Food

SUPERMARKET

B U S I N E S S

Manufacturers are finding new reasons to add flavour to milk.

By Juhi Sharma

alue-addition has not only helped manufacturers in tightening their grip in the healthy beverage category but has also created enough shelf space for other corporate giants to explore the market potential. Can milk-based beverages be next high growth segment?
AHEAD OF WHATS NEXT

Innovation has always played a key role in expansion and creation of any category the innovation in processing coupled with innovation in packaging of raw milk, paved way for an alternate healthy beverage segment. Today the packaged milk and milk-based beverage segment offers everything from plain pasteurised variants of milk such as toned milk, double toned milk,
WWW.PROGRESSIVEGROCER.COM

54 PROGRESSIVE GROCER JANUARY 2009

skimmed milk milk, ultra-high-temperature (UHT) p pasteurised milk, full cream milk, s standardised milk to fortified milk a and slew of ready-todrink (RTD) milk-based beverages flavoured mi milk, milk shakes, cold coffees, butter milk, yoghurt based d l Indian d beverages lassi and traditional thandai, herbal milk drinks, milkbased sports drinks and probiotic milks. India is the largest producer of milk and as per National Dairy Development Board (NDDB)s estimation, the country produced 102 million MT of milk in 2007-08, with annual value worth Rs 1,232 billion. It has been estimated that 46 percent of the milk is consumed in a liquid form. Going by the market trend, we find that Indian consumers slowly but surely opting for healthier beverage alternatives has resulted in an estimated Rs 400 crore ready to drink milk-based beverage market. In urban areas a significant number of households today are guzzling up packaged milk, with most Indians living in rural areas still preferring to consume fresh non-pasteurised loose milk delivered at the door step from a small neighbourhood dairy farm. This non-pasteurised milk is first boiled at home before being consuming in any form. According to a study conducted by the market research firm IMRB,
WWW.PROGRESSIVEGROCER.COM

the p packaged milk sales in the urban areas witnessed an increase of 13 percent between July 2 2007 and June 2008. Rising awareness about h hygiene and adulteration of loose milk has led to a shift among consumers in urban areas to packaged milk. Also, the furore over pesticide content in carbonates in 2003 and again in 2006 has influenced consumers to opt for healthier milk-based beverages. Endorsing this trend, Kiyoshi Oike, managing director, Yakult Danone India (YDI) Private Limited, remarks, There is a greater inclination to self care and a greater awareness about the f functional benefits of dairy ba based beverages. There is also a grea greater willingness to pay a premium for health beverages. As Indians become more health conscious, milk-based products are finding more takers than juices or carbonated drinks. The segment overview suggests that milk-based beverages have further diversified with the entry of new players and brands, offering more choices. During the last couple of years value addition in the segment has been complemented by the entry of international flavours such as mocha, hazelnut etc. Many flavoured milk manufacturers have banked upon introducing ready to drink traditional Indian beverages such as thandai, lassi, kesar-pista flavoured milk etc. Probiotic milk is a new entrant in this segment. A fermented milk product further enhanced by supplementation of probiotic bacteria such as Lactobacillus and Bifidobacterim species, probiotic milk generally refers to a living microbial supplement, which beneficially affects the host by improving its intestinal microbial balance. Fortified milk, another recent debutant, adds nutrient components such as Omega-3 etc. to base milk. Innovation in processing alone especially in the case of perishable milk wouldnt have been accessible without innovation in packaging. Today, packaged milk is being retailed in polythene packs, Tetra Pak

cartons, with milk-based beverages being packed in glass bottles, easyto-open metal cans and Tetra Pak cartons. In October 2008, Tetra Pak announced to invest around approximately Rs 5.7 billion to build a new state-of-the-art packaging material manufacturing plant in India to meet growing demand of the Indian dairy and beverage industries. The new plant will have an initial capacity of four billion standard (1-litre) packages per year. The capacity of Tetra Paks existing plant in Pune is 1.8 billion standard packages. Todays plant, which started commercial operations in 1997, currently produces packaging material for Tetra Fino Aseptic, Tetra Classic Aseptic and Tetra Brik Aseptic packages. Driving brands The segment is fragmented amongst a number of regional players, supermarket private labels and a few national brands owned by major dairy cooperatives, multinational and private companies. Following are some of the chief national players. Amul, which is considered to be the category leader with approximately 70-75 percent market share, pioneered in the year 1946. It is the flagship brand of Gujarat Cooperative Milk Marketing Federation (GCMMF), Indias largest milk products marketing organisation and a state level apex body of milk cooperatives in Gujarat. GCMMF has total milk handling capacity of 10.21 million litres per day. Amuls products are available across the country at various retail formats and through Amul parlours created in Ahmedabad, Bangalore, Baroda, Delhi, Mumbai, Hyderabad and Surat. Amuls large milk portfolio offers: Fresh milk range Amul Taaza toned milk with three percent fat, Amul Gold full cream milk with six percent

fat, Amul Shakti standardised milk with 4.5 percent fat, Amul Slim & trim double toned milk containing 1.5 percent fat, Amul Saathi skimmed milk and Amul cow milk. All these milk variants are available in polythene packs. Ultra-high-temperature (UHT) pasteurised milk Amul Shakti three percent fat milk, Amul Taaza 1.5 percent fat milk, Amul Gold 4.5 percent fat milk, Amul Lite Slimn-Trim milk with zero percent fat, Amul Shakti toned milk. These variants are available in Tetra Paks. Milk-based beverages Amul Kool flavoured milk available in variants of mango, strawberry, saffron, cardamom, rose and chocolate, Amul Kool Cafe, Amul Masti spiced butter milk, Amul lassi, Amul Thandai and Amul Stamina a sports and fitness drink in lemon and orange flavours. Amuls milk-based beverages are available in glass bottles, Tetra Pak bricks and cans in varying sizes. Amuls sports drink Stamina is an effort to harness the untapped sports and fitness drink market in India. Currently, Amul is the only player in this whey-based drink category. Mother Dairy Delhi was set up in 1974 under the legendary Operation Flood programme. It is now a wholly owned company of NDDB.

AHEAD OF WHATS NEXT

JANUARY 2009

PROGRESSIVE GROCER 55

Mother Dairy markets milk to most parts of the country through its exclusive Mother Dairy outlets and other retail formats. Its milk and milk-based beverage range offers: Milk full cream milk, standardised milk, toned milk, double toned milk, skimmed milk and cow milk, all available in polythene packs. UHT milk toned and double toned milk in Tetra Pak cartons. Milk-based beverages flavoured milk made from double toned milk, available in kesar-elaichi, chocolate, cold coffee and vanilla flavours under the brand Chillz, and lassi in sweet and salted variants. Mother Dairys milk-based beverages are available in glass bottles and Tetra wedge aseptic packs. Probiotic milk Mother Dairys b-Activ lassi is made up of the unique probiotic culture Bifidobacterium BB-12. The unique fermentation process and the availability of Bifidobacterium BB-12 makes b-Activ a healthy complement to the regular diet, mainly enhancing the bodys natural digestive system and nutrient absorption capability. It is available in an easy-to-use plastic cup. Nutrifit is the probiotic milk from Mother Dairy. It contains billions of LA5 friendly bacteria, which strengthen the bodys defenses against infections and diseases over time. It is available in mango and strawberry flavours in attractive plastic bottles. In Delhi and NCR Mother Dairy also provides homogenised milk fortified with vitamin-A through a bulk vending token milk booth system. Another national player in the segment is Nestle India, which is a subsidiary of Nestle S.A. of Switzerland. Nestle has over 135 years of dairy expertise and Nestle as an Indian subsidiary incepted in the year 1961 currently offers: Milk Nestle toned milk available in all metros, Nestle Slim milk with fat content of less than 0.5 percent. Fortified milk Nestles Nesvita Pro-heart is everyday milk with Omega 3 heart-friendly nutrients scientifically known to help manage cholesterol. It is available in select metros. Milk-based beverages Nestles Milkmaid Funshakes, a range of
56 PROGRESSIVE GROCER JANUARY 2009

great tasting and healthy dairy based drinks, available in five exciting flavours chocolate, mango, strawberry, banana and kaesar elaichi. This product is also being retailed in select cities. Nestles entire milk and milkbased beverage range is available in Tetra Pak briks. Kishore Biyani-promoted Future Group has recently expanded its product portfolio under the brand Sach, co-created by cricket icon Sachin Tendulkar. Under the brand, company offers tetra pack milk products along with other products. Products under the Sach brand are not for mass distribution and they would only be merchandise through companys retail stores. Also since currently the brand is being test marketed, it is not available panIndia. Besides these national brands, there are scores of regional players dominating the segment in specific regions. In North India and specifically in Delhi are the following prominent players: Delhi Milk Scheme (DMS) DMS was set up in 1959 with the primary objective of supplying wholesome milk to citizens of Delhi at reasonable prices, as well as for providing remunerative prices to milk producers. Today it

manufactures and supplies a range of milk and flavoured milk variants to its consumers. It has been mainly procuring raw/fresh milk from the State Dairy Federations of the neighbouring states and some quantity of milk from the co-operative societies to augment the supplies. Paras Dairy An organisation involved in quality milk collection practices since 1960, it has a strong rural procurement network comprising more than 3,000 villages across western Uttar Pradesh in North India. It is considered to be a largest marketer of polypack milk in Delhi. It currently offers array of products in the category. Global leader in probiotic products Y Yakult Honsha of Japan enter into a 50:50 joint venture tered ag agreement with the dairy major G Group Danone of France to form Yakult Danone India (YDI) Private Limited and launched Yakult probiotic drink last year. Yakult is the only probiotic drink that contains more than 6.5 billion beneficial bacteria Lactobacillus casei strain Shirota, named after its founder Dr Minoru Shirota in a small 65 ml bottle. Besides Delhi, it is available in most parts of North India. Amrit Food, a division of Amrit Corp Limited, was established in 1991, and is recognised as one of the leading producers of variants of pasteurised and UHT milk, along with an exciting range of flavoured milk. Amrit Corp Ltd is a major player in

the category in Delhi and other parts of North India. In 2008, Amrit Food launched the Gagan Caf milk-based beverage range, offering four international coffee flavours hazelnut, caramel, vanilla and cappuccino in attractive disposable bottles. Gopaljee Group, which has three dairy plants in the country, began its journey in the year 1989. It currently offers variants of milk and flavoured milk, along with other dairy products to consumers in Delhi and North India. Moving on to Kolkata, one finds that apart from the national dairy brands, Metro Dairy is the only major regional player in the segment. Metro Dairy offers variants of packaged milk along with other dairy products. From the south, specifically Bangalore, following are leading regional players dominating the market: Karnataka Cooperative Milk Producers Federation Limited (KMF), the apex body in Karnataka representing dairy farmers co-operatives. It is the third largest dairy co-operative amongst all dairy cooperatives in the country. In South India it ranks first in terms of procurement as well as sales. One of the core functions of the Federation is the marketing of milk and milk products. KMFs brand Nandini is a household name for pure and fresh milk and milk products in the region. Tirumala Milk Products (P) Ltd, which was established in the year 1998, is centred at the depot in Gudur, Andhra Pradesh. Tirumala produces a variety of milk and milkbased beverages and other milkbased products.
WWW.PROGRESSIVEGROCER.COM

AHEAD OF WHATS NEXT

The Heritage Group, founded in 1992 by Sri Nara Chandra Babu Naidu, is one of the fastest growing private sector enterprises in India, with significant presence in dairy sector. Heritages milk products have market presence in Andhra Pradesh, Karnataka, Kerala, Tamil Nadu and Maharastra and its retail stores @ Fresh across Bangalore, Chennai and Hyderabad. Tamilnadu Co-operative Milk Producers Federation Limited, popularly known as Aavin, was registered in the state in February 1981. Some of the commercial activities of Aavin are milk procurement, processing, chilling, packing and sale of milk and milk-based beverages to the consumers. The Nilgiri Dairy Farm Ltd is another leading player in dairy sector offering milk, milk-based and other value added products. Hatsun Agro Product Ltd is a private sector ruler in dairy business in South India. It offers an array of milk variants under the brands Arokya, Komatha and Santosa. MTR Foods Limited is amongst the top processed food manufacturers in India. It offers a range of flavoured milk in the category. Kodai Dairy Products (P) Ltd. is another dominant player, which marked 35th year in business in 2008, as a local family-owned Dairy in Kodaikanal. Srikrishna Group, which opened the first private sector dairy in Karnataka in 1989, is engaged in procurement, processing

and distribution of milk in North and South Kanara districts of Karnataka. There are a number of regional manufacturers and marketers in West India as well. Primary among them are Kolhapur District Cooperative Milk Producers Union Ltd, which was established on 16th March 1963 under the Co-operative Act. The dairy co-operative introduced its milk and wide range of dairy products into the market under a now-popular brand Gokul. Parag Milk Foods Pvt. Ltd., which sells milk and other products under the brand Parag and Gowardhan, and Mahananda Dairy and two of the other popular distributors. Brand promotion For any kind innovation to reach consumers, awareness and information needed to be disseminated about availability. For instance, Mother Dairy has always banked intelligently on consumer specific branding activities by employing Above the Line promotional tools T.V commercials, print ads, hoardings at various traffic intersections and posters on the walls of colleges and other places. In fact, the Nutrifit Campaign 2008 by Mother Dairy was adjudged as the best campaign in the nutri-marketing category at the International Dairy Federation Marketing awards 2008. Mother Dairys previous low fat, double toned milk commercial depicted its essential consumption for health conscious people sweating it out in gyms and fitness centres, while its full cream milk commercial displayed the importance of milk for growing children. The companys toned milk commercial showed a pregnant woman and elaborated on toned milks balanced proportion of cream content, which is necessary for expectant mothers.

Rival Amul has also been active in endorsing its brand portfolio through television, print and other activities. For instance, one of Amuls milk print campaigns carries the tagline Have a little of natures goodness every morning. Another campaign displays milk being poured into a glass with the message Containing lush green meadow, early morning dew and sunrises. Amuls sports drink, Stamina, has been endorsed by Apollo Hospitals Group. Besides, Amul sponsored an event called Harmony a marathon for senior citizens in Jawahar Lal Nehru Stadium, Delhi. Apart from these GCMMF has been involved in organising events, contests and sponsoring TV shows as a brand promoting activity. In case of Future Groups Sach Tetra Pak milk, its the celebrity cricketer, Sachin Tendulkars association with the brand and his photo and signature on the carton serving as the promotion campaign. In order to promote its probiotic drink brand, Yalkult introduced a unique home delivery system through sales representatives referred to as Yakult Ladies. Yalkults unique marketing strategy has played a critical role in building awareness. Across the world Yakult Ladies go door-todoor and help the consumers understand the health benefits of the product. In addition the company distributed Yakult throughout traditional and modern retail outlets. Commenting on the importance of promotional activities, Oike says, Since probiotic is a relatively new category, a fair amount of money is needed for advertising and promotion activities to build awareness. Not many people know that reputed probiotic brands contain billions of beneficial bacteria that reach the intestines alive to impart various health benefits.

Significant and intensive promotional activities are especially important for spreading awareness about probiotic milk drinks and fortified milk, as they are new entrants. For Tetra Pak milk, its comparatively higher price point may have restricted faster growth, which also can be addressed by spreading awareness and educating people about its special benefits. Bottlenecks Even though India is the largest producer of milk in the world, as for other perishables and processed foods in the country, the milk and milk-based beverage segment is also a victim of inefficient supply chains, cold storage and distribution networks. Supporting this view, Oike comments, The biggest hurdle today is the shortage of cold storage vans and trucks and the lack of cold storage facilities in retail. Even the organised players often turn off the cold storage units at night, making dairy products vulnerable. Ideally we need to improve the cold storage infrastructure, so that it is at par with international standards.
WWW.PROGRESSIVEGROCER.COM

58 PROGRESSIVE GROCER JANUARY 2009

AHEAD OF WHATS NEXT

Variants Amul
Amul Tazza milk Amul Tazza toned milk (NER) Amul Shakti toned milk Amul Gold milk Amul Gold Milk (NER) Amul Lite Slim-n-Trim milk Amul Calci+ milk Amul Kool avoured milk (kesar, elaichi, rose) Amul Kool avoured milk (kesar, elaichi, rose, chocolate) Amul Kool avoured milk (mango, strawberry) Amul Kool kesar avoured milk Amul Kool kesar avoured milk Amul Kool Cafe Amul Kool Cafe Amul Kool Cafe Amul Kool Millk Shaake (mango, strawberry, banana, badam) Amul Kool Millk Shaake (mango, strwaberry, banana) Amul Masti spiced butter milk Amul Masti spiced butter milk Amul Lassi(rose) Amul Lassi (rose) Amul Stamina sports drink

Packaging
1 litre Tetra Pak brik 1 litre Tetra Pak brik 1 litre Tetra Pak brik 1 litre Tetra Pak brik 1 litre Tetra Pak brik 1 litre Tetra Pak brik 1 litre Tetra Pak brik 200ml bottle 200ml Tetra Pak pack 200 ml Tetra Pak 250 ml can 1 litre Tetra Pak brik 200 ml glass bottle 250 ml can 200 ml Tetra Pak brik 220 ml can 180 ml Tetra Pak brik 200ml Tetra Pak brik8 1 litre Tetra Pak brik 200 ml Tetra Pak brik l litre Tetra Pak brik 200 ml Tetra Pak brik 65 ml plastic bottle pack of 5 bottles 100 ml plastic bottle 1litre Tetra Pak brik 1litre Tetra Pak brik 180 ml glass bottles

Price (Rs)
32 35 33 35 36 38 35 12 12 15 22 50 15 22 15 22 15

30 10 35 12 10 0 10 33 32 12

Yakult
Probiotic milk Probiotic milk

etc.; the ones targeting adults comprise amaretto and Irish cream variants. Most of these also come in options such as fat-free, low-fat, reduced fat. These flavours are also fortified with vitamin D and phosphorus. There are also plenty of organic milk brands to be found. In Europe, dairy is the biggest area for human food applications and probiotics are set to reach USD137.9 million in 2010, with the US market projected to reach USD 394 million, according to Frost & Sullivan, Oike points out. In India the category is in its nascent stages. For branded players, a current area of concern is the adulteration of packaged milk and milk products. Numerous cases of the use of harmful synthetic milk white liquid made from fertilisers and other chemical substances by some greedy dairy owners has already been highlighted across Indian media. In July 2007, law enforcement officers raided one such factory in Uttar Pradesh and confiscated 1,000 litres of fake milk. Way to go Success in the category depends on developing cost-effective and efficient procurement, storage and distribution network and investing in advanced technology-driven processing equipment. That would support more creative innovation in the marketplace. The flavoured milk segment has plenty of room to accommodate more flavours; probiotic milk needs proliferation and milk can be fortified with more nutrients to deepen the category. The wheybased milk category, which currently has only Amul as a brand, also offers a ground full of promise. According to Oike, milk fortified with extra calcium and iron will become popular in times to come. Also, leveraging the intrinsic appeal of traditional Indian ingredients by delivering them in a convenient, hygienic and ready-to-drink form can create a whole new category that will derive its strength from trusted ethnic ingredients. Probiotic beverages will also flourish because of their associated health benefits, he projects. With FMCG majors such as Chennai-based CavinKare Pvt.

Mother Dairy
Nutrit probiotic milk Toned milk Toned milk (Assam & NER) Flavoured milk (Kessar-elaichi, chocolate, cold coffee) Flavoured milk (Kessar-elaichi, chocolate, cold coffee) Flavoured milk (Vanilla)

250 ml Tetra wedge pack 12 500 ml Tetra wedge pack 20 1 litre Tetra Pak carton 1 litre Tetra Pak brik 1 litre polypack 1 litre polypack 1 litre polypack 36 42 26 21 18 25 22 20 20 25

Nestle India
Toned milk Future Group Sach milk

DMS
Full cream milk Toned milk Double toned milk

MTR
Badam milk ( natural almond akes, kesar and 250 ml can cardamom) Chocolate Drink Thandai Herbal drink Health drink 250 ml can 250 ml can 250 ml can 250 ml can

Though innovations and developments have been emerging, the value added milk segment in the country lags behind other top milk
WWW.PROGRESSIVEGROCER.COM

producing countries. For instance, in USA, some of the flavoured milk options targeting children include chocolate malt, cookies and cream

Ltd, which plans to enter the dairy business by acquiring around 5060 small- and medium-sized dairies across the country, starting with the four southern states entering the fray, innovation can be expected to gather pace. C. K. Ranganathan, chairman and MD of CavinKare says, We are known for being innovative, and we will do so in this segment too. There is huge potential in this segment but we also recognise the fact that the margins are thinner than when compared with products in the personal care or skin care space. Soft drink-majors Coca-Cola and PepsiCo have expressed plans to expand into milk-based beverages in India in the days to come. In the past, on gauging a shift from fizzy drinks among US consumers, PepsiCo launched a chocolate milk under the SoBe brand. The companys joint venture with Starbucks rolled out Frapuccino, a refrigerated milk coffee beverage. Coca-Cola, on the other hand, ventured with Nestle USAs beverages division to develop Choglit, a skim milk-based chocolate-flavoured drink. Some day in the future, such collaborations may also take off in the Indian retail landscape. Among retailers that are looking at entering the segment as a route to integrate backwards is Reliance Retail, which has had a national pilot launch of its milk brand in Hyderabad, initially for test marketing. Reliance plans to roll out the brand across the country in a phased manner. The company is believed to be readying to launch three variants of liquid milk family milk, low fat and whole milk, along with other value added dairy products.
JANUARY 2009

AHEAD OF WHATS NEXT

PROGRESSIVE GROCER 59