This summer, India is witnessing one of the most fierce litigations in recent memory.
Two of India’s largest companies have locked horns. Hindustan Unilever Limited (HUL), a consumer goods based company, has dragged India’s biggest dairy cooperative Amul (GCMMF), to the Bombay High Court over Amul’s airing of an allegedly inaccurate advertisement that denigrates Kwality Walls and other brands selling frozen desserts.
The controversial advertisement, “Pure moments deserve pure milk ice cream. Not vegetable oil”, is being aired by Amul since early March 2017.
— Amul.coop (@Amul_Coop) March 27, 2017
Kwality Walls claims that Amul’s advertisement dubiously implies that frozen desserts are made from ‘vanaspati oil’ a hydrogenated vegetable oil that is unhealthy. They said that their products do not use ‘vanaspati oil’ but other vegetable oils.
Amul, while responding to the legal notice, stated that their new campaign is an effort to educate consumers so that they can identify and differentiate between ice-creams and frozen desserts.
In the court, Amul argued that its advertisements were not disparaging as it did not refer to HUL or any of its products by name. HUL countered by stating that their advertisement was guilty of disparagement in general and creates a negative notion in the minds of consumers about frozen desserts. HUL made an interim request to ban the advertisement. However, the Judge, on hearing Amul’s counter arguments, refused to allow this plea.
The matter now awaits the final verdict post the submission of the arguments advanced by both the parties.
An old story
This tussle dates back to 2011 when the ‘Food Safety and Standards Authority of India’ (FSSAI) decreed that only products made with ‘milk fat’ should be termed as ice creams. The rest made with edible vegetable fat (vegetable oil, palm oil, coconut oil), along with milk solids should be termed and sold as ‘frozen desserts’.
Amul claims that despite this, many company selling frozen desserts do not specify or conspicuously highlighted this on their packaging. In another dispute, back in 2012, Amul had complained before the Advertising Council Standards of India (ACSI) that Kwality Walls was branding their products as ice cream in some advertisements. Alan Collaco, Secretary General of India’s self-regulatory body of advertising industry finally said that “the consumer complaints council concluded that the mention of Kwality Walls as an ice cream was misleading.” A spokesperson from Kwality Walls replied saying that the company would be replacing the words from ice cream to frozen desserts in the ads.
GCMMF Managing Director R S Sodhi said that “HUL’s present litigation was a ‘stunt’ to pressure and frighten them into submission. But they don’t know that we are backed by 36 lakh poor farmers who want to make consumers aware about the products they are buying.” He further added that in 2016 HUL had approached the ACSI objecting to their move of distributing pamphlets on this same issue. The ASCI had however ruled in its favour saying that Amul’s campaign “does not disparage the entire campaign of frozen dessert”.
The difference between ice creams and frozen desserts
Typically, all the contents of an ice cream and frozen dessert are the same except for the ‘fat’ used as a smoothening agent to add the creaminess texture to the product. Ice creams and frozen desserts, both contain milk in the form of milk solids that forms the basis of the product. They also have emulsifiers and flavouring agents. The difference arises in the type of smoothening agent used because while ice cream
Ice creams and frozen desserts both contain milk in the form of milk solids that forms the basis of the product. They also have emulsifiers and flavouring agents. The difference arises in the type of smoothening agent used because while ice cream’s agents are those that contain ‘milk fat’, frozen desserts use ‘vegetable fat’ such as palm or coconut oil. And this is what is the present question in dispute. Vegetable oil is used by some manufacturers as this helps reduce the production costs. While dairy fat costs around Rs 300 per kg, vegetable oil at the same quantity, could be obtained at one-fourth of this price.
The Market Statistics
The sales last year from the ice creams and frozen desserts combined was Rs 102 billion. Amul is the largest player with a market share of over 17%. According to Euromonitor, the sales are forecasted to rise 11% until 2021.
However, in the meantime, the competition has favoured the frozen desserts companies that have managed to price their products lower than ice creams. The profit margin in case of frozen desserts is higher than ice creams since their manufacturing cost is generally lesser. Hence giving them room to invest more in marketing and branding.
It now remains to see, whether the ice creams or frozen desserts feel the heat.