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CHAPTER III

AN OVERVIEW OF INDIAN DAIRY INDUSTRY AND

MARKETING OF DAIRY PRODUCTS

Introduction

Globalization and Liberalization are the Mantras of the new economy

today, which is now on the fast track. Industrial production is rapidly moving

forward. The dairy industry is no exception. In India, the dairy sector plays an

important role in the country's socio-economic development, and constitutes an

important segment of the rural economy. Dairy industry provides livelihood to

millions of homes in villages, ensuring supply of quality milk and milk products to

people both in urban and rural areas. With a view to keeping pace with the

country's increasing demand for milk and milk products, the industry has been

growing rapidly.

The main objective of the Indian Dairy Industry is to manage the national

resources in a manner to enhance milk production and upgrade milk processing

using innovative technologies. Then subsequently, milk production has also

increased at an exponential rate while the benefits of an increase in milk

production also reached the consumers from a relatively lower increase in the

price of milk. India is the world’s largest milk producer 121.5 million tonnes of

milk during 2010-11, accounting for more than 17% of worlds total milk

production. It is the world’s largest consumer of dairy products, consuming almost

100% of its own milk production.

Dairy industry: Role of marketing

Marketing is generally defined as the process of planning and executing the

conception, pricing, promotion, and distribution of ideas, goods, and services to

create exchanges that satisfy individual and organizational objectives. The word

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62

dairy means the place or a farm etc where milk is kept and butter and cheese are

made. A place where milk and cream are stored and processed. Dairy marketing

truly came into the public consciousness with the introduction of the “Got milk”

campaign in 1993. The basic dairy product became associated with a memorable

and catchy slogan that helped drive sales. There are many other strategies, to

market all types of dairy products. These include promotion of nutritional value,

appeal to the organic market, and use of social media networks and development

of new dairy products.

Marketing plays a vital role not only in stimulating production and

consumption, but also in accelerating the pace of economic development. An

efficient marketing system minimizes costs, increases returns to farmers by

reducing the number of middlemen or by restricting the commission of marketing

system

Dairy marketing strategies

Marketers use an assortment of strategies to guide how, when, and where

product information is presented to consumers. Their goal is to convince

consumers to buy a particular brand or product. Successful marketing strategies

create a desire for a product. A marketer, therefore, needs to understand consumer

likes and dislikes. In addition, marketers must know what information will

convince consumers to buy their product, and whom consumers perceive as a

credible source of information. Some marketing strategies use fictional characters,

celebrities, or experts (such as doctors) to sell products, while other strategies use

specific statements or "health claims" that state the benefits of using a particular

product or eating a particular food. So dairy marketing Strategies in the context of

Globalization should be as:

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1) Focused Approach: While the product portfolio has been growing, Indian

dairy Industry should plan for reach out to newer markets - but the strategy

here is more product-specific.

2) Wider Spread: However, as far as other dairy products are concerned,

Indian dairy Industry should plan to expand across the board.

3) Create Original Marketing: Re-invent a product with a powerful

marketing campaign. No matter whether what is sold is milk, yogurt, butter,

sour cream, or cheese, a truly original commercial or print ad can cause

consumers to think of the products in a new light. A catchy slogan, a

memorable spokesperson or an emotionally powerful commercial can go a

long way. It is better to use viral marketing and social media to get the

products to the masses without spending an enormous amount on

advertising.

4) Focus on Nutritional Value: Use scientific-based guides and studies such

as this to convince consumers to consume the dairy products.

5) Appeal to the Organic Market: Consumer demand for organic milk

continues to grow at an annual rate approaching 20 percent, according to

the Agricultural Marketing Research Center. Many people are attracted to

products that are free of chemicals and are manufactured naturally. Utilize

the organic trend in the product line. Follow the government guidelines to

get the organic seal to include in the product advertising and packaging.

6) Introduce New or Unknown Products: Offering consumers something

they have never heard of is a sure-fire way to peak interest in a product.

There were 448 total new dairy product launches in 2010, according to

Dairy Foods. Try new flavors of milk, such as banana or blac

The milk marketing channels

A study of the milk marketing system has shown that there are at least 8

different marketing channels as shown below:

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Chart -1: Milk Marketing Channels M

ilk

Ma

rket

ing

Ch

an

nel

s

Nu

mb

er o

f In

term

edia

ries

Producer – Consumer

0

Producer – milk hawker –consumer

1

Producer –Processor - Consumer

1

Producer – Processor-retailer-consumer

2

Producer-dairy co-operative-Processor-

retailer consumer

3

Producer-Milk transporter-processor-

retailer-consumer

3

Producer-Milk trader-processor-retailer-

consumer

3

Producer-dairy coop-milk transporter-

processor-retailer-consumer

4

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65

The number of intermediaries involved will have a bearing on both

producer and consumer milk prices. The shorter the channel the more likely that

the consumer prices will be low and the producer will get a higher return. A

notable omission in the milk marketing channel obtaining in the chart is the

absence of wholesalers. Retailers obtain their dairy products directly from

processors. An efficient milk marketing chain is one which enable farmers to

receive at least 50% of the retail price of milk.

Origin and development of dairy farming

Dairy farming has been part of agriculture for thousands of years.

Historically it has been one part of small, diverse farms. In the last century or so

larger farms doing only dairy production has emerged. Large scale dairy farming

is only viable where either a large amount of milk is required for production of

more durable dairy products such as cheese, butter, etc Or there is a Substantial

market of people with cash to buy milk, but no cows of their own. Since 1980 the

demand for the dairy products grew especially in Asian region from 32 kg per

capita in 1981 to 64 kg per capita in 2007, the Asian consumers presented almost a

half of the world demand for milk and milk products. Growing income and change

in food composition in China, India and other Asian countries are the factors of

the increasing demand. The governmental support of milk consumption like

school milk programs and new dairy products supported this expansion (Food and

agriculture organization, 2009). This growing demand and higher prices created

market opportunities for the local producers and in 2005. Asia became the world

largest milk producer with grows 35% in 1997-2007.

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Chart -2: Milk flows from producers to consumer in India

Source: adapted from Dairy India 1997.

In spite of the investment in co-operative development through Operation

Flood and elsewhere, the share of urban milk market served by dairy co-operatives

in the 1990s was only some 9%, compared to about 72% for the

traditional/informal sector. The role of the private sector has been even smaller,

DOMESTIC PRODUCTION: 66.3M mt

RURAL

PRODUCTION

65.0

URBAN

PRODUCTION

1.3

HOME

CONSUMPTION

23.4

SOLD

41.6

URBAN MARKET

37.1

INFORMAL

30.9

COOPS

3.7

PRIVATE

2.5

URBAN CONSUMERS

37.1

RURAL

CONSUMERS

5.8

98% 2%

9%(14%)

63% (97%) 35% 2% (3%)

46% (72%) 6% (9%) 4% (6%)

% of Milk produced

(% of Milk Marketed)

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67

around 6% of the urban market. While the private sector seems to have grown

since the 1990s, these relative proportions are likely to have not changed

significantly and will not do so for the foreseeable future.

Opinion of researchers and some organisation on dairy Industry

According to the National Sample Survey of 1993-94, livestock sector

produces regular employment to about 9.8 million persons in principal status and

8.6 million in subsidiary status, which constitute about 5% of the total work force.

The progress in this sector will result in a more balanced development of the rural

economy. The Agricultural and Processed Food Products Export Development

Authority (APEDA) regulated the export and import of dairy products till early

1990s. However, in the new EXIM Policy announced in April 2000, the Union

Government has allowed free import and export of most dairy products.

According to the World Bank, India is the fourth largest economy in the

world going by the purchasing power parity estimates. Further, India has been

identified as among the first 10 emerging markets in the world. India has the

vastest domestic market in the world with over one billion consumers - a majority

of whom are vegetarians with drinking of milk as habit. The untapped potential of

the dairy sector is immense and opportunity to set up a new dairy venture is great.

In the words of Dr. Amrita Patel, Chairperson, National dairy development board

(NDDB), there is enough place under the scheme for both private and cooperative

sectors. Notwithstanding the above potential it is cautioned that, entering dairy

sector is not going to be a cakewalk.

Union Agriculture Minister Mr. Sharad Pawar said that the government

looks to increase milk procurement by co-operatives from the current 30 per cent

to 65 per cent in the next 15 years. “We have amended the Constitution to increase

transparency in the co-operative sector and facilitate setting up of producer

companies or new generation co-operatives. Today, only 30 per cent of milk is

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68

procured by co-operatives which we aim to increase to 65 per cent in next 15

years,” said Mr. Pawar at the launch of NDP recently. The total outlay for the

National Dairy Plan has been set at 17,000 crore. The demand for milk is projected

to be around 200 million tonnes in 2021-22. The plan is expected to cover about

1.2 million milk producers in 23,800 villages.

According to the Associated chambers of commerce and industry

(ASSOCHAM) study titled “Indian Dairy Industry: The Way Ahead” Milk

production is likely to reach about 190 million tonnes in 2015 from current level

of about 123 million tones. Growing at about 10 per cent annually, the Indian

dairy industry is predominantly controlled by the unorganised sector, which

accounts for nearly 85 per cent. An upward spiral in prices, the lack of proper

infrastructure like cold storages and absence of a transparent milk pricing system

are affecting retail consumption of milk and leading to escalating milk prices in

the domestic market.The lack of fodder, resulting in low yield from cattle, is

another problem affecting the dairy sector.

International market analysis research and consulting (IMARC) Group, one

of the world’s leading research and advisory firms, finds that the sales of dairy

products in India will nearly double its size from INR 2.6 Trillion (US$ 60

Billion) to around INR 5.1 Trillion (US$ 115 Billion) by 2016.

According to a national survey conducted by the National Sample Survey

Organization (NSSO), an average Indian family’s spend on dairy products was

only next to cereals in terms of food expenditure incurred every month. Such

dependency on dairy products, and more specifically on milk, gives limited scope

for price increases on these products. As such, regional dairy cooperatives and

private manufacturers have to meet the rising demand for packaged milk despite a

limited rise in corresponding production.

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A recent survey carried out by 64th round of NSS has shown that an Indian

family allocates on an average 17 per cent of the expenditure incurred on food

products on milk and milk products; with rural families allocating 15 per cent

while families in the urban area allocating over 18 per cent. With increasing

income the demand for milk is going to rise faster now than seen in the previous

decade. Moreover, the overall demand is galloping rapidly compared to milk

production. The higher GDP growth rate, enhanced income of rural households

through programmes such as National rural employment guarantee act (NREGA)

and the farm debt waiver are influencing the demand for milk both in the rural and

urban areas.

Dairy India 2007 has estimated the size of India's dairy sector in 2005 at Rs

227,340 crore (valued at consumer prices). The largest contributor to this is liquid

milk (at Rs 82,835 crore), followed by ghee (Rs 22,980 crore),

khoa/chhana/paneer (Rs 24,100 crore), milk powder (Rs 4,680 crore), table butter

(Rs 770 crore), cheese/edible casein (Rs 975 crore) and other products such ethnic

sweets, ice-cream, etc (Rs 9,100 crore). By 2011, Dairy India projects the value of

the industry to more than double to Rs 520,780 crore, which includes Rs 159,600

crore from liquid milk, Rs 42,680 crore from ghee, Rs 50,500 crore from

khoa/chhana/paneer, Rs 9,100 crore from milk powder, Rs 2,250 crore from table

butter, Rs 6,150 crore from cheese/edible casein and Rs 25,050 crore from other

products.

The average milk procurement by dairy cooperatives during 2009-10 (up to

December, 2009) was more than 241 lakh kgs per day (provisional) as compared

to 233 lakh kgs per day during the same period in the previous year, registering an

increase of 3.4 per cent. The average milk marketing by cooperatives was 211 lakh

litres per day as against 201 lakh litres per day, registering a rise of about five per

cent over the corresponding period in the previous year. The industry has

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70

maintained a high growth profile, especially in the wake of the Operation Flood,

colloquially also termed as White Revolution, initiated in early 1980s. Today India

produces over 80 mn tonnes of milk annually. In terms of value, the total milk

economy is estimated at Rs. 1200 bn.

India is a very minor player in the world market. India was primarily an

import dependent country till early seventies. In the 1990s, India started exporting

surplus dairy commodities, such as Skim milk powder (SMP), butter and ghee.

The Agricultural and Processed Food Products Export Development Authority

(APEDA) regulated the export and import of dairy products till early 1990s The

major destinations for Indian dairy products are Bangladesh (23.1%), UAE

(15.4%), US (15.6%) and Philippines (8.9%). In terms of products, SMP is the

most important product accounting for about 63% of total export volume, followed

by ghee and butter (11.7%).

SWOT analysis of Indian dairy industry

Strengths:

According to the results of SWOT analysis, Demand for dairy products is

absolutely optimistic. The Margins of returns are quite reasonable, even on packed

liquid milk. Due to the flexibility of product mix product lines can be further

added. As far as raw materials are concerned its availability is abundant. Presently,

more than 80 per cent of milk produced is flowing into the unorganized sector,

which requires proper channelization. Professionally-trained, technical human

resource pool, built over last 30 years is considered as the strength of Indian dairy

industry.

Weaknesses:

According to the results of SWOT analysis, Perishability, Lack of control

over yield, Logistics of procurement, Competition are considered as the major

weakness of the Indian dairy industry. Even then pasteurization has overcome this

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71

perishability weakness partially. UHT gives milk long life. Surely, many new

processes will follow to improve milk quality and extend its shelf life. The

increased awareness of developments like embryo transplant, artificial

insemination and properly managed animal husbandry practices, coupled with

higher income to rural milk producers should automatically lead to improvement

in milk yields thereby enhancing little control over milk yield. Woes of bad roads

and inadequate transportation facility make milk procurement problematic. But

with the overall economic improvement in India, these problems would also get

solved.

Opportunities:

According to the results of SWOT analysis, there is a phenomenal scope for

innovations in product development, packaging and presentation. Steps should be

taken to introduce value-added products like shrikhand, ice creams, paneer, khoa,

flavored milk, dairy sweets, etc. This will lead to a greater presence and flexibility

in the market place along with opportunities in the field of brand building.

Addition of cultured products like yoghurt and cheese lend further strength - both

in terms of utilization of resources and presence in the market place. A lateral

view opens up opportunities in milk proteins through casein, caseinates and other

dietary proteins, further opening up export opportunities. Yet another aspect can

be the addition of infant foods, geriatric foods and nutrition. Amul is exporting to

Bangladesh, Sri Lanka, Nigeria, and the Middle East. Opportunities will increase

tremendously for the export of agri-products in general and dairy products in

particular.

Threats:

According to the results of SWOT analysis, Milk vendors that are the un-

organized sector are found to be the major threat. Today milk vendors are

occupying the pride of place in the industry. Organized dissemination of

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72

information about the harm that they are doing to producers and consumers should

see a steady decline in their importance.

Overall the swot analysis shows that the ‘strengths’ and ‘opportunities’ far

outweigh ‘weaknesses’ and ‘threats’. Strengths and opportunities are fundamental

and weaknesses and threats are transitory.

Organisations engaged in dairy development

Dairy sector can play a pivotal role in our national strategy to combat global

economic turmoil and accelerate growth of Indian economy," India is the world's

highest milk producer and is all set to become the world's largest food factory. In

India, milk penetration is 99% and this is higher than wheat and rice. The dairy

industry is still an unorganised sector and this needs to be regulated. Indian dairy

market is highly unorganized showing a lot of potential opportunities for growth.

The demand for dairy products has been rising continuously and anticipated to

outpace the supply in near future. As a result, a number of foreign companies are

considering their prospects to enter into the Indian Dairy market. For instance,

Danone, the world’s second largest dairy company (after Nestle), is currently

expanding its presence in the Indian dairy industry. To overcome this difficulty

there emerged many organizations which contributed dairy development in India.

They are

National dairy development board of India (NDDB)

The National Dairy Development Board (NDDB) is the national-level body

involved in promoting, financing, and supporting milk-distribution organizations

in India that are owned and controlled by the producers themselves. It’s activities

seek to strengthen farmer cooperatives and support national policies that are

favourable to the growth of such institutions. The National Dairy Development

Board’s Creation is rooted in the conviction that our Nation’s Socio-economic

progress lies largely on the development of rural India.

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Active role of NDDB

NDDB supports the development of dairy cooperatives by providing them

financial assistance and technical expertise, ensuring a better future for India’s

farmers. The Board has helped to organize the dairy industry of India with 170

milk unions, which federate into 15 State Cooperative Milk Marketing

Federations, operating in 285 districts, covering nearly 96,000 villages. More than

10.7 million farmers and laborers are members of the network, directly supplying

milk to the cooperatives, thus eliminating the exploitative chain of middlemen. In

addition, some 3,500 milk collection centers have been computerized, resulting in

accurate and immediate payment to the milk producers. However, organizing

illiterate farmers into a large cooperative network proved to be a challenging task.

National Dairy Development Board (NDDB), has proposed a Rs 17,300

crore draft National Dairy Plan to increase the country's milk production from the

current 102 million tonnes to meet the projected demand of 180 million tonnes by

2021-22. The National Dairy Plan focuses on productivity measures to enhance

milk production as the average annual incremental production will have to

increase from 2.5 million tonnes now to five million tonnes over the next 15 years.

Besides, it also focuses on strengthening and expanding infrastructure to procure,

process and market milk through existing and new institutional structures.

NDDB in its report on New Challenges of Globalisation and Trade

Liberalisation - Perspective 2010 said that they have enabled the cooperatives to

meet the new challenges of globalization and trade liberalization. Like other major

dairying countries of the world, the Indian cooperatives are expected to play a

predominant role in the dairy industry in future as well. Over the years, brands

created by cooperatives have become synonymous with quality and value. Brands

like Amul (GCMMF), Vijaya (AP), Verka (Punjab), Saras (Rajasthan). Nandini

(Karnataka), Milma (Kerala) and Gokul (Kolhapur) are among those that have

earned customer confidence.

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Indian Dairy Association (IDA)

Indian Dairy Association (IDA) an apex body of the dairy industry was

established in the year 1948, in India. The members are from the cooperatives,

MNCs, corporate bodies, private institutions, educational institutions, government

and public sector units. IDA functions very closely with the dairy producers,

professionals & planners, scientists & educationists, institutions and organizations

associated with the development of dairying in India. The Association is managed

by an apex policy making body called the Central Executive Committee (CEC).

The CEC is headed by President and supported by two Vice-Presidents and 19

Executive Committee Members.

IDA has emerged as a platform for assimilation and dissemination of

knowledge, as an important tool for policy making in the dairy sector, in India!

Besides, the IDA, in the recent time, has also succeeded to focus itself at the

national and international fora. The IDA since has a history of around six decades

now, it has had the privilege of being headed by several Presidents and some of

them were of national and international fame. It organises seminars, symposia and

exhibitions on a wide range of topics catering to various segments of

professionals, scientists, institutions and organisations associated with the

development of dairying in India.

The report of Food and Agricultural organization (FAO)

According to Food and Agricultural organization (FAO) estimates, the

world milk production has declined by 2 per cent in the last three years, while milk

production in India has increased by 4 per cent. Having attained self-sufficiency in

food grain production, there is a need to plan for strategic diversification of Indian

agriculture to ensure sustainability and nutritional adequacy. Diversification of

Indian agriculture focused on dairying and export of dairy products represents

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excellent potential leading to prosperity of the farming community representing 65

per cent of the population.

With 198 million cattle and 86 million buffaloes, India has the largest

population of milch animals in the world. These livestock constitute more than 50

per cent of the buffaloes and 20 per cent of the cattle in the world. Although

number of livestock is large, average milk production is far below their genetic

potential. With a well crafted strategic approach, this huge animal wealth could be

utilized in right perspective for enhancement of milk production without many

incremental inputs. In contrast, a small rise in milk production requires intensive

inputs and crossing of genetic barriers in advanced countries of the world, where

milch animals are utilized to produce milk at their maximum potential. It is this

potential that can catapult India as a major dairy exporting country on global basis.

A nation-wide programme for prevention and control of animal epidemics, and

creation of disease free zones coupled with efficient delivery of artificial

insemination network will have tremendous impact on improving the productivity

of milch animals. This, in turn, would strengthen India’s entry into the global milk

products market, as well as improve the quality and viability of the entire Indian

dairy industry.

Prospects and the participation of private player in the dairy industry

In 2010 and 2011, growth in milk production in India was not equal to the

corresponding growth in demand for milk and milk products. This constraint

effectively forced government-endorsed cooperatives as well as private dairies to

concentrate on animal productivity and operational efficiency to meet rising

demand. Private dairy players such as Hatsun Agro Products, Heritage Foods

(India) and VRS Foods will play a relatively greater role in bulk volume-driven

categories such as fresh/pasteurised milk over the forecast period.

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In 2011, the government of India also announced plans to grant “priority

sector lending status” to the dairy sector, thus encouraging private initiatives such

as milk processing centers, fodder plants and chilling infrastructure. Relying on

such supply chain support and technological advancement, value sales of drinking

milk products are also likely to continue to source growth from households

switching from unbranded milk to branded and packaged milk.

Major players in the dairy sector with dairy products include Gujarat Co-

operative Milk Marketing Federation (GCMMF) and Nestle are the largest player.

Other include Milkfood Limited, SmithKline Beecham Limited, Indodan

Industries Limited, H.J. Heinz Limited, Britannia, Cadbury, etc. All other local

dairy cooperatives have their local brands (For e.g. Gokul, Warana in

Maharashtra, Saras in Rajasthan, Verka in Punjab, Vijaya in Andhra Pradesh,

Aavin in Tamil Nadu, etc). Other private players include J K Dairy, Heritage

Foods, Indiana Dairy, Dairy Specialties, etc.

Dairying perceived as subsidiary occupation for vast majority of farming

community in our country is now acquiring an independent status as main

occupation as it is crucial in providing employment .Milk and milk products are

one of the important components of Indian food Industry and India is the world's

highest milk producer and all set to become the world's largest food factory. Dairy

food processing holds immense potential for high returns.

Global dairy products Industry

It continues to be one of the most dynamic markets worldwide. The global

dairy industry was affected by the global economic downturn, changing weather

conditions in export countries, and varying feed and other input costs. The global

recession made a negative impact on the affordability as well as demand for dairy

products, changing consumer behavior across many markets worldwide. However,

demand began to recover in the latter part of the year and the industry began to

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77

witness growth in early 2010. Region-wise, North America and European regions

are mature dairy products markets, while Asia-Pacific and Latin America are the

fastest growing markets for dairy products. Europe is the worldwide leader for

processed dairy products, such as yogurt, cheese, butter and yellow fats category.

The global dairy industry has become highly volatile over the past few

years, with prices experiencing sharper and shorter swings. The situation is

expected to remain the same in the next few years as well, posing a challenge to

the global industry. One of the key reasons for such volatility is the lower amount

of annual milk production being traded between the countries. Resultantly, any

small change to the supply-demand situation would incite fluctuations in the

global dairy commodity prices. High competition and high market fragmentation

is leading to increased consolidation in the dairy industry. Larger dairies are taking

over smaller dairies that are facing problem in operations. Moreover, companies

are increasingly going for mergers and tie-ups to remain competitive in the

market. Major factors driving mergers and acquisitions in the dairy sector include

the drive to enhance economies of scale, increasing profit levels, and reducing

overheads. The consolidation trend is more pronounced in Europe. The dairy

industry, being highly fragmented, comprises large Multinational corporations

(MNCs) as well as small but significant players. With an increase in the

concentration of the industry, there is a trend towards increasing brand value,

market share, and international presence and acceptance. In a highly competitive

scenario, companies need to brace themselves for pro-active business policies.

Impact of World trade organization (WTO) on Dairy Sector

Dairy is one of the sectors affected by WTO. During the negotiations in

1985, dairy sector failed to bargain and agreed to allow import of milk and milk

products under zero percent bound duty. Subsequently, our new Exim Policy

which brought some essential milk products under Open General License, further

facilitated import. Initially, there was no threat from import, as the international

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78

price for milk and milk products was high compared to the prevailing price in

India. Subsequently, many developed countries were able to exert pressure on

their governments to provide subsidy to dairy farmers which helped them to lower

their price of dairy products. Furthermore, new technological interventions and

improved management practices helped the farmers in the Western Countries as

well as in New Zealand to bring down the cost of milk production. Thus the price

for dairy products in the international market fell far below the price paid by

consumers in India. This provided good opportunities for the traders to import

cheaper milk products and thereby earn high profits, at the cost of Indian Dairy

Farmers. This is the background of WTO and its impact on our farmers.

As long as we continue to remain a member of WTO, this threat will

continue to bother us. In 1999, Indian traders imported 10,000 metric tons of milk

powder and in 2000, we were threatened by the arrival of fresh milk from New

Zealand at the landed cost of Rs.9 in Mumbai. Fortunately, the Government of

India in its budget of 2001 has imposed heavy duty on milk and the problem has

been halted temporarily. This duty will have to be abolished before the year 2006,

as per the WTO agreement. Hence we have 5 years to gear ourselves for

international competition. This is probably the last chance for our farmers to

organise themselves and convert this challenge into an opportunity.

There is very little time for Indian dairy farmers to face the challenge of

imported milk and milk products under WTO. Our farmers are not yet prepared to

solve this problem. It is necessary to take immediate steps to reduce the cost of

milk production by increasing the productivity of our animals. We also need to

reduce the cost of transportation, storage and processing of milk by reducing

intermediary agencies and by adding value to the produce at the block or district

level. The quality of the milk should be of international standard which can be

attained through screening of the livestock against important diseases and

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79

maintaining clean surroundings in the dairy farm. The policy of promoting the

production of low fat milk for general consumption and high fat buffalo milk with

high butter fat for selected purposes should also be considered in the general

interest of the public, which will enable the farmers to improve their profitability.

Finally, an effective Animal Husbandry Extension Service should be established

to facilitate close dialogue with the farmers to understand their problems and solve

them from time to time. Simultaneously, dairy farmers’ associations should be

established and strengthened to acquire new technologies, understand the milk

marketing scenario at the international level and find suitable solutions. Hopefully

the task will be within our reach and so all we need is to work in this direction.

Branding of dairy products

Branding

When a company brands a product, they determine its "personality."

Creating a brand that is instantly recognizable and perceived positively is the

ultimate goal. Branding integrates components such as color, style and visual

imagery to distinguish a company's products from the competition. Developing

logos, slogans and tag lines are all ways that marketers communicate a specific

brand.

Brand management

Brand management is the application of marketing techniques to a specific

product, product line, or brand.

Brand equity

It is a phrase used in the marketing industry to describe the value of having

a well-known brand name, based on the idea that the owner of a well-known brand

name can generate more money from products with that brand name than from

products with a less well known name, as consumers believe that a product with a

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well-known name is better than products with less well known names. Another

word for "brand equity" is "brand value".

Brand equity is one of the factors which can increase the financial value of

a brand to the brand owner, although not the only one. Brand equity is strategically

crucial, but famously difficult to quantify. Many experts have developed tools to

analyze this asset, but there is no universally accepted way to measure it. As one

of the serial challenges that marketing professionals and academics find with the

concept of brand equity, the disconnect between quantitative and qualitative equity

values is difficult to reconcile. Quantitative brand equity includes numerical

values such as profit margins and market share, but fails to capture qualitative

elements such as prestige and associations of interest. Overall, most marketing

practitioners take a more qualitative approach to brand equity because of this

challenge.

Factors that influence in Building a Brand

Several factors are crucial in building successful brands, as illustrated in the

diagram below:

Chart -3: Factors Influencing Brand Building

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81

Quality

Quality is a vital ingredient of a good brand. Remember the “core benefits”

– the things consumers expect. These must be delivered well, consistently. The

branded washing machine that leaks, or the training shoe that often falls apart

when wet will never develop brand equity. Higher quality brands achieve a higher

market share and higher profitability that their inferior competitors.

Positioning

Positioning is about the position a brand occupies in a market in the minds

of consumers. Strong brands have a clear, often unique position in the target

market. Positioning can be achieved through several means, including brand name,

image, service standards, product guarantees, packaging and the way in which it is

delivered. In fact, successful positioning usually requires a combination of these

things.

Repositioning

Repositioning occurs when a brand tries to change its market position to

reflect a change in consumer’s tastes. This is often required when a brand has

become tired, perhaps because its original market has matured or has gone into

decline. The repositioning of the Lucozade brand from a sweet drink for children

to a leading sports drink is one example.

Communications

Communications also play a key role in building a successful brand. With

the objective to build a clearly defined position in the minds of the target audience.

All elements of the promotional mix need to be used to develop and sustain

customer perceptions. Initially, the challenge is to build awareness, then to

develop the brand personality and reinforce the perception.

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First-mover advantage

Business strategists often talk about first-mover advantage. In terms of

brand development, by “first-mover” they mean that it is possible for the first

successful brand in a market to create a clear positioning in the minds of target

customers before the competition enters the market. There is plenty of evidence to

support this like Gillette, Coca Cola and Sellotape etc

Long-term perspective

This leads onto another important factor in brand-building: the need to

invest in the brand over the long-term. Building customer awareness,

communicating the brand’s message and creating customer loyalty takes time.

This means that management must “invest” in a brand, perhaps at the expense of

short-term profitability.

Internal marketing

Finally, management should ensure that the brand is marketed “internally”

as well as externally. By this we mean that the whole business should understand

the brand values and positioning. This is particularly important in service

businesses where a critical part of the brand value is the type and quality of service

that a customer receives.

Different brands of dairy products

Aavin

The Dairy Development Department was established in Tamil Nadu in the

year 1958 to oversee and regulate milk production and commercial distribution in

the state. The Dairy Development Department took over control of the milk

cooperatives. It was replaced by the Tamil Nadu Cooperative Milk Producers

Federation Limited in the year 1981.On February 1, 1981, the commercial

activities of the Department such as Milk Procurement, Processing, Chilling,

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packing and sale of milk to the consumers etc., hitherto dealt with by the

Tamilnadu Dairy Development Corporation Ltd., were transferred to the newly

registered Tamilnadu Co-operative Milk Producers' Federation Limited, popularly

known as "Aavin". Aavin is the trademark of the Tamilnadu Co-operative Milk

Producers' Federation Limited, a Tamil Nadu-based milk producer's union. The

aim of Aavin is to procure milk, process it, chill it, pack and sell it to the

consumers. Aavin comes from Tamil meaning 'from cow'. So 'Aavin paal'

translates to cow's milk.

The Tamilnadu Co-operative Milk Producers' Federation Limited is an apex

body of 17 District Cooperative Milk Producers' Unions. The Federation has four

dairy plants at the following locations in Chennai - Ambattur with a capacity of

4.00 lakh litres per day, Madhavaram with a capacity of 3.00 lakh litres per day,

Sholinganallur with a capacity of 4.00 lakh litres per day, Ambattur - Product

Diary. Its revenue in 2010 is $300 million. With many private companies entering

the field of dairy, the Tamil Nadu government is giving high priority to improve

the performance of the cooperatives. Tamil Nadu is one of the leading states in

India in milk production with about 14.5 million litres per day. Aavin produces 4

varieties of milk Toned milk (3% Fat), Doubled toned milk (1.5%), Standardized

Milk (4.5%), Full Cream Milk (6%).

Amul:

Amul ("priceless" in Hindi. The brand name "Amul," from the Sanskrit

"Amoolya," (meaning Precious) was suggested by a quality control expert in

Anand.), formed in 1946, is a dairy cooperative in India. Amul Gujarat

Cooperative Milk Marketing Federation (GCMMF) is India’s largest food

products marketing organization. It is a state level apex body of milk cooperatives

in Gujarat. It markets its array of products under brand name ‘Amul’. Amul

products have been in use in millions of homes in India and also exported all over

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the world since 1946 with a turnover of Rs. 52.55 billion in 2007-08. Today Amul

is a symbol of high-quality products sold at reasonable prices; of the genesis of a

vast co-operative network, of the triumph of indigenous technology, of the

marketing savvy of a farmers’ organisation and of a proven model for dairy

development in India.

The Amul Pattern has established itself as a uniquely appropriate model for

rural development. Amul has spurred the White Revolution of India, which has

made India the largest producer of milk and milk products in the world. It is also

the world's biggest vegetarian cheese brand.

Gujarat Co-operative Milk Marketing Federation Ltd. (GCMMF), which

today is jointly owned by some 3.1 million milk producers in Gujarat, India.

Amul's product range includes milk powders, milk, butter, ghee, cheese, Masti

Dahi, Yoghurt, Buttermilk chocolate, ice cream, cream, shrikhand, paneer, gulab

jamuns, flavoured milk, basundi, Nutramul brand and others. In January 2006,

Amul plans to launch India's first sports drink Stamina, which will be competing

with Coca Cola's Powerade and PepsiCo's Gatorade. In August 2007, Amul

introduced Kool Koko, a chocolate milk brand extending its product offering in

the milk products segment. Other Amul brands are Amul Kool, a low calorie thirst

quenching drink; Masti Butter Milk; Kool Cafe, ready to drink coffee and India's

first sports drink Stamina.

Amul is the largest food brand in India and world's Largest Pouched Milk

Brand with an annual turnover of US $2.2 billion (2010–11). Besides India, Amul

has entered overseas markets such as Mauritius, UAE, USA, Oman, Bangladesh,

Australia, China, Singapore, Hong Kong and a few South African countries.

Arokia / Hatsun

Hatsun Agro Product Limited is a public limited company that was founded

by Mr. R.G.Chandramogan, who is also the present Chairman & Managing

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Director. Hatsun, based in South India is the largest private sector dairy company

in India and hence has a distinct advantage of dealing in cow's milk. In 1970,

Hatsun began with the pioneering effort of producing Arun ice-cream, which still

continues to be the most popular ice-cream brand in South India.

When the market was ruled by unhygienic milk, Hatsun came up with

Arokya - the standardized, homogenised and bacteria clarified milk. Arokya milk

is still unsurpassed in purity, thickness and quality and has made it one of the most

preferred milk brands consumed by several hundred thousand households every

day and then came Hatsun Komatha. This product is Hatsun's proud contribution

of a superior quality, lower fat milk which Hatsun calls Cow's milk. Komatha is

the perfect symbolization of the values and attributes of the provider of fresh milk

- the cow. Hatsun started marketing fresh milk in pouches from 1993 and

manufacturing dairy ingredients from 2003.

Today, Hatsun is a USD 250 million company, listed in the Mumbai Stock

Exchange. Hatsun's Dairy Ingredients are processed at the state-of-the-art

processing technology run by people with strong technological capabilities. These,

together with an innovative and flexible approach, enable it to manufacture a

range of high quality products. Hatsun has an annual production of 20,000 MT of

Milk Powders and 11,000 MT of milk Fat at present.

Hatsun sources its milk with an ever watchful eye, always keen on quality.

It is an enthusiastic and bustling activity when milk takes its first step in its

journey to the consumers homes. Hatsun handles a total 1.8 million litre a day.

Hatsun's quest for quality starts at procurement, two times a day, 365 days of the

year at over a thousand collection centers, from more than a hundred thousand

farmers.

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Aroma

Sri Mahalakshmi dairy was founded by Mr. R. Ponnuswamy, Chairman and

Managing Director of the Aroma Sri Mahalakshmi Group of Food industries in the

year 1972 and the brand name Aroma milk is a house hold name in the city of

Coimbatore and Tiruppur. Sri Mahalakshmi dairy had a humble beginning in 1972

in a small village called a Telugupalayam, nearby Coimbatore. The dairy was

started with an ideological goal to serve the poor and economically weaker dairy

farmers of Coimbatore Dist. and nearby Tiruppur dist. From the time the dairy

started, it has served the farmer community with complete dedication and

affection. The farmers have developed an ever increasing loyalty to this

organisation which is reflected in the yearly growth rate of the company.

Its product ranges are Full cream milk, toned milk, standardized milk, curd

and ghee etc., It has developed good distribution network in Coimbatore dist,

Erode Dist, Tiruppur Dist, Dindigul Dist, The Nilgiri's Dist and Palakkad,

Ottapalam, Trichur & Perunthalmanna of Kerala state.

Cavin:

Cavinkare's new dairy business Cavinkare Dairy Division is the new

venture of CavinKare. Cavin's dairy products include milk, curd, ghee, butter,

flavoured milk etc. The first product, Cavin's milk was launched on 14th of

january 2009. The milk procured from village farms is sent for processing at

CavinKare's State-of-the art dairy plant. Cavin's milk is freshly procured from the

farmers and hygienically processed through state of the art technology under

stringent quality standards to retain its freshness and full nutritional value. Care is

taken to reach the processed milk from the plant to consumers within 24 hours.

This ensures the freshness of Cavin's products when it reaches the market. Cavin's

milk is available in different variants to suit the requirements of different age

groups.

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Sakthi

P. Nachimuthu Gounder laid the foundation Treatment of the Sakthi

Group. It was in 1921, P. Nachimuthu Gounder broke away from his traditional

business of hiring out bullock carts, into pioneering a passenger transport service.

The Sakthi Group has spread its roots into Sugar, Industrial Alcohol, Effluent

Treatment Plant, Auto Components, Textiles, Transport, Finance, Beverages, Soya

Products, Dairy Products, Synthetic Gems manufacture and Plantations.

Dairy division

Sakthi milk is marketed in various towns of Tamil nadu and kerala. It is the

second largest brand in kerala next to state owned co-operative brand. It is also

manufacturing and marketing value added milk products like Cream, ghee, butter,

curd, sterilized flavored milk panner, buttermilk, etc. Attributing future growth of

the division the export of Sakthi to foreign countries has earned significant market

response. Presently it is procuring and processing 1,10,000 litres of milk every

day. Liquid milk is marketed in various towns of Tamilnadu and Kerala carrying

the brand name of “Sakthi Milk'. This division will be the thrust area for further

growth of the company and the potential for growth is immense. Products like

butter, khoa, flavoured milk, yogurt, paneer and cheese are being planned for

introduction shortly. It has established good marketing network for dairy export

demand both in Tamilnadu and in Kerala. It has increase substantially, giving

more margin.

Being the world’s largest producer and consumer of dairy products, India

represents one of most lucrative dairy markets. At the outset with the emergence

of different brands of dairy products the demand for processed dairy products is

expanding and is expected to keep doing so as cold supply chains and modern

trade continue to evolve. Increasing urbanization, exposure to gourmet foods and

corresponding changes in consumer preferences, behavior and purchasing power

are the catalysts for the rise of processed dairy categories.

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