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India ranked first with 78 million tons of milk production in 1999-2000. The milk
industry provides livelihood to 70 million dairy farmers. With 204 million cows and 84
million buffaloes, it has the largest population of cattle in the world. India is the lowest
cost producer per liter of milk in the world.
In India, the milk yield per animal was very low at around 1.5 liters per day. The main
reasons being the lack of use of scientific practices in milking; inadequate availability
of fodder in all seasons; unavailability of veterinary health services.
CHEESE MARKET
In India, the palate is broadly divided into the north and the south. While north is more
exposed to cheese through western food outlets such as Pizza Chains and McDonalds,
the south is still not exposed to cheese as a new food item.
It is mainly consumed in
Pizza Consumption in India.
metropolitan cities, which
accounts for over 60 percent of the
consumption. With Mumbai
Mumbai
consuming about 30 percent,
37% 30% Delhi
primarily by the individual and
Kolkata
household consumption, whereas
Chennai
Delhi consumes about 20 percent, 6%
7% 20%
Rest of India
primarily by large hotel chains.
Calcutta and Chennai consumes
about 7 percent and 6 percent
respectively. Per capita consumption of cheese by household was 2.4 kilograms per
annum as compared to over 20 kilograms in the United States.
International brands such as Dutch Gouda, French Camembert, and Italian Parmesan
have begun to enter the market. Shimla Dairy Products made local versions of all these
cheeses, except for Camembert. For that, Shimla Dairy Products imported the started
culture and other materials from Australia and France.
The branded cheese market was estimated to be 9000 tons per annum which was valued
at 1.8 billion rupees.
1
COMPETITION
Dynamix Group - Manufactures for Britania.
It has a processing capacity of 500,00 liters of Cow milk per day. It has certified by
GMP, HACCP, ISO 9002. It boasts world-class quality standards with in-house R&D
department. It is also the current supplier to McDonalds and other Pizza chains.
Shimla Dairy
It is a 30-year-old family business which later turned into a limited company. It has a
capacity of processing 10,000 liters per day.
30
25
20
20
15
15 12
10
10
2
A Study on Shimla Dairy
It started as a 30-year-old family business, which later turned into a limited company.
Mr. Dinesh Khanna is the present Technical Director of the company who has studied
Dairy Technology for two years. The company is licensed under Government of India
as a food manufacturer, and now they are working towards HACCP certification and
ISO certification.
It has two plants which are 120 kilometers from each other. The first is located at an
altitude of 5500 feet, while the other was at a lower elevation. Both the plants had a
total cold storage facility of 12 tons. The Shimla plant had a capacity of 8000 liters
throughput per day, while the Kiarighat plant had a capacity of 2000 liters. There are
30 employees working in two shifts around the clock through the year.
Production
The facility produced 29 varieties of cheese, with the price ranging from 125 rupees per
kilogram to 1000 rupees per kilogram. Peak production season is during the monsoon,
and lean production months occurred when there was relatively lesser rain. The facility
produced 22 tons of cheese per month during the peak season. Out of 22 tons, 17 tons
is sold and the remaining stock is stored in a cold storage which could store up to 20
tons of cheese.
The production margin was 20 percent for low cost cheese and 15 percent for high end
cheese.
3
Distribution System
Retailers:
17% 15%
2% Super Markets
Small Shops
5 Star Hotels
20%
Mid-Low End Hotels
Restaurants
41%
5%
Pizza Chains
Finance:
Pricing:
o High End Margin - 20 %
o Low End Margin - 15 %
Marketing:
Flyers, Brochures.
4
Which area should it focus?
At present the focus should be targeted towards Low End Cheese. As the product is
relatively new and the consumers are not aware and used-to to the food habit, it is
important to penetrate the market and change the food habit.
It can be done by increasing the supply to fast food chains such as McDonalds and
Pizza chains, as they are penetrating the urban and sub-urban areas as well. The cheese
will act as a compliment product to pizza.
Also, region wise, the north is more exposed to the cheese than the south. Marketing
should emphasize on spreading aware in cities other than metropolitan cities.
With the increase in demand, the production facility should be expanded as Dairy sector
is projected to triple its market in next 10 years.
Also, Army is a big institutional customer but that would require Shimla Dairy to scale
up its production substantially. Through this, better pricing can also be achieved.
5
How could the company market its products better? Can
it create more brand awareness?
Yes, as India is a huge market and most of the sectors are still untapped, it is of the
utmost importance to create more brand awareness. Marketing team should introduce
Ad campaigns like Amul.
They can make the customers more aware of Western Food Habits by marketing
selected cheese types to unaware customers throughout the nation for better product
consolidation and mapping.
Promote and market low-end cheese in rural areas and introduce high end cheese in
metros.