Baskin-Robbins, the American ice cream brand, is celebrating its 65th year internationally. The Indian operations, which nearly folded up in 2000, are now 18 years old. Graviss Foods Pvt. Ltd, the master licensee for Baskin-Robbins in India, says it is now a Rs60 crore business, growing at 25%. The ice cream is available through 400 outlets in 93 cities. Subroto Mukherjee, chief operating officer at Graviss Foods, talks about Baskin-Robbins early years in India and its future plans. Edited excerpts:
Baskin-Robbins was not doing well till some years ago. What has changed since?
There was a very tough period and our survival in the market was a question mark. But it was in 2002 that we finally started turning things around. When we came to India in 1993, we were strictly governed by the way Baskin-Robbins International was doing business in their home market. We needed the original wallpapers and equipment. So the cost of investment was huge—close to Rs25 lakh per parlour. In the overseas market, they have large stores and don’t do anything under 250 sq. ft.
Mass appeal: Mukherjee says Baskin-Robbins has become affordable all of a sudden, with luxury brands entering the market and the purchasing power of consumers growing. Abhijit Bhatlekar / Mint
That’s when we said, this is not going to work. Real estate is very expensive in India, and the investment did not translate into returns. That’s when we came up with the concept of kiosks. We kept rationalizing the model till a franchisee could start a business with as little as Rs8 lakh. The moment you lower the threshold, more and more people try and get into it. We also started looking at other areas such as malls to increase our visibility. Today BR (Baskin-Robbins) is available through as many as 1,800 touch points in the country. We grow at about 25-30% year on year. Almost 65% of our business comes from the parlour business, and the food service and modern trade grow at a healthy 15-20% for us.
What are your expansion plans?
Parlours are the backbone of our business and will always be growth drivers. We opened 80 stores last year and aim to open 80 this year. If you look at the break-up, 60% of our stores are in the stand-alone category or on high streets. Nearly 40% are in malls with over 50% of those being small 100-125 sq. ft kiosk formats. In certain markets, where getting land is fraught with legal challenges, space constraints and steep rents, we are exploring the option of outdoor kiosks.
A place like Park Street in Kolkata, for example, no matter how much you are willing to pay, you will not find a shop, or at Khan Market or Connaught Place in Delhi. How do you break into a place that is on a pagdi system? Which is where these outdoor kiosks come in. It’s a challenge as they have to be weather-proof and the standards have to be maintained, but that may be the way forward to penetrate challenging markets.
We also control the Saarc (South Asian Association for Regional Cooperation) nations other than Pakistan. There is also going to be lots of investment in the food service, where you are part of a menu in a restaurant, catering and modern trade.
But international ice cream brands such as Haagen Dazs are beginning to edge their way into five-star hotels.
In food service accounts, we operate in two areas. We are part of the menu in restaurants where you may see some amount of branding. The other is catering, where we are invisible as a brand. Yes, international brands such as Haagen Dazs and London Dairy are coming in, but they are present only with a select product range. Plus their supplies are erratic. Our challenge will be to do a lot of innovative things with the food service accounts.
How do you plan to grow the business locally?
We are looking to create a mascot for BR. As a brand, we were the first ones to create the concept of tasting, which was built around the little pink spoon. We will create an avatar of that pink spoon which will be launched in a big way through our new website. There will be an offline launch of the mascot as well.
We are also investing a lot of time and resources for developing new local flavours such as kulfi, which will be replicated internationally. We would do four to six new flavours every year and it takes time—close to three months—to get the formulations right. Also, flavour loyalty is a huge thing, so you can’t really play around with that, and your universe is restricted to those 31 displays. We also want to reach out to our consumers. So far, they have to come into our stores for ice cream, but we are looking to launch a standardized home delivery system. Right now, our stores in Mumbai, Bangalore and Delhi deliver products at the local level. The idea is to control this distribution centrally and give a stronger push. Hopefully, by the year-end, we should have a centralized unit, but need a certain bandwidth (number of stores) before we launch a robust system.
Will BR address the new health- conscious consumer?
In the next two months we will explore options such as a sugar-free range or a yogurt range. The paradox is that Indian consumers tend to want healthier, fat-free, sodium-free, sugar-free treats, but rarely end up buying them. In evolved markets like Mumbai and Delhi, we may offer products with lower fat and sugar content. But I’m not sure if this would be applicable in tier II and tier III cities, where ice cream is still an indulgence.
Are you looking to notch up the brand experience through different formats?
We are looking at launching large-format stores similar to BR cafes internationally. These are large-format 450-500 sq. ft flagship stores with lounge seating. These will offer hot beverages and savouries as well. We are hoping this will blunt the competition as Haagen Dazs is planning to have stores that size. Also, the idea is to make our cafes a destination where consumers come and spend time. Each of these will require an investment of Rs50 lakh to set up. We will look to launch three to four of these stores in Mumbai, Delhi and Bangalore.
How big is the industry in India and where does BR fit into all of this?
If you scroll through the Internet, various industry estimates peg the organized ice cream segment in India at around Rs1,500 crore. BR would be at 4-5% of this market. The category is growing at 10-12% year-on-year and we have been growing at 25% a year. But the per capita consumption of ice cream in India, which has traditionally been minuscule, is growing. In the US, the per capita consumption figure is 24 litres per person a year. It is as low as 200 ml in India.
The reduced entry point for your franchisee, critics say, has impacted the premium brand value of BR.
Firstly, we never said that we are a premium brand. BR has always maintained that we are affordable premium. But somehow the pricing gives the perception that this is a premium brand. Brands like London Dairy, Ben and Jerry’s and Haagen Dazs have definitely helped us because they have come in at price points of Rs165, which I would call luxury. But yes, you would not see me selling lollies from a push cart at India Gate. I don’t want to be in the mass segment, I want to be a mass-tige brand where people can afford me and enjoy me. Now with all these brands in the luxury segment, and with consumer purchasing power increasing, all of a sudden we have become affordable to consumers.