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On

Analysis Of The Strategic Orientation Of Mother Dairy


Faculty Guide Submitted By
Prof. Ashok. K. Sar Tanmay Ku Nayak-10202244
KIIT University, arshalin Das-10202210
deanksom.ac.in Ankur ishra-10202233
Arup 4hanty-10202217
Payal Pattnaik-10202247
Lagnajit Parida-10202226

SCHOOL OF MANAGEMENT, KIIT UNIVERSITY

BHUBANESWAR-751024
November, 20, 2011

Contents
1. Background...............................3
a. Introduction to Dairy Industry...................4
b. Introduction to Mother Dairy.....................4
2. Strategic Direction............................7
a. Mission.............................7
b. Objective.............................7
3. External Analysis...............................................................................................................8
a. Industrial Analysis.........................9
b. STEP Analysis..........................12
c. Competition in different Products..................13
4. Internal Analysis.............................14
a. Resources............................14
b. Capabilities............................15
c. Competitive Advantage.......................15
5. Strategy Applied..............................16
a. Strategy Implemented.......................16
6. SWOT Analysis..............................19
7. Recommendations.............................20
b. Strategy for Strengthening Co-operative Business............20
c. Strategy for Production Enhancement................20
d. Strategy for Assuring Quality......................20
e. Strategy for Creating an Information & Development Research......21

Background

Introduction to Dairy Industry
Fr4m chr4nic sh4rtages 41 milk, India has emerged t4day as the largest pr4ducer 41 milk in
the w4rld cr4ssing 97 milli4n t4ns It is 'The Oyster' 41 the gl4bal dairy industry It 411ers
4pp4rtunities gal4re t4 entrepreneurs w4rldwide, wh4 wish t4 capitalize 4n 4ne 41 the
w4rld's largest and 1astest gr4wing markets 14r milk and milk pr4ducts A bag1ul 41 'pearls'
awaits the internati4nal dairy pr4cess4r in India The Indian dairy industry is rapidly
gr4wing, trying t4 keep pace with the gall4ping pr4gress ar4und the w4rld The e11ective
milk market is largely c4n1ined t4 urban areas, inhabited by 4ver 25 per cent 41 the c4untry's
p4pulati4n An estimated 50 per cent 41 the t4tal milk pr4duced is c4nsumed here By the
end 41 2007, the urban p4pulati4n is expected t4 increase by m4re than 100 milli4n t4 t4uch
864 milli4n in 2007 a gr4wth 41 ab4ut 40 per cent The expected rise in urban p4pulati4n
w4uld be a b44n t4 Indian dairying Presently, the 4rganized sect4r b4th c44perative and
private and the traditi4nal sect4r cater t4 this market India with 194mn c4ws and 155mn
bu11al4es has the largest p4pulati4n 41 cattle in the w4rld T4tal cattle p4pulati4n in the
c4untry as 4n Oct4ber'06 st44d at 473mn 4re than 1i1ty percent 41 the bu11al4es and
twenty percent 41 the cattle in the w4rld are 14und in India and m4st 41 these are milch c4ws
and milch bu11al4es Indian dairy sect4r c4ntributes the large share in agricultural gr4ss
d4mestic pr4ducts Presently there are ar4und 70,000 village dairy c44peratives acr4ss the
c4untry The c44perative s4cieties are 1ederated int4 170 district milk pr4ducers uni4ns,
which is turn has 22state c44perative dairy 1ederati4n ilk pr4ducti4n gives empl4yment t4
m4re than 72mn dairy 1armers In terms 41 t4tal pr4ducti4n, India is the leading pr4ducer 41
milk in the w4rld 14ll4wed by USA The milk pr4ducti4n in 2005-06 is estimated at 971mn
T as c4mpared t4 925mn T in the previ4us year This pr4ducti4n is expected t4 increase
t4 100mn T by 2006-07 O1 this t4tal pr4duce 41 89mn c4ws' milk c4nstitute 56mn T
while rest is 1r4m 4ther cattle While w4rld milk pr4ducti4n declined by 2 per cent in the last
three years, acc4rding t4 FAO estimates, India's 39 percent annual gr4wth 41 milk
pr4ducti4n between 1995-96 and 2005-06 surpasses the 2 per cent gr4wth in p4pulati4n; the
net increase in availability is ar4und 2 per cent per year The milk pr4ducti4n in India

acc4unts 14r m4re than 13 41 the t4tal w4rld 4utput and 57 41 t4tal Asia's pr4ducti4n
The t4p 1ive milk pr4ducing nati4ns in the w4rld are India, USA, Russia, Germany and
France Alth4ugh milk pr4ducti4n has gr4wn at a 1ast pace during the last three decades
(c4urtesy: Operati4n Fl44d), milk yield per animal is very l4w The main reas4ns 14r the l4w
yield are:
O Lack 41 use 41 scienti1ic practices in milking
O Inadequate availability 41 14dder in all seas4ns
O Unavailability 41 veterinary health services

Introduction to Mother Dairy
4ther Dairy Delhi was set up in 1974 under the Operati4n Fl44d Pr4gramme It is n4w a
wh4lly 4wned c4mpany 41 the Nati4nal Dairy Devel4pment B4ard (NDDB)
4ther Dairy markets & sells dairy pr4ducts under the 4ther Dairy brand (like Liquid
ilk, Dahi, Ice creams, Cheese and Butter), Dhara range 41 edible 4ils and the Sa1al range
41 1resh 1ruits & vegetables, 1r4zen vegetables and 1ruit juices at a nati4nal level thr4ugh its
sales and distributi4n netw4rks 14r marketing 144d items
4ther Dairy s4urces signi1icant part 41 its requirement 41 liquid milk 1r4m dairy
c44peratives Similarly, 4ther Dairy s4urces 1ruits and vegetables 1r4m 1armers / gr4wers
ass4ciati4ns 4ther Dairy als4 c4ntributes t4 the cause 41 4ilseeds gr4wer c44peratives that
manu1acture/ pack the Dhara range 41 edible 4ils by undertaking t4 nati4nally market all
Dhara pr4ducts It is 4ther Dairy`s c4nstant endeav4r t4
O nsure that milk pr4ducers and 1armers regularly and c4ntinually receive market
prices by 411ering quality milk, milk pr4ducts and 4ther 144d pr4ducts t4 c4nsumers at
c4mpetitive prices and;
O Uph4ld instituti4nal structures that emp4wer milk pr4ducers and 1armers thr4ugh
pr4cesses that are equitable
At 4ther Dairy, pr4cessing 41 milk is c4ntr4lled by pr4cess aut4mati4n whereby state-41-
the-art micr4pr4cess4r techn4l4gy is ad4pted t4 integrate and c4mpletely aut4mate all

1uncti4ns 41 the milk pr4cessing areas t4 ensure high pr4duct quality/ reliability and sa1ety
4ther Dairy is an ISO 9001:2008 (QS), ISO 22000:2005 (FSS) and ISO 14001:2004
(S) certi1ied 4rganizati4n 4ther Dairy has Certi1icate 41 Appr4val 1r4m xp4rt
Inspecti4n C4uncil 41 India als4 4re4ver, its Quality Assurance Lab4rat4ry is certi1ied by
Nati4nal Accreditati4n B4ard 14r Testing and Calibrati4n Lab4rat4ry (NABL)-Department
41 Science and Techn4l4gy, G4vernment 41 India
4ther Dairy markets appr4ximately 28 milli4n liters 41 milk daily in the markets 41 Delhi,
umbai, Saurashtra and Hyderabad 4ther Dairy ilk has a market share 41 66 in the
branded sect4r in Delhi where it sells 23 milli4n liters 41 milk daily and undertakes its
marketing 4perati4ns thr4ugh ar4und 14,000 retail 4utlets and 845 exclusive 4utlets 41
4ther Dairy
The c4mpany`s derives signi1icant c4mpetitive advantage 1r4m its unique distributi4n
netw4rk 41 bulk vending b44ths, retail 4utlets and m4bile units 4ther Dairy ice creams
launched in the year 1995 have sh4wn c4ntinu4us gr4wth 4ver the years and t4day b4asts 41
appr4ximately 62 market share in Delhi and NCR 4ther Dairy als4 manu1actures and
markets a wide range 41 dairy pr4ducts that include Butter, Dahi, Ghee, Cheese, UHT ilk,
Lassi & Flav4red ilk and m4st 41 these pr4ducts are available acr4ss the c4untry
The c4mpany markets an array 41 1resh and 1r4zen 1ruit and vegetable pr4ducts under the
brand name SAFAL thr4ugh a chain 41 400 4wn Fruit and Vegetable sh4ps and m4re than
20,000 retail 4utlets in vari4us parts 41 the c4untry Fresh pr4duce 1r4m the pr4ducers is
handled at the C4mpany`s m4dern distributi4n 1acility in Delhi with an annual capacity 41
200,000 T An IQF 1acility with capacity 41 ar4und 75 T per day is als4 4perati4nal in
Delhi A state-41-the-art 1ruit pr4cessing plant 41 1ruit handling capacity 41 120 T per day,
a 100 percent OU, setup in 1996 at umbai supplies quality pr4ducts in the internati4nal
market With increasing demand an4ther state-41-the-art 1ruit pr4cessing plant has been set
up at Bangal4re with 1ruit handling capacity 41 ar4und 250 T per day
4ther Dairy has als4 been marketing the Dhara range 41 edible 4ils 14r the last 1ew years
T4day it is a leading brand 41 edible 4ils and is available acr4ss the c4untry in 4ver 2,00,000
4utlets The brand is currently available in the 14ll4wing variants: Re1ined Vegetable Oil,
Re1ined S4ybean Oil, Re1ined Sun1l4wer Oil, Re1ined Rice Bran Oil, Kachi Ghani ustard

Oil and Filtered Gr4undnut Oil 4ther Dairy has als4 launched extra virgin Olive Oil under
the Dar4liva brand 4ther Dairy has 4ver the last 3 decades, harnessed the p4wer 41 1armer
c44peratives t4 deliver a range 41 delici4us pr4ducts and bring a smile 4n y4ur 1ace In times
t4 c4me, 4ther Dairy shall strive t4 remain 4ne 41 India`s 1inest 144d c4mpanies

Strategic Direction


Mission:
T4 sustain market leadership in the pr4ducti4n and marketing 41 a variety 41 liquid milk and
milk pr4ducts with assured quality at an a114rdable price, c4vering all market segments and
t4 maintain the gr4wth, pr4sperity and unity 41 all 4ur internal & external cust4mers

Objective:
4ther Dairy shall pr4vide regular and timely supply 41 milk and milk pr4ducts at
c4nvenience distributi4n p4ints under clean and hygienic c4nditi4ns 14r di11erent segments
41 c4nsumers 4ther Dairy shall pr4vide remunerative returns t4 milk pr4ducers and 4ther
ass4ciates 4ther Dairy shall pr4m4te inn4vati4ns, c4ntinu4us learning and impr4vement
The main stakeh4lder 41 4ther Dairy was the 1armer member 14r wh4se wel1are it existed
Unlike 4ther 4rganizati4ns, their 4bjective is n4t t4 maximize the pr41it They are m4re
interested in giving the best price 14r the 1armers 14r their milk than in making a large pr41it
Thus they l44k at the price given t4 their suppliers as n4t a c4st but as an 4bjective
4ther Dairy had, as its main 4bjective, 'carrying 4ut activities 14r the ec4n4mic
devel4pment 41 agriculturists by e11iciently 4rganizing marketing 41 milk and dairy pr4duce,
agricultural pr4duce in raw and/4r pr4cessed 14rm and 4ther allied pr4duce This was t4 be
d4ne thr4ugh:
O C4mm4n branding
O Centralized marketing
O Centralized quality c4ntr4l
O Centralized purchases and
O P44ling 41 milk e11iciently
Mother Dairy had declared, as its business philosophy, the following:

O T4 ensure that milk pr4ducers and 1armers regularly and c4ntinually receive market
prices by 411ering quality milk, milk pr4ducts and 4ther 144d pr4ducts t4 c4nsumers
at c4mpetitive prices and;
O T4 uph4ld instituti4nal structures that emp4wer milk pr4ducers and 1armers thr4ugh
pr4cesses that are equitable
The biggest strength 41 4ther Dairy was the trust it had created in the minds 41 its
c4nsumers regarding the quality 41 its pr4ducts NDDB, and its brand 4ther Dairy, st44d
14r guaranteed purity 41 whatever pr4ducts it had pr4duced Adulterati4n was simply n4t
d4ne in any 41 its pr4ducts In India, where such trust was hard t4 c4me by, this c4uld
pr4vide a central anch4r 14r 4ther Dairy`s 1uture business plans F4r m4re than 40 years'
4ther Dairy helping t4 create a nati4nal netw4rk has been adapted and extended t4 4ther
c4mm4dities and areas Their c4nstant e114rt t4 learn and t4 enrich experience is central t4
their appr4ach and capacities In times t4 c4me, 4ther Dairy shall strive t4 bec4me a
leading player in the 144d industry in India

External Analysis

Industry Analysis
P4rter`s 5 F4rces Analysis:
In 4rder t4 identi1y and assess the strength 41 external c4mpetitive 14rces 4n the ice cream industry I
utilized a c4mm4n analytical t44l, P4rter`s Five F4rces 4del P4rter`s 1ive 14rce industry analysis
can be used t4 get a general 4ver view 41 the threats t4 the pr41itability 41 ice cream business
Th4ugh the m4del d4es n4t help in analysing 1irm speci1ic demand, it gives s4me in14rmati4n 41 its
business envir4nment


Buyer Power
O Buyer p4wer is determined by vari4us 1act4rs such as switching c4sts, the relative v4lume 41
purchases, the standardizati4n 41 the pr4duct, elasticity 41 demand, brand identity, and
quality 41 the pr4ducts

O On 4ne end are the large instituti4nal buyers ie big h4tels and restaurants which ask 14r
disc4unts, extended credit peri4ds and the 4ther end are small retail 4utlets like general
st4res which have n4 p4wer t4 neg4tiate with the 1irms
O The p4wer 41 buyers is relatively high when buyers are large, c4nsisting 41 individual
cust4mers, gr4cery st4res, c4nvenience st4res, and restaurants nati4nwide Since retailers
purchase ice cream pr4ducts in large quantities, this gives buyers substantial leverage 4ver
price
O Cust4mers are able t4 substitute 4ne brand 41 ice cream t4 an4ther at any p4int in time
There are many ice cream pr4ducts t4 ch44se 1r4m, s4 the buyers c4st 41 switching t4
c4mpeting brands is relatively l4w
4ther Dairy`s strategy must include str4ng pr4duct di11erentiati4n s4 that buyers are less able t4
switch 4ver with4ut incurring large c4sts 4ther Dairy uph4lds a str4ng Brand Identity in the
Delhi/NCR market It is perceived as having a higher quality Thus, it is a str4ng p4int 41
di11erentiati4n

Supplier Power
O The suppliers t4 the ice cream industry include dairy 1armers, paper c4ntainer
manu1acturers, and suppliers 41 vari4us 1lav4urings The principal inputs are c4mm4dities
available in c4mpetitive markets
O Fact4rs a11ecting the bargaining p4wer 41 suppliers include the threat 41 14rward integrati4n
and the c4ncentrati4n 41 suppliers There exist numer4us p4tential suppliers 41 ingredients
The ingredients pr4vided by each supplier are n4t unique 4r greatly di11erentiated
Furtherm4re, ice cream manu1acturers are able t4 switch between suppliers quickly and
cheaply
O Als4, many 41 the suppliers viability is tied t4 the well-being 41 large, established
c4mpanies There14re, the bargaining p4wer 41 suppliers 41 ingredients is rather l4w
O H4wever, 4ther Dairy being a milk c4 4perative has t4 emp4wer the milk pr4ducers and
1armers s4 that they get a remunerative return There14re, a certain p4wer is vested in the
hands 41 the 1armer s4cieties

Threat of Substitutes:
any substitute pr4ducts are available within the dessert and 1r4zen 144d industry (c44kies,
pies, P4psicles, cakes, ch4c4lates, s41t drinks) which are basically 144d items c4nsumed at
leisure Since substitute pr4ducts are readily available and attractively priced, the
c4mpetitive pressures p4sed by substitute pr4ducts can be c4nsidered m4derate

Potential Entrants:
O The barriers t4 entry within the ice cream industry are m4derate due t4 the brand pre1erences
and cust4mer l4yalty t4wards the larger and m4re established c4mpanies
O Other 4bstacles t4 new entrants include the requirement 14r large s4urces 41 capital,
specialized mixing 1acilities and manu1acturing plants
O In additi4n, the accessibility 41 distributi4n channels can be di11icult 14r an unkn4wn 1irm
with little 4r n4 brand rec4gniti4n

Industrial Rivalry:

The principal c4mpetit4rs in the dairy industry are large, diversi1ied c4mpanies with
signi1icantly greater res4urces such as Amul, Kwality Walls, Vadilal and Cream Bell,
besides a l4wer threat 1r4m l4cal manu1acturers (kul1i etc manu1acturers) Rivalry can be
characterized as intense, given that numer4us c4mpetit4rs exist, the c4st 41 switching t4 rival
brands is l4w, and the sales-increasing tactics empl4yed by 4ther rivals threatens t4 b44sts
rivals unit v4lume 41 pr4ducti4n
Als4, recently there has been a surge in the number 41 l4cal dairy c4mpanies in and ar4und
Delhi The gr4wing p4pularity 41 such premium dairy pr4ducts will als4 tend t4 a11ect the
business 41 existing c4mpanies
Segmentation
Segmentati4n is n4t s4 easy because 41 mixed audience and vari4us culinary applicati4ns 41 4ther
Dairy pr4ducts Segmentati4n can be d4ne based 4n:
O Consumer type:
F4r Kids-Sundae agic, Kul1i, Fruit Classic
F4r W4men- Skimmed ilk, D4uble T4ned
F4r Y4uth-cheese variants, Bars, Treats, Ice Creams,
F4r the cal4rie c4nsci4us- Skimmed ilk, D4uble T4ned
F4r health c4nsci4us- Skimmed ilk, D4uble T4ned
O Industry type:
ilk- Ice cream manu1acturer, restaurants, c411ee sh4ps etc
Butter/Cheese/Ghee-Bakery, pizza retailers, snack retailers

STEP Analysis
1. Political
Tax Laws
Stability 41 G4vernment
Law 41 hiring and pr4m4ti4n
2. Economic
Increasing GDP
Burge4ning middle class
Higher Disp4sable Inc4mes, hence m4re c4nsumer buying p4wer
asy availability 41 l4ans 1r4m banks
3. Socio cultural
Changing c4nsumer habits & li1estyles - The Indian c4nsumer 41 t4day is clearly
seeking healthier alternatives
C4nsumer buying behavi4r
4. Technological
Advancement 41 newer techn4l4gy
G4vernment pr4viding thrust 4n R&D

Key Success Factors
O Cost
c4n4mies 41 Scale / critical mass building thr4ughput
C4ntr4l 41 value chain
Reducing number 41 value chain 1uncti4naries

O Efficiency & Turnaround time
Aut4mati4n
Seamless access & data management systems
O Food Safety
Integrity 41 system

Accreditati4ns & certi1icati4ns

xperience
O Domain Expertise
Skills in handling 1ruits & vegetables
Requisite in1rastructure and systems

Competition in Different Products

The nature 41 c4mpetiti4n varied am4ng the di11erent pr4ducts In the case 41 liquid milk,
c4mpetiti4n was 1r4m private dairies and c4ntract4rs There was als4 c4mpetiti4n 1r4m
newly emerging private dairies that had started supplying milk t4 the c4nsumers as well as
sweet makers There was intense c4mpetiti4n 14r the supply 41 milk, which was s4ught a1ter,
especially in the 1estival seas4ns, by the sweet makers wh4 derived large pr41its 1r4m the
sale 41 their sweets C4nsumers were generally n4t very particular ab4ut the brand 41 liquid
milk, s4 that the sales depended t4 a large extent 4n dealer push H4wever, there was sc4pe
t4 establish di11erentiati4n thr4ugh apprising the cust4mers 41 the quality n4t 4nly 41 the
initial milk itsel1, but als4 the quality 41 the supply chain, which ensured the stability 41
milk F4r butter and cheese, new entrants were making their mark Britannia, a 1irm engaged
in manu1acture and sale 41 biscuits, had entered int4 144ds business, and m4re particularly in
milk and milk related pr4ducts such as butter Britannia had intr4duced new 14rms 41 cheese
such as cheddar cheese slices, and supp4rted its pr4ducts with extensive advertising
campaigns It was believed that advertisements played a p4wer1ul r4le in the demand 14r
particular brands 41 butter and cheese The sweet market was highly 1ragmented, with
numer4us small time l4cal 4perat4rs pr4ducing their 4wn brands and unbranded 14rms 41
sweets The sales 41 sweets s4ared in the 1estival seas4ns, drawing milk supply by 411ering
higher prices Other 144d c4mpanies such as Hindustan Lever Ltd (HLL), a subsidiary 41
Unilevers, and Nestle had als4 entered in the business 41 ready made 4r near ready sweets
(such as gulab jamun, which just needed t4 be deep 1ried t4 get it ready) Branded ready 4r
near ready sweets were advertised and heavily pr4m4ted thr4ugh campaigns such as thr4ugh
mail 4rders t4 h4usewives The ice creams market was an emerging market in India,
witnessing the entry 41 numer4us players The nati4nal scene was d4minated by Hindustan
Lever with its Kwality and Wallsbrands, acc4unting 14r ab4ut 45 percent 41 the market
GCF was the 4ther nati4nal player, with ab4ut 30 percent 41 the market There were, in
additi4n, very p4wer1ul regi4nal players such as Vadilal Ice Creams in the Western India
wh4 c4mmanded substantial (in excess 41 30 percent) 41 the regi4nal market shares Ice
creams were largely pr4m4ted thr4ugh l4cal pr4m4ti4ns, h4ardings (billb4ards) and
advertisements It c4uld be expected that these c4mpanies w4uld als4 expand their
4perati4ns in the c4ming years

Internal Analysis

1. Resources

Tangible:
O Human res4urce: It pr4vides empl4yment t4 2,500 empl4yees
O Physical res4urce: 4ther Dairy markets appr4ximately 28 milli4n litres 41 milk
daily in the markets 41 Delhi, umbai, Saurashtra and Hyderabad 4ther Dairy
411ers its pr4ducts in Delhi, Haryana, K4lkata, Punjab, Rajasthan, Uttaranchal, Uttar
Pradesh, aharashtra, Andhra Pradesh, and Gujarat 4ther Dairy undertakes its
marketing 4perati4ns thr4ugh ar4und 14,000 retail 4utlets and 845 exclusive 4utlets
41 4ther Dairy
Intangible:
O Organizati4nal Culture: its a c44perative s4ciety and wh4lly 4wned subsidiary 41
Nati4nal Dairy Devel4pment B4ard (NDDB) 41 India 4ther Dairy s4urces 1ruits
and vegetables 1r4m 1armers / gr4wers ass4ciati4ns 4ther Dairy als4 c4ntributes t4
the cause 41 4ilseeds gr4wer c44peratives that manu1acture/ pack the Dhara range 41
edible 4ils by undertaking t4 nati4nally market all Dhara pr4ducts
O Techn4l4gical: "Sa1al" initiative 41 the 4ther Dairy, an instituti4n pr4m4ted by the
Nati4nal Dairy Devel4pment B4ard, is currently handling 1,00,000 T 1resh 1ruits
and vegetables a year with minimal p4st-harvesting l4ss 4ther Dairy is managing
this by making use 41 12 deep 1reezing chambers 41 900 T each, 1ive c4ld st4rage
1acilities 1000 T each and a 1reezing line (IQF) capable 41 handling 35 T / h4ur
The central distributi4n 1acility (CDF) 41 4ther Dairy, is als4 having seven
ripening chambers 41 175 T each and a dispatch hall and pr4cess hall 41 2160 sq
metres and 3900 sq metres area respectively 14r carrying 4ut the task 41 preservati4n
41 highly perishable 1ruits and vegetables
O Res4urce 41 Inn4vati4n: 4ther Dairy is als4 helping 1armers ad4pt new
techn4l4gies Vari4us initiatives like enhancing the pr4ducti4n, devel4pment,
standardisati4n and c4mmercialisati4n 41 st4rage 41 p4tat4es at a high temperature t4
arrest sweetening during st4rage etc are currently being taken up by the c4mpany
C4ntr4lled atm4sphere st4rage 14r apples and pears is an4ther new technique being
devel4ped by SAFAL team The inn4vative strategies ad4pted by 4ther Dairy had
recently helped the c4mpany bag the 1irst "Indian Inn4vati4n Award 2005"
O Reputati4n: 4ther Dairy is an IS/ ISO-9002, IS-15000 HACCP and IS-14001 S
certi1ied 4rganizati4n 4re4ver, its Quality Assurance Lab4rat4ry is certi1ied by

Nati4nal Accreditati4n B4ard 14r Testing and Calibrati4n Lab4rat4ry (NABL)-

Department 41 Science and Techn4l4gy, G4vernment 41 India

2. Capabilities
Product Development
At 4ther Dairy, pr4cessing 41 milk is c4ntr4lled by pr4cess aut4mati4n whereby
state-41-the-art micr4pr4cess4r techn4l4gy is ad4pted t4 integrate and c4mpletely
aut4mate all 1uncti4ns 41 the milk pr4cessing areas t4 ensure high pr4duct quality/
reliability and sa1ety
Marketing
4ther Dairy markets an array 41 1resh and 1r4zen 1ruit and vegetable pr4ducts under
the brand name SAFAL thr4ugh a chain 41 400 4wn Fruit and Vegetable sh4ps and
m4re than 20,000 retail 4utlets in vari4us parts 41 the c4untry Fresh pr4duce 1r4m
the pr4ducers is handled at the C4mpany`s m4dern distributi4n 1acility in Delhi with
an annual capacity 41 200,000 T 4ther Dairy markets appr4ximately 28 milli4n
litres 41 milk daily in the markets 41 Delhi, umbai, Saurashtra and Hyderabad

Competitive Advantage
O The C4mpany derives signi1icant c4mpetitive advantage 1r4m its unique distributi4n
netw4rk 41 bulk vending milk b44ths, retail 4utlets, and m4bile units
O The creative, strategic and inn4vative HR initiatives are the key c4mpetencies which has
helped m4ther dairy t4 resp4nd better t4 market trends and be aligned with the market and
understand 4pp4rtunities with a c4mpetitive advantage 4ther dairy c4ntinu4usly strive t4
achieve alignment with the help 41 new initiatives by way 41 devel4ping, creative
alternatives t4 s4lve c4mplex pr4blems and create value by understanding uncertainties and
business c4mplexities Clear business understanding, F4cused appr4ach and required and
right initiatives in HR has shi1ted the paradigm and has als4 given a reas4n t4 believe that
4ther dairy is rec4gnized as better than any 4ther best 41 the best empl4yer in India and
was als4 judged as ' the 3
rd
best empl4yer ' year 2009-10 by w4rld HRD c4ngress

Strategies applied

Strategies Implemented
1. Focused Approach
4ther Dairy wants t4 get int4 bigger markets and have bigger shares in th4se markets The
c44perative is als4 expanding its pr4duct p4rt14li4 1urther t4 match rival 411erings
particularly th4se 41 Amul F4r the 1irst 22 years 41 its existence, liquid milk was the 4nly
dairy pr4duct that 4ther Dairy 411ered It was in 1996 that it came up with ice-creams But
the real spurt came ab4ut 14ur years ag4, when it intr4duced curd, 1lav4ured milk, lassi and
mishti d4i It intr4duced butter a year-and-a hal1 ag4; ghee and UTH milk a year ag4; and
cheese, ab4ut 10 m4nths ag4 And under its 1r4zen 144ds and vegetables brand Sa1al, besides
the intr4ducti4n 41 c4rn and mixed vegetables, it has plans t4 c4me 4ut with 1r4zen p4tat4-
based snacks in a 1ew m4nths S4 while the pr4duct p4rt14li4 has been gr4wing, 4ther
Dairy has plans 14r reach 4ut t4 newer markets - but the strategy here is m4re pr4duct-
speci1ic In liquid milk, it will initially c4ncentrate 4nly 4n 14ur markets - Delhi, its h4me
gr4und; the Junagarh regi4n and Ahmadabad in Gujarat; umbai, which it entered a year
ag4; and Hyderabad, where it m4ved in a little m4re than a year ag4 They have n4 plans t4
g4 everywhere with liquid milk What's the need t4 get int4 th4se markets that already have
str4ng c4-4perative brands? Their 4bjective 41 getting int4 newer l4cati4ns is n4t t4 make
4ther Dairy larger, but t4 ensure that there is a large viable distributi4n netw4rk and
c4nsumer brand t4 take care 41 surplus milk In umbai, where the liquid milk market is
cl4se t4 40 t4 42 lakh (4 t4 42 milli4n) litres a day, 4nly ab4ut 20-22 lakh (2-22 milli4n)
litres a day is in the 4rganised market - and that t44 is highly 1ragmented with a number 41
smaller players with shares 41 ab4ut 10,000-20,000 litres a day 4ther Dairy claims a share
41 170,000 litres a day, with the biggest player, ahananda, selling ab4ut 800,000 litres a
day and Aarey and Amul ab4ut 250,000-300,000 litres a day each In Hyderabad, 4ther
Dairy claims it has a 15 per cent market share 41 the appr4ximate 9-10 lakh (900,000 t4 1
milli4n) litres a day 41 the 4rganised market These are still early days in the tw4 markets,
but we are l44king at 10-12 per cent gr4wth in the 4verall 1resh milk segment
2. Wider Spread
H4wever, as 1ar as 4ther dairy pr4ducts are c4ncerned, 4ther Dairy plans t4 expand acr4ss
the b4ard Other than milk, 14r m4st state 1ederati4ns, dairy pr4ducts are still a small part 41
their 4perati4ns S4 they are taking their pr4ducts t4 regi4ns acr4ss India, where they see
en4ugh market p4tential In ice creams, it was 4nly tw4 years ag4 that 4ther Dairy entered
its 1irst market 4utside Delhi - UP and Punjab T4day, it's extended its 4perati4n t4 Haryana,

Jaipur, umbai and K4lkata as well Next year, it plans t4 g4 s4uth t4 Hyderabad and
Bangal4re In the case 41 butter and cheese, it's present acr4ss n4rth India, umbai and
K4lkata, and has plans t4 enter Bangal4re by year-end In UTH milk, it has entered umbai
and the milk-sh4rt areas 41 West Bengal and n4rth-east F4r ghee, alth4ugh the current 14cus
is the n4rthern regi4n, it has plans 14r a nati4nwide presence As 1ar as 4ther Dairy's n4n-
dairy pr4ducts are c4ncerned, edible-4il brand Dhara has already has nati4nwide presence
3. Product Differentiation
While 4ther Dairy still may n4t have a pr4duct p4rt14li4 as large as Amul, which is als4
expanding acr4ss the c4untry in a big way and is a much bigger player, it's d4ing its bit
4ther Dairy says the idea is n4t just t4 enter new markets, but t4 d4 well in th4se markets -
which mean bigger market shares in the di11erent pr4duct categ4ries in whichever market it
is present The drivers will be value created thr4ugh quality 41 the 411erings as well as
inn4vati4ns in pr4ducts This will, 41 c4urse, be backed by relevant marketing and
pr4m4ti4n campaigns 4ther Dairy are bringing in mass Indian 1lav4urs which are building
up in terms 41 abs4lute percentage 41 c4ntributi4n Their attempt is t4 make the taste
experience in ice creams as 1amiliar as p4ssible s4 as t4 increase c4nsumpti4n Take the case
41 curd It started 411 very sl4w but t4day, 4ther Dairy claims it's gr4wing at cl4se t4 60
per cent year-4n-year in Delhi Here again, the Indian 1lav4ur 14rmula seems t4 have
w4rked While curd 1r4m an NC player is pr4bably based 4n internati4nal 14rmulati4n,
they 14rmulated it t4 taste as cl4se t4 h4me-made curd as p4ssible I1 the 411ering 1its well
with the Indian c4nsumer, the resistance is l4wer and acceptance m4re
4. Smart Marketing
On the marketing 1r4nt, 4ther Dairy says it's trying t4 take its pr4duct campaigns and
c4mmunicati4ns t4 a higher plat14rm F4r instance, in the case 41 milk, the campaigns d4 n4t
talk ab4ut the 4bvi4us bene1its - milk is g44d 14r health, it has calcium and s4 4n - but rather
it targets children and are created ar4und ideas such as "The c4untry needs y4u, gr4w
1aster" As 1ar as pr4ducts such as butter, cheese and ice creams g4, the campaigns have
been created ar4und "taste" F4r butter again, the 14cus is 4n children Here, 4ther Dairy
has dared t4 g4 di11erent Since 60 per cent butter is c4nsumed by kids, the c4mpany wants
them t4 sit up and take n4tice 41 its butter akkhan Singh, a sturdy j4vial c4w (a cart44n
character) has been made its brand ambassad4r While 4ther Dairy has been carrying 4ut
sch44l pr4grammes - games and activities inv4lving akkhan Singh in Delhi, it has plans
t4 take such activities t4 umbai and K4lkata as well It als4 runs a gaming website 4n the
character t4 attract childrenIt's cheese 14r children again A c4uple 41 m4nths ag4, 4ther
Dairy carried 4ut a retail activity: "Cheese kha4 superher4 ban ja4", where kids buying
cheese at a retail 4utlet were invited 14r a ph4t4 4p - dressed as superher4s - thr4ugh
P4lar4id cameras; and the 1ramed ph4t4graph was presented t4 them The activity was
carried 4ut in ab4ut 150 4utlets in Delhi and umbai, with ab4ut 20,000-25,000 snaps being
taken Cheese was als4 s4mething that helped the c4mpany b4nd better with its retailers In

N4vember 2005, retailers in Delhi displayed banners pr4claiming, "Cheese ke saath bees ki
cheez," a pr4p4sal that said i1 a c4nsumer buys 4ther Dairy cheese, the retailer can 411er
him anything w4rth Rs 20 1r4m the sh4p - which w4rked better than 411ering s4mething 1ree
with the pr4duct, which the c4nsumer didn't even needs The exercise resulted in better ties
with retailers A p4sitive resp4nse made 4ther Dairy t4 repeat it in K4lkata as well
Clearly, 4ther Dairy has aggressive plans But, str4ng regi4nal brands and 4ther c4-
4peratives will c4ntinue t4 give it t4ugh c4mpetiti4n

SWOT Analysis


Strength

O The maj4r strength 41 4ther Dairy
is the di11erent variety 41 ilks and a
rec4gnized BRAND name

O The increasing demand 14r these

pr4ducts presents a great 4pp4rtunity
14r the 4ther Diary t4 increase and
scale up the pr4ducti4n

Weakness

O Scarce 4ther Dairy 4utlets

O Less margin given t4 the Outlet
4wners t4 match the existing
c4mpetit4rs
Opportunity

O There is a sc4pe 41 business as there
is a demand 14r dairy pr4ducts

O 4ther Dairy sh4uld 4pen m4re
4utlets t4 get the maximum
advantage 41 the demand

O Need t4 put m4re stress in the 1ace-
t4-1ace direct marketing t4 reach t4
the cust4mers

O The increasing demand 14r these
pr4ducts presents a great 4pp4rtunity
14r the 4ther Diary t4 increase and
scale up the pr4ducti4n
Threats

O Increasing c4mpetiti4n 1r4m the 4ther
brands

O Str4ng supply chain management by
the c4mpetit4rs

O Str4ng marketing strategy by
c4mpetit4rs by 411ering the disc4unt
c4up4ns t4 c4nsumers and pr4viding
healthy c4mmissi4ns t4 the retailers

Recommendation

1. Strategy for Strengthening Cooperative Business

O 4ther Dairy sh4uld recruit, train and m4tivate increasing numbers 41 w4men t4 w4rk
14r 4ther Dairy t4 achieve signi1icant impr4vements in dairy husbandry, as they
primarily sh4ulder animal husbandry related resp4nsibilities in rural India
O C4ns4lidati4n and gr4wth in milk and milk pr4duct marketing, pr4m4ting better equity
14r regi4nal c44perative brands and devel4ping quali1ied and skilled manp4wer
ducati4n 41 pr4ducer members, 4pini4n leaders and trained pr41essi4nals t4 be
expanded and strengthened
O mp4wer l4cal leaders, strengthen s4cieties and equip their sta11 and members with the
skills and in14rmati4n they need
O Persuade the State and Central G4vernments t4 rem4ve the shackles 4n c44perative
laws s4 dairy can c4mpete 4n equal terms with 4ther 14rms 41 enterprise

2. Strategy for Production Enhancement

O Impr4ve the pr4ducti4n p4tential 41 indigen4us breeds 41 cattle such as Sahiwal, Gir,
Rathi and Kankrej and breeds 41 bu11al4 such as urrah, ehsana and Ja11arbadi
thr4ugh appr4priate selecti4n pr4gramme Cr4ss n4ndescript cattle with H4lestein
Friesian in areas with adequate 1eed and 14dder and with Jersey in res4urce p44r areas
O Increase the pr4ducti4n and use 41 high quality 1eed appr4priate t4 l4cal c4nditi4ns
Increase pr4ducti4n and availability 41 green and ensiled 14dder
O nc4urage uni4ns, NGOs and c44peratives t4 put c4mm4n pr4perty area under
impr4ved pasture and 14dder tree xpand 1irst aid c4verage thr4ugh village level
s4cieties Increase vaccinati4n 41 animals against HS, BQ and FD
O Devel4p astitis and Brucell4sis c4ntr4l strategies



3. Strategy for Assuring Quality

O Identi1y and address quality related pr4blems at every stage 1r4m the pr4ducer at the
village c44perative, t4 the dairy plant and the pr4cess 41 1inal delivery t4 the c4nsumer

O Facilitate impr4vement 41 hygiene, sanitati4n, 144d sa1ety and 4perating e11iciency in

the dairy plants and sensitize dairy pers4nnel t4 pr4duct quality aspects as per
internati4nal standards

4. Strategy for Creating an Information and Development Research

O Link large c44peratives, Uni4ns, Federati4ns and NDDB in a nati4nal netw4rk that
c4llects, adds value and disseminates in14rmati4n
O nsure availability 41 analytical in14rmati4n 14r P4licy Planning and Decisi4n Supp4rt
4ther Dairy has di11erent plans 14r its dairy business, which includes 1lav4ured milk,
lassi, curd, butter and cheese besides its t4ned milks ach 41 these pr4ducts has a
regi4nal str4ngh4ld, with a shel1 li1e 41 10 days H4wever, the c4mpany is l44king at
alternatives that w4uld increase the shel1 li1e and all4w the pr4ducts t4 be distributed in
4ther parts 41 the c4untry as well In the ice cream segment, the c4mpany has been able
t4 capture 15 per cent 41 the market, and h4pes t4 increase it t4 20 per cent by 2008 On
DIL's marketing strategies while the c4mpany d4es a l4t 41 inn4vative advertising
and 4n 1ield activities, it spends 34 per cent 41 the turn4ver 4n marketing All categ4ries
were experiencing a gr4wth 41 30-40 per annum, and that the turn4ver was gr4wing
at 15-17 every year 4ther Dairy had cl4cked a turn4ver 41 Rs 1,800 cr4re in 2005-
06 and was l44king at cl4cking Rs 2,200 cr4re in 2006-07