Hangyo gets $25m to set stage for future growth

• Established and new-age brands alike have been successful in attracting substantial investment, indicating a robust confidence in the sector.
• Companies that were once niche players are now scaling up and looking to enter new geographical markets or expand their product offerings based on consumer trends.

In a remarkable development for the Indian ice cream industry, Hangyo, a Mangaluru-based ice cream brand, has successfully raised $25 million (approximately Rs211 crore) from Faering Capital, marking one of the largest venture funding rounds for an ice cream brand in India to date.

The infusion of capital not only underscores the growing consumer appetite for frozen desserts in the Indian market but also highlights the emerging trend among investors to support innovative food brands with a strong regional presence.

Founded in 2003 by Pradeep Pai and Dinesh Pai, Hangyo is on the brink of a strategic transformation that promises to elevate its production capabilities, accelerate product innovation, and broaden its reach in key markets, particularly in southern India.

Uptick in demand

The ice cream market in India has been witnessing a significant uptick in demand, largely driven by changing consumer preferences, increased disposable incomes, and the proliferation of modern retail channels and e-commerce platforms.

Hangyo, with its diverse product lineup that includes cups, cones, sorbets, stick ice creams, tubs, and traditional kulfis, has positioned itself well to capitalize on this growing trend.

The company effectively utilises multiple distribution channels, including general trade, modern trade, and quick commerce platforms, thereby ensuring that its products are readily accessible to consumers.

With a robust presence in several southern Indian states—namely Karnataka, Tamil Nadu, Kerala, Goa, Andhra Pradesh, Telangana, and Maharashtra—Hangyo has established itself as a formidable player in the market.

The company boasts over 350 distributors and a retail network that spans more than 30,000 outlets. Such expansive distribution capabilities have allowed Hangyo to cater to a wide demographic, claiming to have served over 3 million consumers as of February of this year.

Hangyo’s profit soars

Financially, Hangyo’s performance has been impressive, particularly in light of the ongoing challenges posed by evolving consumer behaviour and competition.

The company reported a remarkable 50 per cent growth in revenue from operations, reaching Rs233 crore in FY23. In a testament to its operational efficiency and market relevance, Hangyo’s profit soared to Rs5.8 crore during the same period, an impressive nine-fold increase compared to previous years.

The growth trajectory not only reflects the company’s strong brand equity in its operational regions but also signifies its capability to adapt and flourish in a rapidly changing market landscape.

The recent funding round comes at a time when the ice cream segment is garnering interest from a plethora of investors. Established and new-age brands alike have been successful in attracting substantial investment, indicating a robust confidence in the sector.

For instance, brands like Hocco, NIC, and Go Zero have collectively raised significant capital, with Hocco securing $12 million, NIC attracting $31 million over two funding rounds, and Go Zero garnering $2.5 million in two funding rounds.

The trend suggests that investors recognise the lucrative potential within the ice cream market, driven partly by the paradigm shift towards health-conscious and innovative frozen dessert options.

Hangyo’s successful capital raise after more than a decade, with its previous fundraising occurring in August 2013, highlights the dynamic nature of the food and beverage industry.