India, the milk bowl of the world
Dairy industry plays an important role in the socio-economic development of India generating huge rural employment and providing cheap nutritional food to a vast population. The Indian dairy industry is growing rapidly, trying to keep pace with the galloping progress around the world. Currently, India is the world’s largest milk producer, accounting for more than 13% of world’s total milk production. In the last decade or so, the dairy boom has been most prominent in Asia, led by India and China, where increased prosperity and rapid growth of the middle-class has been triggering a significant rise in consumption.
Dairy sector growth
India is not only one of the largest producers of dairy products, but also the largest consumer. The consumption of dairy products has been growing exponentially as they provide rich nutrition to millions of Indians. For a large vegetarian population, it is the only acceptable source of animal protein. The rising economic prowess of India coupled with the growing consciousness of vegetarianism is expected to spur a huge change in how people consume milk in India, benefiting organised dairy companies present in the country. Currently, 37% of the milk produced in India is being utilised for processing. Of this, the organised dairy industry accounts for 15% and the unorganised sector accounts for 22%. The remaining 67% is not being processed and is either consumed at the farm level, or is sold as fresh, non-pasteurised milk through unorganised channel. In most of the countries in the world, the proportion of milk delivered to the dairies is over 90%. The trends are now changing fast in India too and it is expected that the processing of milk on organised scale will increase sharply like in developed countries.
Triple production
In the next 10 years, India’s dairy sector is expected to triple its production in view of expanding potential for export to Europe and the West. By 2015, the urban market for milk products is expected to grow at an accelerated pace of around 33% per annum to around Rs 43,500 crore. 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 Rs 7,00,000 mn. Of the total milk distributed jointly by the organised and unorganised sectors, approximately 46 per cent of the milk is consumed in fluid form and the rest is processed into various milk products such as curd, butter, yogurt, milk powder, etc.
Dairy products segment offers a high potential for value addition - the level of processing value-add, at 37 per cent, is amongst the highest in the food processing industry. The growth of dairy market can be attributed to favourable government initiatives such as excise duty of 16 per cent on dairy processing machinery fully waived for promotion of dairy processing, foreign equity participation permitted to the extent of 51 per cent in dairy processing sector, de-reservation of many segments like ice cream and ghee from small-scale industries, exports of certain milk-based products freely allowed provided these units comply with the compulsory inspection requirements of the National Dairy Development Board (NDDB), Export Inspection Council, etc.
The emergence of a significant middle-class, urbanisation and the expansion of modern shopping habits by busy, health-conscious and well-informed consumers is raising the consumption of packaged milk in India. Economic growth is buoying the purchasing power of Asia's middle-class, which is set to fuel demand for healthy packaged products in supermarkets and convenience stores from Shanghai to Mumbai. The changing demographics are changing the way people are consuming dairy products. The burgeoning middle-class is driving demand for new types of liquid dairy products in both developing and developed markets. Increasingly, consumers are opting for ready-to-serve dairy products which ride piggyback on the fast food revolution sweeping the urban India.
Urbanisation impact
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 20th 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 organised sector both cooperative and private and the traditional sector cater to this market. Changing demographics will have an impact on the types of dairy products people consume and how they consume them, providing new growth opportunities for the diary industry.
The global opportunities available to the Indian dairy industry arise primarily out of availability of a large quantity of competitively priced milk. Most of the traditional health and wellness products sold through the dairy sector are represented by processed dairy products such as malt beverages and infant nutritional products. Growing and organised retail penetration is expected to aid the growth of the diary market in India. The visible trends are that the consumption of milk products is on the rise. While it is growing at about 1-1.2% elsewhere in the developed world, India and China are beating these trends. A number of categories which are highly dependent on organised retail like frozen food products are expected to witness significant growth in the years ahead.
Products
Nearly 45% of milk produced in the country is consumed in the liquid form and the balance is converted into various milk products such as ghee, curd, sweetmeats, milk powder and cheese. The milk processed in the organised sector, though growing steadily thanks mainly to increasing demand of packed milk and introduction of new products such as packed curd, UHT milk, etc., accounts for less than 20% of the milk production today. In recent years, however, a number of other health and wellness products such as probiotics and vitamin fortified dairy products have been launched with a considerable amount of success. Consumers are becoming more interested in incorporating healthy foods into their diet such as yoghurt for instance. Organic products including organic milk are likely to see strong development, generally targeting affluent urban consumers.
Today, majority of consumers are willing to make a switchover from plain to value- added dairy products even if they had to pay a premium price for the latter. An increasing urbanisation and working women will increase the demand for safe, convenient and ready-to-drink milk in India. With organic milk being safe and ready-to- drink without the need of boiling, its popularity among urban households will increase significantly in the near future.
Packaging
However, the key to building brands in dairy is an effective cold chain distribution and a wider portfolio of products to make it sustainable. The technology for packaging products and increasing their shelf life is being developed and adopted rapidly. Milk is one product which is sold in four different types of packaging with each type further having different designs and forms. Advances in packaging technology have not only improved the shelf life of milk products but also significantly reduced the cost of packaging. Technologies for primary processing viz. refrigerated chilling centres, compact milk chilling units etc. are available in the country. The processing of liquid milk is largely done by pasteurisation whereas advanced technologies like Ultra High Temperature (UHT) treatment and aseptic packaging, Modified Atmosphere Packaging (MAP), bacteriocin usage, high pressure processing.
That said, the quality of milk leaves much to be desired. Often, milk is adulterated in order to meet the ever increasing demand and mothers have been worried about the quality of milk they have been sourcing. In a survey, the Indian Council of Medical Research which collected milk samples across the country over a period of seven years found that milk was adulterated. If the milk that is being given to children is to be made healthier and more nutritious, switching to organic milk is the only option. Consumption of organic milk is crucial as it is minimally processed and keeps the very nutrition intact. Going forward, the biggest challenges are productivity and quality. If these are addressed, the industry is bound to grow as the consumer gets a product that he considers as value for money. Improved practices to ensure quality of milk would from farm to home.
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