Value Added Dairy Segment To Maintain Higher Growth In India

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New Delhi, March 15, 2019: With the higher margins, value added products offer about 20% higher revenues than regular dairy products.  While packed liquid milk is to remain a key driver in the Indian dairy industry, value added products are promising a growth of 15% to 20% with expected growth in cheese, UHT milk, ice-cream and baby food segments. Notably, Union Minister of State for Agriculture and Farmer Welfare informed to the Lok Sabha that milk production in the country stood 165.4 million tonnes during 2016-17 which increased to 176.35 million tonnes in 2017-18.

As per industry experts, India is contributing about 17% of the total milk production globally. With the projected milk production of 254.5 million tonnes in 2021-22, India will become the largest milk producer in the world. As per Rabobank analysis, in 2016-17 Indian dairy market was largely divided into Liquid Milk (64%), Value Added Products (25%), Ghee (7%) and Milk Powder (4%). Value Added Products in dairy segment is further growing at 15% to 20% year on year that has varied products like Cheese, UHT Products, Curd, Baby Foods, Ice-cream, Butter, Flavored Milk and Dairy Whitener.

Rajasthan Market

As per recent industry reports, Rајаѕthаn has secured second rank in the tор 10 milk рrоduсіng ѕtаtеѕ of India in 2019. The state has a larger landscape and has а huge number of cattle and it produces а about 13.94 million tоnneѕ of milk per annum. Having about 15 dairy cooperatives and around 6 significant private players in the state, it contributes a share of 11.57% of total milk production of the country. Cows and buffaloes are known to be the primary source of milk in the state.  Rajasthan being the second highest milk producing state which has about 15 dairy cooperatives and good number of significant private dairy industries is trying to offer complete milk basket – full of value added products where these industries are trying to focus on securing 50% sales of value added products.

Consumer Trend

Indian consumer is becoming more health conscious and demand for healthier products with natural, organic and an ayurvedic ingredient is increasing. Changing consumer lifestyle, increasing number of working women and increasing personal disposable incomes are leading to an increase in demand of value added dairy products. Smaller packs of packaged dairy products are being aggressively marketed for the second and third tier markets to deepen a brand’s penetration and increase the volume in the country. The increasing numbers of players in the dairy sector are focusing their strategies towards the untapped semi-urban and rural regions, which offer significant opportunities for growth.  Apart from all this, the readily available dairy products enjoy health advocacy and are comparatively lower priced than that of most carbonated drinks in the market.

Mr. Anuj Modi, Director, Lotus Dairy Products Ltd. says, “Value added market in dairy industry is expected to expand to 30% of dairy industry by 2020.  Indian organised dairy sector is required to strengthen the procurement and processing line to scale up for value added market. Lotus dairy has come up with whole new product range of different flavored milks, probiotic curd, mint raita, pineapple raita, extra soft paneer, etc. to offer its customer new range of value added products apart from liquid milk offerings.”

The small dairy players are unable to fulfill the demand of value added products by themselves.  Looking at current scenario where recent decision of US administration was to terminate the preferential trade status granted to India, which was warmly welcomed by US dairy Industry. If both the countries will join hands with good-faith negotiations in future, small organised dairy players may face stiff competition or may look forward JV possibilities as well and will then be able to exploit increased demands for value added products.

Corporate Comm India(CCI Newswire)

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