Fonterra Future Dairy Chairman: Future sees Rs 6,000 crore cream in dairy business

June 14, 2019

Global dairy nutrition major Fonterra’s equal joint venture (JV) with Kishore Biyani’s Future Consumer is set to roll out the first lot of value-added dairy products in the Indian market.

The JV unit, Fonterra Future Dairy, will introduce around half-a-dozen products in the western region before June end or early July, post which it will enter other markets in a phased manner.

Speaking to DNA Money, Sunil Sethi, chairman, Fonterra Future Dairy (FFD) and managing director, Sri Lanka and India Subcontinent, Fonterra, said the JV has been working on the India-specific products for over 18 months and is now ready to bring them to the market. “We have kind of secured the back-end and developed four-five various products that will be launched soon,” he said.

He said the new offerings will not drastically shift the Indian consumer’s taste and preferences. “While making dairy more exciting, we will slowly take the Indian consumers up the ladder towards more value-added products,” said Sethi, without sharing additional details. For now, the company is staying away from selling milk in pouches.

The JV firm has been working with a dairy processor, Schreiber Dynamix Dairies at Baramati in Pune, on the product recipe/range as well as upgrading the processes and equipment to levels that conform with Fonterra’s standards. Having achieved that successfully, the FFD management has now finalised plans to roll out the dairy products in Mumbai and neighbouring markets to start with.

A global leader in milk processing and packaging, Schreiber Dynamix is already catering to global and Indian brands like PepsiCo, Nestle, Britannia, Hindustan Unilever, Mother Dairy, Danone, Hector Beverages, etc, across aseptic beverage, cheese and yoghurt categories.

Ashni Biyani, MD, Future Consumer Ltd, said, “Overall, we will be targeting a business of Rs 6,000 crore over the next five years. In Future Group alone, we would be selling around Rs 900 crore of dairy products across brands through our retail network in this fiscal.” She added that Future Group’s own brands will constitute approximately 70% of all fast-moving consumer goods (FMCG) that it will sell and dairy products will play a crucial role in achieving this goal.

Banking on Future Group’s own retail footprint comprising Big Bazaar, Easyday, Foodhall stores across the country, FFD will also sell the dairy products through the modern trade and general trade channels in a phased manner to ensure maximum reach and visibility. Given the competitive market scenario, especially from players like Amul, Britannia, etc, FFD will be price its products competitively while maintaining good margins despite increasing input costs.

“We will start with the West market followed by South and other parts of the country as we create more co-packing facilities in these parts. We will have to take the hub-and-spoke model to be able to sell our products across India. We want to be in the same space (Amul, Britannia) in terms of pricing, which will be decided based on what value we bring to the products,” said Ishmeet Singh, chief executive officer, Fonterra Future Dairy.

Riding on Future Retail’s 3.0 plans, the JV will also use the digital and mobile application environment and data mining capabilities to build stickiness with its customer base. In fact, Biyani is of the view that there is no online–offline retailing but a blended model that’s into play.

“It’s going to be data that will enable us to deliver more business. We have a huge footprint of membership-driven stores and have also introduced an app, a beta version, in some parts of the northern region. It allows consumers to order on chat/WhatsApp, email or for that matter any format on the mobile application. We are already delivering in one hour and our intent is to bring it down to 30 minutes,” she said.

The members, she added, are already shopping with the company’s retail format approximately 53 times a year. “With the right portfolio of dairy, I think it can be twice a day. There are various means/ways of communicating and engaging with consumers multiple times in the day. On the app, we have also launched subscription. All of this gives Fonterra Future a leeway into building a different channel of distribution that also has data to help forecast and get a sense of the demand scenario. It also gives real-time agile information about consumer behaviour and what it really means for the company,” said Biyani.


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