After liquid milk, flavoured milk represents the second-most preferred liquid dairy product in India. According to the latest research by IMARC Group, flavoured milk market in India reached a value of INR 33.2 Billion in 2021. Looking forward, the flavoured milk market in India to reach INR 127.7 Billion by 2027, exhibiting a CAGR of 26.01% during 2022-2027.
In the recent years, flavoured milk has gained a sudden popularity in the country. The per capita income has increased by 7.4% to 93,293 in 2015-2016 as compared to the previous fiscal year, when it was estimated at 86,879. This has encouraged the consumers to increase their expenditure on upmarket food products.
Inflated consumers’ incomes have also resulted in several transformations in the socio-economic makeup of the country. Consumers have become more cognizant of the influence of the food products they consume. As a result, a shift has been witnessed from carbonated and alcoholic drinks to dairy-based products, among a certain section of the consumer base, particularly the adults.
Considering this growing demand, manufacturers are coming up with value-added products in the country. Hence, the retail shops which mostly sold liquid milk a couple of decades ago, have now stacked flavoured milk, frozen yogurt, ice cream, etc.
Currently, a wide range of flavoured milk products is available in the market, providing the consumers with various options. Besides offering perennial flavours, chocolate, or vanilla, the Indian dairy giants, such as Mother Dairy, Amul and Parag have also started producing Indian flavours like Kesar, elaichi, and badam.
Sometimes nuts or dry fruits are also added so as to give flavoured milk an added touch of sophistication. This makes flavoured milk a suitable beverage for various occasions such as festivals, parties, or communal gatherings.
In order to enhance the sales of these products in the country, marketers are continuously targeting consumers aged below 20 years, which account for around 15% of the total consumers. The flavoured milk acts as a good substitute for liquid milk as it helps in fulfilling the nutritional requirements for the overall development of children.
Apart from being a rich source of essential nutrients including potassium, calcium, and magnesium, it contains less sugar as compared to non-dairy beverages.
Several changes in the packaging industry have allowed the manufacturers of dairy products to reach out to remote and rural areas. As dairy products are perishable in nature, the manufacturers have always faced the challenge of transportation and distribution of dairy products in these regions.
The innovative packaging options such as tetra packs, PET bottles, and flexible containers (pouches) facilitate the dairy companies to transport their products to these untapped markets. The 200-250 ml single-serve tetra pack/ PET bottle/ pouch is the dominant packaging option in the non-metropolitan districts. Apart from this, the 1-liter multi-serve pack is aimed at in-home consumption and is more popular in urban cities.
The dairy giants in the country are quick to realize this potential of packaging. Gujarat Cooperative Milk Marketing Federation (GCMMF), popularly known as Amul, made an investment of around 200 crores in 2015 to set up two aseptic PET bottles lines in Gandhinagar and Godhra. This shot up the production capacity of bottles up to 2.5 Million bottles per day.
The advancement in packaging techniques has also helped in extending the shelf-life of the flavoured milk products. Flavoured milk is produced using the UHT (ultra-high temperature) technology, which reduces the requirement of refrigeration, thereby, aiding the storage of flavoured milk for six to nine months.
Additionally, several other techniques are being developed and adopted to increase the shelf-life, and enhance the flavour and texture of the products. For instance, silver-based micro-particles with bactericidal, antimicrobial, and self-sterilizing properties are added to the plastic packaging, which helps in improving the shelf-life.
In recent years, the carbonation method has been used to amplify the qualitative nutrition contained in milk. The method involves the carbonation of milk at 50 psi pressure for 30 seconds and helps in inhibition of microbes, reduction in psychrotrophic count as well as contents of FFA and soluble nitrogen.
The Government of India has been continuously making efforts towards transforming the Indian dairy industry from a fragmented sector into a regulated and organized market.
In line with this, the department of animal husbandry, dairying, and fisheries under the Ministry of Agriculture launched the ‘Dairy Entrepreneurship Development Scheme,’ in April 2015 so to bring structural changes to the Indian dairy industry.
Under this scheme, the government provides subsidies for setting up modern dairy farms, improving infrastructure for the production of clean milk, up-gradation of traditional technology, and rearing good breeding stock.
Another program, ‘National Programme for Bovine Breeding and Dairy Development,’ launched in 2014, focused at integrating milk production and dairying activities with a scientific approach. This program enabled the dairy farmers to conserve and rear selected indigenous bovine breeds. Along with this, the program also provided information about the breeding tracts of important indigenous breeds so as to prevent them from contracting any disease.
The change in the market structure has positively impacted the face of the Indian dairy industry. These programs ensure the use of high standards and scientific practices of mulching, along with the availability of veterinary health services. This has prompted various MNCs to invest in the dairy industry of India. Some of the multinational food companies which have entered the Indian dairy industry include Arla Foods, Kerry Group, and the Dutch dairy cooperative Friesland Campina.
Their growing interest in India not only boosts the thriving food industry but also brings new technology into the country which helps in increasing productivity and enhancing the quality of output. The MNCs also introduce new flavors and varieties in the culinary tradition and fuse them with ethnic tastes and preferences.
Contract Manufacturing of Value-Added Products
India is the largest producer of milk, accounting for 18.5% of the world's production, registering an annual output of more than 140 Million Tons in 2016. However, sources from IMARC Group find that only one-third of the total milk produced in the country is sold in the organized sector.
The shortage of procurement centers and processing plants acts as a challenge to the development of the industry. On the other hand, the abundant availability of the raw material and low capital investment has encouraged several MNCs to seek untapped opportunities in the country.
These MNCs not only help in expanding the network of procurement centers but promote efficient utilization of resources. The dairy farmers supply their milk to these centers which further process it and manufacture value-added products. The processing of raw milk under the guided management of an established brand promises better quality, longer shelf-life, and varied options of package sizes.
Internationally renowned dairy companies like Lactalis are making multi-million investments in the dairy industry of India. The company bought India’s second-largest private dairy company, Thirumala for 1,750 crores in the year 2014. It also went on to acquire Anik Industries, an Indore-based dairy company, for 470 crores this year in March.
The market for flavoured milk is still at a nascent stage in the country. However, the wider acceptance of the Indian dairy market at the global level has provided various opportunities for the growth of this market in the region. The transformation of the industry into an organized sector has also encouraged the government and international credence in the profit prospects of the market in the country.
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