India’s Rs 30,000-crore ice-cream market is set for an incremental 10-15% annual growth following the sharp GST rate rationalisation from 18% to 5%.
The GST rate rationalisation in ice-creams has opened up the market for new and existing players. A sharp 13% reduction in tax rates (18% to 5%) has meant that ice-creams are cheaper now versus earlier and the shift from unorganised to organised players will likely be faster. Half of the Rs 30,000-crore domestic ice-cream market is organised; the rest is unorganised, according to industry experts.
Tax-powered surge and the organised shift
Analysts as well as companies expect at least a 10-15% incremental growth (per annum) on account of GST tailwinds. As such, the Rs 15,000-crore organised ice-cream market in India has been growing at about 10-12% per annum over the last few years, according to sector experts.
Companies say they need to prepare for the future if they have to capture this likely surge in demand expected in ice-creams. While ice-creams remain a largely seasonal category in India, led by the summer months, when consumption peaks, organised players have been looking to improve offtake in non-summer months by pushing family and small packs.
Distribution through offline as well as online channels such as quick commerce has also improved over the last few years.
Market leaders’ expansion and strategy
For instance, Gujarat Co-operative Milk Marketing Federation (GCMMF), best-known for its Amul brand, may set up 2-3 more additional ice-cream plants in the next couple of years as part of its Rs 10,000-crore investment announced last week across dairy and food processing.
This is expected to help improve reach of its ice-creams to more cities, especially tier 2 and 3, as the co-operative looks to set up plants closer to its consumer markets. GCMMF currently has 29-30 ice-cream plants across the country, with an estimated retail reach of over a million outlets. This is half of the roughly 2-million outlets that ice-creams as a category has in terms of reach in India.
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Amul is also the market leader in ice-creams with an estimated volume share of 35%, followed by Hindustan Unilever (HUL), which is demerging its ice-cream business by the end of FY26, whose estimated volume share is 15% and Vadilal with an estimated volume share of 12%, according to industry experts.
“We spent the last two years increasing our capacity across segments including ice-creams. While we are covered for now, we are looking to gear up for the future,” Jayen Mehta, MD, GCMMF, said. While Mehta declined to specify GCMMF’s production capacity in ice-creams, the business is valued at Rs 2,500-3,000 crore, according to industry experts.
HUL parent Unilever, on the other hand, which will pick up 61.9% of the demerged ice-cream company (called Kwality Wall’s India), will launch affordable dairy treats to improve impulse purchases and premium products during festive occasions, industry sources said. HUL’s retail reach in ice-creams is estimated at around 0.5 million outlets, with plans to improve rural delivery in the future, market sources said.
Manish Bandlish, MD, Mother Dairy, says the co-operative is developing new products and formats at its innovation centre in Delhi as ice-creams and other dairy products become more accessible to consumers following GST rate cuts. “We do about Rs 500-600 crore in terms of annual revenue in ice-creams. Year-on-year, we have been adding about 10-15% in terms of capacity and also have third-party manufacturers for ice-creams. As the market evolves and more people consume ice-creams, the pace of innovation will grow,” he adds.
While Rs 1,500 crore, Bandlish said, has been approved by the board earlier for capacity expansion, Mother Dairy is in the process of planning further capex for the future.
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