23 October 2023
Korean food giant Lotte Confectionery is expanding its presence in India’s ice cream market, with plans to invest ₹550 crore over five years to boost production at Havmor Ice Cream.
In 2017, Lotte had acquired Ahmedabad-based Havmor Ice Cream Ltd for ₹1,020 crore and has been consistently upgrading its facilities, systems, as well as the team since then.
“We have planned investments of ₹550 crore over the next five years," said Komal Anand, managing director of Havmor Ice Cream.
A key element of its expansion plan is a state-of-the-art manufacturing plant in Maharashtra’s Pune district, likely to be operational by June 2024. Havmor, which operates facilities in Ahmedabad and Faridabad districts, is expanding its capacity as rising demand is outpacing its current production. The investment will help ramp up production lines at its existing units.
“This investment covers the six new lines we put up in our Faridabad facility as well as the new lines that will come up in the Pune plant in 2024. We will add more lines in 2025 and 2026 in stages. The plan is to keep increasing production capability as well as upgrading existing facilities to ensure the highest standards of quality. There is also an investment of ₹40 crore- ₹50 crore that we will make every year in the market to set up deep freezers," he said.
Expanding the distribution network will also be a major focus area for the company, as Havmor seeks to strengthen its presence beyond key markets such as Gujarat and Rajasthan, to high-growth regions such as Maharashtra and south India.
“The Maharashtra factory will aid our expansion into these areas through more affordable supply chain costs," Anand added.
The company is present at approximately 70,000 selling points across the country, serving most urban markets, via a network of 300-400 outsourced refrigerated vehicles with temperature monitoring systems.
However, distribution is a key concern for the company. During a recent purchase, Anand realized that the e-commerce platform’s freezer was not functioning. It can be a major issue as Havmor is calibrating its e-commerce play with paper-pack offerings, he added.
Furthermore, inflationary pressures due to rising milk and packaging costs have squeezed margins this year. While Anand said the company had increased prices, Hamvor is also cautious about the extent to which it could pass on inflationary pressures to consumers, given its competitive price points. “We optimized costs and took small price hikes without major consumer resistance," Anand said.
About the significant challenge unpredictable weather patterns pose, Anand said weather has become increasingly erratic, and the company is adapting to this new reality. “It’s a part and parcel of our life now. This is the second year I’ve seen this unpredictable weather. "
However, he added that the company has taken proactive measures to address weather uncertainties. and on finding ways to “flatten the curve" of consumption so as to adapt to changing climate patterns.
“Conceptually, there are a lot of efforts that are happening and one of the things we are doing in a heightened format, is that we are pushing on marketing right from the Ganesh Puja in Mumbai to Durga Puja in Kolkata and the eastern part of India and then Diwali, Christmas and up till the Valentine’s Day," explained Anand.
Korean food giant Lotte Confectionery is expanding its presence in India’s ice cream market, with plans to invest ₹550 crore over five years to boost production at Havmor Ice Cream.
In 2017, Lotte had acquired Ahmedabad-based Havmor Ice Cream Ltd for ₹1,020 crore and has been consistently upgrading its facilities, systems, as well as the team since then.
“We have planned investments of ₹550 crore over the next five years," said Komal Anand, managing director of Havmor Ice Cream.
A key element of its expansion plan is a state-of-the-art manufacturing plant in Maharashtra’s Pune district, likely to be operational by June 2024. Havmor, which operates facilities in Ahmedabad and Faridabad districts, is expanding its capacity as rising demand is outpacing its current production. The investment will help ramp up production lines at its existing units.
“This investment covers the six new lines we put up in our Faridabad facility as well as the new lines that will come up in the Pune plant in 2024. We will add more lines in 2025 and 2026 in stages. The plan is to keep increasing production capability as well as upgrading existing facilities to ensure the highest standards of quality. There is also an investment of ₹40 crore- ₹50 crore that we will make every year in the market to set up deep freezers," he said.
Expanding the distribution network will also be a major focus area for the company, as Havmor seeks to strengthen its presence beyond key markets such as Gujarat and Rajasthan, to high-growth regions such as Maharashtra and south India.
“The Maharashtra factory will aid our expansion into these areas through more affordable supply chain costs," Anand added.
The company is present at approximately 70,000 selling points across the country, serving most urban markets, via a network of 300-400 outsourced refrigerated vehicles with temperature monitoring systems.
However, distribution is a key concern for the company. During a recent purchase, Anand realized that the e-commerce platform’s freezer was not functioning. It can be a major issue as Havmor is calibrating its e-commerce play with paper-pack offerings, he added.
Furthermore, inflationary pressures due to rising milk and packaging costs have squeezed margins this year. While Anand said the company had increased prices, Hamvor is also cautious about the extent to which it could pass on inflationary pressures to consumers, given its competitive price points. “We optimized costs and took small price hikes without major consumer resistance," Anand said.
About the significant challenge unpredictable weather patterns pose, Anand said weather has become increasingly erratic, and the company is adapting to this new reality. “It’s a part and parcel of our life now. This is the second year I’ve seen this unpredictable weather. "
However, he added that the company has taken proactive measures to address weather uncertainties. and on finding ways to “flatten the curve" of consumption so as to adapt to changing climate patterns.
“Conceptually, there are a lot of efforts that are happening and one of the things we are doing in a heightened format, is that we are pushing on marketing right from the Ganesh Puja in Mumbai to Durga Puja in Kolkata and the eastern part of India and then Diwali, Christmas and up till the Valentine’s Day," explained Anand.
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