India: Overview of Dairy Industry · • To help dairy farmers, the Maharashtra government had...
Transcript of India: Overview of Dairy Industry · • To help dairy farmers, the Maharashtra government had...
India: Overview of Dairy Industry
March 4, 2020
We Deliver the India Advantage
© Tecnova, 2020 All Rights Reserved
Authored by:
Vipul Sachdeva (Consultant - Consumer Goods)
Quarterly Update: Q3 FY 2020 (Oct’2019-Dec’2019)
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India is the largest producer and consumer of milk in the world
Dairy development schemes to strengthen production,procurement, processing and marketing of milk and milk products:• National Programme for Dairy Development (NPDD)• National Dairy Plan (Phase-I) Dairy Entrepreneurship
Development Scheme (DEDS)• Support to dairy cooperatives• Dairy Processing and Infrastructure Development Fund (DIDF)
Government Initiative & PoliciesKey Headlines
6th
Largest economy in the world
1st
Contribution of agricultural sector in GDP
15.87 % 26%
Milk contribution in agricultural sector GDP
6.4%
CAGR (2014-19) of India’s milk production
187.7 MMT
USD 130+ Bn
Value of Indian dairy industry
8.47 Mn
Milk Production in India (2018-19)
Upcoming Events
• Considerable presence of unorganized segment due to huge demand of raw material for direct consumption andlower level of value additions required in traditional milk products
• In the organized segment, sales of cooperatives are dominated by fresh liquid milk followed by traditional valueadded products like butter, curd, etc.
• Private players focus on value-added products due to better avenues for product differentiation and profitability.Hence, western product categories such as yogurts, cheese, whey proteins etc. are dominated by these players
Key Economic Indicators Dairy Industry Trend
3.3 3.4
0.8 0.7
Largest producer of milk in the world
146.3 155.5 165.4176.3 187.7
0
50
100
150
200
2014-15 2015-16 2016-17 2017-18 2018-19Milk Production (MMT)
Milk Production
Organized Dairy (20%)
Cooperatives
Procures52.6%
Private dairies
Procures47.4%
Unorganized Dairy (80%)
Traditional Milkmen/ Vendors
(40%)
Self consumption at home
(40% is retained)
• AAHAR - International Food & Hospitality Fair 3 –7 March 2020 at Pragati Maidan, New Delhi
• Food & Technology Expo: 17 - 19 July 2020 atPragati Maidan, New Delhi
• DAIRY UNIVERSE INDIA: 21 – 23 Aug 2020 PragatiMaidan, New Delhi
• International Poultry Dairy & Livestock Expo: 28– 30 August 2020 at Karnal, Haryana
• Dairy and animal husbandry sectors are underfocus in the Union budget with the target ofdoubling milk processing capacity to 108 milliontones by 2025
• Concerted efforts at eliminating animaldiseases will also increase milk production by10 to 15 %
Current Employment
Bn: Billion; CAGR: Compounded Annual Growth Rate; FY: Fiscal Year; GDP: Gross Domestic Product; GoI: Governmentof India; INR: Indian Rupee; MMT: Million Metric Tones ; Mn: Million; SMP: Skimmed Milk Powder; USD: United StatesDollar; YoY: Year on Year
• Increased outlay to the Rashtriya Gokul Mission of USD 107 mn• GoI sanctioned proposal for setting up the Rashtriya Kamdhenu
Aayog for sustainable and enhanced productivity of cows andimplementation of laws and welfare schemes for cows
• 2% interest subvention for farmers engaged in animalhusbandry and fisheries who take loans through the KisanCredit Card (KCC) scheme
• To help dairy farmers, the Maharashtra government had givena INR 5 (USD 0.07) per liter and a INR 3 (USD 0.04) per litersubsidy for a temporary period to tide over the lower milkprices
• GoI increased the export subsidy benefit on milk and milkproducts from 10% to 20% for a short period
Budget 2019 and 2020 Highlights
Sources: National Dairy Development Board, GoI; Indian Dairy Association, GoI; Tecnova Research; Industry Reports and Journals
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Dairy Industry: Quarterly Update
Summary
• For the year between April 2018 and March2019 , India exported 45,082 MMT of SMP ascompared to 11,476 MMT previous year
• Exports to reduce significantly through theremainder of the year 2020 due to very lowcarryover stocks and attractive domestic prices
• Milk production to grow by 4%-5% through 2020(compared with recent averages annual growthrates of 5%-6%)
0.17 0.18 0.190.87 0.71 0.87 0.62
• The dairy and dairy products market isexpected to reach USD 265.7 billion by2023, growing at a CAGR of around15% during FY18-23.
• Milk has traditionally been animportant part of Indian staple foods,and the increase in demand for milkand dairy products is due to populationgrowth and the rise in per capitaconsumption aided by increasingspending power.
• Annual per capita consumption ofliquid milk which was around 58 litersin 2017 is expected to grow to 68 litersby 2023
Milk Consumption and Utilization Type
Notable Deals in FY20
Tecnova’s Experience in Dairy Industry
130.97
265.7
0
50
100
150
200
250
300
FY 18 FY 23(F)
Buffalo49%
Cow44.3%
Others6.7%
International Trade
57%
19%
6%
6%5%2%
5%Milk
Ghee
Paneer
Koha
Curd & Yoghurt
Milk Powder
Others
Faster growth is expected in cow milk consumption in line with developed markets
Milk Utilization for Organized Market
2463
2340 601 22887307
1561
27,771
5,164
7,657 11,476
45,082
0
10000
20000
30000
40000
50000India SMP Exports
Mar
ket
Val
ue
(USD
)
• Drums Food International, the parent company of Indian yogurt brand Epigamia, has secured USD 25.6 millionin funding, including an investment from Danone Manifesto Ventures
• French dairy group Lactalis has signed a definitive agreement to buy the milk-processing business ofMaharashtra based Prabhat Dairy for about USD 242 mn through a slump sale
Bn: Billion; CAGR: Compounded Annual Growth Rate; FY: Fiscal Year; GoI: Government of India; INR: Indian Rupee;MMT: Million Metric Tones ; Mn: Million; SMP: Skimmed Milk Powder; USD: United States Dollar; YoY: Year on Year
• Market research and distributor search for Europe based dairy companies• Industry research for Australia based milk and milk products manufacturer• Market research and strategy for India based dairy companies
Base: 176.3 MMT
FY18
Base: 176.3 MMT
FY18
Sources: National Dairy Development Board, GoI; Indian Dairy Association, GoI; Tecnova Research, Industry Reports and Journals
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