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DAIRY PRODUCTS

Evolution of the Indian flavoured milk industry
Wednesday, 30 August, 2017, 08 : 00 AM [IST]
Gurpreet Saini
Flavoured milk is the second-most preferred liquid dairy product in India, after liquid milk. According to the latest research by IMARC Group, its market has risen from 60 million tonne in 2009 to a massive 153 million tonne in 2016.

The popularity of flavoured milk is a recent phenomenon in the country. The per capita income has increased by 7.4% to ?93,293 in 2015-2016 as compared to the previous fiscal year, when it was estimated at ?86,879. This has encouraged the consumers to increase their expenditure on the upmarket food products.

Increased disposable incomes have also led to several transformations in the socio-economic makeup of the country. The consumers have become more cognisant of the influence of the food products they consume. As a result of this, a certain section of the consumer-base, particularly the adults, are shifting from carbonated and alcoholic drinks to dairy-based products, the market for which is witnessing an annual growth rate of approximately 20-30%.

Considering this growing demand, manufacturers are introducing value-added products in the country. Hence, the retail shops which mostly sold liquid milk a couple of decades ago, are now stacked with flavoured milk, frozen yogurt, ice cream and so on.

A wide range of flavoured milk products have ushered in the market, offering the consumers various options to choose from. Besides offering the perennial flavours – chocolate, or vanilla – the Indian dairy giants, such as Mother Dairy, Amul and Parag have also started producing ethnic flavours like kesar, elaichi, and badam.

Sometimes nuts, or dry fruits are also added to give flavoured milk an added touch of sophistication. This makes flavoured milk an ideal beverage for various occasions such as festivals, parties, or communal gatherings.

However, marketers are targeting consumers aged less than 20 years, which accounts for 12-15% of the total consumers, to further enhance the sales of these products in the country. The flavoured milk products can be a good substitute for liquid milk as they help in fulfilling the nutritional requirements for the overall development of children.

Apart from being a rich source of essential nutrients including calcium, potassium, and magnesium, they contain less sugar as compared to non-dairy beverages.

Innovations in the packaging industry
The revolution in the packaging industry has also allowed the dairy products manufacturers to reach out to the remote and rural areas.

As dairy products are perishable in nature, the manufacturers have always faced the challenge of transportation and distribution of dairy products in these regions.

The innovative packaging options – tetra pack, PET bottles, flexible containers (pouches) and so on – facilitate the dairy companies to transport their products to these untapped markets. The 200-250 ml single-serve tetra pack/ PET bottle/ pouch is the most dominant packaging option in the non-metropolitan districts. Apart from this, the 1 litre multi-serve pack is aimed for in-home consumption and is more popular in the urban cities.

The dairy giants in the country are quick to realise this potential of packaging. Gujarat Cooperative Milk Marketing Federation (GCMMF), popularly known as Amul, made an investment of around ?200 crore in 2015 to set up two aseptic PET bottles lines in Gandhinagar and Godhra. This shot up the production capacity of bottles up to 2.5 million bottles per day.  

The advancement in packaging techniques have also helped in extending the shelf-life of the flavoured milk products. Flavoured milk is produced using the UHT (ultra high temperature) technology, which assists in the storage of flavoured milk for six to nine months, without refrigeration.

Additionally, several other techniques are being developed and adopted to enhance the shelf-life, flavour and texture of the products. For instance, silver-based micro-particles with bactericidal, antimicrobial, and self-sterilising properties are added into the plastic packaging, which helps in increasing the shelf-life.  

More recently, the carbonation method is being used to amplify the qualitative nutrition contained in milk. The method involves the carbonation of milk at 50 psi pressure for 30 seconds. It helps in inhibition of microbes, reduction in psychrotrophic count, contents of FFA and soluble nitrogen.

Government Initiatives
Efforts are being made by the Government of India towards transforming the Indian dairy industry from a fragmented sector into a regulated and organised market.  

In April 2015, the department of animal husbandry, dairying and fisheries under the ministry of agriculture launched ‘Dairy Entrepreneurship Development Scheme,’ to bring structural changes in the Indian dairy industry.

Under this scheme, the government provides subsidies for setting up modern dairy farms, improving infrastructure for production of clean milk, upgradation of traditional technology and rearing of good breeding stock.

Another programme, ‘National Programme for Bovine Breeding and Dairy Development,’ launched in 2014, focusses at integrating milk production and dairying activities with a scientific approach. This programme enabled the dairy farmers to conserve and rear selected indigenous bovine breeds. Along with this, it also helped in providing information about the breeding tracts of important indigenous breeds in order to prevent them from contracting any disease.

The metamorphosis of the market structure has impacted the face of the Indian dairy industry in a positive manner. These programmes ensure the use of high standards and scientific practices of milching, along with availability of veterinary health services. This has resulted in alluring MNCs to invest in the dairy industry of India. Some of the multinational food companies which have entered the Indian dairy industry are Arla Foods, Kerry Group, and the Dutch dairy cooperative FrieslandCampina.

Their growing interest in India not only boosts the already thriving food industry, but also brings new technology into the country which helps in increasing productivity and enhancing the quality of output. The MNCs also introduce new flavours and varieties in the culinary tradition, and fuse them with the ethnic tastes and preferences.  

Contract Manufacturing of Value-Added Products
India is the largest producer of milk, accounting for 18.5% of the world production, achieving an annual output of more than 140 million tonne in 2016. Yet, sources from IMARC Group find that only one-third of the total milk produced in the country is sold under the organised sector.

The dearth of procurement centres and processing plants works unfavourably for the development of the industry. Meanwhile, the abundant availability of the raw material and low capital investment have encouraged several MNCs to seek opportunities in the country.

These MNCs help in expanding the network of procurement centres and promote efficient utilisation of resources. The dairy farmers supply their milk to these centres, which further process it and manufacture value-added products. The processing of raw milk under the guided management of an already established brand promises better quality, longer shelf-life and varied options of package sizes.

Internationally renowned dairy companies like Lactalis are making multi-million investments in the dairy industry of India. It bought India’s second-largest private dairy company, Thirumala for ?1,750 crore in 2014. It also went on to acquire Anik Industries, an Indore-based dairy company, for ?470 crore this year in March.

The flavoured milk market is still at a nascent stage in the country. However, the wider acceptance of the Indian dairy market at the global level has provided various opportunities for growth of this market in the region. The transformation of the industry into an organised sector has also stimulated government and international credence in the profit prospects of the market in the region.

(The author is business analyst, IMARC Group)
 
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