Emerging Trends in Indian Dairy Industry

Over the span of three decades, India has transformed from a country of acute milk shortage to the world’s leading milk producer, with the production of 187.7 million tonnes milk. The year 2019 was the year of revolution for the industry in terms of emergence of value-added dairy products that has taken the dairy industry by storm. As per CRISIL report the INR 25,000 crore value-added dairy product market is set to outpace milk sales by 2021.

Further we saw a large-scale technological integration as new-age start-ups began to flourish in the country. These start-ups reinvented access to milk by delivering it straight to the consumer’s doorstep. These new age dairy startups are not only gaining consumer interest but also attracting global investors. According to a 2018 study by CRISIL, the Indian dairy industry is likely to see INR 130-140 billion in investments by 2021. But the unprecedented global pandemic that has shaken the entire country and economy and immensely affected almost every aspect of life also affected the dairy industry. With the imposed lockdown restrictions in place, the supply chain has witnessed changes in demand and supply.

But, is the future of the industry is going to be exciting? Here’s looking at certain trends that will shape the dairy sector and create more opportunities in future:

Value-added Products – Adding Value to Milk:

Value-added products (VAP) in the dairy industry are products like cheese, paneer, ghee, yoghurt, probiotic drinks etc. These are products which have been created by alteration, enhancement via additives, segregation etc. of liquid milk. The VAP segment is further growing at 15% to 20% year on year with expected growth in cheese, UHT milk, ice-cream and baby food segments. 

The rising VAP segment will continue grow due to the rising urbanization and more women joining the workforce. As lives are getting faster and people are getting busier, urban lifestyle makes it difficult for people to have times for daily basic cores like setting curd at home, make ghee or homemade butter and Lassi. Firms with higher VAP share are better placed to take advantage of this.

With growing health awareness, shifting to health drinks is becoming a new trend these days. With an eye on growing cases of gastro-intestinal diseases, probiotic drinks are penetrating aggressively in the market. Doctors today also have started recommending Pro-Biotic drinks to consumers with digestive issues. Every supermarket has a special segment for these products, known as “Gut Friendly” food. Major dairy companies like AMUL, Nestle, Mother Dairy, etc including new entrants like Epigamia have their offerings in this category like yogurt, milk, ice cream and even tea. Estimated to be INR 15 million market, India is becoming world’s fastest growing probiotic drinks market.

Emergence of Niche Dairy Products:

For years, the dairy industry traditionally was focused only on cow and buffalo milk and milk-based products. Rising internet penetration and increasing consumer awareness have, however, beaten this long-standing norm. Today, consumers are increasingly inclined towards better, healthier alternatives such as camel milk and goat milk.

For instance, camel milk is fit to be consumed by those suffering from milk allergies and people who are lactose intolerant. Further goat milk is also gaining favour among health enthusiasts as they are light on the stomach and packed with essential nutrients.

COVID-19 Impact:

After the break-out of COVID-19 pandemic people have become more health conscious than ever before. The demand for healthier products with natural and Ayurvedic ingredients that boost immunity has grown exponentially and dairy companies are all prepared to milk the opportunity. For instance, Mother Dairy launched a new turmeric-flavoured milk, that helps in boosting immunity. Similarly, Amul launched Turmeric ice-cream and planning to roll-out two more products, “Immuno Chakra Ice Cream – the healthy trinity of Haldi-Ginger-Tulsi in tri-colour ice cream stick and Star Anise Doodh in 200ml can.   

Changing Product Delivery:

Indians are quite accustomed to having their packet of milk being delivered at their doorstep early in the morning. However, new-age consumers are more quality-sensitive and tech-savvy than ever before. Sartup companies are offering custom-made, tech-backed services to consumers and offering pure, premium milk and milk products that can be ordered online in a matter of seconds. The options of pre-payment and long-term subscription further adds to the value proposition being created by these start-ups. All consumers need to do is place an order at night and fresh milk or other essentials and it will be delivered to their home as early as 6 am.

Product Expansion by Dairy Platforms:

Tech-backed dairy product delivery platforms are expanding their domain and offering a holistic grocery shopping experience through one consolidated app. Since customer acquisition costs are quite high in this segment, companies will largely benefit from strengthening their product portfolio and improving customer loyalty. Thus, there is an increasing number of start-ups in the market to stock and deliver milk, milk products, vegetables, groceries, and other everyday essentials (e.g., BB Daily, Milk Basket, Country Delight and Grofers, etc.).

It is truly an exciting time to be operating in India’s fast-growing dairy segment. Evidently, the market is set to expand on the back of the aforementioned trends. As a result, consumers will benefit greatly with easier access to high-quality products – delivered fresh, daily.

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