S2 11 shimla dairy products

Group 11

Pranav Gopal Jha (FT 12238)

Harshavardhan Chinchore (FT 12279)

Rajiv Garg (FT 12245

Siddharth Sureka (FT 12258)

Smruti Rekha Padhy (FT 12261)

Marketing Management SHIMLA DAIRY PRODUCTS

Indian Scenario204 million cows and 84 million buffaloes,

largest population of cattle in the world. livelihood to 70 million dairy farmers. In terms of total milk production, India ranked

first with 78 million tonnes in 1999-2000.India today is the lowest cost producer per litre

of milk in the world Milk yield per animal was very low in India at

around 1.5 liters per day. Main reasons for the low yield were lack of use of scientific practices in milking, inadequate availability of fodder in all seasons unavailability of veterinary health services.

July 4, 2011Group 11 Shimla Dairy Products2

Cheese Market Indian palate broadly divided into the north and the

south.North more exposed to cheese through Western

food outlets such as pizza chains and McDonald’s. To the south, cheese still a new food itemInternational brands began to enter the market-

Dutch Gouda, French Camembert and Italian Parmesan.

Shimla Dairy Products made local versions of all these cheeses.

For Camembert, Shimla imported the starter culture and other materials from Australia and France.

The branded cheese market was estimated to be 9,000 tones per annum valued at Rs1.8 billion

Mainly consumed in urban areas- Four metropolitan cities accounted >60 % of consumption.

Per capita consumption, even among the cheese consuming households, was a poor 2.4 kilograms per annum as compared to over 20 kilograms in the United States.


CompetitionDynamix –current supplier to most leading pizza chainsprocessing capacity of 500,000 litres of cows’

milk per dayGMP ,HACCP,ISO9002Gujarat Cooperative Milk Marketing Federation

(GCMMF) — Amul -Turnover: Rs25 billion in 2002

Milkfed — Verka Andhra Pradesh Dairy Development Co-

operative Federation (APDDCF) — Vijaya -Vijaya Dairy Parlours and a chain of retailers

Britannia,Dabon July 4, 2011Group 11 Shimla Dairy Products4

Shimla Dairy ProductsTwo plants within 120 kilometres of each

other. First was located at 5,500 feet altitude

while the other was at a lower elevation. Both plants had a total cold storage facility

of 12 tonnes. Shimla plant -8,000 litre throughput per

day, Kiarighat plant - 2,000 litres 30 employees two shifts, -365 days a year.


Production vs ConsumptionProductionPeak production season during the monsoonsLean production months occurred when there was

comparatively much less rainPeak cheese production was 22 tonnes of cheese per month

SalesPeak sales seasons directly opposite to peak production

seasons. Holidays taken during monsoons-taken during the summer

months

Storage22 tonnes of cheese produced in a month, minimum of 17

tonnes sold.Surplus stored to be sold during peak seasons. Cheese stored at 4C in the company’s own cold storage

space, Capacity 20 tonnes of cheese. July 4, 2011Group 11 Shimla Dairy Products6

Pricing83% output- Cheddar/MozzarellaParmesan imported from Italy-Rs2,500 a

kilogramShimla’s Romano - Priced Rs1,000 Pizza cheese, Priced at Rs125 per kilogram.


Distribution SystemDistribution : See Chart Retailer : Tamil Nadu and Karnataka -

Nilgiris ,Food World 85 % Kerala – Varkeys

Supermarket. Hyderabad -Q mart and

Giant, Bombay -D Mart and F

Mart. Speciality ‘The Cheese Shop’ in

Shimla‘Cheese and Wine’ shop in

BangaloreJuly 4, 2011Group 11 Shimla Dairy Products8

Hotels: Segmented under two categories: High-end, five-star hotels(90%) lower- to mid-end hotels.

Four main types of restaurants: a) Italian restaurants (20 % market); b) Continental (15 %); c) Chinese (10 %)d) Indian (55 %).

Pizza ChainsJuly 4, 2011Group 11 Shimla Dairy Products9

CompanyWorking Capital : 35 Lakh + Overdraft facilityPricing : High end Margin – 20 % Low end Margin – 15%Marketing : Word of mouth Flyers ,Brochures Display at Shops, smaller shopkeepers provided with

refrigerators Give Aways at Pizza corners

Experiencing a growth of 15 -20 % in sales per annum as opposed to 7-8% growth for other cheese manufacturing companies


ChangesNight shift introduced, milk supplied twiceRegular testing as per HACCPPlan to expand second plant by 2005 Negotiation to become sole supplier to

large Pizza chain


Which area should it focus?

Low End – Market very less penetrated, Low

Awareness, Consumer not ready ,Perceives cost as factor.

North sales – 3000 kg/month (Delhi + Kolkata),Total 22000

North more exposed to cheese through Western food outlets such as pizza chains and McDonald’s

Already following HACCP so easy to get license


Was there a way to streamline operations and make the production process more efficient?

Reduce farmer travel, invest in better supply chain.

Storage capacity to be improved from 20 tonnes.

Product line consolidation from 29 varieties


With the possibility of growing demand, would the production facilities need to be expanded?

Yes Dairy sector to triple in 10 yrs Army as customer where lucrative- large

operations & economies of scale needed. Attainment of Economy of scale – competitive

advantage against new entrants. Rate of growth faster than others - 15 -20 % in

sales per annum Better Supply chain management Processing capacity of competition high –

Dynamix -50000,New players planning to expand.


How could the company market its products better? Can it create more brand awareness?

For Long term yes, since India has growing population of 1.2 billion, good aware customers could be created who would be less price sensitive.

How it can be done: More Specialty shops.Product line can be consolidated from 22 varieties

since customer was not very aware.Lure youth with western style food attraction.Advertisement about 30 years of legacy, HACCP,

superior quality products.Go for advertising like Amul.Negotiation with Pizza chain to be given prime

importance


Product Positioning for different market segments.?

Company should focus fast-food chains and restaurants for its least expensive cheese-mozzarella, as they together contribute 37% to the total cheese sale.

Also focus on hotels with Cheddar and mozzarella cheese as they contribute 40% of the total cheese sales

Introduce high end cheese in metros where consumption of cheese is high and enter in new markets with less expensive variety of cheese.


How to position Shimla to best take advantage of the growth potential in the industryEstablish Brand Equity by implementing new

marketing strategies.Focus on products which would yield high

profitability and narrow down the current Product line.

Capital Sourcing and Cash flow Management.Distribution and PromotionsIncreasing the current production capacity


THANK -YOU


Business

S2 11 shimla dairy products