Story in Pictures

The white revolution

The milk and value-added products space has seen a lot of froth of late, and private players might edge co-operatives out

Published 5 years ago on Apr 11, 2016 1 minute Read

Like most other segments within the FMCG space, the dairy business, too, is gaining momentum. The domestic dairy industry is riding the wave of the growing demand for milk and value-added products. While half of the close to 150 million tonne milk produced in the country is consumed at source, of the balance, 40% is sold to the organised sector and the rest to the unorganised sector. According to a report by PhillipCapital, cooperatives dominate the organised sector (80% of revenue) because the raw material sourcing dynamics work in their favour. While cooperatives dominate the milk space, it’s the organised private sector — barring GCMMF — that is gaining ground in the value-added space. While demand for liquid milk, ghee (clarified butter), paneer (cottage cheese) and the likes is growing at a CAGR of 15%, valued-added products such as UHT milk, flavoured milk and lassi, among others, are clocking CAGR of 24-27%. According to Crisil, over the medium term, the demand for branded milk and value-added products is expected to grow 13-15% and 22-24%, respectively. As a result, the share of the organised segment is expected to increase to 25% by FY18 compared with 19% at present. Besides, with increasing brand awareness, the organised sector will eat into cooperatives’ share of the milk space, as the volume of milk processed from the organised sector is expected to grow 13% annually by FY18 against the current 5% annual growth for the industry at large.