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“Clear shift from carbonated drinks to milk products”
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Monday, 07 September, 2020, 08 : 00 AM [IST]
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 The 28-year-old Heritage Foods is a national brand in the Indian dairy landscape. Its rebranding exercise has given the company a youthful image in tune with changing times and consumer needs. In the current scenario, disposable and dual incomes will spur demand for milk and value-added dairy products and trends such as shift from carbonated drinks to milk products are clearly visible, tells Brahmani Nara, executive director, Heritage Foods, in an email interview to Nandita Vijay. Excerpts:
India is one of the largest milk producing countries globally but its per capita availability is low as compared to global standards. Comment.
Based on milk equivalent (ME), average per capita global milk consumption amounts to about 100 kg of milk annually, with very significant differences between countries and regions. Per capita consumption in Western Europe is in excess of 300 kg of milk per year as compared to less than 30 kg per annum in India. Dual income homes will stimulate the demand for milk and value-added dairy products.
Food and Agriculture Organisation of United Nations (FAO) suggests that consumption of fresh dairy products in India is expected to increase by 2.3% a year, reaching 108 kg per capita in 2028.
How has your company performed so far?
Our company was founded in 1992, and grown multi-fold to emerged as a leader in the Indian dairy sector. The company through its 28 years has enthralled consumers with its well defined processes and that are efficiently executed at each level of operation.
The company has crossed the annual net turnover of Rs 2,681 crore in the financial year 2019-20 and emerged as a national player. Its value-added product basket includes curd, buttermilk, lassi, ice cream, paneer, ghee, table butter, cooking butter, milk powder, flavoured milk, UHT milk, A2 milk, doodh peda and milk cake. These currently contribute 27% to the company’s overall revenues.
What, according to you, are the company’s key strengths that have helped sustain the market leadership in India?
Our company has been ahead of the others in technological innovation. The entire procurement process covering 12,000+ villages pan-India has been digitised right from the procurement to delivery to the end-customer. Technology helps to test and monitor the milk quality transported through cold chain and temperature-controlled processes via GPS (global positioning system).
We are the first dairy to implement SAP ERP to the granular level. Currently, we procure 13.77 lakh LPD (litre per day) from 3,00,000 farmers across India and work closely with them to improve their cattle management practices to double their incomes and also improve milk yields.
The company provides fresh and healthy products through an extensive network of 1.5 lakh traditional retailers, 26 leading modern retail chains and e-commerce platforms, 942 exclusive parlours and over 46 distribution centres. Over 1,25,000 retail outlets sell our products across India.
A cumulative effort of harnessing technology effectively, winning farmers trust through a mutually profitable relationship, and keeping customer satisfaction at the very top of the organisation’s priority, helped the company to emerge as a leader in dairy.
Over 400 quality assurance professionals at its 16 advanced processing plants process over 25.70 lakh litre of pure & hygienic milk every day. The processing plants are located at accessible points to procure from dairy farmers and enable milk delivery in the shortest time.
Which are your fastest growing products?
Nationally, five product groups contribute to 90% VADP (value-added product) revenues. These are: Packaged milk, butter milk, curd / dahi, drinkables: flavoured milk and lassi. Dairy fat: butter, ghee, paneer, peda, fresh cream, ice creams. Healthy variants in lassi such as Sabja lassi and Ragi java have been well accepted by customers. Besides milk shakes in chocolate, strawberry and vanilla flavours are launched to target the milkshake market, which has been growing at 25%. The company recently launched A2 milk for health-conscious consumers to boost immunity.
How do you view the organic milk players in the market, which are vying for a shelf space in the competitive dairy landscape?
The organic milk & A2 milk market is a niche market and there are many small dairy players present in metros and serving the premium segment. Dairy as a segment has considerable room for growth in India and current value-added basket is growing and more players will enter this space.
Having said that, our company is particular about product freshness. The company’s milk collection centres procure milk twice a day. The milk is a mix of buffalo and cow milk and proportions vary depending on season and region. The brand’s focus is on efficiency and maintaining high quality, especially because the production of value-added products demand a high standard of milk.
Almost all the milk comes directly from the farmers through collection centres. Here, technology is deployed to accurately measure the quantity and quality of the milk using foolproof milk analysers.
What kind of investments have gone into the company for processing-packaging and marketing?
The company has invested considerably to enhance the processing capacity across its 16 processing plants and its current installed capacity stands at 25.70 lakh LPD.
Our company spends on marketing have been increased in the last decade to strengthen its position in the market. On digital platforms engagements, it is perceived as a youthful brand. From time to time, print, online and OOH (out of home) promotions are some of its promotion modes. The company underwent a rebranding exercise with a new logo during its silver jubilee.
This is an age of environment-friendly packs and so what are the efforts to reduce carbon footprint?
All packaging is environment-friendly. Tetra packs are recyclable. Chilling plants operate on green energy. The company had opted for renewable energy when none of the dairy players were thinking of going green. The current renewable energy generation capacity stands at 10.39 MW from solar and wind for captive consumption.
Going forward, what is the likely game-plan to increase revenues from the current Rs 2,681 crore net turnover?
Twin strategies for growth are focussed on expanding the value-added products and increasing national presence. Over the next five years, value-added product contribution needs to increase from 27% to 40% and milk procurement from 14.99 lakh LPD to 28 lakh LPD. Milk procurement from 3 lakh farmers would grow to 6 lakh farmers. This would enable serving 30 lakh households which is double the size we serve.
What are the visible trends you sight in the dairy landscape?
Dual and disposable incomes to spur consumption of value-added products. There is a need to or seamlessly integrated dairy play from procurement to delivering fresh and nutritious milk at the doorstep. Health-conscious consumers are accepting milk and milk products as a food supplement. There is a clear shift from carbonated drinks to milk products. Value-added milk products are being purchased through large format stores and modern trade which is picking up pace. Attention to farmer welfare and cattle health-nutrition is resulting in higher milk yields. Reaching out younger consumers, keeping the brand agile in tune with changing times and consumer needs besides launching innovative and fortified products is the growth path of the sector.
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