The Economics of Gelato

In the summer of 2007, the Quaker and I were both in Delhi, interning at the Supreme Court. This was when the first gelato chain stores opened in India, and of course we had to try it out. Of all the places we could choose for our first taste of gelato, we had to pick Khan Market, where one scoop was 120 rupees.

“How is gelato different from normal ice-cream?” we asked the man who was doling it out.

He said, “It has less air pressure.”

At the time, neither the Quaker nor I knew enough about gelato to gauge what he was trying to tell us, to wit, that gelato is denser because it is churned at a slower speed than ice cream, so not as much air is whipped into the mixture. In any case, we did not have 120 rupees, not even between the two of us. The Quaker said, “If I have to pay a hundred and twenty bucks for lower air pressure, then bring on the air pressure.” And we walked out.

That was my first encounter with gelato.

Since then, my relationship with gelato has improved, mostly due to the efforts of the Gelato Italiano chain of stores. They have this scheme which will be remembered with a quiet prayer of gratitude by legions of hard-up gelato-lovers. On the first of every month, they sell scoops of the Flavour of the Month for just nine rupees. The only catch is that the Flavour of the Month is usually the worst flavour on offer. Think Rose-Almond (October, icky-sweet), Honey-Coconut (June, downright weird) and Guava-Strawberry (July, the less said the better).

My friends are cheapskates too, so I know a number of people who queue up religiously every month, whatever the flavour. Sometimes we discuss the possible economic logic behind the scheme. I think the company hopes that lots of people will come to buy the cheap gelato and some of them will be tempted into trying other not-so-cheap flavours. Priyanka, who is a conspiracy-theorist, thinks that they lump all of the past month’s leftover gelato and brand it as a new flavour, and that the KGB is behind this. Pratiti, who is studying Statistics, thinks it is a kind of pilot survey. Sujaan, who had Psychology in high school, thinks this is a social experiment – they will keep producing increasingly worse flavours every month, the idea being to determine how low people will stoop to get a discount. His theory, attractive though it was, suffered a setback yesterday. Choco Crunch, the Flavour of December, is actually edible.