Sweet tooth: Selling ice cream like a hot cake

KARACHI: 

Some business ideas make the news for their innovation. Some do due to their approach and aggressive expansion.

In what may inspire the next generation of entrepreneurs, Alpine Gelato – a Hyderabad-based chain of ice cream parlours – is setting new standards in the ice cream business at a retail level despite the challenging environment that discourages investment.

It may still be a relatively unknown brand for most living in Karachi but the chain is rapidly increasing its footprint in the city. In fact, Alpine Gelato is easily the fastest growing ice cream retail chain in Karachi.

Having already tapped the market in Hyderabad, this local ice cream chain entered the provincial capital only recently. A year into its launch, it is already operating five outlets in the city and plans to open four more by the end of this year. This is, however, just the beginning.

All the five outlets currently get their supply from the Hyderabad factory. However, the owner has already bought a 2,500-yard plot at the National Industrial Park, Korangi Creek for its new manufacturing facility, which is expected to be operational in 2015 – a strong indication of the company’s expansion plan for the country’s largest consumer market.

“There should be at least 25 outlets of Alpine Gelato to cover a market the size of Karachi,” the Managing Director Muhammad Shahzad told The Express Tribune in a recent interview at his Korangi outlet.

Karachi is known for its hostile environment for businesses but Alpine Gelato’s rapid growth and expansion plan show strong resilience to challenges, such as power outages, violence and the worst of all – money extortion threats.

“There is no denying that the business community is facing many challenges but we should look for opportunities even in these difficult times,” the 46-year-old said. “If the situation was better, wouldn’t all the multinationals be here?” he asked.

A 2011-startup, which is looking good to expand across Karachi, has done well in Hyderabad by changing the way ice cream is sold – they raised the quality bar while keeping prices low forcing competition to improve their businesses.

This combination of a high-quality product coupled with affordable prices – Rs40 per scoop of 80 grams – is the sole reason for an overwhelming response the first outlet in Karachi received. It led competitors to even renovate their shops, make workers wear a uniform and improve hygiene to re-attract customers who were lost to Alpine Gelato in a matter of weeks.

With the Korangi outlet drawing a huge response, they opened four more outlets in Landhi, Shah Faisal Colony, Model Town (Malir) and North Nazimabad in a year – they are planning to open one each in Liaquatabad, Nazimabad, Azizabad and Shadman Town this year.

Reasons behind the scoop

So what has been driving this rapid growth for a brand that is selling a scoop for as low as Rs50, which was increased this year after being Rs40 last year.

“It is not viable to run a single outlet by selling a scoop for Rs50,” Shahzad said. “We are using economies of scale.”

This is mainly why all of Alpine Gelato’s outlets are in areas where purchasing power is low but the footfall is very high. In other words, the company chose localities that make most of the city’s population.

The company focuses on quality standards that are followed by leading brands, such as Baskin-Robbins and Mövenpick, said Shahzad, but sells the product at a price that even the labour class can afford.

It offers more than 22 flavours – blueberry, belgian chocolate, mango, crunch, pineapple and pistachio being the hot-selling items – and a customised topping (at Rs10 per cup).

While he looks set to meet the target of 25 outlets in Karachi, Shahzad said he would certainly want to expand to other cities in the future.

“Lahore will be our next destination but that will require a factory in Punjab – which is not part of the current plan,” he said.