium-fat frozen dessert, it contains ingredients including water, sugar, edible vegetable oil, milk solids, liquid glucose, and vegetable protein -- but no dairy fat.

Sensory Appeal

Frozen desserts are similar to ice cream in their taste and sensory appeal, Hindustan Unilever Ltd., the multinational’s local unit, said in an e-mail.

“It is unfortunate that some competitors are trying to misguide consumers by sharing incomplete facts about frozen desserts,” the company said.

The Food Safety and Standards Authority of India in 2011 specified minimum amounts of milk fat and milk protein for ice cream. Last year, Gujarat Co-operative lodged a complaint with the Advertising Standards Council of India over Unilever ads that claimed its frozen desserts were ice cream. The industry self-regulatory body ruled that the ads were misleading.

The ruling hasn’t stopped Unilever and Ahmedabad-based Vadilal Industries Ltd. from gaining market share with their non-dairy frozen desserts. Last year, Unilever introduced Fruttare “ice candy,” and in May, Vadilal started selling Ice-trooper frozen treats targeted at children.

Hindustan Unilever fell 0.7 percent to 628.90 rupees at the close in Mumbai trading, while Vadilal rose 1.9 percent to 133.90 rupees.

Lecturing Teachers

Gujarat Co-operative’s advertising, focused on a few cities, hasn’t had a significant impact, said Naveen Vyas, an analyst at brokerage Microsec Capital Ltd. in Kolkata.

The ads “sound like lectures given by a school teacher -- eat this because it contains milk,” said Vyas. “Young people are not going to be influenced by that sort of thing.”

One reason producers have developed recipes without cream is that milk fat is about five times as expensive as fats derived from palm oil and coconut oil. The wholesale price of milk rose 23 percent in the three years through August, while crude palm oil in Malaysia declined 6.5 percent, according to data compiled by Bloomberg.

Another advantage is that edible oil-based frozen desserts can be engineered to melt slower than dairy ice creams, according to Doug Goff, a food scientist at the University of Guelph in Ontario. That’s important in a country as hot as India.

Consumers often don’t realize the difference between ice cream and frozen desserts with little or no milk fat, according to Rajesh Gandhi, joint managing director at Vadilal. He said the company gets as much as 40 percent of its revenue from vegetable oil-based products, and using low-cost ingredients helps keep the goods affordable.

That’s a view echoed by Tuntun Prasad, a 27-year-old vendor who sells frozen treats from a hand cart near New Delhi’s Connaught Place.

“People don’t ask what’s inside,” Prasad said as he hawked his desserts on a hot September afternoon. “They just want the cheapest thing.”

To contact the reporters on this story: Adi Narayan in Mumbai at anarayan8@bloomberg.net; Malavika Sharma in New Delhi at msharma52@bloomberg.net

To contact the editor responsible for this story: Stephanie Wong at swong139@bloomberg.net

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