The battle in the ice cream market is hotting up with the emergence of two camps.

After a recent
spate of advertisements by Amul, the battle lines are drawn along the ingredients used by both.
Around 60 per cent of India's Rs 3,000-crore ice cream market is accounted for by branded
players. Amul turned on the offensive, starting this summer, when it went to town underlining
its milk-fat-laden ice creams as the real deal, in contrast with products that used vegetable fat.
But there could be mismatch in positioning, according to experts.

Gujarat Co-operative Milk Marketing Federation (GCMMF, which owns the brand Amul and also
sells milk and milk products) remains the market leader in both value and volume terms,
followed by Hindustan Unilever's (HUL's) Kwality Walls.

R S Sodhi, managing director of GCMMF, claims Amul's market share is around 38-39 per cent
of the total ice cream market in volumes. With a turnover of Rs 500 crore, it accounts for around
28 per cent in value share. There is no established retail panel to track market shares for ice
creams.

In its recent radio advertisements, Amul has promoted its ice creams as a healthy option, or as
the 'real ice cream'. "The brand focus is on how health comes first, though taste is also of prime
importance. Consumers will not compromise on taste," Sodhi says. Players such as Amul and
Mother Dairy have always underlined that milk-fat makes for real ice cream and also imparts a
superior taste compared to those made out of vegetable fat, called frozen desserts and are not
allowed to use the moniker 'ice cream' to sell.

The other camp

But the players who sell frozen desserts refute such claims. An HUL spokesperson says, "Neither
frozen desserts nor ice creams can be made without milk. By definition, both must contain milk.
However, to make an ice cream, in addition to milk, you need to have fat. The only difference is
that frozen desserts use vegetable fat instead of dairy fat. Frozen dessert is an Indian
classification. The definition covers products made from milk solids (skimmed milk), but
containing non-dairy fat."

Vadilal, which is planning to increase its national presence, wants to operate in both ice creams
and frozen desserts. It sells frozen desserts under the Ice Trooper and Bada Bite brands, and ice
creams under its Gourmet brand, which is slightly more premium. "It is not that vegetable fat is
unhealthy. However, there is a perception that in frozen desserts, vegetable oil is used in place of
milk, and perceptions will take time to go," says Rajesh Gandhi, managing director, Vadilal
Industries.

Amul is bent on reinforcing the difference, as it builds its campaign by spending two-three per
cent of its ice-cream turnover. Usually, the parent dairy cooperative allocates one per cent of its
turnover for marketing. Sodhi says, "We are doing both print as well as radio ads. However,
there is no plan for a product-wise campaign."
Balancing act
For Amul, it will be a tough act to balance being 'healthy' and 'value-for-money' at the same
time, as experts point out. While, the latter positioning has defined its presence so far, its
current campaigning will set it up as a healthy brand in the space.

"Whenever a product is positioned with a health-first message, the brand tends to lose. Amul is
bound by the fact that it would always make 'real ice creams' and it would need to re-invent to
talk in the language of fun that is associated with the category," says Harish Bijoor, brand
strategy expert and CEO of Harish Bijoor Consults. Gandhi of Vadilal reminds that ice creams
are after all, mostly impulse purchases.

At the same time, making the premium positioning work for a brand like Amul will be a
challenge. Market observers say that if Amul tries to raise prices to position itself as a premium
brand, it might lose market share.

"Amul has failed to come up with product innovations, and now if it tries to raise prices, it would
stand to lose market share," says the owner of an ice cream major on grounds of anonymity.
"Amul will find the transition into a premium brand difficult. It is seen mostly as value-for-
money that offers wholesome products," Bijoor says.

Amul has also been guilty of a lack of innovation in the space. HUL, for example, has come up
with concepts such as Fruttare "ice candy" and Vadilal with its Ice-trooper bars.

However, Amul can mitigate high ingredient costs, as it is integrated with its parent's dairy
supply chain. An Euromonitor report on the segment says, "The availability of raw material is
not a concern due to its close relationships with milk farmers. Moreover, the company already
has a cold chain network, which is crucial for this business."

Amul's cold chain covers its formidable footprint across India, ensuring that its ice creams don't
suffer from faulty storage.

Whether Amul will choose to re-position itself as a premium player or continue to market itself
as a 'healthy' mass brand is not clear. What is, is it will be some time before GCMMF with its
inherent strengths, feels the heat.