Gel with success the Gelato way

The Gelato industry in India is relatively new and developing to find its foot holds among the consumers. The premium gourmet product that originated in Italy is slowly carving its share in the Frozen Dessert market.

Gelato, generally is considered as an ice cream, but technically the product is different. The frozen dessert is a low fat and high flavoured product. Unlike the most industrial ice creams, it is prepared from fresh and natural ingredients. The Gelato made its entry in the Indian market some six years ago and basically caters to the premium consumer. With not many players in this niche business segment, there is lot of scope and untapped market to take advantage of. Currently, there are about 10 Gelato brands and 100 gelaterias or gelato stores in the country.

Players dominating the industry

The Gelato concept in India is infancy and still developing. Several Gelato brands such as Gelato Delight, Mama Mia, Gelato Italiano, Amore and Gelato Vinto etc are the pioneers in this sector in India. Most of them operate through company owned stores and some of them have forayed into the franchise arena to scale up and expand their brand and product reach. As, ‘Gelato’ is a premium product, the ideal distribution format for it, could be retail-kiosks and gelatarias or parlours, catering services, supermarkets supply and via institutional sales.

Franchise opportunities

The gelato brands namely Gelato Vinto, Amore and Gelato Italiano offer franchise opportunities in India along with presence through own stores.

Gelato Vinto: The Delhi based brand launched in 2005 by Shivram Foods Pvt Ltd. has launched its franchise concept pan India. Gelato Vinto, currently has presence in Delhi/ NCR, UP, Rajasthan, Maharashtra and Punjab through 25 franchised and 11 company owned outlets. It also has a supply channel for Hyatt Regency, Leela Kempinski and several other hotels and restaurants in the city. Now, the company is planning further expansion. It is offering franchisees and the interested entrepreneurs require paying a one-time franchise fee. The preferred location would be high footfall areas like ground floor of a market or shopping mall or a food court and minimum space needed would be 100 sq. ft. The company also extends technical knowledge and support to its franchisees.

Amore: Mumbai based gelato brand Amore owned by Gourmet Gelato Company Pvt. Ltd. began operations in 2006 in India. At present, the brand has presence in Mumbai, Surat and Hyderabad through 25 outlets operating through mix of ownership as well as franchise model. The company opted for franchising in its endeavor to establish itself as a national brand. It is also seeking continual expansion across India.  The company provides personalised all-level management support in form of well-trained craftsmen, marketing, human resources or product enquiries. The franchise formats, the company offers include kiosks (space required 80-160 sq.ft.) and high street outlet (140-300 sq. ft). The capital outlay on franchisee’s end could vary between Rs 9 lakh-15 lakh for kiosk and high street format respectively approximately. This would also incorporate the franchise fee and costs for equipment and fittings, staff training, architectural and design fees etc.

Gelato Italiano: The Gelato chain owned by Mumbai based  Blue Food Company currently has around 60 outlets in cities Delhi, Mumbai, Kolkata, Pune, Hyderabad and Bangalore. The company is now on an expansion spree and looking to extend its presence across India through a franchise route in addition to company owned stores.  It is targeting in Tier I cities for initial phase of expansion and to   Tier II and III cities later on. It has plans to open more than 60 outlets pan India and has not disclosed the capital requirement for the proposed quick expansion as yet.

Challenges for the Gelato industry

The Gelato Gourmet Industry has several factors that are critical for its growth prospects. These include issues pertaining to the supply chain mechanism, the infrastructure requirements, enhancing product awareness along with increasing consumer base for this specialty product.

Supply chain Management:  The shelf life of the gelato is of few days only and mostly, it is freshly prepared and sold on daily basis. Therefore, the franchisors prefer having a manufacturing unit close to the franchise stores. The franchisee would need to place orders in advance mostly 24 hours, so that the franchisor is able to supply the stock on time.

Infrastructure: The refrigeration and display cabinets are typical and different from those used in regular ice-cream stores. This is due to the fact that ‘Gealto’ is 10 to 15 degrees warmer than ice cream and requires different temperature settings. Unlike ice cream, gelato is not completely frozen solid.  Moreover, the equipment is sourced from Italy and usually supplied by the franchisor. The Gelato manufacturing involves typical  recipes, equipments, production process and store formats.

Lack of product knowledge: Gelato has still has to carve its identity as a different product other than ice cream. A large section of consumers are not able to differentiate between ice cream and Gelato. In case of ice cream, the content ratio of ice cream to air is 30:70 and for Gelato, this ratio is typically 70:30.  Gelato is prepared from natural ingredients (milk and fruits), and is mostly fat free (only 3 to 4 per cent of fat) and is more creamy, rich and tasty and therefore nutritious. However, the variations in gelato containing chocolate or nuts are more calorised. Also, there are other gelato products available such as water based Sorbettos , Gelato Cakes and shakes.

Small consumer base:  As if now, Gelato industry in India is a very small catering to a niche market.  Its consumer base comprises those foodies who have knowledge and appreciation for the quality food ingredients and its history. The product is 100 percent costlier than any other regular branded ice cream.  Also, with many options available in the category of Frozen Desserts and ice creams, the gelato finds clientele in people who have a more refined palate. The current scenario is that the gelato market is limited to metros and Tier I cities.

Conclusion

Generally,  seen as part of the Ice Cream industry which stood worth Rs 2,000 crore in India in 2010 and pegged at annual growth rate of 15 per cent for coming years, the share of gelato market is very small about five per cent. There is massive scope in this premium gourmet segment in terms of creating product awareness and identity in the Indian market. As more and more people are becoming health conscious and also ready to spend, the sector offers potential entrepreneurial opportunity. The trend is picking up with several players planning expansion and seeking franchise partners to extend the reach of the product across India and creating a larger consumer base.