Taking the milky way

Had it not been for a name like Mother Dairy, we would probably not have managed an iconic stature our brand,? is the candid admission from Paul Thachil, CEO, Mother Dairy Fruit & Vegetable Pvt Ltd, a wholly owned subsidiary of the National Dairy Development Board (NDDB).

Thachil should know. Thirty five years and 845 milk booths later, Mother Dairy, the company that he joined eight years ago after a stint with the country?s largest consumer products maker by revenues, Hindustan Unilever Ltd (HUL), is ready to shed its quintessentially Delhi image with ambitious plans of strengthening its presence in markets such as Mumbai, Hyderabad and Pune.

In the past three years, Mother Dairy?s revenues have grown from Rs 1,700 crore in 2006 to Rs 3,300 crore in 2008. The company has added a bevy of milk and dairy products to its portfolio, including a pro-biotic range of curd (b-Activ) at just the same time when rivals Amul and Nestle were hurrying to launch their own pro-biotic versions, last year.

In addition, Mother Dairy also pioneered the launch of a pro-biotic milk drink called Nutrifit in the Delhi market.

With a 66% share in the branded milk category, vending 3.1 million litres of milk everyday through a network of 10,000 milk booths, the company is hoping to have a turnover of around Rs 4,000 crore this fiscal. Seventy per cent of the company?s revenues comes from its diary portfolio, the rest is from ice creams, frozen vegetables (marketed under the Safal brand) and non-saturated vegetable oils (Dhara brand).

Nationally, Dairy contributes 70%, Dhara 20% and Safal 10% to the turnover. In dairy, milk contributes 80% whereas dairy products are 20%, according to Thachil.

Although it?s difficult to arrive at accurate estimates, the total size of the branded milk category in the country, according to Thachil, is around Rs 20,000 crore with urban sales accounting for 40% of the total sales. This may appear small for a country teeming with nutrient-deficient school children but the situation has vastly improved from 1970, when Operation Flood was launched under NDDB to directly link dairy producers with consumers in 700 urban towns and cities. The outcome is the emergence of strong, milk cooperatives and home-spun brands such as Amul in Gujarat, Vijaya in Andhra Pradesh, Verka in Punjab, Saras in Rajasthan, Nandini in Karnataka, Milma in Kerala, Gokul in Kolhapur and Mother Dairy in Delhi.

In Delhi, the first four booths of Mother Dairy were inaugurated on December 4, 1974?Booth Number 009 in Defense Colony, Booth Number 104 in Sector 4, RK Puram and Booth Number 018 and 019 in?and the rest, as they say, is history.

Over the years, with strategic brand extensions and penetration into other markets, the company has been living its own brand promises?Let?s grow faster, which was its tagline in 2005; ?shakti doodh ki hai mujh me? (The strength of milk is in me) created by Saatchi & Saatchi in 2007. Growing at a rate of 20% to 25% per annum, the brand ploughs back 1% to 1.5% of its turnover into advertising to further consolidate its position as a breakfast to desert brand.

Holding on to its milk turf in Delhi is important for Mother Dairy. Since milk is a price sensitive category, when last year?s drought conditions made procurement difficult, the company hiked the prices of only the full cream variant (from Rs 26 to Rs 28 per litre) and toned milk (Rs 21 to Rs 22 per litre), while holding stable the price of bulk vended, double-tonned and skimmed milk pouches.

Ice creams also contribute significantly to the brand?s turnover (30%) and within a decade of their launch in Delhi in 1995, they are now being hawked to Pune, Hyderabad and other markets. Growth is projected to be fast?at least 15% this year because of the extended summer?in the Rs 10,000 crore segment that?s presently led by Gujarat Co-operative Milk Marketing Federation Ltd?s Amul, which as 35% market share followed by HUL?s Kwality Wall?s that has 17% share.

The rest of Mother Dairy?s turnover (10%) comes from the sale of curd, including pro-biotic curd, estimated at around Rs 180-200 crore; flavoured milk, around Rs 150-200 crore; lassi/chaach, around Rs 80-100 crore and frozen vegetables, estimated at around Rs 150 crore.

On the flipside, the company?s experiments with sugar-free products, however, have not been too ?sweet.? The Diets range of ice-creams was pulled out as soon as it was launched. In contrast, the full-cream based Fruit Classics and Indian Classics continue to do well in the market.

?When it comes to desserts, Indians don?t like to compromise,? says Thachil. However, the response to fortified curd has been good, wherein the company is able to charge a premium of 10% against the rival products. While a 200 grams and a 400 grams pack of regular dahi costs Rs 13 and Rs25, respectively, comparative prices for pro-biotic dahi are Rs 15 and Rs 27.

Yet it?s a long haul for milk co-operatives in India. According to the Dairy India 2007 report, of the total milk produced (valued at Rs 3,00,000 crore by different industry sources) only 20% finds its way into the organised (read urban) markets.

?Tapping the rural market would be a different ball game altogether, one that we are not concentrated on at this moment. However our plans for the metros are big, and we know that all these other categories, dahi, ice creams, paneer etc, draw heavily from our milk equity. We can?t carelessly fritter it away, without an eye on the potential return on investment,? says Thachil.