Rapid urbanization and need for convenience are among the major reasons for the increase in the demand for packaged/processed foods, generating growth opportunities in the dairy industry and this trend is almost certain to continue. In an interaction with Nuffoods Spectrum, Gaurav Haran, COO, MilkLane shares his views on Indian Dairy Sector
MilkLane (ML) is India’s first industrial-scale collection and distribution platform for high quality milk. The company aims to transform the supply chain of the world’s largest dairy market by applying innovative processes, international quality standards and technology to the ‘first mile’ of milk. The company intends to create a panIndia network of Industrial Production Units, village level Bulk Coolers and introduce IT enabled solutions to provide a fresh, safe and steady supply of high quality milk (free of contamination) to industrial processors, FMCG companies, milk product manufacturers and end consumers.
The company is positively disrupting existing milk supply chain models through strong elements of digitalisation and a holistic approach including veterinary services, fodder services, financial services and business support of small industrial producer units (SIPU). MilkLane’s integrated procurement management system helps maintain strong quality controls and preserves the freshness and quality of milk effectively through digitization.
How is the dairy sector doing at the moment, your take?
Indian dairy industry is offering opportunities galore not only to the entrepreneurs in the country but also worldwide to those who wish to capitalize on one of the world’s largest and fastest growing markets for milk and milk-based products. The substantial rise in the per capita income of consumers and the increase in disposable income has drastically improved the purchasing power in the last decade. Rapid urbanization and need for convenience are among the major reasons for the increase in the demand for packaged/processed foods, generating growth opportunities in the dairy industry and this trend is almost certain to continue.
Last year, overall milk production was about 170-175 million tonnes and is expected to touch 185 million tonnes this year, growing at a rate of 15 percent per annum. Envisaging tremendous opportunity, large FMCG players such as ITC and Patanjali have recently entered the segment. Global analytical company CRISIL has suggested a steady growth in milk sales in the coming years and 20-25% percent growth in the value-added products.
Recent Government initiatives would significantly support the smaller and marginal dairy farmers and improve livelihood. For instance, the extension of the Kisan Credit Card (KCC) scheme to animal husbandry will provide a direct receipt of Government benefits and will create a credit history for milk producers. Under the scheme, the government has proposed 2 percent interest subvention to the farmers pursuing the activities of animal husbandry. Additionally, this year’s interim budget has announced setting up of “Rashtriya Kamdhenu Aayog” to improve sustainable genetic upgrading of cow resources, and to enhance production and productivity of cows.
How has the previous year of the company gone by and what is in the store? (Any new products in the pipeline or any promising collaboration or any other initiative in 2019)
MilkLane started its operations last year and the journey so far has been exciting. Till date, we have partnered with more than 7,000 dairy farmers in Kuppam area (Andhra Pradesh) and crossed procurement of one lakh liters of milk per day benchmark. Additionally, the unique BMC (bulk milk cooler) model followed by the company to procure milk, offers huge potential to grow. The company has quickly widened its farmer’s network by partnering with more than 100 BCO rural entrepreneurs. The asset-light model for entrepreneurs is driving entrepreneurship in rural India and can be replicated in other parts of the country as well.
We also built a Cattle feed business to support the milk quality requirements and achieved a penetration level of more than 50% in our network. In 2019 we plan to make the products available to farmer beyond the MilkLane network. Currently, we are serving industrial off-takers and we look forward to build marketing, sales and distribution infrastructure for the end consumer as well.
We continued our endeavour to make verifiable social impact by positively impacting the lives of 7000 farmers in our network and improving health of the animals through sustained effort on training on good dairy practices and veterinary support.
Any disruptive trend(s) you see in the way the Indian food market is evolving?
In the past decade, the Indian food industry has evolved rapidly and become one of the fastest growing sectors in the country. Multiple disruptive trends from the choices of products and packaging that are available, healthy and natural food choices, convenience as a critical decision factor, expectation of world class quality, social media as a significant influencer and eCommerce (daily delivery and discretionary) as an emerging platform for both consumers and brand to provide choices and convenience. Equally importantly, with a rise in urbanization leading to change in lifestyles, consumers have become more aware and are increasingly opting for healthier options such as organic foods, habitually buying them online based on their requirements.
The blooming of juice bars and kiosks selling salads and wraps are cases in point. Consumers are opting for healthy options not only at supermarkets or online groceries portals but also at local kiranas or street vendors as well.
Most of them now cook with healthier oils as opposed to the traditional ghee or make sweets with organic milk products for daily consumptions. The value-added dairy products such as UHT (Ultra-High Temperature) processed milk and flavored & frozen yogurt segments, are expected to grow at 25-30% per annum in the coming years. Health and wellness is a high ride on consumer preferences.
Do you think food fortification is the right tool to create healthy India?
The term food fortification has been described by World Health Organisation (WHO) as one of the most cost-effective ways for preventing and addressing the issue of micronutrient deficiencies in both developed and developing countries across the world. Micronutrients are essential vitamins, lack of which could lead to potential health risks, which includes a host of nutrient deficiency diseases, early onset of cardiovascular diseases, increased chances of fractures, eye disorders, anemia and other possible ailments.
To quote, Vitamin A and D is one of the most important micronutrient deficiencies in India. As per the recent survey conducted by the National Nutrition Monitoring Bureau (NNMB) of National Institute of Nutrition (NIN) and Government of India, close to 62% of the population has low serum blood levels of vitamin A and 50% – 94% of people across the country, suffer from vitamin D deficiency.
It can be prevented by following a balanced diet containing recommended dietary allowance (RDA) constituting of all the micronutrients, which unfortunately cannot be adhered to due to our socio-economic condition, customs, practices, etc. Food fortification, which is a scientifically proven, cost-effective, scalable and sustainable intervention to addresses the problem of micronutrient deficiencies, thereby create a healthy India.
Globally, milk fortification legislation has been practiced since 1935, however, penetration in India is still low despite being one of the largest milk producing country. With widespread of the distribution network and all-around acceptability in our daily food habit, milk and value-added products can be singled out as the best vehicle to combat Vitamin A and D deficiency in the country.