INDUSTRY ANALYSIS

ON

DAIRY PRODUCTS

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 CONTENTS

CHAPTER - 1 EXECUTIVE SUMMARY 1 -- 3

CHAPTER - 2 INTRODUCTION 4 -- 10

CHAPTER - 3 INDUSTRY PROFILE 11 -- 36

CHAPTER - 4 THEORETICAL PERSPECTIVE 37 -- 39

CHAPTER - 5 ANALYSIS AND INTREPRETATION 40

CHAPTER - 6 CONCLUSION 41

BIBLIOGRAPHY 42

Executive summary

Dairy industry represents a major segment of the food industry. Every individual consumes dairy
products daily in various forms like curd, cheese, milk, and their increased attention towards
health and nutrition has increased the demand of dairy products. The dairy farming has been
transformed from traditional farming to advanced farming where more tools and equipments are
used to fulfill the increasing demand of the customers and has enabled the manufacturers to

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present the dairy products in different forms like condensed milk, powdered milk, homogenized
milk, and pasteurized milk.

Provides input for strategic business planning Insights on competitive positioning Identifies
business opportunities & challenges Analyzes market growth and future trends

Market Value The Indian dairy market grew by 9.4% in 2006 to reach a value of $16.3 billion.
Market Value Forecast In 2011, the market is forecast to have a value of $22.2 billion, an
increase of 36.5% since 2006. Market Segmentation I Milk forms the most lucrative sector of the
Indian market, with an 88.6% share of the market's value. Market Segmentation II India
accounts for 20.5% of the Asia-Pacific market's value. Market Share TNCMPF is the leading
company in the Indian market, with a 23% share of the market's value. Distribution
Supermarkets and hypermarkets form the most lucrative distribution channel of the Indian
market, with a 46.3% share of the market's value.

A major shift in milk production from the state owned farms to the private sector: the share of
the private sector in milk production has increased from about 60% before independence to
almost 100% in 1997

General reduction of cattle numbers on state farms, including transfer of state-owned livestock to
the private sector increased the proportion of privately owned cattle from about 60% before
independence to almost 100% at present.

Distribution and marketing methods have developed that are adapted to the change in milk
production and processing patterns. These practices have an informal character and lack quality
control except for the few operating dairy factories
Sharp reduction in production and import of combined concentrate feeds and raw materials for
concentrate feeds (oil seed cake, wheat bran, pre-mix). As a results feeding systems have

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become largely based on natural pasture and crop residues and livestock farming has become
more integrated with crop farming
With the collapse of the state farms, extension and veterinary services have become almost
unavailable for private livestock farmers
There is no longer an effective animal disease monitoring and prevention system
Privatisation of the majority of agro-processing enterprises, of which only few have managed to
attract investment and working capital to resume production
As a result of the collapse of the centrally controlled production system, dairy production and
marketing has been privatised almost completely, although the land privatisation has not yet been
completed. Most milk is produced by smallholder farmers, which are found throughout the
country. Increasingly medium scale private dairy farms and medium-large scale co-operative
farms are emerging that use facilities of former state and collective farms. Milk production has
almost reached pre-independence levels, but cannot satisfy domestic demand completely (about
14% of consumed milk and dairy products is imported, see table below).

Production and consumption of dairy products (in ton milk equivalents)

Local production 631,125

Imported milk powder for reconstitution 33,000

Imported dairy products 66,125

Consumption of dairy products 730,250

Import substitution is a major challenge and opportunity for the Georgian dairy sector and can be
achieved by increasing the availability of good quality milk for industrial processing. Existing
operational dairy factories are interested in processing locally produced milk but because of the
primary production structure (many small scale producers), milk collection and quality control is
expensive and difficult to organise. If fresh milk is available for processing the range of dairy
products produced by the operating dairy factories can be extended to (hard) cheese and other
high added value products, thus creating an alternative for imported goods.

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The Indian dairy market generated total revenues of $16,283.2 million in 2006, this representing
a compound annual growth rate (CAGR) of 12% for the five-year period spanning 2002-2006.
Milk sales proved the most lucrative for the Indian dairy market in 2006, generating total
revenues of $14,426.9 million, equivalent to 88.6% of the market's overall value. The
performance of the market is forecast to decelerate, with an anticipated CAGR of 6.4% for the
five-year period 2006-2011 expected to drive the market to a value of $22,225.1 million by the
end of 2011.

INTRODUCTION

Dairy Market Definition

The dairy market consists of cheese, chilled desserts, cream, fromage frais, milk, spreadable fats
and yogurt. Any currency conversions used in the creation of this report have been calculated
using constant 2005 annual average exchange rates. Market shares by company and distribution
channel are calculated on the basis of market values in 2004. For the purposes of this report,
Asia-Pacific is deemed to consist of Australia, China, India, Japan, Singapore, South Korea and
Taiwan.

Today, India is 'The Oyster' of the global dairy industry. It offers opportunities galore to
entrepreneurs worldwide, who wish to capitalize on one of the world's largest and fastest

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growing markets for milk and milk products. A bagful of 'pearls' awaits the international dairy
processor in India. The Indian dairy industry is rapidly growing, trying to keep pace with the
galloping progress around the world. As he expands his overseas operations to India many
profitable options await him. He may transfer technology, sign joint ventures or use India as a
sourcing center for regional exports. The liberalization of the Indian economy beckons to MNC's
and foreign investors alike.

India’s dairy sector is expected to triple its production in the next 10 years in view of expanding
potential for export to Europe and the West. Moreover with WTO regulations expected to come
into force in coming years all the developed countries which are among big exporters today
would have to withdraw the support and subsidy to their domestic milk products sector. Also
India today is the lowest cost producer of per litre of milk in the world, at 27 cents, compared
with the U.S' 63 cents, and Japan’s $2.8 dollars. Also to take advantage of this lowest cost of
milk production and increasing production in the country multinational companies are planning
to expand their activities here. Some of these milk producers have already obtained quality
standard certificates from the authorities. This will help them in marketing their products in
foreign countries in processed form.

India has become the world’s largest milk producer but its dairy industry lacks market access.
This paper determines how world dairy policy reforms would affect dairy production and trade in
India and the competitiveness of its dairy industry. We measure nominal protection coefficient
for India’s dairy products to determine level and change in competitiveness between 1975 and
2001. We estimate parameters of domestic demand for and supply of raw milk and whole milk
powder to determine how a world price increase would affect domestic milk production and
whole milk powder exports. Results show that India’s dairy products lack export
competitiveness. But with less distorted world dairy markets, India could be competitive and
would emerge as a net exporter of whole milk powder, benefiting dairy industries and milk
producers in India.

The urban market for milk products is expected to grow at an accelerated pace of around 33%
per annum to around Rs.43,500 crores by year 2005. This growth is going to come from the
greater emphasis on the processed foods sector and also by increase in the conversion of milk
into milk products. By 2005, the value of Indian dairy produce is expected to be Rs 10,00,000
million. Presently the market is valued at around Rs7,00,000mn

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The Programme will support the transfer to milk producers of technology and knowledge that
will help them to adopt best practice in the running of their enterprises.

Commenting on the background to the new programme, Minister of State Killeen said: “The
dairy industry, while open to great opportunities, faces also many challenges as it prepares for
quota abolition and the realities of competing in a global marketplace. At producer level the
focus must be on maximising efficiency in order to compete and to cope with periods of severe
volatility like that which we have recently experienced. The Government's commitment to the
development of the Smart Economy is therefore as relevant to dairying as it is to any other sector
of the economy. Initiatives like the Dairy Efficiency Programme exemplify that commitment,
and indeed are vital in ensuring that the fine work being done in agricultural colleges around the
country is carried through to full-time careers in farming."

Commenting further on the programme, the Clare Fianna Fail T.D. indicated that EUR6 million
will be made available in each of 2010, 2011 and 2012 to encourage the participation by dairy
farmers in the programme. The groups which will operate under the programme will be formed
and assisted by facilitators who have been trained by Teagasc to a FETAC-accredited standard,
will place particular emphasis on the adoption of best practice in relation to grassland
management, breeding and financial management. Participants in the programme will have their
progress monitored by their facilitator, and they will be required to meet certain standards in
relation to attendance and project completion. In return they will receive a payment at the end of
each year, with the level of payment determined by the participation rate in the Programme.

Minister of State Killeen added: "The availability of unspent Single Payment Scheme funds
arising from the Health Check agreement provides an opportunity to further reinforce the
initiatives that the Department has undertaken to help the dairy industry to look to the future with
optimism. The Dairy Efficiency Programme will complement the innovative approach already
taken to the Milk Quota Trading Scheme, to the modernisation of the milk quota regulations, to
the encouragement of Milk Production Partnerships, to the allocation of quota to new entrants
and to the support of future-oriented dairy research.”

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India is emerging as a mega dairy market of the 21st century. What Indian dairy industry needs
and what it offers is the main subject of Dairy India 1997. The recent liberalization has thrown a
bagful of opportunities for dairy entrepreneurs. Rewards await those who will transfer
technology, sign joint ventures or use India as an export sourcing centre. A handy reference
sourcebook, the compendium presents an in-depth profile of the emerging dairy situation. It
identifies new trends, market opportunities and investment prospects as well new insights,
analyses and ideas. A multipurpose volume, it serves as a Data book-cum-Buyer's Guide to
suppliers of products and services. More than 7,000 organizations and specialists are listed in its
Directory Section which serves as the "Yellow Pages" of the dairy industry

As we approach the last few years of the century, it is appropriate to look back at what India's
dairy Industry has achieved as also look forward to the 21st century, its challenges and
opportunities. Before we look to the future, we should acknowledge the contributions of those
who have made possible today's self-sufficiency in India's milk production. Our bottom line is
our people. Value for us is the quality of life of millions of farm families.

Milk is a very nutritious food because it has essential nutrients required by the human body but is
prone to contamination and is very perishable. Milk, if it is badly handled, can pose a health risk
to the consumers. It is for these reasons that governments all over the world have in place a set of
laws and regulations in place to ensure that before it reaches the consumer, milk is handled
properly so that the consumer is assured of a safe and wholesome product and gets the intended
benefits of consuming milk and milk products.

Objectives

• Establish the properties of 3 selected Hispanic-style cheeses made from raw or

pasteurized milk.
• Determine influence of proteolytic breakdown system on the properties of the cheeses by
either starter culture or indigenous micro flora.
• Identify the cheese making steps that are key elements in

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 developing the desired characteristics in these cheeses and that meet US

standards and retain properties of raw milk cheeses.

• Develop cheese making procedures to extend the shelf life of selected fresh – Hispanic
style cheeses.
• Determine the flavor components and generate flavor profiles to define the cheeses.
Identify microorganisms in the raw milk cheeses and evaluate their impact on flavor
development.

• Design a new environmentally-benign process for producing

enriched fractions of the whey proteins

• Develop new environmentally-benign processes for dairy

protein modification that utilize supercritical fluids as

reaction media and carriers.

• Develop new, cost effective technologies for processing protein fractions into non-
food products.

Methodology for collection of data

Dairy marketing systems may differ depending upon a number of factors (e.g. physical and
policy environment, organizational arrangements, marketing channels, etc.) so that the
appropriate method for collecting information will depend upon the marketing system being
considered. Group interviews that might be used to collect information from members of a dairy
cooperative, for example, probably would not be used to interview dairy board or cooperative
managers, supermarket managers or customs officials.

Data collection methods will also differ depending upon the type of data sought and the sources
from which they are to be collected. Data are classified into two general types: qualitative and
quantitative. Qualitative data produce descriptions of situations, events, policy environment,
people and systems interactions. Quantitative data are collected when a number, ratio or
proportion related to the target population is to be estimated (Casley and Kumar, 1988;
Frankenberger, 1992). For the functional parameters and performance indicators identified in

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Table 2, quantitative data are appropriate and may be collected from secondary or primary
sources. When collected from secondary sources, the method of collection is straightforward,
being consultation of previously published and unpublished records. Collection of primary data
on a dairy marketing system entails more detailed methodologies and requires an informal or a
formal survey.

In order to estimate the latent demand for functional dairy products across the states or union
territories and cites of India, I used a multi-stage approach. Before applying the approach, one
needs a basic theory from which such estimates are created. In this case, I heavily rely on the use
of certain basic economic assumptions. In particular, there is an assumption governing the shape
and type of aggregate latent demand functions. Latent demand functions relate the income of a
state or union territory, city, household, or individual to realized consumption. Latent demand
(often realized as consumption when an industry is efficient), at any level of the value chain,
takes place if an equilibrium is realized. For firms to serve a market, they must perceive a latent
demand and be able to serve that demand at a minimal return. The single most important variable
determining consumption, assuming latent demand exists, is income (or other financial resources
at higher levels of the value chain).

In the 1930s, John Meynard Keynes conjectured that as incomes rise, the average propensity to
consume would fall. The average propensity to consume is the level of consumption divided by
the level of income, or the slope of the line from the origin to the consumption function. He
estimated this relationship empirically and found it to be true in the short-run (mostly based on
cross-sectional data). The higher the income, the lower the average propensity to consume. This
type of consumption function is labeled "A" in the figure below (note the rather flat slope of the
curve). In the 1940s, another macroeconomist, Simon Kuznets, estimated long-run consumption
functions which indicated that the marginal propensity to consume was rather constant (using
time series data). This type of consumption function is shown as "B" in the figure below (note
the higher slope and zero-zero intercept). The average propensity to consume is constant.

Is it declining or is it constant? A number of other economists, notably Franco Modigliani and

Milton Friedman, in the 1950s (and Irving Fisher earlier), explained why the two functions were
different using various assumptions on intertemporal budget constraints, savings, and wealth.
The shorter the time horizon, the more consumption can depend on wealth (earned in previous
years) and business cycles. In the long-run, however, the propensity to consume is more
constant. Similarly, in the long run, households with no income eventually have no consumption

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(wealth is depleted). While the debate surrounding beliefs about how income and consumption
are related is interesting, in this study a very particular school of thought is adopted. In
particular, we are considering the latent demand for functional dairy products across the states or
union territories and cities of India. The smallest cities have few inhabitants. I assume that all of
these cities fall along a "long-run" aggregate consumption function. This long-run function
applies despite some of these states or union territories having wealth; current income dominates
the latent demand for functional dairy products. So, latent demand in the long-run has a zero
intercept. However, I allow different propensities to consume (including being on consumption
functions with differing slopes, which can account for differences in industrial organization, and
end-user preferences).

Given this overriding philosophy, I will now describe the methodology used to create the latent
demand estimates for functional dairy products in India. Since ICON Group has asked me to
apply this methodology to a large number of categories, the rather academic discussion below is
general and can be applied to a wide variety of categories and geographic locations, not just
functional dairy products in India.

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Industry profile

History

Animal milk is first known to have been used as human food at the beginning of animal
domestication. Cow's milk was first used as human food in the Middle East. Goats and sheep are
ruminants: mammals adapted to survive on a diet of dry grass, a food source otherwise useless to
humans, and one that is easily stockpiled. The animals dairying proved to be a more efficient
way of turning uncultivated grasslands into sustenance: the food value of an animal killed for
meat can be matched by perhaps one year's worth of milk from the same animal, which will keep
producing milk — in convenient daily portions — for years.

Milk byproducts found inside stone age pottery from Turkey indicate processed milk was
consumed in 6500 BC some thousands of years before the ability for adult humans to digest
unprocessed milk had evolved.[11][12].

DNA evidence extracted from Neolithic skeletons indicates that a thousand years later in 5500
BC people in Northern Europe were like all other peoples of the time and were still lactose
intolerant. Earthenware vessels found in England from a thousand years after this in 4500 BC
contain milk byproducts indicating milk was used in some form although perhaps not drunk
directly.

Today lactose tolerance is the key distinguishing feature of Northern European peoples with
around 95% of the population displaying the trait compared to around 15% to 20% for people of
Middle Eastern descent, 5% amongst Han Chinese and 0% amongst American Indians.

Milk was first delivered in bottles on January 11, 1878. The day is now remembered as Milk Day
and is celebrated annually. The town of Harvard, Illinois also celebrates milk in the summer with
a festival known as "Milk Days". Theirs is a different tradition meant to celebrate dairy farmers
in the "Milk Capital of the World."

India with 134mn cows and 125mn buffaloes, has the largest population of cattle in the world.
Total cattle population in the country as on October'00 stood at 313mn. More than fifty percent

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of the buffaloes and twenty percent of the cattle in the world are found in India and most of these
are milch cows and milch buffaloes.

The world's largest development project, it covers some nine million milk producers. Rural
processing capacity of 19.4 million litres per day (mlpd) has been created and 6.7 mlpd
equivalent of chilling capacity set up to ensure better quality milk. Milk marketing facilities of
10 mlpd have also been commissioned.

National Dairy Development Board (NDDB), has proposed a Rs 17,300 crore draft National
Dairy Plan to increase the country's milk production from the current 102 million tonnes to meet
the projected demand of 180 million tonnes by 2021-22.

NDDB proposed the draft plan in its annual report for 2007-08, a NDDB press release said here
on Tuesday. NDDB has its headquarters here, also known as the milk capital of India, some 65
km from Ahmedabad, the principal city of Gujarat.

The National Dairy Plan focuses on productivity measures to enhance milk production as the
average annual incremental production will have to increase from 2.5 million tonnes now to five
million tonnes over the next 15 years, reports IANS.

Besides, it also focuses on strengthening and expanding infrastructure to procure, process and
market milk through existing and new institutional structures.

The plan proposes to increase the share of the organised sector in milk production to 65 per cent
from the current 30 per cent to ensure supply of quality milk to consumers.

During the year, dairy cooperatives procured about 8.3 million tonnes of milk, registering an
annual growth of 5.4 per cent, the statement said.
On an aggregate, cooperatives procured about 14 per cent of the national marketable milk
surplus from around 21 per cent of the country's villages and an estimated 18 per cent of rural
milk-producing households.

Cooperatives marketed about 6.9 million tonnes of liquid milk, an increase of 4.4 per cent over
the previous year, the statement said.

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Recognising the importance of increasing productivity, NDDB provided a range of technical and
managerial services, including establishing standards and protocols for quality bull and semen
production, the statement said.

It also funded the production of genetically evaluated bulls through progeny testing, expansion of
door-step artificial insemination (AI) services, ration balancing (which can also contribute to
reduction in methane emission) amongst other services

Indian dairy sector contributes the large share in agricultural gross domestic products. Presently
there are around 70,000 village dairy cooperatives across the country. The co-operative societies
are federated into 170 district milk producers unions, which is turn has 22-state cooperative dairy
federation. Milk production gives employment to more than 72mn dairy farmers. In terms of
total production, India is the leading producer of milk in the world followed by USA. The milk
production in 1999-00 is estimated at 78mn MT as compared to 74.5mn MT in the previous year.
This production is expected to increase to 81mn MT by 2000-01. Of this total produce of 78mn
cows' milk constitute 36mn MT while rest is from other cattle.

While world milk production declined by 2 per cent in the last three years, according to FAO
estimates, Indian production has increased by 4 per cent. The milk production in India accounts
for more than 13% of the total world output and 57% of total Asia's production. The top five
milk producing nations in the world are India ,USA, Russia, Germany and France. Although
milk production has grown at a fast pace during the last three decades (courtesy: Operation
Flood), milk yield per animal is very low. The main reasons for the low yield are

• Lack of use of scientific practices in milching.

• Inadequate availability of fodder in all seasons.

• Unavailability of veterinary health services.

Milk Yield comparison:

Country Milk Yield

(Kgs per

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 year)

USA 7002

UK 5417

Canada 5348

New Zealand 2976

Pakistan 1052

India 795

World (Average) 2021

Production of milk in India

Year Production in million MT

1988-89 48.4

1989-90 51.4

1990-91 53.7

1991-92 56.3

1992-93 58.6

1993-94 61.2

1994-95 63.5

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 1995-96 65

1996-97 68.5

1997-98 70.8

1998-99 74.7

1999-00(E) 78.1

2000-01(T) 81.0

Growth scenario of dairy products in India

India is the world's highest milk producer and all set to become the world's largest food factory.
In celebration, Indian Dairy sector is now ready to invite NRIs and Foreign investors to find this
country a place for the mammoth investment projects. Be it investors, researchers, entrepreneurs,
or the merely curious – Indian Dairy sector has something for everyone.

Milk production is relatively efficient way of converting vegetable material into animal food.
Dairy cows buffaloes goats and sheep can eat fodder and crop by products which are not eaten
by humans. Yet the loss of nutrients energy and equipment required in milk handling inevitably
make milk comparatively expensive food. Also if dairying is to play its part in rural development
policies , the price to milk producers has to be remunerative. In a situation of increased
international prices, low availabilities of food aid and foreign exchange constraints, large scale
subsidization of milk conception will be difficult in the majority of developing countries.

Hence in the foreseeable future, in most of developing countries milk and milk products will not
play the same roll in nutrition as in the affluent societies of developed countries. Effective
demand will come mainly from middle and high income consumers in urban areas.

There are ways to mitigate the effects of unequal distribution of incomes. In Cuba where the
Government attaches high priority to milk in its food and nutrition policy, all pre-school children
receive a daily ration of almost a litre of milk fat the reduced price. Cheap milk and milk
products are made available to certain other vulnerable groups, by milk products outside the
rationing system are sold price which is well above the cost level. Until recently, most fresh milk
in the big cities of China was a reserved for infants and hospitals, but with the increase in supply,
rationing has been relaxed.

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In other countries dairy industries have attempted to reach lower income consumers by variation
of compositional quality or packaging and distribution methods or blending milk in vegetable
ingredients in formula foods for vulnerable groups. For instance, pricing of products rich in
butter fat or in more luxury packaging above cost level so as to enable sales of high protein milk
products at a some what a reduced price has been widely practiced in developing countries. This
policies need to be brought in Indian Dairy scenario.

Because future market developments are almost always difficult to predict, it is common to use
simulation models such as the one developed for this study to evaluate a number of different
possible scenarios. Because sales of high-protein whey products will continue to grow either
with or without promotional efforts, we assume that the principal effect of promotion will be to
increase the growth rate of domestic (but not export market) sales of high-protein whey
products. To evaluate the impacts of promotion, we compare the dairy farmer revenues and
whey product manufacturer margins resulting from assumed growth rates with and without
promotion. To undertake the analyses, we assume that a successful promotional campaign can
be mounted, and also assume the impact that the promotional campaign will have on the growth
rate of domestic sales.
MARKET SHARE

TNCMPF is the leading company in the Indian market, with a 23% share of the market's value.
In comparison, GCMMF generates 15.7% of the market's revenues.

Company TNCMPF (Tamil Nadu Cooperative Milk Producers' Federation) : 23.00%

GCMMF (Gujarat Co-operative Milk Marketing Federation Ltd) : 15.70%

MPDMSM (Madhya Pradesh Dugdha Mahasangh Sahakari Maryadit) : 10.00%

Other : 51.20%
Total : 100.0%

India: World's Largest Milk Producer

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India has become the world's No. 1 milk producing country, with output in 1999-200
(marketing year ending March 2000) forecasted at 78 million tonnes. United States,
where the milk production is anticipated to grow only marginally at 71 million tonnes,
occupied the top slot till 1997. In the year 1997, India's milk production was on par
with the U.S. at 71 million tonnes. The world milk production in 1998 at 557 million
tonnes would continue the steady progress in recent years Furthermore, the annual rate
of growth in milk production in India is between 5-6 per cent, against the world's at 1
per cent. The steep rise in the growth pattern has been attributed to a sustained
expansion in domestic demand, although per capita consumption is modest - at 70 kg
of milk equivalent.

Annual Milk Prodcution

India's annual milk production has more than trebled in the last 30 years, rising from 21
million tonnes in 1968 to an anticipated 80 million tonnes in 2001. This rapid growth
and modernization is largely credited to the contribution of dairy cooperatives, under
the Operation Flood (OF) Project, assisted by many multi-lateral agencies, including
the European Union, the World Bank, FAO and WFP (World Food Program). In the
Indian context of poverty and malnutrition, milk has a special role to play for its many
nutritional advantages as well as providing supplementary income to some 70 million
farmers in over 500,000 remote villages.

World's Top Milk Producers.

Countries 1998 1997 1996

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 India 74 71 68

United States 71 71 70

Russian Federation 33 34 36

Pakistan 22 21 20

Brazil 22 21 19

Ukraine 14 15 16

Poland 12 12 11

New Zealand 12 11 10

Australia 10 9 9

EC 125 125 125

World (includes others) 557 549 542

Major dairy products manufacturers

Some of the major dairy products manufacturers in the country:

Company Brands Major Products

Nestle India Milkmaid, Cerelac, Sweetened condensed milk,
Limited Lactogen, Milo, malted foods, milk powder and
Everyday Dairy whitener
Milkfood Milk food Ghee, ice cream, and other milk
Limited products
SmithKline Horlicks, Maltova, Viva Malted Milkfood, ghee, butter,

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Beecham powdered milk, milk fluid and
Limited other milk based baby foods.
Indodan Indana Condensed milk, skimmed milk
Industries powder, whole milk powder, dairy
Limited milk whitener, chilled and
processed milk
Gujarat Co- Amul Butter, cheese and other milk
operative products
milk
Marketing
Federation
Limited
H.J. Heinz Farex, Complan, Infant Milk food, malted Milk
Limited Glactose, Bonniemix, food
Vitamilk
Britannia Milkman Flavoured milk, cheese, Milk
Powder, Ghee
Cadbury Bournvita Malted food

Market Size & Growth

Market size for milk (sold in loose/ packaged form) is estimated to be 36mn MT valued at
Rs470bn. The market is currently growing at round 4% pa in volume terms. The milk surplus
states in India are Uttar Pradesh, Punjab, Haryana, Rajasthan, Gujarat, Maharashtra, Andhra
Pradesh, Karnataka and Tamil Nadu. The manufacturing of milk products is concentrated in
these milk surplus States. The top 6 states viz. Uttar Pradesh, Punjab, Madhya Pradesh,
Rajasthan, Tamil Nadu and Gujarat together account for 58% of national production.

Milk production grew by a mere 1% pa between 1947 and 1970. Since the early 70's, under
Operation Flood, production growth increased significantly averaging over 5% pa.

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About 75% of milk is consumed at the household level which is not a part of commercial dairy
industry. Loose milk has a larger market in India as it is perceived to be fresh by most
consumers. In reality however, it poses a higher risk of adulteration and contamination.

The production of milk products, i.e. milk products including infant milk food, malted food,
condensed milk & cheese stood at 3.07 lakh MT in 1999. Production of milk powder including
infant milk-food has risen to 2.25 lakh MT in 1999, whereas that of malted food is at 65000 MT.
Cheese and condensed milk production stands at 5000 and 11000 MT respectively in the same
year.

Major Players
The packaged milk segment is dominated by the dairy cooperatives. Gujarat Co-operative Milk
Marketing Federation (GCMMF) is the largest player. All other local dairy cooperatives have
their local brands (For e.g. Gokul, Warana in Maharashtra, Saras in Rajasthan, Verka in Punjab,
Vijaya in Andhra Pradesh, Aavin in Tamil Nadu, etc). Other private players include J K Dairy,
Heritage Foods, Indiana Dairy, Dairy Specialties, etc. Amrut Industries, once a leading player in
the sector has turned bankrupt and is facing liquidation.

Nutrition and health

The composition of milk differs widely between species. Factors such as the type of protein; the
proportion of protein, fat, and sugar; the levels of various vitamins and minerals; and the size of
the butterfat globules and the strength of the curd are among those than can vary.[27] For example:

• Human milk contains, on average, 1.1% protein, 4.2% fat, 7.0% lactose (a sugar), and
supplies 72 kcal of energy per 100 grams.

• Cow's milk contains, on average, 3.4% protein, 3.6% fat, and 4.6% lactose, 0.7%
minerals and supplies 66 kcal of energy per 100 grams. See also Nutritional value further
on.

Donkey and horse milk have the lowest fat content, while the milk of seals and whales can
contain more than 50% fat. High fat content is not unique to aquatic mammals, as guinea pig
milk has an average fat content of 46%.

Nutritional value

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 Cow milk (whole)
Nutritional value per 100 g (3.5 oz)
Energy 252 kJ (60 kcal)
Carbohydrates 5.26 g
Sugars 5.26 g
Lactose 5.26 g
Fat 3.25 g
saturated 1.865 g
monounsaturated 0.812 g
polyunsaturated 0.195 g
Protein 3.22 g
Tryptophan 0.075 g
Threonine 0.143 g
Isoleucine 0.165 g
Leucine 0.265 g
Lysine 0.140 g
Methionine 0.075 g
Cystine 0.017 g
Phenylalanine 0.147 g
Tyrosine 0.152 g
Valine 0.192 g
Arginine 0.075 g
Histidine 0.075 g
Alanine 0.103 g
Aspartic acid 0.237 g
Glutamic acid 0.648 g
Glycine 0.075 g
Proline 0.342 g

22
 Serine 0.107 g
Water 88.32 g
Vitamin A equiv. 28 μg (3%)
Thiamine (Vit. B1) 0.044 mg (3%)
Riboflavin (Vit. B2) 0.183 mg (12%)
Vitamin B12 0.44 μg (18%)
Vitamin D 40 IU (10%)
Calcium 113 mg (11%)
Magnesium 10 mg (3%
Potassium 143 mg (3%)

Processed milk began containing differing amounts of fat during the 1950s. 1 cup (250 ml) of
2%-fat milk contains 285 mg of calcium, which represents 22% to 29% of the daily
recommended intake (DRI) of calcium for an adult. Depending on the age, milk contains 8 grams
of protein, and a number of other nutrients (either naturally or through fortification) including:

• Biotin

• pantothenic acid

• Iodine

• Potassium

• Magnesium

• Selenium

• Thiamine

• Vitamin A

• Vitamin B12

• Riboflavin

• Vitamins D

23
 • Vitamin K

The amount of calcium from milk that is absorbed by the human body is disputed. Calcium from
dairy products has a greater bioavailability than calcium from certain vegetables, such as
spinach, that contain high levels of calcium-chelating agents, but a similar or lesser
bioavailability than calcium from low-oxalate vegetables such as kale, broccoli, or other
vegetables in the Brassica genus.

Medical research
Studies show possible links between low-fat milk consumption and reduced risk of arterial
hypertension, coronary heart disease, colorectal cancer and obesity. Overweight individuals who
drink milk may benefit from decreased risk of insulin resistance and type 2 diabetes.[37] One
study has shown that for women desiring to have a child, those who consume full fat dairy
products may actually slightly increase their fertility, while those consuming low fat dairy
products may slightly reduce their fertility.[38] Milk is a source of Conjugated linoleic acid. CLA
has been shown to kill human skin cancer, colorectal cancer and breast cancer cells in vitro
studies, and may help lower cholesterol and prevent atherosclerosis.

It appears to be effective at promoting muscle growth.

Indian (traditional) Milk Products

A whole array of milk based delicacies tastefully overcome the basic limitation of milk - it's
perishable nature. An estimated 50 to 55 per cent of the milk produced in India is converted into
a variety of traditional milk products.

There are a large variety of traditional Indian milk products such as

Makkhan - unsalted butter.

Ghee - butter oil prepared by heat clarification, for longer shelf life.
Kheer - a sweet mix of boiled milk, sugar and rice.
Basundi - milk and sugar boiled down till it thickens.
Rabri - sweetened cream.
Dahi - a type of curd.
Lassi - curd mixed with water and sugar/ salt.

24
Channa/Paneer - milk mixed with lactic acid to coagulate.
Khoa - evaporated milk, used as a base to produce sweet meats.

The market for indigenous based milk food products is difficult to estimate as most of these
products are manufactured at home or in small cottage industries catering to local areas.

Consumers while purchasing dairy products look for freshness, quality, taste and texture, variety
and convenience. Products like Dahi and sweets like Kheer, Basundi, Rabri are perishable
products with a shelf life of less than a day. These products are therefore manufactured and sold
by local milk and sweet shops. There are several such small shops within the vicinity of
residential areas. Consumer loyalty is built by consistent quality, taste and freshness. There are
several sweetmeat shops, which have built a strong brand franchise, and have several branches
located in various parts of a city.

Branding Of Traditional Milk Products

Among the traditional milk products, ghee is the only product, which is currently marketed, in
branded form. main ghee brands are Sagar, MilkMan (Britannia), Amul (GCMMF), Aarey
(Mafco Ltd), Vijaya (AP Dairy Development Cooperative Federation), Verka ( Punjab Dairy
Cooperative), Everyday (Nestle) and Farm Fresh (Wockhardt).

With increasing urbanization and changing consumer preferences, there is possibility of large
scale manufacture of indigenous milk products also. The equipments in milk manufacturing have
versatility and can be adapted for several products. For instance, equipments used to manufacture
yogurt also can be adapted for large scale production of Indian curd products (dahi and lassi).
Significant research work has been done on dairy equipments under the aegis of NDDB.

Mafco Limited sells Lassi under the Aarey brand and flavoured milk under the Energee franchise
(in the Western region, mainly in Mumbai). Britannia has launched flavored milk in various
flavors in tetra packs.

GCMMF has also made a beginning in branding of other traditional milk products with the
launch of packaged Paneer under the Amul brand. It has also created a new umbrella brand

25
"Amul Mithaee", for a range of ethnic Indian sweets that are proposed to be launched The first
new product Amul Mithaee Gulabjamun has already been launched in major Indian markets.

Demand for various types of cheese in the Indian market

Type of cheese % of total consumption

Processed 50

Cheese spread 30

Mozzarella 10

Flavoured/Spiced 5

Others 5

The major players are Amul, Britannia, and Dabon International dominating the market. Other
major brands were Vijaya, Verka and Nandini (all brands of various regional dairy cooperatives)
and Vadilal. The heavy advertising and promotions being undertaken by these new entrants is
expected to lead to strong 20% growth in the segment. Amul has also become more aggressive
with launch of new variants such as Mozzarella cheese (used in Pizza), cheese powder, etc.

The entry of new players and increased marketing activity is expected to expand the market. All
the major players are expanding their capacities

Capacity expansion in Cheese

Company Brands State Capacity

Dynamix Group Manufactures for Maharashtra 35 tons per
Britannia day
GCMMF Amul Gujarat 20 tons per
day
APDDCF Vijaya Andhra 10 tons per
Pradesh day

Western Milk Products

26
Western milk products such as butter, cheese, yogurt have gained popularity in the Indian market
only during the last few years. However consumption has been expanding with increasing
urbanization.

Butter

Most Indians prefer to use home made white butter (makkhan) for reasons of taste and
affordability. Most of the branded butter is sold in the towns and cities. The major brands are
Amul, Vijaya, Sagar, Nandini and Aarey. Amul is the leading national brand while the other
players have greater shares in their local markets. The latest entrant in the butter market has been
Britannia. Britannia has the advantages of a wide distribution reach and a strong brand recall.
Priced at par with the Amul brand, it is expected to give stiff competition to the existing players.
In 1999-00 the butter production is estimated at 4 lakh MT of this only 45K MT is in the white
form used for table purposes rest all is in the yellow form.

Cream

Today, milk is separated by large machines in bulk into cream and skim milk. The cream is
processed to produce various consumer products, depending on its thickness, its suitability for
culinary uses and consumer demand, which differs from place to place and country to country.

Some cream is dried and powdered, some is condensed (by evaporation) mixed with varying
amounts of sugar and canned. Most cream from New Zealand and Australian factories is made
into butter. This is done by churning the cream until the fat globules coagulate and form a
monolithic mass. This butter mass is washed and, sometimes, salted to improve keeping
qualities. The residual buttermilk goes on to further processing. The butter is packaged (25 to
50 kg boxes) and chilled for storage and sale. At a later stage these packages are broken down
into home-consumption sized packs. Butter sells for about US$3200 a tonne on the international
market in 2007 (an unusual high).

Cheese

The present market for cheese in India is estimated at about 9,000 tonnes and is growing at the
rate of about 15% per annum. Cheese is mainly consumed in the urban areas. The four metro
cities alone account for more than 50% of consumption . Mumbai is the largest market
(accounting for 30% of cheese sold in the country), followed by Delhi (20%). Calcutta (7%) and
Chennai (6%). Mumbai has a larger number of domestic consumers, compared to Delhi where
the bulk institutional segment (mainly hotels) is larger.

27
Cheese is another product made from milk. Whole milk is reacted to form curds that can be
compressed, processed and stored to form cheese. In countries where milk is legally allowed to
be processed without pasteurisation a wide range of cheeses can be made using the bacteria
naturally in the milk. In most other countries, the range of cheeses is smaller and the use of
artificial cheese curing is greater. Whey is also the byproduct of this process.

Packaging Technology
Commonly sold in 500 ml plastic bags and in bottles in some parts like in west. It is still
customary to serve the milk boiled, despite pasteurization. Milk is often buffalo milk. Flavored
milk is sold in most convenience stores in waxed cardboard containers. Convenience stores also
sell many varieties of milk (such as flavored and ultra-pasteurized) in different sizes, usually in
aseptic cartons.

Milk was initially sold door-to-door by the local milkman. When the dairy co-operatives initially
started marketing branded milk, it was sold in glass bottles sealed with foil. Over the years,
several developments in packaging media have taken place. In the early 80's, plastic pouches
replaced the bottles. Plastic pouches made transportation and storage very convenient, besides
reducing costs. Milk packed in plastic pouches/bottles have a shelf life of just 1-2 days , that too
only if refrigerated. In 1996, Tetra Packs were introduced in India. Tetra Packs are aseptic
laminate packs made of aluminum, paper, board and plastic. Milk stored in tetra packs and
treated under Ultra High Temperature (UHT) technique can be stored for four months without
refrigeration. Most of the dairy co-operatives in Andhra Pradesh, Tamil Nadu, Punjab and
Rajasthan sell milk in tetra packs. However tetra packed milk is costlier by Rs5-7 compared to
plastic pouches. In 1999-00 Nestle launched its UHT milk. Amul too re-launched its Amul Taaza
brand of UHT milk. The UHT milk market is expected to grow at a rate of more than 10-12% in
coming years.

Polyethylene manufactures a series of Automatic Filling Machines for Filling of Liquids and
Semi-Liquid Product in Polyethylene Pouches/Sachets. The traditional method of packing is still
the Cheapest and Most Practical way of packaging. The manufactures a series of Filling and
Packing Machines for Packing Liquids and Semi-Liquid Products in Polysterol / Polypropylene
Cups. The cups are sealed with Aluminum Lids. Additional closure by Plastic Covers is also
possible (over Capping).

28
The recommended products for packaging in Polyethylene Pouches are: Milk, Juices, Drinking
Water, Liquid Chemicals, Household Chemicals, Cosmetics etc.

Bag-in-box manufactures Packaging Units for Liquids and Semi-Liquids for packing into Bag-
in-Box. The Bag-in-Box is of High Quality Laminated Polyethylene or Metalized Polyethylene.
The volume of the bag can vary from 3 ml to 1,000 ml. After filling, the bags are placed in
Carton Boxes, Barrels or stacked on special Pallets.

Bottle Filling and Packing machines are based upon the principal of Step-by-Step Conveyors
(Rotary Stations for M-52), on which the bottles are Established, Filled, Capped and Removed.

The Bottles move from one position the the next one. The first 4 positions are free for the
continent Installation of the bottles on the Conveyor. The fifth and sixth positions are for Dosing.
The further three positions are free for the oppurtunity of Manual Stacking of covers on the
bottle. The following position is for Automatic Screwing or Capping by pressing the cover or by
a Twist-off action.

Growing Volumes

The effective milk market is largely confined to urban areas, inhabited by over 25 per cent of the
country's population. An estimated 50 per cent of the total milk produced is consumed here. By
the end of the twentieth century, the urban population is expected to increase by more than 100
million to touch 364 million in 2000 a growth of about 40 per cent. The expected rise in urban
population would be a boon to Indian dairying. Presently, the organized sector both cooperative
and private and the traditional sector cater to this market.

The consumer access has become easier with the information revolution. The number of
households with TV has increased from 23 million in 1989 to 45 million in 1995. About 34 per
cent of these households in urban India have access to satellite television channel.

Potential for further growth

Of the three A's of marketing - availability, acceptability and affordability, Indian dairying is
already endowed with the first two. People in India love to drink milk. Hence no efforts are
needed to make it acceptable. Its availability is not a limitation either, because of the ample
scope for increasing milk production, given the prevailing low yields from dairy cattle. It leaves
the third vital marketing factor affordability. How to make milk affordable for the large majority
with limited purchasing power? That is essence of the challenge. One practical way is to pack

29
milk in small quantities of 250 ml or less in polythene sachets. Already, the glass bottle for
retailing milk has given way to single-use sachets which are more economical. Another viable
alternative is to sell small quantities of milk powder in mini-sachets, adequate for two cups of tea
or coffee.

Marketing Strategy for 2000 AD

Two key elements of marketing strategy for 2000 AD are: Focus on strong brands and, product
mix expansion to include UHT milk, cheese, ice creams and spreads. The changing marketing
trends will see the shift from generic products to the packaged quasi, regular and premium
brands. The national brands will gradually edge out the regional brands or reduce their presence.
The brand image can do wonders to a product's marketing as is evident from the words of
Perfume Princess Coco Channel: In the factory, we pack perfume; in the market, we sell hope!

Emerging Dairy Markets

• Food service institutional market: It is growing at double the rate of consumer market

• Defense market: An important growing market for quality products at reasonable prices

• Ingredients market: A boom is forecast in the market of dairy products used as raw
material in pharmaceutical and allied industries

• Parlour market: The increasing away-from-home consumption trend opens new vistas
for ready-to-serve dairy products which would ride piggyback on the fast food revolution
sweeping the urban India.

India, with her sizable dairy industry growing rapidly and on the path of modernization, would
have a place in the sun of prosperity for many decades to come. The one index to the statement is
the fact that the projected total milk output over the next 15 years (1995-2010) would exceed
1457.6 million tonnes which is twice the total production of the past 15 years!

Penetration of milk products

Western table spreads such as butter, margarine and jams are not very popular in India. All India
penetration of butter/ margarine is only 4%. This is also largely represented by urban areas,
where penetration is higher at 9%. In rural areas, butter/ margarine have penetrated in 2.1% of
households only. The use of these products in the large metros is higher, with penetration at
15%.

30
Penetration of cheese is almost nil in rural areas and negligible in the urban areas. Per capita
consumption even among the cheese-consuming households is a poor 2.4kg pa as compared to
over 20kg in USA. The lower penetration is due to peculiar food habits, relatively expensive
products and also non-availability in many parts of the country. Butter, margarine and cheese
products are mainly manufactured by organized sector.

Similarly, penetration of ghee is highest in medium sized towns at 37.2% compared to 31.7% in
all urban areas and 21.3% in all rural areas. The all India penetration of ghee is 24.1%. In relative
terms, penetration of ghee is significantly higher in North and West, which are milk surplus
regions. North accounts for 57% of ghee consumption and West for 23%, South & East together
account for the balance 20%. A large part of ghee is made at home and by small/ cottage industry
from milk. The relative share of branded products in this category is very low at around 1-2%.

Milk powder and condensed milk have not been able to garner any significant consumer
acceptance in India as indicated by a very low 4.7% penetration. The penetration is higher at
8.1% in urban areas and lower at 3.5% in rural areas. Within urban areas, it is relatively higher in
medium sized towns at 8.5% compared to 7.7% in a large metros

By-Product of Dairy

Fresh Milk

Over 50% of the milk produced in India is buffalo milk, and 45% is cow milk. The buffalo milk
contribution to total milk produce is expected to be 54% in 2000. Buffalo milk has 3.6% protein,
7.4% fat, 5.5% milk sugar, 0.8% ash and 82.7% water whereas cow milk has 3.5% protein, 3.7%
fat, 4.9% milk sugar, 0.7% ash and 87% water. While presently (for the year 2000) the price of
Buffalo milk is ruling at $261-313 per MT that of cow is ruling at $170-267 per MT. Fresh
pasteurized milk is available in packaged form. However, a large part of milk consumed in India
is not pasteurized, and is sold in loose form by vendors. Sterilized milk is scarcely available in
India.

Packaged milk can be divided according to fat content as follows,

Whole (full cream) milk - 6% fat

Standardized (toned) milk - 4.5% fat
Doubled toned (low fat) milk - 3% fat
Another category of milk, which has a small market is flavoured milk.

31
Milk Powder
Powdered milk is a manufactured dairy product made by evaporating milk to dryness. One
purpose of drying milk is to preserve it; milk powder has a far longer shelf life than liquid milk
and does not need to be refrigerated, due to its low moisture content. Another purpose is to
reduce its bulk for economy of transportation. Powdered milk and dairy products include such
items as dry whole milk, non-fat dry milk, dry buttermilk, dry whey products and dry dairy
blends.

Alternatively, the milk can be dried by drum drying. Milk is applied as a thin film to the surface
of a heated drum, and the dried milk solids are then scraped off. Powdered milk made this way
tends to have a cooked flavor, due to caramelization caused by greater heat exposure.

Another process is freeze drying, which preserves many nutrients in milk, compared to drum
drying.

The drying method and the heat treatment of the milk as it is processed alters the properties of
the milk powder (for example, solubility in cold water, flavor, bulk density).

Uses
Powdered milk is frequently used in the manufacture of infant formula, confectionery such as
chocolate and caramel candy, and in recipes for baked goods where adding liquid milk would
render the product too thin. Powdered milk is also widely used in various sweets such as the
famous Indian milk balls known as Rasa-Gulla and popular Pakistani sweet delicacy (sprinkled
with desiccated coconut) known as Chum chum (made with skim milk powder).

Powdered milk is also a common item in UN food aid supplies, fallout shelters, warehouses, and
wherever fresh milk is not a viable option. It is widely used in many developing countries
because of reduced transport and storage costs (reduced bulk and weight, no refrigerated
vehicles). As with other dry foods, it is considered nonperishable, and is favored by survivalists,
hikers, and others requiring nonperishable, easy-to-prepare food.

Reconstituting one cup of milk from powdered milk requires one cup of potable water and one-
third cup of powdered milk.

32
Powdered milk is also used in western blots as a blocking buffer to prevent nonspecific protein
interactions, and is referred to as Blotto.

Food and health

Nutritional value

Milk powders contain all twenty standard amino acids (the building blocks of proteins) and are
high in soluble vitamins and minerals. According to USAID the typical average amounts of
major nutrients in the unreconstituted milk are (by weight) 36% protein, 52% carbohydrates
(predominantly lactose), calcium 1.3%, potassium 1.8%. Their milk powder is fortified with
Vitamin A and D, 3000IU and 600IU respectively per 100g. Inappropriate storage conditions
(high relative humidity and high ambient temperature) can significantly degrade the nutritive
value of milk powder

Commercial milk powders are reported to contain oxysterols (oxidized cholesterol) in higher
amounts than in fresh milk (up to 30μg/g, versus trace amounts in fresh milk) The oxysterol free
radicals have been suspected of being initiators of atherosclerotic plaques For comparison,
powdered eggs contain even more oxysterols, up to 200μg/g.

Market

Fonterra, a New Zealand based multinational company, is the world's largest producer of milk
powder controlling 40 percent of the global whole milkpowder. The dominance of New Zealand
in the global dairy industry, for example Fonterra controls around 30% of the world's dairy
exports, has prompted the formation of a futures market for trading whole milkpowder.

Milk powder are mainly of 2 types

• Whole milk powder

• Skimmed milk powder

Whole milk powder contains fat, as distinguished from skimmed milk powder, which is
produced by removing fat from milk solids. Skimmed milk powder is preferred by diet conscious
consumers. Dairy whiteners contain more fat than skimmed milk powder but less compared to
whole milk powder. Dairy whiteners are popular milk substitute for making tea, coffee etc. The
penetration of these products in milk abundant regions is driven by convenience and non
perishable nature (longer shelf life) of the product.

33
Dairy sector of advanced nations export milk products with a subsidy of $ 1000 per tonne with a
level of subsidy more than 60 % of the price of milk powder produced in India, this has led to
large scale imports of milk powder both in whole and skimmed form. To protect the domestic
sector from these subsidized imports the central government has recently increased the basic
import duty on all imports of milk powder more than 10000 MT to 60% from 15%. For imports
less than 10000 MT the basic customs duty has been left unchanged at 15%.

In 1999-00 India is estimated to have imported about 18,000 tonnes of milk powder against a
total estimated production of 2.40 Lakh MTs. In 2000-01 India is expected to export 10000 MT
of skimmed milk powder due to rise in international prices to $2300 per MT from last year's
levels of $1400 per MT. These expectations are based on the strong demand from Russia, East
Asia and Latin America, and also on tightening of supply in EU, which accounts for 75% of the
annual global Skimmed Milk Powder exports.

Condensed Milk
The condensed milk market has grown from 9000 MT in 1998 to 11000 MT in 1999. Condensed
milk is a popular ingredient used in home-made sweets and cakes. Nestle's Milkmaid is the
leading brand with more than 55% market share. The only other competitor is GCMMF's Amul.

Condensed milk, also known as sweetened condensed milk, is cow's milk from which water
has been removed and to which sugar has been added, yielding a very thick, sweet product that
can last for years without refrigeration if unopened. The two terms, condensed milk and
sweetened condensed milk, have become synonymous; though there have been unsweetened
condensed milk products, today these are uncommon. Condensed milk is used in numerous
dessert dishes in many countries, especially in Russia and the former Soviet Union where it is
known as "сгущёнка" (sguschyonka, literally "[that which is] condensed").

A related product is evaporated milk, which has undergone a more complex process and which is
not sweetened.

Production
Raw milk is clarified and standardized, and then is heated to 85-90°C for several seconds. This
heating destroys some microorganisms, decreases fat separation and inhibits oxidation. Some
water is evaporated from the milk and sugar is added to approximately 45%. This sugar is what
extends the shelf life of sweetened condensed milk. Sucrose increases the liquid's osmotic

34
pressure, which prevents microorganism growth. The sweetened evaporated milk is cooled and
lactose crystallization is induced.

THEORETICAL PERSPECTIVE

SWOT Analysis is a strategic planning method used to evaluate

the Strengths, Weaknesses, Opportunities, and Threats involved in a projector in
a business venture. It involves specifying the objective of the business venture or project and
identifying the internal and external factors that are favorable and unfavorable to achieving that
objective. The technique is credited to Albert Humphrey, who led a convention at Stanford
University in the 1960s and 1970s using data from Fortune 500 companies.

A SWOT analysis must first start with defining a desired end state or objective. A SWOT
analysis may be incorporated into the strategic planning model. Strategic Planning, including
SWOT and SCAN analysis, has been the subject of much research.

SWOT ANALYSIS OF INDIAN DAIRY INDUSTRY

Strengths:

• Demand profile: Absolutely optimistic.

• Margins: Quite reasonable, even on packed liquid milk.

35
 • Flexibility of product mix: Tremendous. With balancing equipment, you can keep on
adding to your product line.

• Availability of raw material: Abundant. Presently, more than 80 per cent of milk
produced is flowing into the unorganized sector, which requires proper channelization.

• Technical manpower: Professionally-trained, technical human resource pool, built over

last 30 years.

Weaknesses:

• Perishability: Pasteurization has overcome this weakness partially. UHT gives milk long
life. Surely, many new processes will follow to improve milk quality and extend its shelf
life.

• Lack of control over yield: Theoretically, there is little control over milk yield.
However, increased awareness of developments like embryo transplant, artificial
insemination and properly managed animal husbandry practices, coupled with higher
income to rural milk producers should automatically lead to improvement in milk yields

• Logistics of procurement: Woes of bad roads and inadequate transportation facility

make milk procurement problematic. But with the overall economic improvement in
India, these problems would also get solved.

• Problematic distribution: Yes, all is not well with distribution. But then if ice creams
can be sold virtually at every nook and corner, why can’t we sell other dairy products
too? Moreover, it is only a matter of time before we see the emergence of a cold chain
linking the producer to the refrigerator at the consumer’s home.

• Competition: With so many newcomers entering this industry, competition is becoming

tougher day by day. But then competition has to be faced as a ground reality. The market
is large enough for many to carve out their niche.

Opportunities:

"Failure is never final, and success never ending”. Dr Kurien bears out this statement perfectly.
He entered the industry when there were only threats. He met failure head-on, and now he clearly

36
is an example of ‘never ending success’! If dairy entrepreneurs are looking for opportunities in
India, the following areas must be tapped.

• Value addition: There is a phenomenal scope for innovations in product development,

packaging and presentation. Given below are potential areas of value addition:

○ Steps should be taken to introduce value-added products like shrikhand, ice

creams, paneer, khoa, flavored milk, dairy sweets, etc. This will lead to a greater
presence and flexibility in the market place along with opportunities in the field of
brand building.

○ Addition of cultured products like yoghurt and cheese lend further strength - both
in terms of utilization of resources and presence in the market place.

○ A lateral view opens up opportunities in milk proteins through casein, caseinates

and other dietary proteins, further opening up export opportunities.

○ Yet another aspect can be the addition of infant foods, geriatric foods and
nutritionals.

• Export potential: Efforts to exploit export potential are already on. Amul is exporting to
Bangladesh, Sri Lanka, Nigeria, and the Middle East. Following the new GATT treaty,
opportunities will increase tremendously for the export of agri-products in general and
dairy products in particular.

Threats:

Milk vendors, the un-organized sector

Today milk vendors are occupying the pride of place in the industry. Organized dissemination of
information about the harm that they are doing to producers and consumers should see a steady
decline in their importance.
The study of this SWOT analysis shows that the ‘strengths’ and ‘opportunities’ far outweigh
‘weaknesses’ and ‘threats’. Strengths and opportunities are fundamental and weaknesses and
threats are transitory. Any investment idea can do well only when you have three essential
ingredients: entrepreneurship (the ability to take risks), innovative approach (in product lines and
marketing) and values (of quality/ethics).
The Indian dairy industry, following its delicensing, has been attracting a large number of
entrepreneurs. Their success in dairying depends on factors such as an efficient yet economical
procurement network, hygienic and cost-effective processing facilities and innovativeness in the
market place. All that needs to be done is: to innovate, convert products into commercially
exploitable ideas. All the time keep reminding yourself: Benjamin Franklin discovered
electricity, but it was the man who invented the meter that really made the money!

37
ANALYSIS AND INTERPRETATION

Once the data has been collected. It has to be analysis, which amount to the search for meaning
in the collected information It involved the steps like editing, coding and tabulation. The basic
purpose of editing is to examine the collected raw data to decked error and omissions and to
correct these errors, editing involve a careful scrutiny of the completed schedules. During this
phase the answers, which were found to be incompletely answered or erroneous or inconsistent
in nature were isolated and the respondents were followed up again. Since a structured
questionnaire was made, there was no need of post coding the next step was tabulation in which
the responses in different categories were simply counted. Simple tabulation was employed in
which statically tools like frequency Distribution and percentage were used PRESENTATION
OF INFORMATION.

The development process was led by a steering committee consisting of farmers, extension
officers and milk processor representatives. The committee requested that changes be made to
the KBDSS as a response to different circumstances in theIndia dairy industry due to the
deregulation of the milk market. These changes were implemented using the services of a
software development, marketing and product placement company. The research indicates that
the use of the recommended approaches to the development of a KBDSS did not work well in
the rapidly changing environment and that the interpretation that is necessary to determine the
effect of deregulation on farmers added conflict and complexity to the development process.

38
Conclusions

The opinions of dairy farm owners and operators regarding the large set of industry issues
included in the survey have different implications for different industry groups and decision
makers. Collective action may be required on many of the priority and viability items, as well as
the industry concerns. Although industry groups will set their priorities based on the values and
roles within the industry, farmers’ priorities are an important input into the decision making
process. In particular, items with median ratings of 5 have a very high priority for the survey
respondents. Considering that survey responses often have a tendency towards mid-level ratings,
this is a very strong statement by the participating farmers.

In view of the survey responses, there are numerous education and research opportunities to be
addressed. The category receiving high median ratings in the education and research area most
frequently was herd management. However, educators will have to consider specific topics
carefully when setting priorities. The number of highly rated herd management topics does not
indicate that topics in other categories would not be important to the long-term sustainability of
dairy farming in Michigan and to the individual success of dairy farm operators.

Education and research needs reported here are based on overall ratings of dairy farm owners
and operators on the state level. Differences in educational needs and opinions towards research
priorities are to be expected based on farm and operator characteristics, as well as management
practices. Additional insights will be gained through further analysis of the survey responses.
Results from the survey of the allied industry professionals, next-generation family members,
and herdspersons also will be summarized. More survey results will be reported in a future issue
of the Michigan Dairy Review.

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BIBLIOGRAPHY

1. http://www.scribd.com/doc/19621081/Dairy-in-India
2. www.dairyproducts1.com
3. Andhra Pradesh Dairy Development Cooperative Federation Ltd
4. Gujarat Cooperative Milk Marketing Federation Ltd
5. Madhya Pradesh State Cooperative Dairy Federation Ltd

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