18/04/2018 Caramel, Nuts and Cream | Outlook Business

Outlook Traveller Business Money Images Hindi

SIGN IN SUBSCRIBE

Story of the day
Who's Staying?

THE BIG STORY SPECIALS PERSPECTIVE PIXTORY ENTERPRISE STRATEGY MARKETS C'EST LA VIE

EVENTS

Search Here..

Home  /  Enterprise  /  Regional Brand  / Caramel, Nuts and Cream | JUN 24 , 2016

Regional Brand
Caramel, Nuts And
Cream
Belagavi-based Adityaa Milk
Ice Cream is eyeing a bigger
Photographs By Soumik Kar scoop of the growing domestic
market 
Laveena Iyer

"We zeroed in on the diary segment as we felt it was a great way to connect with our roots"— Shivkant
Sidnal, co­ founder

  One by one, the spiral machine lays down milk bars on a

conveyor belt. As tempting as it is to lift one of these milky
goodness off the belt and dig in, they aren’t ready yet. The rites
of passage, we are told, involves a dark chamber, where the
milky delights will be given a cool chocolate bath. And indeed,
when they emerge a few seconds later, at the other end of the

https://www.outlookbusiness.com/enterprise/regional-brand/caramel-nuts-and-cream-2865 1/11
18/04/2018 Caramel, Nuts and Cream | Outlook Business

long tunnel, they are plumper, but with a chocolate glaze that
even Roald Dahl would approve. 

A look around, and there are frozen desserts everywhere,

suspended from wide conveyor belts in shades of yellow,
purple, pink and green. They all have different consistencies —
some, in semi-liquid form are getting scooped out of larger
tubs into plastic containers, others shaped like seasonal fruits
and into popular cartoon characters. 

Whipping it up
 
Around 70 flavours are whipped up everyday at the Adityaa
Milk Ice Cream factory. Spread across 12.5 acres in the
Belagavi district of Karnataka, the factory was set up in 2006
by husband-wife duo, Shivkant and Deepa Sidnal. The 41-
year-old software engineer says he was working with IT firm Majoris Systems in Bengaluru
then, but the urge to start something of his own was so strong that he invested 3 crore
from his personal savings to start the factory, under the name Vijaykant Dairy and Food
Products. The remaining 9 crore was taken as a loan. 

“We were eyeing a few other options and then zeroed in on dairy. It seemed like a great way
to connect with our roots by working directly with the farmers. Also, since my wife belonged
to a business family (she is the daughter of VRL Logistics’ Vijay Sankeshwar), she had a fair
understanding of starting a venture,” shares Shivkant Sidnal, managing director, Adityaa
Milk Ice Cream. 

Today, the factory processes 1.5 lakh litres of milk. While part of it is sold directly, rest is
used to churn out 60,000 litres of ice cream daily except during the off-season when
capacity utilisation drops to 60%. Apart from milk and ice cream, the company also
manufactures shrikhand, Indian sweets, yoghurt, buttermilk, clarified butter, etc. Milk
makes up for 50% of sales, ice cream 30-35% and milk-based products the remainder. 

But the brand’s

  mainstay is ice
creams, especially
unique flavours that
Sidnal keeps
scouting for across
the world. Some of
its offerings include

https://www.outlookbusiness.com/enterprise/regional-brand/caramel-nuts-and-cream-2865 2/11
18/04/2018 Caramel, Nuts and Cream | Outlook Business

flavours such as
banana caramel,
salted peanuts,
Aamras, American
dry nuts, Mello Jello
and Belgian
chocolate, which are
also its bestsellers.
Besides, the brand’s
own version of
HUL’s premium ice
cream brand
Some of Adityaa Milk's unique avours include Salted peanuts, Mello jello, Aamras,
Magnum, is called
Banana caramel and American dry nuts
Magnus. A little too
close for comfort,
but Sidnal says he isn’t afraid of naming this premium offering on similar lines as he wants
to highlight the USP of his own. “Magnus is better than Magnum because they make it with
vegetable oil while we use pure milk.”  

To make these unique products, Adityaa Milk sources flavours from Denmark and Italy. The
products are available as candies, sundaes and cups, starting from 5. Premium products
such as banana caramel cost though as much as 1,000 for a 4-litre pack. This is because a
kilo of any of the unique flavours costs 2,000-7,000 and the factory sources at least 100-
200 kilos of each. Of its huge list, different flavours work in different cities, says Sidnal,
adding, “In Maharashtra, chocolate sells well, strawberry and other fruity flavours do well in
Bengaluru and in Kerala, we sell more of our nut-based ice creams.”  

Churning Quality
 
The other cornerstone of the brand is quality. To ensure, it is never compromised, the
company houses a microbial and chemical lab within the factory. As it sources 1.2 lakh litres
of milk daily from 1,500 villages across the district, the milk is subjected to several rounds
of
 
quality checks before it is passed over for production. Besides, the company has invested
in high-quality freezers and machines. “I visited Germany a few years ago. It has a
flourishing dairy industry, which is why we have sourced some our machinery from there
and countries such as Sweden and Italy,” says Sidnal. 

Some of these machines help convert milk into powder, and are useful in tackling the
frequent fluctuation in milk prices. Sidnal says, “With milk being the main ingredient and

https://www.outlookbusiness.com/enterprise/regional-brand/caramel-nuts-and-cream-2865 3/11
18/04/2018 Caramel, Nuts and Cream | Outlook Business

prices always fluctuating, this stored milk powder comes in handy when there’s a supply
problem.” 

But sourcing milk from farmers is an issue in itself. Sidnal says farmers, who are part of the
co-operatives receive a 4 subsidy for every litre handed over, but not individual farmers. As
Adityaa Milk sources majority of its milk from individual farmers, they are forced to hand
out a similar subsidy, which means a daily expenditure of around 4 lakh, which eats into
the company’s margins.

But the founder adds, where earlier, it was difficult to price products higher, with the years
the brand has grown in repute. “Since we were a new brand, we couldn’t just start quoting a
higher price to make up for these (sourcing) costs, but now we can. People know about the
quality difference now and are ready to pay for it.” 

Its thrust on quality is also why till date the company continues to distribute products from
it Karnataka factory. Adityaa Milk owns a fleet of 60 trucks. Besides, it rents 20-25 vehicles
to ensure an uninterrupted supply of its products. “We have equipped ourselves to be able
to dispatch products anytime,” Sidnal says. The approach though is cost-heavy. As of now,
transportation accounts for 20% of Adityaa Milk’s costs. This is also the reason why the
brand has a low operating margin of 3-5%. 

Ice cream station
 
The transportation
costs though are
unavoidable, with
Adityaa Milk ice
creams being sold at
over 20,000 outlets
in Goa, Karnataka,
Maharashtra, Kerala
and Gujarat. Of
these, 100 are kiosks
at petrol pumps
 
Adityaa Milk is planning to set up niche parlours, premium outlets in metros over the while 200 are own
next two years, besides expanding kiosks parlours. Explaining
the high proportion
of petrol pump kiosks, Sidnal says, “We started by setting up kiosks at petrol pumps. One
has to go to a petrol pump at least once a week. With products starting as low as 5, we
knew it would work. And, it has. It gives us great visibility. Setting up such a kiosk costs 3

https://www.outlookbusiness.com/enterprise/regional-brand/caramel-nuts-and-cream-2865 4/11
18/04/2018 Caramel, Nuts and Cream | Outlook Business

lakh- 5 lakh and it breaks even in two years.” Sales at such kiosks contribute 18-20% to
total sales. 

But after clocking sales of 245 crore, with 93 crore coming from the ice cream segment in
FY16, the brand is thinking of growing the station bigger, especially in the western and
northern parts of the country. It plans to set up two factories, in Mumbai and Bengaluru by
the end of 2016. For its Mumbai foray, it has already tied up with Maharashtra Dairy
Development’s Aarey milk brand. “This is part of our market penetration strategy in
Mumbai. Aarey boasts of 800 booths across the city,” says Sidnal. 

Apart from the standalone kiosk at petrol pumps, it wants to set up niche parlours that the
founder says will cost 15 lakh each, and should break-even in two-three years. He also
plans to come up with what he calls ‘A-class’ parlours, slightly more premium outlets in the
metros over the next two years. Besides, Sidnal hopes to increase his reach to 100,000 retail
outlets this year. 

The brand, which has never advertised till date, is also going to initiate a marketing
campaigns using public transport and auto rickshaws in the cities it is currently present in.
Sidnal is hoping to raise 100-150 crore to fuel this expansion and is considering selling 30-
35% stake to a PE firm. 

More cream
 
The Adityaa Milk founder though is not alone when it comes to expansion plans. The ice
cream market in India is exploding with flavours as brands are expanding their nationwide
presence rapidly. Homegrown and foreign brands such as Havmor, Naturals, Mother Dairy,
London Dairy, Haagen Dazs, Gelato Vinto are pushing ahead into newer markets. Why the
sudden rush? According to an April 2015 Euromonitor International report, the domestic
ice cream market is set to grow to 6,198 crore in 2019 from 4,160 crore in 2014. As of
now, the Gujarat Co-operative Milk Marketing Federation’s brand Amul occupies 32% of
the market. 

Sidnal is confident that they can capture a significant amount of this growing market, with
the right mix of flavours and by maintaining quality standards. More than national brands
though,
  he counts local players such as Lazza, Uncle John, Merriboy, Dairy Day and Frostee
as competitors, given the markets it is currently present in. 

While he accepts that it will be a challenge initially, Sindal believes that with products
starting at 5, Adityaa Milk can capture any space. “We want to be able to command the
price we want and given our quality we will get there,” he says. How far Adityaa Milk's ice
cream truck spreads joy remains to be seen.

https://www.outlookbusiness.com/enterprise/regional-brand/caramel-nuts-and-cream-2865 5/11