1. Indian dairy Industry - a profile
Today, India is 'The Oyster' of the global dairy industry. It offers opportunities
galore(in large no.) to entrepreneurs worldwide, who wish to capitalize on one of
the world's largest and fastest growing markets for milk and milk products. A
bagful of 'pearls' awaits the international dairy processor in India. The Indian dairy
industry is rapidly growing, trying to keep pace with the galloping progress around
the world. As he expands his overseas operations to India many profitable options
await him. He may transfer technology, sign joint ventures or use India as a
sourcing center for regional exports. 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 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 litre 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 of milk production and increasing production in the country multinational
companies are planning to expand their activities here. Some of these milk
producers have already obtained quality standard certificates from the authorities.
This will help them in marketing their products in foreign countries in processed
form.
The urban market for milk products is expected to grow at an accelerated pace of
around 33% per annum to around Rs.43,500 crores by year 2005. This growth is
going to come from the greater emphasis on the processed foods sector and also by
increase in the conversion of milk into milk products. By 2005, the value of Indian
dairy produce is expected to be Rs 10,00,000 million. Presently the market is
valued at around Rs7,00,000mn
Background
India with 134mn cows and 125mn buffaloes has the largest population of cattle in
the world. Total cattle population in the country as on October'00 stood at 313mn.
More than fifty percent of the buffaloes and twenty percent of the cattle in the
world are found in India and most of these are milch cows and milch buffaloes.
Indian dairy sector contributes the large share in agricultural gross domestic
products. Presently there are around 70,000 village dairy cooperatives across the
2. country. The co-operative societies are federated into 170 district milk producers
unions, which is turn has 22-state cooperative dairy federation. Milk production
gives employment to more than 72mn dairy farmers. In terms of total production,
India is the leading producer of milk in the world followed by USA. The milk
production in 1999-00 is estimated at 78mn MT as compared to 74.5mn MT in the
previous year. This production is expected to increase to 81mn MT by 2000-01. Of
this total produce of 78mn cows' milk constitute 36mn MT while rest is from other
cattle.
While world milk production declined by 2 per cent in the last three years,
according to FAO estimates, Indian production has increased by 4 per cent. The
milk production in India accounts for more than 13% of the total world output and
57% of total Asia's production. The top five milk producing nations in the world
are India ,USA, Russia, Germany and France.
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 milching.
Inadequate availability of fodder in all seasons.
Unavailability of veterinary health services.
Milk Yield comparison:
Country Milk Yield
(Kgs per
year)
USA 7002
UK 5417
Canada 5348
New Zealand 2976
Pakistan 1052
India 795
World (Average) 2021
Source: Export prospects for agro-based industries, World Trade Centre, Mumbai.
3. Production of milk in India
Year Production in million MT
1988-89 48.4
1989-90 51.4
1990-91 53.7
1991-92 56.3
1992-93 58.6
1993-94 61.2
1994-95 63.5
1995-96 65
1996-97 68.5
1997-98 70.8
1998-99 74.7
1999-
78.1
00(E)
2000-
81.0
01(T)
E= estimated
T= target / expected
Source: DFPI, Annual Report-1999-2000
World's major milk producers
(Million MTs)
1998-99 (
Country 1997-98
Approx.)
India 71 74.5
USA 71 71
Russia 34 33
4. Germany 27 27
France 24 24
Pakistan 21 22
Brazil 21 27
UK 14 14
Ukraine 15 14
Poland 12 12
New
11 12
Zealand
Netherlands 11 11
Italy 10 10
Australia 9 10
Operation Flood
The transition of the Indian milk industry from a situation of net import to that of
surplus has been led by the efforts of National Dairy Development Board's
Operation Flood. programme under the aegis of the former Chairman of the board
Dr. Kurien.
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 capita availability of milk has increased from
132 gm per day in 1950 to over 220 gm per day in 1998. The main thrust of
Operation Flood was to organize dairy cooperatives in the milkshed areas of the
village, and to link them to the four Metro cities, which are 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. Operation Flood has been one of
5. the world's largest dairy development programme and looking at the success
achieved in India by adopting the co-operative route, a few other countries have
also replicated the model of India's White Revolution.
Per Capita availability of milk
Year gm/day
1950 132
1960 127
1968 113
1973 111
1980* 128
1990 178
1992 192
1996 198
1997 200
1998 202
1999 203
2000 212
2001E 225
2002P 250
E= Estimated
P= Provisional
* Operation flood was launched in 1970
Fresh Milk
Over 50% of the milk produced in India is buffalo milk, and 45% is cow milk. The
buffalo milk contribution to total milk produce is expected to be 54% in 2000.
Buffalo milk has 3.6% protein, 7.4% fat, 5.5% milk sugar, 0.8% ash and 82.7%
water whereas cow milk has 3.5% protein, 3.7% fat, 4.9% milk sugar, 0.7% ash
and 87% water. While presently (for the year 2000) the price of Buffalo milk is
ruling at $261-313 per MT that of cow is ruling at $170-267 per MT. Fresh
6. pasteurized milk is available in packaged form. However, a large part of milk
consumed in India is not pasteurized, and is sold in loose form by vendors.
Sterilized milk is scarcely available in India.
Packaged milk can be divided according to fat content as follows,
Whole (full cream) milk - 6% fat
Standardized (toned) milk - 4.5% fat
Doubled toned (low fat) milk - 3% fat
Another category of milk, which has a small market is flavoured milk.
The Indian Market - A Pyramid
Consumer Habits And Practices
Milk has been an integral part of Indian food for centuries. The per capita
availability of milk in India has grown from 172 gm per person per day in 1972 to
182gm in 1992 and 203 gm in 1998-99.This is expected to increase to 212gms for
1999-00. However a large part of the population cannot afford milk. At this per
capita consumption it is below the world average of 285 gm and even less than 220
gm recommended by the Nutritional Advisory Committee of the Indian Council of
Medical Research.
There are regional disparities in production and consumption also. The per capita
availability in the north is 278 gm, west 174 gm, south 148 gm and in the east only
93 gm per person per day. This disparity is due to concentration of milk production
in some pockets and high cost of transportation. Also the output of milk in cereal
growing areas is much higher than elsewhere which can be attributed to abundant
availability of fodder, crop residues, etc which have a high food value for milch
animals.
In India about 46 per cent of the total milk produced is consumed in liquid form
and 47 per cent is converted into traditional products like cottage butter, ghee,
paneer, khoya, curd, malai, etc. Only 7 per cent of the milk goes into the
production of western products like milk powders, processed butter and processed
cheese. The remaining 54% is utilized for conversion to milk products. Among the
milk products manufactured by the organized sector some of the prominent ones
are ghee, butter, cheese, ice creams, milk powders, malted milk food, condensed
milk infants foods etc. Of these ghee alone accounts for 85%.
7. It is estimated that around 20% of the total milk produced in the country is
consumed at producer-household level and remaining is marketed through various
cooperatives, private dairies and vendors. Also of the total produce more than 50%
is procured by cooperatives and other private dairies.
While for cooperatives of the total milk procured 60% is consumed in fluid form
and rest is used for manufacturing processed value added dairy products; for
private dairies only 45% is marketed in fluid form and rest is processed into value
added dairy products like ghee, makhan etc.
Still, several consumers in urban areas prefer to buy loose milk from vendors due
to the strong perception that loose milk is fresh. Also, the current level of
processing and packaging capacity limits the availability of packaged milk.
The preferred dairy animal in India is buffalo unlike the majority of the world
market, which is dominated by cow milk. As high as 98% of milk is produced in
rural India, which caters to 72% of the total population, whereas the urban sector
with 28% population consumes 56% of total milk produced. Even in urban India,
as high as 83% of the consumed milk comes from the unorganized traditional
sector.
Presently only 12% of the milk market is represented by packaged and branded
pasteurized milk, valued at about Rs. 8,000 crores. Quality of milk sold by
unorganized sector however is inconsistent and so is the price across the season in
local areas. Also these vendors add water and caustic soda, which makes the milk
unhygienic.
India's dairy market is multi-layered. It's shaped like a pyramid with the base made
up of a vast market for low-cost milk. The bulk of the demand for milk is among
the poor in urban areas whose individual requirement is small, maybe a glassful for
use as whitener for their tea and coffee. Nevertheless, it adds up to a sizable
volume - millions of litres per day. In the major cities lies an immense growth
potential for the modern sector. Presently, barely 778 out of 3,700 cities and towns
are served by its milk distribution network, dispensing hygienically packed
wholesome, quality pasteurized milk. According to one estimate, the packed milk
segment would double in the next five years, giving both strength and volume to
the modern sector. The narrow tip at the top is a small but affluent market for
western type milk products.
Growing Volumes
8. The effective milk market is largely confined to urban areas, inhabited by over 25
per cent of the country's population. An estimated 50 per cent of the total milk
produced is consumed here. By the end of the twentieth century, the urban
population is expected toincrease by more than 100 million to touch 364 million in
2000 a growth of about 40 per cent. The expected rise in urban population would
be a boon to Indian dairying. Presently, the organized sector both cooperative and
private and the traditional sector cater to this market.
The consumer access has become easier with the information revolution. The
number of households with TV has increased from 23 million in 1989 to 45 million
in 1995. About 34 per cent of these households in urban India have access to
satellite television channel.
Potential for further growth
Of the three 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,
given the prevailing low yields from dairy cattle. 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.
Marketing Strategy for 2000 AD
Two key elements of marketing strategy for 2000 AD are: Focus on strong brands
and, product mix expansion to include UHT milk, cheese, ice creams and
spreads. The changing marketing trends will see the shift from generic products to
the packaged quasi, regular and premium brands. The national brands will
gradually edge out the regional brands or reduce their presence. The brand image
can do wonders to a product's marketing as is evident from the words of Perfume
Princess Coco Channel: In the factory, we pack perfume; in the market, we sell
hope!
Emerging Dairy Markets
9. Food service institutional market: It is growing at double the rate of
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 raw material in pharmaceutical and allied industries
Parlour 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.
India, with her sizable dairy industry growing rapidly and on the path of
modernization, would have a place in the sun of prosperity for many decades to
come. The one index to the statement is the fact that the projected total milk output
over the next 15 years (1995-2010) would exceed 1457.6 million tonnes which is
twice the total production of the past 15 years!
Penetration of milk products
Western table spreads such as butter, margarine and jams are not very popular in
India. All India penetration of butter/ margarine is only 4%. This is also largely
represented by urban areas, where penetration is higher at 9%. In rural areas,
butter/ margarine have penetrated in 2.1% of households only. The use of these
products in the large metros is higher, with penetration at 15%.
Penetration of cheese is almost nil in rural areas and negligible in the urban areas.
Per capita consumption even among the cheese-consuming households is a poor
2.4kg pa as compared to over 20kg in USA. The lower penetration is due to
peculiar food habits, relatively expensive products and also non-availability in
many parts of the country. Butter, margarine and cheese products are mainly
manufactured by organized sector.
Similarly, penetration of ghee is highest in medium sized towns at 37.2%
compared to 31.7% in all urban areas and 21.3% in all rural areas. The all India
penetration of ghee is 24.1%. In relative terms, penetration of ghee is significantly
higher in North and West, which are milk surplus regions. North accounts for 57%
of ghee consumption and West for 23%, South & East together account for the
balance 20%. A large part of ghee is made at home and by small/ cottage industry
from milk. The relative share of branded products in this category is very low at
around 1-2%.
10. Milk powder and condensed milk have not been able to garner any significant
consumer acceptance in India as indicated by a very low 4.7% penetration. The
penetration is higher at 8.1% in urban areas and lower at 3.5% in rural areas.
Within urban areas, it is relatively higher in medium sized towns at 8.5% compared
to 7.7% in a large metros.
Market Size And Growth
Market size for milk (sold in loose/ packaged form) is estimated to be 36mn MT
valued at Rs470bn. The market is currently growing at round 4% pa in volume
terms. The milk surplus states in India are Uttar Pradesh, Punjab, Haryana,
Rajasthan, Gujarat, Maharashtra, Andhra Pradesh, Karnataka and Tamil Nadu. The
manufacturing of milk products is concentrated in these milk surplus States. The
top 6 states viz. Uttar Pradesh, Punjab, Madhya Pradesh, Rajasthan, Tamil Nadu
and Gujarat together account for 58% of national production.
Milk production grew by a mere 1% pa between 1947 and 1970. Since the early
70's, under Operation Flood, production growth increased significantly averaging
over 5% pa.
About 75% of milk is consumed at the household level which is not a part of
commercial dairy industry. Loose milk has a larger market in India as it is
perceived to be fresh by most consumers. In reality however, it poses a higher risk
of adulteration and contamination.
The production of milk products, i.e. milk products including infant milk food,
malted food, condensed milk & cheese stood at 3.07 lakh MT in 1999. Production
of milk powder including infant milk-food has risen to 2.25 lakh MT in 1999,
whereas that of malted food is at 65000 MT. Cheese and condensed milk
production stands at 5000 and 11000 MT respectively in the same year.
(Source: Annual Report 1999-2000, DFPI)
Major Players
The packaged milk segment is dominated by the dairy cooperatives. Gujarat Co-
operative Milk Marketing Federation (GCMMF) is the largest player. All other
local dairy cooperatives have their local brands (For e.g. Gokul, Warana in
Maharashtra, Saras in Rajasthan, Verka in Punjab, Vijaya in Andhra Pradesh,
Aavin in Tamil Nadu, etc). Other private players include J K Dairy, Heritage
11. Foods, Indiana Dairy, Dairy Specialties, etc. Amrut Industries, once a leading
player in the sector has turned bankrupt and is facing liquidation.
Packaging Technology
Milk was initially sold door-to-door by the local milkman. When the dairy co-
operatives initially started marketing branded milk, it was sold in glass bottles
sealed with foil. Over the years, several developments in packaging media have
taken place. In the early 80's, plastic pouches replaced the bottles. Plastic pouches
made transportation and storage very convenient, besides reducing costs. Milk
packed in plastic pouches/bottles have a shelf life of just 1-2 days , that too only if
refrigerated. In 1996, Tetra Packs were introduced in India. Tetra Packs are aseptic
laminate packs made of aluminum, paper, board and plastic. Milk stored in tetra
packs and treated under Ultra High Temperature (UHT) technique can be stored
for four months without refrigeration. Most of the dairy co-operatives in Andhra
Pradesh, Tamil Nadu, Punjab and Rajasthan sell milk in tetra packs. However tetra
packed milk is costlier by Rs5-7 compared to plastic pouches. In 1999-00 Nestle
launched its UHT milk. Amul too re-launched its Amul Taaza brand of UHT milk.
The UHT milk market is expected to grow at a rate of more than 10-12% in
coming years.
Export Potential
India has the potential to become one of the leading players in milk and milk
product exports. Locational advantage : India is located amidst major milk deficit
countries in Asia and Africa. Major importers of milk and milk products are
Bangladesh, China, Hong Kong, Singapore, Thailand, Malaysia, Philippines,
Japan, UAE, Oman and other gulf countries, all located close to India.
Low Cost Of Production : Milk production is scale insensitive and labour
intensive. Due to low labour cost, cost of production of milk is significantly lower
in India.
Concerns in export competitiveness are
Quality : Significant investment has to be made in milk procurement, equipments,
chilling and refrigeration facilities. Also, training has to be imparted to improve the
quality to bring it up to international standards.
Productivity : To have an exportable surplus in the long-term and also to maintain
cost competitiveness, it is imperative to improve productivity of Indian cattle.
12. There is a vast market for the export of traditional milk products such as ghee,
paneer, shrikhand, rasgolas and other ethnic sweets to the large number of Indians
scattered all over the world
India's exports of milk products
Description 1995-96 1996-97 1997-98
(Quantity, M T.:
Value, Rs. Quantity Value Quantity Value Quantity Value
million)
Skimmed milk
4,638.62 3,35.32 282.70 19.64 5.00 0.375
powder
Milk and Milk
8.27 2.019 111.37 4.27 11.00 2.02
Food for babies
Milk cream 332.23 28.04 1.00 0.084 - -
Sweetened
41.73 2.84 9.22 0.97 60.39 7.22
condensed milk
Whey 78.46 3.75 11.50 1.01 6.00 0.342
Ghee/Butter/Butter
7,895.08 431.1 299.97 19.2 4,352.08 2,38.95
oil
Cheese
(a) Fresh 0.10 0.013 - - - -
(b) Processed 5.67 1.20 2.1 0.375 22.10 2.19
(c) Other 66.64 8.35 36.78 0.69 24.84 4.55
TOTAL - 8,72.7 - 52.4 - 2,55.6
What does the Indian Dairy Industry has to Offer to Foreign Investors?
India is a land of opportunity for investors looking for new and expanding markets.
Dairy food processing holds immense potential for high returns. Growth prospects
in the dairy food sector are termed healthy, according to various studies on the
subject.
The basic infrastructural elements for a successful enterprise are in place.
Key elements of free market system
raw material (milk) availability
an established infrastructure of technology
13. supporting manpower
An entrepreneur's participation is likely to provide attractive returns on the
investment in a fast growing market such as India, along with an export potential in
the Middle East, Singapore, Malaysia, Indonesia, Korea, Thailand, Hong Kong and
other countries in the region.
Among several areas of potential participation by NRIs and foreign investors, the
following list outlines a few promising opportunities:
Biotechnology:
Dairy cattle breeding of the finest buffaloes and hybrid cows
Milk yield increase with recombinant somatotropin
Recombinant chymosin, acceptable to vegetarian consumers
Dairy cultures, probiotics, dairy biologics, enzymes and coloring materials
for food processing
Fermentation derived foods and industrial products alcohol, citric acid,
lysine, flavor preparations, etc.
Biopreservative ingredients based on dairy fermentation, viz., Nisin,
pediococcin, acidophilin, bulgarican contained in dairy powders.
Dairy/food processing equipment:
Potential exists for manufacturing and marketing of cost competitive food
processing machinery of world-class quality.
Food packaging equipment:
Opportunities lie in the manufacturing of both machinery and packaging materials
that help develop brand loyalty and a clear edge in the marketing of dairy foods.
Distribution channels:
For refrigerated and frozen food distribution, a world class cold chain would help
in providing quality assurance to the consumers around the region.
Retailing:
There is scope for standardizing and upgrading food retailing in major
metropolitan cities to meet the shopping needs of a vast middle class. This area
14. includes grocery stores of European and North American quality, warehousing and
distribution.
Product development:
Dairy foods can be manufactured and packaged for export to countries
where Indian food enjoys basic acceptance. The manufacturing may be
carried out in contract plants in India. An option to market the products in
collaboration with local establishments or entrepreneurs can also be
explored. Products exhibiting potential include typical indigenous dairy
foods either not available in foreign countries or products whose authenticity
may be questionable. Gulabjamuns, Burfi, Peda, Rasagollas, and a host of
other Indian sweets have good business prospects.
Products typically foreign to India but indigenous to other countries could
also be developed for export. Such products can be manufactured in retail
package sizes and could be produced from milk of sheep, goats and camel.
Certain products are characteristically produced from milk of a particular
species. For example, Feta cheese is used in significant tonnage, in Iran.
Sheep milk is traditionally used for authentic Feta cheese. Accordingly,
India's goat and sheep herds can be utilized for the manufacture of such
authentic products.
Ingredient manufacture:
Export markets for commodities like dry milk, condensed milk, ghee and certain
cheese varieties are well established. These items are utilized as ingredients in
foreign countries. These markets can be expanded to include value-added
ingredients like aseptically packaged cheese sauce and dehydrated cheese powders.
Cheese sauce: Canned cheese sauce is made from real cheese to which milk,
whey, modified food starch, vegetable oil, colorings and spices may be
added. Cheese sauce is useful in kitchens for the preparation of omelet,
sandwiches, entrees, and soups. In addition, cheese sauce is used as a
topping on potatoes and vegetables and may be incorporated in pasta dishes.
Cheese powders: Cheese powders are formulated for dusting or smearing of
popular snacks like potato chips, crackers, etc. They impart flavor and may
be blended with spices.
15. With the globalization of food items, an opportunity should open up for food
service and institutional markets.
Technology-driven manufacturing units:
These plants would fulfil an essential need by providing a centralized and
specialized facility for hire by the units which cannot justify capital investment but
do need such services. Potential areas for state-of-the-art contract-pack units may
conceivably specialize in cheese slicing, or dicing line, cheese packaging, butter
printing, and aseptic packaged fluid products.
Training centers for continuing education:
NRIs could set up technology transfer and updating centers for conducting
seminars and workshops - catering to the needs of workers at all levels of the dairy
industry. Here technical, marketing and management topics can be offered to
ensure that the manpower continues to acquire the latest know-how of their
respective fields.
The entrepreneurs need powerful tools to implement their plans. Appropriate
investment and involvement by NRIs can serve as a catalyst for India's dairy food
industry leading to exploration of business potential in domestic and export trade.
Risk factors must be identified and managed by in-depth study of chosen areas so
that chances of rewards are maximized under the current liberalization climate.
Indian (traditional) Milk Products
There are a large variety of traditional Indian milk products such as
Makkhan - unsalted butter.
Ghee - butter oil prepared by heat clarification, for longer shelf life.
Kheer - a sweet mix of boiled milk, sugar and rice.
Basundi - milk and sugar boiled down till it thickens.
Rabri - sweetened cream.
Dahi - a type of curd.
Lassi - curd mixed with water and sugar/ salt.
Channa/Paneer - milk mixed with lactic acid to coagulate.
Khoa - evaporated milk, used as a base to produce sweet meats.
16. The market for indigenous based milk food products is difficult to estimate as most
of these products are manufactured at home or in small cottage industries catering
to local areas.
Consumers while purchasing dairy products look for freshness, quality, taste and
texture, variety and convenience. Products like Dahi and sweets like Kheer,
Basundi, Rabri are perishable products with a shelf life of less than a day. These
products are therefore manufactured and sold by local milk and sweet shops. There
are several such small shops within the vicinity of residential areas. Consumer
loyalty is built by consistent quality, taste and freshness. There are several
sweetmeat shops, which have built a strong brand franchise, and have several
branches located in various parts of a city.
Branding Of Traditional Milk Products
Among the traditional milk products, ghee is the only product, which is currently
marketed, in branded form. main ghee brands are Sagar, MilkMan (Britannia),
Amul (GCMMF), Aarey (Mafco Ltd), Vijaya (AP Dairy Development Cooperative
Federation), Verka ( Punjab Dairy Cooperative), Everyday (Nestle) and Farm
Fresh (Wockhardt).
With increasing urbanization and changing consumer preferences, there is
possibility of large scale manufacture of indigenous milk products also. The
equipments in milk manufacturing have versatility and can be adapted for several
products. For instance, equipments used to manufacture yogurt also can be adapted
for large scale production of Indian curd products (dahi and lassi). Significant
research work has been done on dairy equipments under the aegis of NDDB.
Mafco Limited sells Lassi under the Aarey brand and flavoured milk under the
Energee franchise (in the Western region, mainly in Mumbai). Britannia has
launched flavored milk in various flavors in tetra packs.
GCMMF has also made a beginning in branding of other traditional milk products
with the launch of packaged Paneer under the Amul brand. It has also created a
new umbrella brand "Amul Mithaee", for a range of ethnic Indian sweets that are
proposed to be launched The first new product Amul Mithaee Gulabjamun has
already been launched in major Indian markets.
Western Milk Products
17. Western milk products such as butter, cheese, yogurt have gained popularity in the
Indian market only during the last few years. However consumption has been
expanding with increasing urbanization.
Butter
Most Indians prefer to use home made white butter (makkhan) for reasons of taste
and affordability. Most of the branded butter is sold in the towns and cities. The
major brands are Amul, Vijaya, Sagar, Nandini and Aarey. Amul is the leading
national brand while the other players have greater shares in their local markets.
The latest entrant in the butter market has been Britannia. Britannia has the
advantages of a wide distribution reach and a strong brand recall. Priced at par with
the Amul brand, it is expected to give stiff competition to the existing players. In
1999-00 the butter production is estimated at 4 lakh MT of this only 45K MT is in
the white form used for table purposes rest all is in the yellow form.
Cheese
The present market for cheese in India is estimated at about 9,000 tonnes and is
growing at the rate of about 15% per annum. Cheese is mainly consumed in the
urban areas. The four metro cities alone account for more than 50% of
consumption . Mumbai is the largest market (accounting for 30% of cheese sold in
the country), followed by Delhi (20%). Calcutta (7%) and Chennai (6%). Mumbai
has a larger number of domestic consumers, compared to Delhi where the bulk
institutional segment (mainly hotels) is larger.
Demand for various types of cheese in the Indian market
Type of cheese % of total consumption
Processed 50
Cheese spread 30
Mozzarella 10
Flavoured/Spiced 5
Others 5
18. The major players are Amul, Britannia, and Dabon International dominating the
market. Other major brands were Vijaya, Verka and Nandini (all brands of various
regional dairy cooperatives) and Vadilal. The heavy advertising and promotions
being undertaken by these new entrants is expected to lead to strong 20% growth
in the segment. Amul has also become more aggressive with launch of new
variants such as Mozzarella cheese (used in Pizza), cheese powder, etc.
The entry of new players and increased marketing activity is expected to expand
the market. All the major players are expanding their capacities
Capacity expansion in Cheese
Company Brands State Capacity
Dynamix Group Manufactures for Maharashtra 35 tons per
Britannia day
GCMMF Amul Gujarat 20 tons per
day
APDDCF Vijaya Andhra 10 tons per
Pradesh day
Milk Powder
Milk powder are mainly of 2 types
Whole milk powder
Skimmed milk powder
Whole milk powder contains fat, as distinguished from skimmed milk powder,
which is produced by removing fat from milk solids. Skimmed milk powder is
preferred by diet conscious consumers. Dairy whiteners contain more fat than
skimmed milk powder but less compared to whole milk powder. Dairy whiteners
are popular milk substitute for making tea, coffee etc. The penetration of these
products in milk abundant regions is driven by convenience and non perishable
nature (longer shelf life) of the product.
19. Dairy sector of advanced nations export milk products with a subsidy of $ 1000 per
tonne with a level of subsidy more than 60 % of the price of milk powder produced
in India, this has led to large scale imports of milk powder both in whole and
skimmed form. To protect the domestic sector from these subsidized imports the
central government has recently increased the basic import duty on all imports of
milk powder more than 10000 MT to 60% from 15%. For imports less than 10000
MT the basic customs duty has been left unchanged at 15%.
In 1999-00 India is estimated to have imported about 18,000 tonnes of milk
powder against a total estimated production of 2.40 Lakh MTs. In 2000-01 India is
expected to export 10000 MT of skimmed milk powder due to rise in international
prices to $2300 per MT from last year's levels of $1400 per MT. These
expectations are based on the strong demand from Russia, East Asia and Latin
America, and also on tightening of supply in EU, which accounts for 75% of the
annual global Skimmed Milk Powder exports.
Major Players
Milk Powder/Dairy Whiteners : Major skimmed milk brands are Sagar (GCMMF)
and Nandini (Karnataka Milk Federation), Amul Full Cream milk powder is a
whole milk powder brand.
Leading brands in the dairy whitener segment are Nestle's Everyday, GCMMF's
Amulya, Dalmia Industry's Sapan, Kwality Dairy India's KreamKountry,
Wockhardt's Farm Fresh and Britannia's MilkMan Dairy Whitener.
Condensed Milk
The condensed milk market has grown from 9000 MT in 1998 to 11000 MT in
1999. Condensed milk is a popular ingredient used in home-made sweets and
cakes. Nestle's Milkmaid is the leading brand with more than 55% market share.
The only other competitor is GCMMF's Amul.
Value addition in milk powder - Infant Foods
Nestle is the market leader in the segment. This is a category where brand loyalties
are very strong as mothers want the best for their babies. Heinz is the only other
significant competitor to Nestle in this segment. Nestle's Cerelac and Nestum
together have around 80% market share and Heinz's Farex has close to 18% share.
Wockhardt is a relatively new entrant with its First Food brand. Wockhardt also
proposes to launch a new baby food Easum containing moong (moong is one of the
20. easily digestible pulses). The Easum brand will directly compete with Nestle's
Nestum (made from rice).
In infant formula also Nestle's Lactogen formula and Lactogen standard formula
are the leading brands with around 75% market share. Other brands are Heinz's
Lactodex Farex, Wockhardt's Raptakos, and Amul's Amulspray
Regulatory Framework
The dairy industry was de-licensed in 1991 with a view to encourage private
investment and flow of capital and new technology in the segment. Although de-
licensing attracted a large number of players, concerns on issues like excess
capacity, sale of contaminated/ substandard quality of milk etc induced the
Government to promulgate the MMPO (Milk and Milk Products Order) in 1992.
Milk and Milk Products Order (MMPO) regulates milk and milk products
production in the country. The order requires no permission for units handling less
than 10,000 litres of liquid milk per day or milk solids up to 500 tpa. MMPO
prescribes State registration to plants producing between 10,000 to 75,000 litres of
milk per day or manufacturing milk products containing between 500 to 3,750
tonnes of milk solids per year. Plants producing over 75,000 litres per day or more
than 3,750 tonnes per year of milk solids have to be registered with the Central
Government. The stringent regulations, government controls and licensing
requirements for new capacities have restricted large Indian and MNC players
from making significant investments in this product category. Most of the private
sector players have restricted themselves to manufacture of value added milk
products like baby food, dairy whiteners, condensed milk etc.
All the milk products except malted foods are covered in the category of industries
for which foreign equity participation up to 51% is automatically allowed. Ice
cream, which was earlier reserved for manufacturing in the small-scale sector, has
now been de-reserved. As such, no license is required for setting up of large-scale
production facilities for manufacture of ice cream.
Subsequent to de-canalization, exports of some milk based products are freely
allowed provided these units comply with the compulsory inspection requirements
of concerned agencies like: National Dairy Development Board, Export Inspection
Council etc. Bureau of Indian standards has prescribed the necessary standards for
almost all milk-based products, which are to be adhered to by the industry.
Proposal to Amend the MMPO
21. A proposal to raise the exemption limit for compulsory registration of dairy plants,
from the present 10,000 litres a day to 20,000 litres, is being considered by the
Animal Husbandry Department. The 75,000-litre limit is likely to be raised either
to 100,000 litres or 125,000 litres in the amended order. The new order would also
do away with the provision for re-registration.
Amul's secret of success
The system succeeded mainly because it provides an assured market at
remunerative prices for producers' milk besides acting as a channel to market the
production enhancement package. What's more, it does not disturb the agro-system
of the farmers. It also enables the consumer an access to high quality milk and milk
products. Contrary to the traditional system, when the profit of the business was
cornered by the middlemen, the system ensured that the profit goes to the
participants for their socio-economic upliftment and common good.
Looking back on the path traversed by Amul, the following features make it a
pattern and model for emulation elsewhere. Amul has been able to:
Produce an appropriate blend of the policy makers farmers board of
management and the professionals: each group appreciating its roles and
limitations
Bring at the command of the rural milk producers the best of the technology
and harness its fruit for betterment
Provide a support system to the milk producers without disturbing their
agro-economic systems
Plough back the profits, by prudent use of men, material and machines, in
the rural sector for the common good and betterment of the member
producers and
Even though, growing with time and on scale, it has remained with the
smallest producer members. In that sense, Amul is an example par
excellence, of an intervention for rural change.
The Union looks after policy formulation, processing and marketing of milk,
provision of technical inputs to enhance milk yield of animals, the artificial
insemination service, veterinary care, better feeds and the like - all through the
village societies.
The village society also facilitates the implementation of various production
enhancement and member education programs undertaken by the Union. The staff
22. of the village societies have been trained to undertake the veterinary first-aid and
the artificial insemination activities on their own.
Amul's success: A model for other districts to follow.
Amul's success led to the creation of similar structures of milk producers in other
districts of Gujarat. They drew on Amul's experience in project planning and
execution. Thus the 'Anand Pattern' was followed not just in Kaira district but in
Mehsana, Sabarkantha, Banaskantha, Baroda and Surat districts also. Even before
the Dairy Board of India was born, farmers and their leaders carried out empirical
tests of the hypotheses that explained Amul's success. In these districts, milk
producers and their leaders experienced significant commonalties and found easy
and effortless ways to adapt Amul's gameplan to their respective areas. This led to
the Creation of the National Dairy Development Board with the clear mandate of
replicating the 'Anand pattern' in other parts of the country. Initially the pattern was
followed for the dairy sector but at a later stage oilseeds, fruit and vegetables, salt,
and tree sectors also benefited from it's success.
GCMMF: An Overview
Gujarat Cooperative Milk Marketing Federation (GCMMF) is India's largest food
products marketing organization. It is a state level apex body of milk cooperatives
in Gujarat which aims to provide remunerative returns to the farmers and also
serve the interest of consumers by providing quality products which are good value
for money.
Members: 12 district cooperative milk
producers' Union
No. of Producer Members: 2.12 million
No. of Village Societies: 10,411
Total Milk handling capacity: 6.1 million litres per day
Milk collection (Total - 1999-00): 1.59 billion litres
Milk collection (Daily Average 4.47 million litres
1999-00):
23. Milk Drying Capacity: 450 metric Tons per day
Cattle feed manufacturing Capacity: 1450 Mts per day
Sales Turnover Rs (million) US $ (in million)
1994-95 11140 355
1995-96 13790 400
1996-97 15540 450
1997-98 18840 455
1998-99 22192 493
1999-00 22185 493
Major dairy products manufacturers
Some of the major dairy products manufacturers in the country:
Company Brands Major Products
Nestle India Milkmaid,Cerelac, Sweetened condensed milk,
Limited Lactogen, Milo, malted foods, milk powder
Everyday and Dairy whitener
Milkfood Milkfood Ghee, ice cream, and other
Limited milk products
SmithKline Horlicks, Maltova, Malted Milkfood, ghee, butter,
Beecham Viva powdered milk, milk fluid and
Limited other milk based baby foods.
Indodan Indana Condensed milk, skimmed
Industries milk powder, whole milk
Limited powder, dairy milk whitener,
chilled and processed milk
Gujarat Co- Amul Butter, cheese and other milk
operative products
milk
Marketing
24. Federation
Limited
H.J. Heinz Farex, Complan, Infant Milkfood, malted
Limited Glactose, Bonniemix, Milkfood
Vitamilk
Britannia Milkman Flavoured milk, cheese, Milk
Powder, Ghee
Cadbury Bournvita Malted food
Future Prospects
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.
Milk production is relatively efficient way of converting vegetable material into
animal food. Dairy cows buffaloes goats and sheep can eat fodder and crop by
products which are not eaten by humans. Yet the loss of nutrients energy and
equipment required in milk handling inevitably make milk comparatively
expensive food. Also if dairying is to play its part in rural development policies ,
the price to milk producers has to be remunerative. In a situation of increased
international prices, low availabilities of food aid and foreign exchange constraints,
large scale subsidization of milk conception will be difficult in the majority of
developing countries.
Hence in the foreseeable future, in most of developing countries milk and milk
products will not play the same roll in nutrition as in the affluent societies of
developed countries. Effective demand will come mainly from middle and high
income consumers in urban areas.
There are ways to mitigate the effects of unequal distribution of incomes. In Cuba
where the Government attaches high priority to milk in its food and nutrition
policy, all pre-school children receive a daily ration of almost a litre of milk fat the
reduced price. Cheap milk and milk products are made available to certain other
vulnerable groups, by milk products outside the rationing system are sold price
25. which is well above the cost level. Until recently, most fresh milk in the big cities
of China was a reserved for infants and hospitals, but with the increase in supply,
rationing has been relaxed.
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 a
some what a reduced price has been widely practiced in developing countries. This
policies need to be brought in Indian Dairy scenario.
The indian dairy industry overview - Series 1
www.slideshare.net/.../the-indian-dairy-industry-overview-series-1-1...
2 Jan 2012 – An Overview of the Indian Dairy Industry & Segments within.
business.mapsofindia.com › milk-co-operatives
www.socialsciences-ejournal.org/4.6.Parameswara%20Reddy.pdf (growth of dairy
industry)
HEADLINES:
INDIAN DAIRY INDUSTRY
26. More than 10 million dairy farmers belong to 96,000 local dairy
Size of the Industry cooperatives, who sell their product to one of 170 milk producers’
cooperative unions who in turn are supported by 15 state cooperative
Geographical
Delhi, Punjab, Mumbai, Gujarat, Surat, Lucknow, Bihar, Hyderabad
distribution
Output per annum Growing 5 % per annum
Market
The industry contributes about Rs 1,15,970 to the national economy
Capitalization
History
India is the highest milk producer in the entire globe. India is
well known as the ‘Oyster’ of the global dairy industry, with
opportunities galore for the entrepreneurs globally. It might be
dream for any nation in the world to capitalize on the largest and
fastest growing milk and mil products' market. The dairy
industry in India has been witnessing rapid growth with
liberalization. As the economy provides good opportunities for
MNCs and foreign investors to release the full potential of this
industry. The main objective of the Indian Dairy Industry is to
manage the national resources in a manner to enhance milk
production and upgrade milk processing using innovative
technologies.
The crossbred technology in the Indian Dairy Industry has further augmented with the viability
of the dairy units by increasing the milk production per animal. Then subsequently milk
production has also increased at an exponential rate while the benefits of an increase in milk
production also reached the consumers from a relatively lower increase in the price of milk. The
favorable price environment for milk producers for the Dairy Industry in India however
appeared to have weakened during the 90's, a decline in the real price of milk being noticed
27. after the year 1992. And then slowly regained it is glory after 1992 to till now.
In India dairying from very much earlier is regarded as an instrument for social and economic
development. The country’s milk supply comes from millions of small producers, who are
dispersed throughout the rural areas. All these farmers maintain an average herd of one or two
milch animals, comprising cows and/or buffaloes. Mostly ample labour and a small land base
encourage farmers to practice dairying as an occupation subsidiary to agriculture. As income
from crop production is seasonal instead dairying provides a stable which is a year-round
income and also an important economic incentive for the small farmer.
Brief Introduction
India had tremendous milk production in 40 years and has become the
world’s largest milk-producing nation with a gross output of 84.6
million tons in 2001. The Indian Dairy Industry has achieved this
strength of a producer-owned and professionally-managed cooperative
system, despite the facts that a majority of dairy farmers are illiterate
and run small, marginal operations and for many farmers, selling milk is
their sole source of income. More than 10 million dairy farmers belong
to 96,000 local dairy cooperatives, who sell their products to one of 170
milk producers’ cooperative unions who in turn are supported by 15
state cooperative milk marketing federations.
In India dairy business has been practiced as rural cottage industry over the years. Semi-
commercial dairy started with the establishment of military dairy farms and co-operative milk
unions throughout the country towards the end of the 19th century. Since Independence this
Industry has made rapid progress. A large number of modern milk and milk product factories
have since been established.The organized dairies in India have been successfully engaged in
the routine commercial production of pasteurized bottled milk for Indian dairy products.
The growth of Indian Dairy Industry during the last three decades has been impressive, at more
than 5% per annum; and in the 90's the country has emerged as the largest producer of milk.
This is not a small achievement when we consider the fact that dairying in India is largely
stringent that farmers in general keep dairy animals in proportion to their free crop and also are
available for family labor with little or no purchased inputs and a minimum of marketed
outputs. The existence of restrictive trade policy milk in the Diary Industry and the emergence
of Amul type cooperatives have changed the dairy farming practices in the country. Farmers
have gained the favorable price for their milk and for their production which was essentially a
28. self-reliant one is which is now being transformed into a commercial proposition.
In India Milk production is dominated by small and marginal land-holding farmers and also by
landless labourers who in aggregate own 70% of the national milch animal herd. And as the
crop production on 78% of the agricultural land still depends on rain, which is prone to both
drought and floods, rendering agricultural income is very much uncertain for most of the
farmers. Dairying, as a subsidiary source of income and occupation, is real relief to most of the
farmers in the society. Usually one or two milch animals enable the farmers to generate
sufficient income to break the vicious subsistence agricultural-debt cycle.
The Operation Flood which is the successful Indian dairy development programmed has
analyzed that how food aid can be utilized as an investment in building the type of institutional
infrastructure that can bring about national dairy development. Programmes like this, with
similar policy orientations, may prove to be appropriate to dairy development in in India.
India in the early 1950's was commercially importing around 55000 tonnes of milk powder
annually to meet the urban milk demand. Most of the significant developments in dairying have
taken place in India in this century only.
India's Milk Product Mix
Fluid Milk 46.0%
Ghee 27.5%
Butter 6.5%
Curd 7.0%
Khoa (Partially Dehydrated
6.5%
Condensed Milk)
Milk Powders, including IMF 3.5%
Paneer & Chhana (Cottage Cheese) 2.0%
Others, including Cream, Ice Cream 1.0%
Total contribution to the economy/ sales
29. The Indian Dairy Industry engages in the production and processing of milk & cream. This
industry is involved in the manufacture of various dairy products like cheese, curd, yoghurt etc.
The Indian Dairy Industry specializes in the procurement, production, processing, storage and
distribution of dairy products. India as nation stands first in its share of dairy production in the
international scenario. The industry contributes about Rs 1,15,970 to the national economy.
Employment opportunities
The Indian Diary industry which is in the developing stage provides gainful employment to a
vast majority of the rural households. It employs about 8.47 million people on yearly basis out
of which 71% are women.
Jobs in Indian dairy industry are mainly in the fields of production and processing of dairy
products. An individual with minimum of 60% marks who has bachelor’s degree course in the
dairy technology can easily be availing an opportunity to work in this industry. For the
graduation course in Dairy technology one has to qualify the All India Entrance Test that is
affiliated to the Indian Council of Agricultural Research. After that the person can continue with
his masters in dairy technology. Jobs would be for the following positions.
Dairy Scientists: The main job of the dairy scientists is to deal with collection of milk
and taking care of the high yielding variety of animals.
Dairy Technologists: the work of Dairy technology requires procurement officers who
take the responsibility of collecting milk from farmers, milk booths ad cattle-rearers. This
particular procurement officer should well understand the latest technology that is
applicable in maintaining the quality of milk of the process of transporting it to the
desired location.
Dairy Engineers: dairy engineers are usually appointed is to set up and maintain dairy
plants.
Marketing Personnel: These individuals deal with the sale and marketing of milk
together with milk products.
Amul's success story
30. Amul's success had huge impact in the creation of same structure
of milk producers in other districts of Gujarat initially. Amul's
experience was driving force in project planning and execution.
The ‘Anand Pattern' was followed in Kaira district, Mehsana,
Sabarkantha, Banaskantha, Baroda and Surat districts. As even
before the setting up of the Dairy Board of India, farmers and
their leaders carried out various tests of the hypotheses that
explained Amul's success. All through these districts, milk
producers and their leaders experienced significant commonalties
and found easy, effortless ways to adapt Amul's gameplan to their
respective areas. This eventually led to the Creation of the
National Dairy Development Board with the clear mandate of
replicating the 'Anand pattern' in other parts of the country.
Initially this pattern was followed for the dairy Industry but at
later stage oilseeds, fruit and vegetables, salt, and tree sectors also
benefited from its success.
Latest developments
Indian Dairy Industry is the largest milk producer all over the world, around 100 million
MTIndian Dairy Industries value of output amounted to Rs. 1179 billion in 2004-05
which approximately equals combined output of paddy and wheat. With 1/5th of the
world’s bovine population
In India the Milch animals constitutes 45% indigenous cattle, 55 % buffaloes, and 10%
cross bred cows
Intensive Dairy Development Programmed (IDDP): The Schemes, modified under this
programmes are on the basis of the recommendation of the evaluation studies which were
launched during Eighth Plan period and is being continued through out the Eleventh Plan with
an outlay of Rs. 32.49 core for 2009-10.
Strengthening Infrastructure for Quality and Clean Milk Production (CMP): this is a
centrally sponsored scheme which was launched in October 2003, which had the main objective
of improving the quality of raw milk produced at the every village level in the India.
Dairy Venture Capital Fund- this is introduced in the Tenth Fiver Year Plan to bring about
structural changes in unorganized sector, which would measure like milk processing at village
31. level, marketing of pasteurized milk in a cost effective manner, quality or the up gradation of
traditional technology to handle commercial scale using modern equipments and management
skills.
Updated: Jan 2011
Indian Industries
Aluminium industry, Cement industry, Construction
industry, Copper industry, Dairy industry, Diamond
industry, Fashion industry, Fertilizer industry, Film
Classified industry, Granite industry, Health care industry, Jewellery
under RED category industry, Mining industry, Oil industry, Paint industry, Paper
industry, Power industry, Printing industry, Rubber
industry, Silk industry,Soap industry, Steel industry, Sugar
industry, Textile industry, Tabacco industry, Zinc industry
Automobile industry, Cotton industry, Hotel industry, Jute
Classified
industry, Pharmaceutical industry, Tractor industry, Weaving
under ORANGE category
industry
Advertising industry, Agricultural industry, Aviation
industry, Banking industry,Biotechnology industry, Biscuit
industry, Chocolate industry, Coir industry, Cosmetic
industry, Cottage industry, Electronic industry, Food Processing
Classified
industry, Furniture industry, Garment industry, Insurance
under GREEN category
industry, IT industry, Leather industry, Music industry, Mutual
fund industry, Pearl industry, Plastic industry, Poultry
industry, Railway industry, Real estate industry, Shipping
industry, Solar industry