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With Rs 6,000-crore lockdown loss, ice-cream industry faces meltdown in peak summer season

A viral rumour linking ice cream to increased coronavirus risk hasn’t helped matters for the industry, which usually celebrates its best sales months from March to June.

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New Delhi: The ice cream industry has lost as much as Rs 6,000 crore since March on account of the Covid-19 pandemic, expert estimates suggest. This loss constitutes 60 per cent of its average annual turnover of Rs 10,000 crore, industry experts have told ThePrint.

While the onset of summer usually marks the peak season for ice-cream sales, the market has suffered this year on account of the logistical challenges posed by the lockdown, as well as a viral rumour that suggests cold foods constitute a Covid-19 risk.

Anuvrat Pabrai, a regulatory committee member at the Indian Ice-Cream Manufacturers Association (IICMA), an Ahmedabad-based industry body, said the sales from March-June this year were “85-90 per cent lower” than past years. 

“The sales year 2019-20 is the first time the ice-cream industry has witnessed loss of this scale. While the annual loss so far is estimated to be around 25-30 per cent, the sales loss in the last four months, since the lockdown, is around 85-90 per cent across the country,” Pabrai added.

The season, experts say, usually makes up 40 per cent of annual sales. 

“The loss in ice-cream sales varies with place, according to the severity of the coronavirus, which impacts the demand of the product,” said Pabrai. 

Also Read: First flush gone in lockdown, Bengal and Assam tea industries face Rs 2,100 cr loss

A rumour takes root

Most of the ice-cream stocks available in the market currently were manufactured prior to the lockdown announcement, which came 24 March, say experts. 

Since summer is the key sales season, stocks begin to be produced two to three months in advance. However, with the lockdown affecting local transport, labour and other logistics, ice-cream makers were forced to sit over this huge inventory.

Sales were hit further as a rumour linked ice cream with increased Covid-19 risk. While the World Health Organization (WHO) has officially stated that there is no scientific evidence to this end, many consumers are believed to have sworn off the delicacy.  

Even as these factors together caused sales to plummet, costs remained in the form of cold-storage rentals, wages, electricity bills, interest payments, etc.

Also Read: Chennai’s fishing industry is buzzing again as lockdown-hit lean season comes to an end

Milk powder prices fall

One of the upshots of the dip in ice-cream sales has been a drop in the prices of Skimmed Milk Powder (SMP) or dairy whitener. 

In the months leading to the lockdown, the supply of dairy whitener was running short across the country, which created apprehensions about an imminent increase in prices

The lockdown spurred a fall in demand for liquid milk from bulk buyers such as hotels and restaurants. As a result, dairy players diverted a large part of the milk to the production of dairy whitener, which has a shelf life of up to 18 months while liquid milk can get spoilt within days, especially in the summer. 

Among other things, SMP is a key ingredient for ice cream. A reduced off-take along with increasing stocks has thus helped bring down SMP prices. 

“Large-scale and industrial consumption of SMP has not resumed yet as ice-cream production and marriages, which are major contributors to demand, are almost zero now. Amul’s SMP is around Rs 250/kg, against Rs 300/kg last year,” said R.S. Sodhi, the managing director of the Gujarat Cooperative Milk Marketing Federation, which owns dairy major Amul.

“There are various small and private dairies that are selling SMP at even Rs 150-210/kg due to surplus stocks and sluggish demand. The stock of SMP is estimated to have doubled at 16 lakh tonnes from its position in March-end,” Sodhi added.

Also Read: Lockdown flattened the wrong curve — GDP instead of Covid: Rajiv Bajaj tells Rahul Gandhi


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