[ Lockdown Impact] How poor supply chain is affecting the delivery of essentials like Milk ?

Let's hear from Gaurav Haran, CEO, MilkLane about the journey of the company and how it is coping with the current challenging market scenario amidst COVID-19 lockdown
[ Lockdown Impact] How poor supply chain is affecting the delivery of essentials like Milk ?
Gaurav Haran

Walk us through the journey of MilkLane. Has it been a significant part of your entrepreneurial journey?        

 It’s been over two years for me at MilkLane and I am proud to state that we are one of India's first dairy companies that offers high-quality milk that is safe from toxins and antibiotics contamination. We have been present in the B2B segment, successfully addressing institutional consumption and steadily gaining market share since 2016. That was the year MilkLane was conceptualized by Pioneering Ventures, an agri-food platform-company based in Switzerland and India, focused on modernizing and transforming the food ecosystem to sustainably provide healthy food to people. The platform consists of vertically integrated and technologically supported agri-food and financial service businesses.

We at MilkLane have approached this task by improving and more stringently coordinating and integrating numerous activities along the entire production and value chain of milk production and distribution. For instance, our milk collection model uses bulk milk chillers (BMC), enabling refrigeration at an early stage after collection so that there is minimal deterioration of quality. Enabling collection through local collection centers has been instrumental in building rural entrepreneurship in Kuppam and nearby areas in Andhra Pradesh, where we mainly operate. This unique model helps bring down the time taken for the collection of milk, thereby increases the shelf life and quality.

Apart from business aspects, we have also been reaching out to our dairy farming communities. We conduct outreach programs for 5000-odd dairy farmers in and around Kuppam by educating them on global best practices. We provide veterinary services, high-quality feed and fodder, along with options to facilitate finance and insurance services to help them grow and become independent.

In 2019, we made a conscious decision to expand into the B2C segment – this decision proved prescient, especially during the current battle against COVID-19 in the country. As of now, we are serving the B2C customers in Bengaluru only – but our plan is to eventually expand our reach to all metro cities in India.  

Since milk has lower shelf life even among perishables, it has not fallen into the panic buying category. What has been the impact of Covid-19 on the milk category overall? What is the new normal for this category?

Covid-19 lockdown restriction has undoubtedly caused a change in the milk-buying pattern of consumers. We have observed a significant disruption in the dairy industry supply chain along with a 25-30 percent dip in demand. However, the demand for ultra-heat-treated (UHT) milk with a has been steadily increasing. The UHT process preserves the necessary nutrients in the milk but kills germs as well as the spores of bacilli. As the milk is then packed in pre-sterilised, multi-layer packaging material, it offers a safe and improved shelf life of 90 days without refrigeration. More and more people are waking up to the convenience and safety of UHT milk.

The new normal for this category is to reach out directly when consumers are not able to buy dairy products due to the lockdown. The industry is witnessing a rise in demand for at-home delivery services during such unprecedented time. More Brands are partnering with app-based service aggregators to get the products delivered at consumer's doorsteps.

These are clearly difficult times for small-scale dairy farmers. For them, impact on prices and disruption of daily collection services are key challenges. We cannot speak for the entire industry, however at MilkLane, we are working together with our farmers to minimize the impact of fall in demand and prices. Despite market pressures, we are maintaining a fair and transparent pricing structure. Our support for healthcare initiatives in the farming communities has also been appreciated.

 Amidst the COVID19 lockdown, how is MilkLane managing the collection and processing platform?

 So far, we haven’t seen any reduction in milk production. On the contrary, there is more milk available in our procurement network of local farmer communities. There are some on-ground challenges like availability of labor and logistical channels – to address these, we are constantly working with the authorities, innovating and adjusting our business models while taking required precautions related to safety of our colleagues and partners. So far, all our collection centers are operating seamlessly, and we haven’t seen any disruption in our collections as well. The recent MHA guidelines to exempt dairy farming and supply chains from the country-wide lockdown have created welcome clarity and will help us run the operations smoothly. Due to the long shelf-life of UHT packaging and the availability of surplus milk for producing high margin value-added dairy products, we can sustain long term procurement and safe storage.

 What are the challenges faced by MilkLane in operating the supply chain smoothly and ensuring milk availability in Bengaluru?

 Despite the lockdown exemption, the dairy industry is still facing challenges due to temporary unavailability of logistical channels, labor and last-mile delivery resources. To keep things operational during such difficult times, a considerable reimagination of supply chains and resource utilization is needed for on-ground players. At MilkLane, we are optimizing strategies and responding to changing situations at the collection, processing and delivery levels in an agile way.

 For example, we have recently scaled up our doorstep delivery capabilities in the city of Bengaluru. The move has helped the residents avoid the hassle of stepping out and stand in queues. Interested residents can register by dialing or texting on the number 093531.00107 to avail this service.

 How can the issue of scarcity / accessibility of milk during the lockdown be resolved?

 Currently, the problem is not the scarcity of milk but the fact that people can no longer step out multiple times a day to buy perishable goods. We see more and more consumers opting for UHT milk with a long shelf life, thereby solving the problem of storage and safety.

Additionally, supply constraints in the milk industry have known to lead to a sharp rise in milk adulteration. The UHT packaging, along with adequate food safety measures at every level of the supply chain - collection, processing, and distribution - helps MilkLane deliver high-quality milk to the families in Bengaluru.

Gaurav Haran