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Dairy Industry in India



India has the highest livestock population in the world with 50% of the buffaloes and 20% of the world’s cattle population, most of which are milch cows and milch buffaloes. India’s dairy industry is considered as one of the most successful development programmes in the post-Independence period.

In the year 2006-07the total milk production in the country was over 94.6 million tonnes with a per capita availability of 229 gms per day. The industry had been recording an annual growth of 4% during the period 1993-2005, which is almost 3 times the average growth rate of the dairy industry in the world. Milk processing in India is around 35%, of which the organized dairy industry account for 13% of the milk produced, while the rest of the milk is either consumed at farm level, or sold as fresh, non-pasteurized milk through unorganized channels.

Dairy Cooperatives account for the major share of processed liquid milk marketed in the India. Milk is processed and marketed by 170 Milk Producers’ Cooperative Unions, which federate into 15 State Cooperative Milk Marketing Federations. Over the years, several brands have been created by cooperatives like Amul (GCMMF), Vijaya (AP), Verka (Punjab), Saras (Rajasthan). Nandini (Karnataka), Milma (Kerala) and Gokul (Kolhapur).

Uttar Pradesh, Punjab, Haryana, Rajasthan, Gujarat, Maharashtra, Andhra Pradesh, Karnataka and Tamil Nadu are the milk surplus states in India. The manufacturing of milk products is obviously high in these milk surplus States. Exports of dairy products have been growing at the rate of 25% per annum in the terms of quantity terms and 28% in terms of value since 2001. Significant investment opportunities exist for the manufacturing of value-added milk products like milk powder, packaged milk, butter, ghee, cheese and ready-to-drink milk products.

India has emerged as the largest milk producing country in the world with present level of annual milk production estimated as 94.5 million tonnes. We expect a production level of 135 million tonnes by the year 2015. India has a large livestock population base constituting 278 million livestock including 180.5 million cattle, 82.8 million buffaloes, 4 million sheep and 9.2 million goats. The livestock population is projected to increase to 322 million by the year 2015. The large livestock population is raised primarily on crop residues and grazing in the common property including basement. The forest area, which was a major source of grazing, is no longer available to livestock breeders especially landless people. As a consequence, the available feed resources fall short of the nutritional requirement. The shortfall is estimated as 59.9 million tonnes for the green fodder and 19.9 million tonnes for dry fodder. This shortfall is likely to increase by 2015 to 63.5 million tonnes of green fodder and 23.56 million tonnes of dry fodder.

The landless people are, therefore, likely to face severe shortage of resources to raise cattle and other species of livestock. There is a real danger that in the absence of resources to maintain their stock, these under-privilege rural people may give up livestock farming. This could be a serious setback to lakhs of rural families who derive income as well as employment opportunities from livestock sector.

India prepares to tackle the international market following Japan, where milk consumption today, has more than trebled to 70 kg per capita from a mere 20 kg in the 'sixties - the consumption of dairy products in other Asian 'tiger' nations is also growing. As a consequence - creating excellent export opportunities for India, as these nations are deficient in milk by at least 3 million tonnes per year. India, with some 27 per cent of Asia's population, accounts for more than half of the milk output with enough growth potential to explore foreign markets. In anticipation of the export opportunities and in view of the post GATT scenario, India is gearing up to tackle the demands of the international market.

Indian companies are preparing themselves to meet international standards and other non-tariff barriers. Planners are taking measures to meet the sanitary and phyto-sanitary specifications - prescribed by Office International des Epizooties (OIE) under the auspices of the World Trade Organization (WTO) -, which range from the quality assurance of processed dairy products to the health status of livestock.

Livestock Population in India by Species

(In Million Numbers)

Species

1951

1956

1961

1966

1972

1977

1982

1987

1992

1997

2003

Cattle

155.3

158.7

175.6

176.2

178.3

180.0

192.5

199.7

204.6

198.9

185.2

Adult Female Cattle

54.4

47.3

51.0

51.8

53.4

54.6

59.2

62.1

64.4

64.4

64.5

Buffalo

43.4

44.9

51.2

53.0

57.4

62.0

69.8

76.0

84.2

89.9

97.9

Adult Female Buffalo

21.0

21.7

24.3

25.4

28.6

31.3

32.5

39.1

43.8

46.8

51.0

Total Bovines

198.7

203.6

226.8

229.2

235.7

242.0

262.2

275.7

288.8

288.8

283.1

Sheep

39.1

39.3

40.2

42.4

40.0

41.0

48.8

45.7

50.8

57.5

61.5

Goat

47.2

55.4

60.9

64.6

67.5

75.6

95.3

110.2

115.3

122.7

124.4

Horses and Ponies

1.5

1.5

1.3

1.1

0.9

0.9

0.9

0.8

0.8

0.8

0.8

Camels

0.6

0.8

0.9

1.0

1.1

1.1

1.1

1.0

1.0

0.9

0.6

Pigs

4.4

4.9

5.2

5.0

6.9

7.6

10.1

10.6

12.8

13.3

13.5

Mules

0.1

0.0

0.1

0.1

0.1

0.1

0.1

0.2

0.2

0.2

0.2

Donkeys

1.3

1.1

1.1

1.1

1.0

1.0

1.0

1.0

1.0

0.9

0.7

Yak

 NC

NC

0.0

0.0

0.0

0.1

0.1

0.0

0.1

0.1

0.1

Mithun

NA

NA

NA

NA

NA

NA

NA

NA

0.2

0.2

0.3

Total Livestock

292.9

306.6

336.5

344.5

353.2

369.4

419.6

445.2

470.9

485.4

485.0

Poultry *

73.5

94.8

114.2

115.4

138.5

159.2

207.7

275.3

307.1

347.6

489.0

Dogs

NC

NC

NC

NC

NC

NC

18.5

18.0

21.8

25.5

29.0

NC: Not Collected; NA: Not Available    * Includes Chicken, ducks, turkey & other birds
Source: Livestock Census 2003

 

Processed Dairy Products
 
Cheese
The organized cheese market including its variants like processed cheese, mozzarella, cheese spreads, flavored and spiced cheese, is valued at around Rs 4.5 billion. Processed cheese at 60% of the overall market is Rs 2.7 billion. The next most popular variant is cheese spread claiming a share of around 30% of the total processed cheese market.  The market is primarily an urban phenomenon and is known to be growing at around 15%. The market for cheese cubes, slices and tins is growing. The flavored cheese segment has been constantly declining. 
Gujarat Cooperative Milk Marketing Federation (GCMF) with the Amul brand continues to be the main operator in the branded cheese market in India. It pioneered the market for processed, branded cheese.  What GCMF did was to develop the technology to make cheese from buffalo milk.  World over it is made from cow milk.
Britannia Industries joined the fray in the cheese market in mid-1990s through an arrangement with Dynamix Dairy Industries (DDI). It was set up in 1995 by a consortium of five companies - Conwood, Indo Saigon, Hiranandani, ETA and Metro.  DDI has capacity to process 500,000 litres of milk per day with an estimated investment of Rs 1500 mn. The plant designed by Valio of Finland is run on technology tie-up with Schreiber Foods of the US.  Schreiber is the largest supplier of processed cheese to fast food chains in the US with expertise in sliced cheese.
Britannia's cheese is sold in tins in the form of cubes, and in individually wrapped slices in packs of fives and tens.  The slices are being promoted more aggressively worldwide, and these account for a bulk of cheese consumption. These are gaining acceptance in India as well.  Amul followed Britannia in launching slices.   Its cheese spread in the form of paste has been well received in the market.
Britannia has been concentrating on metros and large cities. The network covers some 60,000 dairy outlets equipped with cold cabinets, refrigerators and insulated boxes.  Amul covers some 500,000 retail outlets. 
French cheese major, Fromageries Bel, a 10-bn French franc outfit, has entered the Indian market with La Vache Kirit or what is worldwide known as The Laughing Cow. Its target market to start with were the two metros of Delhi and Mumbai with distribution entrusted to Delhi-based Rai & Sons, distributors for premium food brands, Ferraro Rocher and Ricola. The Bel product will be produced at Bel's facility in Poland exclusively for the Indian market.  La Vache Kirit is a guaranteed vegetarian product. Fromageries Bel is expected to widen its product portfolio by launching laughing Kirit (creamy cheese in cube form) and Babybel (semi-hard with a wax coating appropriate for sandwiches).
Laughing Cow was expected to be followed by an Austrian cheese brand, Happy Cow (owned by Woerle).  Woerle has entered into a licensing arrangement with Veekay Foods & Beverages in Mumbai. Nestle and Kraft have been planning to make foray in the Indian market.
 Foreign brands in India include: Probolene, Colby, Mozzarella and Parmessan from Italy, Cheddar from Dutch, Gryueve. The new entrants will have to compete with well-established players such as Amul, Britannia's Milkman and Dabur’s Le Bon, enjoying substantial market shares in the overall Indian cheese market.  The US-based Philip Morris, which brought in its Kraft cheese brand earlier, has gained a significant presence in the market.  The rest of the market is spread among Verka, Nandini, Vijaya and Vadilal.
 Dabur had forayed into the dairy products market through its joint venture company, Dabon International, a 50:50 joint venture between Dabur India and French dairy products major, Bongrain. The company claimed a product range of 20 different varieties of cheese under LeBon brand. Dabon has a manufacturing facility at Noida with an installed capacity of 12,000 tonnes per annum. Incidentally, the government had, in a move in late April 2001, barred Dabon from marketing flavoured milk and processed cheese in the country.
Dabur was to launch speciality cheese like blue cheese and hard cheese. It had plans to developing cold chains at the distributor and retail levels in the state capitals and major towns in order to increase penetration levels.
The demand for cheese is projected to grow from about Rs. 4.50 bn in 2003-04 to Rs. 6.00 bn in 2006-07 and to over Rs 11.00 bn by the terminal year of the projection period, 2014-15. Cheese is becoming a popular item in the menu of all relatively affluent families.  Slowly but surely, it will penetrate into the rural markets.
Processed Cheese  
 
Leading Brands
Amul, Vijaya, Verka, Vadilal, Kraft, Britannia.
Market Growth Rates
1990-91 – 1996-97
18.5%
1996-97 – 2001-02
20.6%
2001-02 – 2006-07
11.7%
2004-05 – 2009-10
9.4%
2009-10 – 2014-15
7.4%
 
Lead Players
The lead players in processed milk products in the market are as follows:
Amul, Britannia, and others include Vijaya, Verka and Vadilal. In the category of cheese Amul, Britannia Dabur (Le Bon) are the leading players including others like Verka, Nandini, Vijaya and Vadilal
Dairy Whiteners
About 15% of the total milk output in India is estimated to be processed in the organized dairy.  The industry has 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 85 mn tonnes of milk annually.  The total milk economy is estimated at Rs 1300 billion in terms of value.
 The market for dairy whiteners (commercially know as beverage milk powders and condensed milk) and creamers is around Rs 3,000 mn. Apart from MNCs like Nestle and companies like Britannia, the Indian enterprises have also made perceptible progress.  Names like Amul, Sapan, Vijaya, Mohan, Parag and several others have been seen in the marketplace with their whiteners.  These are available mostly in pouches, tetrapacks, and in the near future, may be in miniportion cups. 
 Aseptically packed creamer in miniportions is widely used in the West, but has yet to enter the Indian market in any substantial way.  Amul did make a beginning with its whitener pouches and has emerged as a leader with a market share of 45% followed by Nestle’s 23%. Aseptically packed creamer involves techniques to impart a longer shelf life to the product.  It is packed in small cups ready to be poured into a cup of tea or coffee.   Creamer is fresh milk with increased fat content (upto 12%) and is aseptically packed after undergoing Ultra Heat Treatment (UHT) at 1400 C. Its introduction will affect the existing whitener market as a natural milk product with a longer shelf life. 
Britannia forayed into the dairy business as a diversification move in 1997. Its first offering, Milkman Butter, just managed a 5% share. The dairy business claims a 10% share in Britannia's topline. The company had drawn up plans to atleast capture 5% of the overall fresh milk market estimated by Britannia at Rs 420 bn.  Extending the product portfolio beyond cheese, dairy whitener and butter, Britannia entered the fresh milk segment in 2001.  In the dairy whitener, the company has managed to capture a significant market share.
Nestle India with its Everyday dairy whitener has established its brand well. It has also entered into the market with its Nestle Pure Milk and, of course, a product in its niche area, Nescafe Frappe. Having earlier launched UHT milk, Nestle is concentrating on expanding its reach. Its plans   covered   Rs 800 mn investment in its Moga (Punjab) facility. New product segments like butter, yoghurt and flavoured milk were also on the cards.
While Sapan characterises it as Dairy Special (instant milk mix for tea and coffee), Vijaya is the only UHT processed milk homogenised brand sold in the market in 200 ml and one litre tetrapack. All the rest, Amulya, Meadow, Mohan, Parag and Shweta dairy whiteners are in the form of powders. Mohan also markets a non-dairy whitener alongside its dairy type product. 
Since India is a major consumer of tea and coffee, it would be a very large market if only the price was not a constraint.  In addition to domestic consumption, the whiteners/creamers find a high level of institutional acceptance, especially by railways, hotels and restaurants, airlines, hospitals and nursing homes and corporate offices. The institutional market can be tapped first, in particular, the airlines, railways and hotels. The penetration can then be extended to the household sector. The potential for exports, especially to neighboring countries and the countries in the Middle East, the Gulf and Africa, also exist and could be exploited.
Dairy Whiteners / Creamers
Demand: Past & Future
Year
th MT
1990-91
80
1991-92
83
1992-93
85
1993-94
86
1994-95
89
1995-96
91
1996-97
99
1997-98
95
1998-99
135
1999-00
183
2000-01
147
2001-02
160
2002-03
175
2003-04
190
2004-05
206
2005-06
224
2006-07
243
2007-08
263
2008-09
284
2009-10
307
2014-15
450
 
Lead Players
Nestle, Amul, Britannia, Dynamix Diary, Sterling Agro, Haryana Milk Foods, Mohan Food, Modern Dairy, K Dairy
Leading Brands
Amul, Sapan, Vijaya Spray, Meadow, Mohan, Parag, Shweta, Malkana, Gagan, White Magic, Every Day.
Market Growth Rates
1990-91 - 1996-97
3.6%
1996-97 - 2001-02
10.1%
2001-02 - 2006-07
8.7%
2004-05 - 2009-10
8.3%
2009-10 - 2014-15
8.0%
 

The main thrust of proposals is on the improvement of animal health and adoption of sanitary and phyto-sanitary specifications (SPS) for dairy products. Towards this end, the Technology Mission on Dairy Development (TMDD) has initiated a wide-ranging program.


Table 1: Milk Utilisation Pattern in India, 1943-2004
Year
1943*
1956
2004
Milk Production (million tones)
23.5
17.8
91
Mil Utilisation (Percentage)
100
100
100
Liquid Milk
28.0%
39.2%
46.0%
Traditional Products
72.0%
60.8%
50.0%
Ghee/Makhan (clarified butter)
58.7%
46.0%
33.0%
Dahi (Yogurt-like)
5.2%
8.8%
7.0%
Khoya (Partially desiccated Milk
5.0%
4.4%
7.0%
Chhana and Paneer (unprocessed cottage cheese)
3.1%
1.6%
3.0%
Western Products: Milk Powder, etc
Neg
Neg
4.0%
*Includes Pakistan and Bangladesh
 
 
 
Source: Handbook on Technology of Indian Milk Products

The upsurge in milk production has thrown up challenges in milk marketing. The country is blessed with an enormous domestic market because of the following factors: Large population and its continuous growth, low level of per capita milk consumption and hence large size of potential, but latent demand, increasing purchasing power, which is already in evidence, will transform the huge latent demand into real demand. The groups of dairy products offering exciting marketing opportunities are liquid milk itself, which accounts for a sizeable part of the milk consumption products, in which our dairy industry already has demonstrated considerable expertise, like milk powders, butter and ghee. The ability to manufacture the relatively new and sophisticated products like cheese and ice cream alongside the traditional products like paneer, khoya and milk-based sweets are now being manufactured on a large scale.

Utilization pattern

Table 2: Projected demand for major milk products in the organized sector, 1988-2009/ metric tonne
 
Product
Demand 1988
Project demand 2009
Ghee
100,000
200,000
Cheese
4,200
15,000
Paneer
1,000
16,000
Shrikhand
3,000
5,650
Rasgolla
1,600
6,000
Gulabjamun
3,000
5,850

As shown in the table, of the total milk produced in the country, nearly 46 per cent is consumed as liquid milk and the balance converted into various dairy products, such as ghee, butter, milk powder, ice cream, cheese, condensed milk and for making various kinds of sweetmeats having distinct regional preferences. Dairy products an estimated 54 per cent of India's milk production is converted into products, both traditional and Western. In this, the share of traditional products is about 50 per cent, accounting in 2001 for a little over 42 million tonne of milk, which yields over 10 million tonne of mithais and other related products per year. The growth projections for their demand in the organized sector are presented in Table above.

Commercial production of traditional products

With the increase in the availability of liquid milk and Western dairy products, refinement in the marketing network and significant improvement in per capita income, there is an increased pressure for the restructuring of the indigenous milk product industry. Now, the organized sector has started showing keen interest in processes and equipment for manufacturing traditional products standardization of products, as well as refinement in packaging and improvement in safety and shelf life. Any innovation which can enable the organized sector to manufacture and market indigenous milk products on an industrial scale can have a far reaching impact on the dairy industry as well as on the economic condition of milk producers. The market for indigenous products far exceeds that for Western dairy products like butter, milk powder and cheese. A great scope exists for further expansion of the market for indigenous milk products, provided quality and safety are ensured and the shelf life is extended to facilitate distribution over larger areas. Major innovations are needed in manufacturing, quality assurance, packaging and process engineering to adapt these products to current marketing and consumer requirements. Some commercial processes have been developed to manufacture ghee, khoya, shrikhand and gulabjamun, but much is required to be done.

Major Players

The dairy industry is dominated by the co-operative sector. About 60% of the installed processing capacity is in the co-operative sector.

The National Dairy Development Board (NDDB) is a major player in the market with its major brand, Amul. Leading brands like Amul, Nestle, Mother Dairy and Britannia are in the race to tap the growing market.

 

SmithKline Beecham Consumer Healthcare, Nestlé India and Heinz India are amongst the large MNCs that dominate the high-value milk products market. Other players include Indiana Dairy Specialties, Jagatjit Industries Ltd and various other state co­operatives.

Some dairy plants have production of mithais on a commercial scale. Some national brands like Haldiram, Bikanervala, K C Das, Chitales, Ganguram, Brijwasi, Agarwal Sweets etc are getting wide acceptance because of consistent quality Encouraged by the growing market and cashing on brand value select dairy companies are planning major expansion plans in various cities with new brands suited to local taste and preferences and realizing higher prices with higher sales volumes and product safety.

The milk and dairy products segment is set for up gradation of cold-storage chains for expansion. Mother Dairy, a wholly owned subsidiary of National Dairy Development Board plans to make strong presence in the market of milk and milk products under the Mother Dairy brand through retail outlets across the country in addition to its own 300 outlets with provision of cold storage and cold chains.

Milk Production in India

Production in India

Year

Production (Million Tonnes)

Per Capita Availability (gms/day)

1991-92

55.7

178

1992-93

58.0

182

1993-94

60.6

187

1994-95

63.8

194

1995-96

66.2

197

1996-97

69.1

202

1997-98

72.1

207

1998-99

75.4

213

1999-2000

78.3

217

2000-01

80.6

220

2001-02

84.4

225

2002-03

86.2

230

2003-04

88.1

231

2004-05*

90.7

229

     2005-06                                            94.6                                                                                              220

Source: State/UT Animal Husbandry Departments, 2004
*Source: Production Estimate of MILK, EGG, MEAT and WOOL of the year 2004-2005

Milk Production By States

Estimates of Milk Production - State wise

(000 tones)

State

1997-98

1998-99

1999-2000

2000-01

2001-02

2002-03

2003-04

2004-05 *

All India

72128

75424

78286

80607

84406

86159

88082

90715

Andhra Pradesh

4473

4842

5122

5521

5814

6584

6959

7252

Arunachal Pradesh

43

45

46

42

42

46

46

48

Assam

719

725

667

683

682

705

727

739

Bihar

3420

3440

3454

2489

2664

2869

3180

2974

Goa

38

41

44

45

45

46

48

57

Gujarat

4913

5059

5269

5312

5862

6089

6421

6745

Haryana

4373

4527

4679

4850

4978

5124

5221

5222

Himachal Pradesh

714

724

742

761

756

773

786

870

J & K

1167

1232

1286

1321

1360

1389

1414

# 1422

Karnataka

3970

4231

4471

4599

4797

4539

3857

3917

Kerala

2343

2420

2532

2605

2718

2419

2111

2025

Madhya Pradesh

5377

5442

5519

4761

5283

5343

5388

5506

Maharashtra

5193

5609

5707

5849

6094

6238

6379

6567

Manipur

62

65

68

66

68

69

71

75

Meghalaya

59

61

62

64

66

68

69

71

Mizoram

17

20

18

14

14

15

15

16

Nagaland

46

48

48

51

57

58

63

69

Orissa

672

733

850

876

929

941

997

1283

Punjab

7165

7394

7706

7777

7932

8173

8391

8554

Rajasthan

6487

6923

7280

7455

7758

7789

8054

8310

Sikkim

35

35

35

35

37

45

48

46

Tamil Nadu

4061

4273

4586

4910

4988

4622

4752

4784

Tripura

57

76

77

77

90

79

84

86

Uttar Pradesh

12934

13618

14152

13857

14648

15288

15943

16512

West Bengal

3415

3441

3465

3471

3515

3600

3686

3790

A&N Islands

22

22

23

22

23

26

25

24

Chandigarh

43

43

42

43

43

43

44

43

D&N Haveli

4

8

8

8

8

8

8

4

Daman & Diu

1

1

1

1

1

1

1

1

Delhi

267

290

290

291

294

296

299

303

Lakshadweep

1

2

1

2

2

2

1

1

Pondicherry

36

36

37

37

37

37

40

41

Chhattisgarh

-

-

-

777

795

804

812

831

Uttaranchal

-

-

-

1025

1066

1079

1188

1195

Jharkhand

-

-

-

910

940

952

954

1330

Source: Basic Animal Husbandry Statistics, 2004
* Source: Production Estimate of MILK, EGG, MEAT and WOOL of the year 2004-05
# Projected by state

Source: Indiandairyassociation.com

 

In addition to the above-mentioned points - there are areas where major thrust is required:

Brand image or major players needs to be projected in leading international dairy trade fairs, particularly of those countries to which exports are being targeted. Another step may be to encourage technical collaboration and marketing tie-ups with leading international dairy companies.

With the liberalization and open policies of the Government and the restructuring of the economy the dairy industry is undergoing major developments. This has brought about greater participation of the private sector. This is also consistent with global trends, which can hopefully lead to greater integration of Indian dairying with the world market for milk and milk products. India is witnessing winds of change because of improved milk availability, a changeover to market economy, globalization and the entry of the private sector in the dairy industry. The value addition and variety in the availability of milk products are on everybody's agenda. There is a consistent increasing demand for new products and processes. The major reasons are an increase in disposable incomes, changes in consumer concerns and perceptions on nutritional quality, hygiene and safety, arrival of foreign brands, increasing popularity of satellite or cable media and availability of new technologies and functional ingredients. India is the world's largest milk producer in the present scenario.

Market for liquid milk

 

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