The size of the packaged milk sector for the fiscal year 2012­13 was Rs420.75 billion, as per the findings of Netscribes. “Packaged milk, as a category, is projected to grow to Rs 1,783.84 billion by 2030, registering an annual growth of eight per cent. About 73 per cent of the milk sold by 2030 would be branded,” it added. To purchase the full report, write to us at info@netscribes.com

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TOP NEWS
Indian packaged milk sector projected to grow to Rs
1,783.84 bn by ’30
Friday, 27 February, 2015, 08 : 00 AM [IST]
Anurag More
Indian packaged milk industry
The size of the packaged milk sector for the fiscal year 2012­13 was Rs
420.75 billion, as per the findings of Netscribes. “Packaged milk, as a
category, is projected to grow to Rs 1,783.84 billion by 2030, registering an
annual growth of eight per cent. About 73 per cent of the milk sold by 2030
would be branded,” it added.
Devendra Shah, chairman, Parag Milk Foods Pvt Ltd, stated, “The size of the
packaged milk sector is estimated to be 450 lakh litre per day, translating to
Rs 55,000 crore per annum.”
“In terms of volume, it is growing at 7­8 per cent. Of this, 4­5 per cent is on
account of consumption growth, and three per cent is due to shifting from
loose milk to packaged milk in the urban and semi­urban areas,” he added.
Sustainable solutions for packaged milk industry
The packaged milk industry should create packaging solutions that save on
raw material and reduce the costs. The industry should also cater to the
changing lifestyle of consumers and come up with innovative packaging.
Packaging companies should also focus on cost effective recycling of
packaging material, waste reduction, material savings and improved
sustainability.
Shah said, “One of the major challenges the packaged milk industry is facing
is competition from the low­priced adulterated milk sold by loose milk sector
as well as the low­quality packaged milk, which often goes scot­free due to
the poor enforcement of food laws.”
The poor road infrastructure and the availability of power are some other
bottlenecks in the smooth distribution and storage of milk at retail outlets.
As pouch packaged milk has a shelf life of 2­3 days under refrigeration,
transportation and distribution in the quickest possible time is of paramount
importance.
Direct or indirect subsidy or control on the selling prices of milk by many
state governments is another factor adversely impacting the growth of the
industry. Hence, these bottlenecks are to be removed to ensure sustainable
packaged milk industry.
Pricing of packaged milk compared to loose milk
The price of packaged milk has frequently increased over the last few years. A
litre of full­cream milk now costs Rs 44. Similarly, toned milk prices have
increased to Rs 34 per litre and double­toned milk to Rs 28, while the price of
loose milk ranges between Rs 28 and Rs 32 per litre.
Shah said, “In case of pouch packaged milk, in spite of the added costs of
processing, refrigeration and packaging, almost 75 per cent of the rupee
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realised from the consumer is passed on to milk producers, whereas in the
case of loose milk, it is only 60 per cent or even less.”
“A premium is charged for loose milk because of the widely­prevalent myth
that it is fresher and purer than packed milk. On the contrary, vendors
buying packaged milk, cutting open the pack, pouring it in cans, adulterating
it with water and selling the same to consumer at a premium are very
common sights in urban areas,” he added.
Challenges faced by the packaged milk sector
Packaged milk sector faces intense competition from the unorganised and
loose milk sector. The former has to meet government norms and regulations.
Other challenges include a shortage of cold storage units and deficit in power
supply. Power is an essential requisite for any industry, especially the food
processing industry (owing to processing plants and refrigerated storage
systems).
Poor supply chain and distribution facilities and rising packaging costs also
pose a serious challenge to the functioning of the industry.
Loose milk is more adulterated than packaged milk. Water turns out to be the
most common adulterant in milk, and it also reduces the nutritional value of
milk. If contaminated, water poses a health risk to consumers.
Non­conformity to food safety standards is 100 per cent in loose milk. The
most common reason given for non­conformity is the difference between the
demand for and supply of milk. In order to meet the demand, suppliers
usually adulterate the milk and increase the quantity.
Shah said, “The major challenge faced by the packaged milk sector is related
to the improvement in the procurement and distribution infrastructure
(including maintaining robust cold chains) so as to ensure that pure and
hygienically processed milk reaches the consumers without compromising on
its taste and aroma.”
“Another challenge for this sector is managing the seasonal nature of milk
production (i.e. the consumption remains almost uniform, but the milk
production or availability varies from season to season),” he added.
The loose milk sector has started degrowing at 2­3 per cent, as the cost
economics of the entire supply chain is increasingly becoming non­
sustainable due to the increasing distance between the production and
consumption areas, high real estate and infrastructure cost to maintain loose
milk retail outlets and supply chains, increasing manpower costs, and above
all, changing consumer preferences and convenience. Given these factors, the
degrowth of the loose milk segment is going to further accelerate.
Factors influencing rising inflation
Factors influencing rising inflation are rising wages, devaluation leading to
increased import prices, increasing raw material prices, declining productivity
and higher taxes.
Shah said, “It is mainly because of the increasing cost of all inputs of milk
production at the farmer level that the milk procurement cost has increased.
The increase in the costs of processing, packaging, transportation, etc. also
contribute to inflation.”
Steps govt is taking to control food inflation
The government has decided to take several steps to control food inflation and
to keep a close watch on the price movements of 22 commodities.
It is planning to release five million tonne rice from state stockpiles to curb
inflation. It would be releasing additional rice stocks from government
warehouses for supplies to the state governments.
The government has also imposed a minimum export price on onions to
discourage overseas shipments and is also planning to impose this curb on
the exports of potatoes.
The Central government has asked the states to amend their laws and crack
down on speculative hoarding in anticipation of a weak monsoon and boost
the supply of fruit and vegetables in the open markets.
It would also extend a line of credit to the state governments to import pulses
and edible oil to bridge the shortfall in the domestic market.
Shah said, “The government’s initiative to improve animal productivity should
help in the long­term.”
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Role F&B companies can play to control inflation
The food processing industry lacks proper cold storage facilities and
infrastructure. Companies can partner with logistics and warehouse
companies, thereby ensuring the efficiency and reliability of temperature­
controlled transportation.
They can work out the modalities to strengthen their back­end infrastructure.
At the front­end of the retail sales market, they could go on to invest in
chillers and freezers to store their products. This can be done to ensure that
products are available at the right temperature till the last mile.
Therefore, companies could put in efforts to build an efficient and reliable
infrastructure.
F&B sectors that are doing reasonably well despite rise in inflation
The processed food sector is doing well in spite of the surge in inflation. The
increasing prices of fresh fruit and vegetables are causing consumers to shift
to processed foods, which seems to be cheaper.
The processed food industry looks to stock up fresh produce when the prices
are comparatively cheaper, enabling them to offset the effect of a future price
rise. This is the reason for a small increase in the cost of processed foods.
Rising inflation impacted the food and beverage sector's revenues
Inflation is opening up opportunities in the food processing industry, thereby
leading to an increase in the sales and revenues of processed foods.
Change in food and beverage consumption pattern since inflation has risen
Consumers are shifting preferences towards cheaper produce and products.
Households have reduced the consumption expenditure on expensive foods,
and are looking at a healthy but inexpensive range of food products.
Therefore, there been a rise in the consumption of processed and frozen
foods.
Shah said, “The consumption of white milk, being a basic need for Indian
households, is the least and last to be impacted by rising inflation.”
“However, one can feel that consumers are slowly shifting from high­fat full­
cream milk (which is priced higher) to low­priced toned/cow’s milk, which
has moderate fat content. Partly this phenomenon could be attributed to the
changing consumer food preferences,” he added.
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