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Overview of Indian Dairy Industry
Indian Dairy Market Snapshot
• Cow milk production 46.57 million tonnes
• % of worldwide milk production 17%
• Buffalo milk production 57.96 million tonnes
• No. of milk producing dairy cows 38.50 million
• Number of buffaloes 38.10 million
• The productivity of Indian cattle (944 kg/annum)
• The average size of herd in India is 2‐3 milch animals
• Dairy Cooperatives account for 60% share of processed liquid
81 84 86 88 93 97 101 102 109 115 120
Total Milk Production (MT)
2
• Dairy Cooperatives account for 60% share of processed liquid
milk marketed in the India.
• About 16% of the world milk is produced in India
• Milk production is growing at 7% by volume and approximately
10% by value
• Production level of milk is projected to increase to 190 million
tonnes, worths 5 Lakh Crore by the year 2015
• Accounts for 21% of agricultural production of India
Source : National Dairy Development Board, International Dairy Federation 2010
Consumption (kg per capita)
Milk 36.6
Butter 3.3
Indian Dairy Market Snapshot
• The market size for milk and milk products (formal +
informal sector) is estimated INR 3.6 lakh crores.
• The organized market is growing at nearly 10 percent in
value terms annually
• Traditional dairy products account for about 50% of the
total milk produced
• The organized sector processes an estimated 20% of the
total milk output in India
• Milk is processed and marketed by 170 Milk Producers’
937
679
435 538 446 378 383 364 289 287 278 194 215 210 197
Per Capita Availability of Milk by States (gms/day)
2010-11
3
• Milk is processed and marketed by 170 Milk Producers’
Cooperative Unions
• Dairy Sector Contributes 17% of the Country’s Total
Expenditure on Food
• Per capita milk consumption is around 276 g per day
• Dairy contributes to 16% of consumer spend on food –
18% in Urban, 15% in rural
• Milk procurement price has grown by about 2.5 times in
the last decade
Source : Department of Animal Husbandry, Dairying & Fisheries, Ministry of Agriculture, GoI
Degree of
Processing
Type
% milk
handled
Raw
Retention by rural consumers / sale
to rural non‐producers
41
Sold as loose milk in urban areas 17
Processed
(Formal)
Packed liquid milk 15
Value‐added milk products 5
Processed
(Informal)
Value‐added milk products
(mostly traditional Indian milk
products)
22
Total 100
Structure of Dairy Industry in India
Indian Dairy
Industry
Key National Private Players
Aarey Milk Parag
Aravind Foods Mahaan Foods
Britannia Vadilal
Dynamix Dairy Vidya Dairy
Mother Dairy Gowardhan
VRS Foods
4
Organized
Private Dairies
(National)
Private Dairies
(International)
Cooperative
Societies
Government
Unorganized
International
Players (Existing)
International Players
(Upcoming)
Nestle Alra Foods
Danone
Fonterra with
Britannia
Hatson Land O’Lakes, Inc
Kerry Group
Schreiber Food with
Dynamix
Coke
Pepsi
Market for Dairy Products is expected to grow at 15‐20% over the next three years
Products
Organized market
value INR billion
(2008-09)
Growth
rate (%)
Remarks
Liquid milk 313.90 20
Dairy co‐operatives have a major presence in this segment e.g. ‘Amul’ in Gujarat, ‘Verka’ in
Punjab, ‘Nandini’ in Karnataka, ‘Aavin’ in Tamilnadu,,‘Saras’ in Rajasthan. Private players like
Hatsun Agro, Creamline Dairy are also having a sizeable market share in liquid milk
Milk Powder,
sweets, Dairy
whitener
36.22 10‐15
(Dairy Whitener)‐ Amul as a leader have a market share of 45% followed by Nestle’s 23%,
Britannia 5% and others are Dynamix Diary, Sterling Agro, Haryana Milk Foods, Mohan Food,
Modern Dairy, K Dairy
Ghee
(Anhydrous milk
fat)
33.78 8‐10
‘Amul’ and ‘Sagar’ are two well known brands. Other strong regional brands include ‘Saras’,
‘Verka’, ‘Nandini’, and Madhusudhan’ etc.
5
fat)
‘Verka’, ‘Nandini’, and Madhusudhan’ etc.
Ice‐cream 15.44 20
70% of the Ice‐cream sold in India through organized retail.
Market share – Amul (25%), Kwality (15%) & Vadilal (10%) and others are Mother Dairy,
Hatsun Dairy, Dinshaw
Butter 12.56 8
Amul is market leader with 80% market share. Other strong regional players present are
Mother Dairy, Parag Dairy, Verka, Vijaya etc.
Dahi (Curd) 6.28 20
Karnataka Dairy Co‐operative (brand ‘Nandini’) is the market leader in pouch dahi while Amul
is the leader in set curd segment & other players are Mother Dairy, Nestle, Britannia and Parag
Cheese 5.34 25
Processed cheese has around 70% market share of the total cheese sold in the country. Key
players Amul, Vijaya, Verka, Vadilal, Britannia, Kraft, Dabon, Danone
Flavored milk 5.78 20
‘Amul’ is the market leader with close to 75% market share. Other brands include
Mother Dairy (7%), Verka, Nandini, Vijaya, Saras etc
Paneer (Indian
Soft Cheese)
2.39 10‐12
The market share of ‘Amul’ is close to 50% while Mother Dairy and MilkFed (brand ‘Verka’)
have 20% share each. Reliance Industries has also entered this category.
Source : National Dairy Development Board
Cooperative Revolution in India
Dairy Cooperative
Network
• Increased from 21.2 million MT in 1968-69 to 110 million MT in 2008-09
• Per capita availability increased from 112 grams/day in 1968-69 to 258 grams per
day in 2008-09
• India's 3.8% annual growth of milk production between 1997-98 and 2007-08
surpasses the 1.8% growth in population; the net increase in availability is around 2%
p.a.
• Includes 177 Milk Unions
• Operates over 346 districts
• Covers 1,33,349 villages
• Owned by around 13.9 million farmers
Milk Production
6
p.a.
Marketing
• In 2008-09, average daily cooperative milk marketing stood at 200.4 lakh litres;
annual growth has averaged about 6.1 per cent compounded over the last five years
• Dairy Cooperatives now market milk in all metros, major cities and more than 2000
towns/cities
• During 2001-2009 the daily milk supply by Cooperatives to each 1000 urban
consumers has increased from 57.8 to 73.1 Kg per day
Innovation
• Bulk-vending - saving money and the environment
• Milk travels as far as 2,200 kilometers to deficit areas, carried by innovative rail and
road milk tankers
• Automatic Milk Collection Unit (AMCU) and Bulk Milk Cooler (BMC) at grass root
level – preserve quality and reduce post-procurement losses
Key Players in the Dairy Industry in India & their Product Portfolio
Key Players
Condensed
Milk/UHT
Ghee
Milk
Food
Cheese Paneer Butter Whey
Yogh
urt
Ice-
crea
m
Milk
Powde
r
Flavor
ed
Milk
Lactos
e
Amul √ √ √ √ √ √ ‐ √ √ √ √ ‐
ADF Food ‐ ‐ ‐ √ √ ‐ ‐ ‐ ‐ ‐ ‐ ‐
Britannia √ √ ‐ √ √ √ √ ‐ ‐ √ ‐
Dynamix Dairy Industry Ltd √ √ ‐ √ √ √ √ √ ‐ √ ‐ √
Heritage Foods (India) Ltd √ √ √ √ √ √ ‐ √ √ √ √ ‐
Herman Milk Foods √ √ ‐ ‐ ‐ √ ‐ √ ‐ ‐ ‐ ‐
Hatsun Agro Ltd √ √ √ √ √ √ ‐ √ √ √ √ ‐
7
Hatsun Agro Ltd √ √ √ √ √ √ ‐ √ √ √ √ ‐
Mother Dairy Food √ √ ‐ √ √ √ ‐ √ √ ‐ √ ‐
Mahaan Foods ‐ ‐ √ ‐ ‐ ‐ √ ‐ ‐ √ ‐ √
Parag Foods √ √ √ √ √ √ ‐ √ ‐ √ ‐ ‐
Vadilal √
VRS Foods √ √ ‐ √ √ ‐ ‐ √ ‐ √ √ ‐
Vidya Dairy √ √ ‐ √ √ ‐ ‐ ‐ √ ‐ ‐ ‐
International Players
Kraft Foods ‐ ‐ ‐ √ ‐ ‐ ‐ ‐ ‐ ‐ ‐
Le‐bon ‐ ‐ ‐ √ √ ‐ ‐ ‐ ‐ ‐ ‐ ‐
Nestle √ ‐ √ ‐ ‐ √ ‐ ‐ √ √ √
Danone √ ‐ ‐ ‐ ‐ ‐ √ ‐ ‐ √ ‐
Snapshot of Key Indian Players
Key Players Brand Turnover (2009-10)Rs. CR
GCMMF Amul 8007
Nestle India Nestle 1641
Punjab State Cooperative Verka 1150
Hatsun Agro
Anun, Komatha, Hatsun Cooking Butter,
Hatsun Curd
1141
Britannia Industries Ltd Britannia 1083
8
Kwality Kwality Walls 1054
Heritage Foods Heritage, Heritage Golden 900
Parag Milk Food Parag 550
Modern Dairy Modern Dairy 445
Rajasthan State Cooperative Saras 300
Vadilal Industries Vadilal 189
ADF Food Ashoka 102
Himalaya International Himalaya Fresh (Paneer) 69
Supply Chain of Indian Dairy Industry
Inputs for
Dairying
Milk
Production
Milk
Collection
Chilling
& Bulk
Cooling
Transport
ation of
Chilled
Milk
Processing &
Packaging
Marketing
&
Distribution
Consumer
Milk
9
• Fodder Farming
• Animal Feed
Plant Owners
• Veterinary aid
• Labor
• Large Scale Farmers
• Medium Scale
Farmers
• Small Farmers
• Cooperative
Societies
• Milk Aggregators
• Chilling Center at
Village Level
• Bulk Cooling at
District Level
• Refrigerated Vans
• Insulated Milk
Tankers
• Cooperative Plant
• Private Plant
• Govt. Plant
• Own Retail
Outlets
• Supermarkets
• Any retail outlets
Unorganized Sector:
Local Milkman
Confectionaries/
Restaurants
Value Added
Products
USA
Key Companies
Land –O‐ Lakes
Kraft Foods
ConAgra
Dairy Farmers of America
Dean Foods
Praire Farms
1. Annual milk production in US is 83.42bn litres in 2009 and
government estimated the production of around 86.73 bn
litres in 2010.
2. Key Processed foods are Cheese, Milk Powders, Whey, Lactose
and bulk milk.
3. India, Majorly, imports Whey and Lactose
Amount in INR CroreImport of Dairy Products from USA
10
HS Code Product 2009-10
040210 Milk & Cream in Powders 0.18
0406 Cheese and Curd 0.51
0405 Butter and Other Fats 0.00
40310 Yogurt 0.00
0404 Whey 10.61
170219 Lactose 3.90
Total Dairy Products 15.20
1% 3%
0% 0%
70%
26%
Product-wise Contribution of Imports to
India from USA (2009-10)
Milk & Cream in
Powders
Cheese and Curd
Butter and Other
Fats
Yogurt
Whey
Lactose
Source: Ers.usda.org, Business WeekSource: Commerce.nic.in
EURO ZONE
HS Code Product 2009-10
Key Companies
Groupe Danone
Lactalis
Freisland Campina
Arla Foods
Nordmilch
Nestle S.A
1. Europe’s milk production is estimated to reach 135 bn Litres
vis‐a‐vis 2009’s production of 134.75 bn litres.
2. Key Processed foods are Liquid Milk, Cheese, Butter, Whole
Milk Powder and Condensed Milk
Amount in INR CroreImport of Dairy Products from EU
11
HS Code Product 2009-10
040210 Milk & Cream in Powders 1.65
0406 Cheese and Curd 19.60
0405 Butter and Other Fats 0.77
40310 Yogurt 0.53
0404 Whey 6.90
170219 Lactose 16.11
Total EU 45.56
4%
43%
2%1%
15%
35%
Product-wise Contribution of Imports to
India from EU*(2009-10)
Milk & Cream in
Powders
Cheese and Curd
Butter and Other
Fats
Yogurt
Whey
Lactose
Source: Euromilk.orgSource: Commerce.nic.in *: comprise of Denmark, Netherlands, Germany, France, Itlay
United Kingdom
HS Code Product 2009-10
Key Companies
Dairy Crest
First Milk
Milk Link
Unilever UK
Muller Dairy (UK) Ltd
1. UK Produces approximately 13 bn litres of Milk every year.
2. 50% of milk goes for the processing of dairy foods.
3. Key Processed foods are Cheese, Milk Powders and Butter.
Amount in INR Crore
Import of Dairy Products from United
Kingdom
12
040210
Milk & Cream in
Powders
0.05
0406 Cheese and Curd 0.69
0405
Butter and Other
Fats
0.00
40310 Yogurt 0.00
0404 Whey 0.20
170219 Lactose 0.61
Total 1.55
Source: DairyUK.org
3%
44%
0%0%
13%
40%
Product-wise Contribution of Imports to India
from UK (2009-10)
Milk & Cream in Powders
Cheese and Curd
Butter and Other Fats
Yogurt
Whey
Lactose
Source: Commerce.nic.in
Australia
HS Code Product 2009-10
Key Companies
Dairy Farmers
De Cicco Industries pty
Fonterra
Murray Goulburn
Pauls
Tatura Milk Industries
1. Australia’s milk production is estimated to reach 9.2 bn litres
considering a growth of 1%‐2%.
2. Import demand for dairy remains strong and relatively stable
3. Key Processed foods are Whole Milk Powder, Cheese and
Butter
Amount in INR Crore
Import of Dairy Products from
Australia
13
HS Code Product 2009-10
040210 Milk & Cream in Powders 0.00
0406 Cheese and Curd 1.13
0405 Butter and Other Fats 23.23
40310 Yogurt 0.00
0404 Whey 0.02
170219 Lactose 0.00
Total 24.39
Source: DairyAustralia
3%
44%
0%0%
13%
40%
Product-wise Contribution of Imports to India
from AUS (2009-10)
Milk & Cream in Powders
Cheese and Curd
Butter and Other Fats
Yogurt
Whey
Lactose
Source: Commerce.nic.in
Opportunities in India for International Dairy Players
• One of the fastest growing market for milk and milk products
• Market size for milk and milk products (Formal & Informal sectors) is INR.
2000 bn (EUR 30.8 bn)
• Organized market is growing almost at 10% annually in terms of value
• The demand for value added milk products viz. cheese, dahi (Indian yoghurt),
probiotic drinks etc. is increasing at a double digit rate
Market Potential
• Foreign players can enter into a Joint Venture with an Indian company to
Farm Related
• Foreign players can enter into a Joint Venture with an Indian company to
improve farm management practice
Farm Related
• Setting up own procurement network is not only costly but also time consuming
for any foreign player entering India. It is therefore essential to have a local
partner to enter India to ensure consistent supply of raw milk to the dairy plant
Procurement
• As part of the JV mentioned in farm related /procurement related (above)
players could also invest in the supply chain infrastructure to ensure availability
of high quality milk on a sustainable basis
Infrastructure
14
Growth Drivers of Dairy Industry
• Population growth
• Economic Growth: Indian economy is the second fastest
growing economy in the world after China and growing at
an average rate of 8% (Y-o-Y )
• Rapid Urbanization: At present about 28.40% of India’s
population live in urban area and this figure expected to
touch 40.76% by 2030
• Rising Income Levels: Average income of Indians have
Population Growth,
Urbanization &
Rising Income
Levels
15
• Rising Income Levels: Average income of Indians have
grown by 10.50% to Rs. 44,345 in 2009-10 from Rs.
40,141 in 2008-09
• Technical innovation in milk products processing
• The fast changing food habits
• Increased use of fast foods, modified foods and instant
foods
• Health food is a sunrise industry in India
• Value added milk products
Technical
Innovation
Fast Changing
Food Habits
Key Challenges of Indian Dairy Industry
Small Holder
Level
• Milk base mainly consisting of small holders
• Involvement of too many intermediaries
• Increasing pressure on the land resources for cultivation
• Lack of good quality animal feed
• Lack of animal health care facilities
• Low genetic potential of the animals
• Lack of chilling capacities
• High production costs
Collection Level
16
• Involvement of too many intermediaries
• Lack of Infrastructure
• Manipulation of the quality of milk by the farmers
Processing Level
Collection Level
• Seasonality of production and fluctuating supply
• Absence quality standards
• Adulteration and Food safety
• Lack of trained and skilled workers
Key Challenges of Indian Dairy Industry
Storage & Logistics
Level
Co-operative Level
• Lack of cold storage facilities
• Gap in the cold chain and transport facilities
• Less number of member farmers
• Lower participation in the decision making process
• Low prices of milk
• Inefficient services
17
Marketing
Challenges
• Insufficient Infrastructure
• Majority of the Market is still unorganized
• Acceptability of the Consumer base
• Less penetration to the rural Market
• Lack of transparent milk pricing System
Government Initiatives
Intensive Dairy Development Scheme:
• Improve the entire dairy supply chain by providing
financial aids and technical input
• Pattern of assistance is 100% grant in aid with a
maximum allocation of Rs 300 lakhs/district
• A 70 % loan and 30% basis of funding is provided for
over 20000 LPD milk processing capacity
• Milk chilling capacity of 18.49 lakh litres per day and
National Dairy Plan:
• Aims to increase the milk production to about 180
million tonnes annually by 2021-22
• Enhancing milk production in major milk producing
areas, and strengthening and expanding infrastructure
for production process
• This plan also proposes to bring 65% of the surplus milk
produced under the organized sector for procurement as
against the present 30%
18
• Milk chilling capacity of 18.49 lakh litres per day and
processing capacity of 23.96 lakh litres per day have
been created under this scheme
Dairy Venture Capital Fund Scheme :
• Aims to promote ventures in the dairy sector
• Assistance is provided to bankable projects with 50%
interest free loan component
• Entrepreneur has to contribute 10% seed amount and
arrange 40% loan from local bank. Government of India
provides 50% interest free loan
Strengthening Infrastructure and Clean Milk
Production Scheme:
• To promote clean milk production and creation of
necessary infrastructure for it
• Pattern of funding is in the ratio of 75:25 for purchase
and installation of bulk milk coolers at village level
• Achievement: About 30,468 farmers trained, 1362 no.
of Bulk milk coolers with a total chilling capacity of
21.05lakhs LPD were installed and 886 existing
laboratories have been strengthened
Regulatory Environment of Indian Dairy Sector
1. Dairy sector was de-licensed in 1991
2. Milk and Milk Products Order 1992:
a. Collection areas/milk sheds specified
b. Processing capacity fixed
3. Private sector investment in dairying has increased considerably
4. Previously, co-operatives did not have any competition from the private sector
5. To strengthen co-operatives Mutually Aided Cooperative Societies (MACS Act,1995): reduce government
19
5. To strengthen co-operatives Mutually Aided Cooperative Societies (MACS Act,1995): reduce government
interference in management
6. Farmer freedom to govern the organization
7. Agriculture is a state policy in India
8. Center cannot enforce policies, driven by the ideologies and interests of the state government
9. Department of Livestock is with the Ministry of Agriculture
10. Feed distribution at subsidized rate through co‐operatives
“We are led by high energy experienced individuals having operating expertise and deep domain
knowledge across verticals. People at D’Essence are driven by accountability and performance”
For further queries
Chief Consultant
Chandni Sahgal
chandni@dessenceconsulting.com
20
D’Essence Consulting
303, Aar Pee Center,
11th Road, MIDC, Andheri (E)
Mumbai- 400093
+91-22-28347425
www.dessenceconsulting.com

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Overview of indian dairy industry

  • 1. 1 Extending our insights, knowledge and experience for building and growing businesses profitably Overview of Indian Dairy Industry
  • 2. Indian Dairy Market Snapshot • Cow milk production 46.57 million tonnes • % of worldwide milk production 17% • Buffalo milk production 57.96 million tonnes • No. of milk producing dairy cows 38.50 million • Number of buffaloes 38.10 million • The productivity of Indian cattle (944 kg/annum) • The average size of herd in India is 2‐3 milch animals • Dairy Cooperatives account for 60% share of processed liquid 81 84 86 88 93 97 101 102 109 115 120 Total Milk Production (MT) 2 • Dairy Cooperatives account for 60% share of processed liquid milk marketed in the India. • About 16% of the world milk is produced in India • Milk production is growing at 7% by volume and approximately 10% by value • Production level of milk is projected to increase to 190 million tonnes, worths 5 Lakh Crore by the year 2015 • Accounts for 21% of agricultural production of India Source : National Dairy Development Board, International Dairy Federation 2010 Consumption (kg per capita) Milk 36.6 Butter 3.3
  • 3. Indian Dairy Market Snapshot • The market size for milk and milk products (formal + informal sector) is estimated INR 3.6 lakh crores. • The organized market is growing at nearly 10 percent in value terms annually • Traditional dairy products account for about 50% of the total milk produced • The organized sector processes an estimated 20% of the total milk output in India • Milk is processed and marketed by 170 Milk Producers’ 937 679 435 538 446 378 383 364 289 287 278 194 215 210 197 Per Capita Availability of Milk by States (gms/day) 2010-11 3 • Milk is processed and marketed by 170 Milk Producers’ Cooperative Unions • Dairy Sector Contributes 17% of the Country’s Total Expenditure on Food • Per capita milk consumption is around 276 g per day • Dairy contributes to 16% of consumer spend on food – 18% in Urban, 15% in rural • Milk procurement price has grown by about 2.5 times in the last decade Source : Department of Animal Husbandry, Dairying & Fisheries, Ministry of Agriculture, GoI Degree of Processing Type % milk handled Raw Retention by rural consumers / sale to rural non‐producers 41 Sold as loose milk in urban areas 17 Processed (Formal) Packed liquid milk 15 Value‐added milk products 5 Processed (Informal) Value‐added milk products (mostly traditional Indian milk products) 22 Total 100
  • 4. Structure of Dairy Industry in India Indian Dairy Industry Key National Private Players Aarey Milk Parag Aravind Foods Mahaan Foods Britannia Vadilal Dynamix Dairy Vidya Dairy Mother Dairy Gowardhan VRS Foods 4 Organized Private Dairies (National) Private Dairies (International) Cooperative Societies Government Unorganized International Players (Existing) International Players (Upcoming) Nestle Alra Foods Danone Fonterra with Britannia Hatson Land O’Lakes, Inc Kerry Group Schreiber Food with Dynamix Coke Pepsi
  • 5. Market for Dairy Products is expected to grow at 15‐20% over the next three years Products Organized market value INR billion (2008-09) Growth rate (%) Remarks Liquid milk 313.90 20 Dairy co‐operatives have a major presence in this segment e.g. ‘Amul’ in Gujarat, ‘Verka’ in Punjab, ‘Nandini’ in Karnataka, ‘Aavin’ in Tamilnadu,,‘Saras’ in Rajasthan. Private players like Hatsun Agro, Creamline Dairy are also having a sizeable market share in liquid milk Milk Powder, sweets, Dairy whitener 36.22 10‐15 (Dairy Whitener)‐ Amul as a leader have a market share of 45% followed by Nestle’s 23%, Britannia 5% and others are Dynamix Diary, Sterling Agro, Haryana Milk Foods, Mohan Food, Modern Dairy, K Dairy Ghee (Anhydrous milk fat) 33.78 8‐10 ‘Amul’ and ‘Sagar’ are two well known brands. Other strong regional brands include ‘Saras’, ‘Verka’, ‘Nandini’, and Madhusudhan’ etc. 5 fat) ‘Verka’, ‘Nandini’, and Madhusudhan’ etc. Ice‐cream 15.44 20 70% of the Ice‐cream sold in India through organized retail. Market share – Amul (25%), Kwality (15%) & Vadilal (10%) and others are Mother Dairy, Hatsun Dairy, Dinshaw Butter 12.56 8 Amul is market leader with 80% market share. Other strong regional players present are Mother Dairy, Parag Dairy, Verka, Vijaya etc. Dahi (Curd) 6.28 20 Karnataka Dairy Co‐operative (brand ‘Nandini’) is the market leader in pouch dahi while Amul is the leader in set curd segment & other players are Mother Dairy, Nestle, Britannia and Parag Cheese 5.34 25 Processed cheese has around 70% market share of the total cheese sold in the country. Key players Amul, Vijaya, Verka, Vadilal, Britannia, Kraft, Dabon, Danone Flavored milk 5.78 20 ‘Amul’ is the market leader with close to 75% market share. Other brands include Mother Dairy (7%), Verka, Nandini, Vijaya, Saras etc Paneer (Indian Soft Cheese) 2.39 10‐12 The market share of ‘Amul’ is close to 50% while Mother Dairy and MilkFed (brand ‘Verka’) have 20% share each. Reliance Industries has also entered this category. Source : National Dairy Development Board
  • 6. Cooperative Revolution in India Dairy Cooperative Network • Increased from 21.2 million MT in 1968-69 to 110 million MT in 2008-09 • Per capita availability increased from 112 grams/day in 1968-69 to 258 grams per day in 2008-09 • India's 3.8% annual growth of milk production between 1997-98 and 2007-08 surpasses the 1.8% growth in population; the net increase in availability is around 2% p.a. • Includes 177 Milk Unions • Operates over 346 districts • Covers 1,33,349 villages • Owned by around 13.9 million farmers Milk Production 6 p.a. Marketing • In 2008-09, average daily cooperative milk marketing stood at 200.4 lakh litres; annual growth has averaged about 6.1 per cent compounded over the last five years • Dairy Cooperatives now market milk in all metros, major cities and more than 2000 towns/cities • During 2001-2009 the daily milk supply by Cooperatives to each 1000 urban consumers has increased from 57.8 to 73.1 Kg per day Innovation • Bulk-vending - saving money and the environment • Milk travels as far as 2,200 kilometers to deficit areas, carried by innovative rail and road milk tankers • Automatic Milk Collection Unit (AMCU) and Bulk Milk Cooler (BMC) at grass root level – preserve quality and reduce post-procurement losses
  • 7. Key Players in the Dairy Industry in India & their Product Portfolio Key Players Condensed Milk/UHT Ghee Milk Food Cheese Paneer Butter Whey Yogh urt Ice- crea m Milk Powde r Flavor ed Milk Lactos e Amul √ √ √ √ √ √ ‐ √ √ √ √ ‐ ADF Food ‐ ‐ ‐ √ √ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Britannia √ √ ‐ √ √ √ √ ‐ ‐ √ ‐ Dynamix Dairy Industry Ltd √ √ ‐ √ √ √ √ √ ‐ √ ‐ √ Heritage Foods (India) Ltd √ √ √ √ √ √ ‐ √ √ √ √ ‐ Herman Milk Foods √ √ ‐ ‐ ‐ √ ‐ √ ‐ ‐ ‐ ‐ Hatsun Agro Ltd √ √ √ √ √ √ ‐ √ √ √ √ ‐ 7 Hatsun Agro Ltd √ √ √ √ √ √ ‐ √ √ √ √ ‐ Mother Dairy Food √ √ ‐ √ √ √ ‐ √ √ ‐ √ ‐ Mahaan Foods ‐ ‐ √ ‐ ‐ ‐ √ ‐ ‐ √ ‐ √ Parag Foods √ √ √ √ √ √ ‐ √ ‐ √ ‐ ‐ Vadilal √ VRS Foods √ √ ‐ √ √ ‐ ‐ √ ‐ √ √ ‐ Vidya Dairy √ √ ‐ √ √ ‐ ‐ ‐ √ ‐ ‐ ‐ International Players Kraft Foods ‐ ‐ ‐ √ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Le‐bon ‐ ‐ ‐ √ √ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Nestle √ ‐ √ ‐ ‐ √ ‐ ‐ √ √ √ Danone √ ‐ ‐ ‐ ‐ ‐ √ ‐ ‐ √ ‐
  • 8. Snapshot of Key Indian Players Key Players Brand Turnover (2009-10)Rs. CR GCMMF Amul 8007 Nestle India Nestle 1641 Punjab State Cooperative Verka 1150 Hatsun Agro Anun, Komatha, Hatsun Cooking Butter, Hatsun Curd 1141 Britannia Industries Ltd Britannia 1083 8 Kwality Kwality Walls 1054 Heritage Foods Heritage, Heritage Golden 900 Parag Milk Food Parag 550 Modern Dairy Modern Dairy 445 Rajasthan State Cooperative Saras 300 Vadilal Industries Vadilal 189 ADF Food Ashoka 102 Himalaya International Himalaya Fresh (Paneer) 69
  • 9. Supply Chain of Indian Dairy Industry Inputs for Dairying Milk Production Milk Collection Chilling & Bulk Cooling Transport ation of Chilled Milk Processing & Packaging Marketing & Distribution Consumer Milk 9 • Fodder Farming • Animal Feed Plant Owners • Veterinary aid • Labor • Large Scale Farmers • Medium Scale Farmers • Small Farmers • Cooperative Societies • Milk Aggregators • Chilling Center at Village Level • Bulk Cooling at District Level • Refrigerated Vans • Insulated Milk Tankers • Cooperative Plant • Private Plant • Govt. Plant • Own Retail Outlets • Supermarkets • Any retail outlets Unorganized Sector: Local Milkman Confectionaries/ Restaurants Value Added Products
  • 10. USA Key Companies Land –O‐ Lakes Kraft Foods ConAgra Dairy Farmers of America Dean Foods Praire Farms 1. Annual milk production in US is 83.42bn litres in 2009 and government estimated the production of around 86.73 bn litres in 2010. 2. Key Processed foods are Cheese, Milk Powders, Whey, Lactose and bulk milk. 3. India, Majorly, imports Whey and Lactose Amount in INR CroreImport of Dairy Products from USA 10 HS Code Product 2009-10 040210 Milk & Cream in Powders 0.18 0406 Cheese and Curd 0.51 0405 Butter and Other Fats 0.00 40310 Yogurt 0.00 0404 Whey 10.61 170219 Lactose 3.90 Total Dairy Products 15.20 1% 3% 0% 0% 70% 26% Product-wise Contribution of Imports to India from USA (2009-10) Milk & Cream in Powders Cheese and Curd Butter and Other Fats Yogurt Whey Lactose Source: Ers.usda.org, Business WeekSource: Commerce.nic.in
  • 11. EURO ZONE HS Code Product 2009-10 Key Companies Groupe Danone Lactalis Freisland Campina Arla Foods Nordmilch Nestle S.A 1. Europe’s milk production is estimated to reach 135 bn Litres vis‐a‐vis 2009’s production of 134.75 bn litres. 2. Key Processed foods are Liquid Milk, Cheese, Butter, Whole Milk Powder and Condensed Milk Amount in INR CroreImport of Dairy Products from EU 11 HS Code Product 2009-10 040210 Milk & Cream in Powders 1.65 0406 Cheese and Curd 19.60 0405 Butter and Other Fats 0.77 40310 Yogurt 0.53 0404 Whey 6.90 170219 Lactose 16.11 Total EU 45.56 4% 43% 2%1% 15% 35% Product-wise Contribution of Imports to India from EU*(2009-10) Milk & Cream in Powders Cheese and Curd Butter and Other Fats Yogurt Whey Lactose Source: Euromilk.orgSource: Commerce.nic.in *: comprise of Denmark, Netherlands, Germany, France, Itlay
  • 12. United Kingdom HS Code Product 2009-10 Key Companies Dairy Crest First Milk Milk Link Unilever UK Muller Dairy (UK) Ltd 1. UK Produces approximately 13 bn litres of Milk every year. 2. 50% of milk goes for the processing of dairy foods. 3. Key Processed foods are Cheese, Milk Powders and Butter. Amount in INR Crore Import of Dairy Products from United Kingdom 12 040210 Milk & Cream in Powders 0.05 0406 Cheese and Curd 0.69 0405 Butter and Other Fats 0.00 40310 Yogurt 0.00 0404 Whey 0.20 170219 Lactose 0.61 Total 1.55 Source: DairyUK.org 3% 44% 0%0% 13% 40% Product-wise Contribution of Imports to India from UK (2009-10) Milk & Cream in Powders Cheese and Curd Butter and Other Fats Yogurt Whey Lactose Source: Commerce.nic.in
  • 13. Australia HS Code Product 2009-10 Key Companies Dairy Farmers De Cicco Industries pty Fonterra Murray Goulburn Pauls Tatura Milk Industries 1. Australia’s milk production is estimated to reach 9.2 bn litres considering a growth of 1%‐2%. 2. Import demand for dairy remains strong and relatively stable 3. Key Processed foods are Whole Milk Powder, Cheese and Butter Amount in INR Crore Import of Dairy Products from Australia 13 HS Code Product 2009-10 040210 Milk & Cream in Powders 0.00 0406 Cheese and Curd 1.13 0405 Butter and Other Fats 23.23 40310 Yogurt 0.00 0404 Whey 0.02 170219 Lactose 0.00 Total 24.39 Source: DairyAustralia 3% 44% 0%0% 13% 40% Product-wise Contribution of Imports to India from AUS (2009-10) Milk & Cream in Powders Cheese and Curd Butter and Other Fats Yogurt Whey Lactose Source: Commerce.nic.in
  • 14. Opportunities in India for International Dairy Players • One of the fastest growing market for milk and milk products • Market size for milk and milk products (Formal & Informal sectors) is INR. 2000 bn (EUR 30.8 bn) • Organized market is growing almost at 10% annually in terms of value • The demand for value added milk products viz. cheese, dahi (Indian yoghurt), probiotic drinks etc. is increasing at a double digit rate Market Potential • Foreign players can enter into a Joint Venture with an Indian company to Farm Related • Foreign players can enter into a Joint Venture with an Indian company to improve farm management practice Farm Related • Setting up own procurement network is not only costly but also time consuming for any foreign player entering India. It is therefore essential to have a local partner to enter India to ensure consistent supply of raw milk to the dairy plant Procurement • As part of the JV mentioned in farm related /procurement related (above) players could also invest in the supply chain infrastructure to ensure availability of high quality milk on a sustainable basis Infrastructure 14
  • 15. Growth Drivers of Dairy Industry • Population growth • Economic Growth: Indian economy is the second fastest growing economy in the world after China and growing at an average rate of 8% (Y-o-Y ) • Rapid Urbanization: At present about 28.40% of India’s population live in urban area and this figure expected to touch 40.76% by 2030 • Rising Income Levels: Average income of Indians have Population Growth, Urbanization & Rising Income Levels 15 • Rising Income Levels: Average income of Indians have grown by 10.50% to Rs. 44,345 in 2009-10 from Rs. 40,141 in 2008-09 • Technical innovation in milk products processing • The fast changing food habits • Increased use of fast foods, modified foods and instant foods • Health food is a sunrise industry in India • Value added milk products Technical Innovation Fast Changing Food Habits
  • 16. Key Challenges of Indian Dairy Industry Small Holder Level • Milk base mainly consisting of small holders • Involvement of too many intermediaries • Increasing pressure on the land resources for cultivation • Lack of good quality animal feed • Lack of animal health care facilities • Low genetic potential of the animals • Lack of chilling capacities • High production costs Collection Level 16 • Involvement of too many intermediaries • Lack of Infrastructure • Manipulation of the quality of milk by the farmers Processing Level Collection Level • Seasonality of production and fluctuating supply • Absence quality standards • Adulteration and Food safety • Lack of trained and skilled workers
  • 17. Key Challenges of Indian Dairy Industry Storage & Logistics Level Co-operative Level • Lack of cold storage facilities • Gap in the cold chain and transport facilities • Less number of member farmers • Lower participation in the decision making process • Low prices of milk • Inefficient services 17 Marketing Challenges • Insufficient Infrastructure • Majority of the Market is still unorganized • Acceptability of the Consumer base • Less penetration to the rural Market • Lack of transparent milk pricing System
  • 18. Government Initiatives Intensive Dairy Development Scheme: • Improve the entire dairy supply chain by providing financial aids and technical input • Pattern of assistance is 100% grant in aid with a maximum allocation of Rs 300 lakhs/district • A 70 % loan and 30% basis of funding is provided for over 20000 LPD milk processing capacity • Milk chilling capacity of 18.49 lakh litres per day and National Dairy Plan: • Aims to increase the milk production to about 180 million tonnes annually by 2021-22 • Enhancing milk production in major milk producing areas, and strengthening and expanding infrastructure for production process • This plan also proposes to bring 65% of the surplus milk produced under the organized sector for procurement as against the present 30% 18 • Milk chilling capacity of 18.49 lakh litres per day and processing capacity of 23.96 lakh litres per day have been created under this scheme Dairy Venture Capital Fund Scheme : • Aims to promote ventures in the dairy sector • Assistance is provided to bankable projects with 50% interest free loan component • Entrepreneur has to contribute 10% seed amount and arrange 40% loan from local bank. Government of India provides 50% interest free loan Strengthening Infrastructure and Clean Milk Production Scheme: • To promote clean milk production and creation of necessary infrastructure for it • Pattern of funding is in the ratio of 75:25 for purchase and installation of bulk milk coolers at village level • Achievement: About 30,468 farmers trained, 1362 no. of Bulk milk coolers with a total chilling capacity of 21.05lakhs LPD were installed and 886 existing laboratories have been strengthened
  • 19. Regulatory Environment of Indian Dairy Sector 1. Dairy sector was de-licensed in 1991 2. Milk and Milk Products Order 1992: a. Collection areas/milk sheds specified b. Processing capacity fixed 3. Private sector investment in dairying has increased considerably 4. Previously, co-operatives did not have any competition from the private sector 5. To strengthen co-operatives Mutually Aided Cooperative Societies (MACS Act,1995): reduce government 19 5. To strengthen co-operatives Mutually Aided Cooperative Societies (MACS Act,1995): reduce government interference in management 6. Farmer freedom to govern the organization 7. Agriculture is a state policy in India 8. Center cannot enforce policies, driven by the ideologies and interests of the state government 9. Department of Livestock is with the Ministry of Agriculture 10. Feed distribution at subsidized rate through co‐operatives
  • 20. “We are led by high energy experienced individuals having operating expertise and deep domain knowledge across verticals. People at D’Essence are driven by accountability and performance” For further queries Chief Consultant Chandni Sahgal chandni@dessenceconsulting.com 20 D’Essence Consulting 303, Aar Pee Center, 11th Road, MIDC, Andheri (E) Mumbai- 400093 +91-22-28347425 www.dessenceconsulting.com