In a striking innovation ITC ties up with ice cream brand Havmor for distribution on the move
“We want to make the freezer the new pantry at home,” says Ashu Phakey about ITC Master Chef. Will it work? Ting! Ting! Ting! The jingling sound of a bell would get us scampering on our feet and rushing out of the house to the road. The bell would invite us to a calming and joyful experience of enjoying a cold ice cream on a warm afternoon. In recent years these jingling bells have become rare on ice cream carts. But now people in Delhi and NCR are once again hearing these welcoming sounds- though from the same ice cream carts, they are now selling frozen food. ITC Master Chef Frozen Snacks, in partnership with Havmor Ice cream, is using its ice cream pushcart distribution network to make its easy-to-cook snacks more easily available. A part of ITC’s new routes-to-market distribution strategy, it enables ITC Master Chef to leverage 100 Havmor Ice cream carts during the winter season, which is the peak season for frozen snacks and generally the non-peak season for ice cream in Delhi markets. In November to March, the frozen foods industry registers a 30 per cent increase in sales as compared to the summer months, as people living in cold regions prefer to eat hot snacks at home. Ashu Phakey, vice president and business head, ITC Limited (Frozen Foods), says this partnership will help ITC add more touch points for distribution. It is creating additional capacity, helping build frequency and also allowing ITC Master Chef to display its full range of products. “It’s a unique and an industry-first initiative. Never before has a cross-industry partnership like this happened in this category,” he said.
The size of the frozen food category in India is about Rs 2,400 crore with around half of the market in the Hotel, Restaurant and Cafe (HORECA) channel, and balance in the retail segment. Despite the convenience, taste and nutrition these foods offer, the category is not very large when compared to other competitive segments in India. It is a large segment in Southeast Asia, but the per capita freezer penetration in India is far lower compared to countries like Sri Lanka and Thailand, which have taken to frozen foods in a big way. Apart from the myths people have about frozen food and the fact that there is ample help in Indian homes to make fresh food, Phakey also attributes this lack of growth to less diversification in the product portfolio as until recently it was largely potatoes – whether French Fries, Smilies or Potato Bites. This limited it to being an occasional children’s tiffin snack. Master Chef countered the problem by diversifying the portfolio with more variety of products and also going beyond snacking into mealtimes. However, another challenge remains. That of limited freezer storage space. “Let’s say India has 1.5 million outlets. Out of that only 10% or less have freezers. And those freezers have to keep multiple categories- frozen peas, ice creams, ice cubes and the entire range of frozen snacks. Moreover it is the only stocking unit, which means the entire stock has to go into that freezer unit and he can’t keep extra stock hidden away like they do with other products,” he said.
A similar challenge is faced at home. The freezer is stocked with everything from frozen vegetables, desserts and even masalas! “Moreover, the frequency of opening the freezer is about two or three times a week, whereas for the fridge it is about three to five times a day. That limits the frequency of consumption.” “The frequency of opening the freezer is about two or three times a week, whereas for the fridge it is about three to five times a day.” Ashu Phakey. Phakey says the challenges in this category are very different and they need to be solved for it to explode. The partnership with Havmor is a step in that direction. “I can’t increase the freezer space but I can create more touch points. So if the consumer is seeing my product more frequently or can order it more frequently then he will prefer it. At ITC Master Chef we want to make the freezer the new pantry at home. Earlier it was the cupboard that would have all the snacks like noodles and biscuits. But now it’s the freezer. It has everything from nuggets to burger patties, from light to heavy food- it’s all there,” he added. To help increase frequency, the cart vendor rings the cart’s bell and calls out the products like a traditional salesman. “Fries le lo. Tikki le lo.” Though ITC found it a little odd initially, it trained the vendors to beckon the consumers.
“Ice cream is a little passive selling as the consumer himself approaches the cart. For frozen snacks, we’ve tried to make it a little more active. Unlike an ice cream guy, he’s got a bell and he calls out. So we trained them and my team practiced with them to get them more comfortable,” he said. Countering the limited space issue at stores, these carts help it display its full range of products. “Stores don’t have space to display more than 15 to 20 products. But these carts are my shops and can provide great visibility,” he said. However the carts sell only vegetarian snacks. “One of the challenges with ice cream is that it is a vegetarian product. So Havmor was a little concerned about the FSSAI rules. So for the first partnership we decided to keep it vegetarian. When consumers come to the cart we show them the range in the freezer but also inform them that we have a non vegetarian range. We have kept a barcode scanner on the cart that leads them to the e-store where they can buy the non-vegetarian range,” he said. Consumers buying from the cart receive discount vouchers that can be redeemed at itcstore.in, the company’s own D2C platform. This helps drive traffic to both the cart and the e-store. Through this initiative, Master Chef is not only driving sales but also enabling trials. Since the brand has come to their doorstep there’s more brand awareness. But what happens in the summer season?
“Post March three things could happen. One, we might still continue this in a different format with Havmor, like having some carts which carry both frozen foods and ice cream. Two, some of them can get replaced with exclusive ITC carts. And the third is a lot of consumers who have tried our products may have gone on to our e-store and would purchase from there,” Phakey said. Master Chef chose to partner with Havmor for its good presence in Delhi. “In terms of the number, the infrastructure availability is very good, both the distributor network and carts. Like us, they’re also a fairly experimental, experiential kind of brand. That helps when two partners work together,” he said. While ITC is using Havmor’s infrastructure, it also offers some benefits to the ice cream brand. For Havmor Ice cream, owned by the Lotte group, a South Korean conglomerate, this partnership ensures that its vendors remain employed through the offseason as well. These vendors generally return home to their villages during this time and have no earning. “We saw this as an opportunity to provide gainful employment through the year,” Phakey said. “We saw this as an opportunity to provide gainful employment through the year.” The distributor also earns through the frozen snacks revenue, when the ice cream sales fall. Moreover, the carts remain operational, saving on maintenance expenses. “This is a win-win initiative for both the companies and its channel partners. It helps Havmor ice cream channel partners generate incremental revenues during winter months. Expanding pushcart operations is an integral part of our strategy to enhance its reach. Given that the frozen supply chain in India is evolving, leveraging the existing ecosystem to expand reach at an optimised cost will continue to remain a focus area,” said Vincent Noronha, VP Marketing at Havmor Ice Cream.
Apart from this partnership, the other route-to-market distribution strategy for ITC Master Chef is to leverage e-commerce- both its own D2C platform and other platforms. It is also offering customised products through the cloud kitchen model in Bengaluru, called the ITC Master Chef creations. Using its product range from both Master Chef and ITC’s other brand Kitchens of India it is offering dishes like Dal Makhni, rice bowls, wraps, burgers, etc. It’s like a restaurant menu that can be ordered through Zomato or Swiggy. “The dishes are made and delivered. Generally the brand reaches consumers through the packaged form and they make it. Here it comes in the made form. So the consumers can make it on their own or order it from here. Currently we have about eight stations in Bengaluru as a pilot and we are leveraging that to get our consumers to taste our range of products,” he said. Since HORECA forms a sizable share of Master Chef’s business, the third wave of the Covid19 pandemic in India has impacted it. The capacity restrictions, weekend and night curfews in different parts of the country have taken a toll on the restaurant industry. Master Chef is tackling this impact by educating its partners and strengthening the distribution networks. “Since home delivery has increased, we are educating our partners on the products that will be a great fit for the service. For example if someone has ordered a burger and it takes 30 minutes to deliver it, it should still have the same bite and not be soggy. So we educate them on how much sauces to use. We are also trying to create more products for them to use in this segment,” he said.Despite lockdowns and distributors not keeping well due to the Coronavirus, Master Chef is striving to keep the distribution going. To this end it has linked all its partners to multiple distributors. So if distributor A is not keeping well, the restaurant can reach out to distributor B. “Normally the areas are demarcated, but we have made that more connected,” he said.