Indian Dairy Industry

INDUSTRY OVERVIEW

India is the world’s largest producer of dairy products

The largest milk-producing animal population of over 118 million

The country accounts for more than 13% of world’s total milk production

CAGR of 5% from 138 million tonnes in 2014 to 200 million tonnes in 2022 #DEE

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DIFFERENT CATEGORY OF PRODUCTS

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VISION & MISSION

VISION: Amul’s vision is to provide more and more sa

tisfaction to the farmers, their customers, employees and distributers.

MISSION: We at GCMMF endeavour to satisfy the taste

and nutritional requirements of the customers of the world, through excellence in marketing by our committed team. Through co-operative networking, we are committed to offering quality products that provide best value for money.

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CRITICAL SUCCESS FACTORS

Supply chain Competitive and penetrative

pricing Distribution Acquisition or production of high

quality cattle feed High quality raw milk Kiosks Legal and marketing issues Research and technology

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KEY CHALLENGES Small Holder Level (Farmer level) Lack of good quality animal feed. Lack of animal health care facilities. Low genetic potentiality of animals. Collection Level (Farmer to Companies) Involvement of too many intermediaries. Lack of infrastructure. Manipulation of quality of milk by farmers.Processing Level (MANUFACTURING, TETRA PACK) Absence of quality standards. Adulteration and foods safety. Lack of trained and skilled workers. #DEE

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KEY CHALLENGES (CONTD)Storage and Logistics level

Lack of cold storage facilities Gap in cold chain and transport facilities

Co-operative Level Less number of member farmers Inefficient services Insufficient infrastructureMarketing challenges Majority of the market is still unorganized Customer base Less penetration to the rural market

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SWOT• Demand profile: Absolutely optimistic.• Margins: Quite reasonable, even on packed liquid milk.• Flexibility of product mix: Tremendous. With balancing

equipment, you can keep on adding to your product line.• Availability of raw material: Abundant. Presently, more

than 80 per cent of milk produced is flowing into the unorganized sector, which requires proper channelization.

Strengths

• Perish ability: Pasteurization has overcome this weakness partially. UHT gives milk long life.

• Logistics of procurement: Woes of bad roads and inadequate transportation facility make milk procurement problematic.

• Competition: With so many newcomers entering this industry, competition is becoming tougher day by day.

Weakness

• Value addition: There is a phenomenal scope for innovations in product development, packaging and presentation. Given below are potential areas of value addition:

• Steps should be taken to introduce value-added products like shrikhand, ice creams, paneer, flavoured milk, dairy sweets, etc.

• A lateral view opens up opportunities in milk proteins through proteins, further opening up export opportunities.

• Yet another aspect can be the addition of infant foods, geriatric foods and nutritionals.

Opportunities

• Milk vendors, the un-organized sector: Today milk vendors are occupying the pride of place in the industry. Organized dissemination of information about the harm that they are doing to producers and consumers should see a steady decline in their importance.

• All that needs to be done is: to innovate, convert products into commercially exploitable ideas. All the time keep reminding yourself: Benjamin Franklin discovered electricity, but it was the man who invented the meter that really made the money.

Threats

SUSTAINABLE BUSINESS MODEL

First, it must be commercially successful

Second, a sustainable business model is future ready

Third, it must be part of a sustainable society.

HOW WE CAN DO THIS

Our consumers Through access to safe,

nutritious, high-quality products.

We value consumer trust and relationships, and we innovate

To meet the full range of global dairy consumer needs.

Our planet Through the stewardship and

responsible use of natural resources. We rely on ecosystems and are committed to their health.

We manage our impacts on air, biodiversity, land & water through the conservation of resources & we strive to improve our footprint.

SUSTAINABLE BUSINESS MODELOur communities Through contributing,

participating and investing Where we live and

operate. Our businesses operate safely, maintain agricultural heritage and support community health and development

Through the provision of educational, social and economic opportunities.

Our employees Through ensuring a safe

and respectful workplace. We value the people on our

team. We commit to providing

safe and fair labour practices and equitable compensation and providing employees with training and development

SUSTAINABLE BUSINESS MODELOur businesses Through a focus on long-

term economic vitality. We manage for risk,

prosperity and quality of life of our farms, families, communities and stakeholders.

We strive to ensure our businesses are attractive to successive generations.

Our cows & buffalos Through animal

stewardship. Our animals receive the

greatest respect, care, health and comfort throughout their lives.

Dairy farmers understand that healthy and productive cows provide high-quality milk.

Different Gaps

Revamping the cooperative laws Recognising federalism in cooperatives Introducing integrated food laws Adulterations Quality and Standards

I. Following TPM, TQM & SIX SIGMA

II. Adopting food laws , environmental standard

III. Adopting HACCP Eco friendly measures Packaging

Different Gaps

Skill Requirements and Skill Gaps storage and transportation cold chain facility Distribution networks Operational aspects( manpower) Infrastructural problems

i. plant machinery & components

ii. Industry dependence on imported machinery

Different Gaps

Scientific farms

a. Need to develop “farm culture”( cattle more in numbers)

b. Breed development will lower the milk cost & encourage the farmers to adopt animal rearing

Government support Elimination of production quotas by the EU

IDEA DEVELOPMENT

The first step in any product development is of course the idea.

It’s one thing to have an idea; it’s another altogether to develop it.

But once you have your idea well established, there are some very important steps to pursue, including the design of a business plan framework which encompasses the development of procedures, milestones to achieve, estimates of financial aid required, and an assessment of training needs.

PRODUCT DEVELOPMENTBusiness Analysis

1. Preliminary evaluation of the market Decisions related to regional/global positioning need to be made. Things like format, prices,

quality, packaging and selling points need to be established. Will it be sold in retail stores or available only to hotels, restaurants and other foodservice institutions?

2. Preliminary technical evaluation Following the market assessment is the technical evaluation. A technical pre-feasibility analysis

should be completed, enabling you to establish R&D needs along with defined steps to take, such as assessing associated risks, and market and regulations alignment..

3. Market analysis and feasibility study Based on your preliminary market evaluation, detailed market and feasibility studies are needed.

This will help determine your positioning strategy, evaluating the cost of sale and the profit margin. As well, it is an important step in establishing a strategy to present the product to consumers and promoters.

4. Company concept, business model and business plan This is the document that brings together all the research and preliminary work done so far,

including a list of stakeholders who have offered their services. The business plan becomes a guide for the project, a document you refer to and use for information purposes.

PRODUCT DEVELOPMENT Commercialization

1. External product testing: The Consumer Testing the product in the lab is an important step, but the one that really counts is

product testing with actual consumers. The consumer buys your product, eats /drinks your product, and hopefully, recommends your product; therefore, it’s important to get the consumer’s feedback on every aspect.

2. Marketing Plan This is the part that involves the marketing mix: product, positioning, place, price,

promotion. These are key areas to plan for when you are preparing to launch a new product.

3. Maintenance Just because your product is on the market does not mean your job is done.

Maintaining quality control, customer service, and distribution strategies on par with your objectives should be a constant..

PROTOTYPE DEVELOPMENT

1. Prototype development

Once the idea development process is complete, it’s time to develop the product, or at least a sample or prototype of the product.

2. Product testing and organization of production

Now that you know who your market is, how you want to position your product, what it’s going to cost, and more importantly, what your profit may be, it’s time to test the product. This involves quality assurance, quality control, process control, bench top trials, taste-testing and pilot scale trials.

SOME EXAMPLES OF NEW PRODUCT DEVELOPMENT

HP Hood launches low sugar, low-cal milk beverage HP Hood LLC, based in Lynnfield, Mass., introduced a milk beverage called Milk Wise, available in New England and upstate New York. The beverage contains fewer calories, less sugar and more calcium than traditional milk, according to the company.

DAIRY INDUSTRY VALUE CHAINStakeholders

Key considerations

Feed producers

High input feed & grain costs significantly increase the production variable costsShort and medium term climatic conditions

Dairy producers

High dependence on climatic changesHigh input costs associated with production and farm management as well as volatile retail prices inhibit producers from increasing production

Dairy processors

Increased pressure on marginsAlternative supply arrangements by supermarkets (private labels) leading to supply chain complexities

Dairy productmanufacturers

Large inventories of unallocated dairy produceCompetition from local and private players

Dairy exporters

Demand surge in emerging marketsChallenging production conditions and high operational costs resulting in substitution risks

Retailers Consumers remain value-oriented and are open to considering non-branded products spurring the growth of private labelsLow food price inflation as retailers continue to compete on price and focus on private label strategies

Marketing mix

PRODUCT Product description Target market and target customers Goals Features

Traditional

• Paneer• Butter• Pure ghee• Khova• Cream• Butter milk/lassie• Fresh milk

Value Added

• Processed cheese• Infant food• UHT/FLV milk• Dessert mixies• Ice cream• Tetra pack/lassie• Dairy whitener/condensed milk

PRICE

Pricing  decisions are ones that could have incredible impact on marketing organization.

Price strategies that are not built up under careful consideration could lead the company to both financial loss and declined market share.

CUSTOMER SATISFACTION(PRICING)

The packaged milk industry should create packaging solutions that save on raw material and reduce the costs

Pricing of packaged milk compared to loose milkThe price of packaged milk has frequently increased over the last few years. A litre of full-cream milk now costs Rs 44. Similarly, toned milk prices have increased to Rs 34 per litre and double-toned milk to Rs 28, while the price of loose milk ranges between Rs 28 and Rs 32 per litre

The government’s initiative to improve animal productivity should help in the long-term

Factors influencing rising inflation are rising wages, devaluation leading to increased import prices, increasing raw material prices, declining productivity and higher taxes.

PLACE

Place (the term does not refer to business location itself but rather the customers’ location)

Channels for effective and efficient products distribution He early stage of cows importing, herd control, veterinary

care, disease prevention and treatment to milking, the fresh milk is transported and stored by cooling tank trucks at 2-4 degrees C in order to best preserve the nutrients

PROMOTION

Promotion in exclusive outlets Promoting events Mass media and print media Women oriented promotion such

(mall activities)

(salon and spa) Social media

MOTHER DAIRYObjectives Increasing brand

awareness among the targetted audiences

Increase fan base for the company

Increase fan engagements for the company

MOTHER DAIRYResults The Mother Dairy Ice Creams ‘Ice Truck Grabber’ game

application was live on the Facebook page and ran for a period of 2-3 months.

During this period, the response was overwhelming, on all parameters, the campaign was a success. Few important numbers are given below.

Parameter Time period Number No. of New 3 weeks 12,000+ New Likes in 3 weeks.

LIKES No. of entries 3 weeks Over 1,000 entries in all. to the contest 9 winners got Mother Dairy Ice Creams No. of winners 3 weeks Goodies.

15 Social Media Case Study – Mother Dairy Ice Creams.

PRODUCT INNOVATION

Organic milk Adoption of digital technologies (e.g. Ghowardhan) Extended shelf life (ESL) products and ultra-high

temperature (UHT) milk, Advanced manufacturing processes and technologies Develop niche products catering to health conscious

consumers

AMUL RECEIVES GREEN GLOBE FOUNDATION AWARD GCMMF received this award for its mass tree plantation drive

and contribution to environment by the milk producers of Gujarat

30 lakh milk producers of Gujarat have planted more than 312 lakh trees in 15000 villages

Amul has shown its concern, awareness and commitment for betterment of environment

Has set an example for all the cooperatives and other institutions to turn India green in the era of global warming and environmental crisis.

NESTLE ECO-FRIENDLY ALTERNATIVE PACKAGING (BOTTLE ) It’s environmentally friendly bottle shape uses at least

15% less plastic They are coming up with a newer version that will use

30% less plastic The plastic they do use is thinner so it is easier to

recycle these bottles The best eco-friendly alternative is a sustainable bottle,

which you fill with water you filtered yourself.