The Pabrai’s of Kolkata are veterans in the ice cream domain. While Anuvrat Pabrai is credited with launching the city’s oldest ice cream brand Tulika’s, which was later shut down, his eldest son Kunal Pabrai came up with a new brand of gourmet ice creams, called Fresh and Naturelle, with a 100 percent ‘natural’ positioning. Today, the five-year old brand covers major metros and cities, with a presence in the retail format with standalone and shop-in-shops, which it is aggressively expanding through franchisees. Also, the brand makes a significant impact on the bottom line of many premium restaurants with its Nolen gurice cream. Both Kunal and younger brother Nishant have scaled new heights under the able guidance of their father, and they strive to keep the Indian tradition alive by experimenting with the most traditional flavoured ice creams. Priyanka Dasgupta delves into the family’s exciting world of icecreams in a tête-à-tête with Kunal Pabrai, Founder, Fresh and Naturelle.
How was Fresh and Naturelle conceived, and how has it developed over the years?
Pabrai’s Fresh and Naturelle was started in 2008. We wanted to create the best, 100 natural percent ice cream, without any artificial colourant, flavour or essence. For instance, we are probably the only ice cream maker in India making vanilla ice creams from naturally sourced vanilla pods, and chocolate ice creams from naturally sourced cocoa. Our fruit-based ice creams are made from raw fruits, not canned fruits. In the summer months we will not have any strawberry ice cream since strawberries are not in season.
Sourcing involves identifying the best producers around the world, and natural ingredients are very expensive. But our concept is based on producing high quality international standard ice creams, and giving little importance to pricing. Our ice creams taste like no other, and I have witnessed customers’ reaction from my experience of serving behind the counters. Our focus after the launch was to incorporate more and more Indian and other exotic/unusual flavours. We offer traditional flavours like filter coffee or pan ice cream, along with a Japanese range of flavours like wasabi or matcha green tea. We take great care in creating authentic flavours and the level of customer satisfaction bears testimony to that.
What is the brand’s positioning?
Our business philosophy stems from the fact that we are denizens of Calcutta, and the average Calcuttan is a foodie; it is built into our cultural chromosome! So, our benchmark is not the pricing, but quality. We do want to keep our product affordable for the middle and upper middle class of consumers, but having said that, it’s not a mass market product, rather, it is a premium product. Baskin Robbins might come closer in terms of pricing, but we have no qualms in admitting that we are the most expensive natural ice cream in the country. I would like to peg my brand against international players like Hagen Daz and Moven Pick in terms of quality. Our long-term goal is to match these players in their backyards. I would love to go to New Jersey where Hagen Daz originated, open a counter right next to their flagship store and compete with them on their home turf!
How do you manage cost?
In spite of being a price sensitive market, supplementary products like coffee have almost dented this market. Though we are not charging as high as Rs 250 a scoop (like Hagen Daz), the average ticket size for a cup of coffee is Rs 100 to Rs 150 at a cafe. Here, the bottomline is to have a portion of food at that price point, hence, it has become easier for us to navigate this mindset.
Although we have not faced much resistance when it comes to pricing, people do tend to compare us with other brands. However, after having our ice creams, they appreciate the quality difference. Even if we have to raise the price by 50 percent, it would not impact our sales much. We don’t want to be perceived as too expensive or over priced, but, for us, there is a relentless focus on quality, and quality does not come cheap. We even discontinue a flavour if the right quality of ingredient is not available. This happened in the case of our banana toffee flavour; when the supplier stopped making the same quality of toffee, we decided to temporarily discontinue the flavour till we got the right quality again. We believe that if we never lose our focus on quality, we will never go wrong.
How much sales comes from the HoReCa business?
The HoReCa segment has been witnessing a silent revolution of sorts in the icecream cum dessert section.Chefs are looking to create more novelty in this area. Star hotels no longer serve flavours like tutti-fruity, vanilla, chocolate, and strawberry. Customers are asking for innovative products, and chefs are obliging them by creating unusual flavours like watermelon, black grapes, tender coconut, chocolate macademia, apple pie, etc. Restaurants like Mainland China and Oh! Calcutta have seen a huge spurt in dessert consumption by partnering with us to create customised offerings for their guests. Currently, around 40-50 percent of our sales is contributed from the HoReCa segment.
Please give examples of your flavours for HoReCa.
For Italian restaurants, we have Mascarpone Cheese with candied fruits, Natural Strawberry ice cream with balsamic vinegar; for Japanese restaurants, we are making Matcha Green Tea and Wasabi icecream; and for Tibetan and Chinese restaurants, we have Sichuan Peppercorn. We create unique flavours that supplement different cuisines such that restaurant owners and chefs can offer a wholesome and authentic dining experience.
We partner with chefs across the country to help develop signature ice creams for their diners. We have partnered with ITC hotels, Taj Group, and Park Hotels; and restaurant chains like Specialty Restaurants that house brands like Mainland China and Oh! Calcutta, and many Bengali restaurants such as Bhojohari Manna, 6 Ballygunge Place, Solo Ana Bengali, etc. We hope to partner with more HoReCa clients, and are looking for tie-ups in Delhi, Bangalore, Hyderabad, Chennai, and Mumbai. We are also keen on increasing our presence in the catering segment.
What is your retail reach? Please elaborate on your franchise model.
We have two basic retail models: the kiosk or counter and the parlour. When we started, we tied up with Spencer’s and have three counters with them. We also have counters in premium clubs of the city, and a stand-alone store at Russel Street. In the rest of the country, we have followed the franchise model for our parlours, which has worked very well. Many franchisees have become highly successful and will be opening their second or third outlets. Products are sent to multiple locations from our centralised manufacturing base in Kolkata.
Currently, we have 18 counters run by franchisees, and by the end of this year, we hope to grow the number to 50. As per our company policy, these will be run only by franchisees, who alone can give undivided attention to the business. Our main focus is on improving quality, introducing new flavours, and increasing operational efficiencies.
Right now, we have only one company-owned counter at Mani Square Mall, which we plan to give to a franchisee soon. We intend to open one large flagship store in south Kolkata, which will be a testing ground for franchisees for any new concept that will be undertaken. From this store, franchisees can also test new products launched, check any errors that might crop up, and gain first hand experience, before they manage their own counters.
We have covered 8 cities so far, with kiosks in Kolkata, Siliguri, Chennai, Bangalore, Hyderabad, Delhi, Jaipur, Mumbai, and one in Surat is coming up. At present, we are in consolidation mode because in this line of business you keep oscillating between consolidation and expansion. Most of the counters will come up in existing cities. We want to saturate the metro markets before moving on to tier II cities.
The basic investment of setting up a kiosk is around Rs 9 lakh, which is borne by the franchisee, while a parlour would require Rs 12 to 15 lakh, excluding the cost of real estate. There are youngsters, young couples, and retired people approaching us for franchising, which has emerged as a viable business concept for us.
When it comes to franchising, what is important is not the product but putting the systems and controls in place. For a company, it requires making a tremendous mental shift to move from company-owned stores to franchised stores. We hand-hold our franchisees through the starting phase by giving them the complete infrastructure from the biggest machines to the smallest spoons, or advising them on the brand they should buy.
Will you be having region specific flavours as you expand?
We already have. For instance, we have a jackfruit flavour that is very popular in the south, which won’t work in the north. A flavour like chandan might be very popular in the north but it might not have any takers in the south. We have a huge portfolio of around 55 flavours and are keen on increasing them so that we have something for every customer. We create region specific flavours l along with the universally popular ones.
Who do you consider your main competitors?
Apsara, Gokul and Naturals are three players in Mumbai which have roughly a similar kind of positioning, but are technically different. So while they are similar in the same market space, the end product is not the same at all. We are excited to be in a market like Mumbai and the initial response from Mumbaikars has been very encouraging. But I believe that my biggest competitor is myself. As a company, we are focused on working hard to bring out the best possible icecreams, and we are going to bring in many more innovations. It is difficult to track our market share because there is no one in the same positioning as ours.
How do you perceive your brand within the icecream category?
We are positioned in the premium category under ‘naturally made’ ice creams. Within the icecream spectrum there are different products such as sorbets, gelatos, softies and ice creams, and newer categories like frozen yogurt and low-fat gelatos. Each has its unique style and own set of challenges, which are very different from ours. They are not our competitors.
Our ice creams are 100 percent vegetarian, which gives us a competitive edge in a market like India where many companies use egg in their icecream preparations. We use only plant-based derivatives, which act as a stabiliser like egg. This is one problem that international icecream companies in India are facing.
There is a growing health consciousness even for products like icecreams. So, natural ingredients are far better than artificial ones. All our fruit-based ice creams have real fruits in them. Icecreams are full of fat so we are toying with the idea of launching sorbets that have a very low fat content.
Tell us about your manufacturing facilities.
Currently, we have one plant at Tollygunj in Kolkata. We have just doubled our production in that plant, which will serve us for the next couple of years. Another plant is coming up at Thakurpukur in Kolkata, which will increase our production ten-fold. In the coming decade or two we would be pretty comfortable. In fact, we have already anticipated and made provisions for more growth The new plant has the capacity to treble its production, and as a state-of-the-art plant, it will incorporate some of the best food control practices as per international norms. We will be investing an additional Rs 50 crores for upgrading the machines.
How do you ensure cold supply efficiency?
We have taken a guerrilla-like approach for our entire logistics/cold supply chain, and have come up with a totally novel way of doing it. So far, nobody has been airlifting their ice creams, and we do that all the time. We have managed to incorporate the facility because we are making a premium product. We can airlift our icecreams to any part of the world, and are actually toying with the idea of doing so. We can send our products by air to even a single counter in a particular city, and that too, profitably. However, in the long run, as volumes build up, we will consider more economical means.
What are your customer engagement initiatives?
We have undertaken a series of interesting customer connect initiatives. We are on Facebook through which we promote sampling to create brand awareness. We see ourselves as a very small company, so we need to achieve a scale where we can invest heavily in advertising. Being a niche product with a premium positioning, our volumes are unlike that of other national brands.
What is your current turnover and growth rate?
We cannot share our numbers, but we can say that we are very comfortable with the numbers that we have achieved so far. To give you an idea, typically, one counter gives us yearly business worth Rs 40 lakhs and we want to take that to Rs 50 lakhs very soon, plus we are opening more counters. So you can reach a rough estimate of our potential sales.
Since the time we started, we have seen 100 to 110 percent growth year on year, and this has remained constant. You could say that our growth has been phenomenal, and that too without any advertising.
The field is wide open for improvement. How quickly we can scale up will be determined by own limiting factors and nothing else; we could choose to go at a slower pace or increase our speed. The main challenge has been to sustain the growth momentum and maintain the quality level. These are good challenges to have, and we hope that they continue to drive us to achieve higher success.