Taking a big leap forward into the super-premium segment, General Mills has decided to bring in its most profitable ice-cream brand, Haagen-Dazs, to India. The US-based MNC has decided to set up a series of branded cafes under the franchise model. While making money in this category may take a while, General Mills believes in tapping into the luxury end of the food market when the time is right.
General Mills has consciously adopted a cautious approach to launching the brand. . “Typically when we study the foods market what we plot is the income generation versus country’s GDP and now is the time when we feel a point of inflexion has been reached in the Indian economy,” says Arindam Haldar, Director, Haagen-Dazs. But setting up a robust cold chain will remain one of the main challenges for the brand. However, its first priority is to get into institutional sales before tapping the retail market.
“We have to establish our presence in the five-star hotels and gourmet outlets before opening our branded shops,” stated Haldar. Its branded cafes are likely to come up later, by early next year.
In fact, a similar strategy of institutional presence first has also been adopted by its nearest competitor, Movenpick, which has re-entered the country through a distributor, Rhapsody Foods & Beverages Pvt. Ltd.
However, in the case of Haagen-Dazs, its retail strategy is going to be imperative as it plans to use that as a brand-building tool. It intends a combination of flagship stores, cafes and kiosks across the metros. .
With the onus of building the super-premium ice-cream category in India, General Mills well realises the challenges ahead for its brand. “Even globally the super-premium category accounts for just about 3 per cent of the ice-cream market where our brand is the leader. But India is opening up and we have positioned our brand as an experiential product,” says Haldar.
Building its brand based on its international model, Haagen-Dazs would rely on word-of-mouth publicity and not mass media. It would also use a couple of direct marketing initiatives such as leaflets and mailers. Its tagline, ‘Longer Lasting Pleasure’ would be adopted in India too.
Importing the brand directly from its factory based in France (at Arras), General Mills well realises that logistics and cold chain facilities will be crucial. “Our cold chain infrastructure is still not proven and will remain our biggest challenge as temperatures have to be maintained. After the brand is shipped it will be taken directly to General Mills factory in Nashik before it reaches the high-end gourmet stores and hotels,” explains Haldar.
Its strategy to go slow on retail expansion is a conscious one considering the lack of cold chain infrastructure. “We have been supplying our branded freezers to the food services and gourmet stores. The strategy is to go slow on purpose before we open our shops and retail cafes,” says Haldar.
At the same time General Mills is also in a hurry to get the first mover advantage in the luxury food retail segment. “We want to get in early into the luxury segment and having the first mover advantage is going to be an advantage for the brand. Indians are ready for high-indulgence brands and we want to be there at the right time,” says Kavita Jagtiani, Group Brand Manager, General Mills.
However, nearest competitor Movenpick does not think it will be that easy to reach the high-end consumers. As M.V. M Rao, Consultant - South Asia, Movenpick, says, “India is still a widely dispersed market and consumers with purchasing power are not just based in the urban cities. It will be difficult to for a super-premium brand to reach its customers compared to the advanced European economies. Besides, high-end retailing will take time to develop in the country.”
But General Mills believes its most profitable brand will make its mark in India like it did in neighbouring China where it has already clocked revenues of $50 million. “Haagen-Dazs came to China ten years ago and is a profitable brand today. The brand has to do a lot of catching up in Asia, and India is no doubt going to be challenging market,” states Haldar. The$1-billion Häagen-Dazs today produces ice-cream, ice-cream bars, sorbets and frozen yogurt.
In India too, its dessert dining experience will not be limited to ice-creams. Its spread would include a range of sweet delicacies such as brownies, waffles and shakes. A super-premium experiment that can prove interesting to watch!