Milk & Dairy Products : Industry Structure

In India
• India has the largest milk and milk products market in the
world.

• State co-operatives & privately owned Indian companies

dominate the liquid milk sector

• India has around 70,000 village dairy co-operatives, 22 co-

operative dairy federations at state level & 170 milk
producer unions at district level

• Infant Milk Food, Milk Powder, Whitener, Condensed Milk,

Malted Milk Food, Butter, Cheese, Ice Cream and Ghee are
the major value added products from the Indian dairy sector
 GROWTH RATE
Projected Growth Rate
Product
Per cent per annum

Milk production 3

Ghee consumption 9

Table Butter consumption 10

Paneer (cottage cheese) 10

Processed cheese 14

Dairy whiteners and condensed milk 8

 Market Environment
• India has the largest milk and milk products
market in the world.
• If the growth of this sector is extrapolated, it
is observed that in the next ten years
production will increase to about three times
today’s numbers.
 Growing Industry
• Due to increasing population, per capita
availability of milk will increase by only about 1.5
per cent per annum.
• For an economy growing at about 6 per cent per
annum, this increase in availability will be grossly
inadequate.
• Production growing at only 3 per cent and
consumption growing at more than double the
rate is obviously going to lead to a mismatch
between demand and supply..
Amul India and Nestle India has been the TWO
major players in the milk products industry
since a very long time
 COMPANY OVERVIEW

• Nestle India Limited; a • Amul was set up in 1945

subsidiary of Nestle; was as Gujarat Cooperative
founded by Henri Nestle Milk Marketing Federation
in Switzerland in the year (GCMMF).
1867. The company was • It is a state level apex
established in India in body of milk cooperatives
1961. in Gujarat that helps
• The first production unit farmer get good
was launched in Punjab remuneration on his
• Nestle developed a milk produce.
economy in Punjab (per • Milk economy was set up
the request of Punjab in Gujarat by Amul
government )
 Company overview

• Amul has a more Indian • Nestle has its identity has

appeal than brand. a International Brand
• Its turnover was 67.11 • In 2009 Nestle recorded a
billion Indian Rupees in net profit of CHF 10.43
2008-09. billion, 16% of which was
• It has over 50 products from Asia
on the Indian market. • It has a total of six
thousand brands.
MILK PRODUCTS AND PREPARED DISHES AND
NUTRITION COOKING AIDS

CHOCOLATES AND
BEVERAGES
CONFECTIONARY
 Market Position
• In butter, cheese and saturated fats, Amul has
remained the undisputed market leader in India since
its inception in 1955.
• Today the market share of Amul ice cream is 38%
share against the 9% market share of HLL, thus making
it 4 times larger than its closest competitor.
• Nestle markets its products in130 countries across the
world.
• Nestlé has 80% market share in the baby cereal
segment ( Infant food)and is clearly a market leader.
• Nestlé is the Indian market leader in instant coffee ,
with 55% market share and NI has about 80% market
share in the instant noodle segment.
• NESTLE brand has had a great distribution.
• Nestle to start with launched its Nestle Milkmaid
and Nestle Everyday range. The Everyday milk
powder which is popular even now among
people all over India especially in rural India.
• Then Maggi Noodle was launched
• Another most popular brand they have is range
of beverages ( Nescafe classic , sunrise)
• The other range is chocolates and confectioner
• Solely on the basis of the quality products and
not a very “Indian” image of the brands, they
have surely endured and have been quite
popular.
• Nestle has great marketing strategies that
maintains good distribution reaching out to
the mass. However the number and variety of
products and category ranges are limited here.
• Amul launched its butter way back in 1945
• Amul first became famous for its butter
among the mass and slowly began to expand
itself in other milk products category. It has
now about 8 different categories
• Bread Spreads, Milk Drinks, Powder Milk,
Fresh Milk, Cheese, For Cooking, Desserts,
Health Drink
• This organization has a very Indian feel to it
and this is more emphasized by its positioning
as “the taste of India” as well as its Indian
products range like Malai paneer, Amul
Lassee, Shrikhand and many more.
• Amul also bags the image as “savior of
farmers”, “a milk revolution” and this got only
more popularity with a movie made on the
organization
 Expansion
• Amul is the largest food brand in India and
world's Largest Pouched Milk Brand with an
annual turnover of US $1050 million (06–07) .
• Besides India Amul has entered overseas markets
such as Mauritius
, UAE, USA, Bangladesh, Australia, China, Singapo
re, Hong Kong and a few South African countries.
• Future plans to enter Japan and Sri-Lanka Market
 Expansion
• Milk products and nutrition account for around
45per cent of Nestlé India’s total revenues.
• hence now company has expanded their product
line to attract Indian market more extensively by
adding in their portfolio yoghurt segment
consists of Fresh ’n Natural Dahi, Slim Dahi, Jeera
Raita and fruit-flavoured yoghurts.
• Tied up with Andhra Pradesh-based Heritage
Foods India Ltd in the South, Bengal Nester in the
East and Dynamix Dairy Industries Ltd in the West
not only for sourcing milk but also processing,
packaging and supplying
 Market Responsiveness
• Amul has responded very quickly to the
various niches in the market locally as well as
internationally by launching products like
Amul Kool (targeting the youth) and Amul
Masti (Buttermilk educating youth against
carbonated drinks).
• Nestle is slowly traversing this path by
launching Nestle Jeera Raitha
 Market Responsiveness
• Amul is slowly transforming from the very
“cute” image to the “yo” and “yippie” image
reaching out to the young crowd stirring them
up with their confectionery range.
• Nestle has reached out to the masses by
quietly maintaining its international image but
with a great taste and quality. It has some of
the most popular brands (Maggi Noodles) for
long which does not had any challengers.
 Marketing Strategy
• Amul has this “desi brand” image with extensive
marketing activities like
– sponsoring various programs
– hosting many competitions ( TV reality shows such as
Voice of India, Master Chef)
– own exclusive parlors.
– Advertising in simple
– Advertisement in akashavani to reach more people in
rural India
– Introduction of IT in milk collection, processing and
distribution area from rural level itself.
 Marketing strategy
• Nestlé supports initiatives to create awareness
about the right to education
• Company veterinarians and agronomists
supervise the milk routes and advise farmers on
various issues including proper feed for the
herds. Milk storage facilities have been set up
close to the farmers. Veterinary services are
provided free, and medicines provided at
wholesale cost
• Nestlé India supports local schools, helps in the
maintenance of public parks and green belts,
facilitates blood donation camps and health
awareness programs
 Sales Turnover
• sales of our Federation registered a quantum
growth of 19.3% to reach Rs. 8005.36 crores
(Rs. 80 billion).
• The Company has posted a net profit of Rs
2185.60 million for the quarter ended
September 30, 2010 nestle.
 Awards
• Nestle India was recognized with the top
Exporter Award for export of Instant Coffee,
and for export of all coffees to Russia and CIS
Countries.
• Amul has won various national awards which
includes the Rajiv Gandhi National Quality
Award and the Ramakrishna National Quality
Award.
Market Competitors
• Mother Dairy , National Dairy Development
Board (NDDB)
• Cadbury
• Local Brands : regional wise Nandini (K), Vijaya
(AP), Aravind(TN)
• HLL (Kwality Walls)
 SWOT
ANALYSIS
 SWOT ANALYSIS OF INDIAN DAIRY
INDUSTRY
STRENGHTS WEAKNESS
•Demand  •Perishability
•Margins •Lack of control over yield: 
•Flexibility of product mix:  • Logistics of procurement: 
•Availability of raw material: •Problematic distribution: 
•Technical manpower:  • Competition: 

OPPORTUNITIES THREATS
•Value addition •un-organized sector
•New products
•utilization of resources
•geriatric foods and
nutritionals.( milk proteins)
•Export potential
 SWOT ANALYSIS OF AMUL
STRENGHTS
•Has a National image
•Variety of products to cater
to all customer groups
•Brand image
•Affordable price
•Effective ad campaign
OPPORTUNITIES
•Export potential
•Entry in retailing
•Packaged sweets, sports
drink new market
WEAKNESS
•Not focused on other food
product lines
• Inadequate transportation
•Problems in distribution
THREATS
•Increasing requirements
•Adulteration
•Competition
•No supporting units
 SWOT ANALYSIS OF NESTLE
STRENGHTS
•International Company
•Strong brands (market
leader)
•Expanded product line
•Wide distribution network
•Quality maintenance
•R&D support
OPPORTUNITIES
•Expansion: Potential to
expand smaller towns ( rural
market)
•Global hub
•Product offerings
WEAKNESS
•Complex supply chain
management
•Lacking in promotion
•Prices are high
•Less consumer research
THREATS
•Immense competition from
the organized as well as the
unorganized sector
•Changing consumer trends
•Increasing prices of raw
material