CHAPTER 3

FACTORS CONTRIBUTING TOWARDS THE GROWTH

OF ORGANIZED DAIRY SECTOR
Following are the factors which contribute in the growth of the organized dairy
sector.

3.1: Increased Population:

Mittal S (2010) had analyzed through that the overall rise in demand for food
item happens mainly due to increase in population and rise in per capita income of the
people. Milk is as it considered complete food in India and is an important part of staple
Indian diet. People from all age group prefer consuming milk and milk products and
hence there has been tremendous rise in demand with respect to the population rise. The
unorganized sector alone cannot meet the demand and hence people prefer resorting to
the packaged milk offered by cooperatives and private player. Punjabi M. in her article
conveys that “To supply the market, an average incremental increase of 5 million tons
per annum of milk over the next 15 years is required – a doubling of the average
incremental rate achieved over the past 15 years.” This clearly shows as there is upward
push in demand the consumers are prone to switch to a more reliable and handy source
of milk, i.e. the packaged milk.

3.2: Change in the mindset of people (Increased awareness and rise in

education level) :

Various studies have been conducted to find the impact on better consumption
practices as and when there is rise in the level of education and awareness following
studies confirm that rise in the level of education and awareness among the masses have
positive correlation with product switch for more nutritive and healthy options along
with hygienic food preparations i.e; the people become more health conscious and
switch to healthy and hygienic options of food and beverages, the packaged dairy
products and milk definitely becomes a more preferred choice . Boniface, B., &
Umberger, W. J. (2012) confirms in their study that there is rise in demand and
consumption of milk and milk products as they feel “dairy products are a good source
of nutrients” and “a good source of protein..” another study confirms that “Considering
the marginal effect, consumers who perceive dairy products to be a good source of
nutrients are 4% more likely to have increased their consumption of dairy in the last
three years”. Shaharudin, Pani, Mansor, Elias, & Sadek, 2010; Sheng, Shamsudin,
Mohamed, Abdullah & Radam, 2008). Additionally, extrinsic product cues such as
packaging, food labels, quality certifications, brands and promotional /marketing
material can influence both consumers‟ perceptions and choices of food products
(Liana et al., 2010; Ong et al., 2008; Prescott et al., 2002) Radam et al. (2010) found
that females were generally more health-conscious than men and consumers in
households with children less than 12 years of age were generally less concerned 6
about price and more interested in purchasing safe and wholesome food.

3.3: Increased Urbanization:

According to various studies conducted to find the relation between the rate of
urbanization and switch for packaged milk confirms that as and when new localities are
getting established in the cities there is need for consumer goods like milk, bread and
other grocery materials, not everywhere there can be availability and supply of the loose
milk by the milkman or doodhwala’s, now a days as per the marketing policy of various
co-operatives and the private players the special milk booths / supply at retail kiraana
stores are getting opened looking at the prospective demand that is going to emerge
because of the full blown urbanization.

The article in Economic times confirming an economic survey been conducted

in Pune city in July 2019 to determine the reasons for the rise in demand of the packaged
milk and following three key reasons were clearly identified “There are three key
drivers of increasing milk demand viz; (i) population growth (ii) urbanization and (iii)
income growth which leads to an increase in the price of milk.”

3.4: Marketing and Advertising strategies adopted by cooperatives and

private players:
“The American Marketing Association defines marketing 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.” Marketers use an assortment of strategies to guide how, when, and where
product information is presented to consumers. Their goal is to persuade consumers to
buy a particular brand or product.” Marketing and Advertising strategies aims at
creating aspiration among the current and prospective consumers that the product /
service shall fulfill their need.
In Dairy industry the advertisement greatly emphasis on the health benefits that
are associated with consumption of the dairy products with respect of Calcium, protein,
and vitamin D, rest advertisements concentrate on the energy boosts it gives.
The unorganized dairy industry lacks with the resources and thus cannot thrust
on the marketing and advertising strategies. Who else than the co-operatives and the
private players can rightly afford to bring the desired awareness amongst the consumers
about the consumption of milk and dairy products. Not only one type of milk or dairy
product but advertisement for skimmed milk, toned milk, for more health conscious
consumers has brought the rise in the demand of packaged milk and the overall dairy
products offered by the organized sector Informative and awareness creating
Advertising

3.5: Timing for Availability of milk and dairy products:

Generally the loose milk is available in morning and evening hours at ‘Tabelas’
of local milkman or dairy shops or home-delivered by the milkman at the doorstep.
However the super stores retail stores, and kirana shops and exclusive milk parlors keep
a stock of packed milk and other dairy products during the whole day and during the
business hours, this add to the convenience, easy and on the spot purchasing decisions
of the consumers. And with modern life style people are more inclined to have
availability of the desired products according to their convenience buying.

3.6: Government Initiatives/Schemes for Employment opportunity in

dairy business:
The government, under the Dairy Entrepreneurship Development Scheme, is
providing subsidy through NABARD on dairy installation and dairy products
equipment. The progressive consumption of milk and milk products is leading to
immense possibilities of self-employment in this field the Union Government has
launched Dairy Entrepreneurship Development Scheme (DEDS). The government,
under this scheme, provides subsidy through NABARD on dairy installation to dairy-
products manufacturing equipment. DEDS seeks to improve the production of milk,
purchase, protective transportation, processing and marketing in order to promote self-
employment in the field of dairy. The Union government had in the year 2018-19
sanctioned a budget of Rs 323 crore for the scheme. The subsidies are offered to the
people who wish to start their own dairy business and can avail the financial benefits
for purchasing cattle, dairy equipment, and owning a milk storage devices and
equipment.
3.7: Supply chain facility for last mile connectivity:
Milk as a commodity is highly perishable in nature it does not have a total life
span for more than 5 to 7 days even after refrigeration. Shelf-life is the period of time
that a food may be stored before it starts to deteriorate or become potentially unsafe. In
case of milk it needs to be pasteurized to kill the germs and bacteria. “The US Centers
for Disease Control (CDC) says improperly handled raw milk is responsible for nearly
three times more hospitalizations than any other food-borne disease source, making it
one of the world's most dangerous food products”. Source: Wikipedia
 It is thus important that the raw milk should be quickly transported from the
farmers to the consumers so that it does not get contaminated before consumption. It is
mandatory that the efficient supply mechanism be built for the dairy products. Since
the Organized dairy players have rightful resources for timely collection, processing,
packaging and distribution mechanism of milk and dairy products, this instills
confidence among the buyers that the packed milk is free from bacterial infestation,
hygienic and free from pathogens. Moreover the supply through refrigerated vans and
availability of the cooling machines in the retail stores ensure the extended shelf life.
Such an option is not in the case in the loose milk or from local vendor or milkman.
Hence consumers are switching to packed milk and dairy products in a big way.
3.8: Future Requirement for Expansion:
It has been observed that as the people are moving from rural belts to the urban
centers and there has been increase in planned urban colonization, but before the people
actually start to reside there needs to be availability of basic amenities and availability
of the food and medical supplies in the vicinity. Milk thus is been made available at
mostly the extended outskirts of the growing cities through milk booths and generally
are supplied from the retail kirana shops. One can clearly infer the expected rise in
urban population would be an advantage to the Indian dairying. Presently, the organized
sector both cooperative and private and the traditional sector cater to this market.

3.9: Growth Trends of Various Milk and Milk Products in Indore District

Milk:

Liquid pouch milk has shown a consistent rise in sales in Indore city, below is
the sales in Ltr per day of overall milk variants offered by the brands. Total milk sale
in 2003 was 49000 LPD whereas it rose to 187000 LPD in 2020. Majorly in Indore city
and surrounding area consumers prefer full cream milk, lowest sale is to toned milk.
Double toned milk is the lowest priced milk variant which is majorly consumed by low
income group consumers and health conscious consumers. Even double toned milk sells
more than the toned milk.
 Table 3.1: Growth Trends of Selected Brands

Total Sale
in Indore % Growth
Year Sanchi Amul Saurabh Others City Rate

2003 38000 8000 3000 - 49000

2004 38000 11000 4000 - 53000 8.16
2005 42000 13000 4500 - 59500 12.26
2006 45000 13000 5000 - 63000 5.88
2007 50000 16000 6000 - 72000 14.28
2008 55000 17000 6500 - 78500 9.02
2009 65000 18000 6500 - 89500 14.01
2010 71270 22000 6700 - 99970 11.69
2011 84340 22500 7000 - 113840 13.87
2012 90060 23000 8000 - 121060 6.34
2013 103320 23000 9000 - 135320 11.77
2014 112680 25000 9000 - 146680 8.39
2015 120510 27000 9000 12000 168510 14.88
2016 117045 30000 8500 15000 170545 1.21
2017 125310 35000 9000 17000 186310 9.24
2018 120680 35000 9000 22000 186680 0.19
2019 122760 40000 6000 25000 193760 3.79
2020 117000 50000 5000 15000 187000 -3.48

Total Sales of Pouch milk in Indore City

2025 250000

2020
200000
2015

2010 150000

2005 100000
2000
50000
1995

1990 0
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18

Year Total Sale in Indore City

Source: Marketing & Sales Report: Sanchi Dugdh Sangh, Amul & Saurabh
Ghee :

prices of Ghee are generally influenced by local market and trend of Ghee as a
commodity which generally varies with respect to milk season flush and lean and also
very much influences by festive seasons and marriage and other social events. In
general in Indore Sanchi is leader in Ghee sale and one of the most reputed brand in
consumer’s mind, the reason behind it is the consumer have very strong feelings and
trust that it belongs to a government organization which have a mission of providing
best quality product at fair price with the tag line “Seva hi Lakshya; Munaafa Nahi”.
Indore is a very big Ghee Mandi, other brands, local brands also supply in other states
and other districts at trading price. Which is influenced by All India Mandi rate of Ghee.

AMUL sells close to 75-80 tons of Ghee per month. Normally retailers sale
Ghee at undercutting price means most of the retailers sell ghee at the lower than MRP
rate as there is a lot of scope of earning profit margin. In the year 2003 the annual sale
of Ghee in Indore was 1513.58 MTs, it showed a consistent rise till 2015-2016 in
production and sale, however from 2017 to 2019 the average annual sale in Indore has
been reduced to 1388. From 2016 the product has registered a negative growth.

Table 3.2: Growth Trends of Ghee

Ghee Sales in MTs % Growth rate

2012-2013 1513.58 -
2013-2014 1716.47 13.40
2014-2015 1823.57 6.24
2015-2016 2122.44 16.39
2016-2017 1593.55 -24.92
2017-2018 1154.17 -27.57
2018-2019 1416.99 22.77

Ghee : Sales in MTn Growth trend

Growth rate

Sales in MTs

-500 0 500 1000 1500 2000 2500

2018-2019 2017-2018 2016-2017 2015-2016 2014-2015 2013-2014 2012-2013

Source: Marketing & Sales Report: Sanchi Dugdh Sangh, Amul & Saurabh
Butter:

Consumer Butter sale is pretty low in Indore however the bulk butter sale used
for commercial use for conversion into Ghee runs the butter market. The product has
shown rise till 2016-2017 however has registered a negative growth by 55% in 2017-
18.

Table 3.3: Growth Trends in Sales of Butter

Table Butter Sales in MTs % Growth rate

2012-2013 51.7 -
2013-2014 48.45 -6.29
2014-2015 76.15 57.17
2015-2016 55.25 -27.45
2016-2017 79.74 44.33
2017-2018 35.11 -55.97
2018-2019 27.28 -22.30

Table Butter : Sales in MTn in Indore

Growth rate

Sales in MTs

-80 -60 -40 -20 0 20 40 60 80 100

2018-2019 2017-2018 2016-2017 2015-2016 2014-2015 2013-2014 2012-2013

Source: Marketing & Sales Report: Sanchi Dugdh Sangh, Amul & Saurabh
Paneer:

organized sector is low on sale of Paneer in Indore where unorganized sector is

well accepted and easily available. Over Paneer is sold in packets of 200 gm and half
kg and also sold in bulk to institutions. Overall market size for packed paneer is not so
big with respect to population / overall consumer base. Paneer has almost got doubled
in sale in last 10 years starting from 63MTs per year to 139 Mts in 2018-19.

Table 3.4: Growth Trends in Sales of Paneer

Paneer Sales in MTs % Growth rate

2012-2013 63
2013-2014 84 33.33
2014-2015 82 -2.38
2015-2016 98 19.51
2016-2017 96 -2.04
2017-2018 115 19.79
2018-2019 139 20.87

Paneer : Sales in Mt and Growth Trend

Growth rate

Sales in MTs

-20 0 20 40 60 80 100 120 140 160

2018-2019 2017-2018 2016-2017 2015-2016 2014-2015 2013-2014 2012-2013

Source: Marketing & Sales Report: Sanchi Dugdh Sangh, Amul & Saurabh
Lassi:

Lassi is majorly consumed in summer season and the production and

availability is also seasonal in nature. The annual sale of Lassi in Ton Ltr is 205 in
2012-2013, the products sale continued to rise till 2016-2017 and reached 409 Ton Ltr
however after 2017 the product is registering a negative growth.

Table 3.5: Growth Trends in Sales of Lassi

Lassi Sales in Ton Ltr Growth rate

2012-2013 205
2013-2014 170 -17.07
2014-2015 240 41.18
2015-2016 278 15.83
2016-2017 409 47.12
2017-2018 327 -20.05
2018-2019 282 -13.76

Growth rate

Sales in TonLtr

-50 0 50 100 150 200 250 300 350 400 450

2018-2019 2017-2018 2016-2017 2015-2016 2014-2015 2013-2014 2012-2013

Source: Marketing & Sales Report: Sanchi Dugdh Sangh, Amul & Saurabh
Srikhand:

Shrikhand is the second largest selling Value added Fresh Product in 2012-2013
the annual sale was 49MT. by the year 2016-2017 it reached to 66 MT, however post
this period product is lowly reducing its annual sale. In 2018-19 the sale was as low as
41.

Table 3.6: Growth Trends in Sales of Shrikhand

Shrikhand Sales in MTs Growth rate

2012-2013 49
2013-2014 37 -24.49
2014-2015 44 18.92
2015-2016 52 18.18
2016-2017 66 26.92
2017-2018 56 -15.15
2018-2019 41 -26.79

Shrikhand : Sales in MTn & Growth Trends

Growth rate

Sales in MTs

-40 -20 0 20 40 60 80

2018-2019 2017-2018 2016-2017 2015-2016 2014-2015 2013-2014 2012-2013

Source: Marketing & Sales Report: Sanchi Dugdh Sangh, Amul & Saurabh
Chena Rabri is one of the lowest selling products, which is seasonal in nature. The
product has a very low proportion in overall sale of portfolio in value added fresh
product. In 2012-2013 is 11 MTs, the same reached to 65 MTs in 2018-2019.

Table 3.7: Growth Trends in Sales of Chena Rabri

Chaina Rabri Sales in MTs Growth rate

2012-2013 11
2013-2014 14 27.27
2014-2015 27 92.86
2015-2016 61 125.93
2016-2017 93 52.46
2017-2018 76 -18.28
2018-2019 65 -14.47

Chaina Rabri : Sales in MTn and Growth Trend

Growth rate

Sales in MTs

-40 -20 0 20 40 60 80 100 120 140

2018-2019 2017-2018 2016-2017 2015-2016 2014-2015 2013-2014 2012-2013

Source: Marketing & Sales Report: Sanchi Dugdh Sangh, Amul & Saurabh
Probiotic Dahi in cup:

this product is for health conscious consumers, it is considered good for

digestion and gastric health. In spite of having health benefits it doesn’t have that much
sale. In 2012-2013 the sale was as low as 8Mt, whereas 75 Mt in 2018-2019. The same
has almost reached 10 times in ten years span.

Table 3.8: Growth Trends in Sales of Probiotic Curd

Probiotic Curd Sales in MTs Growth rate

2012-2013 8
2013-2014 20 150.00
2014-2015 38 90.00
2015-2016 57 50.00
2016-2017 63 10.53
2017-2018 69 9.52
2018-2019 75 8.70

Probiotic Dahi : Sales in MTn & Growth Trend

Growth rate

Sales in MTs

0 20 40 60 80 100 120 140 160

2018-2019 2017-2018 2016-2017 2015-2016 2014-2015 2013-2014 2012-2013

Source: Marketing & Sales Report: Sanchi Dugdh Sangh, Amul & Saurabh
Curd:

it is a seasonal product, but still its demand almost remains consistent

throughout the year. The product has shown tremendous growth from being 8 MT in
2012-2013 to 215MT in 2018-2019. The average annual growth is 88.48%.

Table 3.9: Growth Trends in Sales of Curd

Curd Sales in MTs Growth rate

2012-2013 8
2013-2014 26 225.00
2014-2015 46 76.92
2015-2016 94 104.35
2016-2017 162 72.34
2017-2018 188 16.05
2018-2019 215 14.36

Curd : Sales in MTn & Growth Trends

Growth rate

Sales in MTs

0 50 100 150 200 250

2018-2019 2017-2018 2016-2017 2015-2016 2014-2015 2013-2014 2012-2013

Source: Marketing & Sales Report: Sanchi Dugdh Sangh, Amul & Saurabh
Buttermilk:

Buttermilk sale in 2012-13 was 384 Tltr, the product has registered a constant
growth and now the sale has reached upto 1206 Tltr. The growth is comparatively high
from 2012-2017 whereas after 2017-2019 the growth is in single figure.

Table 3.10: Growth Trends in Sales of Buttermilk

Buttermilk Sales in TLtr Growth rate

2012-2013 384
2013-2014 364 -5.21
2014-2015 590 62.09
2015-2016 773 31.02
2016-2017 1103 42.69
2017-2018 1175 6.53
2018-2019 1206 2.64

Buttermilk : Sales in Tltr & Growth trend

Growth rate

Sales in TLtr

-200 0 200 400 600 800 1000 1200 1400

2018-2019 2017-2018 2016-2017 2015-2016 2014-2015 2013-2014 2012-2013

Source: Marketing & Sales Report: Sanchi Dugdh Sangh, Amul & Saurabh
Peda:

It is a value added fresh product, initially it started with the sales in 2012 of
being 11 MT, and the same reached to a level of 76 MT in 2019. Average growth rate
for the 10 year period is 40%. A major rise with 53%-55% is registered in 2017-2019

Table 3.11: Growth Trends in Sales of Peda

Peda Sales in MTs Growth rate

2012-2013 11
2013-2014 15 36.36
2014-2015 25 66.67
2015-2016 29 16.00
2016-2017 32 10.34
2017-2018 49 53.13
2018-2019 76 55.10

Peda : Sales in Mt & Growth Trend

Growth rate

Sales in MTs

0 10 20 30 40 50 60 70 80

2018-2019 2017-2018 2016-2017 2015-2016 2014-2015 2013-2014 2012-2013

Source: Marketing & Sales Report: Sanchi Dugdh Sangh, Amul & Saurabh
3.10: Summary of the Chapter

In this chapter, a number of factors affecting the growth of organized dairy

industry have been discussed such as; increased population, Change in the mind-set of
people due to increased awareness and rise in education level, Increased Urbanization.
The unorganized dairy industry lacks with the resources and thus cannot thrust on the
marketing and advertising strategies. Who else than the co-operatives and the private
players can rightly afford to bring the desired awareness amongst the consumers about
the consumption of milk and dairy products. Various government initiated schemes
seeks to improve the production of milk, purchase, protective transportation, processing
and marketing in order to promote self-employment in the field of dairy.

On national front India has registered a dramatic rise in production and

consumption of milk and milk products as a result of these factors put together.
According to the study focused on Indore District, sales data has been studied for a
period of 2010-2018 for individual brand and collectively the total sales of Indore city.
Milk as a product has shown an average growth of 8.33% per annum, Sanchi as a player
has contributed most to the overall sales of the liquid pouch milk.

Ghee as a product has a mandi based market and has a consistent growth. Ghee’s
demand is generated majorly in festivities, marriages and other similar occasion, Ghee
is second most important product in the overall product portfolio of the players. Other
value products fetch a seasonal demand are not contributing majorly to the overall
business profitability.