Marketing Management and International Trade

Lesson 25. STATUS AND PROBLEMS IN MARKETING OF DAIRY PRODUCTS

Module 7. Dairy product marketing

Lesson 25

STATUS AND PROBLEMS IN MARKETING OF DAIRY PRODUCTS

25.1 Introduction

India is the largest milk producing country in the world having 121 million tonnes of milk production in the year 2010-11. In India, per capita availability of milk is 281 gms/day in the year 2010-11. (Source: Department of Animal Husbandry, Dairying & Fisheries, Ministry of Agriculture, GOI). Dairying is considered as a subsidiary occupation along with agriculture in mixed farming system practiced in India. However, now this concept is changing and dairying activity is fetching important independent status as main occupation. With increased milk production in the country, scope of dairy as a small scale enterprise for its processing and product manufacturing has found economic base. Thus, there is still a scope for establishing well planned commercial dairy farms to meet well established growth of organized sector.

Milk is considered as a complete and essential food item even among the poor people. With technological improvement and new research findings in the dairy sector, it is possible to adopt value addition in processed milk and milk products. There is growth of large number of Indian consumers exhibiting definite preference for value added milk & milk products. There is varied demand at low cost but visible demand for quality based products at even premium price showing pathways for prospective dairy entrepreneurs. Table 25.1 given below indicates the utilization pattern and opportunities of selling of milk and milk products in India.

Table 25.1 Utilization of milk and milk products in India

Type of Product	Quantity (%)
Fluid Milk	46.0
Ghee	27.5
Butter	6.5
Curd	7.0
Khoa (Partially Dehydrated Condensed Milk)	6.5
Milk Powders, including IMF	3.5
Paneer & Chhana (Cottage Cheese)	2.0
Others, including Cream, Ice Cream	1.0

Source: [e-mail]

25.2 Present Status

The top dairy players in India are categorized into following groups: (A) Cooperatives: Gujarat Cooperative Milk Marketing Federation (GCMMF), Mother Dairy, Visakha Dairy, (B) Multinational: Nestle,(C) Private: Dynamix Dairy, Britannia, Creamline Dairy, (C) Public: Hatsun Agro, Heritage and Metro Dairy (Source: Dairy India 2007)

25.3 Marketing Network

India is largest milk producing country in the world. In India milk is handled by both organized and unorganized sectors as shown in the figure 25.1.

Fig. 25.1 Milk handling pattern of organized and unorganized sector

25.4 Problems in Milk and Milk Product Marketing

The milk production and its marketing in India suffer from following main problems.

1. It is scattered throughout India and undertaken by large number of small and marginal milk producers.

2. The quantity (output per annum) and quality of milk is poor.

3. Erratic power supply mostly in villages adversely impacting quality of milk.

4. Seasonal and regional imbalances in milk supply.

5. Lack of incentive and awareness for clean milk production.

6. Tropical climatic conditions of the country.

7. Mal practices adopted by middlemen particularly in unorganized sector.

25.5 Opportunities in Milk and Milk Product Marketing

Following factors are influencing the food habits and market profile in India:

25.5.1 Growing urbanization and rise in purchasing power

India witnesses growth of urban centers. People move from rural to urban areas. The population of all cities is increasing. Along with this, income of people has also increased. With the rise in income, there is more disposable income and there is higher demand for more variety in value added food products. There is also decline in demand for tinned and dried milk powders and rise in demand of packaged, fresh dairy products.

25.5.2 Health consciousness

Consumers have become health conscious and demand health benefits in their food products. Dairy Products have a positive image and considered to possess quality and health benefits. There is growth in demand for probiotic dairy products such as ice cream, lassi etc.Human health consciousness is at an all time high and growing. This has given birth to many industries benefiting the health conscious consumer. The desire to look and feel younger has been, to a large part, been driven by the rise in life expectancy rates. The longer we live, the more we want to stay young as long as possible. One testament to our allegiance to healthier lifestyles is the growth in the number of health spas and retreats. Interestingly, the strongest growing segment in the spa industry is the medical spa market. These types of spas combine medical procedures with healthy alternatives, such as Swedish massages. In fact, many medical centers have now begun to offer alternative therapies by including acupuncture and spa treatments within their complex. Even the media has recognized this trend growth and targeted more broadcasts for the health conscious audience. There are now shows on television that demonstrate medical procedures and advise on healthy alternatives. Its almost as if you are not health conscious, then you might as well be an uneducated derelict. All this awareness has driven our psyche in search of our youth.

25.5.3 Life style changes

People now prefer to spend some of their money by going out from home and taking meals outside in restaurants and other dining halls. This has given rise to a fast food industry. The growth of fast food sector has also benefitted the dairy products like ice cream, milk shakes, cheese etc which are listed in fast food menus.

25.5.4 Scope of organized dairying

In India, milk production is scattered in large number of villages in small quantity of two to four liters by milch animals. The approximate contribution of buffalo, cow and goat milk is 54, 43 and 3 percent respectively in India's total milk production. The unorganized sector comprises of numerous small and /or seasonal milk producers/trader (popularly known as halwais) that are not registered under Milk and Milk product order (MMPO). They are involved in selling raw liquid milk, boiled liquid milk as well as selling mainly traditional milk products, usually at the local levels, but have a major share in these milk products. There are no official records on number of such unorganized dairy units. The organized dairy sector procures around 30% of the marketable surplus i.e. around 15 % of the national milk production, while the unorganized sector handles about 70 % of the marketable milk. Thus there is a huge scope for organized dairying in India.

25.5.5 Expanding market for traditional dairy products

The Khoa, Chhanna and Chakka are intermediate products for manufacture of most of the ethnic products. A very large part of country’s milk production is converted into these products but the organized dairy industry has not taken adequate initiatives to be a part of this huge market.

Two major interventions are required to integrate the organized dairy sector to become an integral part of supply chain for traditional milk products. Firstly, the organized dairy sector undertakes the manufacture of intermediate products on a large scale to supply to the unorganized sector for conversion into variety of ethnic products as per regional preferences of the consumers.

Such reconfiguration of the supply chain will not only require introduction of technology for their large scale manufacture but also a second intervention in terms of a business model to expand the demand of traditional products in future and upscale their quality standards.

The major traditional dairy products are shown in the figure 25.2

Fig. 25.2 Major traditional dairy products