Today, India is ‘The Oyster’ of the global dairy industry. It offers opportunities galore to entrepreneurs worldwide, who wish to capitalize on one of the world’s largest and fastest growing markets for milk and milk products. The Indian dairy industry is rapidly growing, trying to keep pace with the galloping progress around the world. The liberalization of the Indian economy beckons to MNC’s and foreign investors alike.

India’s dairy sector is expected to triple its production in the next 10 years in view of expanding the potential for export to Europe and the West. Moreover, with WTO regulations expected to come into force in coming years all the developed countries which are among big exporters today would have to withdraw the support and subsidy to their domestic milk products sector. Also, India today is the lowest cost producer of per liter of milk in the world, at 27 cents, compared with the U.S’ 63 cents, and Japan’s $2.8 dollars. Also, to take advantage of this lowest cost and increasing production of milk, MNC’s are planning to expand their activities here.

Business Potential in Dairy IndustryIndian dairy sector contributes the large share in agricultural gross domestic products. Presently there are around 80,000 village dairy cooperatives across the country. The co-operative societies are federated into 210 district milks producer’s unions, which has turned to the 29-state cooperative dairy federation. In terms of total production, India is the leading producer of milk in the world followed by the USA.

Although milk production has grown at a fast pace during the last three decades (courtesy: Operation Flood), milk yield per animal is very low.

The main reasons for the low yield are:

• Lack of use of scientific practices in milking
• Inadequate availability of fodder in all seasons
• Unavailability of veterinary health services

The transition of the Indian milk industry has been led by the efforts of National Dairy Development Board’s (NDDB) “Operation Flood” under the former Chairman of the board Dr. Kurien. It was launched in 1970; Operation Flood has led to the modernization of India’s dairy sector and created a strong network for procurement processing and distribution of milk by the co-operative sector. Per capital availability of milk has increased from 132 gm per day in 1950 to over 270 gm per day in 2010. The main thrust of Operation Flood was to organize dairy cooperatives in the milk shed areas of the village, and to link them to the main markets for milk. The efforts undertaken by NDDB have not only led to enhanced production, improvement in methods of processing and development of a strong marketing network, but have also led to the emergence of dairying as an important source of employment and income generation in the rural areas. It has also led to an improvement in yields, longer lactation periods, shorter calving intervals, etc. through the use of modern breeding techniques. Establishment of milk collection centers, and chilling centers has enhanced life of raw milk and enabled minimization of wastage due to spoilage of milk.

Indian companies are preparing themselves to meet international standards and other non-tariff barriers. Planners are taking measures to meet the sanitary and Phyto-sanitary specifications prescribed by Office International des Epizooties (OIE) under the auspices of the World Trade Organization (WTO) – which range from the quality assurance of processed dairy products to the health status of livestock.

Major Players

The dairy industry is dominated by the co-operative sector. About 60% of the installed processing capacity is in the co-operative sector.

The NDDB is a major player in the market with its major brand, Amul. Followed by leading brands like Nestle, Mother Dairy and Britannia are in the race to tap the growing market. SmithKline Beecham Consumer Healthcare, Nestlé India and Heinz India are among the large MNCs that dominate the high-value milk products market. Other players include Indiana Dairy Specialties, Jagatjit Industries Ltd and various other state cooperatives.

Some dairy plants have production of mithais on a commercial scale. Some national brands like Haldiram, Bikanervala, K C Das, Chitales, Ganguram, Brijwasi, Agarwal Sweets etc. are getting wide acceptance because of consistent quality encouraged by the growing market and cashing on brand value. Dairy companies are planning major expansion in various cities with new brands suited to local taste and preferences and realizing higher prices with higher sales volumes and product safety. The milk and dairy products segment is set for upgradation of cold-storage chains for expansion. Mother Dairy, a wholly owned subsidiary of NDDB plans to make strong presence in the market of milk and milk products under the Mother Dairy brand through retail outlets across the country in addition to its own 300 outlets with provision of cold storage and cold chains.

Potential for further growth

India is the world’s highest milk producer and all set to become the world’s largest food factory. In celebration, Indian Dairy sector is now ready to invite NRIs and Foreign investors to find this country a place for the mammoth investment projects. Be it investors, researchers, entrepreneurs, or the merely curious – Indian Dairy sector has something for everyone.

In other countries, dairy industries have attempted to reach lower-income consumers by variation of compositional quality or packaging and distribution methods or blending milk in vegetable ingredients in formula foods for vulnerable groups. For instance, pricing of products rich in butter fat or in more luxury packaging above cost level so as to enable sales of high protein milk products at somewhat a reduced price has been widely practiced in developing countries. These policies need to be brought in the Indian Dairy scenario.

3 A’s of marketing – availability, acceptability and affordability, Indian dairying is already endowed with the first two. People in India love to drink milk. Hence no efforts are needed to make it acceptable. Its availability is not a limitation either, because of the ample scope for increasing milk production. It leaves the third vital marketing factor affordability. How to make milk affordable for the large majority with limited purchasing power? That is essence of the challenge. One practical way is to pack milk in small quantities of 250 ml or less in polythene sachets. Already, the glass bottle for retailing milk has given way to single-use sachets which are more economical. Another viable alternative is to sell small quantities of milk powder in mini-sachets, adequate for two cups of tea or coffee.

Emerging Dairy Markets – 

  • Food service institutional market: It is growing at double the rate of the consumer market
  • Defense market: An important growing market for quality products at reasonable prices
  • Ingredients market: A boom is forecast in the market of dairy products used as a raw material in pharmaceutical and allied industries
  • Parlor market: The increasing away-from-home consumption trend opens new vistas for ready-to-serve dairy products which would ride piggyback on the fast food revolution sweeping the urban India.

Leave a Reply

Your email address will not be published. Required fields are marked *