Can audacious ice cream startup Hocco hit Rs 500 crore in sales this year?

What does it take to carve out space for a new ice cream brand in India’s crowded market? In this engaging interview, Ankit Chona, founder of Hocco, reveals everything from naming the brand and market strategy to lessons learnt in creating a challenger brand.

Here are the excerpts from the conversation. To watch the complete interview, visit YouTube.

Sreekant Khandekar: Why Hocco? What does it mean – if it means anything!

Ankit Chona: To be honest, it stands for something that has been force-fitted. Our family has a soft spot for the alphabet H, so we made up Hocco, which stands for House of Chona Collaborative. It took a lot of brainstorming, I can tell you! 

Like other new age brands, we wanted the name to have two syllables. Look at brands like Zomato, Swiggy, and Uber – they don’t mean much, but they roll off the tongue easily. And that’s how Hocco was created.

Sreekant Khandekar: You were born into the ice cream business. You know it inside out. What drew you back to it? What was the opportunity you saw in a market dominated by big, well-established brands like Amul, Mother Dairy and Kwality Wall’s?

Ankit Chona: People point out that many new brands have entered the space. There are lovely brands such as Noto, Get-A-Way and Minus 30, but they are competing either in the health or the ultra-premium space.

In the last decade there has been no launch in the space where the real consumption is happening – someone who has decided to challenge the top five brands and do something new and cutting-edge at the Rs 10 and Rs 20 price points. And that’s where I saw the big gap.

Mainstream companies were not innovating. They were merely launching one new flavour, one new product. There was no challenger brand. We started with a plant which could manufacture 50,000 litres of ice cream per day from Day One. And now we are scaling up to almost 350,000 litres per day for the next summer. It is this scale that has paid off.

It is a cliche, but we are very innovation-led. We have launched products that nobody else has. It’s not like they can’t do it, but they choose not to because the production process for some of these is cumbersome.

Sreekant Khandekar: Because of the low temperature at which it has to be produced and distributed, ice cream seems like a tricky business. On the question of pricing, aren’t your products priced at a premium of 20-30% over mainstream brands? 

Ankit Chona: No. The major brands have about 150 SKUs (Stock Keeping Units). Everybody will have a choco bar for Rs 20 and a mini choco bar for Rs 10. These are the vanilla products, right? Price elasticity here is low, so our products are priced competitively.

We have a differentiated strategy under which we have products that nobody else has – for example, our Mango Amchi comes for Rs 150. 

Where we are priced higher than the competition is where there is no competition! Where everybody has a biscuit sandwich, we have a cake sandwich. It is more expensive to make, but we can price it at a premium.

Sreekant Khandekar: Got it. Are you targeting a younger audience or the same kind as the market leaders?

Ankit Chona: The ice cream-consuming audience is very, very varied. Everybody wants to talk to the younger generation, but we don’t believe in talking to a specific age group. 

Most of the ice cream brands are very serious. They tend to get a little emotional in their communication. We want to be associated with a more fun narrative. 

We’ve come up with a hip hop song for our ice cream. Our mascot speaks to children. This Diwali, we are doing a collab with one of India’s largest FMCG brands to launch a mithai-based ice cream. That’s the kind of stuff we are doing to target all the segments of society, irrespective of age. We have a whole team that is trying to actively interact with consumers constantly. We want them to speak to us. 

Sreekant Khandekar: You grew your revenue 7x from Rs 30+ crore in the first year to more than Rs 220 crore in the second. That’s a crazy scale-up. I imagine you are well funded; you also understand the business very well. Still, why was it necessary to accelerate so quickly? Or were you just impatient?!

Ankit Chona. It was a little bit of everything. But as my investors would say, when you have tailwinds, make the most of them. When you have headwinds, that’s the time to consolidate; you’ll have time to cut costs. 

Sreekant Khandekar: What are these tailwinds?

Ankit Chona: The biggest factor has been the team that we’ve put together. You could say that they are the royalty of the business. I am very proud of them. Their goodwill together with the Chona name, which my father has earned, is what we are cashing in on. We are delivering on that, too. That plus the innovation we are doing is getting the retailers to queue up to sell our products. 

Sreekant Khandekar: I remember reading that the category has been growing rapidly post-Covid. Why is that? 

Ankit Chona: The short answer to that is ‘Nobody knows’! 

Ice cream consumption in India was very low. In almost half of India, power was never available for more than 12 hours a day. So ice cream could not become an item of daily consumption – it was a luxury.

The government has been subsidising the establishment of cold storage facilities in a big way. That has also had a big impact on the distribution. Meanwhile, India has gone from being power-deficient to being power-surplus. All these changes in infrastructure have been great for the business.

The other big reason for the growth has been the advent of quick commerce. Quick commerce has just changed the game. It has democratised the entire supply chain massively.

Sreekant Khandekar: Could you explain that? 

Ankit Chona: I would say that 99% of Indian homes have one refrigerator or none at all. In its freezer, there is ice, fish, chicken, curd and perhaps aamras. Ice cream has to compete with all these items for freezer space. That’s why, though ice cream is an impulse category, earlier nobody could order it at home.

Now, if you want to have it post-dinner, you order it via Swiggy Instamart or Zepto and only as much as you want to eat. You don’t need to store it. That has been a big change. 

Sreekant Khandekar: What percentage of your sales come from quick commerce? 

Ankit Chona: This financial year it would be between 15 and 20%. We are very focused on q-commerce. We have separate SKUs, separately priced, handled by a separate team. You can’t sell low-priced SKUs online because the economics don’t make sense. 

Sreekant Khandekar: You think that kind of percentage would be true for mainstream brands? 

Ankit Chona: I think the weighted average would be around 10%. 

Sreekant Khandekar: When you went from Rs 30 to Rs 220 crore, did most of the growth come from wider distribution? And what’s your sales target for this year?

Ankit Chona: Obviously, it came from wider distribution, but the bottom line is that we’ve grown in every market that we’ve entered.

To give you some context, in the first year out of Rs 30 crore, we did about Rs 28 crore in Gujarat. In year two, out of Rs 220 crore, Gujarat contributed Rs 160 crore. This year, we have already exceeded last year’s numbers, and we are on a trajectory to cross Rs 500 crore in revenue this year. 

Sreekant Khandekar: That’s impressive. If you do Rs 500 crores, where would you stand in the hierarchy of ice cream brands by sales? 

Ankit Chona: I think we’d be about No. 9 or No. 10. 

Sreekant Khandekar: How large is the market?

Ankit Chona: The number I keep hearing is about Rs 25,000 crore. 

Sreekant Khandekar: Hocco has its own cold chain distribution?

Ankit Chona: We are probably the only company in the past decade which began with its own cold chain from Day One. We started with our own fleet, our own cold rooms and our own feet on the street. It was a big investment and a big risk. I am sitting here talking to you about it because that risk paid off!

Normally, startups begin with a few SKUs and rent one truck. If it does well, you rent one more truck and so on. That’s the normal way. 

Sreekant Khandekar: When you look back, what are the advantages and disadvantages of being a latecomer in a relatively mature business?

Ankit Chona: There are many disadvantages. The biggest is that you have to fight for freezer space, for real estate, at the shop front. Convincing the shopkeeper to remove a competitor’s deep freezer and put yours instead is difficult. Or you have to persuade him to add one more deep freezer – or you have to let him put your product in a competitor’s freezer! But that’s the fun of competition, right?

Also, the cost of setting up a manufacturing plant today is much higher than it was 10 years ago. A lot of our machines are imported from Europe, and the euro has appreciated from Rs 88 to Rs 103 in the last few months.

There are advantages, too, and the biggest of them is that we understand the industry and know what is lacking in terms of innovation. So, our probability of success is higher. We know how to differentiate from the clutter. We know how to learn from other people’s mistakes. And when you are a new company, you have nothing to lose anyway!

People’s willingness to experiment has gone up significantly. To give you some context, the top sellers in India are vanilla, butterscotch, dry fruit and chocolate. Today they will experiment with dark chocolates or Sicilian pistachios and will pay a significant premium for it. 

Sreekant Khandekar: You have seen the ice cream business for a long time. How have consumer attitudes changed?

Ankit Chona: People’s willingness to experiment has gone up significantly. To give you some context, the top sellers in India are vanilla, butterscotch, dry fruit and chocolate. Today they will experiment with dark chocolates or Sicilian pistachios and will pay a significant premium for it. So, it’s a lot of fun to be in the industry right now.

For example, we launched a kunafa (a traditional Middle Eastern dessert) sandwich ice cream. It sold so well that we had to discontinue it because we couldn’t manage the supplies of kunafa!

The other phenomenon is that a segment of society has become health conscious, so that subcategory is growing at a significantly more rapid pace than the rest of the business.

Sreekant Khandekar: Healthy ice cream is still a very small segment, isn’t it? So, consumption is exploding, but which segment is growing faster – in-home or eating out?

Ankit Chona: As a percentage, eating out still remains much larger. It would be about 70% of the market, but at-home is increasing faster thanks to quick commerce. There is a degree of saturation on the eating-out aspect – after all, how many more pushcarts can Delhi take, right?!

Hocco is an anomaly because we are new. We will grow in every which way, but for the legacy players, their real growth is coming from at-home consumption.

Sreekant Khandekar: When you go from Rs 220 crore to Rs 500 crore this year, where will that extra Rs 280 crore come from? Which are the geographies?

Ankit Chona: We are in seven states now, and I would say that the best-performing are Maharashtra and Rajasthan. 

Sreekant Khandekar: Are you moving into contiguous states first?

Ankit Chona: Yes, but now we are also putting up a plant in North India, so that will become one of our focus markets. The plan is clear: in the next three years we want to be a pan-India player of some size, which would mean a topline of about Rs 1,000 crore.

Sreekant Khandekar: That’s ambitious. What’s your broad view of advertising and promotion – of digital marketing and social media? 

Ankit Chona: We don’t want to go the whole endorsement route and get celebrities to dance around the product. We get a lot of these offers of equity for endorsement. We’ve shied away from that.

What we have spent all our might and mind behind is social media and digital marketing because that is where you can actually pick up conversations with consumers. Instead of one big campaign for the year, we are doing something new every month. That’s working for us. And we are projecting our products as the hero and hoping people will talk about them. 

The first lesson has been that it is not easy to create a brand!

Sreekant Khandekar: Your experience has been unique. You grew up in the family ice cream business. You managed one of India’s leading brands, then you exited it.

Then you became an outsider, a challenger in version 2.0 of your life. What does that feel like? And what have been the big lessons so far in the Hocco journey? 

Ankit Chona: The first lesson has been that it is not easy to create a brand!

The other realisation has been that the momentum to get from 0 to 1 is way harder than from 1 to 100.

Sreekant Khandekar: What surprised you about that?!

Ankit Chona: Not surprised, but there is a reason why it takes 50, 60, 70 or 80 years to create a brand, right? So my first learning was that – I shouldn’t be saying this! – we sold our earlier brand way too cheap! 

It takes a lot to build a brand. My dad makes fun of me, saying, ‘You sold your first brand so that you could put all that money into the second brand?!’ The only one who’s laughing all the way to the bank is the government in terms of the taxes it has collected. I guess you live and learn! 

Sreekant Khandekar: So, creating a brand is damn tough. What else has surprised you about the Hocco experience? 

Ankit Chona: The other realisation has been that the momentum to get from 0 to 1 is way harder than from 1 to 100. You know, in the first year, putting together a team of 200-300 while revenue was zero….

Now everything is hunky-dory, but in those days I had a lot of sleepless nights. It was too much. Also just having faith and not questioning myself all the time… I think I aged five years in those five months before the launch!

The best part has been the team we have put together – I can’t be more grateful for that. 

Sreekant Khandekar: This has been a really interesting conversation, Ankit, and I look forward to interviewing you again as you head towards Rs 1,000 crore. Best of luck with that.

Ankit Chona: Thank you!