The ongoing crackdown by the Food Safety and Standards Authority of India (FSSAI) on analogue products across several states could significantly open up India’s estimated ₹1-lakh-crore paneer market for organised dairy players, according to a senior official at Milky Mist Dairy Food, the country’s largest private packaged paneer brand.
“Right now, it (crackdown) is only a few states like Maharashtra, Gujarat, Uttarakhand and other places in Delhi. If the ban of analogue paneer extends across the country, the paneer volumes will go up,” K Rathnam, Wholetime Director and Chief Executive Officer, Milky Mist Dairy Food, said, addressing the company’s first earnings briefing post listing earlier this month.
Milky Mist is the country’s largest private packaged paneer brand in the organised market, with a capacity to produce 150 tonnes of paneer a day at its Perundurai manufacturing plant in Tamil Nadu. The plant is currently operating at around 60% capacity utilisation. Rathnam said it would become clear by the end of the second quarter whether the company needs to further expand its paneer capacity. “we may have to rethink our strategy maybe in this Q2.”
India’s paneer market is estimated at around ₹1 lakh crore, with 94% dominated by the unorganised sector and the remaining 6-7% accounted for by organised players such as Milky Mist. Within the organised segment, Milky Mist has around 20% market share. “If the organized sector is able to handle about 25% of the total paneer produced in India, That is the greatest opportunity what we have,” he said.
Paneer volume has grown at a CAGR of 19% over the last six years through FY26. “Witth analogue paneer (ban) coming into play, so the volume growth is going to be maybe slightly higher something like a 25%. Our volume growth of paneer is 34%. We expect that the paneer volume to grow even 40% going forward,” he said.
FSSAI has stepped up enforcement against cheese analogues being sold or used as paneer, while several states, including Maharashtra, Gujarat, Chhattisgarh and Madhya Pradesh, have moved to restrict or ban such products. Analogue dairy products are non-dairy alternatives in which some or all milk constituents are replaced with ingredients not derived from milk. Analogue paneer, for instance, can be made using vegetable oils, starches, plant proteins, emulsifiers and other additives instead of milk fat.
Food delivery platform Zomato recently announced that it would remove dishes that restaurant partners have declared as containing analogue dairy with immediate effect.
Meanwhile, Milky Mist reported a ten-fold jump in net profit in the first quarter to ₹64.68 crore, while revenue from operations rose 44% to ₹973.45 crore, driven by volume growth across its portfolio, including paneer, cheese, curd, butter, ghee, yogurt, ice cream and UHT products.
Paneer remained the company’s largest contributor, with revenue growing 34% year-on-year. Cheese and curd also continued to post healthy growth, with revenue rising 38% and 27%, respectively. The company’s revenue grew at a CAGR of 31.26% between FY24 and FY26, reaching ₹3,138.36 crore in FY26. Paneer, cheese and curd together contribute more than 60% of its total revenue.
Gross profit margin expanded to 34.21% from 31.46% in the same quarter last year. Rathnam said the expansion in gross profit was primarily driven by higher volume growth, improved product mix and pricing ability.
The Tamil Nadu government on Monday announced a further increase of ₹3 in the procurement price of milk procured by primary milk producers’ cooperative societies in the state, taking the price to ₹44 per litre. Rathnam said that since the company is focused on value-added products and packaged liquid milk, it has the pricing ability to pass on any increase to consumers without affecting margins. The company had taken an 11% price hike across product categories in Q1.