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Probing the reason(s) for low sales & suggesting remedial measures thereof.
By: Kalyan Sundar Banerjee Krishna Tomar Priya Madan
Sudip Verma Sushant Chowdhary
Acknowledgement Project Details Analysis of Milk Industry Indian Dairy Industry – Facts & Figures Analyzing the product – Milk Operation Flood Cooperative Unions National Dairy Development Board About Mother Dairy Other Major Players Delhi’s (NCR) Milk Market Objectives of Research Findings of the Research SWOT Analysis of Mother Dairy & Others Recommendations Annexure
At the very outset we would like to express our heartfelt gratitude to ‘Mother Dairy India Ltd.’ for allowing us to contribute, though modestly, in the functioning of WT-5, which has the unique distinction of being the most competitive milk market of Asia by way of our research project which we all found very interesting & challenging. Our thanks are due to Mr.K.P.S. Chauhan who was very kind in explaining to us the challenge that lay ahead of us & also for allowing us to make liberal use of his knowledge, resource & patience. We feel grateful to Mr. Venkatramani, for allowing & encouraging us to pursue our research with utmost objectivity, fairness & flexibility. We feel indebted to Mr. Kumar & Mr. Anil Grover for explaining to us the intricacies & peculiarities of milk business which came handy on various occasions & allowed us to retain our focus & finish our research with the satisfaction of a job well done. We would also like to thank all those people at ‘Mother Dairy India Ltd.’ who though being total strangers to us lifted our spirit with their cheerful smiles & gave us the courage & inspiration to work zealously on the project assigned to us & do justice to it. I am extremely thankful to my Faculty Guide Dr. Anurika vaish at Indian Institute of Information Technology for her invaluable Guidance and Suggestions during my Training. We all would also like to express our gratitude towards our parents from whom we have inherited all the desired virtues & to whom we look up to as living inspirations. Last, but by no means the least, we would like to pay obeisance to the Almighty God for bestowing on us his blessings & also for being on our side when the challenge
seemed insurmountable & the going was tough. Our unshakeable faith in Him allowed us to take this research to its logical conclusion.
Name of the company: Title of the project:
“Mother Dairy India Ltd.”
Probing the reason(s) for low sales & suggesting remedial measures thereof. Research based marketing project. 6 weeks (from May 1 to June 15, 2005)
Type of project:
Duration of project:
Number of team members: 5 Area under research:
WT-5 (West Delhi)
Analysis of Milk Industry
Traditionally, in India dairying has been a rural cottage industry. Semi-commercial dairying started with the establishment of military dairy farms and co-operative milk unions throughout the country towards the end of the nineteenth century. In earlier years, many households owned their own ‘family cow’ or secured milk from a neighbour who had one. With the increase in urban population fewer households could afford to keep a cow for private use & moreover there were other problems also like the high cost of milk production, problems of sanitation etc. restricted the practice; and gradually the family cow in the city was eliminated and city cattle were all sent back to the rural areas. Gradually farmers living near the cities took advantage of their proximity to the cities & began supplying milk to the urban population; this gave rise to the fluid milk-sheds we see today in every city of our country. Prior to the 1850s most milk was necessarily produced within a short distance of the place of consumption because of lack of suitable means of transportation and refrigeration. The Indian Dairy Industry has made rapid progress since Independence. A large number of modern milk plants and product factories have since been established. These organised dairies have been successfully engaged in the routine commercial production of pasteurized bottled milk and various Western and Indian dairy products. With modern knowledge of the protection of milk during transportation, it became possible to locate dairies where land was less expensive and crops could be grown more economically. In India, the market milk technology may be considered to have commenced in 1950, with the functioning of the Central Dairy of Aarey Milk Colony, and milk product technology in 1956 with the establishment of AMUL Dairy, Anand. Indian dairy sector is still mainly an unorganised sector as barely 10% of our total milk production undergoes organised handling.
Indian Dairy Industry – Facts & Figures
Beginning in organized milk handling was made in India with the establishment of Military Dairy Farms. Handling of milk in Co-operative Milk Unions established all over the country on a small scale in the early stages. Long distance refrigerated rail-transport of milk from Anand to Bombay since 1945 Pasteurization and bottling of milk on a large scale for organized distribution was started at Aarey (1950), Calcutta (Haringhata, 1959), Delhi (1959), Worli (1961), Madras (1963) etc. Establishment of Milk Plants under the Five-Year Plans for Dairy Development all over India. These were taken up with the dual object of increasing the national level of milk consumption and ensuing better returns to the primary milk producer. Their main aim was to produce more, better and cheaper milk. Milk Production
• • • •
India's milk production increased from 21.2 million MT in 1968 to 88.1 million MT in 2003-04. India is the largest producer of Milk in the World (replacing USA) Per capita availability of milk presently is 231 grams per day, up from 112 grams per day in 1968-69. India's 3.8 percent annual growth of milk production surpasses the 2 per cent growth in population; the net increase in availability is around 2 per cent per year.
In 2004-05, average daily cooperative milk marketing stood at 155 lakh litres, registering a growth of 4.2 percent over 148.75 lakh litres in 2003-04.
Dairy Cooperatives now market milk in about 200 class cities including metros and some 550 smaller towns. During the last decade, the daily milk supply to each 1,000 urban consumers has increased from 17.5 to 52.0 litres.
• • •
Bulk-vending - saving money and the environment. Milk travels as far as 2,200 kilometers to deficit areas, carried by innovative rail and road milk tankers. Ninety-five percent of dairy equipment is produced in India, saving valuable foreign exchange.
• • • •
The annual value of India's milk production amounts to about Rs. 880 billion. Dairy cooperatives generate employment opportunities for some 12 million farm families. Dairy Farming is the single largest contributor to the economy(5% of GDP &13% of employment) Dairy industry represents a huge opportunity being the largest single FMCG Market: Urban Mkt size Rs 33000 Crores and organized sector Rs 11000 Crores representing a huge opportunity for conversion and growth.
Key challenges before Indian Dairy Industry are as follows: • Ensuring Quality • Procurement and efficiencies in supply chain • Product differentiation and value addition
Per Capita Monthly Consumption Expenditure on Broad Groups of Items (in Rs.) NSS Round Milk and Meat, Milk Egg, Products Fish Total Food Total NonFood Total Exp. Average Size of Household
25th (1970 - 1971) Rural Urban 3.03 5.01 1.02 1.9 25.98 34.04 9.33 18.81 35.31 52.85
27th (1972 - 1973) Rural Urban 3.22 5.91 1.09 2.07 32.16 40.84 12.01 22.49 44.17 63.33 5.22 4.72
32nd (1977 - 1978) Rural Urban 38th (1982) Rural Urban 8.45 15.15 3.40 5.92 73.73 96.97 38.71 67.06 112.45 5.20 164.03 4.85 5.29 9.16 1.84 3.33 44.33 57.67 24.56 38.48 68.89 96.15 5.22 4.89
42nd(1986 - 1987) Rural Urban 13.48 23.32 5.25 9.25 92.55 48.38 140.93 5.26 222.65 4.79
43rd(1987 - 1988) Rural Urban 13.63 23.83 5.11 8.85 100.82 57.28 139.75 110.18 158.10 5.08 249.93 4.71
44th(1988 - 1989) Rural Urban 15.65 26.74 6.12 10.59 111.80 63.30 152.49 114.36 175.10 5.17 266.85 4.87
45th(1989 - 1990)
121.78 67.68 165.46 132.54
189.46 4.96 298 4.66
46th (1990 - 1991) Rural Urban 19.04 32.37 7.08 12.27 133.34 68.78 185.77 140.00 202.12 4.81 326.75 4.55
47th (July - Dec. 1991) Rural Urban 21.90 37.21 8.20 13.49 153.59 89.91 207.77 162.57 243.50 5.00 370.34 4.73
48th (Jan. - Dec. 1992) Rural Urban 23.00 42.00 8.00 14.00 161.00 87.00 224.00 175.00 247.00 5.20 399.00 4.80
49th(Jan. - June 1993) Rural Urban 23.00 41.00 9.00 14.00 159.00 85.00 221.00 162.00 244.00 5.10 382.00 4.60
50th(July 1993 - June 1994) Rural Urban 27.00 45.00 9.40 15.50 178.00 104.00 250.00 208.00 281.00 4.90 458.00 4.50
51st (July 1994 ? June 1995) Rural Urban 27.00 49.00 10.00 17.00 189.00 121.00 271.00 237.00 309.00 4.90 508.00 4.60
52nd (July 1995 ? June 1996) Rural Urban 32.38 56.45 10.94 19.11 207.75 136.53 299.98 299.28 344.29 5.00 599.26 4.60
53rd (Jan-Dec 1997) Rural Urban 39.31 62.75 11.79 19.58 231.99 163.02 320.26 325.19 395.01 5.00 645.44 4.60
54th (Jan-? June 1998) Rural 36.54 12.65 232.40 149.67 382.07 5.00
55th (July 1999 ? June 2000) Rural Urban 42.56 74.18 16.14 26.77 288.80 197.28 410.10 444.10 486.07 5.00 854.96 5.00
Source : Basic Animal Husbandry Statistics,2004, GOI.
Share of Agriculture and Livestock Sector in GDP (At current prices in Rs. Billion) Year GDP (Total) GDP (Agriculture) Rs. 1980-81 1985-86 1986-87 1987-88 1988-89 1989-90 1990-91 1,224 2,338 2,600 2,949 3,527 4,087 4,778 425 700 744 835 1,041 1,154 1,352 % Share 34.72 59 29.94 139 28.62 156 28.31 183 29.52 217 28.24 275 28.30 308 GDP (Livestock Sector) Rs. % Share 4.82 5.95 6.00 6.21 6.15 6.73 6.45
1991-92 1992-93 1993-94 1994-95 1995-96 1996-97 1997-98 1998-99 1999-00 2000-01 2001-02 2002-03
5,528 6,307 7,813 9,170 10,733 12,435 13,901 15,981 17,618 19,030 20,910 22,495
1,593 1,779 2,218 2,552 2,778 3,340 3,535 4,064 4,224 4,235 4,730 4,560
28.82 375 28.21 432 28.39 507 27.83 577 25.88 650 26.86 747 25.43 819 25.43 911 23.98 992 22.25 1093 22.62 1187 20.27 1209
6.78 6.85 6.49 6.29 6.06 6.01 5.89 5.70 5.63 5.74 5.68 5.37
* Provisional; ** Quick Estimate; Source : Central Statistical Organisation, Dept. of Statistics, GOI Dairy Cooperatives- Progress on Key Parameters during 2003-04 * States/UT DCS # Farmer Women Procurement Members Members (Nos) (TKGPD) $ ('000) ('000) 5072 65 4657 424 169 11400 4219 283 ** 756 3 240 19 19 2360 230 21 ** 143 0 36 4 3 540 30 6 950 4 396 18 43 5102 331 25 ** Marketing (TLPD) $ 898 8 288 28 1937 89 2101 153 15 **
Andhra Pradesh Assam Bihar Chhattisgarh DELHI Goa Gujarat Haryana Himachal Pradesh Jammu &
Kashmir Jharkhand Karnataka Kerala Madhya Pradesh Maharashtra Nagaland Orissa Pondicherry Punjab Rajasthan Sikkim Tamil Nadu Tripura Uttar Pradesh West Bengal 80 9293 3208 4699 18349 76 1654 96 6892 9643 189 7631 84 18104 2287 2 1737 706 231 1582 3 122 32 402 534 7 1988 4 824 172 11994 0 444 125 33 366 0 54 14 42 111 0 717 1 237 59 2963 6 2243 614 294 2680 2 127 54 745 1036 9 1664 2 814 324 17483 163 1518 738 296 2629 4 132 53 496 855 7 1206 9 436 816 14875
All - India Total 108574
@ Organised ( cumulative ) *Provisional, includes conventional societies and Taluka unions formed earlier ** Not reported Chhattisgarh & Jharkhand reported separately from 2003-04
Increasing awareness: As India enters an era of economic reforms, agriculture, particularly the livestock sector, is positioned to be a major growth area. The fact that dairying could play a more constructive role in promoting rural welfare and reducing poverty is increasingly being recognized. For example, milk production alone involves more than 70 million producers, each raising one or two cows/buffaloes. Cow dung is an important input as organic fertilizer for crop production and is also widely used as fuel in rural areas. Cattle also serve as an insurance cover for the poor households, being sold during times of distress. Supply matches demand: Efforts to increase milk production by dairy farmers are strongly influenced by the degree to which demand signals are transmitted through the marketing system. Cooperatives have played an important role in transmitting the message of urban market demand to them. Since the demand in the urban scenario is rapidly increasing so is the supply generated by the farmers. Surplus capacity: Further, the new dairy plant capacity approved under the Milk & Milk Products Order (MMPO) has exceeded 100 million lpd. The new capacity would surpass the projected rural marketable surplus of milk by about 40 per cent by 2005 AD.
Technological gaps: Several areas of the dairy industry can be strengthened by the induction of state-of-the-art technologies from overseas. Those
who bring in new technologies or sign joint ventures with foreign companies stand to benefit the most. To make the best out of the present situation, the following areas require immediate remedial action on the part of dairy entrepreneurs: Raw milk handling needs to be upgraded in terms of physiochemical and microbiological attributes of the milk collected. The use of clarification and bactofugation in raw milk processing can help improve quality of the milk products. Better operational efficiencies are needed to improve yields, reduce waste, minimize fat/protein losses during processing, control production costs, save energy and extend shelf-life. The adoption of Good Manufacturing Practices (GMP) and HACCP would help manufacture milk products conforming to international standards and thus make their exports competitive. Latest packaging technology can help retain nutritive value of packaged products and extend their shelf-life. For proper storage and transportation, cold chain needs to be strengthened.
Analyzing the product Milk
Milk- An almost complete food Milk is not only an excellent source of Calcium, which is vital for strong bones and teeth; it also contains many other vital nutrients like: Protein: For growth and repair of body tissues. Carbohydrates: In the form of lactose. Fat: For energy. It also contains Vitamins needed for good health; Vitamin A, B1, B2, B3, B12, FOLIC ACID and Vitamin D are all found in significant quantities in milk. A glass of milk provides 50% of the daily intake of calcium required by teenagers.
Demand & Supply Equations: Supply:
Supply of milk is affected by the seasonal influences, in summers the milk supplies dip & in winters it soars. Therefore, dairies generally make use of the surplus milk available with them during winters for manufacturing milk powder so that they can meet the increased demand during summers.
Demand for milk is not very stable either, during festivals its demand increases exponentially .In 2003,for example, the demand during festivals surpassed even Mother Dairy’s projections & its booth had to encounter a rare problem of being out of stock, a blot indeed on an otherwise impeccable distribution system of Mother Dairy. Since then, to its credit Mother Dairy brought efficiency in the system & reevaluated its strategy to encounter this problem & to be fair to them they have lived to the expectations of its consumers by making milk easily available.
Launched in 1970, Operation Flood has helped dairy farmers direct their own development, placing control of the resources they create in their own hands. A National Milk Grid links milk producers throughout India with consumers in over 700 towns and cities, reducing seasonal and regional price variations while ensuring that the producer gets a major share of the consumers' rupee. The bedrock of Operation Flood has been village milk producers’ cooperatives, which procure milk and provide inputs and services, making modern management and technology available to members. Operation Flood's objectives included: • Increase milk production ("a flood of milk") • Augment rural incomes • Fair prices for consumers
Operation Flood was implemented in three phases. Phase Phase I (1970-1980) was financed by the sale of I skimmed milk powder and butter oil gifted by the European Union then EEC through the World Food Programme. NDDB planned the programme and negotiated the details of EEC assistance. During its first phase, Operation Flood linked 18 of India's premier milk sheds with consumers in India's four major metropolitan cities: Delhi, Mumbai, Calcutta and Chennai. Phase Operation Flood's Phase II (1981-85) increased the milk II sheds from 18 to 136; 290 urban markets expanded the outlets for milk. By the end of 1985, a selfsustaining system of 43,000 village cooperatives covering 4.25 million milk producers had become a reality. Domestic milk powder production increased from 22,000 tons in the pre-project year to 140,000 tons by 1989, all of the increase coming from dairies set up under Operation Flood. In this way EEC gifts and World Bank loan helped to promote self-reliance. Direct marketing of milk by producers' cooperatives increased by several million litres a day. Phase Phase III (1985-1996) enabled dairy cooperatives to III expand and strengthen the infrastructure required to procure and market increasing volumes of milk. Veterinary first-aid health care services, feed and artificial insemination services for cooperative members were extended, along with intensified member education.
Operation Flood's Phase III consolidated India's dairy cooperative movement, adding 30,000 new dairy cooperatives to the 42,000 existing societies organized during Phase II. Milk sheds peaked to 173 in 1988-89 with the numbers of women members and Woman’s Dairy Cooperative Societies increasing significantly. Phase III gave increased emphasis to research and development in animal health and animal nutrition. Innovations like vaccine for Theileriosis, bypass protein feed and urea-molasses mineral blocks, all contributed to the enhanced productivity of milk animals. From the outset, Operation Flood was conceived and implemented as much more than a dairy programme. Rather, dairying was seen as an instrument of development, generating employment and regular incomes for millions of rural people. "Operation Flood can be viewed as a twenty year experiment confirming the Rural Development Vision" (World Bank Report 1997c.)
Over almost half a century ago, the life of a farmer in Kaira District was very much like that of his counterpart anywhere else in India. His income was derived almost entirely from seasonal crops. The income from selling milk was undependable. The marketing and distribution system for the milk was controlled by private traders and middlemen. As milk is perishable, farmers were compelled to sell it for whatever they were offered. Often, they had to sell cream and ghee at throwaway prices. In this situation, the one who gained was the private trader. Gradually, the realization dawned on the farmers that the exploitation by the trader could be checked only if they market their milk themselves. In order to do that they needed to form some sort of an organization. This realization is what led to the establishment of the Kaira District Cooperative Milk Producers' Union Limited (popularly known as Amul) which was formally registered on December 14, 1946. Backward integration of the process led the cooperatives to advances in animal husbandry and veterinary practice.
More than 900 village cooperatives have created jobs for people in their own villages and that too without disturbing the socio-agro-system and thereby the exodus from the rural areas has been arrested to a great extent. The yearly elections of the management committee and its chairman, by the members, are making the participants aware of their rights and educating them about the democratic process. Perpetuating the voluntary mix of the various ethnic and social groups twice-a-day for common causes and mutual betterment has resulted in eroding many social inequalities. The rich and the poor, the elite and the ordinary come together to cooperate for a common cause. Live exposure to various modern technologies and their application in day-to-day life has not only made them aware of these developments but also made it easier for them to adopt these very processes for their own
betterment. One might wonder whether the farmer who knows almost everything about impregnating a cow or buffalo, is also equally aware of the process in the humans and works towards planning it. The income from milk has contributed to their household economy. Besides, women, who are the major participants, now have a say in the home economy.
This income is helping these people not only to liberate themselves from the stronghold of poverty but also to elevate their social status. The system succeeded mainly because it provides an assured market at remunerative prices for producers' milk besides acting as a channel to market the production enhancement package. What's more, it does not disturb the agro-system of the farmers. It also enables the consumer an access to high quality milk and milk products. Contrary to the traditional system, when the profit of the business was cornered by the middlemen, the system ensured that the profit goes to the participants for their socio-economic upliftment and common good.
Produce an appropriate blend of the policy makers farmers board of management and the professionals: each group appreciating its roles and limitations. Bring at the command of the rural milk producers the best of the technology and harness its fruit for betterment. Provide a support system to the milk producers without disturbing their agro-economic systems.
Plough back the profits, by prudent use of men, material and machines, in the rural sector for the common good and betterment of the member producers. Even though, growing with time and on scale, it has remained with the smallest producer members. In that
sense, Cooperative Movement is an example excellence, of an intervention for rural change.
Recently the Indian cooperative movement got a much needed facelift. With competition snapping at its heels, the sector which has been governed by arcane laws until the recent past will see a special provision inserted in the Companies Act, 1956. All the cooperative unions will be re-christened cooperative companies; they will come under the purview of the registrar of companies, instead of the registrar of cooperatives. While they will have to adhere by the audit procedures like any corporate, they will differ from ordinary companies in many ways. Not everyone can join a cooperative. Only users can enroll as members at a fixed membership fee. Quantum of business and not equity capital will see an election to the board. And there will be flexibility to raise capital from members and outside. Dairy Cooperatives account for the major share of processed liquid milk marketed in the country. Milk is processed and marketed by 170 Milk Producers' Cooperative Unions, which federate into 15 State Cooperative Milk Marketing Federations. The Dairy Board's programmes and activities seek to strengthen the functioning of Dairy Cooperatives, as producerowned and controlled organizations. NDDB supports the development of dairy cooperatives by providing them financial assistance and technical expertise, ensuring a better future for India's farmers. 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. Some of the major Dairy Cooperative Federations include:
Andhra Pradesh Dairy Development Cooperative Federation Ltd (APDDCF) Bihar State Cooperative Milk Producers Federation Ltd (COMPFED) Gujarat Cooperative Milk Marketing Federation Ltd (GCMMF) Haryana Dairy Development Cooperative Federation Ltd. (HDDCF) Himachal Pradesh State Cooperative Milk Producers Federation Ltd (HPSCMPF) Karnataka Cooperative Milk Producers Federation Ltd (KMF) Kerala State Cooperative Milk Marketing Federation Ltd (KCMMF) Madhya Pradesh State Cooperative Dairy Federation Ltd (MPCDF) Maharashtra Rajya Sahakari Maryadit Dugdh Mahasangh (Mahasangh) Orissa State Cooperative Milk Producers Federation Ltd (OMFED) Pradeshik Cooperative Dairy Federation Ltd (UP) (PCDF) Punjab State Cooperative Milk Producers Federation Ltd (MILKFED) Rajasthan Cooperative Dairy Federation Ltd (RCDF) Tamilnadu Cooperative Milk Producers Federation Ltd (TCMPF) West Bengal Cooperative Milk Producers Federation Ltd. (WBCMPF)
The Dairy Cooperative Network: • • • • includes 170 milk unions operates in over 338 districts covers nearly 1,08574 village level societies is owned by nearly 12 million farmer members.
Apart from making India self sufficient in milk, these dairy cooperatives have established our country as the largest milkproducing nation in the world!
National Dairy Development Board
The National Dairy Development Board was created to promote, finance and support producer-owned and controlled organizations. NDDB's programmes and activities seek to strengthen farmer cooperatives and support national policies that are favourable to the growth of such institutions. Fundamental to NDDB's efforts are cooperative principles and the Anand Pattern of Cooperation. A commitment to help rural producers help themselves has guided the Dairy Board's work for more than 30 years. This commitment has been rewarded with achievements made by cooperative dairies in milk production, employment generation, per capita availability of milk, foreign exchange savings and increased farmer incomes. The National Dairy Development Board (NDDB) has replaced exploitation with empowerment, convention with modernity, stagnation with growth and transformed dairying into an instrument for the development of Indian farmers. The National Dairy Development Board was created in 1964 in response to the Prime Minister Lal Bahadur Shastri's call to "transplant the spirit of Anand in many other places". He wanted the Anand model of dairy development - with institutions owned by rural producers, which were sensitive to their needs and responsive to their demands - replicated in other parts of the country. The Board's creation was routed in the conviction that our nation's socio-economic progress lies largely on the development of rural India. Thus NDDB's mandate is to promote, finance and support producer-owned and controlled organizations. NDDB's programmes and activities seek to strengthen farmer cooperatives and support national policies that are favourable to the growth of such institutions.
NDDB believes that the Rs 7,000-crore (Rs 70-billion) milk cooperative market is getting much more competitive and wants to strengthen the position of cooperatives through a multi-pronged action plan with an outlay of Rs 800 crore (Rs 8-billion). This includes using MDFL to enter into 51:49 joint venture companies with state cooperative federations to assist them with marketing value added products and to help them in other ways to become self-reliant enterprises.
Mother Dairy India Limited
‘Mother Dairy’ is the largest liquid milk brand in Asia. It started its operations in 1974 under the Operation Flood programme of the National Dairy Development Board. Operation Flood is one of the largest dairy development projects in the world. Mother Diary, Delhi is IS/ISO- 9002 & IS-15000 (HACCP) certified organisation. ‘Mother Dairy’ is the single largest brand of milk in Delhi, India as well as in Asia, marketing about 1.9 million liters of milk per day. Mother Dairy commands 40% market share in the organized sector in and around Delhi, primarily because of consistent quality and service reliability. ‘Mother Dairy’, which markets over 15 lakh LPD of milk procured from various State federations in Delhi, has now entered the Mumbai market. In addition to toned milk through Bulk vending, Mother Dairy also markets Full cream milk, standardised milk, toned milk, double toned milk and Skimmed milk (lite) in polypacks.
Mother Dairy, Delhi is an IS/ISO-9001:2000 and Hazard Analysis Critical Control Points (HACCP) and IS-14001:1996 Environment Management System (EMS) Certified organisation. Mother Dairy was the first industry in country to implement ISO-14031(Environment Performance Evaluation) project.
This provides assurance to the consumer in respect of Quality and Safety of products manufactured and marketed by Mother Dairy. The National Dairy Development Board (NDDB) commissioned Mother Dairy in the first phase of Operation Flood in 1974. Considering the success of Dairy industry NDDB established Fruit & Vegetable Project in Delhi in 1988 with "SAFAL" as its umbrella brand. With a view to separating the commercial activities from developmental activities, the NDDB merged Mother Dairy and the Fruit & Vegetable project into a wholly owned company named Mother Dairy Fruit &Vegetable Ltd (MDFVL) in April 2000. This becomes the holding company of Mother Dairy India Ltd (MDIL)- a marketing company and Mother Dairy Foods Processing Ltd (MDFPL)- a processing company. The company is a highly trusted household name for its wide range of milk products like Milk, Flavoured Milk, Ice-Cream, Dahi, Lassi, Table Butter, Dairy Whitner, Ghee etc. Mother Dairy sources its entire requirement of liquid milk from dairy cooperatives. The objective of Mother Dairy is to: (a) ensure that milk producers and farmers regularly and continually receive market prices by offering quality milk, milk products and other food products to consumers at competitive prices and; (b) Uphold institutional structures that empower milk producers and farmers through processes that are equitable.
At Mother Dairy, processing of milk is controlled by process automation whereby state-of-the-art microprocessor technology is adopted to integrate and completely automate all functions of the milk processing areas to ensure high product quality/ reliability and safety.
In addition to its market leadership in India, Mother Dairy is also active in the global arena, exporting its range of dairy products to various international markets.
Process of Procurement & Distribution of Milk:
Farmers and the Milk Co-operative Society The Operation Flood programme helps both farmers as well as the city consumers. The programme ensures that the farmers get a fair price for their cow & buffalo milk and the consumers get best quality milk at reasonable prices. In order to maintain freshness, this milk is chilled and then transported to Mother Diary in insulated milk tankers by road and by rail. Checking the quality of milk At the Dairy stringent hygienic standards are maintained. The milk in the tankers is first checked for quality and freshness and then unloaded into huge insulated stainless steel storage tanks. These tanks have a capacity of 1 lakh liters each. The presence of adulterants (impurities) like urea, neutralisers, preservatives and germs like bacteria are checked. All these tests ensure that only good quality milk is accepted. Once empty, the tankers are thoroughly cleaned and sanitized using acid and alkali. The tankers are then finally rinsed with water.
Processing of milk Unprocessed milk may contain small dirt particles invisible to the naked eye. In order to remove these particles the milk has to be processed. To process milk at Mother Dairy, the milk is first clarified. This is done in a clarifier which spins the milk at a very high speed,
as a result of which the dirt particles are thrown out and drained. The milk is then pasteurized to make it safe for human consumption. This process destroys any disease causing bacteria and also increases the shelf life of the milk. During pasteurization the milk is heated to 72 degree Celsius for 15 seconds and then rapidly cooled down to 7 degree celsius. This process, unlike boiling, does not affect the nutritional value of the milk. Pasteurized milk is safe to drink without boiling as long as it is kept cool at all times. Fortification with Vitamin A Toned milk during processing is fortified with Vitamin A. The deficiency of Vitamin A can lead to night blindness and skin horning.
Homogenisation At Mother Dairy the milk is also homogenised. This ensures that the customers get uniform amount of cream in their milk. In this process the milk is pumped at a very high pressure turning the cream into tiny droplets thus distributing the fat through out the milk. These droplets do not float to the surface to form a creamy layer. That is why no creamy layer appears when Mother Dairy milk is boiled at home. Mother Dairy shops sell homogenised toned milk which contains minimum 3% fat even though you cannot notice it. Dispatching of milk After processing, the milk is chilled and stored in silos and further chilled to about 2 C. by the glycol chilling system, and
then dispatched to the Milk Shops in insulated road milk tankers. Prior to the milk being dispatched in tankers, it is tested for quality to make sure that it meets the quality standards. When the tanker arrives at the shop the milk is transferred into a large refrigerated tank. Making the milk available The control room is very vital to the efficient distribution of milk to the 900 shops across the city. It organizes the tanker routes and its staff is responsible for ensuring that shops do not run out of milk. Each milk tanker is fitted with a wireless set. As soon as the incharge at the control room learns that a particular shop is running out of milk, he contacts the tanker nearest to the shop on the wireless which then delivers the extra milk to it. Quality control all the way A final quality check of the mill is also made at the shop itself. This ensures that milk reaching the customers is of same quality as dispatched from the Dairy. Consumer Information To raise the consumers awareness regarding Adulteration of milk, Mother Dairy has thrown open its testing facilities. In its laboratories consumers can see for themselves how impurities and adulterants are easily detected. Mother Dairy also has two "mobile labs" that can test milk in the residential colonies. All this is part of a commitment to provide the consumers with the purest milk nature has to offer. Keeping milk cool
Mother Dairy takes care to keep milk cool at every stage-it is chilled before transporting in insulated tankers, it is stored in insulated silos and kept in refrigerated tanks at the shops. Keeping milk cool slows down the rate at which bacteria multiply. This also increases its shelf life.
Caring for the environment Solar Panels: In an effort to conserve fuel, Mother Dairy utilises the abundant solar energy to preheat the water going into the boilers. This also minimizes the pollution caused by burning of fuels like coal, oil etc.
Effluent treatment plant: The water used for cleaning equipment and tankers is treated at the effluent treatment plant in the Dairy before being discharged into the sewege system.
Other Major Players
Amul is the latest entrant in the highly competitive milk market of NCR where Mother Dairy had an almost monopoly. Amul is the brand owned by GCMMF is handling almost 80 lakh litres of milk daily.
It sells 3 lakh LPD
DMS GOPALJEE PARAM
COMPARITIVE ANALYSIS OF MAJOR MILK BRANDS
Full Cream Toned Double Toned Standard Skimmed
Mother Dairy 19 15 13 17 11
Amul 19 15 NA NA NA
Delhi Milk Gopaljee Scheme 19 19 15 NA NA NA 15 NA NA NA
Paras 19 15 NA NA NA
Delhi’s (NCR) Milk Market
Delhi National Capital Region (NCR), among the biggest milk markets in the country, is dominated by Mother Dairy currently. The Delhi market comprises 40 lakh litres currently and is dominated by NDDB owned Mother Dairy, which sells 10 lakh LPD. The other organized sector players are Paras Dairy, which sells 3 lakh LPD, state-owned Delhi Milk Scheme (2.5 lakh LPD), Gopaljee (1-1.5 lakh LPD) and Britannia 30-40,000 LPD. Amul and NDDB's non-compete agreement has prevented the former from launching its liquid milk in the Delhi market till 2003.With the non-compete agreement having run out, Amul launched its fresh milk in Delhi in two variants — full cream and toned — priced at par with that of Mother Dairy .Amul, to its delight, has seen the demand for its milk going up by leaps and bounds in the city and is now planning to enter into alliances with dairies located around Delhi such as Indian Potash and Modern Dairy to cater to the demand. Amul already has a lease agreement with Kwality Dairy's unit in Faridabad where it is planning to increase capacity and has also decided to set up a new 5-lakh litre per day dairy plant at an investment of Rs 40 crore in Haryana to cater to the northern market. GCMMF officials say the company's milk capacity has already touched 80,000 litres per day (LPD) and have plans to take it to 3 LPD. Amul is now selling through 2,500 retail outlets and will increase this to 7,500 apart from covering outlets which are selling Amul butter. Another player gearing up to unseat Mother Dairy from the leadership throne is the Rs 400-crore Paras group. The company has hit upon an innovative strategy of introducing milk vending machines which dispense token milk at Rs 13 per litre. Paras says this strategy targets the unbranded milk
segment which accounts for 45 per cent of the total milk consumed in Delhi NCR. The company plans to put up Paras Milk Point (PMP) machines at various fast-moving consumer goods outlets all over the capital. Over 50 machines — each costing over Rs 2 lakh — will be installed in phases over the next four months to cater to toned milk users. The PMP machines carry about 250 litres of milk and have an in-built refrigerator. Paras brand currently reaches 9,000 outlets in and around Delhi, and the group is looking at penetrating fresh markets in the northern region. Paras' total processing capacity of its three units, one at Haryana and two at Sahibabad in Uttar Pradesh, is 14 lakh LPD.
Objectives of Research
1) 2) 3) 4) 5)
Assessing the population of WT-5. Assessing the milk market of WT-5. Assessing Mother Dairy’s position in the territory vis-à-vis other brands. Assessing the reasons of low sales volume of Mother Dairy’s milk in WT-5. Suggesting remedial course of action for Mother Dairy India Ltd.
Findings of the Research
HOUSEHOLDS Analysis: MONTHLY INCOME
Graph showing Relationship between MONTHLY INCOME and use of Mother Dairy Milk.
100% 80% 60% 40% 20% 0%
48 56 64 38 yes
monthly household income above 25000
4 263 150 no use MD milk 0 rarely
monthly household income 15000 to 25000 monthly household income 10000 to 15000 monthly household income upto 10000
It shows that people falling in income group of 10000 to 15000 and 15000 to 25000 are maximum in number who do not consume MD milk and also major number of people fall under this category. So this group can be the target for action.
Graph showing QUALITY as an important parameter.
100% 80% 60% 40% 20% 0%
0 quality as a paramtr not at all imp quality as a paramtr somewhat imp quality as a paramtr most imp
no use MD milk
It shows that Quality is the most important parameter that effects the buying decision of consumers. Out of 1000 households surveyed 738 were not consuming MD milk since they are not satisfied with the quality of MD milk. These were the findings in the area of Narayana and Patel nagar.
Graph showing TASTE as an important parameter.
100% 80% 60% 40% 20% 0%
0 taste as a paramtr not at all imp taste as a paramtr somewhat imp taste as a paramtr most imp
use MD milk
It shows that taste being the second most important parameter effects the buying decision of consumers. Out of 1000 households surveyed 676 people do not use MD milk since they do not find taste appropriate. The reason for not liking the taste was that they had become habitual of consuming either the other brands or the loose milk available from local dairies. These findings were common in all the areas i.e. it was the problem in almost every area surveyed.
Graph showing ease of AVAILABILITY as an important parameter.
100% 80% 60% 40% 20% 0%
ease of availability not at all imp ease of availability somewhat imp ease of availability most imp
no use MD milk
It shows that ease of availability is also an important parameter that plays a role in effecting consumers buying decision. Out of 1000 sample size 590 do not consume MD milk who prefer ease of availability as the most important parameter. Either they were getting the milk they were consuming on their doorsteps or it was available near to their house. These were the findings in the area of Anand Parvat, which was a hilly area and there was no MD booth there.
Graph showing PRICE as an important parameter.
100% 80% 60% 40% 20% 0% 26 51 yes 129 582 4 75 132 no price as a paramtr not at all imp price as a paramtr somewhat imp price as a paramtr most imp
use MD milk
It shows that price being one the parameter that effects the buying decision of consumers is least effective in major areas. Out of 1000 sample size those who are not consuming MD milk i.e. 582, consider Price as not at all important. But there are areas where Price is still the most important parameter. These areas are the areas of Karol Bagh, Regarpura. In these areas price is still the most important factor and hence its importance cannot be ignored in these areas.
Analysis: REASONS FOR DISCONTINUATION
The following Pie chart shows the major reasons of discontinuing MD milk by a sample that was earlier consuming MD milk.
1 % 2 % 3 % 7 % 1% 4 5% 2 2% 1
qa u lity ta te s aa b v ila ility pic r e s c n u in till o s m g m d n v r tr d e e ie o es th r
The major of discontinuing the use of MD milk is Quality. Majority of people discontinued MD milk due to quality problems followed by taste, then availability and last price.
The graph shows the combined availability as important parameters effect of Price and
There is an inverse relationship between PRICE and AVAILABILITY parameters. People who consider price as most important parameter do not consider availability as important at all and vice versa.
Analysis: NUMBER OF RETAILERS
The graph shows the NUMBER OF RETAILERS that stock Mother Dairy milk and those who do not stock Mother Dairy milk.
Out of 100 samples of Retailers surveyed 56 were stocking MD milk and 44 were not stocking MD milk.
Analysis: SATISFACTORY LEVEL
The graph shows the SATISFACTORY LEVEL of Retailers.
50 40 30 20 10 0 0 yes 16
stock MD milk yes stock MD milk no
Out of the total retailers surveyed 56% of Retailers were stocking MD milk but out of these 56 only 16 Retailers were fully satisfied with the services of the company and the sales they were getting. 40 were still having some or the other problems. 44% of Retailers who were not stocking MD milk were not at all satisfied with the company, which is why they were not stocking MD milk.
The Pie shows the PROBLEMS faced by Retailers.
Problems faced by Retailers 12 40
8 3 4 5
back date no return staff misbehavior near by booth
low margin no Interaction with Co. promotion problem less demand
Major problem being faced by Retailers was due to SUPPLY PROBLEM. The distribution channel is not at all satisfying.
The graph shows the only important parameter i.e. TASTE for the institutional consumers.
100% 80% 60% 40% 20% 0%
4 type of milk used packed type of milk used loose
most imp somewhat imp taste as imp paramtr
According to the institutional consumers, who consume milk as an Input for their production of sweets (like sweet shops, restaurants etc) consider TASTE as the only and the most important parameter that effects their buying decision. Out of total sample size of 50 only 16 consume packed milk rest 34 consume loose milk as they perceive it to be fresh and of better taste.
The graph shows whom do MD Retailers consider their major competitors as they are facing competition from them.
According to the total sample of 30 MD Retailers maximum Retailers considered Local dairy owners as their competitors and then the second major was Amul. These are the competitors according to the MD Retailers surveyed as they were having them as their neighbors and facing competition from them.
SWOT Analysis of Mother Dairy
• The major strength of the Mother Dairy is the different variety of Milks and a recognized BRAND name. The increasing demand for these products presents a great opportunity for the Mother Diary to increase and scale up the production. • •
Scarce Mother Dairy Outlets. Less Margin given to the Outlet owners to match the existing competitors.
• • There is a scope of business as there is a demand for dairy products. Mother Dairy should open more outlets to get the maximum advantage of the demand. Need to put more stress in the face-to-face direct marketing to reach to the customers. The increasing demand for these products presents a great opportunity for the Mother Diary to increase and scale up the production. • • •
Increasing competition from the other brands. Strong supply chain management by the competitors. Strong marketing strategy by competitors by offering the discount coupons to consumers and providing healthy commissions to the retailers.
HOUSEHOLDS: Areas of Narayana Vihar and Patel Nagar
People have a high consideration for QUALITY and they think MD Milk is low in quality and is also yellowish in colour. Recommendation: Company should try to conduct camps and awareness programmes in these areas to overcome this thinking of people.
Areas of Karol Bagh and Regar Pura
People in these areas have PRICE as the most important factor which effects their decision to consume. Recommendation: If the company can achieve its target in this area by keeping low margin and by reducing the price then the sales in this area can improve drastically because in this area the income level of households is not very high.
Areas of Anand Parvat and Baljit Nagar
This area being a HILLY Area is the most challenging job for any company to serve. People want MD Milk here but there are no booths in this area. Recommendation: If the company can open its Booth in this area it can be the leader as no other company has its booth in this area except GOPALJEE. The sales can improve to a very big extent from this area alone since there is demand but no availability. • MOTHER DAIRY should also launch certain schemes for Households. It has schemes for Retailers but not for households. This section being the major user of milk and
in order to enter into a new area such starting schemes can be very helpful. • Demand and Visibility go hand in hand. If MD can do certain promotions as its competitor AMUL does, then it can attract sales. Promotion with the help of boards, hoardings etc. • Lastly incase of Households the company should maintain a proper communication with the Localities or Areas facing problem.
RETAILERS AND MD RETAILERS:
• The major problem faced by Retailers and MD Retailers is the SUPPLY problem i.e. problem with the distribution. The company should aim at improving its SUPPY CHAIN MANAGEMENT. • The company should increase incentives that can increase Retailers Nominal Income. This can be done through certain Schemes that increase the overall sales. • The company should lay emphasis on proper PROMOTION of the brand at the Retail Outlet. • The company should get a proper FEEDBACK from Retailers time to time. Incase they are facing any problem it can be solved timely, without delays. • There is a problem of DATE also being faced by Retailers. The date printed is one day previous. If retailers get the same day’s milk in the evening (which is not so), the Retailers can sell some of the same day’s milk in the evening itself and the remaining would be happily acceptable by people in the Morning, next day.
1. M/S __________________________________________________________ 2. Location\Address:- ______________________________________________ 3. Avg. Daily Sales: ________lts 4. Which brand of milk do you sell? (In order of volume of sales) i) __________________________ ii) __________________________ iii) __________________________ iv) __________________________ v) __________________________ vi) __________________________ 5. Which type of milk sells the most? Toned ___ Double toned ___ Standard ___ Skimmed ___ Full Cream __ 6. Do you stock Mother Dairy’s milk? Yes ____ No ____
7. If yes, what’s the customers’ response to it? ______________________________________________________________ 8. If no, please specify the reason(s). ______________________________________________________________ 9. Any suggestions would you like to give? ______________________________________________________________
1) Name: ______________________________________________________ 2) Address/Phone no: ____________________________________________ 3) No. of family members: ____ A: ___ C: ___
4) Avg household consumption of milk/day: ______lts. 5) Type of milk you consume • Loose Cow ____ • Packed Brand ______________________________ Type: Toned ___ Double toned ___ Standard ___ Skimmed ___ Full Cream ___ • Both Qty of packed Milk _____lts Qty of Loose Milk _____lts. Buffalo _____
6) Rank the top 3 most important parameters which affect your purchase. • • • • • Price Taste Quality Ease of Availability Advertising/promotion
7) Have you ever tried Mother Dairy’s Milk? (To be asked only if the brand mentioned in 5 is other than Mother Dairy) Yes ____ No ____
8) If yes, why have you discontinued using it? • • • • • Price Taste Quality Availability Others _________________________________________________
9) If no, please specify the reason. ___________________________________________________________ _ 10) What suggestions would you like to give to Mother Dairy? ___________________________________________________________ _ 11) What is your monthly household income: • • • • Up to Rs.10000 Rs.10000 to 15000 Rs.15000 to 25000 Above Rs.25000
1. M/S: ____________________________________________________________ 2. Address/Phone no: _________________________________________________ 3. Avg consumption of milk/day: ____lts 4. Type of milk you consume • Loose Cow ____ • Packed Brand ______________________________ Type: Toned ___ Double toned ___ Standard ___ Skimmed ___ Full Cream ___ • Both Qty of packed Milk _____lts Qty of Loose Milk _____lts. Buffalo _____
5. Rank the top 3 most important parameters which affect your purchase. • • • • • Price Taste Quality Ease of Availability Advertising/promotion
6. Have you ever tried Mother Dairy’s Milk? (To be asked only if the brand mentioned in 5 is other than Mother Dairy) Yes ____ 7. If yes, why have you discontinued using it? • • • • • Price Taste Quality Availability Others _________________________________________________ No ____
8. If no, please specify the reason. ___________________________________________________________ _ 9. What suggestions would you like to give to Mother Dairy? ____________________________________________________________
MOTHER DAIRY RETAILER
1. Booth No:- _____ Vendor Name:- ___________________________ 2. Location/Address:- __________________________________________________ 3. Avg. Daily Sales: ____lts. a) Packed: _____ b) Vending Machine: _____ 4. How would you rate your present sales? a) Satisfactory: ______ b) Average: ______ c) Unsatisfactory: ______
5. If the answer to the above is other than 4a then please choose the reasons from below: a) Competition from other brands b) Competition from local dairy owners c) Others ____________________________________________________________ 6. Whom do you consider your major competitor? ___________________________________________________________________ 7. Which type of milk sells the most? Toned ___ Double toned ___ Standard ___ Skimmed ___ Full Cream __ 8. Package of what size moves faster? 500 ml _____ 1lt _____
9. Which situation you encounter at your booth more? Over stocking ________ Shortage ________
10. What according to you has been general consumers’ experience? __________________________________________________________________ _ 11. Any suggestions would you like to give to the company? __________________________________________________________________ _
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