Question 2

Why did PRAN wish to venture into the dairy industry? Why did it decide to enter
with UHT milk, which was a relatively new concept for the milk consumers in
Bangladesh?

Answer:

Ultra High Temperature (UHT) milk, also known as “long-life milk” is a common
product in grocery stores in many developed parts of the world. The extra treatment at
high temperatures enables the milk to be stored unopened at room temperature for
extended periods. In Bangladesh, however, the concept was relatively new, and UHT
milk was rare. The brands available were exclusively imported, very expensive and
targeted towards the high-end market. For example, while it was possible to buy a liter
of pasteurized milk for Tk 28, a liter of imported UHT milk typically cost around Tk
200! (See Table 1) The managers at PRAN knew that they could produce domestic
UHT milk at a fraction of the price of the imported varieties.

In 2003 Bangladesh’s dairy market was dominated by unprocessed, raw milk, which
accounted for over 80% of the market. The branded, processed segment of the market
was dominated by imported powdered milk and locally produced liquid pasteurized
milk. For that PRAN decided to enter the dairy industry.

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