Post on 18-Mar-2018
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CHAPTER III
AN OVERVIEW OF INDIAN DAIRY INDUSTRY AND
MARKETING OF DAIRY PRODUCTS
Introduction
Globalization and Liberalization are the Mantras of the new economy
today, which is now on the fast track. Industrial production is rapidly moving
forward. The dairy industry is no exception. In India, the dairy sector plays an
important role in the country's socio-economic development, and constitutes an
important segment of the rural economy. Dairy industry provides livelihood to
millions of homes in villages, ensuring supply of quality milk and milk products to
people both in urban and rural areas. With a view to keeping pace with the
country's increasing demand for milk and milk products, the industry has been
growing rapidly.
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. 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. India is the world’s largest milk producer 121.5 million tonnes of
milk during 2010-11, accounting for more than 17% of worlds total milk
production. It is the world’s largest consumer of dairy products, consuming almost
100% of its own milk production.
Dairy industry: Role of marketing
Marketing is generally defined as the process of planning and executing the
conception, pricing, promotion, and distribution of ideas, goods, and services to
create exchanges that satisfy individual and organizational objectives. The word
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dairy means the place or a farm etc where milk is kept and butter and cheese are
made. A place where milk and cream are stored and processed. Dairy marketing
truly came into the public consciousness with the introduction of the “Got milk”
campaign in 1993. The basic dairy product became associated with a memorable
and catchy slogan that helped drive sales. There are many other strategies, to
market all types of dairy products. These include promotion of nutritional value,
appeal to the organic market, and use of social media networks and development
of new dairy products.
Marketing plays a vital role not only in stimulating production and
consumption, but also in accelerating the pace of economic development. An
efficient marketing system minimizes costs, increases returns to farmers by
reducing the number of middlemen or by restricting the commission of marketing
system
Dairy marketing strategies
Marketers use an assortment of strategies to guide how, when, and where
product information is presented to consumers. Their goal is to convince
consumers to buy a particular brand or product. Successful marketing strategies
create a desire for a product. A marketer, therefore, needs to understand consumer
likes and dislikes. In addition, marketers must know what information will
convince consumers to buy their product, and whom consumers perceive as a
credible source of information. Some marketing strategies use fictional characters,
celebrities, or experts (such as doctors) to sell products, while other strategies use
specific statements or "health claims" that state the benefits of using a particular
product or eating a particular food. So dairy marketing Strategies in the context of
Globalization should be as:
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1) Focused Approach: While the product portfolio has been growing, Indian
dairy Industry should plan for reach out to newer markets - but the strategy
here is more product-specific.
2) Wider Spread: However, as far as other dairy products are concerned,
Indian dairy Industry should plan to expand across the board.
3) Create Original Marketing: Re-invent a product with a powerful
marketing campaign. No matter whether what is sold is milk, yogurt, butter,
sour cream, or cheese, a truly original commercial or print ad can cause
consumers to think of the products in a new light. A catchy slogan, a
memorable spokesperson or an emotionally powerful commercial can go a
long way. It is better to use viral marketing and social media to get the
products to the masses without spending an enormous amount on
advertising.
4) Focus on Nutritional Value: Use scientific-based guides and studies such
as this to convince consumers to consume the dairy products.
5) Appeal to the Organic Market: Consumer demand for organic milk
continues to grow at an annual rate approaching 20 percent, according to
the Agricultural Marketing Research Center. Many people are attracted to
products that are free of chemicals and are manufactured naturally. Utilize
the organic trend in the product line. Follow the government guidelines to
get the organic seal to include in the product advertising and packaging.
6) Introduce New or Unknown Products: Offering consumers something
they have never heard of is a sure-fire way to peak interest in a product.
There were 448 total new dairy product launches in 2010, according to
Dairy Foods. Try new flavors of milk, such as banana or blac
The milk marketing channels
A study of the milk marketing system has shown that there are at least 8
different marketing channels as shown below:
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Chart -1: Milk Marketing Channels M
ilk
Ma
rket
ing
Ch
an
nel
s
Nu
mb
er o
f In
term
edia
ries
Producer – Consumer
0
Producer – milk hawker –consumer
1
Producer –Processor - Consumer
1
Producer – Processor-retailer-consumer
2
Producer-dairy co-operative-Processor-
retailer consumer
3
Producer-Milk transporter-processor-
retailer-consumer
3
Producer-Milk trader-processor-retailer-
consumer
3
Producer-dairy coop-milk transporter-
processor-retailer-consumer
4
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The number of intermediaries involved will have a bearing on both
producer and consumer milk prices. The shorter the channel the more likely that
the consumer prices will be low and the producer will get a higher return. A
notable omission in the milk marketing channel obtaining in the chart is the
absence of wholesalers. Retailers obtain their dairy products directly from
processors. An efficient milk marketing chain is one which enable farmers to
receive at least 50% of the retail price of milk.
Origin and development of dairy farming
Dairy farming has been part of agriculture for thousands of years.
Historically it has been one part of small, diverse farms. In the last century or so
larger farms doing only dairy production has emerged. Large scale dairy farming
is only viable where either a large amount of milk is required for production of
more durable dairy products such as cheese, butter, etc Or there is a Substantial
market of people with cash to buy milk, but no cows of their own. Since 1980 the
demand for the dairy products grew especially in Asian region from 32 kg per
capita in 1981 to 64 kg per capita in 2007, the Asian consumers presented almost a
half of the world demand for milk and milk products. Growing income and change
in food composition in China, India and other Asian countries are the factors of
the increasing demand. The governmental support of milk consumption like
school milk programs and new dairy products supported this expansion (Food and
agriculture organization, 2009). This growing demand and higher prices created
market opportunities for the local producers and in 2005. Asia became the world
largest milk producer with grows 35% in 1997-2007.
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Chart -2: Milk flows from producers to consumer in India
Source: adapted from Dairy India 1997.
In spite of the investment in co-operative development through Operation
Flood and elsewhere, the share of urban milk market served by dairy co-operatives
in the 1990s was only some 9%, compared to about 72% for the
traditional/informal sector. The role of the private sector has been even smaller,
DOMESTIC PRODUCTION: 66.3M mt
RURAL
PRODUCTION
65.0
URBAN
PRODUCTION
1.3
HOME
CONSUMPTION
23.4
SOLD
41.6
URBAN MARKET
37.1
INFORMAL
30.9
COOPS
3.7
PRIVATE
2.5
URBAN CONSUMERS
37.1
RURAL
CONSUMERS
5.8
98% 2%
9%(14%)
63% (97%) 35% 2% (3%)
46% (72%) 6% (9%) 4% (6%)
% of Milk produced
(% of Milk Marketed)
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around 6% of the urban market. While the private sector seems to have grown
since the 1990s, these relative proportions are likely to have not changed
significantly and will not do so for the foreseeable future.
Opinion of researchers and some organisation on dairy Industry
According to the National Sample Survey of 1993-94, livestock sector
produces regular employment to about 9.8 million persons in principal status and
8.6 million in subsidiary status, which constitute about 5% of the total work force.
The progress in this sector will result in a more balanced development of the rural
economy. The Agricultural and Processed Food Products Export Development
Authority (APEDA) regulated the export and import of dairy products till early
1990s. However, in the new EXIM Policy announced in April 2000, the Union
Government has allowed free import and export of most dairy products.
According to the World Bank, India is the fourth largest economy in the
world going by the purchasing power parity estimates. Further, India has been
identified as among the first 10 emerging markets in the world. India has the
vastest domestic market in the world with over one billion consumers - a majority
of whom are vegetarians with drinking of milk as habit. The untapped potential of
the dairy sector is immense and opportunity to set up a new dairy venture is great.
In the words of Dr. Amrita Patel, Chairperson, National dairy development board
(NDDB), there is enough place under the scheme for both private and cooperative
sectors. Notwithstanding the above potential it is cautioned that, entering dairy
sector is not going to be a cakewalk.
Union Agriculture Minister Mr. Sharad Pawar said that the government
looks to increase milk procurement by co-operatives from the current 30 per cent
to 65 per cent in the next 15 years. “We have amended the Constitution to increase
transparency in the co-operative sector and facilitate setting up of producer
companies or new generation co-operatives. Today, only 30 per cent of milk is
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procured by co-operatives which we aim to increase to 65 per cent in next 15
years,” said Mr. Pawar at the launch of NDP recently. The total outlay for the
National Dairy Plan has been set at 17,000 crore. The demand for milk is projected
to be around 200 million tonnes in 2021-22. The plan is expected to cover about
1.2 million milk producers in 23,800 villages.
According to the Associated chambers of commerce and industry
(ASSOCHAM) study titled “Indian Dairy Industry: The Way Ahead” Milk
production is likely to reach about 190 million tonnes in 2015 from current level
of about 123 million tones. Growing at about 10 per cent annually, the Indian
dairy industry is predominantly controlled by the unorganised sector, which
accounts for nearly 85 per cent. An upward spiral in prices, the lack of proper
infrastructure like cold storages and absence of a transparent milk pricing system
are affecting retail consumption of milk and leading to escalating milk prices in
the domestic market.The lack of fodder, resulting in low yield from cattle, is
another problem affecting the dairy sector.
International market analysis research and consulting (IMARC) Group, one
of the world’s leading research and advisory firms, finds that the sales of dairy
products in India will nearly double its size from INR 2.6 Trillion (US$ 60
Billion) to around INR 5.1 Trillion (US$ 115 Billion) by 2016.
According to a national survey conducted by the National Sample Survey
Organization (NSSO), an average Indian family’s spend on dairy products was
only next to cereals in terms of food expenditure incurred every month. Such
dependency on dairy products, and more specifically on milk, gives limited scope
for price increases on these products. As such, regional dairy cooperatives and
private manufacturers have to meet the rising demand for packaged milk despite a
limited rise in corresponding production.
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A recent survey carried out by 64th round of NSS has shown that an Indian
family allocates on an average 17 per cent of the expenditure incurred on food
products on milk and milk products; with rural families allocating 15 per cent
while families in the urban area allocating over 18 per cent. With increasing
income the demand for milk is going to rise faster now than seen in the previous
decade. Moreover, the overall demand is galloping rapidly compared to milk
production. The higher GDP growth rate, enhanced income of rural households
through programmes such as National rural employment guarantee act (NREGA)
and the farm debt waiver are influencing the demand for milk both in the rural and
urban areas.
Dairy India 2007 has estimated the size of India's dairy sector in 2005 at Rs
227,340 crore (valued at consumer prices). The largest contributor to this is liquid
milk (at Rs 82,835 crore), followed by ghee (Rs 22,980 crore),
khoa/chhana/paneer (Rs 24,100 crore), milk powder (Rs 4,680 crore), table butter
(Rs 770 crore), cheese/edible casein (Rs 975 crore) and other products such ethnic
sweets, ice-cream, etc (Rs 9,100 crore). By 2011, Dairy India projects the value of
the industry to more than double to Rs 520,780 crore, which includes Rs 159,600
crore from liquid milk, Rs 42,680 crore from ghee, Rs 50,500 crore from
khoa/chhana/paneer, Rs 9,100 crore from milk powder, Rs 2,250 crore from table
butter, Rs 6,150 crore from cheese/edible casein and Rs 25,050 crore from other
products.
The average milk procurement by dairy cooperatives during 2009-10 (up to
December, 2009) was more than 241 lakh kgs per day (provisional) as compared
to 233 lakh kgs per day during the same period in the previous year, registering an
increase of 3.4 per cent. The average milk marketing by cooperatives was 211 lakh
litres per day as against 201 lakh litres per day, registering a rise of about five per
cent over the corresponding period in the previous year. The industry has
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maintained a high growth profile, especially in the wake of the Operation Flood,
colloquially also termed as White Revolution, initiated in early 1980s. Today India
produces over 80 mn tonnes of milk annually. In terms of value, the total milk
economy is estimated at Rs. 1200 bn.
India is a very minor player in the world market. India was primarily an
import dependent country till early seventies. In the 1990s, India started exporting
surplus dairy commodities, such as Skim milk powder (SMP), butter and ghee.
The Agricultural and Processed Food Products Export Development Authority
(APEDA) regulated the export and import of dairy products till early 1990s The
major destinations for Indian dairy products are Bangladesh (23.1%), UAE
(15.4%), US (15.6%) and Philippines (8.9%). In terms of products, SMP is the
most important product accounting for about 63% of total export volume, followed
by ghee and butter (11.7%).
SWOT analysis of Indian dairy industry
Strengths:
According to the results of SWOT analysis, Demand for dairy products is
absolutely optimistic. The Margins of returns are quite reasonable, even on packed
liquid milk. Due to the flexibility of product mix product lines can be further
added. As far as raw materials are concerned its availability is abundant. Presently,
more than 80 per cent of milk produced is flowing into the unorganized sector,
which requires proper channelization. Professionally-trained, technical human
resource pool, built over last 30 years is considered as the strength of Indian dairy
industry.
Weaknesses:
According to the results of SWOT analysis, Perishability, Lack of control
over yield, Logistics of procurement, Competition are considered as the major
weakness of the Indian dairy industry. Even then pasteurization has overcome this
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perishability weakness partially. UHT gives milk long life. Surely, many new
processes will follow to improve milk quality and extend its shelf life. The
increased awareness of developments like embryo transplant, artificial
insemination and properly managed animal husbandry practices, coupled with
higher income to rural milk producers should automatically lead to improvement
in milk yields thereby enhancing little control over milk yield. Woes of bad roads
and inadequate transportation facility make milk procurement problematic. But
with the overall economic improvement in India, these problems would also get
solved.
Opportunities:
According to the results of SWOT analysis, there is a phenomenal scope for
innovations in product development, packaging and presentation. Steps should be
taken to introduce value-added products like shrikhand, ice creams, paneer, khoa,
flavored milk, dairy sweets, etc. This will lead to a greater presence and flexibility
in the market place along with opportunities in the field of brand building.
Addition of cultured products like yoghurt and cheese lend further strength - both
in terms of utilization of resources and presence in the market place. A lateral
view opens up opportunities in milk proteins through casein, caseinates and other
dietary proteins, further opening up export opportunities. Yet another aspect can
be the addition of infant foods, geriatric foods and nutrition. Amul is exporting to
Bangladesh, Sri Lanka, Nigeria, and the Middle East. Opportunities will increase
tremendously for the export of agri-products in general and dairy products in
particular.
Threats:
According to the results of SWOT analysis, Milk vendors that are the un-
organized sector are found to be the major threat. Today milk vendors are
occupying the pride of place in the industry. Organized dissemination of
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information about the harm that they are doing to producers and consumers should
see a steady decline in their importance.
Overall the swot analysis shows that the ‘strengths’ and ‘opportunities’ far
outweigh ‘weaknesses’ and ‘threats’. Strengths and opportunities are fundamental
and weaknesses and threats are transitory.
Organisations engaged in dairy development
Dairy sector can play a pivotal role in our national strategy to combat global
economic turmoil and accelerate growth of Indian economy," India is the world's
highest milk producer and is all set to become the world's largest food factory. In
India, milk penetration is 99% and this is higher than wheat and rice. The dairy
industry is still an unorganised sector and this needs to be regulated. Indian dairy
market is highly unorganized showing a lot of potential opportunities for growth.
The demand for dairy products has been rising continuously and anticipated to
outpace the supply in near future. As a result, a number of foreign companies are
considering their prospects to enter into the Indian Dairy market. For instance,
Danone, the world’s second largest dairy company (after Nestle), is currently
expanding its presence in the Indian dairy industry. To overcome this difficulty
there emerged many organizations which contributed dairy development in India.
They are
National dairy development board of India (NDDB)
The National Dairy Development Board (NDDB) is the national-level body
involved in promoting, financing, and supporting milk-distribution organizations
in India that are owned and controlled by the producers themselves. It’s activities
seek to strengthen farmer cooperatives and support national policies that are
favourable to the growth of such institutions. The National Dairy Development
Board’s Creation is rooted in the conviction that our Nation’s Socio-economic
progress lies largely on the development of rural India.
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Active role of NDDB
NDDB supports the development of dairy cooperatives by providing them
financial assistance and technical expertise, ensuring a better future for India’s
farmers. The Board has helped to organize the dairy industry of India with 170
milk unions, which federate into 15 State Cooperative Milk Marketing
Federations, operating in 285 districts, covering nearly 96,000 villages. More than
10.7 million farmers and laborers are members of the network, directly supplying
milk to the cooperatives, thus eliminating the exploitative chain of middlemen. In
addition, some 3,500 milk collection centers have been computerized, resulting in
accurate and immediate payment to the milk producers. However, organizing
illiterate farmers into a large cooperative network proved to be a challenging task.
National Dairy Development Board (NDDB), has proposed a Rs 17,300
crore draft National Dairy Plan to increase the country's milk production from the
current 102 million tonnes to meet the projected demand of 180 million tonnes by
2021-22. The National Dairy Plan focuses on productivity measures to enhance
milk production as the average annual incremental production will have to
increase from 2.5 million tonnes now to five million tonnes over the next 15 years.
Besides, it also focuses on strengthening and expanding infrastructure to procure,
process and market milk through existing and new institutional structures.
NDDB in its report on New Challenges of Globalisation and Trade
Liberalisation - Perspective 2010 said that they have enabled the cooperatives to
meet the new challenges of globalization and trade liberalization. Like other major
dairying countries of the world, the Indian cooperatives are expected to play a
predominant role in the dairy industry in future as well. Over the years, brands
created by cooperatives have become synonymous with quality and value. Brands
like Amul (GCMMF), Vijaya (AP), Verka (Punjab), Saras (Rajasthan). Nandini
(Karnataka), Milma (Kerala) and Gokul (Kolhapur) are among those that have
earned customer confidence.
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Indian Dairy Association (IDA)
Indian Dairy Association (IDA) an apex body of the dairy industry was
established in the year 1948, in India. The members are from the cooperatives,
MNCs, corporate bodies, private institutions, educational institutions, government
and public sector units. IDA functions very closely with the dairy producers,
professionals & planners, scientists & educationists, institutions and organizations
associated with the development of dairying in India. The Association is managed
by an apex policy making body called the Central Executive Committee (CEC).
The CEC is headed by President and supported by two Vice-Presidents and 19
Executive Committee Members.
IDA has emerged as a platform for assimilation and dissemination of
knowledge, as an important tool for policy making in the dairy sector, in India!
Besides, the IDA, in the recent time, has also succeeded to focus itself at the
national and international fora. The IDA since has a history of around six decades
now, it has had the privilege of being headed by several Presidents and some of
them were of national and international fame. It organises seminars, symposia and
exhibitions on a wide range of topics catering to various segments of
professionals, scientists, institutions and organisations associated with the
development of dairying in India.
The report of Food and Agricultural organization (FAO)
According to Food and Agricultural organization (FAO) estimates, the
world milk production has declined by 2 per cent in the last three years, while milk
production in India has increased by 4 per cent. Having attained self-sufficiency in
food grain production, there is a need to plan for strategic diversification of Indian
agriculture to ensure sustainability and nutritional adequacy. Diversification of
Indian agriculture focused on dairying and export of dairy products represents
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excellent potential leading to prosperity of the farming community representing 65
per cent of the population.
With 198 million cattle and 86 million buffaloes, India has the largest
population of milch animals in the world. These livestock constitute more than 50
per cent of the buffaloes and 20 per cent of the cattle in the world. Although
number of livestock is large, average milk production is far below their genetic
potential. With a well crafted strategic approach, this huge animal wealth could be
utilized in right perspective for enhancement of milk production without many
incremental inputs. In contrast, a small rise in milk production requires intensive
inputs and crossing of genetic barriers in advanced countries of the world, where
milch animals are utilized to produce milk at their maximum potential. It is this
potential that can catapult India as a major dairy exporting country on global basis.
A nation-wide programme for prevention and control of animal epidemics, and
creation of disease free zones coupled with efficient delivery of artificial
insemination network will have tremendous impact on improving the productivity
of milch animals. This, in turn, would strengthen India’s entry into the global milk
products market, as well as improve the quality and viability of the entire Indian
dairy industry.
Prospects and the participation of private player in the dairy industry
In 2010 and 2011, growth in milk production in India was not equal to the
corresponding growth in demand for milk and milk products. This constraint
effectively forced government-endorsed cooperatives as well as private dairies to
concentrate on animal productivity and operational efficiency to meet rising
demand. Private dairy players such as Hatsun Agro Products, Heritage Foods
(India) and VRS Foods will play a relatively greater role in bulk volume-driven
categories such as fresh/pasteurised milk over the forecast period.
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In 2011, the government of India also announced plans to grant “priority
sector lending status” to the dairy sector, thus encouraging private initiatives such
as milk processing centers, fodder plants and chilling infrastructure. Relying on
such supply chain support and technological advancement, value sales of drinking
milk products are also likely to continue to source growth from households
switching from unbranded milk to branded and packaged milk.
Major players in the dairy sector with dairy products include Gujarat Co-
operative Milk Marketing Federation (GCMMF) and Nestle are the largest player.
Other include Milkfood Limited, SmithKline Beecham Limited, Indodan
Industries Limited, H.J. Heinz Limited, Britannia, Cadbury, etc. 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
Foods, Indiana Dairy, Dairy Specialties, etc.
Dairying perceived as subsidiary occupation for vast majority of farming
community in our country is now acquiring an independent status as main
occupation as it is crucial in providing employment .Milk and milk products are
one of the important components of Indian food Industry and India is the world's
highest milk producer and all set to become the world's largest food factory. Dairy
food processing holds immense potential for high returns.
Global dairy products Industry
It continues to be one of the most dynamic markets worldwide. The global
dairy industry was affected by the global economic downturn, changing weather
conditions in export countries, and varying feed and other input costs. The global
recession made a negative impact on the affordability as well as demand for dairy
products, changing consumer behavior across many markets worldwide. However,
demand began to recover in the latter part of the year and the industry began to
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77
witness growth in early 2010. Region-wise, North America and European regions
are mature dairy products markets, while Asia-Pacific and Latin America are the
fastest growing markets for dairy products. Europe is the worldwide leader for
processed dairy products, such as yogurt, cheese, butter and yellow fats category.
The global dairy industry has become highly volatile over the past few
years, with prices experiencing sharper and shorter swings. The situation is
expected to remain the same in the next few years as well, posing a challenge to
the global industry. One of the key reasons for such volatility is the lower amount
of annual milk production being traded between the countries. Resultantly, any
small change to the supply-demand situation would incite fluctuations in the
global dairy commodity prices. High competition and high market fragmentation
is leading to increased consolidation in the dairy industry. Larger dairies are taking
over smaller dairies that are facing problem in operations. Moreover, companies
are increasingly going for mergers and tie-ups to remain competitive in the
market. Major factors driving mergers and acquisitions in the dairy sector include
the drive to enhance economies of scale, increasing profit levels, and reducing
overheads. The consolidation trend is more pronounced in Europe. The dairy
industry, being highly fragmented, comprises large Multinational corporations
(MNCs) as well as small but significant players. With an increase in the
concentration of the industry, there is a trend towards increasing brand value,
market share, and international presence and acceptance. In a highly competitive
scenario, companies need to brace themselves for pro-active business policies.
Impact of World trade organization (WTO) on Dairy Sector
Dairy is one of the sectors affected by WTO. During the negotiations in
1985, dairy sector failed to bargain and agreed to allow import of milk and milk
products under zero percent bound duty. Subsequently, our new Exim Policy
which brought some essential milk products under Open General License, further
facilitated import. Initially, there was no threat from import, as the international
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78
price for milk and milk products was high compared to the prevailing price in
India. Subsequently, many developed countries were able to exert pressure on
their governments to provide subsidy to dairy farmers which helped them to lower
their price of dairy products. Furthermore, new technological interventions and
improved management practices helped the farmers in the Western Countries as
well as in New Zealand to bring down the cost of milk production. Thus the price
for dairy products in the international market fell far below the price paid by
consumers in India. This provided good opportunities for the traders to import
cheaper milk products and thereby earn high profits, at the cost of Indian Dairy
Farmers. This is the background of WTO and its impact on our farmers.
As long as we continue to remain a member of WTO, this threat will
continue to bother us. In 1999, Indian traders imported 10,000 metric tons of milk
powder and in 2000, we were threatened by the arrival of fresh milk from New
Zealand at the landed cost of Rs.9 in Mumbai. Fortunately, the Government of
India in its budget of 2001 has imposed heavy duty on milk and the problem has
been halted temporarily. This duty will have to be abolished before the year 2006,
as per the WTO agreement. Hence we have 5 years to gear ourselves for
international competition. This is probably the last chance for our farmers to
organise themselves and convert this challenge into an opportunity.
There is very little time for Indian dairy farmers to face the challenge of
imported milk and milk products under WTO. Our farmers are not yet prepared to
solve this problem. It is necessary to take immediate steps to reduce the cost of
milk production by increasing the productivity of our animals. We also need to
reduce the cost of transportation, storage and processing of milk by reducing
intermediary agencies and by adding value to the produce at the block or district
level. The quality of the milk should be of international standard which can be
attained through screening of the livestock against important diseases and
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maintaining clean surroundings in the dairy farm. The policy of promoting the
production of low fat milk for general consumption and high fat buffalo milk with
high butter fat for selected purposes should also be considered in the general
interest of the public, which will enable the farmers to improve their profitability.
Finally, an effective Animal Husbandry Extension Service should be established
to facilitate close dialogue with the farmers to understand their problems and solve
them from time to time. Simultaneously, dairy farmers’ associations should be
established and strengthened to acquire new technologies, understand the milk
marketing scenario at the international level and find suitable solutions. Hopefully
the task will be within our reach and so all we need is to work in this direction.
Branding of dairy products
Branding
When a company brands a product, they determine its "personality."
Creating a brand that is instantly recognizable and perceived positively is the
ultimate goal. Branding integrates components such as color, style and visual
imagery to distinguish a company's products from the competition. Developing
logos, slogans and tag lines are all ways that marketers communicate a specific
brand.
Brand management
Brand management is the application of marketing techniques to a specific
product, product line, or brand.
Brand equity
It is a phrase used in the marketing industry to describe the value of having
a well-known brand name, based on the idea that the owner of a well-known brand
name can generate more money from products with that brand name than from
products with a less well known name, as consumers believe that a product with a
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well-known name is better than products with less well known names. Another
word for "brand equity" is "brand value".
Brand equity is one of the factors which can increase the financial value of
a brand to the brand owner, although not the only one. Brand equity is strategically
crucial, but famously difficult to quantify. Many experts have developed tools to
analyze this asset, but there is no universally accepted way to measure it. As one
of the serial challenges that marketing professionals and academics find with the
concept of brand equity, the disconnect between quantitative and qualitative equity
values is difficult to reconcile. Quantitative brand equity includes numerical
values such as profit margins and market share, but fails to capture qualitative
elements such as prestige and associations of interest. Overall, most marketing
practitioners take a more qualitative approach to brand equity because of this
challenge.
Factors that influence in Building a Brand
Several factors are crucial in building successful brands, as illustrated in the
diagram below:
Chart -3: Factors Influencing Brand Building
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Quality
Quality is a vital ingredient of a good brand. Remember the “core benefits”
– the things consumers expect. These must be delivered well, consistently. The
branded washing machine that leaks, or the training shoe that often falls apart
when wet will never develop brand equity. Higher quality brands achieve a higher
market share and higher profitability that their inferior competitors.
Positioning
Positioning is about the position a brand occupies in a market in the minds
of consumers. Strong brands have a clear, often unique position in the target
market. Positioning can be achieved through several means, including brand name,
image, service standards, product guarantees, packaging and the way in which it is
delivered. In fact, successful positioning usually requires a combination of these
things.
Repositioning
Repositioning occurs when a brand tries to change its market position to
reflect a change in consumer’s tastes. This is often required when a brand has
become tired, perhaps because its original market has matured or has gone into
decline. The repositioning of the Lucozade brand from a sweet drink for children
to a leading sports drink is one example.
Communications
Communications also play a key role in building a successful brand. With
the objective to build a clearly defined position in the minds of the target audience.
All elements of the promotional mix need to be used to develop and sustain
customer perceptions. Initially, the challenge is to build awareness, then to
develop the brand personality and reinforce the perception.
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First-mover advantage
Business strategists often talk about first-mover advantage. In terms of
brand development, by “first-mover” they mean that it is possible for the first
successful brand in a market to create a clear positioning in the minds of target
customers before the competition enters the market. There is plenty of evidence to
support this like Gillette, Coca Cola and Sellotape etc
Long-term perspective
This leads onto another important factor in brand-building: the need to
invest in the brand over the long-term. Building customer awareness,
communicating the brand’s message and creating customer loyalty takes time.
This means that management must “invest” in a brand, perhaps at the expense of
short-term profitability.
Internal marketing
Finally, management should ensure that the brand is marketed “internally”
as well as externally. By this we mean that the whole business should understand
the brand values and positioning. This is particularly important in service
businesses where a critical part of the brand value is the type and quality of service
that a customer receives.
Different brands of dairy products
Aavin
The Dairy Development Department was established in Tamil Nadu in the
year 1958 to oversee and regulate milk production and commercial distribution in
the state. The Dairy Development Department took over control of the milk
cooperatives. It was replaced by the Tamil Nadu Cooperative Milk Producers
Federation Limited in the year 1981.On February 1, 1981, the commercial
activities of the Department such as Milk Procurement, Processing, Chilling,
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packing and sale of milk to the consumers etc., hitherto dealt with by the
Tamilnadu Dairy Development Corporation Ltd., were transferred to the newly
registered Tamilnadu Co-operative Milk Producers' Federation Limited, popularly
known as "Aavin". Aavin is the trademark of the Tamilnadu Co-operative Milk
Producers' Federation Limited, a Tamil Nadu-based milk producer's union. The
aim of Aavin is to procure milk, process it, chill it, pack and sell it to the
consumers. Aavin comes from Tamil meaning 'from cow'. So 'Aavin paal'
translates to cow's milk.
The Tamilnadu Co-operative Milk Producers' Federation Limited is an apex
body of 17 District Cooperative Milk Producers' Unions. The Federation has four
dairy plants at the following locations in Chennai - Ambattur with a capacity of
4.00 lakh litres per day, Madhavaram with a capacity of 3.00 lakh litres per day,
Sholinganallur with a capacity of 4.00 lakh litres per day, Ambattur - Product
Diary. Its revenue in 2010 is $300 million. With many private companies entering
the field of dairy, the Tamil Nadu government is giving high priority to improve
the performance of the cooperatives. Tamil Nadu is one of the leading states in
India in milk production with about 14.5 million litres per day. Aavin produces 4
varieties of milk Toned milk (3% Fat), Doubled toned milk (1.5%), Standardized
Milk (4.5%), Full Cream Milk (6%).
Amul:
Amul ("priceless" in Hindi. The brand name "Amul," from the Sanskrit
"Amoolya," (meaning Precious) was suggested by a quality control expert in
Anand.), formed in 1946, is a dairy cooperative in India. Amul 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. It markets its array of products under brand name ‘Amul’. Amul
products have been in use in millions of homes in India and also exported all over
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the world since 1946 with a turnover of Rs. 52.55 billion in 2007-08. Today Amul
is a symbol of high-quality products sold at reasonable prices; of the genesis of a
vast co-operative network, of the triumph of indigenous technology, of the
marketing savvy of a farmers’ organisation and of a proven model for dairy
development in India.
The Amul Pattern has established itself as a uniquely appropriate model for
rural development. Amul has spurred the White Revolution of India, which has
made India the largest producer of milk and milk products in the world. It is also
the world's biggest vegetarian cheese brand.
Gujarat Co-operative Milk Marketing Federation Ltd. (GCMMF), which
today is jointly owned by some 3.1 million milk producers in Gujarat, India.
Amul's product range includes milk powders, milk, butter, ghee, cheese, Masti
Dahi, Yoghurt, Buttermilk chocolate, ice cream, cream, shrikhand, paneer, gulab
jamuns, flavoured milk, basundi, Nutramul brand and others. In January 2006,
Amul plans to launch India's first sports drink Stamina, which will be competing
with Coca Cola's Powerade and PepsiCo's Gatorade. In August 2007, Amul
introduced Kool Koko, a chocolate milk brand extending its product offering in
the milk products segment. Other Amul brands are Amul Kool, a low calorie thirst
quenching drink; Masti Butter Milk; Kool Cafe, ready to drink coffee and India's
first sports drink Stamina.
Amul is the largest food brand in India and world's Largest Pouched Milk
Brand with an annual turnover of US $2.2 billion (2010–11). Besides India, Amul
has entered overseas markets such as Mauritius, UAE, USA, Oman, Bangladesh,
Australia, China, Singapore, Hong Kong and a few South African countries.
Arokia / Hatsun
Hatsun Agro Product Limited is a public limited company that was founded
by Mr. R.G.Chandramogan, who is also the present Chairman & Managing
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Director. Hatsun, based in South India is the largest private sector dairy company
in India and hence has a distinct advantage of dealing in cow's milk. In 1970,
Hatsun began with the pioneering effort of producing Arun ice-cream, which still
continues to be the most popular ice-cream brand in South India.
When the market was ruled by unhygienic milk, Hatsun came up with
Arokya - the standardized, homogenised and bacteria clarified milk. Arokya milk
is still unsurpassed in purity, thickness and quality and has made it one of the most
preferred milk brands consumed by several hundred thousand households every
day and then came Hatsun Komatha. This product is Hatsun's proud contribution
of a superior quality, lower fat milk which Hatsun calls Cow's milk. Komatha is
the perfect symbolization of the values and attributes of the provider of fresh milk
- the cow. Hatsun started marketing fresh milk in pouches from 1993 and
manufacturing dairy ingredients from 2003.
Today, Hatsun is a USD 250 million company, listed in the Mumbai Stock
Exchange. Hatsun's Dairy Ingredients are processed at the state-of-the-art
processing technology run by people with strong technological capabilities. These,
together with an innovative and flexible approach, enable it to manufacture a
range of high quality products. Hatsun has an annual production of 20,000 MT of
Milk Powders and 11,000 MT of milk Fat at present.
Hatsun sources its milk with an ever watchful eye, always keen on quality.
It is an enthusiastic and bustling activity when milk takes its first step in its
journey to the consumers homes. Hatsun handles a total 1.8 million litre a day.
Hatsun's quest for quality starts at procurement, two times a day, 365 days of the
year at over a thousand collection centers, from more than a hundred thousand
farmers.
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Aroma
Sri Mahalakshmi dairy was founded by Mr. R. Ponnuswamy, Chairman and
Managing Director of the Aroma Sri Mahalakshmi Group of Food industries in the
year 1972 and the brand name Aroma milk is a house hold name in the city of
Coimbatore and Tiruppur. Sri Mahalakshmi dairy had a humble beginning in 1972
in a small village called a Telugupalayam, nearby Coimbatore. The dairy was
started with an ideological goal to serve the poor and economically weaker dairy
farmers of Coimbatore Dist. and nearby Tiruppur dist. From the time the dairy
started, it has served the farmer community with complete dedication and
affection. The farmers have developed an ever increasing loyalty to this
organisation which is reflected in the yearly growth rate of the company.
Its product ranges are Full cream milk, toned milk, standardized milk, curd
and ghee etc., It has developed good distribution network in Coimbatore dist,
Erode Dist, Tiruppur Dist, Dindigul Dist, The Nilgiri's Dist and Palakkad,
Ottapalam, Trichur & Perunthalmanna of Kerala state.
Cavin:
Cavinkare's new dairy business Cavinkare Dairy Division is the new
venture of CavinKare. Cavin's dairy products include milk, curd, ghee, butter,
flavoured milk etc. The first product, Cavin's milk was launched on 14th of
january 2009. The milk procured from village farms is sent for processing at
CavinKare's State-of-the art dairy plant. Cavin's milk is freshly procured from the
farmers and hygienically processed through state of the art technology under
stringent quality standards to retain its freshness and full nutritional value. Care is
taken to reach the processed milk from the plant to consumers within 24 hours.
This ensures the freshness of Cavin's products when it reaches the market. Cavin's
milk is available in different variants to suit the requirements of different age
groups.
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Sakthi
P. Nachimuthu Gounder laid the foundation Treatment of the Sakthi
Group. It was in 1921, P. Nachimuthu Gounder broke away from his traditional
business of hiring out bullock carts, into pioneering a passenger transport service.
The Sakthi Group has spread its roots into Sugar, Industrial Alcohol, Effluent
Treatment Plant, Auto Components, Textiles, Transport, Finance, Beverages, Soya
Products, Dairy Products, Synthetic Gems manufacture and Plantations.
Dairy division
Sakthi milk is marketed in various towns of Tamil nadu and kerala. It is the
second largest brand in kerala next to state owned co-operative brand. It is also
manufacturing and marketing value added milk products like Cream, ghee, butter,
curd, sterilized flavored milk panner, buttermilk, etc. Attributing future growth of
the division the export of Sakthi to foreign countries has earned significant market
response. Presently it is procuring and processing 1,10,000 litres of milk every
day. Liquid milk is marketed in various towns of Tamilnadu and Kerala carrying
the brand name of “Sakthi Milk'. This division will be the thrust area for further
growth of the company and the potential for growth is immense. Products like
butter, khoa, flavoured milk, yogurt, paneer and cheese are being planned for
introduction shortly. It has established good marketing network for dairy export
demand both in Tamilnadu and in Kerala. It has increase substantially, giving
more margin.
Being the world’s largest producer and consumer of dairy products, India
represents one of most lucrative dairy markets. At the outset with the emergence
of different brands of dairy products the demand for processed dairy products is
expanding and is expected to keep doing so as cold supply chains and modern
trade continue to evolve. Increasing urbanization, exposure to gourmet foods and
corresponding changes in consumer preferences, behavior and purchasing power
are the catalysts for the rise of processed dairy categories.
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