š¤ RIL Scooping Up a Rs. 20,000 Cr Industry?
Decoding RIL's reported entry into the ice-cream space.
Mangoes, ACs and ice-creams.
Pretty much all you need to beat the scorching heat in summer.
RIL already has its foot in the first two categories.
It is the largest exporter of mangoes in Asia (let us know if you want to read more about this) and it makes ACs under the Reconnect brand.
Whatās left to stay on top of the minds of people in Summers?
A foray into the ice-cream space.
What is RIL going to do?
Foray into the ice-cream space, according to reports.
Letās take a look at RILās master plan to disrupt the ice-cream sector in India.
šÆ RIL Planning on Stealing the Summer
RIL already had people sweating with its entry into the cola space.
But now it seems that it wants to leave no aspect of summer untouched.
Think summer, think Reliance, seems to be its motto.Ā
So, it plans on entering the ice-cream space and the frozen foods space in general in India.
Reports claim that it will launch ice-cream under the Independence brand (its newly launched affordable FMCG brand). It is apparently in talks with a Gujarat-based manufacturer to start its production.
Now, selecting Gujarat as the launchpad for its ice-cream and frozen foods brand is super interesting. Why?
š The Choice of the Battle Ground
Because Gujarat screams for ice-cream.
It accounts for 12% of Indiaās total ice-cream consumption ($1.3 bn). Some of the best ice-creams in India are made in Gujarat.
And well, RIL also has roots in Gujarat.
But while Gujarat may be a lucrative starting point, it may also be the most difficult to crack.
First: the Amul challenge.
Gujarat is the home ground of Amul, the leading ice-cream maker in India, with a 40% market share.
But to be fair, RIL could take on Amul.
After all, it has roped in RS Sodhi, former managing director of Amul.Ā
During his 12-year tenure at Amul, Mr. Sodhi scaled Amul's revenue from Rs 9,774.27 crore in FY11 to Rs 46,481 crore in FY22!
Plus, weāve repeatedly seen how RIL completely changes the pricing of any sector that it enters!
And this could be Amulās weakness right now. It cannot afford a price war now.
Why?Ā
Because of the rising costs of production.
Due to the high cost of cattle feed and a fall in productivity due to lumpy skin disease, milk prices are sky-high right now.Ā
And Amul has been passing on these costs to customers.Ā
But if RIL enters the space with affordable ice-creams, people could easily switch.
The second challenge: Gujaratās unorganised players.
Now, this would be a major challenge.
To cater to Gujaratās love for ice-cream, a lot of unorganised players have sprung up in the state.Ā
From mango barfi ice cream to paan ice cream, to even garlic ice-cream (really?), these players are constantly innovating with ice-cream!
To keep up with Gujaratās taste buds and growing demands, even organised players like Havmor and Vadilal are constantly launching new flavours.
Havmor currently has over 160 flavours and launches 3 new flavours every quarter.Ā
Yep, Gujaratās ice-cream space is ironically pretty heated up!Ā
Now, letās take a step back and look at the country-level opportunity for RIL.
š¤ The India Opportunity
India's per capita ice-cream consumption is 400 ml.
This is much less than the US's (22,000 ml) and China's (3,000 ml) per capita ice-cream consumption.Ā
But demand for ice-cream in India is steadily rising.Ā
In 2022, ice-cream sales rose 45% as compared to 2019!Ā
The Rs. 20,000 crore ice-cream industry is growing at a CAGR of 17.69%.
But cracking this space is not easy.Ā
Rising production costs, irregular electricity supply and improper cold-storage systems are just a few problems in this industry.
Plus, in urban India, innovation becomes a challenge.
You always have to keep up with the changing tastes of the younger generation.
The space is huge. The space is heated up.Ā
How does RIL plan to compete with the unorganised players that make up about 50% of the market?
Only time will tell.
Our hopes are high. After all, RIL wins every space it enters!
And we are super excited to try out innovative flavours that RIL will soon be launching!
What are your thoughts on RILās entry into the ice cream business?
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Awesome article! Although bits of it seem biased towards RIL :P
Great work team revolution readon but it now feels like that big players with deep pocket if they are left open then small and medium players will tumble ultimately the economy as a whole might suffer in a longerun ,but still it will be interesting to see how it will turn out it will be a case study in itself will price war work this time or reliance will have to treat it as a charity.