Niti Aayog estimates that the country is expected to increase its milk production to 330 million metric tonnes (mt) in 2033–34 from the current level of 176 mt.
By Kushankur Dey
In 2019, India emerged as the largest milk producer and consumer. Niti Aayog estimates that the country is expected to increase its milk production to 330 million metric tonnes (mt) in 2033–34 from the current level of 176 mt. Marketing and innovation, thus, are increasingly becoming important on the cusp of White Revolution 2.0. This is also evident from the fact that dairy business is expected to reach `21,97,100 crore by 2024 with a CAGR of about 16%.
But, is White Revolution 2.0 symptomatic in nature?
The new revolution has effectuated dairy firms’ marketing strategy for milk and milk products, resuscitating the outlook of product-market mix. For example, until 1990s, dairy business was more specific to production and sales of butter, ghee, skim milk powder (SMP/WMP), spray and the market structure was oligopolistic. When the market integration took place post-liberalisation and Milk and Milk Products Order (2002) was abolished, dairy businesses observed a radical shift toward a strategic product diversification towards functional and traceable foods like nutrition-based health drinks, packaged milk products (such as paneer), and frozen/probiotic products and so on.
Second, market structure, conduct, and performance has dramatically changed post 2000s. Besides the established cooperative federations like Amul, other state cooperative federations and multinationals (namely, Nestle, Danon, and Lactalis) are aggressively harnessing the untapped business potential. It is interesting to note that there are 28 state federations, 218 district unions, 1,85,903 dairy cooperative societies. These societies are directly associated with 16.6 million farmers. However, the federal structures have outreach to only 24% of villages and around 22% of milch animal population. A majority, 80% of the market share, lies with private dairies and/or informal/unorganised markets. Thus, there is an opportunity to improve milk procurement and processing. Strategic partnership and competitive intelligence can create and distribute tangible benefits by strengthening the backend and frontend supply chain.
Third, increase in the market share depends on how dairy firms’ capabilities and their resources are utilised given the opportunities and threats emanating from emerging markets economies. White revolution 2.0 can strengthen the scope of vertical integration between cattle feed industries, dairy machinery firms, producer cooperatives unions, state marketing federations, advertising and marketing firms, logistics and distribution agencies.
Fourth, contract/corporate dairying and emerging global dairy trade are required to rope in dairy supply chains stakeholders in order to expand their outreach and “on-the-go” product positioning into the target segment. Also, digital technology-enabled dairy firms need to identify their compatible partners and competitors for co-creation through product-process innovation via relationship/value-based marketing. Freshness in milk, and convenience to store milk or milk products can be a technology innovation brought in by large dairy firms in association start-ups.
Fifth, National Dairy Development Board (NDDB) plays a pivotal role in dairy businesses through institutional and structural/policy reforms. For example, National Dairy Plan flagged off in 2012 at the auspices of NDDB has just concluded its phase one with an outlay of `2,242 crore. The phase one aimed to improve milk production and animal breed development. The phase two, which will begin shortly with an outlay for `8,004 crore, will provide the financial assistance to private dairy units for processing, increasing their outreach to the unexplored market, and improving milk quality testing at the milk collection centres.
The article is an abridged version of a lecture note titled ‘Status and Scope of Marketing Intelligence in Dairy Business Management’ presented at the Navsari Agricultural University at the CAAST-NAHEP project, ICAR