Friday, May 4, 2012

SWOT ANALYSIS OF INDIAN DAIRY



India Dairy industry profile

India is the world leader in milk production with total volume of 121.8 million tons. Driven by steady population growth and rising income, milk consumption continues to rise in India. Dairy market is currently growing at an annual growth rate of around 7 per cent in volume terms. The market size of Indian dairy industry stands at around US$ 45 billion.

Since India’s population is predominantly vegetarian; milk serves as an important part of daily diet. Indians use milk in various preparations such as in brewing tea and coffee, in making yogurt or curd and in preparing many Indian dishes. For most households, milk is also a popular beverage due to its nutritional value.

In India, rural households consume almost 50 percent of total milk production. The remaining 50 percent is sold in the domestic market. Of the share of milk sold in the domestic market, almost 50 percent is consumed in fluid form, 35 percent is consumed as traditional products (cheese, yoghurt and milk based sweets), and 15 percent is consumed for the production of butter, ghee, milk powder and other processed dairy products (including baby foods, ice cream, whey powder, casein, and milk albumin).

Most dairy products are consumed in the fresh form and only a small quantity is processed for value addition. In recent years, however, the market for branded processed food products has expanded. Although only around 2 per cent food is processed in India, still the highest processing happens in the dairy sector, where 35 per cent of the total produce is processed, of which only 13 per cent is processed by the organised sector.

Key facts
ñ 65 per cent of the milk is sold in “loose” form
ñ Only 5 per cent of the milk is sold through retail chains
ñ 70 per cent is delivered to the homes by ‘milk agents’
ñ Carton milk or packaged milk has been growing at 24 per cent annually.
ñ Most branded FMCG companies are keen on launching flavored dairy products whose market size is pegged at US$ 166 million



Porter competitive analysis

ñ Threat of competition is high as there are no entry barriers and consequently there are many brands and local players making up the competitive rivalry
ñ Threat of substitutes is low as milk is an essential item for beverages like tea, coffee etc. Also traditional consumption habits make milk a favourite with most households in India
ñ  Bargaining power of suppliers is low because suppliers mainly comprise rural households and small co-operatives
ñ  Bargaining power of consumers is high because of competition in the organized sector and large unorganized market in rural areas

Main Players

Milk products - Amul, Britannia, Vijaya, Verka and Vadilal

Cheese products- Amul, Britannia, Dabur (Le Bon) are the leading players. Other prominent players include Verka, Nandini, Vijaya and Vadilal

Dairy Whiteners - Nestle, Amul, Britannia, Dynamix Diary, Sterling Agro, Haryana Milk Foods, Mohan Food, Modern Dairy, K Dairy

Regulatory changes
ñ Dairy sector was de-licensed in 1991
ñ No industrial license is required fro dairy industry
ñ Foreign equity participation permitted to the extent of 51 per cent in dairy processing sector
ñ Excise duty on dairy machinery has been fully waived off

Key legislations:

·         Milk and Milk Products Order 1992: With following controls
        Collection areas/milk sheds specified
        Processing capacity fixed
·         Revised MMPO in 2002: Controls stand withdrawn 
·         The production, distribution and supply of milk products are controlled by the Milk and Milk Products Order, 1992. The order sets sanitary requirements for dairies, machinery, and premises, and includes quality control, certification, packing, marking and labeling standards for milk and milk products
·         The Infant Milk Substitutes, Feeding Bottles and Infant Foods (Regulation of Production, Supply and Distribution) Act, 1992 and Rules 1993







1 comment:

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