12/27/2014

IndiandairyIndustry

IndiandairyIndustryaprofile
Today,Indiais'TheOyster'oftheglobaldairyindustry.Itoffersopportunitiesgaloreto
entrepreneursworldwide,whowishtocapitalizeononeoftheworld'slargestandfastest
growingmarketsformilkandmilkproducts.Abagfulof'pearls'awaitstheinternational
dairyprocessorinIndia.TheIndiandairyindustryisrapidlygrowing,tryingtokeeppace
withthegallopingprogressaroundtheworld.Asheexpandshisoverseasoperationsto
Indiamanyprofitableoptionsawaithim.Hemaytransfertechnology,signjointventuresor
useIndiaasasourcingcenterforregionalexports.TheliberalizationoftheIndian
economybeckonstoMNC'sandforeigninvestorsalike.
Indias 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
expectedtocomeintoforceincomingyearsallthedevelopedcountrieswhichareamong
bigexporterstodaywouldhavetowithdrawthesupportandsubsidytotheirdomesticmilk
products sector. Also India today is the lowest cost producer of per litre of milk in the
world,at27cents,comparedwiththeU.S'63cents,andJapans$2.8dollars.Alsototake
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
producershavealreadyobtainedqualitystandardcertificatesfromtheauthorities.Thiswill
helptheminmarketingtheirproductsinforeigncountriesinprocessedform.
Theurbanmarketformilkproductsisexpectedtogrow 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
fiftypercentofthebuffaloesandtwentypercentofthecattleintheworldarefoundinIndia
andmostofthesearemilchcowsandmilchbuffaloes.
Indian dairy sector contributes the large share in agricultural gross domestic products.
Presently there are around 70,000 village dairy cooperatives across the country. The co
operativesocietiesarefederatedinto170districtmilkproducersunions,whichis turn has
22state cooperative dairy federation. Milk production gives employment to more than
72mndairyfarmers.Intermsoftotalproduction,Indiaistheleadingproducerofmilkinthe
world followed by USA. The milk production in 199900 is estimated at 78mn MT as
compared to 74.5mn MT in the previous year. This production is expected to increase to
81mnMTby200001.Ofthistotalproduceof78mncows'milkconstitute36mnMTwhile
restisfromothercattle.
While world milk production declined by 2 per cent in the last three years, according to
FAOestimates,Indianproductionhasincreasedby4percent.ThemilkproductioninIndia
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.
Althoughmilkproductionhasgrownatafastpaceduringthelastthreedecades(courtesy:
OperationFlood),milkyieldperanimalisverylow.Themainreasonsforthelowyieldare
Lackofuseofscientificpracticesinmilching.
Inadequateavailabilityoffodderinallseasons.
Unavailabilityofveterinaryhealthservices.
MilkYieldcomparison:

http://www.aavinmilk.com/dairyprofile.html

Country

MilkYield(Kgs
peryear)

USA

7002
1/14

12/27/2014

IndiandairyIndustry

UK

5417

Canada

5348

NewZealand

2976

Pakistan

1052

India

795

World(Average)

2021

Source:Exportprospectsforagrobasedindustries,WorldTradeCentre,Mumbai.

ProductionofmilkinIndia
Year

ProductioninmillionMT

198889

48.4

198990

51.4

199091

53.7

199192

56.3

199293

58.6

199394

61.2

199495

63.5

199596

65

199697

68.5

199798

70.8

199899

74.7

199900(E)

78.1

200001(T)

81.0

E=estimated
T=target/expected
Source:DFPI,AnnualReport19992000

World'smajormilkproducers
(MillionMTs)
Country

199798

199899(Approx.)

India

71

74.5

USA

71

71

Russia

34

33

Germany

27

27

France

24

24

Pakistan

21

22

Brazil

21

27

UK

14

14

Ukraine

15

14

Poland

12

12

NewZealand

11

12

Netherlands

11

11

Italy

10

10

Australia

10

OperationFlood

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.
programmeundertheaegisoftheformerChairmanoftheboardDr.Kurien.
Launchedin1970,OperationFloodhasledtothemodernizationofIndia'sdairysectorand
created a strong network for procurement processing and distribution of milk by the co
operativesector.Percapitaavailabilityofmilkhasincreasedfrom132gmperdayin1950
http://www.aavinmilk.com/dairyprofile.html

2/14

12/27/2014

IndiandairyIndustry

toover220gmperdayin1998.ThemainthrustofOperationFloodwastoorganizedairy
cooperativesinthemilkshedareasofthevillage,andtolinkthemtothefourMetrocities,
whicharethemainmarketsformilk.TheeffortsundertakenbyNDDBhavenotonlyledto
enhancedproduction,improvementinmethodsofprocessinganddevelopmentofastrong
marketingnetwork,buthavealsoledtotheemergenceofdairyingasanimportantsource
ofemploymentandincomegenerationintheruralareas.Ithasalsoledtoanimprovement
inyields,longerlactationperiods,shortercalvingintervals,etcthroughthe 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 the world's largest dairy development programme and
looking at the success achieved in India by adopting the cooperative route, a few other
countrieshavealsoreplicatedthemodelofIndia'sWhiteRevolution.
PerCapitaavailabilityofmilk

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
*Operationfloodwaslaunchedin1970

FreshMilk
Over50%ofthemilkproducedinIndiaisbuffalomilk, 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%milksugar,0.8%ashand82.7%waterwhereascowmilkhas
3.5%protein,3.7%fat,4.9%milksugar,0.7%ashand87%water.Whilepresently(forthe
year 2000) the price of Buffalo milk is ruling at $261313 per MT that of cow is ruling at
$170267perMT.Freshpasteurized 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.
SterilizedmilkisscarcelyavailableinIndia.
Packagedmilkcanbedividedaccordingtofatcontentasfollows,
Whole(fullcream)milk6%fat
Standardized(toned)milk4.5%fat
Doubledtoned(lowfat)milk3%fat
Anothercategoryofmilk,whichhasasmallmarketisflavouredmilk.

TheIndianMarketAPyramid
ConsumerHabitsAndPractices
Milk has been an integral part of Indian food for centuries. The per capita availability of
milkinIndiahasgrownfrom172gmperpersonperdayin1972to182gmin1992and203
gmin199899.Thisisexpectedtoincreaseto212gmsfor199900.Howeveralargepartof
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
CommitteeoftheIndianCouncilofMedicalResearch.
http://www.aavinmilk.com/dairyprofile.html

3/14

12/27/2014

IndiandairyIndustry

There are regional disparities in production and consumption also. The per capita
availabilityinthenorthis278gm,west174gm,south148gmandintheeastonly93gm
per person per day. This disparity is due to concentration of milk production in some
pocketsandhighcostoftransportation.Alsotheoutputofmilkincereal growing areas is
muchhigherthanelsewherewhichcanbeattributedtoabundantavailabilityoffodder,crop
residues,etcwhichhaveahighfoodvalueformilchanimals.
InIndiaabout46percentofthetotalmilkproducedisconsumedinliquidformand47per
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%.
It is estimated that around 20% of the total milk produced in the country is consumed at
producerhousehold level and remaining is marketed through various cooperatives, private
dairiesandvendors.Alsoofthetotalproducemorethan50%isprocuredbycooperatives
andotherprivatedairies.
Whileforcooperativesofthetotalmilkprocured60%isconsumedinfluidformandrestis
usedformanufacturingprocessedvalueaddeddairyproductsforprivatedairiesonly45%
ismarketedinfluid form and rest is processed into value added dairy products like ghee,
makhanetc.
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
packagingcapacitylimitstheavailabilityofpackagedmilk.
ThepreferreddairyanimalinIndiaisbuffalounlikethemajorityoftheworldmarket,which
isdominatedbycowmilk.Ashighas98%ofmilkisproducedinruralIndia,whichcaters
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
comesfromtheunorganizedtraditionalsector.
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
thesevendorsaddwaterandcausticsoda,whichmakesthemilkunhygienic.
India'sdairymarketismultilayered.It'sshapedlikeapyramidwiththebasemadeupofa
vastmarketforlowcostmilk.Thebulkofthedemandformilkisamongthepoorinurban
areaswhoseindividualrequirementissmall,maybeaglassfulforuseaswhitenerfor their
teaandcoffee.Nevertheless,itaddsuptoasizablevolumemillionsoflitresperday.In
themajorcitiesliesanimmensegrowthpotential 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
packedmilksegmentwoulddoubleinthenextfiveyears,givingbothstrengthandvolume
to the modern sector. The narrow tip at the top is a small but affluent market for western
typemilkproducts.

GrowingVolumes
Theeffectivemilkmarketislargelyconfinedtourbanareas,inhabitedbyover25percent
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 to
increase by more than 100 million to touch 364 million in 2000 a growth of

about40percent.Theexpectedriseinurbanpopulationwouldbeaboon
toIndian dairying. Presently, the organized sector both cooperative and private and the
traditionalsectorcatertothismarket.
The consumer access has become easier with the information revolution. The number of
http://www.aavinmilk.com/dairyprofile.html

4/14

12/27/2014

IndiandairyIndustry

householdswithTVhasincreasedfrom23millionin1989to45millionin1995.About34
percentofthesehouseholdsinurbanIndiahaveaccesstosatellitetelevisionchannel.

Potentialforfurthergrowth
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,
becauseoftheamplescopeforincreasingmilkproduction,giventheprevailinglowyields
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
polythenesachets.Already,theglassbottleforretailingmilkhasgiven way to singleuse
sachetswhicharemoreeconomical.Anotherviablealternativeistosellsmallquantitiesof
milkpowderinminisachets,adequatefortwocupsofteaorcoffee.

MarketingStrategyfor2000AD
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
changingmarketingtrendswillseetheshiftfromgenericproducts to the packaged quasi,
regular and premium brands. The national brands will gradually edge out the regional
brandsorreducetheirpresence.Thebrandimagecandowonderstoaproduct'smarketing
as is evident from the words of Perfume Princess Coco Channel: In the factory, we pack
perfumeinthemarket,wesellhope!

EmergingDairyMarkets
Foodserviceinstitutionalmarket:Itisgrowingatdoubletherateofconsumer
market
Defensemarket:Animportantgrowingmarketforqualityproductsatreasonable
prices
Ingredientsmarket:Aboomisforecastinthemarketofdairyproductsusedas
rawmaterialinpharmaceuticalandalliedindustries
Parlourmarket:Theincreasingawayfromhomeconsumptiontrendopensnew
vistasforreadytoservedairyproductswhichwouldridepiggybackonthefastfood
revolutionsweepingtheurbanIndia.
India, with her sizable dairy industry growing rapidly and on the path of modernization,
wouldhaveaplaceinthesunof prosperity for many decades to come. The one index to
thestatementisthefactthattheprojectedtotalmilkoutputoverthenext15years(1995
2010)wouldexceed1457.6milliontonneswhichistwicethetotalproductionofthepast15
years!
Penetrationofmilkproducts
Westerntablespreadssuchasbutter,margarineandjamsarenotverypopularinIndia.All
Indiapenetrationofbutter/margarineisonly4%.Thisisalsolargelyrepresentedbyurban
areas,wherepenetrationishigherat9%.Inruralareas,butter/margarinehave penetrated
in2.1%ofhouseholdsonly.Theuseoftheseproductsinthe large metros is higher, with
penetrationat15%.
Penetration of cheese is almost nil in rural areas and negligible in the urban areas. Per
capitaconsumptionevenamongthecheeseconsuminghouseholdsisapoor2.4kgpaas
compared to over 20kg in USA. The lower penetration is due to peculiar food habits,
relativelyexpensiveproductsandalsononavailabilityinmanypartsofthecountry. Butter,
margarineandcheeseproductsaremainlymanufacturedbyorganizedsector.
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,
http://www.aavinmilk.com/dairyprofile.html

5/14

12/27/2014

IndiandairyIndustry

whicharemilksurplusregions.Northaccountsfor57%ofgheeconsumptionandWestfor
23%,South&Easttogetheraccountforthebalance20%.Alargepartofgheeismadeat
home and by small/ cottage industry from milk. The relative share of branded products in
thiscategoryisverylowataround12%.
Milk powder and condensed milk have not been able to garner any significant consumer
acceptanceinIndiaasindicatedbyaverylow4.7%penetration.Thepenetrationishigher
at8.1%inurbanareasandlowerat3.5%inruralareas.Withinurbanareas,itisrelatively
higherinmediumsizedtownsat8.5%comparedto7.7%inalargemetros.
MarketSizeAndGrowth
Marketsizeformilk(soldinloose/packagedform)isestimatedtobe36mnMTvaluedat
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
productsisconcentratedinthesemilksurplusStates.Thetop6statesviz.UttarPradesh,
Punjab,MadhyaPradesh,Rajasthan,TamilNaduandGujarattogetheraccountfor58%of
nationalproduction.
Milkproductiongrewbyamere1%pabetween1947and1970.Sincetheearly70's,under
OperationFlood,productiongrowthincreasedsignificantlyaveragingover5%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.
Theproductionofmilkproducts,i.e.milkproductsincludinginfantmilkfood,maltedfood,
condensed milk & cheese stood at 3.07 lakh MT in 1999. Production of milk powder
includinginfantmilkfoodhasrisento2.25lakhMTin1999,whereasthatofmaltedfoodis
at 65000 MT. Cheese and condensed milk production stands at 5000 and 11000 MT
respectivelyinthesameyear.
(Source:AnnualReport19992000,DFPI)

MajorPlayers
Thepackagedmilksegmentisdominatedbythedairycooperatives. Gujarat Cooperative
MilkMarketingFederation(GCMMF)isthelargestplayer.Allotherlocaldairycooperatives
havetheirlocalbrands(Fore.g.Gokul,WaranainMaharashtra,SarasinRajasthan,Verka
in Punjab, Vijaya in Andhra Pradesh, Aavin in Tamil Nadu, etc). Other private players
includeJKDairy,HeritageFoods,IndianaDairy,DairySpecialties, etc. Amrut Industries,
oncealeadingplayerinthesectorhasturnedbankruptandisfacingliquidation.
PackagingTechnology
Milk was initially sold doortodoor by the local milkman. When the dairy cooperatives
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 12 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
operativesinAndhraPradesh,TamilNadu,PunjabandRajasthansellmilkintetrapacks.
However tetra packed milk is costlier by Rs57 compared to plastic pouches. In 199900
Nestle launched its UHT milk. Amul too relaunched its Amul Taaza brand of UHT milk.
TheUHTmilkmarketisexpectedtogrowatarateofmorethan1012%incomingyears.

ExportPotential
India has the potential to become one of the leading players in milk and milk product
http://www.aavinmilk.com/dairyprofile.html

6/14

12/27/2014

IndiandairyIndustry

exports.Locationaladvantage:IndiaislocatedamidstmajormilkdeficitcountriesinAsia
andAfrica.MajorimportersofmilkandmilkproductsareBangladesh,China,HongKong,
Singapore,Thailand,Malaysia,Philippines,Japan,UAE,Omanandothergulfcountries,all
locatedclosetoIndia.
Low Cost Of Production : Milk production is scale insensitive and labour intensive. Due
tolowlabourcost,costofproductionofmilkissignificantlylowerinIndia.
Concernsinexportcompetitivenessare
Quality:Significantinvestmenthastobemadeinmilkprocurement, equipments, chilling
andrefrigerationfacilities.Also,traininghastobeimpartedtoimprovethequalitytobringit
uptointernationalstandards.
Productivity : To have an exportable surplus in the longterm and also to maintain cost
competitiveness,itisimperativetoimproveproductivityofIndiancattle.
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
overtheworld
India'sexportsofmilkproducts
Description
(Quantity,MT.:Value,Rs.million)

199596
Quantity

Value

199697
Quantity

Value

199798
Quantity

Value

Skimmedmilkpowder

4,638.62

3,35.32

282.70

19.64

5.00

0.375

MilkandMilkFoodforbabies

8.27

2.019

111.37

4.27

11.00

2.02

Milkcream

332.23

28.04

1.00

0.084

Sweetenedcondensedmilk

41.73

2.84

9.22

0.97

60.39

7.22

Whey

78.46

3.75

11.50

1.01

6.00

0.342

Ghee/Butter/Butteroil

7,895.08

431.1

299.97

19.2

4,352.08

2,38.95

(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

Cheese

WhatdoestheIndianDairyIndustryhastoOffer
toForeignInvestors?
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
foodsectoraretermedhealthy,accordingtovariousstudiesonthesubject.
Thebasicinfrastructuralelementsforasuccessfulenterpriseareinplace.
Keyelementsoffreemarketsystem
rawmaterial(milk)availability
anestablishedinfrastructureoftechnology
supportingmanpower
Anentrepreneur'sparticipationislikelytoprovideattractivereturnsontheinvestmentina
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.
AmongseveralareasofpotentialparticipationbyNRIsandforeigninvestors,thefollowing
listoutlinesafewpromisingopportunities:

Biotechnology:
Dairycattlebreedingofthefinestbuffaloesandhybridcows
Milkyieldincreasewithrecombinantsomatotropin
http://www.aavinmilk.com/dairyprofile.html

7/14

12/27/2014

IndiandairyIndustry

Recombinantchymosin,acceptabletovegetarianconsumers
Dairycultures,probiotics,dairybiologics,enzymesandcoloringmaterialsforfood
processing
Fermentationderivedfoodsandindustrialproductsalcohol,citricacid,lysine,flavor
preparations,etc.
Biopreservativeingredientsbasedondairyfermentation,viz.,Nisin,pediococcin,
acidophilin,bulgaricancontainedindairypowders.

Dairy/foodprocessingequipment:
Potential exists for manufacturing and marketing of cost competitive food processing
machineryofworldclassquality.

Foodpackagingequipment:
Opportunitieslieinthemanufacturingofbothmachineryandpackagingmaterialsthathelp
developbrandloyaltyandaclearedgeinthemarketingofdairyfoods.

Distributionchannels:
For refrigerated and frozen food distribution, a world class cold chain would help in
providingqualityassurancetotheconsumersaroundtheregion.

Retailing:
Thereisscopeforstandardizingandupgradingfoodretailinginmajormetropolitancitiesto
meet the shopping needs of a vast middle class. This area includes grocery stores of
EuropeanandNorthAmericanquality,warehousinganddistribution.

Productdevelopment:
DairyfoodscanbemanufacturedandpackagedforexporttocountrieswhereIndian
foodenjoysbasicacceptance.Themanufacturingmaybecarriedoutincontract
plantsinIndia.Anoptiontomarkettheproductsincollaborationwithlocal
establishmentsorentrepreneurscanalsobeexplored.Productsexhibitingpotential
includetypicalindigenousdairyfoodseithernotavailableinforeigncountriesor
productswhoseauthenticitymaybequestionable.Gulabjamuns,Burfi,Peda,
Rasagollas,andahostofotherIndiansweetshavegoodbusinessprospects.
ProductstypicallyforeigntoIndiabutindigenoustoothercountriescouldalsobe
developedforexport.Suchproductscanbemanufacturedinretailpackagesizes
andcouldbeproducedfrommilkofsheep,goatsandcamel.Certainproductsare
characteristicallyproducedfrommilkofaparticularspecies.Forexample,Feta
cheeseisusedinsignificanttonnage,inIran.Sheepmilkistraditionallyusedfor
authenticFetacheese.Accordingly,India'sgoatandsheepherdscanbeutilizedfor
themanufactureofsuchauthenticproducts.

Ingredientmanufacture:
Export markets for commodities like dry milk, condensed milk, ghee and certain cheese
varietiesarewellestablished.These items are utilized as ingredients in foreign countries.
These markets can be expanded to include valueadded ingredients like aseptically
packagedcheesesauceanddehydratedcheesepowders.
Cheesesauce:Cannedcheesesauceismadefromrealcheesetowhichmilk,
whey,modifiedfoodstarch,vegetableoil,coloringsandspicesmaybeadded.
Cheesesauceisusefulinkitchensforthepreparationofomelet,sandwiches,
entrees,andsoups.Inaddition,cheesesauceisusedasatoppingonpotatoesand
vegetablesandmaybeincorporatedinpastadishes.
Cheesepowders:Cheesepowdersareformulatedfordustingorsmearingof
popularsnackslikepotatochips,crackers,etc.Theyimpartflavorandmaybe
blendedwithspices.
http://www.aavinmilk.com/dairyprofile.html

8/14

12/27/2014

IndiandairyIndustry

With the globalization of food items, an opportunity should open up for food service and
institutionalmarkets.

Technologydrivenmanufacturingunits:
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 stateoftheart contractpack units may conceivably
specialize in cheese slicing, or dicing line, cheese packaging, butter printing, and aseptic
packagedfluidproducts.

Trainingcentersforcontinuingeducation:
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
continuestoacquirethelatestknowhowoftheirrespectivefields.

The entrepreneurs need powerful tools to implement their plans. Appropriate investment
andinvolvementbyNRIscanserveasacatalystforIndia'sdairyfoodindustryleadingto
exploration of business potential in domestic and export trade. Risk factors must be
identifiedandmanagedbyindepthstudyofchosenareassothatchancesof rewards are
maximizedunderthecurrentliberalizationclimate.
Indian(traditional)MilkProducts
TherearealargevarietyoftraditionalIndianmilkproductssuchas
Makkhanunsaltedbutter.
Gheebutteroilpreparedbyheatclarification,forlongershelflife.
Kheerasweetmixofboiledmilk,sugarandrice.
Basundimilkandsugarboileddowntillitthickens.
Rabrisweetenedcream.
Dahiatypeofcurd.
Lassicurdmixedwithwaterandsugar/salt.
Channa/Paneermilkmixedwithlacticacidtocoagulate.
Khoaevaporatedmilk,usedasabasetoproducesweetmeats.
Themarketforindigenousbasedmilkfoodproductsisdifficulttoestimateasmostof
theseproductsaremanufacturedathomeorinsmallcottageindustriescateringtolocal
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
manufacturedandsoldbylocalmilkandsweetshops.Thereareseveralsuchsmallshops
withinthevicinityofresidentialareas.Consumerloyaltyisbuiltbyconsistentquality,taste
and freshness. There are several sweetmeat shops, which have built a strong brand
franchise,andhaveseveralbrancheslocatedinvariouspartsofacity.
BrandingOfTraditionalMilkProducts
Amongthetraditionalmilkproducts,gheeistheonlyproduct,whichiscurrentlymarketed,
inbrandedform.maingheebrandsareSagar,MilkMan(Britannia),Amul(GCMMF),Aarey
(MafcoLtd),Vijaya(APDairyDevelopmentCooperativeFederation),Verka(PunjabDairy
Cooperative),Everyday(Nestle)andFarmFresh(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,
equipmentsusedtomanufactureyogurtalsocanbeadaptedforlargescale production of
Indian curd products (dahi and lassi). Significant research work has been done on dairy
equipmentsundertheaegisofNDDB.
http://www.aavinmilk.com/dairyprofile.html

9/14

12/27/2014

IndiandairyIndustry

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
invariousflavorsintetrapacks.
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"AmulMithaee",forarangeofethnicIndiansweetsthatareproposedtobelaunched
ThefirstnewproductAmulMithaeeGulabjamunhasalreadybeenlaunchedinmajor Indian
markets.
WesternMilkProducts
Westernmilkproductssuchasbutter,cheese,yogurthavegainedpopularityintheIndian
market only during the last few years. However consumption has been expanding with
increasingurbanization.
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
markethasbeenBritannia.Britanniahastheadvantagesofawidedistributionreachanda
strong brand recall. Priced at par with the Amul brand, it is expected to give stiff
competitiontotheexistingplayers.In199900thebutterproductionisestimatedat4lakh
MTofthisonly45KMTisinthewhiteformusedfortablepurposesrestallisintheyellow
form.
Cheese
ThepresentmarketforcheeseinIndiaisestimatedatabout9,000tonnesandisgrowing
attherateofabout15%perannum.Cheeseismainlyconsumedintheurbanareas.The
fourmetrocitiesaloneaccountformorethan50%ofconsumption.Mumbaiisthelargest
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,
comparedtoDelhiwherethebulkinstitutionalsegment(mainlyhotels)islarger.

DemandforvarioustypesofcheeseintheIndianmarket

Typeofcheese

%oftotalconsumption

Processed

50

Cheesespread

30

Mozzarella

10

Flavoured/Spiced

Others

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
(usedinPizza),cheesepowder,etc.
The entry of new players and increased marketing activity is expected to expand the
market.Allthemajorplayersareexpandingtheircapacities
CapacityexpansioninCheese

http://www.aavinmilk.com/dairyprofile.html

10/14

12/27/2014

IndiandairyIndustry

Company

Brands

State

Capacity

DynamixGroup

ManufacturesforBritannia

Maharashtra

35tonsperday

GCMMF

Amul

Gujarat

20tonsperday

APDDCF

Vijaya

AndhraPradesh

10tonsperday

MilkPowder
Milkpowderaremainlyof2types
Wholemilkpowder
Skimmedmilkpowder
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
drivenbyconvenienceandnonperishablenature(longershelflife)oftheproduct.
Dairysectorofadvancednationsexportmilkproductswithasubsidyof$1000pertonne
withalevelofsubsidymorethan60%ofthepriceofmilkpowderproducedinIndia,this
hasledtolargescaleimportsofmilkpowderbothinwholeandskimmedform.Toprotect
the domestic sector from these subsidized imports the central government has recently
increasedthebasicimportdutyonallimportsofmilkpowdermorethan10000MTto60%
from 15%. For imports less than 10000 MT the basic customs duty has been left
unchangedat15%.
In199900Indiaisestimatedtohaveimportedabout18,000tonnesofmilkpowderagainst
a total estimated production of 2.40 Lakh MTs. In 200001 India is expected to export
10000MTofskimmedmilkpowderduetoriseininternationalpricesto$2300perMTfrom
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
accountsfor75%oftheannualglobalSkimmedMilkPowderexports.
MajorPlayers
Milk Powder/Dairy Whiteners : Major skimmed milk brands are Sagar (GCMMF) and
Nandini(KarnatakaMilkFederation),AmulFullCreammilkpowderisawholemilkpowder
brand.
Leading brands in the dairy whitener segment are Nestle's Everyday, GCMMF's Amulya,
DalmiaIndustry'sSapan,KwalityDairyIndia'sKreamKountry,Wockhardt'sFarmFreshand
Britannia'sMilkManDairyWhitener.
CondensedMilk
The condensed milk market has grown from 9000 MT in 1998 to 11000 MT in 1999.
Condensed milk is a popular ingredient used in homemade sweets and cakes. Nestle's
Milkmaidistheleadingbrandwithmorethan55%marketshare.Theonlyothercompetitor
isGCMMF'sAmul.
ValueadditioninmilkpowderInfantFoods
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
newentrantwithitsFirstFoodbrand.Wockhardtalsoproposestolaunchanewbabyfood
Easumcontainingmoong(moongisoneoftheeasilydigestiblepulses).TheEasumbrand
willdirectlycompetewithNestle'sNestum(madefromrice).
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'sRaptakos,andAmul'sAmulspray
http://www.aavinmilk.com/dairyprofile.html

11/14

12/27/2014

IndiandairyIndustry

RegulatoryFramework
The dairy industry was delicensed in 1991 with a view to encourage private investment
and flow of capital and new technology in the segment. Although delicensing 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
handlinglessthan10,000litresofliquidmilkperdayormilksolids up to 500 tpa. MMPO
prescribesStateregistrationtoplantsproducingbetween10,000to75,000litresofmilkper
dayormanufacturingmilkproductscontainingbetween500to3,750tonnesofmilk solids
peryear.Plantsproducingover75,000litresperdayormorethan3,750tonnesperyearof
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
addedmilkproductslikebabyfood,dairywhiteners,condensedmilketc.
All the milk products except malted foods are covered in the category of industries for
whichforeignequityparticipationupto51%isautomaticallyallowed.Icecream,whichwas
earlierreservedformanufacturinginthesmallscalesector,hasnowbeendereserved.As
such, no license is required for setting up of largescale production facilities for
manufactureoficecream.
Subsequent to decanalization, exports of some milk based products are freely allowed
provided these units comply with the compulsory inspection requirements of concerned
agencieslike:NationalDairyDevelopmentBoard,ExportInspectionCounciletc.Bureauof
Indian standards has prescribed the necessary standards for almost all milkbased
products,whicharetobeadheredtobytheindustry.
ProposaltoAmendtheMMPO
Aproposaltoraisetheexemptionlimitforcompulsoryregistrationofdairyplants,fromthe
present 10,000 litres a day to 20,000 litres, is being considered by the Animal Husbandry
Department. The 75,000litre 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'ssecretofsuccess
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
enhancementpackage.What'smore,itdoesnotdisturbtheagrosystemofthefarmers.It
also enables the consumer an access to high quality milk and milk products. Contrary to
thetraditionalsystem,whentheprofitofthebusinesswascorneredbythemiddlemen,the
systemensuredthattheprofitgoestotheparticipants for their socioeconomic upliftment
andcommongood.
LookingbackonthepathtraversedbyAmul,thefollowing features make it a pattern and
modelforemulationelsewhere.Amulhasbeenableto:
Produceanappropriateblendofthepolicymakersfarmersboardofmanagement
andtheprofessionals:eachgroupappreciatingitsrolesandlimitations
Bringatthecommandoftheruralmilkproducersthebestofthetechnologyand
harnessitsfruitforbetterment
Provideasupportsystemtothemilkproducerswithoutdisturbingtheiragro
economicsystems
Ploughbacktheprofits,byprudentuseofmen,materialandmachines,intherural
sectorforthecommongoodandbettermentofthememberproducersand
Eventhough,growingwithtimeandonscale,ithasremainedwiththesmallest
producermembers.Inthatsense,Amulisanexampleparexcellence,ofan
interventionforruralchange.
http://www.aavinmilk.com/dairyprofile.html

12/14

12/27/2014

IndiandairyIndustry

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,
veterinarycare,betterfeedsandthelikeallthroughthevillagesocieties.
The village society also facilitates the implementation of various production enhancement
and member education programs undertaken by the Union. The staff of the village
societies have been trained to undertake the veterinary firstaid and the artificial
inseminationactivitiesontheirown.

Amul'ssuccess:Amodelforotherdistrictstofollow.
Amul'ssuccessledtothecreationofsimilarstructuresofmilkproducersinotherdistricts
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,farmersandtheirleaderscarriedoutempiricaltestsofthehypothesesthatexplained
Amul'ssuccess.Inthesedistricts,milkproducersandtheirleadersexperiencedsignificant
commonalties and found easy and effortless ways to adapt Amul's gameplan to their
respectiveareas.ThisledtotheCreationoftheNationalDairyDevelopmentBoardwiththe
clear mandate of replicating the 'Anand pattern' in other parts of the country. Initially the
patternwasfollowedforthedairysectorbutatalaterstageoilseeds,fruitandvegetables,
salt,andtreesectorsalsobenefitedfromit'ssuccess.

GCMMF:AnOverview
Gujarat Cooperative Milk Marketing Federation (GCMMF) is India's largest food products
marketingorganization.ItisastatelevelapexbodyofmilkcooperativesinGujaratwhich
aims to provide remunerative returns to the farmers and also serve the interest of
consumersbyprovidingqualityproductswhicharegoodvalueformoney.

Members:

12districtcooperativemilkproducers'
Union

No.ofProducerMembers:

2.12million

No.ofVillageSocieties:

10,411

TotalMilkhandlingcapacity:

6.1millionlitresperday

Milkcollection(Total199900):

1.59billionlitres

Milkcollection(DailyAverage199900):

4.47millionlitres

MilkDryingCapacity:

450metricTonsperday

CattlefeedmanufacturingCapacity:1450Mtsperday

SalesTurnover

199495
199596
199697
199798
199899
199900
http://www.aavinmilk.com/dairyprofile.html

Rs(million)

US$(inmillion)

11140

355

13790

400

15540

450

18840

455

22192

493

22185

493
13/14

12/27/2014

IndiandairyIndustry

Majordairyproductsmanufacturers
Someofthemajordairyproductsmanufacturersinthecountry:
Company

Brands

MajorProducts

NestleIndiaLimited

Milkmaid,Cerelac,Lactogen,Milo,
Everyday

Sweetenedcondensedmilk,maltedfoods,milk
powderandDairywhitener

MilkfoodLimited

Milkfood

Ghee,icecream,andothermilkproducts

SmithKlineBeecham Horlicks,Maltova,Viva
Limited

MaltedMilkfood,ghee,butter,powderedmilk,milk
fluidandothermilkbasedbabyfoods.

IndodanIndustries
Limited

Condensedmilk,skimmedmilkpowder,wholemilk
powder,dairymilkwhitener,chilledand
processedmilk

Indana

GujaratCooperative Amul
milkMarketing
FederationLimited

Butter,cheeseandothermilkproducts

H.J.HeinzLimited

Farex,Complan,Glactose,
Bonniemix,Vitamilk

InfantMilkfood,maltedMilkfood

Britannia

Milkman

Flavouredmilk,cheese,MilkPowder,Ghee

Cadbury

Bournvita

Maltedfood

FutureProspects
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
investorstofindthiscountryaplaceforthemammothinvestmentprojects.Beitinvestors,
researchers,entrepreneurs,orthemerelycurious Indian Dairy sector has something for
everyone.
Milkproductionisrelativelyefficientwayofconvertingvegetablematerialintoanimalfood.
Dairycows buffaloes goats and sheep can eat fodder and crop by products which are not
eatenbyhumans.Yetthelossofnutrientsenergyandequipmentrequiredinmilkhandling
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
majorityofdevelopingcountries.
Henceintheforeseeablefuture,inmostofdevelopingcountriesmilkandmilkproductswill
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
theGovernmentattacheshighprioritytomilkinitsfoodandnutritionpolicy,allpreschool
childrenreceiveadailyrationofalmostalitreofmilkfatthereducedprice.Cheapmilkand
milk products are made available to certain other vulnerable groups, by milk products
outside the rationing system are sold price which is well above the cost level. Until
recently,mostfreshmilkinthebigcitiesofChinawasareservedforinfantsandhospitals,
butwiththeincreaseinsupply,rationinghasbeenrelaxed.
In other countries dairy industries have attempted to reach lower income consumers by
variationofcompositionalqualityorpackaginganddistributionmethodsorblendingmilkin
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
practicedindevelopingcountries.ThispoliciesneedtobebroughtinIndianDairyscenario.

oooo

http://www.aavinmilk.com/dairyprofile.html

14/14