Dairy in India grazing on technology and high quality with massive expansion

July 28, 2021

By Nandita Vijay

Indian dairy sector is on a growth trajectory. Technology adoption has seen emergence of robotic milking machines, sensors to detect whether the cow is ready for milking or not, advanced processes to detect once milking starts to identify impurities, colour and quality of milk are in vogue. Then there is cattle monitoring drones, blockchain for product traceability which is used by Nestle and Kerala government, farm management technology and RFID (radio frequency identification technology) to spot cow activity.

Yet another transformation on the dairy landscape which became ubiquitous is the use of apps for door delivery of milk. From Karnataka Milk Federation to Happy Milk to Organic Mandya, Country Delight and Milk Lane to name a few jumped on the bandwagon to ensure no disruption of milk supply to consumers during Covid-19 lockdown, while also safeguarding the interest of farmers in the value chain.

Supply constraints in the milk industry have known to lead to a sharp rise in milk adulteration. “The UHT packaging, along with adequate food safety measures at every level of the supply chain spanning from collection, processing, and distribution deliver high-quality milk to the families, technology played a key role to support dairy operations,” noted Gaurav Haran, CEO of MilkLane,

“It’s the right time to reach out directly when consumers are not able to buy dairy products due to the lockdown. We have started this service to help people avoid the risk of stepping out while still availing themselves of best quality products that maintain the highest hygiene regulations,” said Haran.

In an effort to revolutionise the dairy ecosystem in India, Pioneering Ventures – an agri-food platform company based in Switzerland and India, supported companies like Milk Lane among others to accelerate customer reach with technology adoption.

Happy Milk was founded by 22-year old Mehal Kejriwal in December 2017, who believed in the motto of true, organic products. The company began with a small dairy farm near Tumkur, bringing farm-fresh, ready-to-drink milk in glass bottles that was entirely untouched by human hands to Bangaloreans. The company currently has 14 products in 22 SKUs, including homogeneous & pasteurised milk, ghee, curd and paneer (cottage cheese).

Massive expansion plans

According to T Satish Kumar who founded the Erode based Milky Mist which is known for its curds and paneer among other dairy products, the use of chillers has catapulted the growth of the dairy industry.

There are massive expansion plans across the sector to come out with value-added products. From frozen milk sweets to low fat butter options and innovative packaging to ensure dairy products can be consumed in a convenient manner or even on the move as the country is now unlocking after the slew of lockdowns.

The dairy sector plays a critical role in providing livelihood opportunities to millions of people, largely women, in rural areas. It has an important role to play if the target of doubling farmers’ income has to be achieved in near future.

India ranks first among the world’s milk producing nations. The dairy products are currently consumed all across the world. However, the country exports a relatively smaller volume of dairy products and has a small share in global dairy trade despite being the largest milk producer in the world.

The dairy products exported from India are mainly Skimmed Milk Powder (SMP), butter, butter oil, cheese, ghee and butter milk. SMP has share of around 30% in the exports of the dairy products from the country.

The major export destinations for dairy products are Turkey, the United Arab Emirates, Egypt, Bangladesh, Bhutan, the United States, Saudi Arabia and Malaysia. SMP is traded globally. Despite being the biggest producer of milk, India has negligible presence in global dairy trade.

“Post-pandemic interest in health and wellness bodes well for milk and flavoured milk to reinforce their positioning as sources of trustful and affordable nutrition,” stated Rushikesh Aravkar, food & drink analyst – India, Mintel.

“We see a robust demand for dairy products and we are glad to bring our quality dairy products to lakhs of households in Maharashtra. HAP stays ahead of the curve in terms of automation, quality & hygiene standards and always sets new benchmark for dairy products,” said RG Chandramogan, chairman, Hatsun Agro Product.

Focus on health and wellness

Given the increased focus on health and wellness, dairy drinks can underscore intrinsic nutrition and cater to emerging functional claims to win over consumers seeking affordable, convenient, healthy options. Flavoured milk consumers are concerned about their sugar intake. “Brands can drive increased consumption by offering lower-sugar variants targeting health-conscious consumers using naturally sourced sugars such as jaggery, honey and dates,” said Balachandra Jarakiholi, chairman, Karnataka Milk Federation.

According to Brahmani Nara, executive director, Heritage Foods, with both spouses working coupled with increasing disposable income, the consumption of value-added products is increasing. “The need for seamlessly integrated dairy play from procurement to delivering fresh and nutritious milk at the doorstep is the need of the hour, wherein Heritage Foods had been taking lead and enjoying first mover advantage.”

“Increasing health-conscious consumers are moving towards milk and milk products to supplement food with nutritious and other minerals required for the body. There is a clear shift of the market from carbonated drinks to milk products seen in the last decade,” added Nara.

Some of the major organised private players include Tamil Nadu-based Hatsun Agro Product Ltd which procures an average 26 lakh litre per day (LLPD) or around one million tonne (MT) annually. Besides, there are companies with an average milk procurement of 5-15 LLPD each. These include Parag Milk Foods, Schreiber Dynamix Dairies, Heritage Foods, Tirumala Milk Products, Sterling Agro Industries, VRS Foods, Nestle India, Prabhat Dairy, Indapur Dairy, Dodla Dairy, Creamline Dairy Products, GRB, SMC Foods, Milkfood, Gopaljee Dairy Foods, Karnataka Milk Federation with Nandini brand, Gujarat Co-operative Milk Marketing Federation with its Amul brand and Anik Industries.

Focus on fortification and functionality

The pandemic has fueled consumer interest in a healthy immune system. Opportunity exists for milk and flavoured milk brands to effectively communicate how they can support immune health. Brands can address immune health with herbal ingredients such as turmeric, tulsi and ginger; probiotics; proteins and micronutrients.

As consumers spend more time at home, their screen time has significantly increased, especially among children with video games and online classes. Eye health is increasingly becoming a concern. Fortifying dairy drinks with vitamins A, E, lutein and omega-3 allows brands to tap into the opportunity to support eye health.

Tackling a busy and stressful lifestyle, a quarter of Indians use stress-relieving products such as calming teas or warm milk to manage stress. “Dairy drinks can use a range of calming ingredients such as botanicals, adaptogens and nervines to deliver relaxation and stress reliever,” said Dr Mridul Salgame, dairy consultant.

“This is where we are seeing a transformation in the product mix by diary majors,” noted Aravkar, who said there are efforts to innovate with good sugars to offer guilt-free indulgence and positioning flavoured milk as an affordable and permissible indulgence.

Karnataka Milk Federation noted that in their range of flavoured milk, the focus was to create occasions for consumers to drive at-home consumption of milk and flavoured milk fitted the bill because there is taste, nutrition, convenience and affordability.

Even Amul’s Kool flavoured milk in elaichi, kesar and rose flavours was driving the sales during the national and state specific lockdowns as dairy was among the few sectors under the essential categories announced by the Government of India.

Further the company went on to launch innovative and healthy beverage product ‘Amul TRU Seltzer’ which is a blend of dairy, fruit juice and fizz, in the market. Currently available in two flavours of lemon and orange, it is attractively priced at just Rs 15 for 200 ml PET bottle. The company will soon roll out many new variants like Cola, Jeera and Apple, all made from real fruit, in PET bottles and introduce all flavours in smart can packaging.

According to Dr K Jayaraj Rao, vice president, Alumni Association SRS of ICAR-National Dairy Research Institute, considerable innovation is underway and many have been commercialised too. The scope for value addition with milk is unbelievable.

Government handholds dairy sector

The Union government has extended considerable support under the Ministry of Animal Husbandry to dairy farmers and dairy companies. It has also identified logistics as a lucrative investment opportunity as it is driven by a rapidly growing market in the Indian dairy sector. There is a huge shortfall for ambient, reefer and insulated trucks as well as cold warehouses.

“Here the total investment required is Rs 9 crore to Rs 11 crore. The potential returns expected are 7 to 11 per cent IRR (internal rate of return) with a payback of 6 to 12 years. We see that there are attractive returns and proactive government support,” said Atul Chaturvedi, Secretary, Ministry of Animal Husbandry.

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