Mumbai-based Varun Sheth loved digging into ice cream during his teens but hated the guilt trip that followed. His subsequent weight loss journey often saw him seeking healthy dessert alternatives that satisfied his sweet cravings while letting him remain within the health macros he needed to be in.  

While pursuing his education at New York's Culinary Institute of America, he came across Wells Enterprises' Halo Top low-calorie and high-protein ice cream that tasted delightful and had much fewer calories per pint than other indulgent brands like Ben & Jerry's and Haagen-Dazs.  

While Sheth's refrigerator would always have Halo Top because he loved its packaging and flavour profiles, he soon learned that the brand did a whopping $347.3 million in sales in 2017 by positioning itself as low-calorie ice cream targeting health-conscious customers.  

That was his Eureka moment, when Sheth realised he could use his culinary knowledge to whip up indulgent frozen desserts to suit the tastebuds of customers in India, a country that accounts for 17 per cent of the world's diabetes patients and which is seeing a rapid prevalence in obesity, especially among the younger generation. 

"We started NOTO in 2019 after observing the general movement towards fitness and wellness," he stated. Another reason that egged him to pursue this enterprise was the absence of more prominent players like Amul, Havmor, Kwality Walls, and Vadilal in the low-calorie ice cream domain, which would help him get the first-mover advantage.  

Sheth revealed that the company's revenues stood at Rs 8 crore in FY 21-2022, which shot up to Rs 25 crore in FY 22-2023. NOTO has already managed to rake in Rs 55 crore in the current fiscal and is on track to becoming profitable in another 12 months at this scale.

"We wish to go deeper within geographies where we have gained ground, make better use of our resources, improve manufacturing efficiencies as well as reduce our dependency on discounts and advertising to increase customer retention," Sheth noted. 

The brand's annual run rate stands at Rs 50 crore, and it hopes to double this by next summer, the peak season for ice cream companies. Sheth is unperturbed by the imminent entry of Reliance Consumer Products into the fray with its Independence ice cream brand.  

"We don't necessarily want to compete with the mass ice cream brands because we are targeting the health-conscious 100 million customers and not the entire 1.4 billion population in the country. We will not be able to beat them in price battles, but the real opportunity lies in offering better value-for-money products," he added. 

Breaking The Ice 

In March this year, NOTO raised $2 million in pre-Series A funding led by White Whale Ventures and Rainmatter. Before this, it had raised Rs 4 crores from investors like Titan Capital, Rockstud Capital, Venture Catalysts, Bollywood actor John Abraham, WEH Ventures, and other angel investors.  

Market research firm IMARC Group estimates that India's ice cream market, which reached Rs 194.1 billion in 2022, is expected to touch Rs 508.4 billion by 2028, growing at 17.5 per cent CAGR during 2023-2028. However, there is no precedent there for sugar-free, low-calorie, or vegan ice creams since it is a new category, in which indigenous brands dominate. 

This potential has caught the attention of investors, who are increasingly willing to back homegrown companies. Last year, Pune's Walko Foods, which owns the NIC natural ice cream brand, was in talks to raise around $37.5 million from private equity firms to drive its expansion plans. In December 2022, Mumbai's Get-A-Whey raised $2 million in a funding round led by Sky Gate Hospitality after bagging Rs 1 crore in the first season of the Shark Tank India reality show. 

Sheth claimed that NOTO has enough capital runway for another 12 months. "Our capital efficiency stems from our ARRs (annual recurring revenue), and it is 3X over the capital deployed," he revealed, adding that the company might consider another capital raise by this year-end. 

Sizzle In The Ice 

According to a report by market research company Wazir Advisors, conventional players in the ice cream market, like Amul, Unilever, Vadilal, Baskin Robbins and Cream Bell, are increasingly partnering with hyperlocal quick-commerce platforms like Blinkit and Zepto to expand their delivery footprint through dark stores as well as aggregators like Swiggy and Zomato.  

NOTO, which produces around 4 lakh units monthly in its Mumbai facility, too, depends on these platforms to further its customer reach. "Since we are currently focused on select cities, our distribution network is largely food-tech based. Working closely with Swiggy, Zomato, Zepto, BigBasket, InstaMart, and Blinkit helps us penetrate these markets and ensure product availability at all times," Ashni, Sheth's wife and NOTO co-founder, added.  

The duo believes customer acquisition costs through these platforms are much lower since the latter can drive product discoverability more efficiently and at scale. When customers intend to purchase specific food items, like ice cream, they often head to these apps by default, ensuring better sales than NOTO would get on its brand site. However, to reduce its dependency on a single channel, the company does plan to have an offline presence soon.