BT Buzz: Global dairy companies carve their India strategy
These global dairy companies have struggled to get their recipe right in India. But the 1.3 billion strong consumption story never really allowed them to give up on India.
- Jun 18, 2019,
- Updated Jun 19, 2019 9:53 AM IST
The Rs 100,000 crore organised Indian dairy industry is something that global dairy giants such as Fonterra or Danone are finding impossible to ignore. The irony, however, is that these dairy companies have struggled to get their recipe right in India. Danone (dairy arm) burnt its fingers and exited the Indian market in early 2018, while Fonterra, which had partnered with Britannia exited the country in 2007.
But the 1.3 billion strong consumption story never really allowed them to give up on India. Within a year of its exit, Danone's investment arm, Danone Manifesto Ventures, pumped in Rs 182 crore into gourmet yoghurt brand, Epigamia, while New Zealand's Fonterra Dairy, after a 12-year hiatus is back in India through a 50:50 joint venture with Future Consumer Products.
"Earlier, when we got into the country, the focus was on fresh liquid milk. There were challenges in procuring the right quantity of milk as well as the right quality of milk. The second part was the cold chain, which was fairly traditional and not developed to handle the cold chain requirements across the country. We faced issues and realised that we needed to exit. Those challenges which were there at that time have gone away to a very large extent," points out Sunil Sethi, Chairman, Fonterra-Future Dairy and MD, Sri Lanka & India Subcontinent, Fonterra. The JV's target is to build a Rs 6,000 crore business in the next 5-6 years.
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Lactalis India entered India by acquiring Tirumala, which is a regional brand out of Tamil Nadu. It then went on to acquire Anik, which is popular in Central India and then Prabhat Dairy in Maharashtra. "Lactalis has over 250 brands but it never kills the local brand," explains Kumar.
The Fonterra-Future JV has national aspirations, however, they are clear that their strategy will not be one-size-fits-all. "Whatever is right for New Zealand may not be right for India. We are clear that we will keep the Indian consumer at the heart of everything," points out Sethi of Fonterra. The JV first plans to roll out its products in the West and then move to the South. "We are looking at a national rollout but we are not in a hurry. The idea is to first have credible co-packaging partners across regions," Sethi adds.
Will the global dairy giants be able to taste success in India? Will they be able to challenge the dairy cooperatives? Let's wait and watch.
The Rs 100,000 crore organised Indian dairy industry is something that global dairy giants such as Fonterra or Danone are finding impossible to ignore. The irony, however, is that these dairy companies have struggled to get their recipe right in India. Danone (dairy arm) burnt its fingers and exited the Indian market in early 2018, while Fonterra, which had partnered with Britannia exited the country in 2007.
But the 1.3 billion strong consumption story never really allowed them to give up on India. Within a year of its exit, Danone's investment arm, Danone Manifesto Ventures, pumped in Rs 182 crore into gourmet yoghurt brand, Epigamia, while New Zealand's Fonterra Dairy, after a 12-year hiatus is back in India through a 50:50 joint venture with Future Consumer Products.
"Earlier, when we got into the country, the focus was on fresh liquid milk. There were challenges in procuring the right quantity of milk as well as the right quality of milk. The second part was the cold chain, which was fairly traditional and not developed to handle the cold chain requirements across the country. We faced issues and realised that we needed to exit. Those challenges which were there at that time have gone away to a very large extent," points out Sunil Sethi, Chairman, Fonterra-Future Dairy and MD, Sri Lanka & India Subcontinent, Fonterra. The JV's target is to build a Rs 6,000 crore business in the next 5-6 years.
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Lactalis India entered India by acquiring Tirumala, which is a regional brand out of Tamil Nadu. It then went on to acquire Anik, which is popular in Central India and then Prabhat Dairy in Maharashtra. "Lactalis has over 250 brands but it never kills the local brand," explains Kumar.
The Fonterra-Future JV has national aspirations, however, they are clear that their strategy will not be one-size-fits-all. "Whatever is right for New Zealand may not be right for India. We are clear that we will keep the Indian consumer at the heart of everything," points out Sethi of Fonterra. The JV first plans to roll out its products in the West and then move to the South. "We are looking at a national rollout but we are not in a hurry. The idea is to first have credible co-packaging partners across regions," Sethi adds.
Will the global dairy giants be able to taste success in India? Will they be able to challenge the dairy cooperatives? Let's wait and watch.