India is the largest producer of milk in the world, producing over 65 million metric tonnes per year in 2017. However, it also has the lowest milk yield per animal at 1.8 tonnes per year. The Indian dairy market is largely unorganized, with around 80% of the market being informal in 2017. The industry is expected to see revenue growth of 15% annually to reach $85 billion by 2020. Key challenges for competitors in the Indian dairy market include product quality issues, inadequate understanding of customer demand, limited brand awareness, and the dominance of large companies. The document outlines strategies that different players in the industry could adopt related to customers, products, pricing, channels, and governance.

1. India’s Evolving Dairy Landscape - Part I
May 2018
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2018 Universal Consulting India Pvt LtdCopyright ©

2. 2All Rights Reserved2018 Universal Consulting India Pvt LtdCopyright ©
India’s Dairy Metrics
Source: UCAnalysis
Largest
milk
producer
(~65Mn
mtpa
2017)
Lowest
milk yield
(1.8
tonnes/
animal p.a.
2017)
Lowest
share of
branded
products
(~22% in
2017)
Largely un-
organized
market
(~80% in
2017)
Industry
revenue
(US$ 85 bn
2017,
expected
CAGR of
15% by
2020)

3. 3All Rights Reserved2018 Universal Consulting India Pvt LtdCopyright ©
Highest Milk Production, Lowest Price
Milk production volume (MTPA)
Source: CIA World Factbook (www.indexmundi.com) , World Bank, International Monetary Fund –World Economic Outlook , www.ceicdata.com, UCanalysis
2.2
1.8
1.4
1.0
0.6
0
0.8
1.2
1.6
2.0
20 60 180140100-20
China
New Zealand
France
Denmark
Netherlands
Retail price of toned milk (US$/ltr)
Size of bubbleindicates Per Capita
Consumption in Kgs
India
USA
Brazil
Russia
UK
Australia
Note: All the data provided is for FY17

4. 4All Rights Reserved2018 Universal Consulting India Pvt LtdCopyright ©
Largest Cattle Population, Lowest Milk Yield
12
10
8
6
4
2
0
Source: CIA World Factbook (www.indexmundi.com) , World Bank, International Monetary Fund –World Economic Outlook , www.ceicdata.com, UCanalysis
Note: 1Cattle = Cows & Buffalos. 2All the data provided is for FY16.
IndiaBrazil
China
USA
Denmark
Netherlands
UK
France
Australia
New Zealand Russia
Milk yield (Tonnes/ animal/ year)
350300250200150100500
Cattle
(millions)

5. 5All Rights Reserved2018 Universal Consulting India Pvt LtdCopyright ©
Key Challenges for Competitors
Product
Challenges
Customer
Challenges
Governance
Challenges
Price
Challenges
1 2 3 5
Channel
Challenges
4
Source: UCAnalysis

6. 6All Rights Reserved2018 Universal Consulting India Pvt LtdCopyright ©
Marginally Profitable
B2C Customers
Untapped B2B
Customers
Subscaleproduction
capabilities
Inadequate
understandingof
demand
Limited brand
awareness
Inconsistent customers
for valueadded
products
Low bargainingpower
with retailers
Dominanceof large
companies
Inability to co-create
new products
Customer Challenges1
Source: UCAnalysis

7. 7All Rights Reserved2018 Universal Consulting India Pvt LtdCopyright ©
Differential Customer Challenges
Regional Co-
operative Societies /
Boards
National Co-
operative Societies/
Boards
Private Indian
Companies
Multinational
Companies
Inadequate understanding of
demand
Subscale production
capabilities
Inability to co-create new
products
Limited brand awareness
Inconsistent customers for
value added products
Low bargaining power with
retailers
Dominance of large
companies
High Low
Challenges
Strategic Groups
Source: UCAnalysis

8. 8All Rights Reserved2018 Universal Consulting India Pvt LtdCopyright ©
Product Challenges
Inconsistent Quality
and Productivity
Unplanned Basket Of
Products
Poor cattle farm
automation
Poor collaborationwith
farmers
Lack of cold chain
infrastructure
Slow adoption of
production technology
Narrowportfolio
Unavailabilityof
product SKUs/ variants
Poor retailer
infrastructure
2
Source: UCAnalysis

9. 9All Rights Reserved2018 Universal Consulting India Pvt LtdCopyright ©
Differential Product Challenges
Regional Co-
operative Societies /
Boards
National Co-
operative Societies/
Boards
Private Indian
Companies
Multinational
Companies
Poor cattle farm
Infrastructure
Slow adoption of production
technology
Poor collaboration with
farmers
Lack of cold chain logistics
infrastructure
Poor retail infrastructure
Narrow portfolio
Unavailability of SKUs/
variants
Challenges
High Low
Strategic Groups
Source: UCAnalysis

10. 10All Rights Reserved2018 Universal Consulting India Pvt LtdCopyright ©
Price Challenges
Low Return On Marketing
Expenditure
Less marketing expenditure for
valueadded product
Low price offering
Low volume sales for value
added product
3
Source: UCAnalysis

11. 11All Rights Reserved2018 Universal Consulting India Pvt LtdCopyright ©
Differential Price Challenges
Regional Co-
operative Societies /
Boards
National Co-
operative Societies/
Boards
Private Indian
Companies
Multinational
Companies
Low price offering
Low volume sales for value
added product
Low marketing expenditure
for value added products
Challenges
Strategic Groups
High LowSource: UCAnalysis

12. 12All Rights Reserved2018 Universal Consulting India Pvt LtdCopyright ©
Channel Challenges
Weak Channel Performance
Limited reach across customer
segments
Lack of focus on Modern retail
channel
Weak channel policiesand
incentives
Under developed retail network
4
Source: UCAnalysis

13. 13All Rights Reserved2018 Universal Consulting India Pvt LtdCopyright ©
Differential Channel Challenges
Regional Co-
operative Societies /
Boards
National Co-
operative Societies/
Boards
Private Indian
Companies
Multinational
Companies
Limited reach across
customer segment
Lack of focus on Modern
retail channel
Weak channel policies and
incentives
Under developed retail
network
Challenges
Strategic Groups
High LowSource: UCAnalysis

14. 14All Rights Reserved2018 Universal Consulting India Pvt LtdCopyright ©
Governance Challenges
Risk and Capabilities
Management capabilities
Promoters’risk appetite
5
Source: UCAnalysis

15. 15All Rights Reserved2018 Universal Consulting India Pvt LtdCopyright ©
Differential Governance Challenges
Regional Co-
operative Societies /
Boards
National Co-
operative Societies/
Boards
Private Indian
Companies
Multinational
Companies
Promoters’ risk appetite
Management capability
Challenges
Strategic Groups
High LowSource: UCAnalysis

16. 16All Rights Reserved2018 Universal Consulting India Pvt LtdCopyright ©
Tactical Actions by Competitors
Single
Customers
Multi Customer
Segment
Traditional
Products
Valueadded
products
Standard Quality Superior Quality
Single
Channel
Omni Channel
Family Business/
Co-operatives
Professional
Management
Local/ Regional International
Increasing demandfrom HoReCa/InstitutionalCustomers
Value added products are expected to have a CAGR of 15% - 20%
over next 5 years
Increasing customer’s demandfor hygiene due to health
consciousness
Ecommerce andmodern retailhave widenedthe sales channels.
Indian dairy space dominatedby state wise co-operative
society demanding change in governance
Indian dairy companies are trying to have a pan India presence as
well as looking for internationalexpansion throughexport
Source: UCAnalysis

17. 17All Rights Reserved2018 Universal Consulting India Pvt LtdCopyright ©
Competitive Market Position
Single Customer/Product Segment Multiple Customer/ Product Segment
Single
Attributes
Multiple
Attributes
• Price
• Price
• Quality &
Innovation
• Packaging
• Availability
• Channel &
Operational
Excellence
• Price
• Quality
• Packaging
• Channel &
Operational
Excellence
• Price
• Quality
• Availability
• Channel
Local/Regional Co-
Operative
Societies/Boards
Large Co-
Operative
Societies/Boards
Multinational
Companies
Regional Indian
Companies
Source: UCAnalysis

18. 18All Rights Reserved2018 Universal Consulting India Pvt LtdCopyright ©
Axes of Competition
Price
Quality
Packaging
Availability
Channel
Innovation
Operational
Excellence
Local/Regional Co-
Operative
Societies/Boards
Regional Indian
Companies
Large Co-Operative
Societies/Boards
Multinational
CompaniesAttributes
Strategic
Groups
Source: UCAnalysis

19. 19All Rights Reserved2018 Universal Consulting India Pvt LtdCopyright ©
Competitive Strategies for Players
Product
Strategies
Customer
Strategies
Governance
Strategies
Pricing
Strategies
1 2 3 5
Channel
Strategies
4
Source: UCAnalysis

20. 20All Rights Reserved2018 Universal Consulting India Pvt LtdCopyright ©
Customer Strategies
IncreaseB2C
Customers’Reach
Target B2B Customers
Develop suitableSKUs
& product variants
Read
HORECA/institutional
demand
Choose segments
Dig deep into rural
areas
Choose modern &
traditional retail mix
Engagewith customers
early into lifecycle
1
Source: UCAnalysis

21. 21All Rights Reserved2018 Universal Consulting India Pvt LtdCopyright ©
Differentiated Customer Strategies
Regional Co-
operative Societies /
Boards
National Co-operative
Societies/ Boards
Private Indian
Companies
Multi National
Companies
Read HORECA/institutional
demand
Develop suitable SKUs &
product variants
Engage with customers early
into lifecycle
Choose segments
Dig deep into rural areas
Choose modern & traditional
retail mix
Strategies
Strategic Groups
High LowSource: UCAnalysis

22. 22All Rights Reserved2018 Universal Consulting India Pvt LtdCopyright ©
Product Strategies
Enhance Sourcing,
Quality and
Productivity
Redefine Product
Portfolio
Collaboratewith cattle
farmsfor better quality
Contractswith dairy
cooperativesocieties
Make hard choicesin
product portfolio
Invest in automation in
milkcollection and
production
Co-createwith the
ecosystem
Focuson healthy
fortified products
Attain pan India and
global pricediscovery
2
Source: UCAnalysis

23. 23All Rights Reserved2018 Universal Consulting India Pvt LtdCopyright ©
Differentiated Product Strategies
Regional Co-
operative Societies /
Boards
National Co-operative
Societies/ Boards
Private Indian
Companies
Multi National
Companies
Collaborate with cattle farm
for better quality
Contracts with dairy
cooperative societies
Attain pan India and global
price discovery
Invest in automation in milk
collection and production
Make hard choices in product
portfolio
Co-create with the ecosystem
Focus on healthy fortified
product
Strategies
Strategic Groups
High LowSource: UCAnalysis

24. 24All Rights Reserved2018 Universal Consulting India Pvt LtdCopyright ©
Pricing Strategies
OptimizeMarketing
Expenditure
Premium Price for niche/
differentiated value added
products
Scale up the volume of
traditional products
Enhance sales/ marketing
productivity
Spend on functional and
experiential differentiation
3
Source: UCAnalysis

25. 25All Rights Reserved2018 Universal Consulting India Pvt LtdCopyright ©
Differentiated Pricing Strategies
Regional Co-
operative Societies /
Boards
National Co-operative
Societies/ Boards
Private Indian
Companies
Multi National
Companies
Premium Price for niche/
differentiated value added
products
Enhance sales/ marketing
productivity
Scale up the volume of
traditional products
Spend on functional and
experiential differentiation
Accelerate the expansion of
right profile of partners
Strategies
Strategic Groups
High LowSource: UCAnalysis

26. 26All Rights Reserved2018 Universal Consulting India Pvt LtdCopyright ©
Channel Strategies
EnhanceChannel Performance
Accelerate the expansion of right
profileof partners
Explore ecommerce/ modern
retail channels
Alter incentives policies
4
Source: UCAnalysis

27. 27All Rights Reserved2018 Universal Consulting India Pvt LtdCopyright ©
Differentiated Channel Strategies
Regional Co-
operative Societies /
Boards
National Co-operative
Societies/ Boards
Private Indian
Companies
Multi National
Companies
Accelerate the expansion of
right profile of partners
Explore ecommerce/ modern
retail channel
Alter incentive policies
Strategies
Strategic Groups
High LowSource: UCAnalysis

28. 28All Rights Reserved2018 Universal Consulting India Pvt LtdCopyright ©
Governance Strategies
Build Mind Set for Change
Institutionalize professional
practices
Train leaders on Risk and Returns
5
Source: UCAnalysis

29. 29All Rights Reserved2018 Universal Consulting India Pvt LtdCopyright ©
Differentiated Governance Strategies
Regional Co-
operative Societies /
Boards
National Co-operative
Societies/ Boards
Private Indian
Companies
Multi National
Companies
Train leaders on Risk and
Returns
Institutionalize professional
practices
Strategies
Strategic Groups
High LowSource: UCAnalysis

30. 30All Rights Reserved2018 Universal Consulting India Pvt LtdCopyright ©
Strategic Roadmap
Customer Product Price Channel Governance
• Untapped B2B
Customers
• Marginally profitable
B2C Customers
• Inconsistent Quality
and Low
Productivity
• Sub-optimal Profit
Generating Basket
Of Products
• Low return on
marketing
expenditure
• Weak Channel
Performance
• Mindset and
Capabilities
• Target B2B
Customers
• Increase B2C
Customer Reach
• Enhance Sourcing
Productivity and
Quality Consistency
• Redefine Product
Portfolio
• Optimize
Marketing
Expenditure
• Enhance
Channel
Performance
• Globalize
mind set and
Localize
Business
Operations
Differential
Challenges
Differentiated
Strategies
Source: UCAnalysis

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