Mumbai: Mother Dairy, the Delhi based dairy products company, plans to increase its marketing budget to between Rs35-40 crore, up from Rs25 crore last year, primarily on advertising and promotions of new product launches, mostly in Mumbai and Kolkata.
In the ice cream business, where Mother Dairy trails market leader Amul and Kwality Walls, its advertising and promotions budget will double to Rs10 crore. Amul, which is the market leader with 37% market share, spends Rs2.5 crore on advertising. Kwality has a 8% market share and Mother Dairy has about 7%.
Mother Dairy expects new markets to drive up sales of its ice cream by 41% this year, compared to 25% growth last year. Set up in 1974 to provide marketing and retail operations for the National Dairy Development Board, which developed India’s milk cooperative movement, Mother Dairy has sales of Rs2,200 crore. More than half of such sales comes from milk sales. It also sells vegetables, oil, ice cream and yoghurt. “While in Delhi the growth of our business was supported by the easy accessibility of our own outlets, we do not intend to have our stores elsewhere,” says Paul Thachil, Mother Dairy’s chief executive. “We will use the existing retail network so that we are easily available.”
The company intends to have up to 4,000 outlets selling its ice creams in Mumbai by year end from around 2,000 now. But extending its distribution network could be the hardest part, analysts said.
“Amul and Kwality already have most of the available shelf space. So, it could be hard for Mother Dairy to get shelf space,” said an equities analyst at a domestic brokerage who preferred anonymity citing company policy.
Gaining a foothold in Mumbai and Kolkata will also reduce the seasonality of its ice cream business. Nationally, 45% of all ice cream sales take place in March, April and June.