Distribution of Perishable

Commodities

Group 2
Annapoorani Barani- F010
Prakhar Jain - I025
Gulshan Kumar Mishra - A039
Alok S Kumar- E052
Arkajyoti Saha- I044
Shaily Kasaudhan- E031
Amir Asif- B009
Agenda
Vegetables & Fruits:
• Industry overview & traditional channel
• Modern retail distribution (Spencer, Reliance Fresh)
• E-commerce and online channels(Big Basket, Grofers, Ninjacart)
• Hybrid distribution models (Sahyadri Farms)

Dairy (Milk):
• State distribution (Hatsun Agro)
• National distribution (Amul)
Fruits &
Vegetables
 Traditional Modern Retail E-commerce Sahyadri Hatsun Agro Amul
Industry Overview Farmers producing agricultural produce
are scattered in remote villages while
consumers are in semi-urban and urban
• Market size for grocery industry is $570+ million out of which vegetables/fruits account for 16% areas. This produce has to reach
• India produced 90.2 million metric tonnes of fruits and 169.1 million metric tonnes of vegetables consumers for its final use and
consumption. There are different
• During 2019-20, India exported fruits and vegetables worth $1,280 Millions which comprised of fruits agencies and functionaries through
worth $ 670 millions and vegetables worth Rs. $610 millions which this produce passes and reaches
the consumer.
• 98% market is captured by local kirana and vendors. 1-2% market is online based
Factors affecting channels : There are
several channels of distribution
depending upon type of produce or
commodity. The factors are :

• Perishable nature of produce .e.g.

fruits, vegetables, flowers, milk,
meat, etc.

• Bulk and weight–cotton, fodders are

bulky but light in weight.

• Storage facilities.

• Weak or strong marketing agency.

• Distance between producer and
consumer. Whether local market or
distant market.
*All % figures are gross margin
 Traditional Modern Retail E-commerce Sahyadri Hatsun Agro Amul
Hub and Spoke Model (HSB) Differences between HSM and VCM model

➢ Spencer's Retail, More and Food Bazaar In HSB Model, organised

retailers depends on
➢ Players: Farmers, organised retailers, wholesalers and customers wholesaler to buy small
In HSB Model, the supply to
Hubs is made from buying In HSB model, the shelf
quantity of products to centres, while in VCM model life expired products are
meet supply-demand supply to Hubs is either sold to cart vendors while
mismatch, while VCM through Collection centres or in VCM these products
model have no directly from contracted
farmers
are disposed off.
dependency on
wholesalers

Comparison of gross margins between traditional and modern retailing value chain

Value chain model (VCM) ➢ In the traditional value

chain farmers, on an
❖ Based on retailers core growth strategy of “backward integration and
average, receive a higher
progressing towards building an entire value chain” (Reliance Fresh)
share than other
❖ Players: Farmers, organised retailers and customers stakeholders

➢ The farmers linked to the

modern retail chain
receive a higher price for
each of the vegetables.

* Source: G.P. Reddy, M.R.K. Murthy and P.C. Meena : Value Chains and Retailing of
Fresh Vegetables and Fruits, Andhra Pradesh
 Traditional Modern Retail E-commerce Sahyadri Hatsun Agro Amul
E-commerce & Online Channel Inventory Lead Model

Market Place Model Farm Farm

Business Model

Avg delivery time 12 hrs

Avg delivery time 1 day
Collection Centre

Avg delivery time 1 day

Inventory lead Market place City Team Collection
Centre
• Direct procurement •Procurement from local Fulfilment Centre
from farm vendor
•Inventory is maintained •Zero inventory model Local Store Distribution
•Better margin •Commission from Hub Micro Distribution
•better quality vendor (less) Centre
management •Less quality
•Order received after •Order is received Customer Customer
(B2C) Customer (B2B)
checking accessibility in before checking the
market availability

Challenge • Operational in 7 cities

• 25 Cities coverage
• Operational in 18 Cities • Forecast via customer
• Only 1-2% possible market is tapped by online • 30-35% gross Margin
• Per day 100,000 orders analysis, historic demand
channel • 150,000 orders per month
• After Covid order data, market condition data
• Highly fluctuating prices (70% F&V)
190,000 • Cash and carry business
• Expansion can not be done very fast • After covid order 230,000
• 7-8% commission from model
• Buyer’s reluctance to pay delivery charges • Procurement: orders for
vendor • All carts are RFID tagged.
• Very thin profit margin (7-8%) Tomorrow +safety stock
• Software/App used: Odin –
• Wastage/Returns, cash, crate mismatch, inventory • Complete Ownership of
operation, Falcon- Sales,
mismatch channel
Blink -Driver
 Traditional Modern Retail E-commerce Sahyadri Hatsun Agro Amul
ABOUT SAHYADRI (NASHIK)
Formed in 2010, Sahyadari farmer
producer company limited (SFPCL)
was registered as a Farmer Producer
Company (FPC) under the provision
Sahyadri Agro Limited (SARL) is a
introduced in Companies Act. It's a
private company established to enter
30% (50% for exports)* the retail market and has a long term collective that is owned and
Farmers
vision of becoming an FMCG giant. managed by farmers and has an
7%
DISTRIBUTION CHANNELS

VesatoGo app SFPCL SFPCL owns 70% stakes in the company annual turnover of Rs 500+ crore

The Grape Vine

B2B (Wholesale) B2C (SARL) Grape export accounts for 150+ crore in annual
revenue. It has exported 8000+ containers since its
inception.
25% 5% 6% 5%
1400 containers
Rs 30 lakh/container
Export Domestic Retail Ecommerce 27,500+ tonnes

• Exports as per country wise
technical specifications
• Inventory model for domestic
supply
*All % figures are net margin
• 10 retail stores in Mumbai & Nashi.
• SFPCL fruits & vegetables (64%), SFPCL
processed products (23%), 3rd party &
FMCG products (13%)
• Retail SP benchmark against local mandi
• Ecommerce SP benchmark against
Reliance JioMar, Big Basket
The HUL affair
SFPCL has an MoU with HUL, allowing SFPCL
production of Kissan ketchup & jam, squash & juice.
It is the largest tomato processing plant of the
country, accounting for 40% of all India Kissan ketup
production (200+ crores in revenue)
Dairy (Milk)
 Traditional Modern Retail E-commerce Sahyadri Hatsun Agro Amul

India is the largest milk producer, produces 20% of the world’s total milk
The distribution is highly fragmented and distribution is done by highly unorganised sector

CO-OPERATIVE MODEL PRIVATE COMPANY

First Tranche: Based on quality and quantity of milk, payment
within 15 days of procuring milk.
Second Tranche: Based on The sales of various value added
products manufactured during the year, profits are paid back
to the farmers on the basis of their shareholding in the co-
operative
The company directly deals with the farmers/vendors
and milk producers, procures milk from them,
processes it, and sells it through its distribution
channels.
• Farmer is paid only once

Finally transported to
various wholesalers and
retail stores Private player Packs, brands and
Milk is produced Wholesalers and
procures milk sells it to various
Pasteurized milk is transported to the regional milk into various value retailers send it
from various distributors and
federation where dairy milk is manufactured and branded added products to end customers
sources wholesalers

Chilled milk is then transported

to the union for pasteurisation
Dairy farmers get milk to the
VCC where milk is cooled
using chillers
 Traditional Modern Retail E-commerce Sahyadri Hatsun Agro Amul

Distribution Delivery to End Consumer

Hatsun Milk Dairy Farm Technology Enablement

Chilling Centres Dairy Farm
Banks (HMBs)
Pilot of using IOT in partnership with an India-
focused agri-tech startup. IOT sensors measure
•Routes carry milk •Further testing of CFA
•Milk procured from milk conductivity to test for diseased cow milk
from HMBs to milk at chilling
farmers from 3.2 before accepting it for distribution
chilling centers centers from all
lakh villages tested First company in India to implement low-cost
•Further testing of HMBs through
for fat and SNF Retail Stockist RFID tagging for cows in its network – eventually
milk at chilling samples
• Payment to hoping to use this data to track cow health and
centers from all •Distributed to end
farmers based on educate farmers, get cluster-wide data on cow
HMBs through consumer through
quantity and quality Exclusive Booths & Retail health, implement veterinarian schemes, etc
samples intermediaries
Outlets
Improving Efficiency
A New and advanced process of procuring and chilling the milk at the Opportunities
village level using ABC (Active Bulk Cooler) has been introduced in 400 plus Implementation of IOT sensors in its all its storage and transportation
locations. components to track quality, cleaning and refrigeration
Advantages
•Farmers having flexibility to pouring their milk (3 Hours milk collection per
shift).
•Instant chilling at Village level within 2 hours. Risks
•Farmers Milk Quality increased. Low switching costs for famers, so company won’t be able to realize good
•Avoiding milk spoilage & spillage returns on their investment
•Avoid Routes to Chilling Centre
 Traditional Modern Retail E-commerce Sahyadri Hatsun Agro Amul
Amul, is an Indian dairy cooperative society, based at Anand in the state of Gujarat. Formed in 1946, it is a cooperative brand
managed by a cooperative body, the Gujarat Co-operative Milk Marketing Federation Ltd. (GCMMF), which today is jointly
owned by 3.6 million milk producers in Gujarat.

FRESH MILK DISTRIBUTION

CHANNELS
3-TIER STRUCTURE
36
Amul believes in sustainable
Lacs
value creation through its
shareholder model
Milk Producer
18,600
Village Dairy Co-
operative Amul Parlours HORECA
18
District • Franchise Based • Institutional business
Co-op. • Approx. 8000 outlets in India • Serviced by distributors
Union • Serviced by distributors
GCMMF

State Co-op. Milk

Mtkg. Federation

Intermediaries

Retail Supermarkets
Consumer • Approx. 5 lac retail outlets • Approx. 5 lac retail outlets
• Serviced through • Serviced through
• Serviced by • Serviced by
distributors/wholesalers distributors/wholesalers
Traditional Modern Retail E-commerce Sahyadri Hatsun Agro Amul

Farmers 61-62 rupees/litre

Distribution of AMUL products is
Village co-op. societies Village co-op. societies interestingly based on
with chilling units without chilling units
temperature required to
transport the product. The 4
Milk processing units & broad categories are:
warehouses Chilling plants
• Chilled (up to 4°C)
Milk, Butter, etc.
• Ambient (room temperature)
GCMMF warehouses
Bread
• Frozen (-18 °C)
Ice-cream
Distributors 10-15 paise/litre • Dry ( No temperature control)
Amul KOOL
60-65 paise/litre
AMUL Products are available over
Amul Parlours Retailers Supermarkets HORECA 600,000 retail outlets across India
through its network of 10,000
distributors
Consumers
Traditional Modern Retail E-commerce Sahyadri Hatsun Agro Amul

IMPACT OF COVID
Against all odds, when the entire industry was adversely affected due to
the disruptions along the entire value chain, AMUL emerged as a clear
winner.

KEY FACTS
STRATEGIES ADOPTED BY AMUL
• 177% jump in sales during
lockdown • Focus on online channel
• Supply of milk increased by 17% • Incentivising intermediaries
• 33 new variants were launched – • Direct society supply
Shakti, Panchamrut, haldi milk, • Dynamic re-distribution ( Focus
Bread, etc. on GT)
• New channels were effectively
explored
Appendix
• Sahyadri Farmer’s app: VesataGo (Agritech Logistics Solution)
• Ninjacart (Timeline)
VesatoGo (Agritech Logistics Solutions)
Timeline (T=Delivery day)
T-2
Farmers harvest the produce. Based on the expected
harvest, they intimate the procurement team of the
produce quantity.
T-1
The procurement team informs the sales team of the
SKU’s and the category team informs the sales team of the
SKU pricing for the for the day. Sales team starts taking
orders from their customers till 8:30 pm. Post 8:30 pm,
the cart is closed (orders are no longer entertained) and
readjustment orders are determined. On the same day,
the procurement team procures the harvest from farmers
and delivers them to CC from which it is sorted based on
tonnage and redistributed to FC.
T+0
• On the delivery day, the SKU’s are dispatched from
FC’s to MDC’s after further sorting and batch
creation (Small/medium/large crates). All the crates
are RFID tagged. The crates reach the MDC’s by 3-4
am in the morning. The last mile delivery window is
from 6-10 am. The whole process of delivery from FC
to the end customer takes 11 hours.
•
• The inventory turnover at CC’s, FC’s and MDC’s is 1.
In other word, the warehouse should be emptied of
existing inventory in 1 day. Items are batched and
loaded into trucks enabled with real time tracking