Why ice-cream and confectionary giants are collaborating to create new products

Ice-Cream and Confectionary operate in complementary product categories with some of the most iconic brands in the market, which creates an exciting opportunity for brands to cross-leverage their equities and consumer base.

Cashing in on this opportunity, brands in both the categories have given birth to a new trend, where ice-cream brands are collaborating with major confectionary brands to come up with new products. The association unlocks massive value for the associating brands by bringing new, premium offerings to the market.

When HUL’S Kwality Wall had launched Cornetto Oreo, it brought Oreo lovers to Cornetto, and equally provided the experience of Oreo to millions of Cornetto consumers across the country in a new experience for the first time. Perfetti’s Alpenliebe had collaborated with Baskin Robbins to launch Alpenliebe Juzt Jelly Strawberry Paradise Ice-cream.

BestMediaInfo.com digs deeper to understand this trend and what impact it has on other home-grown ice-cream brands. And if there is a common consumer base that confectionary and ice-cream markets share and how this trend will change the behaviour among the consumer base. Talking about the growing trends in the ice-cream/frozen dessert, brands also discussed that ice-cream is one of the fastest emerging categories in the dairy sector, growing at a five year CAGR of 15%.

Vincent Noronha

“The consumer base for both these categories: ice-cream and confectionary traverse across age spectrums. If put on a Venn diagram, there will be a significant overlap of consumers consuming both categories,” said Vincent Noronha, Vice-President Marketing at Havmor Ice-Cream.

Globally, many consumers now want to go beyond the “simple” act of consuming products. They instead want to attain greater value by seeking products that somehow offer rewarding experiences. Hence, in countries where ice-cream per capita consumption is as high as 4-5 litres, there are numerous products where confectionery brands have either collaborated with ice-cream brands to come up with a fusion products or use confectioneries as ingredients, said Noronha.

“Consumers are willing to pay a premium for such unique experiences today. Consumers are willing to pay for good quality products and brands that appeal to them. India is a massive market with enough headroom for growth at every tier of the market,” said the HUL spokesperson.

Such elevated product experiences build brand associations and product attributes among the brand’s target audiences apart from reinforcing consumers’ love for the brands, all leading to stronger brand equity.

It is said brand extensions guarantee revenues especially when it is with a major confectionery brand. Are ice-cream brands following this league?

 These offerings are said to add novelty to the category. Noronha said it’s a three-fold benefit and not just revenue. One, it builds brand awareness, making the confectionery product more likely to be the subject of an impulse purchase. Secondly, the use of known brands practically guarantees the success of the new product, where a totally new brand might fail. And finally, the revenue.

When such partnerships happen, the consumer disposition towards either of the brands grows. This is a proven fact when two established brands merge and leverage equity of each other. Especially in the ice-cream category where most brands are strong in their respective regions, partnering with national confectionery brands helps regional brands to enter new households and generate new trails and consumption.

Would this lead consumer behaviour to shift towards premium offerings?

While home-grown ice-brands in India such as Mother Dairy, Amul, Havmor take into account a mass market, there is currently a developing affection for premium brands among frozen desserts. These product line extensions and increased competition are driving new partnerships and collaborations on behalf of ice-cream makers.

A HUL spokesperson said that the successes of Cornetto Oreo or Magnum are examples of this at the premium end. But at the same time, the growth in ice-creams is coming in equal proportion from small towns and price point offerings.

R S Sodhi

R S Sodhi, Managing Director, Amul, said it is the overall image of a brand that affects the buying process, not just the offerings.

He said, “India has a lower middle-class base. Though premium offerings are sought after, the demand for ice-cream is also coming from smaller cities and villages. A major consumer base that wants an ice-cream cup costing Rs 5-10 is many times bigger.”

 “The purchasing power of the consumer has gone up and because of the spread of media and awareness, consumers are ready to explore more. Hence, brands are shaping up their products in line with what the consumer expectations are. As there is a general tendency to trade up, everyone is looking at launching premium products that can offer more value to the consumer,” said Noronha.

Ice-cream market growth

Currently, the ice-cream market in India is estimated to be over Rs 4,000 crore and is growing at a rate of 15-20% year on year. It is projected that by 2022, the market will reach around Rs 18,786 crore. This makes India as one of the fastest growing ice-cream consumption markets in the world.

“The ice-cream and frozen desserts market will continue to grow at a double-digit rate,” shared the HUL spokesperson.

“With brands investing in creating awareness, innovative products, more consuming touch points, improved and increased distribution and higher benefit products will ensure the category grows faster than before,” said Noronha.

The big challenge before the industry and the manufacturers is how to make ice-cream affordable for the common Indian with an efficient distribution, said Sodhi.

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