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Swiss Movenpick woos affluent Indians with ice cream

Movenpick, the Swiss-German foods and hotels chain, set out on Thursday to seduce affluent Indian palates with the opening of its first premium ice cream and coffee 'boutique' in the country.

Predominantly tea drinkers, Indians, especially the upwardly mobile with higher disposable incomes, have been recently targeted by a handful of coffee chains out to convert occasional drinkers into regulars using upscale menus and slick interiors.

"We're addressing a segment which is upper middle class and rich," Neeraj Jain, general manager at Movenpick Foods told Reuters at the opening in New Delhi of the company's first 32-seat cafe in India and its fifth in Southeast Asia.

"Our research shows that 60 million people in India have a higher per capital income than Switzerland. That's the market we are eyeing," he said.

Cafes such as Movenpick's are being launched against a backdrop of a growing gap between India's increasingly materialistic middle class and its teeming poor as the country's economy opens up.

Movenpick, which had global sales of about $1.0 billion last year, has introduced a pricey menu in India where the average per capita income among its billion-plus population is $213.70.

Its ice cream cones and sundaes retail between Rs 110 to Rs 250, and a cup of coffee -- made from beans imported from all parts of the world -- cost Rs 30 to Rs 85.

The two-level cafe located in one of the capital's ritziest malls offers eight blends of hot and cold coffees and 12 ice cream flavours. It is Movenpick's first foray into direct retailing in India.

MOVE CAUTIOUSLY

But unlike the aggressive expansion strategies of its rivals -- the year-old Barista Coffee Company, in which Asia's largest coffee producer Tata Coffee has a 34.3 per cent stake and Qwiky's, a coffee chain from Southern India -- Movenpick plans to move cautiously in India.

"We're going slow, taking feedback from customers in India who are very smart and price conscious," said Jain, adding Movenpick had plans to open two take-away outlets in Delhi by next month, followed by a cafe in the southern city of Bangalore in October.

Jain acknowledged Movenpick's offerings were priced at the high end, saying: "It's expensive but you get value for money."

He said Movenpick's folio of some 300 ice cream flavours had no artificial ingredients. He added he expected the domestic super premium ice cream segment -- which is just 5.0 per cent of the overall market -- would grow at 10 per cent annually.

Movenpick has opened two similar cafes in Pakistan's commercial capital of Karachi, one in Nepal's capital Kathmandu and one in Bangladesh in less than two years.

"The response there has been tremendous. We have daily sales in the range of Rs 30,000 to 35,000," Jain said.

Movenpick's boutiques will be run by franchisees who will incur a start-up cost of some Rs 3.0-to-4.0 million and have an estimated cash breakeven of Rs 28,000 a day.

Movenpick, which has invested Rs 40 million since it entered India more than two years ago, forecasts Indian sales for the year to next March of about Rs 80 million and margins of 10 to 15 per cent.

Although no official figures are available, industry sources estimate the overall domestic ice cream market at Rs 10 billion and say it is growing at a sedate two to three per cent a year.

Per capita consumption of ice cream in India is a scant 250 millilitres (ml) compared with 10 litres in Europe and 22 litres in the United States, industry figures show.

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