We didn't build Naturals to sell it. IPO also not on our minds: Siddhant Kamath

The growth, understandably, lost steam. In FY18, Naturals had 77 franchisees in Maharashtra and 35 across the country. After three years, in FY20, the corresponding numbers were 77 and 37, respectively. The numbers stagnated in terms of company-owned stores as well. From 11 in FY18, it crawled to 15 in FY20.

Unfortunately, there was little respite even as the ‘stability era’ came to an end by the fag end of 2017. Over the next few months, Naturals was fighting a ‘GST confusion’ battle. While the ice cream industry was slapped with a GST of 18 percent, food and restaurant chains were levied 5 percent. Naturals had a bit of both. It was in the business of selling ice cream, and it was an ice cream parlour chain as well. The confusion persisted for two years, the business meandered, and it was only in December 2020 that the rate was made uniform for ice creams and parlour players: 18 percent.

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But even as the ‘5 percent versus 18 percent’ chaos was taking a toll, the pandemic wreaked havoc during the first half of 2020. While other ice cream players managed to run operations, Naturals was the odd one out. Reason? The biggest strength of the brand—a small shelf life of 15 days—became its biggest curse. The logistics nightmare during Covid, truncated shelf life, and the fact that their ice creams were sold only via parlours forced Naturals to shut operations for over three months. “The pandemic tested the resilience of the brand,” says Siddhant.

Cut to July 2024. Naturals has posted a strong rebound. The outlet count has increased from 129 in FY20 to 169 in FY24. In terms of production, the brand has enhanced its tally from 4,771 metric tonnes per annum in FY20 to 6,647 metric tonnes in FY24. Revenue too has leapfrogged: From ₹166.85 crore in FY20, which dipped to ₹93.14 crore in the subsequent fiscal, Naturals closed FY24 at ₹294.02 crore. Siddhant now wants to make Naturals a ₹500-crore brand in three years.

Food and beverage experts are impressed with the growth story of Naturals. “What the Kamaths have done is commendable given the natural limitations that they have,” says KS Narayanan, a food industry veteran. “What is most fascinating about them is their ingredient philosophy of making ice creams with just sugar, milk and fruit,” he says. Their inputs shun so-called nasties such as artificial colours, flavours, stabilisers and a bunch of chemical additives.

A culture of innovation helped widen the consumer base. Fruit flavours and combinations such as tender coconut, chikoo, sitaphal, and alphonso wooed Indians to a niche and cololurful way of consuming a premium brand. When popularity increased, and word of mouth spread, people started carrying Naturals to different cities in thermocol boxes loaded with dry ice. “Suddenly, the brand became visible at airports and on conveyor belts,” says Narayanan. “In fact, such boxes became as ubiquitous as cartons of alphonso mangoes,” he adds. Apart from parlours, Naturals took a unique route to distribution through caterers where a lot of weddings, events and functions had Naturals ice cream as one of the dessert options.

Though the brand has grown at a brisk pace over the last few years, it has to deal with a fair share of challenges. The biggest is its curtailed shelf life. “This limits geographical expansion,” contends Narayanan, adding that the brand needs to set up manufacturing locations closer to the centres of demand. “This, in turn, brings in challenges of ensuring consistency in manufacturing across locations,” he adds. The second big task is ensuring consistency in service. A wide franchise network is a huge challenge, and the Kamaths have seen how this factor played spoilsport after 2014. Third, ice cream is an impulse product. Consumers constantly seek innovation in products, formats, and flavours. “They need to consistently fire on all cylinders,” he says.

Siddhant reckons a different kind of challenge for the brand. Naturals, he underlines, needs to ensure that it keeps doing what it has been over the last four decades: Slow and steady growth. “There is no need to sprint,” he says. There is also no need to do what other regional brands might opt for at some stage of life: Outside capital, pan-India aspirations, and initial public offering (IPO). “When do you eat a second cup of ice cream? Only when you have finished the first, right?” he asks. The brand too needs to expand its footprint in Maharashtra, and adjoining states. “I am in no hurry. Naturals will grow at a natural pace,” he says.