Value added dairy products segment to maintain higher growth in India

While packaged liquid milk is to remain a key driver in the Indian dairy industry, value added products are promising a growth of 15 per cent to 20 per cent with expected growth in cheese, UHT milk, ice-cream and baby food segments. Notably, Union Minister of State for Agriculture and Farmer Welfare informed to the Lok Sabha that milk production in the country stood at 165.4 million tonnes during 2016-17 which increased to 176.35 million tonnes in 2017-18.

As per industry experts, India is contributing about 17 per cent of the total milk production globally. With the projected milk production of 254.5 million tonnes in 2021-22, India will become the largest milk producer in the world. As per Rabobank analysis, in 2016-17 Indian dairy market was largely divided into Liquid Milk (64 per cent), Value Added Products (25 per cent), Ghee (7 per cent) and Milk Powder (4 per cent). Value Added Products in dairy segment is further growing at 15 per cent to 20 per cent year on year that has varied products like cheese, UHT milk, curd, baby Foods, Ice-cream, Butter, Flavored Milk and Dairy Whitener.

Mr Anuj Modi, Director, Lotus Dairy Products Ltd. says, “Value added market in dairy industry is expected to expand to 30 per centof dairy industry by 2020.  Indian organised dairy sector is required to strengthen the procurement and processing line to scale up for value added market. On the other side, Industry is looking health aspects very strictly and focus is shifting on nutrition in the milk and value added products which unorganised market is not serving.”

Indian consumer is becoming more health conscious and demand for healthier products with natural, organic and an ayurvedic ingredient is increasing. Changing consumer lifestyle, increasing number of working women and increasing personal disposable incomes are leading to an increase in demand of value added dairy products. Smaller packs of packaged dairy products are being aggressively marketed for the second and third tier markets to deepen a brand’s penetration and increase the volume in the country. The increasing numbers of players in the dairy sector are focusing their strategies towards the untapped semi-urban and rural regions, which offer significant opportunities for growth.

The US dairy industry is indirectly putting pressure on India to open market access. Recent decision of US administration to terminate the preferential trade status granted to India was warmly welcomed by US dairy Industry. If both the countries will join hands with good-faith negotiations in future, small organised dairy players may face stiff competition or may look forward JV possibilities.