Dairy Q1 profit margins pulled down due to procurement cost and strike
Dairy Q1 profit margins pulled down due to procurement cost and strike

The Q1 profit margins for the dairy industry this year have seen a sharp decline as compared to that of Q1FY17. While Chandrababu Naidu-promoted Heritage Foods posted net profit of Rs 17.11 crore last year, this year, it has only been Rs 10.37 crore. Similarly, Kwality Ltd reported a sharp decline in its June quarter profits to Rs 27.88 crore, from Rs 42.27 crore a year ago, while Umang Dairies posted a loss of Rs 2.90 crore compared to a Rs 1.48 crore profit. Interestingly, net sales of both companies jumped by 7 per cent and 11 per cent, respectively.

Companies with increased focus on value-added products, such as Parag Milk Foods and Hatsun Agro Products, however, have maintained their profit margins in the June quarter despite interruption in milk supply due to the farmers' mass protest and roadblock. While organised sector players are adjusting increase in compliance cost of GST (goods and services tax), rollout without an increase in product prices, unorganised sector players are considering raising milk prices by Rs 2-4 a kg to pass on the increased cost burden to consumers. "

"Gross margins of Heritage Foods were impacted by an increase in milk procurement cost which the company was unable to pass on to the consumers completely. EBITDA margins at 4.4 per cent was also hit by loss making Reliance Dairy business and increase in other expenditure which grew by 37.8 per cent yoy a function of higher branding expenditure. However, the company is confident with initiatives taken on cost optimization and expectation of lower milk procurement cost post monsoons. We expect the recovery to be gradual," said Dhaval Mehta, an analyst with Emkay Global Financial Services Ltd.

According to R S Sodhi, Managing Director, Gujarat Cooperative Milk Marketing Federation (GCMMF) which sales Amul brand dairy products, "Milk prices had declined drastically over the last one year. Milk prices, therefore are recovering. Prices are likely to remain stabilised now."

"We intend to increase our direct procurement to over 50% over the next 3-4 years. This would accelerate the transition towards B2C by enabling faster shifting of our product mix towards consumer products, primarily fresh milk and value-added products. With our persistent focus on B2C segment, strong position in north markets, and planned product rollouts of value-added products, we shall continue to witness strong growth in the forthcoming years. We believe favourable demographics such as rising disposable income and changing consumer lifestyle would further support our growth story," said Nawal Sharma, president & head business transformation, Kwality Ltd. 

 
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ITC introduces dairy beverage range Sunfeast Wonderz Milk in four variants
ITC introduces dairy beverage range Sunfeast Wonderz Milk in four variants
 

ITC Limited has launched Sunfeast Wonderz Milk in four variants, including Milk Fruit ‘n’ Milk in two flavours (Mango and Mixed Fruit), Shakes and Nut Shakes. With this launch, the company has forayed into the rapidly-growing ready-to-drink milk-based beverage segment.

Priced at Rs 25, the Milk Fruit ‘n’ Milk variants are available in 200ml bottles. The Shakes are available in 200ml bottles at Rs 30, while the Nut Shakes are available in 200ml bottles at Rs 35.

Hemant Malik, Divisional Chief Executive, foods, ITC Ltd, said, “The launch of Sunfeast Wonderz Milk dairy beverages reflects ITC’s focus in delighting consumers with superior and differentiated food products. The ready-to-drink milk beverages market has seen high growth with a paradigm shift to healthier beverages.”

“Our investment in superior technology for manufacturing beverages, with inclusions such as fruit pieces and dry fruit, coupled with our institutional capabilities like agri sourcing, enable us to bring these high-quality, first-in-the-market offerings in the dairy beverages space,” he added.

Malik further stated, “Sunfeast Wonderz Milk has received encouraging response in the markets of Tamil Nadu, Kerala and Karnataka, where the brand was recently launched. We are happy to extend this new offering now to the discerning customers in Telangana.”

 

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Himalayan Creamery collaborates with dairy tech startup Mr Milkman
Himalayan Creamery collaborates with dairy tech startup Mr Milkman
 

Dairy farm Himalayan Creamery has tied up with tech startup Mr Milkman to launch a co-branded application for milk subscription and delivery. Few other firms such as Milk Mantra, Whyte Farms, Amlaan A2 Milk, Go4Life and Milk Valley Farms have also collaborated with Mr Milkman for hassle-free operations and smooth delivery. 

Samarth Setia, Founder of Mr Milkman, said, "With this partnership, we aim to improve delivery services and manage milk subscriptions. We are confident that Mr Milkman's technology will ensure operations in a smoother and more organised manner."

Mr Milkman’s cloud-based 'SaaS platform' will be offering Punjab-based Himalayan Creamery with automated processes, which will enable them to track subscriptions, revenue, sales growth, payments and customer consumption patterns. 

The application provides features like order-tracking and delivery, inventory management, and reverse logistics for glass bottles.

Deepak Gupta, Founder and CEO, Himalayan Creamery, stated, "One of the greatest challenges in the dairy industry is managing inventory and logistics. Our partnership with Mr Milkman will assist us to streamline our logistics and inventory management and allow us to focus on production and growth."

Founded in 2016, Himalayan Creamery is located in Patiala, Punjab. Unlike an aggregator, it is home to 350 Holstein Friesian and Jersey cows that daily produce unadulterated milk of more than 4,000 litres.

 

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Karnataka's ice-cream brand Adityaa Milk to sell biz to HUL
Karnataka's ice-cream brand Adityaa Milk to sell biz to HUL
 

Seeking a larger market share that is gradually seeing local or family owned brands selling out to multinationals, Hindustan Unilever has announced to acquire Karnataka based ice-cream brand Adityaa from Vijaykant Dairy and Food Products Limited (VDFPL) for an undisclosed amount.

The maker of Kwality Walls ice-cream said it will also get the brand's front end distribution network across geographies and the acquisition is line with the company's strategic intent to strengthen its position in the category. "“Ice creams and frozen desserts is an exciting category and we see great potential for growth. We believe the acquisition will complement our existing portfolio of Kwality Wall’s,” said Sanjiv Mehta, Chairman at HUL.

Having established in Karnataka, Adityaa Milk has gradually expanded into Maharashtra, Goa and Kerala. Post the sell-out, VDFPL will continue to pursue its dairy business. HUL said VDFPL will manage the business until the transaction is completed, and will also continue to manufacture for them for an agreed period of time.

Last month, Hindustan Unilever combined its foods and refreshments business into one division in an effort to increase agility, in line with the global category structure of parent Unilever. In the Rs 12,000 crore ice-cream market, HUL is the second largest player after Amul with share of over 8% according to Euromonitor.

At present, a handful of national players with big marketing and distribution muscle such as Amul, Mother Dairy, Vadilal’s or HUL’s Walls even Havmore are jostling for retail space countrywide while smaller regional players who collectively still control half the market are clinging on to their different pockets of dominance.

Since HUL took over Kwality ice cream in phases after buying the trademark in 1994 or even after Malaysian PE firm Navis lapped up Nirula’s in 2006 for Rs 90 crore. However, the market is fast evolving. Many family owned brands including Vadilal and JSF Holdings that sells under the best selling Uncle John, Skei and Lazza are taking a hard look at their prospects in the backdrop of fast changing consumer habits and before facing any meltdown. Late November, Lotte Confectionary scooped up the Havmor – the country’s seventh largest ice cream brand -- for Rs 1020 crore in an all cash deal.

Two brands announced their India entry in 2015 seeing the potential market of the country, Nestle-owned premium ice cream brand Mövenpick and Arizona-based Cold Stone Creamery. The market is expected to grow at a value CAGR of 20% for next 5 years. In 2013, even Unilever’s brought its top grosser from Europe, the premium Magnum ice cream bars.

 

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Amul Expects Rs 50K cr group turnover in 2019 fiscal
Amul Expects Rs 50K cr group turnover in 2019 fiscal
 

Dairy major Amul is aiming 20 per cent growth to touch a turnover of Rs 50,000 crore this financial year, on the back of growing consumer portfolio, premiumisation and rising demand, a top company official said.

"The Amul brand, which clocked a turnover of over Rs 40,000 crore last financial year, will grow at 20 per cent this year," RS Sodhi, the managing director of Gujarat Co-operative Milk Marketing Federation (GCMMF), which markets milk and milk products under the Amul brand said.

"We are launching several consumer products, and are also premiumising our offerings. The growing demand will help us see a good growth this year," he added.

The Amul brand includes the 18 member dairies of the Gujarat Co-operative Milk Marketing Federation (GCMMF).

GCMMF, however, registered only 8 per cent increase in turnover to Rs 29,220 crore in financial year 2017-2018, owing to a decline in commodity prices.

The consumer product portfolio has been growing at nearly 15 per cent on a volume basis, Sodhi pointed out, which has helped the performance of the Amul's branded products, despite lower commodity prices.

"Branded consumer products have registered a growth of 14 per cent in the last financial year, with products such as cheese, butter, milk beverages, paneer, cream, buttermilk and dahi having grown at 20-40 per cent," Sodhi said.

The 18 member unions of GCMMF has a farmer strength of more than 36 lakh across 18,700 villages of Gujarat, and is procuring on an average 211 lakhs litres of milk per day which is 20 per cent higher than the previous year.

The co-operative has also recently tied up with the government and lenders, under the Pradhan Mantri Mudra Yojana, to procure easy loans for its farmer partners.

"The scheme will help rural entrepreneurs immensely, to upgrade their facilities and will also help distributors and transporters. It will enhance the overall employment opportunities in rural India," Sodhi said.

 

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Ananda To Open 150 outlets in Kanpur, Invest Rs 10 cr for expansion
Ananda To Open 150 outlets in Kanpur, Invest Rs 10 cr for expansion
 

India’s dairy manufacturer Ananda today said it plans to invest Rs 10 crore to launch about 150 stores in Kanpur by financial year 2018-19, as part of its Rs 500 crore investments committed in Uttar Pradesh.

In addition to its six already present in the city, Ananda has revealed two company owned company operated (COCO) stores.

The company, which is stepping up for expanding its retail presence rapidly to augment its market share, last month announced opening 500 retail COCO outlets by the end of next fiscal in states like Delhi-NCR, Haryana, UP and Punjab.

"We see a huge potential in the Kanpur market and are certain that the city will play a huge role in our expansion plans for Uttar Pradesh," Ananda Group Chairman Radhey Shyam Dixit said.

The company expressed its plans to launch an average of 10 COCO stores on a monthly basis.

Headquartered in Noida, Ananda has a current production capacity of over 12 lakh litres of milk a day. It sells over 50 products and has presence in most of the diary products, except ice creams.

 

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Mother Dairy faces attrition at top level management
Mother Dairy faces attrition at top level management
 

Indian major Dairy player Mother Dairy Fruit & Vegetable is facing top level management crisis as the company's top occupying ranks have quit in the middle of the last year.

The company which holds one of the largest market share in the country registers sales of around Rs 8,000 crore.

Mother Dairy has lost some of its top executives after its former MD & Director S Nagarajan last year due to undisclosed reasons.

Mother Dairy’s head of dairy business Subhashis Basu put in his papers around the same time to join Indore-based Prataap Snacks as Chief Operating Officer (COO).

The company later appointed Sanjiv Khanna, who was serving as PepsiCo’s CEO of SBC Beverages Ghana (marketers and manufacturers of PepsiCo products), to replace Nagarajan.

Sources said other senior executives to follow in the footsteps of their colleagues are Meghnad Mitra, who served as group CFO at Mother Dairy Fruit & Vegetable, Vikas Dogra, the company’s head of sales, and Maheswaran Rajaram, responsible for regional sales. T S R Murali, head of R&D, may also be on his way out, sources said.

When asked about the development, a Mother Dairy Fruit & Vegetable spokesperson said, “Mother Dairy is a professionally managed company with a leading position in the dairy sector. While we do not wish to comment on specific changes, it will be sufficient to say that movement of professionals is an industry wide phenomenon. Strong HR practices and the brand name of Mother Dairy is enabling us to get the right mix of talent for accelerated growth in alignment with the organisational strategy.”

 

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Ananda Dairy Predicts Revenue To Rise By 30 percent
Ananda Dairy Predicts Revenue To Rise By 30 percent
 

Ananda Dairy is predicting a total add up of 30 percent rise from its  Rs 2,000 crore revenue in the next financial year as it expands retail footprint as well as product portfolio.

The company is planning to open 500 retail company-owned and company-operated outlets by end of next fiscal at places like Delhi-NCR, Haryana, Uttar Pradesh and Punjab.

Ananda Group Chairman R S Dixit said, "We are targeting over 30 per cent growth in turnover to Rs 2,000 in financial year 2018-19. We expect retail outlets to contribute 15 per cent to sales by then as we increase the number of outlets. It is 10 per cent at present."

The company is expected to report a turnover of Rs 1,500 crore in the current fiscal, ending March 31. Currently, it operates over 200 outlets in the NCR. It sells over 50 products at present and has presence in most of the dairy products, except ice creams.

About the company prospects of introducing ice creams category in the near future, he said: "It is not a priority right now. It will require huge investment". Based on customer need and feedback the company will launch more value-added products especially those with higher protein content.

 

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Danone Exits Dairy Business in India
Danone Exits Dairy Business in India
 

French foods giant Danone has decided to exit the dairy business in India. The company which entered India in 2010 is rationalising its product portfolio and has discontinued stock keeping units (SKUs), which have been making a minority contribution to its overall business in India that include the UHT (ultra high treatment) and fresh dairy products.

In line with this, Danone’s factory at Rai near Delhi has discontinued production.

Danone under the leadership of its India MD Rodrigo Lima, plans to focus on its nutrition business that it had acquired from Wockhardt in 2012, for about Rs 1,500 crore. In 2015, the company consolidated its India business by merging the two portfolios (dairy and nutrition).

Danone was incurring losses on its dairy business which includes milk, flavoured yogurt, buttermilk, cold coffee, curd and smoothies and could not sustain maintaining its margin. The company was unable to compete with national giants like Amul, Mother Dairy and other regional brands.

In a statement, Danone said it has decided to rationalise its product portfolio in India to allow for accelerated investments and a sharper focus on growing its nutrition portfolio which is more than 90% of the business. The company said Danone has a stated goal to double its nutrition business in India by 2020 in line with its global mission to ‘bring health through food to as many people as possible’ and this renewed focus is key to achieving this goal.

Danone India Spokesperson said “We have great ambitions for our business in India and remain committed to invest and grow in India through well-established brands such as Protinex, Aptamil, Farex, Dexolac and Neocate. In order to maximise growth opportunities, we are continuously analysing our portfolio and sharpening our focus to accelerate investments on the best performing categories and products. For this reason, we will discontinue some of the SKU’s sold in India. Our focus is to bring nutritionally superior and relevant products to India, and 2017 has been a testimony of that with 10 new launches including some from our global portfolio”.

 

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OMFED Partners With Grozip for online marketing of milk products
OMFED Partners With Grozip for online marketing of milk products
 

Provider of milk and other milk products prepared by the Orissa State Cooperative Milk Producers' Federation Limited (OMFED) at customers’ doorsteps on Monday signed a MoU with Grozip, a city-based online grocery service. Grozip will make home delivery of various OMFED products on a phone call or click of a mouse.

Odisha government had asked OMFED to start online marketing of milk and milk products in 2015 after the state-owned dairy board failed to sale huge amount of surplus milk. “Online marketing is the need of the hour and more numbers of customers want to buy products online so we tied up with Grozip.

Managing director of OMFED said “It a sizable costumer base who buy various products like grocery and vegetables from them and now the costumers can get milk through it. OMFED is also going to launch its own mobile APP (application) soon through which customers can directly order milk and milk products.

Anand Mishra, CEO and founder of Grozip  said “We have a customer base of around one lakh in the last one and a half years. We have plans to offers attractive schemes for customers like cash back and free delivery on a minimum order. We get around 60 to 100 orders a day from Cuttack and Bhubaneswar for various grocery items including vegetables. We are also planning to include cooked food in our products soon”.

Meanwhile, the online marketing service launched by Odisha State Poultry Products Co-operative Marketing Federation Ltd (OPOLFED) in 2015 has not been working for last several months.

 

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Amul cuts skimmed milk prices by 6-7 per cent on weak domestic demand
Amul cuts skimmed milk prices by 6-7 per cent on weak domestic demand
 

Gujarat Co-operative Milk Marketing Federation Ltd (GCMMF), which sells its products under the Amul brand has decided to cut the prices of its skimmed milk products (SMPs) by 6-7 per cent across all varieties. This, according to experts, is the result of the sharp decline in demand during the ongoing lean season, coupled with a sharp increase in supply.

This decision has accounted for a decrease of the prices by about Rs 10 per kg making the the current prices of SMPs to be around Rs 220 per kg.

"We have cut maximum retail price (MRP) of skimmed milk powder by six-seven per cent across all varieties recently because of weak demand from consumers. SMP prices are likely to remain subdued in coming months due to the commencement of new milk supply season," said R S Sodhi, managing director, GCMMF.

The price decline, however, is unlikely to impact farmers’ realisations for the supply of liquid milk as dairy companies are preparing to absorb a squeeze in margins from lower prices. "Dairy companies in Maharashtra have posted lower profit margins for June quarter due to increase in milk procurement prices. Milk prices, however, are unlikely to decline because of a cut in SMP prices," said Shirish Upadhyay, senior vice-president (strategic planning), Parag Milk Foods Ltd, the producer of Gowardhan brand milk and cheese.

An Edelweiss Securities report said that the average milk procurement price for Prabhat Dairy stood at Rs 27.1 for the April–June quarter of 2017, up by five per cent from the corresponding quarter last year and down by around five per cent from the previous sequential quarter.

However, dairy producers are having a hard time on the exports as the prices prevailing in the international markets are 20 per cent less than the domestic market.

 

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?PepsiCo extends Quaker Oats brand to packaged milk
?PepsiCo extends Quaker Oats brand to packaged milk
 

Beverage maker PepsiCo has said it is foraying in the dairy market by extending its Quaker Oats brand to packaged milk.

Deepika Warrier, VP (nutrition), PepsiCo India said the product, a value added grain-based, fibre-fortified dairy beverage, would be available in cartons and under the Quaker umbrella.

Former cricketer and sports icon Sachin Tendulkar is not only endorsing the new product, Quaker Oats plus Milk, but has also played a role in ‘co-creating’ it, PepsiCo said.

Warrier said, "Sachin has shared significant insights on the importance of healthy mornings and the right intake of nutrition needed for sustained energy."

PepsiCo said the product uses its patented global 'soluOats' technology to blend milk with the oats.

Warrier added, "In line with PepsiCo’s larger goal of performance with purpose, we are looking at multiple ways to transform our nutrition portfolio. 

This product addresses the nutrition needs of the time-pressed millennials and young Indian consumers."

 

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Amul to start selling vegetables and fruits in Ahmedabad
Amul to start selling vegetables and fruits in Ahmedabad
 

The Gujarat Co-operative Milk Marketing Federation (GCMMF) that markets dairy products under brand Amul is seriously exploring possibility of buying fresh vegetables and fruits directly from farmers in the villages from where it procures milk on daily basis.

Apart from milk, homegrown dairy giant Amul will now procure and sell fruits and vegetables at their outlets.

For this, GCMMF has roped in the National Dairy Development Board (NDDB) to carry out technical evaluation of the project.

To begin with, Amul is looking to start selling vegetables and fruits in Ahmedabad where it runs over 200 parlours.

R S Sodhi, Managing Director, GCMMF, said, "On January 26, we had signed a MoU with Gujarat government to help farmers get better price for their agri produce."

Amul may replicate the Delhi model of Safal that is engaged in retailing of fresh fruits and vegetables along with value-added products, he said.

The proposal came up for discussion during the recent board meeting of GCMMF in which chairman of all the 17 district dairy unions of Gujarat who are member unions of the federation had participated at Palanpur.

Jetha Patel, Chairman, GCMMF, said, "We are studying the procedure on how to start procurement and marketing of different vegetables including tomatoes, cauliflowers, brinjals, onions among others."

He added, "If we succeed in our study, the vegetables will be marketed under brand Amul and will be procured by our member unions.

This will not only benefit the vegetable producers but also benefit consumers as the role played by middlemen will get eliminated. Producers dealing in horticulture will get better price while consumers will get the agri produce at affordable price with trusted brand name of Amul."

 

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HFL plans to set up five milk processing units across India
HFL plans to set up five milk processing units across India
 

Hyderabad-based Heritage Foods Limited (HFL) said it is in the process of entering into a Joint Venture (JV) with an European dairy firm for manufacturing and marketing yogurt in India.

Brahmani Nara, Executive Director, Heritage Foods also said the company aims to achieve $1 billion in the next five years from now.

Brahmani said, "Being the leading player in curd segment, the company is going to launch varied products in Yogurt market, by tying up with its international partner. In continuation to this, the company is going to launch new products very soon in beverages segment. This will further strengthen the current large portfolio of value added products. The negotiations are in the final stage with an European company and will be finalised in a month."

The company (Heritage) with footprints in 15 states has plans to enter newer markets soon. It also has plans to set up five milk processing units across the country with an investment outlay of Rs 150 crore, she further said.

She said, "Staying true to the company's mission to reach Rs 6000 crore or $ one billion in revenues by 2022, the company along with its core business vertical of milk also aims to further enhance the contribution of value-added products from current 24 per cent to 40 per cent in the next five years. Heritage had already made inroads into western markets like Pune and Mumbai besides Northern market. The management is confident of achieving these numbers by both organic and inorganic growth."

As a part of inorganic expansion, the company had recently acquired dairy business of Reliance Retail making Heritage Foods a pan India player.

 

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Mother Dairy aims 20% growth from health segment
Mother Dairy aims 20% growth from health segment
 

Aiming for at least 20 per cent growth in the value added dairy products segment in the near term, Delhi-based Mother Dairy Fruit & Vegetable, subsidiary of the National Dairy Development Board, might enter the health foods segment and diversify its low-calorie product line.

Value-added dairy products, fastest growing category for the company, comprised 18 per cent of its latest annual turnover of Rs 6,800 crore. The category covers ice-cream, cheese, yoghurt, buttermilk and cottage cheese, among others.

S Nagarajan, Managing Director said, "Low-calorie items are gaining traction and is definitely a focus area for us. Besides, entering into health food is an objective."

However, despite being asked, he would not go into specifics on products or schedules. The company has invested around Rs 15 crore in research and development to come up with new health foods and low-calorie product lines.

Nagarajan adds that their research has found females in the 11-59 years age group are deficient in calcium, iron and Vitamin-D, presenting a new consumer division possibility for it.

Targeting Rs 10,000 crore annual turnover by the end of the next two financial years, the company is also betting on its Dailycious brand, which until recently focused solely on powder milk; it recently came up with liquid milk.

In Bengal, where the company cannot sell liquid milk under the Mother Dairy name, owing to the state government having the brand rights, it has extended the Dailycious brand to do so in the state.

The milk portfolio accounts for a little over 70 per cent of its annual earnings but its contribution to overall sales is poised to fall to around 60 per cent by 2018-19 as sales of its value added dairy products pick up. The company is keen to target the market in Bengal and the neighbouring area.

Nagarajan said, "The eastern region (market) is poised to grow by 10-12 per cent in the coming 10-15 years. We don't want to miss our growth opportunity here."

Currently, the eastern region accounts for around 15 per cent of its annual revenue; the northern region contributes 80 per cent. Nagarajan is aiming to grow the brand by testing in West Bengal, and thereafter, based on market response, do so across India, except the south. It had first experimented with its sweet curd in Bengal and then went for a national rollout.

 

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Mother Dairy to hike milk prices of both poly pack and bulk vended milk in Delhi NCR by Rs.2 a litre
Mother Dairy to hike milk prices of both poly pack and bulk vended milk in Delhi NCR by Rs.2 a litre
 

Mother Dairy has said that it will hike milk prices, of both poly pack and bulk vended milk (token milk), in Delhi NCR by Rs 2 a litre with effect from March 11.

The consumer milk prices in regions of Mumbai, Chennai and Uttar Pradesh -East will also be increased from March 11, Mother Dairy said in a press statement.

The last consumer price revision in Delhi NCR for poly pack milk was taken in July 2016. Since then the consumer milk prices have been retained despite significant increase in raw milk purchase prices, said Mother Dairy.

"The consumer price of token milk was last revised in May 2014 and the company is now increasing its prices by Rs 2 a litre," it said.

The milk prices which in a normal year come down during winter months have gone up substantially, it said.

Mother Dairy said that they have increased farm prices by about Rs 2.5 – Rs 3 a kg over July and compared to last year the prices are up by Rs 5 - Rs 6 a kg.

"The company believes in giving competitive and remunerative price to the farmer to ensure sustainability of dairying and availability of safe milk for consumers," said Mother Dairy adding that they passed close to 80% of the sales realization from milk towards the procurement of milk.

New prices for token milk in Delhi will be Rs 38 a litre, full cream milk at Rs 52 a litre, toned milk at Rs 42 a litre, double toned milk at Rs 38 a litre, skimmed milk at Rs 34 a litre and cow milk at Rs 42 a litre.

 

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Edible oil surpass dairy as India's largest packaged food items
Edible oil surpass dairy as India's largest packaged food items
 

Oils surpassed dairy as India's largest packaged food item, underpinned by increasing awareness among consumers who now prioritise health and hygiene over expenses on the staple cooking medium.

Sales of cooking oils increased 22 per cent at Rs. 1.05 lakh crore, outpacing dairy that was below Rs.1 lakh crore during 2016, according to Euromonitor International. Domestic companies harnessed their last-mile distribution network beyond metropolitan centers to dominate sales: The top five companies in the overall packaged foods industry worth Rs. 3.5 lakh crore were homegrown.

Angshu Mallick, chief operating officer at Adani Wilmar that sells the Fortune brand of cooking oils, said rural India was at the vanguard of sales growth. "People are becoming conscious of what they eat. The per capita consumption of edible oil too has increased from 8 kg per person annually to 16 kg in the past one decade," he added.

Sales are increasing by more than 25 per cent in rural India, where increasing farm gate prices of cereals and vegetables are helping broaden the consumer base. The introduction of smaller and more affordable pack sizes is also bringing more packaged food categories within the reach of price-sensitive consumers in semi-urban and rural India. By contrast, companies are stressing health and wellness through innovative marketing in urban India, helping shift value to the premium end of the spectrum.

Ruchi Soya, the third largest company within the foods segment, launched the "Kill lethargy with Sunrich Sunflower Oil" campaign as part of the strategy to focus on health and well-being. Similarly, Adani Wilmar sought to attack diabetes, a condition that affects millions of Indians, with the Fortune VIVO diabetes care oil.

Siraj Chaudhry, chairman, Cargill India said the efforts of the industry and the government to increase consumer awareness on food adulteration and safety have helped spur sales.

"Consumers believe it is convenient to buy packaged oil. The cost difference between the two is also not much," said Chaudhry, who believes that sales growth would get more companies to fortify oil with vitamins.

Experts, however, attribute higher sales in part to a wider category: Dairy is consumed largely by end-users, but cooking oils have consumers within the processed food industry.

"The growth in edible oils is driven more by out of home consumption by fast growing snacking companies and quick service restaurants. Also, oil comes with a higher price tag compared to dairy products on a similar pack size," said Devendra Chawla, group president at Future Group, adding that dairy will be the next big bet within foods as the economy matures.

Changing lifestyles are leading to strong growth in areas such as savoury snacks, and manufacturers remain sensitive to the peculiarities of the Indian palate.

By contrast, dairy has not innovated much and the industry is largely controlled by state-led co-operative producers that are beset with challenges of prompt logistics and preserving products that have short shelf lives. Amul and Mother Dairy, the state co-operatives that lead the dairy business, remained the two largest food companies and accounts for about 10 percent of the entire packaged food market.

Dairy was the slowest-expanding category with 4 percent volume growth last calendar year due to its relative maturity in the food sector. India is the ninth-largest market for dairy products and the largest for milk, globally. "Dairy is still driven largely by loose or unbranded products even at urban centres. Hence, as a product category, it is way bigger than edible oil that is hardly being sold loose now," said RS Sodhi, managing director at Gujarat Co-operative Milk Marketing Federation that sells Amul.

 

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To prevent high nutritional deficiency disorder, NDDB asks dairy sectors to start fortification of food
To prevent high nutritional deficiency disorder, NDDB asks dairy sectors to start fortification of food
 

According to Dilip Rath, Chairman of National Dairy Development Board (NDDB), fortification of foods, which can address nutritional value of millions, provides a huge opportunity to the organised dairy sector to increase their market share.

"The organised dairy sector is the only source for milk powder and condensed milk due to the requirement for specialised equipment.

"High nutritional deficiency disorders can be prevented with fortification of foods with Vitamin A and D, and it represents an opportunity for the organised sector to grow its market share," a release here quoted him saying at Anand in Gujarat.

Focused and continuous research and development, keeping in mind the fast-changing consumer preferences, will also help the organised sector in increasing its market share, he said.

Similarly, he said, development of longer shelf life dairy products, specialised dairy based nutraceuticals and wellness products, probiotics catering to different classes of consumers and niche markets needs, can be undertaken by the dairy industry, especially cooperatives, to increase realisation.

Rath said milk is India's single largest agricultural commodity in value terms and is more than the combined value of paddy and wheat.

As per reports, the value of the Indian market for milk and milk products is expected to grow at 15 per cent annually. Of this, the contribution of milk products like cheese, paneer, fermented milk products, butter and ghee would be significant, representing both an opportunity and challenge to the dairy industry, he added.

Dairy cooperative network should adopt renewable energy, he said. "These renewable energy initiatives include use of concentrated solar thermal for pre-heating of water and solar powered milk collection systems."

 

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Kwality signs an agreement with Bank of Baroda for Rs 4000 crore loan to farmers
Kwality signs an agreement with Bank of Baroda for Rs 4000 crore loan to farmers
 

Kwality Ltd, a reputed dairy firm recently signed an agreement with Bank of Baroda for providing Rs 4,000 crore loans to the former's one lakh farmers from whom the company procures milk.

In a filing to BSE, Kwality said, “it has signed an MoU with Bank of Baroda to disburse Rs 4,000 crore of loan to its one lakh farmers in initial phase out of its established network".

The company has a network of about 3.25 lakh across about 4,500 villages in Uttar Pradesh, Haryana and Rajasthan which are amongst the largest milk producing states of India.

Kwality Ltd would attend to the remaining farmers in successive phases over a period of time.

The dairy brand emphasised that the funds would be available at preferential rate and shall be utilised primarily towards purchasing of milching animals, smartphone and two wheelers. The scheme is aimed at providing financial assistance to improve socio-economic lives of farmers and guide them towards digitisation.

Regarding the event, Nawal Sharma, company's President and Head Business Transformation said, "This is a win-win situation for all the three stakeholders which are farmers, bank and company. This will help in increasing our direct sourcing of milk from farmers and faster rolling out of high-margin value added products thereby improving the profitability."

As per Nawal, Bank of Baroda would get a readily available customer base for the priority sector lending and would also get operational support from the company in identification of farmers and payment management system.

Nawal said, "Farmers will get financial assistance at attractive terms with which they can create additional infrastructure leading to higher income. This will also promote digitisation among farmers.”

He also said that farmers would get loans up to Rs 4 lakh at less than 9 per cent interest rates. Furthermore, he said, "It would allow us to develop a robust engine to increase our procurement directly from farmers who currently contribute 22 per cent of our total milk handling capacity of 3.4 mn litres/day, pinpointing that the company is targeting to increase direct procurement to over 50 per cent over the next 3-4 years.

Kwality plans to roll out 10-12 variants of high margin value-added products such as flavoured milk, paneer, cheese, UHT, cream in tetra packs, table-butter, yoghurts, amongst others over next 12-18 months.

 

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International dairy players are not ready to take a dig at the Indian market
International dairy players are not ready to take a dig at the Indian market
 

Though the Central Government has made its way clear for 100 per cent FDI (Foreign Direct Investment) in animal husbandry (including breeding of dogs), pisciculture, aquaculture and apiculture under automatic route, but unfortunately, the move has not managed to allure many foreign investors. The experts feel that the foreign investors are not ready to put their money on India, mainly because of the ban on cow slaughter.

In India, many states have joined their hands to curb the cow slaughter in their respective states but this has triggered a big controversy around the nation. Most of these states have banned this activity due to religious sentiments attached to the animal (Hindus considered cow as a holy animal). Sharing his views on the subject, Kuldeep Saluja, Managing Director, Sterling Agro Industries Ltd. maker of Nova brand of dairy products said that globally, non-milking cattle goes to slaughter house, which is not the case in India. So it's a big challenge for global dairy companies that want to enter the Indian market. Not being allowed to slaughter certain cattle is a huge drawback in India for global dairies.

In international markets unproductive cattle, most of which are cows, after being in dairies for 14-15 years, go to slaughter houses. A company expects 50-60 per cent return on investment on sale of each cow. Informing further, Saluja stated that 95 per cent of the cattle used in commercial dairy farming globally are cows and not buffaloes, unlike India. Hence, he said, the country is not lucrative for companies to attract FDI in animal husbandry sector.

International firms such as Fonterra of New Zealand, French cheese maker Fromageries Bel, Denmark's Arla, Dutch dairy cooperative Friesland Campina, Mexico's Grupo Lala, and Germany's Hochland Group have been exploring the Indian domain to fish in good opportunities to set up own units or to partner with local players.

 

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Mumbai based Prabhat Dairy launches Dahi with no preservatives
Mumbai based Prabhat Dairy launches Dahi with no preservatives
 

Mumbai based Prabhat Dairy Ltd has recently launched Dahi with no preservatives.

Positioned as “Ghar Jaisa Dahi” it is made from fresh cow’s milk and produced in an ultra modern state–of–the-art-plant, under strict hygienic conditions.

The manufacturing process employs the latest technology to ensure a product untouched by human hand. This ensures that the Dahi contains all the natural goodness of cow’s milk which has nutritive value.

The company has adopted a unique model being used for first time in India called ‘Raftar’ which directly delivers fresh Dahi in chilled vans to 10,000 local grocery shops.

Other new ways of delivery are also being worked like use of Mopeds with chilling box at the back.

Launched in Mumbai, it is available in packs of 85g (Rs 10), 200g (Rs 25) and 400g (Rs 45) across the modern retail chains

 

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Jetha Bharwad becomes Amul's first vice-chairman
Jetha Bharwad becomes Amul's first vice-chairman
 

Senior BJP MLA and Chairman of Panchmahal Dairy, Jetha Bharwad was unanimously elected as the first vice chairman of Gujarat Cooperative Milk Marketing Federation (GCMMF) that sells its dairy products under brand name 'Amul', reported PTI.

Since its start in 1973, this is for the first time that GCMMF created the post of vice-chairman by amending their by-laws recently.

Bharwad, MLA from Sehra constituency of Panchmahal district became the first vice chairman of the prestigious cooperative institution.

The election was conducted by the Prant Officer B S Patel in presence of chairman of all the 17 member unions, who represented their district milk unions in the state.

Bharwad's nomination was proposed by Rajkot Dairy's chairman Govind Ranpariya and supported by the chairman of Sarhad dairy in Kutch Valji Umbad. Chairman of the Sabarkantha District Cooperative Milk Producers Union (Sabar Dairy) Jethabhai Patel is currently the chairman of GCMMF.

GCMMF is considered as India's largest food products marketing organisation with an annual turnover of Rs 21,000 crore.

The member unions of GCMMF procure an average of 160 lac litres of milk everyday from 36 lac milk producers in 18,000 villages of the state.

 

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ITC to invest Rs 1000 crore in juice, dairy biz
ITC to invest Rs 1000 crore in juice, dairy biz
 

ITC Ltd, one of the biggest FMCG major in the company is palnning to invest Rs 1000 crore in dairy and juice business, as per a report in ET.

The company which has already entered into ready to eat and snack market, is planning to enter juice and dairy business by January-March quarter, said people aware of the development.

The Kolkata-based company will make the proposed investment in the short term on manufacturing capacity, marketing and brand building and distribution expenses.

The FMCG major has alraedy undertaken over Rs 250-crore investments for these businesses. The company has also acquired Bangalore based B Natural juice brands for about Rs 50-60 crore earlier this May.

ITC's expansion into dairy is done organically and involves setting up processing plants in Munger (Bihar), Punjab, Uttar Pradesh, Maharashtra, Telangana and Andhra Pradesh. Trial production in Munger will start this month, added the person.
“ITC will soon roll out juices across the country, whereas the entry into dairy business will be late next quarter. We plan to regionalise both juices and dairy products since the taste would vary,” said, Chitranjan Dar, CEO, Foods, ITC.

The company will enter into both 100 percent juices and nectars with 7-8 variants, while in dairy it is yet to decide the full portfolio.

"In dairy, there will be both B2B and B2C products such as milk powder and ghee to start with. However, our aim is to launch a wide variety of dairy products which we will evolve in phases," added, Dar.

 

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Hassad Food files FIR against Bush Foods
Hassad Food files FIR against Bush Foods
 

Hassad Food, the Qatar based company which acquired Delhi’s Bush Food last year has filed an FIR against the Indian Basmati Company, as per a report in ET.

The Qatar based company said in a statement that Bush Foods had fudged accounts and indulged in fictitious sales amounting to Rs 1,000 crore.

Hassad Food, owned by Qatar Investment Authority has alleged that it invested around Rs 750 crore in Bush Foods in April 2013 for 69.5 per cent stake based on false financial statements and nonexistent inventory.

The company’s legal counsel Simon Henders on its FIR said Bush Foods' top management including promoter Virkaran Awasty provided incorrect financial statements to induce investment.

Hassad Food has also accused Standard Chartered Private Equity officials, claiming that they were aware of the financial affairs of Bush Foods and helped negotiate and seal the deal. Hassan Food's acquisition of Bush Foods had given an exit option to Standard Chartered PE that held around 30 per cent while promoters including Awasty family too sold part of their stake.
An email query to Hassad Food didn't get any response as of press time while Bush Foods was unreachable for comment.  And the Standard Chartered declined to comment.

Bush Foods was founded in 1992 by Awasty who still holds 30.5 percent stake in the company.

"The internal investigations reveal significant discrepancies between the actual inventory available with the company and inventory that was shown in its books of accounts up to October, 2013, which has been represented to various shareholders / lenders ," said Henders in the FIR.
"The misrepresentations indicate a huge accounting fraud, which is to the tune of approx Rs 1,000 crore," it read. Hassad Food alleged that Bush Foods, during the deal process, maintained it had at least 12 months of stock of inventory at any given time in order to ensure continuity of supply for the branded products.

A vendor due diligence report dated October 31, 2013 prepared by PwC at the request of Bush Foods, also stated that the company had inventories of Rs 895.50 crore as on March 31, 2012.

However, Hassad Food in its internal investigation this year found that the actual extent of the stock of inventory to be in the range of Rs 18-30 crore as substantial number of bags were filed with husk and wooden pallets, giving an impression that warehouses are filled with stocks. Hassad Food also alleged that credit facilities have been availed on behalf of Bush Foods on the basis of non-existent stocks.
 

 

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